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) January 25, 1996
BALCOR REALTY INVESTORS 86 - SERIES I
A REAL ESTATE LIMITED PARTNERSHIP
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Exact Name of Registrant
Illinois 0-15649
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State or other jurisdiction Commission file number
of organization
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 36-3327914
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Address of principal I.R.S. Employer
executive offices Identification
Number
60015
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Zip Code
Registrant's telephone number, including area code:
(847) 267-1600
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
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In 1986, the Partnership acquired Phases I and II of the Pines of Cloverlane
apartment complex (together, the "Property") utilizing approximately $7,200,000
of offering proceeds. The Partnership financed the acquisition of the Property
with a first mortgage loan in the amount of $16,300,000.
On January 25, 1996, the Partnership contracted to sell the Property for a sale
price of $19,300,000 to an unaffiliated party, ERP Operating Limited
Partnership, an Illinois limited partnership. The purchaser has deposited
$400,000 into an escrow account as earnest money. The remaining $18,900,000 of
the sale price will be paid in cash by the purchaser at closing, scheduled for
March 7, 1996. From the proceeds of the sale, the Partnership will pay the
outstanding balance of the first mortgage loan, expected to be approximately
$14,200,000 at closing, and a brokerage commission of $193,000 to an
unaffiliated party. The General Partner will be reimbursed by the Partnership
for its actual expenses incurred in connection with the sale.
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 that the sale of the Property may not
occur.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
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(A) FINANCIAL STATEMENTS:
None
(B) PRO FORMA FINANCIAL INFORMATION:
None
(C) EXHIBITS:
(2) Agreement of Sale and attachment there to relating
to the sale of the Pines of Cloverlane apartment complex.
No information is required under Items 1, 3, 4, 5, 6 and 8 and these items
have, therefore, been omitted.
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Signature
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
BALCOR REALTY INVESTORS 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: February 6, 1996
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AGREEMENT OF SALE
THIS AGREEMENT, entered into as of the 24th day of January, 1996, by and
between ERP OPERATING LIMITED PARTNERSHIP, an Illinois limited partnership
("Purchaser") and PINES OF CLOVERLANE INVESTORS, an Illinois limited
partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Nineteen Million Three Hundred Thousand and No/100 Dollars
($19,300,000.00), that certain property ("Property") in Pittsfield Township,
Michigan, more particularly described on Exhibit A attached hereto, which
Property is known as Pines of Cloverlane Apartments and contains 592 units and
approximately 56 acres. Included in the Purchase Price 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 hardware
and software located at the Property are not included in the conveyance to
Purchaser.
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2. PURCHASE PRICE. The Purchase Price shall be paid as follows:
a. Upon the execution of this Agreement, the sum of $400,000.00 ("Earnest
Money") to be held in escrow by the Escrow Agent (as that term is defined in
the Escrow Agreement) by and in accordance with the provisions of the Escrow
Agreement ("Escrow Agreement") attached hereto as Exhibit C;
b. On the Closing Date (as hereinafter defined), $19,300,000.00 (inclusive of
all Earnest Money plus accrued interest) 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 title commitment dated January 9, 1996
("Title Commitment") for an owner's title insurance policy ("Title Policy")
issued by Lawyers Title Insurance Corporation ("Title Insurer"). The owner's
Title Policy issued at Closing will be an ALTA policy with extended coverage
over the so-called general or standard exceptions in the amount of the Purchase
Price subject only to real estate taxes and assessments not yet due and
payable, and the special title exceptions set forth in Schedule B-Section 2,
Numbers 1 through 10, inclusive of the Title Commitment and shall include a
comprehensive 3.1 zoning endorsement (including coverage as to parking), an
endorsement over any creditors' rights exception, a 103.7 access endorsement,
coverage insuring utility easements and such other endorsements as Purchaser
may reasonably require, provided such endorsements are available in said
jurisdiction. All of the above are herein referred to as the "Permitted
Exceptions". Notwithstanding anything to the contrary herein, the "Permitted
Exceptions" are subject to Purchaser's review and approval during the Approval
Period. The Title Commitment shall be conclusive evidence of good title as
therein shown as to all matters insured by the policy, subject only to the
exceptions therein stated. If, prior to the expiration of the Approval Period,
Purchaser notifies Seller that Purchaser objects to the Permitted Exceptions,
then Seller has five (5) business days thereafter to elect to (i) terminate
this Agreement or (ii) agree to cause the Title Insurer to either insure
against loss or damage resulting from the Permitted Exceptions or remove the
Permitted Exceptions from the Title Commitment. On the Closing Date, Seller
shall cause the Title Insurer to issue the Title Policy or a "marked up"
commitment in conformity with the Title Commitment subject only to Permitted
Exceptions to which Purchaser has not objected during the Approval Period. If
the Title Policy or marked-up commitment delivered at closing discloses
exceptions to title other than Permitted Exceptions to which Purchaser has not
objected, then Purchaser may terminate this Agreement and obtain a return of
its Earnest Money, including interest thereon. Purchaser and Seller shall
equally share the costs of the Title Policy and all endorsements.
