SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported) August 16, 1996
BALCOR REALTY INVESTORS 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
------------------------------------------------------------
Exact Name of Registrant
Illinois 0-15649
- ----------------------------------- -----------------------------------
State or other jurisdiction Commission file number
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3327914
- ----------------------------------- -----------------------------------
Address of principal I.R.S. Employer
executive offices Identification
Number
60015
- -----------------------------------
Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- -----------------------------------------------------------------------
Cedar Crest Apartments
In 1985, a limited partnership (the "Limited Partnership") in which the
Partnership and an affiliate of the General Partner (the "Affiliate") are
limited partners acquired the Cedar Crest Apartments, Overland Park, Kansas.
The Partnership and the Affiliate contributed approximately $9,183,000 and
$351,000, respectively, towards the purchase of the property, and have
participating percentages in the Limited Partnership of approximately 96.32%
and 3.68%, respectively. The property was purchased subject to first mortgage
financing in the amount of $16,710,000.
On October 8, 1996, the Limited Partnership contracted to sell the property for
a sale price of $21,550,000 to an unaffiliated party, ERP Operating Limited
Partnership, an Illinois limited partnership. The purchaser has deposited
$300,000 in an escrow account as earnest money and will pay the remaining
portion of the sale price at closing, scheduled for October 31, 1996. From the
proceeds of the sale, the Limited Partnership will repay the outstanding
balance of the first mortgage loan, which is expected to be approximately
$14,825,000 at closing, and will pay $431,000 to an unaffiliated party as a
brokerage commission. An affiliate of the third party providing property
management services for the property will receive a fee of up to $161,625 for
services rendered in connection with the sale of the property. The Limited
Partnership will receive the remaining proceeds of approximately $6,132,000.
Of such proceeds, $500,000 will be retained by the Limited Partnership and will
not be available for use or distribution by the Limited Partnership until 120
days after closing. The Partnership's share of total net proceeds is expected
to be approximately $5,906,000, less the Partnership's share of closing costs.
During 1996, two other properties in which the Partnership had an interest were
sold to the purchaser. Affiliates of the General Partner have sold over 20
other properties to the purchaser during 1996.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
ITEM 5. OTHER EVENTS
- ----------------------------------
a) Brighton Townhomes
As previously reported, on May 6, 1996, the Partnership contracted to sell
Brighton Townhomes, Washington County, Oregon, to Security Capital Pacific
Trust, a Maryland real estate investment trust. The sale price is $11,150,000.
The sale closed on August 16, 1996. From the proceeds of the sale, the
Partnership repaid the outstanding balance of the first mortgage loan of
$6,858,644. The holder of the first mortgage loan also received $1,377,156 in
additional interest representing 35% of the net sale proceeds. The Partnership
paid $54,675 in closing costs and $167,250 to an unaffiliated party as a
brokerage commission. The Partnership received $2,692,275 in remaining
proceeds.
<PAGE>
b) Lakeville Resort Apartments
As previously reported, on April 23, 1996, a joint venture consisting of the
Partnership and an affiliate which owns Lakeville Resort Apartments, Petaluma,
California, contracted to sell the property to an unaffiliated party, ERP
Operating Limited Partnership, an Illinois limited partnership, for a sale
price of $27,000,000. The closing of the sale has been extended to November 1,
1996.
c) Lake Ridge Apartments
In 1986, Lake Ridge Apartments, Fresno, California, was acquired by a joint
venture (the "Joint Venture") consisting of the Partnership and the seller of
the property (the "JV Partner") to the Joint Venture. The Partnership
contributed approximately $2,577,000 towards the purchase of the property. The
property was acquired subject to first mortgage financing in the amount of
$5,800,000. In 1993, the seller relinquished its interest in the Joint Venture
to the Partnership. Also in 1993, the first mortgage loan, which had a balance
of $6,339,368, including accrued interest, was repaid at a discount of
$1,281,439 and refinanced with a new $4,223,800 first mortgage loan and $86,200
second mortgage loan from an unaffiliated party. The Partnership utilized
$675,209 of Partnership reserves towards the refinancing .
On October 1, 1996, the Partnership contracted to sell the property for a sale
price of $5,400,000 to an unaffiliated party, Fowlershore & Flanagan, a
California general partnership. The purchaser has deposited $50,000 in an
escrow account as earnest money and will pay the remaining portion of the sale
price at closing, scheduled for December 1, 1996. From the proceeds of the
sale, the Partnership will repay the outstanding balance of the first mortgage
loan, which is expected to be approximately $4,212,838 at closing and will pay
$108,000 to an unaffiliated party as a brokerage commission. An affiliate of
the third party providing property management services for the property will
receive a fee of up to $67,500 for services rendered in connection with the
sale of the property. The Partnership will receive the remaining proceeds of
approximately $1,012,000, less closing costs.
Affiliates of the General Partner have entered into contracts to sell two
additional properties to the purchaser during 1996.
The closing is subject to the satisfaction of numerous terms and conditions.
There can be no assurance that all of the terms and conditions will be complied
with and, therefore, it is possible the sale of the property may not occur.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- ----------------------------------------------------------------------
(A) FINANCIAL STATEMENTS AND EXHIBITS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) Agreement of Sale and attachment thereto relating to the sale
of Cedar Crest Apartments, Overland Park, Kansas.
(99) (a) Letter Agreements dated August 20, 1996, September 19, 1996
and September 30, 1996 relating to the sale of Lakeville
Resort Apartments, Petaluma, California.
(b) Agreement of Sale and attachment thereto relating to the
sale of Lake Ridge Apartments, Fresno, California.
No information is required under Items 1, 3, 4, 6 and 8 and these items
have, therefore, been omitted.
Signature
- -------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR REALTY INVESTORS 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
By: Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware corporation,
a partner
By: /s/ Jerry M. Ogle
------------------------------------
Jerry M. Ogle, Vice President
and Secretary
Dated: October 23, 1996
<PAGE>
Cedar Crest Apartments, Overland Park, KS
AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the day of October, by and between
ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership
("Purchaser") and CEDAR CREST INVESTORS, an Illinois limited partnership
("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of TWENTY-ONE MILLION FIVE HUNDRED FIFTY THOUSAND and No/100
Dollars ($21,550,000.00), that certain property ("Property") in Overland Park,
Kansas more particularly described on Exhibit A attached hereto, which Property
is known as Cedar Crest Apartments and contains 466 units and approximately
40.3 acres. Included in the "Purchase Price" (as hereinafter defined) is all
of Seller's right, title and interest in the personal property set forth on
Exhibit B, which shall be transferred to Purchaser at "Closing" (as hereinafter
defined) by a Bill of Sale; and all right, title and interest of Seller
(whether now or hereafter existing) in and to any land lying in the bed of any
street, alley, road or avenue (whether open, closed or proposed) within, in
front of, behind or otherwise adjoining the Property or any of it; and all
right, title and interest of Seller (whether now or hereafter existing) in and
to any award made or to be made as a result of or in lieu of condemnation, and
in and to any award for damage to the Property or any part thereof by reason of
casualty (all of the foregoing being included within the term "Property"); and
all of the building, structures, fixtures, facilities, installations and all of
Seller's right, title and interest in other improvements of every kind and
description now or hereafter in, on, over and under the land, including,
without limitation, any and all recreational buildings, structures and
facilities, plumbing, air conditioning, heating, ventilating, mechanical,
electrical and other utility systems, parking lots, landscaping, sidewalks,
swimming pools, signs and light fixtures which are not owned by tenants under
leases (all of the foregoing being included within the term "Property"); and
all of Seller's right, title and interest in all of the following which are in
Seller's possession: existing surveys, blue prints, drawings, plans and
specifications (including, without limitation, structural, HVAC, mechanical and
plumbing, water and sewer plans and specifications); all available tenant lists
and data, correspondence with present and prospective tenants, vendors,
suppliers, utility companies and other third parties, booklets, manuals and
promotional and advertising materials concerning the Property or any part
thereof (all of the foregoing being included within the term "Property"); and
all right, title and interest of Seller in and to the intangible personal
property now or hereafter owned by Seller and used in connection with or
arising from the business now or hereafter conducted on or from the Property or
any part thereof, including, without limitation, claims, choses in action,
lease and other contract rights, names and telephone exchange numbers (all of
the foregoing being included within the term "Property"). The computer
software located at the Property is not included in the conveyance to
Purchaser.
2. PURCHASE PRICE. The purchase price (the "Purchase Price") shall be
paid by Purchaser as follows:
<PAGE>
A. Upon the execution of this Agreement, the sum of $300,000.00
("Earnest Money") to be held in escrow by the Escrow Agent (as that term is
defined in the "Escrow Agreement" [as hereinafter defined]) by and in
accordance with the provisions of the Escrow Agreement ("Escrow Agreement")
attached hereto as Exhibit C;
B. On the "Closing Date" (as hereinafter defined), the balance of
the Purchase Price adjusted in accordance with the prorations by federally
wired "immediately available" funds delivered to the "Title Insurer" (as
hereinafter defined) no later than 12:00 Noon on the Closing Date. If the
funds are not received by 12:00 Noon, then, on the Closing Date, Purchaser
shall pay Seller an amount equal to any additional mortgage per diem interest
costs incurred by the Seller.
