UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
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Commission file number 0-15648
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BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
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(Exact name of registrant as specified in its charter)
Illinois 36-3447130
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
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(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ X ]
<PAGE>
PART I
Item 1. Business
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Balcor Equity Pension Investors-IV A Real Estate Limited Partnership (the
"Registrant") is a limited partnership formed in 1986 under the laws of the
State of Illinois. The Registrant raised $46,371,500 from sales of Limited
Partnership Interests. The Registrant's operations consist exclusively of
investment in and operation of income-producing real property, and all
information included in this report relates to this industry segment.
The Registrant originally funded one acquisition loan and acquired two real
property investments. The Registrant currently has two properties in its
portfolio as of December 31, 1996 as described under "Item 2. Properties". The
Partnership Agreement generally provides that the proceeds of any sale or
refinancing of the Registrant's properties will not be reinvested in new
acquisitions, but will be distributed to the extent not required to meet the
Registrant's cash requirements.
The Registrant's remaining properties face various levels of competition for
retention of their tenants from similar types of properties in the vicinities
in which they are located. The Registrant has no plans to change the current
use of or to renovate any of its remaining properties.
Real estate values, especially for good quality, well located property,
increased significantly during 1996 due to a combination of readily
available capital, low interest rates, and decreased vacancy rates
resulting from steady demand and an acceptable level of new construction.
While 1996 proved to be an excellent year to sell real estate, projected
yields by buyers on new acquisitions have declined significantly due to
competition and rising prices. Although there will be variances by asset
class and geographic area, the investment climate is expected to remain
strong for 1997. However, values could begin to level off as they approach
replacement cost triggering new construction and an increase in
capitalization rates.
The investment market for apartments was excellent during 1996 due to a number
of factors. Investor interest was strong, driven primarily by institutions, as
Real Estate Investment Trusts aggressively expanded their portfolios and
pension funds viewed apartments as an attractive asset class due to their
perceived low volatility and the emergence of large professional property
management companies. Operationally, existing apartment properties registered
on a national basis occupancy in the mid 90's and rental rate increases of 3-4%
in 1996. While above the rate of inflation, the rate of rental growth in 1996
was below that of the previous two years suggesting that the apartment cycle
may have plateaued, especially as the impact of new construction in many areas
is being felt. While 1997 is projected to be another solid year, values should
begin to level off as capitalization rates move upward continuing a trend which
began during the second half of 1996.
<PAGE>
The outlook for the retail sector of the investment real estate industry is
uncertain for 1997. The retail industry is being simultaneously impacted by a
number of factors which are likely to affect values for quite some time. As
retailers battle to gain market dominance, tenant bankruptcies have grown.
Consolidation among retailers has and is expected to continue to occur. Unlike
other asset classes, new construction of power centers went unabated in the
early 1990's, creating an oversupply of space including "big box" anchor tenant
space. Regional malls, which are not the dominant center in the market, face
continued out-migration of retailers to the power centers. Finally shopping
patterns continue to shift due to the aging baby boomers, high consumer debt,
alternative distribution channels, and the greater emphasis on entertainment.
As a result, the capital requirements necessary to maintain a shopping center's
competitiveness are all significant, but with uncertain returns. The Registrant
believes there is significant risk to holding retail assets for future upside
potential.
The 45 West 45th Street Office Building was owned by a joint venture consisting
of the Registrant and three affiliates. During November 1996, the General
Partner sold the property in an all cash sale for $10,300,000. See "Item 7.
Liquidity and Capital Resources" for additional information. The Registrant has
entered into a contract for the sale of the Evanston Plaza Shopping Center for
a sales price of $8,100,000. See "Other Information" for additional
information. The Registrant is actively marketing the Gleneagles Apartments for
sale.
The timing of the termination of the Registrant and final distribution of cash
will depend upon the nature and extent of liabilities and contingencies which
exist or may arise. Such contingencies may include legal and other fees
stemming from litigation involving the Registrant including, but not limited
to, the lawsuits discussed in "Item 3. Legal Proceedings." In the absence of
any contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency exists, reserves may be held by
the Registrant for a longer period of time.
Activity for the purchase of limited partnership interests ("tender offers")
has increased in real estate limited partnerships generally. Many of these
tender offers have been made by investors seeking to make a profit from the
purchase of the interests. In the event a tender offer is made for interests in
the Registrant, the General Partner will issue a response to limited partners
expressing the General Partner's opinion regarding the offer. Certain
administrative costs will be incurred to respond to a tender offer. The General
Partner cannot predict with any certainty what impact a tender offer will have
on the operations or management of the Registrant.
The Registrant, by virtue of its ownership of real estate, is subject to
Federal and state laws and regulations covering various environmental issues.
Management of the Registrant utilizes the services of environmental consultants
to assess a wide range of environmental issues and to conduct tests for
environmental contamination as appropriate. The General Partner is not aware of
any potential liability due to environmental issues or conditions that would be
material to the Registrant.
The officers and employees of Balcor Equity Partners-IV, the General Partner of
the Registrant, and its affiliates perform services for the Registrant. The
Registrant currently has no employees engaged in its operations.
<PAGE>
Other Information
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Evanston Plaza
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In 1987, the Registrant acquired Evanston Plaza, Illinois, utilizing
approximately $19,680,850 of offering proceeds.
On March 18, 1997, the Registrant contracted to sell the property for a sale
price of $8,100,000 to an unaffiliated party, Crosstown Asset Corp. I, a
Delaware corporation. The purchaser has deposited $81,000 into an escrow
account as earnest money and is obligated to deposit an additional $64,800 upon
completion of the purchaser's due diligence review. The remaining portion of
the sale price will be payable in cash at closing, which is scheduled to occur
on April 30, 1997. From the proceeds of the sale, the Registrant will pay a
total of $283,500 as a brokerage commission to an affiliate of the third party
providing property management services for the property and an unaffiliated
third party. The Registrant will receive the remaining proceeds of
approximately $7,816,500, less closing costs. Of such proceeds, $405,000 will
be retained by the Registrant and will not be available for use or distribution
by the Registrant until November 30, 1997. Neither the General Partner nor any
affiliate will receive a brokerage commission in connection with the sale of
the property. The General Partner will be reimbursed by the Registrant for
actual costs incurred in connection with the sale.