b. Purchaser acknowledges receipt of a survey ("Survey") of the Property
dated April 15, 1986 prepared by Midwestern Consulting Inc. Seller has ordered
an updated Survey ("Updated Survey"). Purchaser shall have ten (10) days from
the date of receipt of the Updated Survey to approve the Updated Survey. If
Purchaser disapproves the Updated 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
Updated Survey, Seller shall have five (5) days to either: (i) cause the Survey
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Defects to be removed from the Updated 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. If the Closing occurs, then on the Closing Date,
Seller will receive a credit for half of the cost of the Updated Survey.
4. CONDITION OF TITLE/CONVEYANCE. Seller agrees to convey fee simple title
to the Property by Special Warranty Deed ("Deed") in recordable form subject
only to the Permitted Exceptions to which Purchaser has not objected during its
Approval Period. 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 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 shall equally share the
costs of the documentary stamps (if any) to be paid with reference to the Deed
and all other stamps, intangible, documentary, recording, sales tax and surtax
imposed by law with reference to any other documents delivered in connection
with this Agreement. 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
$200,000 or less, or in the case of Personal Property, for $25,000 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.
b. If condemnation proceedings ("Proceedings") have been instituted against
the Property and such Proceedings are in an amount less than $100,000, 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
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$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
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
<PAGE>
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. Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C.
Section 7401 et seq.; and in any permits, licenses, approvals, plans, rules,
regulations or ordinances adopted, or other criteria and guidelines promulgated
pursuant to the preceding laws or other similar federal, state or local laws,
regulations, rules or ordinance now or hereafter in effect relating to
environmental matters (collectively the "Environmental Laws"); and (ii) any
other substances, constituents or wastes subject to any applicable federal,
state or local law, regulation or ordinance, including any Environmental Law,
now or hereafter in effect, including but not limited to (A) petroleum,
(B) refined petroleum products, (C) waste oil, (D) waste aviation or motor
vehicle fuel, (E) asbestos, (F) lead in water, paint or elsewhere, (G) radon,
(H) Polychlorinated Biphenyls (PCB's) and (I) ureaformaldehyde.
b. Seller has provided to Purchaser certain unaudited historical financial
information regarding the Property relating to certain periods of time in which
Seller owned the Property. Seller and Purchaser hereby acknowledge that such
information has been provided to Purchaser at Purchaser's request solely as
illustrative material. 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 March 7,
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 (in the form of Exhibit E attached hereto) subject to the
Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser; a
UCC search from appropriate jurisdiction 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 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
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(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
owner's policy subject only to Permitted Exceptions to which the Purchaser has
not objected during its due diligence period.
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); 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); water and other utility
charges; fuels; prepaid operating expenses; real and personal property taxes;
and other similar items shall be adjusted ratably as of 12:01 A.M. on the
Closing Date ("Proration Date"), and credited or debited to the balance of the
cash due at Closing. 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 b below, real estate taxes which will be
reprorated upon receipt of final bills for the calendar year 1996, 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 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. This subparagraph of
this Agreement shall survive the Closing and the delivery and recording of the
Deed.