3. TITLE COMMITMENT AND SURVEY.
A. Attached hereto as Exhibit D is a copy of a title commitment for
an owner's standard title insurance policy issued by Charter Title, as agent
for Lawyers Title Insurance Co. (hereinafter referred to as "Title Insurer")
dated July 1, 1996 for the Property (the "Title Commitment"). For purposes of
this Agreement, "Permitted Exceptions" shall mean: (a) general real estate
taxes, association assessments, special assessments, special district taxes and
related charges not yet due and payable; (b) matters shown on the "Survey"
(hereinafter defined); (c) matters caused by the actions of Purchaser; and (d)
the title exceptions set forth in Section II of Schedule B of the Title
Commitment as Numbers 6 -30, inclusive, to the extent that same affect the
Property. All other exceptions to title shall be referred to as "Unpermitted
Exceptions". The Title Commitment shall be conclusive evidence of good title
as therein shown as to all matters to be insured by the title policy, subject
only to the exceptions therein stated. On the Closing Date, Title Insurer
shall deliver to Purchaser a standard title policy in conformance with the
previously delivered Title Commitment, subject to Permitted Exceptions and
"Unpermitted Exceptions" (as hereinafter defined) which have been waived by
Purchaser (the "Title Policy"). Purchaser and Seller hereby agree to divide
evenly the costs of the Title Commitment and Title Policy (except for the costs
of any endorsements to, or extended coverage on, the Title Policy which will be
the responsibility of Purchaser).
B. Seller has ordered a survey (the "Survey") of the Property.
Purchaser shall have ten (10) days from the date of receipt of the Survey to
approve the Survey. If Purchaser disapproves the Survey because it contains
matters which are not acceptable to Purchaser ("Survey Defects"), then upon
notice delivered to Seller by Purchaser within ten (10) days from the date of
receipt of the Survey, Seller shall have five (5) days to either: (i) cause the
Survey Defects to be removed from the Survey or (ii) cause the title Insurer to
insure against loss or damage resulting from the Survey Defects ("Title
Indemnity"). If Seller is unwilling to do either (i) or (ii) above, then
Purchaser shall have the right to elect to terminate this Agreement. Purchaser
shall notify Seller of its election within five (5) days after receipt of
notice from Seller that the Survey Defects will not be removed or that the
Title Insurer will not issue the Title Indemnity. If Purchaser fails to make
the election within the aforesaid five (5) days, then it shall be conclusively
presumed that Purchaser has elected to take title to the Property subject to
the Survey Defects. If Purchaser elects to terminate this Agreement pursuant
to this Paragraph, then the Earnest Money plus all accrued interest shall be
delivered to Purchaser immediately following Seller's receipt of all
third-party reports ("Reports") which Purchaser has received during Purchaser's
<PAGE>
inspection of the Property. If Purchaser desires any modifications to the
Survey, Seller will reasonably cooperate with Purchaser to cause the surveyor
to make such modifications. Purchaser and Seller shall each pay for one-half
of the costs of the Survey.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple
title to the Property by Special Warranty Deed in the form of Exhibit E
attached hereto (the "Deed") in recordable form subject only to the Permitted
Exceptions. If Seller is unable to convey title to the Property subject only
to the Permitted Exceptions because of the existence of an additional title
exception ("Unpermitted Exception"), then Purchaser can elect to take title to
the Property subject to the Unpermitted Exception or terminate this Agreement.
Notwithstanding the aforesaid, Seller shall be required to remove all
Unpermitted Exceptions which are liens of a definite or ascertainable amount.
If Purchaser elects to terminate this Agreement, then the Earnest Money plus
all accrued interest shall be delivered to the Purchaser.
5. PAYMENT OF CLOSING COSTS. Purchaser and Seller hereby agree to
divide evenly the costs of the documentary stamps (if any) to be paid with
reference to the Deed and all other stamps, intangible, documentary, recording,
sales tax and surtax imposed by law with reference to any other documents
delivered in connection with this Agreement as well as for all costs of the
Title Commitment, Survey, Title Policy (except for the costs of any
endorsements to, or extended coverage on, the Title Policy which will be the
responsibility of Purchaser), escrow charges and all other charges of the Title
Insurer in connection with this transaction. Seller shall pay any fees and
charges payable in connection with paying off the loan currently encumbering
the property (the "Loan") and causing the release of the related loan
documents, including, without limitation, any applicable prepayment fees and
charges. Purchaser and Seller shall be responsible for the costs of their
respective attorneys.
6. DAMAGE, CASUALTY AND CONDEMNATION.
A. If the Property suffers damage as a result of any casualty prior
to the Closing Date and can be repaired or restored in the case of real
property for $215,000.00 or less, or in the case of Personal Property, for
$25,000.00 or less, as determined by Seller in good faith, then Seller shall
either repair such damage prior to Closing or, at Purchaser's option (which
shall be exercised by Purchaser within ten (10) days after notice of such
casualty), allow Purchaser a credit against the Purchase Price in an amount
equal to the reasonably estimated cost of repair. Seller shall retain all
insurance proceeds. If the cost of repair or restoration exceeds the aforesaid
amounts (as determined by Seller in good faith), then Purchaser can, upon
notice to Seller within ten (10) days after notice of such casualty, elect to
either: (a) cause Seller to repair and restore same, in which event the Closing
Date will be extended until such date as may reasonably be required to complete
the repair or restoration; or (b) terminate this Agreement upon notice to
Seller served within ten (10) days of notice of such casualty or (c) accept the
Property in its damaged condition together with an assignment from Seller of
all insurance proceeds and receive a credit at Closing in the amount of the
deductible.
<PAGE>
B. If condemnation proceedings ("Proceedings") have been instituted
against the Property and such Proceedings are in an amount less than
$100,000.00, then Purchaser shall take the Property subject to the Proceedings
and an assignment of Seller's interest in the Proceedings. If the Proceedings
are in excess of $100,000.00, then Purchaser can elect to either take the
Property subject to the Proceedings and an assignment of Seller's interest in
the Proceedings or terminate this Agreement. If Purchaser elects to terminate
this Agreement, it shall be by notice to the Seller within five (5) days after
Seller notifies Purchaser of the Proceedings.
C. If the Agreement is terminated pursuant to this Paragraph, then
the Earnest Money plus all accrued interest shall be delivered to the
Purchaser.
7. AS-IS CONDITION.
A. Except as may hereinafter be specifically set forth in this
Agreement, Purchaser is not relying on Seller having made any inquiry as to the
condition of the Property or the leases. Purchaser acknowledges and agrees
that, except as may hereinafter be specifically set forth in this Agreement, it
will be purchasing the Property based solely upon its inspection and
investigations of the Property and that Purchaser will be purchasing the
Property "AS IS" and "WITH ALL FAULTS" based upon the condition of the Property
as of the date of this Agreement, subject to reasonable wear and tear and loss
by fire or other casualty or condemnation from the date of this Agreement until
the Closing Date. Without limiting the foregoing, Purchaser acknowledges that,
except as may otherwise be specifically set forth elsewhere in this Agreement,
neither Seller nor its consultants, brokers or agents have made any other
representations or warranties of any kind upon which Purchaser is relying as to
any matters concerning the Property, including, but not limited to, the
condition of the land or any improvements, the existence or nonexistence of
asbestos, lead in water, lead in paint, radon, underground or above ground
storage tanks, petroleum, toxic waste or any "Hazardous Materials" or
"Hazardous Substances" (as such terms are defined below), the tenants of the
Property or the leases affecting the Property, economic projections or market
studies concerning the Property, any development rights, taxes, bonds,
covenants, conditions and restrictions affecting the Property, water or water
rights, topography, drainage, soil, subsoil of the Property, the utilities
serving the Property or any zoning, environmental or building laws, rules or
regulations affecting the Property. Seller makes no representation that the
Property complies with Title III of the Americans With Disabilities Act and,
except as may hereinafter be specifically set forth in this Agreement, Seller
makes no representation that the Property complies with any fire codes or
building codes. Purchaser hereby releases Seller from any and all liability in
connection with any claims which Purchaser may have against Seller, and
Purchaser hereby agrees not to assert any claims, for damage, loss,
compensation, contribution, cost recovery or otherwise, against Seller, whether
in tort, contract, or otherwise, relating directly or indirectly to the
existence of asbestos or Hazardous Materials or Hazardous Substances on, or
environmental conditions of, the Property, or arising under the "Environmental
Laws" (as such term is hereinafter defined), or relating in any way to the
quality of the indoor or outdoor environment at the Property. This release
shall survive the Closing. As used herein, the term "Hazardous Materials" or
"Hazardous Substances" means (i) hazardous wastes, hazardous materials,
hazardous substances, hazardous constituents, toxic substances or related
materials, whether solids, liquids or gases, including but not limited to
substances defined as "hazardous wastes," "hazardous materials," "hazardous
<PAGE>
substances," "toxic substances," "pollutants," "contaminants," "radioactive
materials," or other similar designations in, or otherwise subject to
regulation under, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.;
the Toxic Substance Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking
Water Act, 42 U.S.C. e300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. e7401
et seq.; and in any permits, licenses, approvals, plans, rules, regulations or
ordinances adopted, or other criteria and guidelines promulgated pursuant to
the preceding laws or other similar federal, state or local laws, regulations,
rules or ordinance now or hereafter in effect relating to environmental matters
(collectively the "Environmental Laws"); and (ii) any other substances,
constituents or wastes subject to any applicable federal, state or local law,
regulation or ordinance, including any Environmental Law, now or hereafter in
effect, including but not limited to (A) petroleum, (B) refined petroleum
products, (C) waste oil, (D) waste aviation or motor vehicle fuel, (E)
asbestos, (F) lead in water, paint or elsewhere, (G) radon, (H) Polychlorinated
Biphenyls (PCB's) and (I) ureaformaldehyde.
B. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Except as may hereinafter be
specifically set forth in this Agreement, Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller from any liability with respect
to such historical information.
8. CLOSING. The closing ("Closing") of this transaction shall be on
October 31, 1996 ("Closing Date"), at the office of the Seller's attorney, at
which time Seller shall deliver possession of the Property to Purchaser.