Affiliates of the Registrant have simultaneously contracted to sell four other
properties to the purchaser.
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.
Gleneagles Apartments
- ---------------------
As previously reported, on October 24, 1996, the Registrant contracted to sell
the Gleneagles Apartments, Dade County, Florida, for a sale price of
$13,675,000. The purchaser failed to satisfy the terms of the agreement of
sale, the closing did not occur and the contract was terminated. The $300,000
in earnest money previously deposited and interest accrued thereon will be paid
to the Registrant.
Item 2. Properties
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As of December 31, 1996, the Registrant directly owns the two properties
described below, both of which are owned in fee simple:
<PAGE>
Location Description of Property
- -------- -----------------------
Evanston, Illinois Evanston Plaza Shopping Center: a neighborhood
shopping center containing approximately 170,000
square feet located on approximately 13 acres.
Dade County, Florida Gleneagles Apartments: a 292-unit apartment
complex located on approximately 14 acres.
The average occupancy rates and effective average rent per unit for the
Gleneagles Apartments for each of the last five years are described below.
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
Occupancy rate 98% 97% 98% 96% 100%
Effective rent $705 $691 $691 $668 $615
Apartment units in the Gleneagles Apartments are rented with leases of one year
or less, with no tenant occupying greater than ten percent of the property.
The average occupancy rates and effective average rent per square foot for the
Evanston Plaza Shopping Center for each of the last five years are described
below.
1996 1995 1994 1993 1992
---- ---- ---- ---- -----
Occupancy rate 85% 96% 96% 96% 92%
Effective rent $12.43 $10.43 $10.12 $9.31 $10.97
Information regarding tenants occupying 10% or more of the leaseable square
feet of the Evanston Plaza Shopping Center is provided below.
Scheduled Lease
Base Rent Lease Expiration Renewal
Tenant Square Feet Per Annum Date Option
- ------ ----------- --------- ------------ ------
Franks Nursery
(Arts/Crafts/Plants) 26,996 $276,000 8/2007 Yes
Office Depot
(Coffee Supplies
and Equipment) 40,050 $400,000 9/2002 Yes
Kids R Us
(Children's
Clothing) 20,400 $254,100 1/2014 Yes
Real estate taxes incurred in 1996 for the above properties totaled $1,216,855.
The Federal tax basis of the Registrant's properties totaled $26,625,202 as of
December 31, 1996. For Federal income tax purposes, the acquisition costs of
the properties are depreciated over the useful life of 40 years, using the
straight-line method. Other minor assets are depreciated over their applicable
recovery periods.
<PAGE>
In the opinion of the General Partner, the Registrant has provided for adequate
insurance coverage for its real estate investment properties.
See Notes to Financial Statements for other information regarding real property
investments.
Item 3. Legal Proceedings
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Proposed Class and Derivative Action Lawsuits
- ----------------------------------------------
On June 14, 1996, a proposed class and derivative action complaint was filed,
Dee vs. Walton Street Capital Acquisition II, LLC (Circuit Court of Cook
County, Illinois, County Department, Chancery Division ("Chancery Court"), Case
No. 96 CH 06283) (the "Dee Case"), naming the General Partner and the general
partners (the "Balcor Defendants") of nine other limited partnerships sponsored
by The Balcor Company (together with the Registrant, the "Affiliated
Partnerships"), as well as the Affiliated Partnerships, as defendants.
Additional defendants were Insignia Management Group ("Insignia") and Walton
Street Capital Acquisition II, LLC ("Walton") and certain of their affiliates
and principals (collectively, the "Walton and Insignia Defendants"). The
complaint alleged, among other things, that the tender offers for the purchase
of limited partnership interests in the Affiliated Partnerships made by a joint
venture consisting of affiliates of Insignia and Walton were coercive and
unfair.
On July 1, 1996, another proposed class action complaint was filed in the
Chancery Court, Anderson vs. Balcor Mortgage Advisors (Case No. 96 CH 06884)
(the "Anderson Case"). An amended complaint consolidating the Dee and Anderson
Cases (the "Dee/Anderson Case") was filed on July 25, 1996.
The complaint seeks to assert class and derivative claims again the Walton and
Insignia Defendants and alleges that, in connection with the tender offers, the
Walton and Insignia Defendants misused the Balcor Defendants' and Insignia's
fiduciary positions and knowledge in breach of the Walton and Insignia
Defendants' fiduciary duty and in violation of the Illinois Securities and
Consumer Fraud Acts. The plaintiffs amended their complaint on October 8, 1996,
adding additional claims. The plaintiffs requested certification as a class and
derivative action, unspecified compensatory damages and rescission of the
tender offers. Each of the defendants filed motions to dismiss the complaint.
On January 7, 1997, the Chancery Court denied the plaintiffs' motion for leave
to amend the complaint and dismissed the matter with prejudice.
On February 3, 1997, the plaintiffs filed a Notice of Appeal of the Chancery
Court's order to the Appellate Court of Illinois.
The Balcor Defendants intend to vigorously contest this action. No class has
been certified as of this date. The Registrant believes it has meritorious
defenses to contest the claims. It is not determinable at this time whether or
not an unfavorable decision in this action would have a material adverse impact
on the Registrant.
<PAGE>
Proposed Class Action
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On August 30, 1996, a proposed class action complaint was filed, Lenore Klein
vs. Lehman Brothers, Inc., et al., Superior Court of New Jersey, Law Division,
Union County, Docket No. Unn-L-5162-96). The Registrant, additional limited
partnerships which were sponsored by The Balcor Company (together with the
Partnership, the "Affiliated Partnerships"), American Express Company, Lehman
Brothers, Inc., additional limited partnerships sponsored by the predecessor of
Lehman Brothers, Inc. (together with the Registrant and the Affiliated
Partnerships, the "Defendant Partnerships") and Smith Barney Holdings, Inc. are
the named defendants in the action. The complaint was amended on October 18,
1996 to add additional plaintiffs. The amended complaint alleges, among other
things, common law fraud and deceit, negligent misrepresentation, breach of
contract, breach of fiduciary duty and violation of certain New Jersey statutes
relating to the disclosure of information in the offering of limited
partnership interests in the Defendant Partnerships. The amended complaint
seeks judgment for compensatory damages equal to the amount invested in the
Defendant Partnerships by the proposed class plus interest; general damages for
injuries arising from the defendants' alleged actions; equitable relief,
including rescission, on certain counts; punitive damages; treble damages on
certain counts; recovery from the defendants of all profits received by them as
a result of their alleged actions relating to the Defendant Partnerships;
attorneys' fees and other costs.