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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 .
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 . 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 acknowledge that the Dietz Organization
("Broker") is the only real estate broker involved in this transaction.
Purchaser has not paid and will not pay at any time before, at or after the
Closing, any fee, commission or compensation whatsoever to any such person
whomsoever directly or indirectly on account of this Agreement, its
negotiation, or the sale hereby contemplated. Seller agrees to pay Broker a
commission or fee ("Fee") pursuant to a listing agreement between Seller and
Broker. However, this Fee is due and payable only from the proceeds of the
Purchase Price received by Seller. The foregoing does not apply to any fee
which may be paid to any affiliate of Seller as a result of this transaction.
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. 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.
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16. DOCUMENTS, INSPECTION OF PROPERTY AND APPROVAL PERIOD.
a. Seller has delivered to Purchaser copies of the most recent available tax
bills, rent rolls, insurance premiums, service contracts, utility account
numbers, year-end 1995 and year-to-date 1996 operating statements (collectively
the "Documents"). All of the Documents shall be subject to approval by
Purchaser by the close of business (5:00 P.M. Central Daylight Time) on
February 23, 1996 ("Approval Period"). During the Approval Period, upon
reasonable notice to the Seller, the Purchaser shall have the right to inspect
and approve the condition of the Property including the interior of the
apartments, 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 the Documents or the 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 ("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 Documents and the
condition of the Property and all Earnest Money plus the interest accrued
thereon shall belong to Seller unless Seller is in default hereunder.
17. SURVIVAL OF 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 Al Lieberman, and any representation or warranty
of the Seller is based upon those matters of which Al Lieberman has actual
knowledge. A copy of this Paragraph 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 Al Lieberman within five (5) business
days after receipt by the resident manager as to the accuracy and truthfulness
of the representations and warranties. Al Lieberman shall notify Purchaser as
to the response of the resident manager by February 2, 1996. Any knowledge or
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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 best of Seller's knowledge, which shall survive the Closing and
delivery of the Deed for a period of one hundred twenty (120) days:
i. 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.
ii. 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.
iii. 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.
iv. 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.
v. Seller has not received any written notice from any tenant occupying
the Property that Seller is in default under that tenant's lease.
vi. Seller is the sole owner of, and has good title to, the Property free
and clear of all liens, encumbrances, claims, demands, easements,
covenants, conditions, restrictions and encroachments of any kind or
nature other than those set forth on the Title Commitment and the Updated
Survey. Seller has not entered into any agreement to sell or dispose of
its interest in the Property or any part thereof, except for this
Agreement.
vii. 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.
viii. 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 any contract or agreement to which Seller is a
party or by which Seller is bound.
<PAGE>
ix. 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.
x. Seller represents and warrants to Purchaser that, as of the Closing
Date, each of the warranties and representations set forth herein shall be
true, complete and correct except for (i) changes in the operation of the
Property occurring prior to Closing which are specifically permitted by or
pursuant to this Agreement and (ii) receipt of a notice of a condition or
a fact which affects a representation or warranty.
xi. Seller has not received written notice from any governmental
authority alleging that the Property presently contains Hazardous
Materials or Hazardous Substances.
xii. As of the Closing Date, no leasing commissions will be due subsequent
to the Closing Date.
xiii. None of the on-site employees is employed by the Seller.
xiv. 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, except for compliance with Ordinances 194 and 195 as
listed on Exhibit K attached hereto.
xv. 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.
xvi. Seller shall not make any distributions to its partners prior to one
hundred twenty (120) days after the Closing Date.
xvii. 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
and software used at the Property will not be transferred to the
Purchaser.
xviii. 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.