9. CLOSING DOCUMENTS.
A. On the Closing Date, Purchaser shall deliver to Seller an
executed closing statement, the balance of the Purchase Price, and such other
documents as may be reasonably required in order to consummate the transaction
as set forth in this Agreement.
B. On the Closing Date, Seller shall deliver to Purchaser
possession of the Property; the Deed subject to the Permitted Exceptions and
those Unpermitted Exceptions waived by Purchaser; a UCC search from appropriate
jurisdictions reflecting no liens against Seller, or a termination statement as
to any lien secured by a UCC filing; an inventory of the Personal Property and
a Bill of Sale for the same (in the form of Exhibit F attached hereto); an
executed closing statement; an executed assignment and assumption of all
service contracts (in the form of Exhibit G attached hereto); an executed
assignment and assumption of all leases and security deposits (in the form of
<PAGE>
Exhibit H attached hereto); updated rent roll; a notice to the tenants of the
transfer of title and the assumption by Purchaser of the landlord's obligations
under the leases and the obligation to refund the security deposits (in the
form of Exhibit I attached hereto), the original leases to be delivered to
Purchaser at the Property; a non-foreign affidavit (in the form of Exhibit J
attached hereto) and such other documents as may be reasonably required by the
Title Insurer in order to consummate the transaction as set forth in this
Agreement and shall cause the Title Company to deliver the Title Policy subject
only to Permitted Exceptions and Unpermitted Exceptions waived by Purchaser.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT THIS TRANSACTION FAILS TO
CLOSE DUE TO THE DEFAULT OF THE PURCHASER UNDER THE PROVISIONS OF THIS
AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST MONEY AND THE INTEREST
THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER REMEDY. THE PARTIES
HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY
PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE.
THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE
EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE ACTUAL DAMAGES NOT TO EXCEED THE
AMOUNT OF THE EARNEST MONEY THEN ON DEPOSIT WITH THE ESCROW AGENT, PLUS THE
RETURN OF ALL EARNEST MONEY TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND
THIS AGREEMENT SHALL TERMINATE AND THE PARTIES SHALL HAVE NO FURTHER LIABILITY
TO EACH OTHER AT LAW OR IN EQUITY. NOTWITHSTANDING ANYTHING CONTAINED HEREIN
TO THE CONTRARY, IF SELLER'S DEFAULT IS ITS REFUSAL TO DELIVER THE DEED, THEN
PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. A. PRORATIONS. Rents for the month of the Closing (exclusive of
delinquent rents, but including prepaid rents); any previously paid signing
bonus or similar payment relating to any laundry room, cable, telephone or
similar agreement in effect as of the Closing, refundable security deposits
with interest if required by local law (which will be assigned to and assumed
by Purchaser and credited to Purchaser at Closing); refundable and
non-refundable pet and cleaning fees and deposits, water and other utility
charges; fuels; prepaid operating expenses; real and personal property taxes
(as provided for in the next following sentence); and other similar items shall
be adjusted ratably as of 11:59 P.M. on the Closing Date ("Proration Date"),
and credited or debited to the balance of the cash due at Closing. Real
property taxes shall be prorated based on the following information in the
following circumstances: (i) if the current tax bill is available, real
property taxes shall be prorated based on that tax bill; (ii) if the tax bill
for the current tax year is not available, real property taxes shall be
prorated based on an assessed valuation for the Property of $16,400,900
multiplied by a tax rate equal to 102% of the tax rate for the prior tax year
multiplied by the equalization factor for the prior tax year, if applicable.
If the amount of any of the items to be prorated is not then ascertainable, the
adjustment thereof shall be on the basis of the most recent ascertainable data.
All prorations will be final except as to Delinquent Rents referred to in 12B
below, and errors in calculation on the closing statement. If special
assessments have been levied against the Property for completed improvements,
then the amount of any installments which are due prior to the Closing Date
shall be paid by the Seller; and the amount of installments which are due after
<PAGE>
the Closing Date shall be paid by the Purchaser. All assessments for
incomplete improvements shall be paid by Purchaser.
B. DELINQUENT RENTS. If, as of the Closing Date, any rent is in
arrears ("Delinquent Rent") for thirty (30) days or less, then the first rent
collected by Purchaser will be delivered to Seller for the Delinquent Rent. If
Delinquent Rent is in arrears for more than thirty (30) days, then rents
collected by Purchaser shall first be applied to current rent and then to
Delinquent Rent. Purchaser shall deliver Seller's pro rata share within 10
days of Purchaser's receipt of that Delinquent Rent. Within 120 days after the
Closing Date, Purchaser shall deliver to Seller a reconciliation statement of
rents collected by Purchaser through the first 90 days after the Closing Date.
Seller retains the right to conduct an audit, at reasonable times and upon
reasonable notice, of Purchaser's books and records to verify the accuracy of
the reconciliation statement and if such audit discloses that additional funds
are owing, then the party owing such funds shall promptly pay such sums to the
party so owed. This subparagraph of this Agreement shall survive the Closing
and the delivery and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of
recording by Purchaser shall be an act of default hereunder by Purchaser and
shall be subject to the provisions of Paragraph 10.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller,
except to an entity directly or indirectly controlled by Purchaser. Any
non-permitted assignment or transfer of, or attempt to assign or transfer,
Purchaser's interest in this Agreement shall be an act of default hereunder by
Purchaser and subject to the provisions of Paragraph 10. Seller hereby
consents to an assignment to an entity which is an affiliate of Purchaser,
provided Purchaser notifies Seller of the assignment at least five (5) business
days prior to the Closing Date.
15. BROKER. The parties hereto hereby each represent and warrant to
the other that neither has retained the services of a broker in connection with
this transaction except for Paine Webber Real Estate Investments, Incorporated
Group ("Seller's Broker") retained by Seller and whose commission will be paid
by Seller. Purchaser agrees to indemnify, defend and hold harmless the Seller
and any partner, affiliate, parent of Seller, and all shareholders, employees,
officers and directors of Seller or Seller's partner, parent or affiliate (each
of the above is individually referred to as a "Seller Indemnitee") from all
claims, including attorneys' fees and costs incurred by a Seller Indemnitee as
a result of anyone's claiming by or through Purchaser any fee, commission or
compensation on account of this Agreement, its negotiation or the sale
hereby contemplated (except for Seller's Broker). Seller agrees to indemnify,
defend and hold harmless the Purchaser and any partner, affiliate, parent of
Purchaser and all shareholders, employees, officers and directors of Purchaser
or Purchaser's parent or affiliate (each of the above is individually referred
to as a "Purchaser Indemnitee") from all claims, including attorneys' fees and
costs incurred by a Purchaser Indemnitee as a result of anyone's claiming by or
through Seller any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated.
<PAGE>
16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
A. Purchaser has completed its inspection of the Property other
than its review of title, survey and environmental matters. Purchaser shall
have until the close of business (5:00 P.M. Chicago Time) on October 25, 1996
(the "Approval Period") to review title, survey and environmental matters
(subject to an extension to review the Survey as set forth in Paragraph 3.B.
above). During the Approval Period, upon reasonable notice to the Seller, the
Purchaser shall have the right to access the Property, during normal business
hours. Purchaser shall maintain public liability insurance policies insuring
against claims arising as a result of the inspections of the Property being
conducted by Purchaser. Purchaser agrees to indemnify, defend, protect and
hold Seller harmless from any and all loss, costs, including attorneys' fees,
liability or damages which Seller may incur or suffer as a result of
Purchaser's conducting its inspection and investigation of the Property
including the entry of Purchaser, its employees or agents and its lender onto
the Property, including without limitation, liability for mechanics' lien
claims.
B. Purchaser agrees to defend and hold Seller harmless from any
injuries, damages or claims of any nature whatsoever which Purchaser's
servants, agents or employees may have as a result of Purchaser's inspection of
the Property. Purchaser further agrees to restore any damage to the Property
which may arise as a result of Purchaser's inspection of the Property.
C. If Purchaser disapproves of the status of title to the Property,
the Survey and/or the environmental condition of the Property, in its sole and
absolute discretion, it must be by a notice ("Notice of Disapproval") delivered
to Seller and the Escrow Agent prior to the expiration of the Approval Period.
The Notice of Disapproval delivered to Seller shall be accompanied by copies of
all Reports which Purchaser has received during the Approval Period. Upon
receipt of the Notice of Disapproval and copies of the Reports, the Earnest
Money plus the interest accrued thereon shall be returned to the Purchaser. If
Purchaser does not timely deliver a Notice of Disapproval and copies of the
Reports to Seller, then it shall be conclusively presumed that Purchaser has
approved the condition of the Property (as described above) and all Earnest
Money plus the interest accrued thereon shall belong to Seller unless Seller is
in default hereunder.
17. SURVIVAL OF INDEMNITY. Notwithstanding anything in this Agreement to
the contrary, the parties' obligations to indemnify, defend and hold each other
harmless under various provisions of this Agreement shall forever survive the
termination of this Agreement or the Closing and delivery and recording of the
Deed.
18. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. Any reference herein to Seller's knowledge, representation,
warranty or notice of any matter or thing, shall only mean such knowledge or
notice that has actually been received by Phillip Schechter, and any
representation or warranty of the Seller is based upon those matters of which
Phillip Schechter have actual knowledge. A copy of this Paragraph 18 shall be
delivered to the resident manager of the Property within two (2) days after the
execution by Seller of this Agreement, with a request to advise Phillip
Schechter within five (5) business days after receipt by the resident manager
as to the accuracy and truthfulness of the representations and warranties.