The defendants intend to vigorously contest this action. No class has been
certified as of this date. The Registrant believes it has meritorious defenses
to contest the claims. It is not determinable at this time whether or not an
unfavorable decision in this action would have a material adverse impact on the
Registrant.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
No matters were submitted to a vote of the Limited Partners of the Registrant
during 1996.
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
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Matters
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There has not been an established public market for Limited Partnership
Interests and it is not anticipated that one will develop. For information
regarding distributions, see "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations-Liquidity and Capital Resources".
As of December 31, 1996, the number of record holders of Limited Partnership
Interests of the Registrant was 6,240.
Item 6. Selected Financial Data
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Year ended December 31,
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1996 1995 1994 1993 1992
----------- ---------- ---------- ----------- ----------
Total income $5,327,280 $5,191,721 $5,088,403 $ 4,556,554 $4,728,736
Net (loss) income (2,849,269) 905,702 1,144,130 339,089 698,621
Net (loss) income
per Limited
Partnership
Interest (16.54) 3.82 5.14 .81 2.67
Total assets 21,923,945 26,733,957 28,010,591 28,709,441 30,454,887
Distributions
per taxable
Limited
Partnership
Interest (A) 9.16 11.37 11.28 10.08 10.83
Distributions
per tax-exempt
Limited Partnership
Interest (A) 9.04 9.76 10.09 10.53 10.00
(A) No distributions of original capital were made in any of the last five
years.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- -------------------------------------------------------------------------------
of Operations
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Operations
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<PAGE>
Summary of Operations
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During 1996, Balcor Equity Pension Investors - IV A Real Estate Limited
Partnership (the "Partnership") recognized a decline in the fair value of the
Evanston Plaza Shopping Center. In addition, the Partnership recognized its
share of the gain on the sale of the 45 West 45th Street Office Building. The
combined effect of these events resulted in a net loss during 1996 as compared
to net income during 1995. During 1995, the Partnership recognized its share of
the decline in the fair value of the 45 West 45th Street Office Building which
was the primary reason for the decrease in net income during 1995 as compared
to 1994. Further discussion of the Partnership's operations is summarized
below.
1996 Compared to 1995
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Higher average occupancy and rental rates at the Gleneagles Apartments was the
primary reason for the increase in rental income during 1996 as compared to
1995.
The Partnership incurred higher consulting, postage and printing costs in
connection with a response to a tender offer during the second quarter of 1996.
As a result, administrative expenses increased during 1996 as compared to 1995.
Provisions are charged to income when the General Partner believes an
impairment has occurred to the value of its properties. Determinations of fair
value are made periodically on the basis of property operations.
Determinations of fair value represent estimations based on many variables
which affect the value of real estate, including economic and demographic
conditions. During December 1996, the Partnership recognized a provision for
investment property writedown of $4,782,000 to provide for changes in the
estimate of fair value of the Evanston Plaza Shopping Center. The decline in
value is attributable to a decline in occupancy at the property, certain tenant
bankruptcies and an overall softness in the retail market.
Participation in income (loss) of joint venture with affiliates represents the
Partnership's share of the operations of the 45 West 45th Street Office
Building. As a result of the Partnership's share of the gain on the sale of the
property in 1996 of approximately $447,000 and its share of a decline in the
fair value of the property in 1995 of approximately $376,000, the Partnership
recognized participation in income of joint venture with affiliates during 1996
as compared to participation in loss during 1995.
1995 Compared to 1994
- ---------------------
Interest income on short-term investments increased during 1995 as compared to
1994 as a result of higher interest rates earned on short-term investments and
higher average cash balances available for investment.
Property management fees, which are earned as a percentage of rental and
service income collected, decreased during 1995 as compared to 1994 due to the
timing of the collection of real estate tax reimbursements at the Evanston
Plaza Shopping Center.
<PAGE>
Participation in (loss) income of joint venture with affiliates represents the
Partnership's share of the operations of the 45 West 45th Street Office
Building. The Partnership recognized its share of a decline in the fair value
of the property in 1995. As a result, the Partnership recognized participation
in loss of joint venture with affiliates during 1995 as compared to
participation in income during 1994.
Liquidity and Capital Resources
- -------------------------------
The cash position of the Partnership increased by approximately $1,795,000 as
of December 31, 1996 as compared to December 31, 1995 primarily due to Net Cash
Proceeds received from the sale of the 45 West 45th Street Office Building.
Cash flow of approximately $2,142,000 was provided by operating activities
during 1996 consisting of cash flow from the operations of properties and
interest income on short-term investments, which were partially offset by the
payment of administrative expenses. Cash provided by investing activities of
approximately $1,519,000 consisted of the net distributions received from the
joint venture with affiliates. Financing activities consisted of distributions
to the Partners of approximately $1,866,000. In addition, in January 1997 the
Partnership made a special distribution of $1,635,987 to Limited Partners from
the proceeds of the sale of the 45 West 45th Street Office Building.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit, or a significant deficit, each after
consideration of debt service payments unless otherwise indicated. A deficit is
considered significant if it exceeds $250,000 annually or 20% of the property's
rental and service income. The Partnership defines cash flow generated from its
properties as an amount equal to the property's revenue receipts less property
related expenditures. During 1996 and 1995, the Gleneagles Apartments and
Evanston Plaza Shopping Center generated positive cash flow. The 45 West 45th
Street Office Building, in which the Partnership held a minority joint venture
interest with affiliates, also generated positive cash flow during 1995 and
prior to being sold in 1996. Significant leasing costs were incurred in 1995
and 1996 at the 45 West 45th Street Office Building to lease vacant space and
renew existing tenant leases which were scheduled to expire. These nonrecurring
expenditures were not included in classifying the cash flow performance of the
property. Had the costs been included, the property would have generated a
significant cash flow deficit during 1995 and a marginal cash flow deficit
during 1996.