<PAGE>
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. If Seller becomes aware that a representation or warranty is materially
inaccurate or untrue, Seller shall forthwith notify Purchaser of such fact. In
such event, Purchaser's sole remedy shall be the right to terminate this
Agreement within three (3) business days after Purchaser has received such
notice from Seller.
19. INSPECTIONS BY PITTSFIELD CHARTER TOWNSHIP. Pursuant to Pittsfield
Charter Township Ordinances Numbers 194 and 195, the Property is subject to
future inspections by Pittsfield Charter Township ("Inspections"). Purchaser
acknowledges that it will be purchasing the Property subject to any Inspections
of the Property that may occur subsequent to the execution of this Agreement
and the costs of the Inspections and the remedial costs thereof.
20. ENVIRONMENTAL REPORT. Attached to this Agreement as Exhibit N is the
following report (the "Report") of the Property, which Seller is delivering to
Purchaser, at Purchaser's request: Phase I Environmental Site Assessment Report
prepared by Hygienetics Environmental Services, Inc. dated November 9, 1995.
Seller makes no representation or warranty that the Report is accurate or
complete. Purchaser hereby releases Seller from any liability whatsoever with
respect to the Report or, including, without limitation, the matters set forth
in the Report, the accuracy and/or completeness of the 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. However, if Seller makes distributions to its
partners from the net proceeds of the cash due at Closing ("Net Proceeds")
prior to 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 of the
Agreement. The general partner's liability shall not exceed the amount of Net
Proceeds distributed to Seller's partners.
22. PURCHASER'S CONDITIONS TO CLOSE. Purchaser's obligation to close is
conditioned upon: (i) All of Seller's representations and warranties being true
as of the Closing Date; and (ii) Seller's having performed all of Seller's
covenants set forth in this Agreement.
23. ORGANIZATIONAL DOCUMENTS.
a. On or before March 1, 1996, 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.
<PAGE>
b. On or before March 1, 1996, Seller will deliver copies of its partnership
agreement and appropriate certificates of authority to the Purchaser.
24. TIME OF ESSENCE. Time is of the essence of this Agreement.
25. 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: Al Lieberman
708/267-1600
708/317-4462 (FAX)
and
Morton M. Poznak
Schwartz & Freeman
Suite 1900
401 North Michigan Avenue
Chicago, Illinois 60611
312/222-0800
312/222-0818 (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)
with a copy to: Shelley Dunck
c/o Equity Residential Properties Trust
Two North Riverside Plaza
Suite 450
Chicago, Illinois 60606-2639
312/466-3624
312/454-0434 (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
<PAGE>
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.
26. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute three
(3) copies of this Agreement and three (3) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent. Seller will forward one (1) copy of the executed
Agreement to Purchaser and will forward the following to the Escrow Agent:
a. Earnest Money;
b. One (1) fully executed copy of this Agreement; and
c. Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to the Purchaser and the Seller.
27. 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 Michigan.
28. 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.
29. 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.
30. 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.
31. 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.
<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:
January 24, 1996.
ERP OPERATING LIMITED PARTNERSHIP,
an Illinois limited partnership
By: Equity Residential Properties Trust, a
Maryland real estate investment trust
By: /s/Shelley Dunck
--------------------------------
V.P.
Executed by Seller on SELLER:
January 25, 1996.
PINES OF CLOVERLANE 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/Alan G. Lieberman
---------------------------------
<PAGE>
Pines of Cloverlane
Dietz Organization ("Broker") executes this Agreement in its capacity as a real
estate broker and acknowledges that the fee or commission ("Fee") due to it as
a result of the transaction described in this Agreement is the amount as set
forth in the listing agreement between Broker and Seller. Broker also
acknowledges that payment of the aforesaid Fee is conditioned upon the Closing
and the receipt of the Purchase Price by the Seller. Broker agrees to deliver
a receipt to the Seller at the Closing for the Fee and a release stating that
no other fees or commissions are due to Broker from Seller or Purchaser.
DIETZ ORGANIZATION
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 - Inspection Ordinances and Complaint
L - Rent Roll
M - Service Contracts
N - Report