Phillip Schechter shall notify Purchaser as to the response of the resident
<PAGE>
manager by October 15, 1996, if the resident manager indicated that any of the
representations or warranties were incorrect. If Phillip Schechter fails to so
notify Purchaser, Purchaser shall be entitled to conclude that the resident
manager reviewed the representations and warranties and that they are correct.
Any knowledge or notice given, had or received by any of Seller's agents,
servants or employees shall not be imputed to Seller or the individual partners
or the general partner of Seller.
B. Subject to the limitations set forth in subparagraph "A" above,
Seller hereby makes the following representations and warranties, all of which
are made to the Seller's knowledge. The parties agree that the representations
contained herein shall survive Closing for a period of 120 days (i.e. the
claiming party shall have no right to make any claims against the other party
for a breach of a representation or warranty after the expiration of 120 days
immediately following Closing.)
(1) Except as set forth on Exhibit K attached hereto, the
present use and occupancy of the Property conform with applicable building and
zoning laws and Seller has received no written notice that any such laws, rules
or regulations are being violated.
(2) The rent roll attached hereto as Exhibit L and which shall
be updated as of the Closing Date is true and accurate. No tenant under any
lease has any option or right of first refusal to acquire any ownership
interest in the Property or any right to terminate its lease or is entitled to
any rebate or concession except as set forth in its lease or on Exhibit L.
(3) Except as set forth on Exhibit K attached hereto, Seller
has no knowledge of any pending or threatened litigation, claim, cause of
action or administrative proceeding concerning the Property.
(4) Attached hereto as Exhibit M are copies of all licenses and
permits which are in Seller's possession and all service contracts affecting
the Property (none of which is in default), except for the management agreement
which shall be terminated as of the Closing Date; and Seller shall not enter
into any new service contracts which cannot be terminated within 30 days
written notice or modify or extend any existing service contracts without the
prior consent of Purchaser which consent shall not be unreasonably withheld or
delayed.
(5) Seller has not received any written notice from any tenant
occupying the Property that Seller is in default under that tenant's lease.
(6) Except as set forth on Exhibit K attached hereto, Seller
has not received from any governmental authority, any written notice of zoning,
building, fire, health code or other violations with respect to the Property,
or any part thereof, that will not have been corrected prior to Closing solely
at Seller's expense.
(7) Seller is duly organized, validly existing, qualified and
empowered to conduct its business, and has full power and authority to perform
and comply with the terms of this Agreement. Neither the execution and
delivery of this Agreement nor its performance will conflict with or result in
the breach of Seller's partnership agreement or any contract or agreement to
which Seller is a party or by which Seller is bound.
<PAGE>
(8) This Agreement is valid and enforceable against Seller in
accordance with its terms and each instrument to be executed by Seller pursuant
to this Agreement or in connection herewith will, when executed and delivered,
be valid and enforceable against Seller in accordance with its terms.
(9) Seller has not received written notice from any
governmental authority alleging that the Property presently contains Hazardous
Materials or Hazardous Substances.
(10) As of the Closing Date, no leasing commissions will be due
subsequent to the Closing Date.
(11) None of the on-site employees is employed by the Seller.
(12) Through the Closing Date, Seller shall continue to operate,
manage and maintain the Property in the same manner as prior to the execution
of this Agreement.
(13) Seller shall not extend or otherwise renew any lease
without the prior written consent of Purchaser, except for any renewal or other
extension of a lease providing for a monthly rental of not less than the
monthly rental being presently charged for a similar apartment and for a period
of time not to exceed twelve (12) months.
(14) Seller agrees not to distribute the net proceeds of the
Purchase Price up to a maximum amount of $500,000.00 to its partners for one
hundred twenty (120) days after the Closing Date.
(15) Exhibit B attached hereto is a list of all the personal
property owned by Seller and used in the operation of the Property. The
computer software used at the Property will not be transferred to the
Purchaser.
(16) The unaudited operating statements heretofore or hereafter
delivered to Purchaser by Seller are and shall be true, complete and correct in
all material respects.
C. For the period commencing with the execution of this Agreement,
and expiring at the earlier of a termination of this Agreement or the Closing
Date, Seller will not offer the Property for sale to any other third party.
D. Seller shall furnish to Purchaser unaudited operating
statements, rent rolls and a leasing status report on a monthly basis.
E. Upon at least two (2) days' prior notice, Purchaser shall have
the right, during normal business hours, to visit the Property and the
interiors of the apartments.
F. Seller shall not apply security deposits towards delinquent rent
except for (i) those tenants who have vacated their apartments or (ii) tenants
who are in arrears for rent for more than thirty (30) days and Seller has
commenced the process of evicting the tenant.
G. Seller hereby agrees to remake the aforesaid representations and
warranties at Closing. If at any time after the execution of this Agreement,
Seller becomes aware of information which makes a representation or warranty
contained in this Agreement to become untrue in any material respect, Seller
<PAGE>
shall promptly disclose said information to Purchaser. Provided the
representation or warranty was true when made and further provided that Seller
did not take any deliberate actions to cause the representation or warranty in
question to become untrue in any material respect, Seller shall not be in
default under this Agreement and the sole remedy of Purchaser shall be to
terminate this Agreement. Notwithstanding anything contained herein to the
contrary, if the status of any of the tenancies changes from the date of the
rent roll attached hereto and the date of the rent roll delivered at Closing,
provided the change in status is not caused by a breach of Seller's covenants
contained herein, then Purchaser shall not have the right to terminate this
Agreement or make any claim for a breach of a representation or warranty
hereunder involving the rent roll or tenancies thereunder. Purchaser and
Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party had actual knowledge of prior to Closing.
19. PURCHASER'S REPRESENTATIONS AND WARRANTIES. Purchaser hereby
represents and warrants to Seller that Purchaser has the full right, power and
authority to execute this Agreement and consummate the transactions
contemplated herein.
20. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit N is the
following report (the "Existing Report") of the Property, which Seller is
delivering to Purchaser, at Purchaser's request: Phase I Environmental Site
Assessment prepared by EMG under Project #04501056.96B, dated April 11, 1996.
Seller makes no representation or warranty that the Existing Report is accurate
or complete. Purchaser hereby releases Seller from any liability whatsoever
with respect to the Existing Report or, including, without limitation, the
matters set forth in the Existing Report, the accuracy and/or completeness of
the Existing Report.
21. LIMITATION OF SELLER'S LIABILITY. No general or limited partner of
Seller, nor any of its respective beneficiaries, shareholders, partners,
officers, agents, employees, heirs, successors or assigns shall have any
personal liability of any kind or nature for or by reason of any matter or
thing whatsoever under, in connection with, arising out of or in any way
related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability. Notwithstanding the foregoing to the contrary, for
any claims against Seller following Closing, if Seller fails to retain the net
proceeds of the Purchase Price up to a maximum amount of $500,000.00 (the
"Cap") for 120 days after the Closing Date, then the general partner of Seller
shall be liable for actual damages sustained by Purchaser as a result of
Seller's breach of a representation or warranty contained in Paragraph 18 of
this Agreement in an amount not to exceed the Cap. The foregoing Cap on
liability for a claim against the Seller following Closing shall not apply, and
Seller's general partner shall be liable, if Seller has entered into leases at
the Property for more than one year in breach of the representation identified
in Paragraph 18(B)(2) hereof and Purchaser makes a claim against Seller for a
breach of said representation within 120 days immediately following Closing.
<PAGE>
22. ORGANIZATIONAL DOCUMENTS.
A. On or before the Closing Date, Purchaser will provide Seller's
attorney with copies of its organizational documents, including a certified
copy of its recorded certificate of limited partnership and a true copy of its
Partnership Agreement or a certified copy of its Articles of Incorporation,
corporate resolutions authorizing the transaction, and an incumbency
certificate, whichever is applicable.
B. On or before the Closing Date, Seller will deliver copies of its
partnership agreement and appropriate certificates of authority to the
Purchaser.
23. TIME OF ESSENCE. Time is of the essence of this Agreement.
24. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express or by facsimile or made by United States registered or
certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: Ilona Adams
with copies to: The Balcor Company
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attn: James Mendelson
708/267-1600
708/317-4462 (FAX)
and
Andrew D. Small, Esq.
Katten Muchin & Zavis
Suite 2100
525 W. Monroe Street
Chicago, Illinois 60661
312/902-5532
312/222-1061 (FAX)
TO PURCHASER: Alan George
c/o Equity Residential Properties Trust
Two North Riverside Plaza
Suite 450
Chicago, Illinois 60606-2639
312/466-3932
312/454-9678 (FAX)
<PAGE>
with a copy to: Daniel Baskes
c/o Equity Residential Properties Trust
Two North Riverside Plaza
Suite 450
Chicago, Illinois 60606-2639
312/466-3618
312/454-0335 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or on the same day if sent by facsimile before the close of business,
or the next day if sent by facsimile after the close of business, or on the 4th
business day after the same is deposited in the United States Mail as
registered or certified matter, addressed as above provided, with postage
thereon fully prepaid. Any such notice, demand or document not given,
delivered or made by registered or certified mail or by overnight courier or by
facsimile as aforesaid shall be deemed to be given, delivered or made upon
receipt of the same by the party to whom the same is to be given, delivered or
made. Copies of all notices shall be served upon the Escrow Agent.
25. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
three (3) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution. Seller will forward one (1) copy of
the executed Agreement to Purchaser and will forward the following to the
Escrow Agent:
A. One (1) fully executed copy of this Agreement, and
B. Three (3) copies of the Escrow Agreement signed by the parties
with a direction to execute two (2) copies of the Escrow Agreement and deliver
a fully executed copy to the Purchaser and the Seller. Purchaser shall deposit
the initial $300,000.00 of Earnest Money immediately following receipt by
Purchaser of a fully executed Purchase Agreement and Escrow Agreement.