As of December 31, 1996, the Gleneagles Apartments and Evanston Plaza Shopping
Center had occupancy rates of 98% and 85%, respectively. Many rental markets
continue to remain extremely competitive; therefore, the General Partner's
goals are to maintain high occupancy levels while increasing rents where
possible and to monitor and control operating expenses and capital improvement
requirements at the properties.
Evanston Plaza Shopping Center is located in Evanston, Illinois, one of
Chicago's oldest and more prestigious suburbs. The property, however, is not
located in one of the more affluent sections of Evanston. The center has a good
infill location, but visibility of the property is hampered by the position of
the Kids' R' Us building, which blocks the most prominent site lines. In
addition, the lack of a grocery store tenant, the percentage of space devoted
to small shop tenants and the relatively high level of property taxes,
represent added deficient elements of the property. The sub-market is generally
<PAGE>
strong with occupancies and rents comparable with other properties in the area.
No new construction is planned in the sub-market.
Gleneagles Apartments is located in the north Dade County area of Miami,
Florida, in the Hialeah sub-market. Hialeah has a diverse apartment market,
catering to a wide range of apartment dwellers. Gleneagles Apartments competes
with the higher-end product market. Average occupancy at the property in 1996
was 98% while sub-market occupancy for a similar property type averaged 94%.
While there was no new multi-family construction completed in the immediate
area surrounding Gleneagles in 1996, several new apartment communities were
developed in South Broward County. Additionally, an estimated 800 new units in
Hialeah are scheduled for completion in 1997. These properties are expected to
cause a softening in the overall market.
The 45 West 45th Street Office Building was owned by a joint venture consisting
of the Partnership and three affiliates. During November 1996, the General
Partner sold the property in an all cash sale for $10,300,000. The Partnership
has entered into a contract for the sale of Evanston Plaza Shopping Center for
a sales price of $8,100,000. The Partnership is actively marketing the
Gleneagles Apartments for sale.
The timing of the termination of the Partnership final distribution of cash
will depend upon the nature and extent of liabilities and contingencies which
exist or may arise. Such contingencies may include legal and other fees
stemming from litigation involving the Partnership. In the absence of any
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency exists, reserves may be held by
the Partnership for a longer period of time.
The 45 West 45th Street Office Building was owned by a joint venture consisting
of the Partnership and three affiliates. In November 1996, the joint venture
sold the property in an all cash sale for $10,300,000. From the proceeds of the
sale, the joint venture paid $579,075 in selling costs. The net proceeds of the
sale were approximately $9,720,925, of which $1,479,525 was the Partnership's
share. Pursuant to the terms of the sale, $500,000 of the proceeds will be
retained by the joint venture until April 1997. The remaining proceeds received
by the joint venture were distributed to the Limited Partners in January 1997.
See Note 6 of Notes to Financial Statements for additional information.
The Partnership made four distributions totaling $9.16 per Taxable Interest and
$9.04 per Tax-exempt Interest during 1996 as compared to $11.37 per Taxable
Interest and $9.76 per Tax-exempt Interest during 1995 and $11.28 per Taxable
Interest and $10.09 per Tax-exempt Interest during 1994. See Statements of
Partners' Capital for additional information. Average quarterly distributions
to Limited Partners remained relatively unchanged during 1996 as compared to
1995 and 1994. Cash flow distributions decreased in 1996 as compared to 1995
for Taxable Investors due to the timing of collection of real estate tax
reimbursements at the Evanston Plaza Shopping Center.
It should be noted that distributions to Taxable Limited Partners and
Tax-exempt Limited Partners are computed by different formulas as set forth in
the Prospectus; therefore, the amount of distributions to Taxable Limited
Partners when compared to the amount of distributions to Tax-exempt Limited
Partners will fluctuate from quarter to quarter.
<PAGE>
In January 1997, the Partnership paid a distribution of $2,055,720 ($11.11 per
Taxable Interest and $11.08 per Tax-exempt Interest) to the holders of Limited
Partnership Interests. This distribution represents the regular quarterly
distribution of Cash Flow for the fourth quarter of 1996 of $2.29 per Taxable
Interest and $2.26 per Tax-exempt Interest and a special distribution of $8.82
per Taxable and Tax-exempt Interest as a return of Original Capital from the
November 1996 sale of the 45 West 45th Street Office Building. Including the
January 1997 distribution, Limited Partners have received cumulative
distributions of $102.20 per $250 Taxable Interest, of which $93.13 represents
Cash Flow from operations and $9.07 represents a return of Original Capital,
and $100.08 per $250 Tax-exempt Interest, of which $91.01 represents Cash Flow
from operations and $9.07 represents a return of Original Capital. In January
1997, the Partnership also paid $34,978 to the General Partner as its
distributive share of the fourth quarter of 1996 distribution, and made a
contribution to the Repurchase Fund of $11,659. Future distributions will be
made from Cash Flow and sales proceeds from the Partnership's remaining
properties, as to which there can be no assurances. In light of results to
date, the General Partner does not anticipate that investors will recover all
of their original investment.
During 1996, the General Partner on behalf of the Partnership used amounts
placed in the Repurchase Fund to repurchase 637 Interests from Limited Partners
at a total cost of $89,787. In February 1997, the Partnership discontinued the
repurchase of Interests form Limited Partners.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
Item 8. Financial Statements and Supplementary Data
- ---------------------------------------------------
See Index to Financial Statements and Financial Statement Schedule in this
Form 10-K.
The supplemental financial information specified by Item 302 of Regulation S-K
is not applicable.
The net effect of the differences between the financial statements and the tax
returns is summarized as follows:
<PAGE>
December 31, 1996 December 31, 1995
----------------------- -------------------------
Financial Tax Financial Tax
Statements Returns Statements Returns
------------- ------------ ------------ -------------
Total assets $21,923,945 $38,818,289 $26,733,957 $38,950,316
Partners' capital
(deficit) accounts:
General Partner (84,420) 263,511 (116,554) 232,138
Limited Partners 20,859,034 37,482,763 25,605,915 37,473,570
Net income (loss):
General Partner 218,680 217,919 197,170 184,627
Limited Partners (3,067,949) 1,686,896 708,532 (1,413,259)
Per Limited Part-
nership Interest (16.54) (A) 3.82 (A)
(A) The net income is $9.09 per Tax-exempt Interest and $9.09 per Taxable
Interest for 1996, $6.90 per Tax-exempt Interest and $7.70 per Taxable Interest
for 1995.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- -----------------------------------------------------------------------
Financial Disclosure
- --------------------
On September 14, 1995 the Registrant approved the engagement of Coopers &
Lybrand L.L.P. as its independent auditors for the fiscal year ending December
31, 1995 to replace the firm of Ernst & Young LLP, who were dismissed as
auditors of the Partnership effective September 14, 1995. The General Partner
of the Registrant approved the change in auditors.
The reports of Ernst & Young LLP on the Registrant's financial statements for
each of the two fiscal years ended December 31, 1994 did not contain an adverse
opinion or a disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
In connection with the audits of the Registrant's financial statements for each
of the two fiscal years ended December 31, 1994, and in the subsequent interim
period, there were no disagreements with Ernst & Young LLP on any matters of
accounting principles or practices, financial statement disclosure, or auditing
scope and procedures which, if not resolved to the satisfaction of Ernst &
Young LLP would have caused Ernst & Young LLP to make reference to the matter
in their report.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
(a) Neither the Registrant nor Balcor Equity Partners-IV, its General Partner,
has a Board of Directors.
(b, c & e) The names, ages and business experience of the executive officers
and significant employees of the General Partner of the Registrant are as
follows:
TITLE OFFICERS
----- --------
Chairman, President and Chief Thomas E. Meador
Executive Officer
Senior Vice President Alexander J. Darragh
Senior Vice President James E. Mendelson
Senior Vice President John K. Powell, Jr.
Managing Director, Chief Jayne A. Kosik
Financial Officer, Treasurer
and Assistant Secretary
Thomas E. Meador (age 49) joined Balcor in July 1979. He is Chairman,
President and Chief Executive Officer and has responsibility for all ongoing
day-to-day activities at Balcor. He is a Director of The Balcor Company. He is
also Senior Vice President of American Express Company and is responsible for
its real estate operations worldwide. Prior to joining Balcor, Mr. Meador was
employed at the Harris Trust and Savings Bank in the commercial real estate
division where he was involved in various lending activities. Mr. Meador
received his M.B.A. degree from the Indiana University Graduate School of
Business.
Alexander J. Darragh (age 42) joined Balcor in September 1988 and is
responsible for due diligence analysis and real estate advisory services for
Balcor and American Express Company. He also has supervisory responsibility
for Balcor's environmental matters. Mr. Darragh received masters' degrees in
Urban Geography from Queen's University and in Urban Planning from
Northwestern University.
James E. Mendelson (age 34) joined Balcor in July 1984 and is responsible for
Balcor's property sales activities. He also has supervisory responsibility for
Balcor's accounting, financial, treasury, investor services and investment
administration functions. From 1989 to 1995, Mr. Mendelson was Vice President
- - Transaction Management and Vice President - Senior Transaction Manager and
had responsibility for various asset management matters relating to real
estate investments made by Balcor, including negotiations for the
restructuring of mortgage loan investments. Mr. Mendelson received his M.B.A.
degree from the University of Chicago.
<PAGE>
John K. Powell, Jr. (age 46) joined Balcor in September 1985 and is
responsible for portfolio and asset management matters relating to Balcor's
partnerships. Mr. Powell also has supervisory responsibility for Balcor's risk
management function. He received a Master of Planning degree from the
University of Virginia. Mr. Powell has been designated a Certified Real Estate
Financier by the National Society for Real Estate Finance and is a full member
of the Urban Land Institute.
Jayne A. Kosik (age 39) joined Balcor in August 1982 and, as Chief Financial
Officer, is responsible for Balcor's financial, human resources and treasury
functions. From June 1989 until October 1996, Ms. Kosik had supervisory
responsibility for accounting functions relating to Balcor's public and
private partnerships. She is also Treasurer and a Managing Director of The
Balcor Company. Ms. Kosik is a Certified Public Accountant.
(d) There is no family relationship between any of the foregoing officers.
(f) None of the foregoing officers or employees are currently involved in any
material legal proceedings nor were any such proceedings terminated during the
fourth quarter of 1996.
Item 11. Executive Compensation
- -------------------------------
The Registrant paid $1,659 with respect to one of the executive officers and
directors of Balcor Equity Partners - IV, the General Partner. Certain of the
remaining officers receive compensation from The Balcor Company (but not from
the Registrant) for services performed for various affiliated entities, which
may include services performed for the Registrant. The Registrant has not paid
and does not propose to pay any remuneration to the remaining executive
officers and directors of the General Partner. However, the General Partner
believes that any such compensation attributable to services performed for the
Registrant is immaterial to the Registrant. See Note 9 of Notes to Financial
Statements for the information relating to transactions with affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -----------------------------------------------------------------------
(a) The following entity is the sole Limited Partner which owns beneficially
more than 5% of the outstanding Limited Partnership Interests of the
Registrant:
Name and Amount and
Address of Nature of Percent
Beneficial Beneficial of
Title of Class Owner Ownership Class
-------------- ----------- ----------- ---------
Limited Engineers Joint 12,780 Limited 6.2%
Partnership Pension Fund Partnership
Interests Syracuse, New York Interests
(b) Balcor Equity Partners-IV and its officers and partners own as a group the
following Limited Partnership Interests of the Registrant:
<PAGE>
Amount
Beneficially
Title of Class Owned Percent of Class
-------------- --------------- ----------------
Limited 3,193 Interests 1.72%
Partnership
Interests
Relatives and affiliates of the officers and partners of the General Partner do
not own any Interests.
(c) The Registrant is not aware of any arrangements, the operation of which may
result in a change of control of the Registrant.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
(a & b) See Note 4 of Notes to Financial Statements for information relating to
the Partnership Agreement and the allocation of distributions and profits and
losses.
See Note 9 of Notes to Financial Statements for additional information relating
to transactions with affiliates.
(c) No management person is indebted to the Registrant.
(d) The Registrant has no outstanding agreements with any promoters.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K
- ------------------------------------------------------------------------
(a)
(1 & 2) See Index to Financial Statements and Financial Statement Schedule in
this Form 10-K.