26. GOVERNING LAW. The provision contained herein with reference to
retention of the Earnest Money in the event of Purchaser's default shall be
governed by the laws of the State of Illinois. The remaining provisions of
this Agreement shall be governed by the laws of the State of Texas.
27. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
28. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
29. CAPTIONS. Paragraph titles or captions contained herein are inserted
as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or any provision hereof.
<PAGE>
30. FINANCIAL STATEMENTS. Seller acknowledges that audited financial
statements pertaining to the Property for one prior calendar year of operation
and the portion of the calendar year in which the Closing occurs up to the
Closing Date are required to be filed by the Purchaser with the Securities and
Exchange Commission after the Closing. Accordingly, Seller agrees that for a
period of six (6) months after the Closing Date it shall provide Purchaser and
its representatives with access to Seller's books and records after the Closing
upon reasonable advance notice in order to conduct the required audit, which
shall be done at Purchaser's cost and expense.
31. CONVEYANCE OF PARTNERSHIP INTERESTS. If required to do so by
Purchaser, Seller hereby agrees, at no cost or expense to Seller, to cooperate
in good faith with Purchaser in structuring the conveyance of Property by the
Seller to Purchaser as a conveyance of title to such Property by the Seller
into a partnership or limited liability company having the Seller and/or
affiliates of the Seller as its sole partners (or members) and then, at
Closing, assigning to Purchaser the partnership (or membership) interests in
the partnership (or limited liability company). In such case, the Purchaser
hereby agrees to indemnify and hold the Seller harmless from and against any
and all loss, cost, expense, liability or damage (including reasonable
attorneys' fees) incurred by Seller arising out of Seller's conveyance in and
out of such partnership (or limited liability company) provided that such loss,
cost, expense, liability or damage (including reasonable attorneys' fees) would
not have been suffered or incurred by such Seller if such Property had been
conveyed directly by Seller to Purchaser. This Paragraph 32 shall survive the
Closing and the delivery of the Deed.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date set forth above.
Executed by Purchaser on PURCHASER:
___________, 1996.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland real estate investment trust
By: /s/ Lori P. Shelstad
-------------------------------------
Name: Lori P. Shelstad
-------------------------------------
Its: Vice President
-------------------------------------
Executed by Seller on SELLER:
___________, 1996
CEDAR CREST INVESTORS,
an Illinois limited partnership
By: Balcor Partners-XIX, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation a general partner
By: /s/ James E. Mendelson
-------------------------------------
Name: James E. Mendelson
-------------------------------------
Title: Authorized Representative
-------------------------------------
<PAGE>
BROKER JOINDER
[Cedar Crest]
of PW Real Estate Group ("Seller's Broker") executed this
Agreement in its capacity as a real estate broker and acknowledges that the
fee or commission due it from Seller as a result of the transaction described
in this Agreement is a set forth in that certain Listing Agreement, dated
between Seller and Seller's Broker (the "Listing
Agreement"). Seller's Broker also acknowledges that payment of the aforesaid
fee or commission is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt to
the Seller at the Closing for the fee or commission due Seller's Broker and a
release, in the appropriate form, stating that no other fees or commissions
are due to it from Seller or Purchaser.
PW REAL ESTATE GROUP
By:
--------------------------------------
<PAGE>
EXHIBITS
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment of Service Contracts
H - Assignment of Leases and Security Deposits
I - Notice to Tenants
J - Non-Foreign Affidavit
K - Compliance with Laws and Notice of Litigation
L - Rent Roll
M - Licenses, Permits and Service Contracts
N - Existing Reports
<PAGE>
August 20, 1996
VIA FACSIMILE MAIL
Lakeville Investors The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between Lakeville Investors, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of
Lakeville Apartments, Petaluma, California (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
"September 3, 1996" in the seventh line of Section 9 thereof to "September 19,
1996". Please acknowledge Seller's acceptance of this modification to the
Agreement by executing this letter in the space provided below and returning it
via facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Shelley L. Dunck
--------------------------------
Shelley L. Dunck
Vice President
<PAGE>
Approved and Accepted this 21 day of August, 1996
LAKEVILLE INVESTORS
By: Balcor Realty Investors 85-Series III A Real
Estate Limited Partnership, a partner
By: Balcor Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Jerry M. Ogle
----------------------------------
Name: Jerry M. Ogle
----------------------------------
Title: Vice President and Secretary
----------------------------------
By: Lakeville Partners, an Illinois limited partnership,
a partner
By: Balcor Partners-XIX, an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ Jerry M. Ogle
----------------------------------
Name: Jerry M. Ogle
----------------------------------
Title: Vice President and Secretary
----------------------------------
<PAGE>
September 19, 1996
VIA FACSIMILE MAIL
Lakeville Investors The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between Lakeville Investors, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of
Lakeville Apartments, Petaluma, California (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
"September 19, 1996" in the seventh line of Section 9 thereof to "October 1,
1996". Please acknowledge Seller's acceptance of this modification to the
Agreement by executing this letter in the space provided below and returning it
via facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Shelley L. Dunck
----------------------------------
Shelley L. Dunck
Vice President
<PAGE>
Approved and Accepted this day of September, 1996
LAKEVILLE INVESTORS
By: Balcor Realty Investors 85-Series III A Real
Estate Limited Partnership, a partner
By: Balcor Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ John K. Powell, Jr.
------------------------------
Name:
------------------------------
Title:
------------------------------
By: Lakeville Partners, an Illinois limited partnership,
a partner
By: Balcor Partners-XIX, an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ John K. Powell, Jr.
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
<PAGE>
September 30, 1996
VIA FACSIMILE MAIL
Lakeville Investors The Balcor Company Daniel J. Perlman, Esq.
c/o The Balcor Company 2355 Waukegan Road Katten Muchin & Zavis
2355 Waukegan Road Suite A200 Suite 2100
Suite A200 Bannockburn, IL 60015 525 W. Monroe Street
Bannockburn, IL 60015 Attn: Al Lieberman Chicago, IL 60661
Attn: Ilona Adams
Re: Agreement of Sale, dated as of the 23rd day of April, 1996 (the
"Agreement") between Lakeville Investors, as Seller, and ERP
Operating Limited Partnership, as Purchaser, for the purchase of
Lakeville Apartments, Petaluma, California (the "Property").
Dear Ms. Adams and Messrs. Lieberman and Perlman:
Purchaser hereby requests that the Agreement be modified to change
"October 1, 1996" in the seventh line of Section 9 thereof to "November 1,
1996". Please acknowledge Seller's acceptance of this modification to the
Agreement by executing this letter in the space provided below and returning it
via facsimile mail to Purchaser.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust,
a Maryland Real Estate Investment
Trust, its general partner
By: /s/ Shelley L. Dunck
----------------------------------
Shelley L. Dunck
Vice President
<PAGE>
Approved and Accepted this 1st day of October, 1996
LAKEVILLE INVESTORS
By: Balcor Realty Investors 85-Series III A Real
Estate Limited Partnership, a partner
By: Balcor Partners-XVIII, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ James E. Mendelson
------------------------------
Name: James E. Mendelson
------------------------------
Title: Authorized Rep.
------------------------------
By: Lakeville Partners, an Illinois limited partnership,
a partner
By: Balcor Partners-XIX, an Illinois general partnership,
its general partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ James E. Mendelson
------------------------------
Name: James E. Mendelson
------------------------------
Title: Authorized Rep.
------------------------------
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 1st
day of October, 1996, by and between FOWLERSHORE & FLANAGAN, a California
general partnership ("Purchaser"), and LAKE RIDGE ASSOCIATES, an Illinois
general partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to
sell at the price of Five Million Four Hundred Thousand And No/100 Dollars
($5,400,000.00) (the "Purchase Price"), that certain property commonly known as
Lake Ridge Apartments, Fresno, California legally described on Exhibit A
attached hereto (the "Property"). Included in the Purchase Price is all of the
personal property set forth on Exhibit B attached hereto (the "Personal
Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as
follows:
2.1. Upon the execution of this Agreement, the sum of Fifty Thousand
and No/100 Dollars ($50,000.00) (the "Earnest Money") to be held in escrow by
and in accordance with the provisions of the Escrow Agreement ("Escrow
Agreement") attached hereto as Exhibit C; and
2.2. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 1:00 p.m Chicago time.
3. TITLE COMMITMENT AND SURVEY.
3.1. Attached hereto as Exhibit D is a copy of a title commitment
for an owner's standard title insurance policy issued by Lawyers Title
Insurance Company (hereinafter referred to as "Title Insurer") dated June 21,
1996 for the Property (the "Title Commitment"). For purposes of this
Agreement, "Permitted Exceptions" shall mean: (a) the general printed
exceptions contained in the extended coverage title policy to be issued by
Title Insurer based on the Title Commitment; (b) general real estate taxes,
association assessments, special assessments, special district taxes and
related charges not yet due and payable; (c) matters shown on the "Existing
Survey" (hereinafter defined); (d) matters caused by the actions of Purchaser;
and (e) the title exceptions set forth in Schedule B of the Title Commitment as
Numbers 1 through 30 inclusive and Number 35, to the extent that same affect
the Property. All other exceptions to title shall be referred to as
"Unpermitted Exceptions". The Title Commitment shall be conclusive evidence of
good title as therein shown as to all matters to be insured by the title
policy, subject only to the exceptions therein stated. On the Closing Date,
Title Insurer shall deliver to Purchaser an extended coverage title policy in
conformance with the previously delivered Title Commitment, subject to
Permitted Exceptions and Unpermitted Exceptions waived by Purchaser (the "Title
Policy"). Seller shall pay for the costs of the Title Commitment and the Title
Policy, and Purchaser shall pay the cost of any endorsements to, or extended
coverage on, the Title Policy.