(3) Exhibits:
(3) The Amended and Restated Agreement and Certificate of Limited Partnership
of Balcor Equity Pension Investors-IV A Real Estate Limited Partnership,
previously filed as Exhibit 3 to Amendment No. 1 dated November 28, 1986 to the
Registrant's Registration Statement on Form S-11 (Registration No. 33-7133), is
hereby incorporated herein by reference.
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
to Registrant's Registration Statement on Form S-11 dated November 28, 1986
(Registration No. 33-7133) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Registrant's Report on Form 10-Q for
the quarter ended June 30, 1992 (Commission File No. 0-15648) are incorporated
herein by reference.
(10) Material Contracts:
(a)(i) Agreement of Sale and attachment thereto relating to the sale of the
Gleneagles Apartments located in Dade County, Florida previously files as
Exhibit 2 to the Registrant's Report on Form 8-K dated October 24, 1996 is
incorporated herein by reference.
(ii) Amendment to Agreement of Sale and Escrow Agreement dated November 10,
1996, relating to the sale of Gleneagles Apartments, Dade County, Florida, is
attached hereto.
(iii) Second Amendment to Agreement of Sale and Escrow Agreement dated January
3, 1997, relating to the sale of Gleneagles Apartments, Dade County, Florida,
is attached hereto.
(iv) Third Amendment to Agreement of Sale and Escrow Agreement dated January
15, 1997, relating to the sale of Gleneagles Apartments, Dade County, Florida,
is attached hereto.
(v) Fourth Amendment to Agreement of Sale dated January 31, 1997, relating to
the sale of Gleneagles Apartments, Dade County, Florida, is attached hereto.
(vi) Letter Agreement dated February 25, 1997, relating to the sale of the
Gleneagles Apartments, Dade County, Florida, is attached hereto.
(vii) Letter dated March 14, 1997, relating to the sale of the cancellation of
the Agreement of Sale of the Gleneagles Apartments, Dade County, Florida, is
attached hereto.
(b) Agreement of Sale and attachment thereto relating to the sale of Evanston
Plaza, Evanston, Illinois, is attached hereto.
<PAGE>
(16) Letter from Ernst & Young LLP dated September 19, 1995 regarding the
change in the Registrant's certifying accountant previously filed as Exhibit 16
to the Registrant's Report on Form 8-K/A dated October 27, 1995 (Commission
File No. 0-15648) is hereby incorporated herein by reference.
(27) Financial Data Schedule of the Registrant for 1996 is attached hereto.
(b) Reports on Form 8-K: A Current Report on form 8-K dated October 24, 1996,
was filed reporting a contract to sell the Gleneagles Apartments located in
Dade County, Florida.
(c) Exhibits: See Item 14(a)(3) above.
(d) Financial Statement Schedule: See Index to Financial Statements and
Financial Statement Schedule attached hereto in this Form 10-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of l934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
By: /s/Jayne A. Kosik
------------------------------
Jayne A. Kosik
Managing Director and Chief
Financial Officer (Principal
Accounting Officer) of Balcor
Equity Partners-IV, the General Partner
Date: March 26, 1997
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
- ---------------------- ------------------------------------------------
President and Chief Executive
Officer (Principal Executive
Officer) of Balcor Equity
/s/Thomas E. Meador Partners-IV, the General Partner March 26, 1997
- -------------------- --------------
Thomas E. Meador
Managing Director and Chief
Financial Officer (Principal
Accounting Officer) of Balcor
Equity Partners-IV,
/s/Jayne A. Kosik the General Partner March 26, 1997
- -------------------- --------------
Jayne A. Kosik
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
Report of Independent Accountants
Report of Independent Auditors
Financial Statements:
Balance Sheets, December 31, 1996 and 1995
Statements of Partners' Capital, for the years ended December 31, 1996, 1995
and 1994
Statements of Income and Expenses, for the years ended December 31, 1996, 1995
and 1994
Statements of Cash Flows, for the years ended December 31, 1996, 1995 and 1994
Notes to Financial Statements
Financial Statement Schedule:
III - Real Estate and Accumulated Depreciation, as of December 31, 1996
Financial Statement Schedules, other than that listed, are omitted for the
reason that they are inapplicable or equivalent information has been included
elsewhere herein. Audited Financial Statements for subsidiary investment in
joint venture are omitted since the property was sold and the Partnership is in
its liquidation phase.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Balcor Equity Pension Investors-IV
A Real Estate Limited Partnership:
We have audited the accompanying balance sheets of Balcor Equity Pension
Investors-IV A Real Estate Limited Partnership (An Illinois Limited
Partnership) as of December 31, 1996 and 1995, and the related statements of
partners' capital, income and expenses and cash flows for each of the two years
in the period ended December 31, 1996. We have also audited the accompanying
financial statement schedule. These financial statements and the financial
statement schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Balcor Equity Pension
Investors-IV A Real Estate Limited Partnership (An Illinois Limited
Partnership) at December 31, 1996 and 1995, and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
1996, in conformity with generally accepted accounting principles. In addition,
in our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
As described in Note 2 to the financial statements, the Partnership Agreement
provides for the dissolution of the Partnership upon the disposition of all its
real estate interests. The Partnership is presently marketing for sale its
remaining real estate assets. Upon disposition of its remaining real estate
assets and resolution of the litigation described in Note 10 to the financial
statements, the Partnership intends to cease operations and dissolve.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Chicago, Illinois
March 24, 1997
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Partners of
Balcor Equity Pension Investors-IV
A Real Estate Limited Partnership
We have audited the accompanying statements of partners' capital, income and
expenses and cash flows of Balcor Equity Pension Investors-IV A Real Estate
Limited Partnership (An Illinois Limited Partnership) for the year ended
December 31, 1994. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Balcor
Equity Pension Investors-IV A Real Estate Limited Partnership for the year
ended December 31, 1994, in conformity with generally accepted accounting
principles.