<PAGE>
3.2. Purchaser has received a survey of the Property prepared by
Fred N. Rabe Engineering Inc., dated September 11, 1996 (the "Existing
Survey"). Purchaser hereby acknowledges that all matters disclosed by the
Existing Survey are acceptable to Purchaser.
3.3. The obligation of Purchaser to pay various costs set forth in
Paragraphs 3.1 and 3.2 shall survive the termination of this Agreement.
4. PAYMENT OF CLOSING COSTS.
4.1. In addition to the costs set forth in Paragraphs 3.1 and 3.2,
Purchaser shall pay for the costs of the documentary or transfer stamps to be
paid with reference to the "Deed" (hereinafter defined) and all other stamps,
intangible, transfer, documentary, sales tax and surtax imposed by law with
reference to any other sale documents delivered in connection with the sale of
the Property to Purchaser and all other charges of the Title Insurer in
connection with this transaction. Seller shall pay all recording costs
associated with the recording of the Deed.
4.2. Purchaser shall pay for all other costs associated with the
Closing of the sale of the Property, including, without limitation, recording
fees associated with Purchaser's financing of the transaction contemplated
herein. The parties shall equally share escrow fees in connection with the
closing of this transaction and each party shall pay its own attorney's fees.
5. CONDITION OF TITLE.
5.1. If, prior to "Closing" (as hereinafter defined), a date-down to
the Title Commitment discloses any new Unpermitted Exception, Seller shall have
thirty (30) days from the date of the date-down to the Title Commitment at
Seller's expense, to (i) bond over, cure and/or have any Unpermitted Exceptions
which, in the aggregate, do not exceed $25,000.00, removed from the Title
Commitment or to have the Title Insurer commit to insure against loss or damage
that may be occasioned by such Unpermitted Exceptions, or (ii) have the right,
but not the obligation, to bond over, cure and/or have any Unpermitted
Exceptions which, in the aggregate, equal or exceed $25,000.00, removed from
the Title Commitment or to have the Title Insurer commit to insure against loss
or damage that may be occasioned by such Unpermitted Exceptions. In such
event, the time of Closing shall be delayed, if necessary, to give effect to
said aforementioned time periods. If Seller fails to cure or have said
Unpermitted Exception removed or have the Title Insurer commit to insure as
specified above within said thirty (30) day period or if Seller elects not to
exercise its rights under (ii) in the preceding sentence, Purchaser may
terminate this Agreement upon notice to Seller within five (5) days after the
expiration of said thirty (30) day period. Absent notice from Purchaser to
Seller in accordance with the preceding sentence, Purchaser shall be deemed to
have elected to take title subject to said Unpermitted Exception. If Purchaser
terminates this Agreement in accordance with the terms of this Paragraph 5.1,
this Agreement shall become null and void without further action of the parties
and all Earnest Money theretofore deposited into the escrow by Purchaser
together with any interest accrued thereon, shall be returned to Purchaser, and
neither party shall have any further liability to the other, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in Paragraph 7.
<PAGE>
5.2. Seller agrees to convey fee simple title to the Property to
Purchaser by special warranty deed (the "Deed") in recordable form subject only
to the Permitted Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
6.1. Except as provided in the indemnity provisions contained in
Paragraph 7.1 of this Agreement, Seller shall bear all risk of loss with
respect to the Property up to the earlier of the dates upon which either
possession or title is transferred to Purchaser in accordance with this
Agreement. Notwithstanding the foregoing, in the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost less than or equal to $100,000.00 (as determined by Seller in good
faith) Purchaser shall not have the right to terminate its obligations under
this Agreement by reason thereof, but Seller shall have the right to elect to
either repair and restore the Property (in which case the Closing Date shall be
extended until completion of such restoration) or to assign and transfer to
Purchaser on the Closing Date all of Seller's right, title and interest in and
to all insurance proceeds paid or payable to Seller on account of such fire or
casualty, and Seller shall pay to Purchaser at the Closing the amount of
Seller's insurance deductible. Seller shall promptly notify Purchaser in
writing of any such fire or other casualty and Seller's determination of the
cost to repair the damage caused thereby. In the event of damage to the
Property by fire or other casualty prior to the Closing Date, repair of which
would cost in excess of $100,000.00 (as determined by Seller in good faith),
then this Agreement may be terminated at the option of Purchaser, which option
shall be exercised, if at all, by Purchaser's written notice thereof to Seller
within five (5) business days after Purchaser receives written notice of such
fire or other casualty and Seller's determination of the amount of such
damages, and upon the exercise of such option by Purchaser this Agreement shall
become null and void, the Earnest Money deposited by Purchaser shall be
returned to Purchaser together with interest thereon, and neither party shall
have any further liability or obligations hereunder. In the event that
Purchaser does not exercise the option set forth in the preceding sentence, the
Closing shall take place on the Closing Date and Seller shall assign and
transfer to Purchaser on the Closing Date all of Seller's right, title and
interest in and to all insurance proceeds paid or payable to Seller on account
of the fire or casualty, and Seller shall pay to Purchaser at the Closing the
amount of Seller's insurance deductible.
6.2. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impair the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
<PAGE>
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall
assign to Purchaser all of Seller's right, title and interest in and to any
award made in connection with such condemnation or eminent domain proceedings.
6.3. Purchaser shall then notify Seller, within five (5) business
days after Purchaser's receipt of Seller's notice, whether Purchaser elects to
exercise its rights under Paragraph 6.2.1 or Paragraph 6.2.2. Closing shall be
delayed, if necessary, until Purchaser makes such election. If Purchaser fails
to make an election within such five (5) business day period, Purchaser shall
be deemed to have elected to exercise its rights under Paragraph 6.2.2. If
between the date of this Agreement and the Closing Date, any condemnation or
eminent domain proceedings are initiated which do not constitute a Material
Event, Purchaser shall be required to proceed with the Closing, in which event
Seller shall assign to Purchaser all of Seller's right, title and interest in
and to any award made in connection with such condemnation or eminent domain
proceedings.
7. INSPECTION AND AS-IS CONDITION.
7.1. During the period commencing on September 26, 1996 and ending
at 5:00 p.m. Chicago time on October 26, 1996 (said period being herein
referred to as the "Inspection Period"), Purchaser and the agents, engineers,
employees, contractors and surveyors retained by Purchaser may enter upon the
Property, at any reasonable time and upon reasonable prior notice to Seller, to
inspect the Property, including a review of leases located at the Property, and
to conduct and prepare such studies, tests and surveys as Purchaser may deem
reasonably necessary and appropriate, including Purchaser's own environmental
report. In connection with Purchaser's review of the Property, Seller agrees
to deliver to Purchaser copies of the current rent roll for the Property, the
most recent tax and insurance bills, utility account numbers, service
contracts, and unaudited year end 1995 and year to date 1996 operating
statements.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliate of Seller") harmless from any and all liability, cost
and expense (including without limitation, reasonable attorney's fees, court
costs and costs of appeal) suffered or incurred by Seller or Affiliates of
Seller for injury to persons or property caused by Purchaser's investigations
and inspection of the Property. Purchaser shall undertake its obligation to
defend set forth in the preceding sentence using attorneys selected by Seller,
in Seller's sole discretion.
<PAGE>
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Paragraph
7.1, or if Purchaser is dissatisfied for any other reason whatsoever, Purchaser
shall have the right to terminate this Agreement by giving written notice of
such termination to Seller at any time prior to the expiration of the
Inspection Period. If written notice is not received by Seller pursuant to
this Paragraph 7.1 prior to the expiration of the Inspection Period, then the
right of Purchaser to terminate this Agreement pursuant to this Paragraph 7.1
shall be waived. If Purchaser terminates this Agreement by written notice to
Seller prior to the expiration of the Inspection Period: (i) Purchaser shall
promptly deliver to Seller copies of all studies, reports and other
investigations obtained by Purchaser in connection with its due diligence
during the Inspection Period; and (ii) the Earnest Money deposited by Purchaser
shall be immediately paid to Purchaser, together with any interest earned
thereon, and neither Purchaser nor Seller shall have any right, obligation or
liability under this Agreement, except for Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in this Paragraph 7.1.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.1, shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.2. Seller can make no representations or warranties relating to
the condition of the Property or the Personal Property. Purchaser acknowledges
and agrees that it will be purchasing the Property and the Personal Property
based solely upon its inspections and investigations of the Property and the
Personal Property, and that Purchaser will be purchasing the Property and the
Personal Property "AS IS" and "WITH ALL FAULTS", based upon the condition of
the Property and the Personal Property as of the date of this Agreement, wear
and tear and loss by fire or other casualty or condemnation excepted. Without
limiting the foregoing, Purchaser acknowledges that, except as may otherwise be
specifically set forth elsewhere in this Agreement, neither Seller nor its
consultants, brokers or agents have made any representations or warranties of
any kind upon which Purchaser is relying as to any matters concerning the
Property or the Personal Property, including, but not limited to, the condition
of the land or any improvements comprising the Property, the existence or
non-existence of "Hazardous Materials" (as hereinafter defined), economic
projections or market studies concerning the Property, any development rights,
taxes, bonds, covenants, conditions and restrictions affecting the Property,
water or water rights, topography, drainage, soil, subsoil of the Property, the
utilities serving the Property or any zoning or building laws, rules or
regulations or "Environmental Laws" (hereinafter defined) affecting the
Property. Seller makes no representation or warranty that the Property
complies with Title III of the Americans with Disabilities Act or any fire code
or building code. Purchaser hereby releases Seller and the Affiliates of
Seller from any and all liability in connection with any claims which Purchaser
may have against Seller or the Affiliates of Seller, and Purchaser hereby
agrees not to assert any claims for contribution, cost recovery or otherwise,
against Seller or the Affiliates of Seller, relating directly or indirectly to
the existence of asbestos or Hazardous Materials on, or environmental
<PAGE>
conditions of, the Property, whether known or unknown. As used herein,
"Environmental Laws" means all federal, state and local statutes, codes,
regulations, rules, ordinances, orders, standards, permits, licenses, policies
and requirements (including consent decrees, judicial decisions and
administrative orders) relating to the protection, preservation, remediation or
conservation of the environment or worker health or safety, all as amended or
reauthorized, or as hereafter amended or reauthorized, including without
limitation, the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., the Resource
Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.,
the Emergency Planning and Community Right-to-Know Act ("Right-to-Know Act"),
42 U.S.C. Section 11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C. Section
7401 et seq., the Federal Water Pollution Control Act ("Clean Water Act"), 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq., the Safe Drinking Water Act ("Safe Drinking Water
Act"), 42 U.S.C. Section 300f et seq., the Atomic Energy Act ("AEA"), 42 U.S.C.