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, Illinois
March 20, 1995
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
BALANCE SHEETS
December 31, 1996 and 1995
ASSETS
1996 1995
------------- -------------
Cash and cash equivalents $ 5,184,704 $ 3,389,826
Accounts and accrued interest receivable 139,281 87,630
Prepaid expenses 38,439 35,931
Deferred expenses, net of accumulated
amortization of $15,367 in 1996 and
$9,779 in 1995 40,517 46,105
------------- -------------
5,402,941 3,559,492
------------- -------------
Investment in real estate:
Land 5,694,341 6,958,341
Buildings and improvements 20,730,600 24,248,600
------------- -------------
26,424,941 31,206,941
Less accumulated depreciation 9,980,038 9,171,989
------------- -------------
Investment in real estate, net of
accumulated depreciation 16,444,903 22,034,952
------------- -------------
Investment in joint venture
with affiliates 76,101 1,139,513
------------- -------------
$ 21,923,945 $ 26,733,957
============= =============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 31,703 $ 105,783
Due to affiliates 59,177 16,286
Accrued liabilities, principally
real estate taxes 995,568 1,034,351
Security deposits 62,883 88,176
------------- -------------
Total liabilities 1,149,331 1,244,596
------------- -------------
Commitments and contingencies
Limited Partners' capital (185,486
Interests issued and
outstanding) 20,859,034 25,605,915
General Partner's deficit (84,420) (116,554)
------------- -------------
Total partners' capital 20,774,614 25,489,361
------------- -------------
$ 21,923,945 $ 26,733,957
============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
for the years ended December 31, 1996, 1995 and 1994
Partners' Capital (Deficit) Accounts
------------- ------------- -------------
General Limited
Total Partner Partners
------------- ------------- -------------
Balance at December 31, 1993 $ 27,585,954 $ (90,704) $ 27,676,658
Cash distributions to:
Limited Partners (A) (1,892,752) (1,892,752)
General Partner (210,306) (210,306)
Net income for the year
ended December 31, 1994 1,144,130 191,630 952,500
------------- ------------- -------------
Balance at December 31, 1994 26,627,026 (109,380) 26,736,406
Cash distributions to:
Limited Partners (A) (1,839,023) (1,839,023)
General Partner (204,344) (204,344)
Net income for the year
ended December 31, 1995 905,702 197,170 708,532
------------- ------------- -------------
Balance at December 31, 1995 25,489,361 (116,554) 25,605,915
Cash distributions to:
Limited Partners (A) (1,678,932) (1,678,932)
General Partner (186,546) (186,546)
Net (loss) income for the year
ended December 31, 1996 (2,849,269) 218,680 (3,067,949)
------------- ------------- -------------
Balance at December 31, 1996 $ 20,774,614 $ (84,420) $ 20,859,034
============= ============= =============
(A) Summary of cash distributions paid per Interest:
1996 1995 1994
------------- ------------- -------------
Taxable
- -----------------
First Quarter $ 2.29 $ 3.24 $ 2.50
Second Quarter 2.29 2.98 2.94
Third Quarter 2.29 2.86 3.08
Fourth Quarter 2.29 2.29 2.76
Tax-exempt
- -----------------
First Quarter 2.26 2.50 2.59
Second Quarter 2.26 2.50 2.50
Third Quarter 2.26 2.50 2.50
Fourth Quarter 2.26 2.26 2.50
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
------------- ------------- -------------
Income:
Rental $ 3,953,370 $ 3,724,300 $ 3,677,124
Service 1,191,949 1,288,507 1,278,641
Interest on short-term
investments 181,961 178,914 132,638
------------- ------------- -------------
Total income 5,327,280 5,191,721 5,088,403
------------- ------------- -------------
Expenses:
Depreciation 808,049 808,049 808,049
Property operating 1,134,989 1,204,793 1,217,820
Real estate taxes 1,216,855 1,324,473 1,290,821
Property management fees 246,488 250,356 296,144
Administrative 443,502 326,279 350,877
Provision for investment
property writedown 4,782,000
------------- ------------- -------------
Total expenses 8,631,883 3,913,950 3,963,711
------------- ------------- -------------
(Loss) income before
participation in
income (loss) of joint venture
with affiliates (3,304,603) 1,277,771 1,124,692
Participation in income (loss)
of joint venture with
affiliates 455,334 (372,069) 19,438
------------- ------------- -------------
Net (loss) income $ (2,849,269) $ 905,702 $ 1,144,130
============= ============= =============
Net income allocated to General
Partner $ 218,680 $ 197,170 $ 191,630
============= ============= =============
Net (loss) income allocated to
Limited Partners $ (3,067,949) $ 708,532 $ 952,500
============= ============= =============
Net (loss) income per Limited
Partnership Interest (185,486
issued and outstanding) $ (16.54) $ 3.82 $ 5.14
============= ============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995 and 1994
1996 1995 1994
------------- ------------- -------------
Operating activities:
Net (loss) income $ (2,849,269) $ 905,702 $ 1,144,130
Adjustments to reconcile net
income to net cash provided
by operating activities:
Participation in (income)
loss of joint venture
with affiliates (455,334) 372,069 (19,438)
Depreciation of properties 808,049 808,049 808,049
Amortization of deferred
expenses 5,588 5,588 4,191
Provision for investment
property writedown 4,782,000
Payment of deferred expenses (55,884)
Net change in:
Accounts and accrued
interest receivable (51,651) (17,384) 841,031
Prepaid expenses (2,508) (35,931)
Accounts payable (74,080) 61,059 5,580
Due to affiliates 42,891 (38,360) 22,213
Accrued liabilities (38,783) (141,736) 239,914
Security deposits (25,293) (19,932) (7,629)
------------- ------------- -------------
Net cash provided by
operating activities 2,141,610 1,899,124 2,982,157
------------- ------------- -------------
Investing activities:
Capital contribution to joint
venture - affiliates (15,934) (95,901)
Distributions from joint
venture - affiliates 1,534,680 17,790
------------- -------------
Net cash provided by or (used
in) investing activities 1,518,746 (78,111)
------------- -------------
Financing activities:
Distributions to Limited
Partners (1,678,932) (1,839,023) (1,892,752)
Distributions to General
Partner (186,546) (204,344) (210,306)
------------- ------------- -------------
Cash used in financing
activities (1,865,478) (2,043,367) (2,103,058)
------------- ------------- -------------
Net change in cash and cash
equivalents 1,794,878 (222,354) 879,099
Cash and cash equivalents at
beginning of year 3,389,826 3,612,180 2,733,081
------------- ------------- -------------
Cash and cash equivalents at
end of year $ 5,184,704 $ 3,389,826 $ 3,612,180
============= ============= =============
The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Nature of the Partnership's Business:
Balcor Equity Pension Investors-IV A Real Estate Limited Partnership ("the
Partnership") is engaged principally in the operation of residential and retail
real estate located in Florida and Illinois, respectively.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1996, the Partnership sold its minority joint venture
interest in the 45 West 45th Street Office Building. The Partnership has
entered into a contract to sell the Evanston Plaza and is actively marketing
the Gleneagles Apartments for sale. The timing of the termination of the
Partnership and final distribution of cash will depend upon the nature and
extent of liabilities and contingencies which exist or may arise. Such
contingencies may include legal and other fees stemming from litigation
involving the Partnership including, but not limited to, the lawsuits discussed
in Note 10 of Notes to the Financial Statements. In the absence of any
contingency, the reserves will be paid within twelve months of the last
property being sold. In the event a contingency exists, reserves may be held by
the Partnership for a longer period of time.