Section 2011 et seq., the Occupational Safety and Health Act ("OSHA"),
29 U.S.C. Section 651 et seq., and the Hazardous Materials Transportation Act
(the "Transportation Act"), 49 U.S.C. Section 1802 et seq. As used herein,
"Hazardous Materials" means: (1) "hazardous substances," as defined by CERCLA;
(2) "hazardous wastes," as defined by RCRA; (3) any radioactive material
including, without limitation, any source, special nuclear or by-product
material, as defined by AEA; (4) asbestos in any form or condition; (5)
polychlorinated biphenyls; and (6) any other material, substance or waste to
which liability or standards of conduct may be imposed under any Environmental
Laws. Notwithstanding anything contained herein to the contrary, the terms of
this Paragraph 7.2 shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.3. Seller has provided to Purchaser certain unaudited historical
financial information regarding the Property relating to certain periods of
time in which Seller owned the Property. Seller and Purchaser hereby
acknowledge that such information has been provided to Purchaser at Purchaser's
request solely as illustrative material. Seller makes no representation or
warranty that such material is complete or accurate or that Purchaser will
achieve similar financial or other results with respect to the operations of
the Property, it being acknowledged by Purchaser that Seller's operation of the
Property and allocations of revenues or expenses may be vastly different than
Purchaser may be able to attain. Purchaser acknowledges that it is a
sophisticated and experienced purchaser of real estate and further that
Purchaser has relied upon its own investigation and inquiry with respect to the
operation of the Property and releases Seller and the Affiliates of Seller from
any liability with respect to such historical information. Notwithstanding
anything contained herein to the contrary, the terms of this Paragraph 7.3
shall survive the Closing and the delivery of the Deed and termination of this
Agreement.
7.4. Seller has provided to Purchaser the following existing report:
Phase I Environmental Site Assessment of Lake Ridge prepared by EGM as project
number 04501044.96B, dated April 11, 1996 ("Existing Report"). Seller makes
no representation or warranty concerning the accuracy or completeness of the
Existing Report. Purchaser hereby releases Seller and the Affiliates of Seller
from any liability whatsoever with respect to the Existing Report, or,
including, without limitation, the matters set forth in the Existing Report,
and the accuracy and/or completeness of the Existing Report. Furthermore,
<PAGE>
Purchaser acknowledges that it will be purchasing the Property with all faults
disclosed in the Existing Report. Notwithstanding anything contained herein to
the contrary, the terms of this Paragraph 7.4 shall survive the Closing and the
delivery of the Deeds and termination of this Agreement.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
December 1, 1996 (as hereinafter defined) (the "Closing Date"), at the office
of Title Insurer, Fresno, California at which time Seller shall deliver
possession of the Property to Purchaser. This transaction shall be closed
through an escrow with Title Insurer, in accordance with the general provisions
of the usual and customary form of deed and money escrow for similar
transactions in California, or at the option of either party, the Closing shall
be a "New York style" closing at which the Purchaser shall wire the Purchase
Price to Title Insurer on the Closing Date and prior to the release of the
Purchase Price to Seller, Purchaser shall receive the Title Policy or marked up
commitment dated the date of the Closing Date. In the event of a New York
style closing, Seller shall deliver to Title Insurer any customary affidavit in
connection with a New York style closing. All closing and escrow fees shall be
divided equally between the parties hereto.
9. CLOSING DOCUMENTS.
9.1. On or prior to the Closing Date, Seller and Purchaser shall
execute and deliver to one another a joint closing statement. In addition,
Purchaser shall deliver to Seller the balance of the Purchase Price, an
assumption of the documents set forth in Paragraph 9.2.3 and 9.2.4 and such
other documents as may be reasonably required by the Title Insurer in order to
consummate the transaction as set forth in this Agreement.
9.2. On the Closing Date, Seller shall deliver to Purchaser the
following:
9.2.1. the Deed (in the form of Exhibit E attached hereto),
subject to Permitted Exceptions and those Unpermitted Exceptions waived by
Purchaser;
9.2.2. a quit claim bill of sale conveying the Personal
Property (in the form of Exhibit F attached hereto);
9.2.3. assignment and assumption of intangible property (in
the form attached hereto as Exhibit G), including, without limitation, the
service contracts listed in Exhibit H;
9.2.4. an assignment and assumption of leases and security
deposits (in the form attached hereto as Exhibit I);
9.2.5. non-foreign affidavit (in the form of Exhibit J
attached hereto);
9.2.6. original, and/or copies of, leases affecting the
Property in Seller's possession which shall be delivered at the Property;
9.2.7. all documents and instruments reasonably required by
the Title Insurer to issue the Title Policy;
<PAGE>
9.2.8. possession of the Property to Purchaser, subject to
the terms of leases;
9.2.9. evidence of the termination of the management
agreement;
9.2.10. notice to the tenants of the Property of the transfer
of title and assumption by Purchaser of the landlord's obligation under the
leases and the obligation to refund the security deposits (in the form of
Exhibit K); and
9.2.11. an updated and certified rent roll.
10. PURCHASER'S DEFAULT. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS
TO SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND
UNDERTAKINGS UNDER THIS AGREEMENT. IN THE EVENT OF A DEFAULT OF THE PURCHASER
UNDER THE PROVISIONS OF THIS AGREEMENT, SELLER SHALL RETAIN ALL OF THE EARNEST
MONEY AND THE INTEREST THEREON AS SELLER'S SOLE RIGHT TO DAMAGES OR ANY OTHER
REMEDY, EXCEPT FOR PURCHASER'S OBLIGATIONS TO INDEMNIFY SELLER AND RESTORE THE
PROPERTY AS SET FORTH IN PARAGRAPH 7.1 HEREOF. THE PARTIES HAVE AGREED THAT
SELLER'S ACTUAL DAMAGES, IN THE EVENT OF A DEFAULT BY PURCHASER, WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE. THEREFORE, BY PLACING THEIR
INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE EARNEST MONEY HAS BEEN AGREED
UPON, AFTER NEGOTIATION, AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S
DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF
SELLER'S DEFAULT IS ITS WILLFUL REFUSAL TO DELIVER THE DEED OR ANY OTHER
CLOSING DOCUMENTS REQUIRED PURSUANT TO PARAGRAPH 9.2 HEREOF, THEN PURCHASER
WILL BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
12.1. Rents (exclusive of delinquent rents, but including prepaid
rents); prepaid association dues, if any; refundable security deposits (which
will be assigned to and assumed by Purchaser and credited to Purchaser at
Closing); water and other utility charges; fuels; prepaid operating expenses;
real and personal property taxes and other similar items shall be adjusted
ratably as of 11:59 p.m. on the day preceding Closing Date, and credited
against the balance of the cash due at Closing. Assessments payable in
installments which are due subsequent to the Closing Date shall be paid by
Purchaser. If the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of the most recent
ascertainable data. All prorations will be final except as to delinquent rent
referred to in Paragraph 12.2 below.
12.2. All rent paid on and following the Closing Date by any tenant
of the Property who is indebted under a lease for rent for any period prior to
and including the Closing Date after the payment to Purchaser of all current
<PAGE>
basic rent shall be deemed a "Post-Closing Receipt" until such time as all such
indebtedness is paid in full. Within ten (10) days following each receipt by
Purchaser of a Post-Closing Receipt, Purchaser shall pay such Post-Closing
Receipt to Seller. Purchaser shall use its best efforts to collect all amounts
which, upon collection, would constitute Post-Closing Receipts hereunder.
Within 120 days after the Closing Date, Purchaser shall deliver to Seller a
reconciliation statement of Post-Closing Receipts through the first 90 days
after the Closing Date. Upon the delivery of the Post-Closing Receipts
reconciliation, Purchaser shall deliver to Seller any Post-Closing Receipts
owing to Seller and not previously delivered to Seller in accordance with the
terms hereof. Seller retains the right to conduct an audit, at reasonable
times and upon reasonable notice, of Purchaser's books and records to verify
the accuracy of the Post-Closing Receipts reconciliation statement and upon the
verification of additional funds owing to Seller, Purchaser shall pay to Seller
said additional Post-Closing Receipts and the cost of performing Seller's
audit. Paragraph 12.2 of this Agreement shall survive the Closing and the
delivery and recording of the deed.
13. RECORDING. Neither this Agreement nor a memorandum thereof shall be
recorded and the act of recording by Purchaser shall be an act of default
hereunder by Purchaser and subject to the provisions of Paragraph 10 hereof.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its
interest in this Agreement without the prior written consent of the Seller.
Any assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10 hereof. Notwithstanding the
foregoing, Purchaser may assign its interest in this Agreement without the
consent of Seller to any entity in which Purchaser owns a controlling interest
provided that Purchaser remains liable for and the assignee assumes the
obligations of Purchaser hereunder.
15. BROKER. The parties hereto represent and warrant that no broker
commission or finder fee is due and payable in connection with this transaction
other than to Paine Webber Real Estate Investments, Incorporated ("Paine
Webber") and Arroyo & Coates ("A & C") (Seller to pay a commission to Paine
Webber and Paine Webber to pay a cooperating commission to A & C). Seller's
commission to Paine Webber shall only be payable out of the proceeds of the
sale of the Property in the event the transaction set forth herein closes.
Purchaser and Seller shall indemnify, defend and hold the other party hereto
harmless from any claim whatsoever (including without limitation, reasonable
attorney's fees, court costs and costs of appeal) from anyone claiming by or
through the indemnifying party any fee, commission or compensation on account
of this Agreement, its negotiation or the sale hereby contemplated other than
to Paine Webber and A & C (as a cooperating broker). The indemnifying party
shall undertake its obligations set forth in this Paragraph 15 using attorneys
selected by the indemnifying party and reasonably acceptable to the indemnified
party. The provisions of this Paragraph 15 will survive the Closing and
delivery of the Deed.
16. REPRESENTATIONS AND WARRANTIES.
16.1. Any reference herein to Seller's knowledge or notice of any
matter or thing shall only mean such knowledge or notice that has actually been
received by James Mendelson (the "Seller's Representatives"), and any
<PAGE>
representation or warranty of the Seller is based upon those matters of which
the Seller's Representatives have actual knowledge. Any knowledge or notice
given, had or received by any of Seller's agents, servants or employees shall
not be imputed to Seller, the general partner or limited partners of Seller,
the subpartners of the general partner or limited partners of Seller or
Seller's Representatives.
16.2. Subject to the limitations set forth in Paragraph 16.1, Seller
hereby makes the following representations and warranties, which
representations and warranties are made to Seller's knowledge and which shall
not survive Closing: (i) Seller has no knowledge of any pending or threatened
litigation, claim, cause of action or administrative proceeding concerning the
Property; (ii) Seller has the power to execute and deliver this Agreement and
consummate the transactions contemplated herein; (iii) the rent roll attached
hereto as Exhibit L which Seller will update as of the Closing Date is accurate
as of the dates set forth thereon; (iv) Seller will continue to lease, manage
and maintain the Property in the same manner as the Property is leased, managed
and maintained as of the date of this Agreement; (iv) Seller will not enter
into any new service contracts not cancelable on thirty (30) days' notice
without the prior consent of the Purchaser which consent shall not be
unreasonably withheld; and (v) the unaudited operating statements furnished to
Purchaser are the same unaudited operating statements as Seller relies upon for
filing tax returns and reporting to Seller's investors.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
17. LIMITATION OF LIABILITY. Neither Seller, nor any Affiliate of
Seller, nor any of their respective beneficiaries, shareholders, partners,
officers, directors, agents or employees, heirs, successors or assigns shall
have any personal liability of any kind or nature for or by reason of any
matter or thing whatsoever under, in connection with, arising out of or in any
way related to this Agreement and the transactions contemplated herein, and
Purchaser hereby waives for itself and anyone who may claim by, through or
under Purchaser any and all rights to sue or recover on account of any such
alleged personal liability.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required
or may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered or given or made by overnight courier
such as Federal Express, by facsimile transmission or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
<PAGE>
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(708) 317-4360
(708) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: Fowlershore & Flanagan
1 Harbor Drive, Suite 200
Sausalito, California 94965
Attention: Ms. Darla T. Flanagan
(415) 332-8900
(415) 332-8992 (FAX)
and one copy to: Ellman Burke Hoffman & Johnson
1 Ecker Building, Suite 200
San Francisco, California 94105
Attention: Leslie Browne, Esq.
(415) 777-2727
(415) 495-7587 (FAX)
subject to the right of either party to designate a different address for
itself by notice similarly given. Any notice or demand so given shall be
deemed to be delivered or made on the next business day if sent by overnight
courier, or the same day as given if sent by facsimile transmission and
received by 5:00 p.m. Chicago time or on the 4th business day after the same is
deposited in the United States Mail as registered or certified matter,
addressed as above provided, with postage thereon fully prepaid. Any such
notice, demand or document not given, delivered or made by registered or
certified mail, by overnight courier or by facsimile transmission as aforesaid
shall be deemed to be given, delivered or made upon receipt of the same by the
party to whom the same is to be given, delivered or made. Copies of all
notices shall be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute
two (2) copies of this Agreement and three (3) copies of the Escrow Agreement
and forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(A) Earnest Money;
(B) One (1) fully executed copy of this Agreement; and
<PAGE>
(C) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by
the laws of the State of California.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
24. CAPTIONS. Paragraph titles or captions contained herein are inserted
as a matter of convenience and for reference, and in no way define, limit,
extend or describe the scope of this Agreement or any provision hereof.
25. FINANCING CONTINGENCY. Purchaser shall have until 5:00 p.m. Chicago
time on November 26, 1996 (the "Financing Period") to obtain a commitment for
financing in an amount not to exceed Four Million Fifty Thousand and No/100
Dollars ($4,050,000.00) from an institutional lender at an interest rate not to
exceed the sum of (a) the yield for a treasury note with a term equal to the
term of the loan, plus (b) one hundred eighty basis points or 1.8%. Purchaser
agrees to (i) diligently pursue and use good faith in obtaining such financing,
(ii) deliver to Seller prior to the expiration of the Inspection Period, its
application for said financing, and (iii) keep Seller advised of the status of
obtaining said financing. The date on which Purchaser obtains such a financing
commitment shall be the "Financing Contingency Date". If Purchaser is unable
to obtain a financing commitment as referenced in this Paragraph 25, Purchaser
shall have the right to terminate this Agreement by giving written notice of
such termination to Seller at any time prior to the expiration of the Financing
Period. If written notice is not given by Purchaser pursuant to this Paragraph
25 prior to the expiration of the Financing Period, then the right of Purchaser
to terminate this Agreement pursuant to this Paragraph 25 shall be waived and
Purchaser shall be deemed to have obtained such financing on the last day of
the Financing Period. If Purchaser terminates this Agreement by written notice
to Seller prior to the expiration of the Financing Period, the Earnest Money
theretofore deposited by Purchaser shall be immediately paid to Purchaser,
together with any interest earned thereon, and neither Purchaser nor Seller
shall have any right, obligation or liability under this Agreement, except for
Purchaser's obligation to indemnify Seller and restore the Property, as more
fully set forth in Paragraph 7.1.
26. TAX FREE EXCHANGE. Seller hereby agrees to cooperate with Purchaser
in the event that Purchaser desires to conduct a tax free exchange in a manner
which would cause the transaction contemplated hereby to qualify as a like-kind
exchange under Section 1031 of the Internal Revenue Code of 1986, as amended.
Notwithstanding anything contained in this Section 26 to the contrary, it is
understood and agreed that Seller shall not incur or be responsible for any
expenses related to said tax free exchange. Additionally, it is understood and
agreed that Purchaser's ability or inability to enter into a tax free exchange
<PAGE>
shall in no way alter the terms of this Agreement or release Purchaser from any
obligations hereunder.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
FOWLERSHORE & FLANAGAN,
a California general partnership
By: /s/ Darla L. Flanagan
-----------------------------------
Name: Darla L. Flanagan
Its: General Partner
SELLER:
LAKE RIDGE ASSOCIATES,
an Illinois general partnership
By: Lake Ridge Investors, an Illinois
limited partnership, a general partner
By: Balcor Partners - XIX, an Illinois
general partnership, its general
partner
By: The Balcor Company, a
Delaware corporation,
a partner
By: /s/ James E. Mendelson
------------------------------
Name: James E. Mendelson
------------------------------
Its: Authorized Representative
------------------------------
<PAGE>
Lake Ridge Apartments, Fresno, California
_________________ of Paine Webber Real Estate Investments, Incorporated
("Seller's Broker") executed this Agreement in its capacity as a real estate
broker and acknowledges that the fee or commission due it from Seller as a
result of the transaction described in this Agreement is as set forth in that
certain Listing Agreement, dated ____________, 199_ between Seller and Seller's
Broker (the "Listing Agreement"). Seller's Broker also acknowledges that
payment of the aforesaid fee or commission is conditioned upon the Closing and
the receipt of the Purchase Price by the Seller. Seller's Broker agrees to
deliver a receipt to the Seller at the Closing for the fee or commission due
Seller's Broker and a release, in the appropriate form, stating that no other
fees or commissions are due to it from Seller or Purchaser.
Paine Webber Real Estate Investments,
Incorporated
By:
----------------------------------------
<PAGE>
Lake Ridge Apartments, Fresno, California
______________________________ of Arroyo & Coates ("A & C") executed this
Agreement in its capacity as a cooperating real estate broker and acknowledges
that the fee or commission due it from Paine Webber Real Estate Investments,
Incorporated ("Paine Webber") as a result of the transaction described in this
Agreement is as set forth in that certain Cooperating Agreement between Paine
Webber and A & C (the "Cooperating Agreement"). A & C also acknowledges that
payment of the aforesaid fee or commission is conditioned upon the Closing and
the receipt of the Purchase Price by the Seller. A & C agrees to deliver a
receipt to the Seller at the Closing for the fee or commission due A & C from
Paine Webber and a release, in the appropriate form, stating that no other fees
or commissions are due to it from Seller, Purchaser or Paine Webber.
Arroyo & Coates
By:
------------------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Rent Roll
<PAGE>