3. Accounting Policies:
(a) The preparation of the financial statements in conformity with generally
accepted accounting principles requires the General Partner to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could vary from those estimates.
(b) Depreciation expense is computed using the straight-line method. Rates used
in the determination of depreciation are based upon the following estimated
useful lives:
Buildings and improvements 25 to 30 years
Furniture and fixtures 5 years
Maintenance and repairs are charged to expense when incurred. Expenditures for
improvements are charged to the related asset account.
(c) Effective January 1, 1995, the Partnership adopted Statement of Financial
Accounting Standards No. 121 (SFAS 121), "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to Be Disposed Of". Under SFAS 121, the
Partnership records its investments in real estate at the lower of cost or fair
value, and periodically assesses, but not less than on an annual basis,
possible impairment to the value of its properties. The General Partner
estimates the fair value of its properties based on the current sales price
less estimated closing costs. In the event the General Partner determines an
<PAGE>
impairment in value has occurred, and the carrying amount of the real estate
asset will not be recovered, a provision is recorded to reduce the carrying
basis of the property to its estimated fair value. The General Partner
considers the method referred to above to result in a reasonable measurement of
a property's fair value, unless other factors affecting the property's value
indicate otherwise.
Loan losses on mortgage notes receivable were charged to income when the
General Partner believed the loan balance would not be recovered. The General
Partner assessed the collectibility of each loan on a periodic basis through a
review of the collateral property operations, the property value and the
borrower's ability to repay the loan. Upon foreclosure, the loan balance was
transferred to real estate, after the fair value of the property less costs of
disposal were assessed. Upon the transfer to real estate, a new basis in the
property was established.
(d) Investment in joint venture with affiliates represented the Partnership's
15.22% interest, under the equity method of accounting, in a joint venture with
affiliated partnerships. Under the equity method of accounting, the Partnership
recorded its initial investment at cost and adjusted its investment account for
additional capital contributions, distributions and its share of joint venture
income or loss.
(e) Deferred expenses consist of leasing commissions which are amortized over
the life of each respective lease.
(f) Revenue is recognized on an accrual basis in accordance with generally
accepted accounting principles. Income from operating leases with significant
abatements and/or scheduled rent increases is recognized on a straight line
basis over the respective lease term. Service income includes reimbursements
from operating costs such as real estate taxes, maintenance and insurance and
is recognized as revenue in the period the applicable costs are incurred.
(g) The Financial Accounting Standard Board's Statement No. 107, "Disclosures
About Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments for which it is practicable to estimate
that value. Statement No. 107 does not apply to all balance sheet items and
excludes certain financial instruments and all non-financial instruments such
as real estate from its disclosure requirements.
(h) Cash equivalents include all unrestricted highly liquid investments with an
original maturity of three months or less. Cash is held or invested in one
financial institution.
(i) The Partnership is not liable for Federal income taxes and each Partner
recognizes his proportionate share of the Partnership income or loss in his tax
return; therefore, no provision for income taxes is made in the financial
statements of the Partnership.
(j) Several reclassifications have been made to the previously reported 1994
financial statements to conform with the classifications used in 1996 and 1995.
These reclassifications have not changed the 1994 results.
<PAGE>
4. Partnership Agreement:
The Partnership was organized on June 20, 1986; however, operations did not
commence until 1987. The Partnership Agreement provides for Balcor Equity
Partners-IV to be the General Partner and for the admission of Limited Partners
through the sale of up to 1,000,000 Limited Partnership Interests at $250 per
Interest, 185,486 of which were sold through December 14, 1987, the termination
date of the offering.
Pursuant to the terms set forth in the Partnership Agreement, "Operating Income
from Real Properties" of the Partnership will be allocated 10% to the General
Partner and 90% to the Limited Partners; "Operating Losses from Real
Properties" and certain other components will be allocated 1% to the General
Partner and 99% to the Limited Partners; and "Other 'Operating Income' or
'Operating Losses'" will be allocated 10% to the General Partner and 90% to the
Limited Partners.
The Partnership Agreement provides for different allocations of profits and
losses and cash distributions to Limited Partners depending on whether the
investor originally acquiring the Limited Partnership interest was a taxable or
tax-exempt entity.
Ninety percent of Net Cash Receipts available for distribution will be
distributed to Limited Partners. To the extent possible, Taxable Limited
Partners will receive an allocation of such available Net Cash Receipts
generated by the operation of the Partnership's two properties in the same
manner as if their investment in the Partnership had been attributable solely
to the properties. Taxable Limited Partners were to commence sharing in such
available Net Cash Receipts generated by the Partnership's investment in the 45
West 45th Street Office Building at such time as the Taxable Limited Partners'
investment in the Partnership was not then solely attributable to the two
properties (which time was anticipated to be upon the sale of both properties).
The Tax-exempt Limited Partners will be allocated all other Net Cash Receipts
to be allocated to the Limited Partners, consisting of (i) 100% of such
available Net Cash Receipts that had been generated by the investment in the 45
West 45th Street Office Building (until such time as both of the properties
were sold, as described above) plus (ii) the Net Cash Receipts generated by the
operation of the two properties, to the extent not allocated to the Taxable
Limited Partners as described above. Of the remaining 10% of Net Cash Receipts,
7 1/2% will be paid to the General Partner as its distributive share from
Partnership operations and an additional 2 1/2% will be paid to the General
Partner for allocation to the Repurchase Fund, which was utilized to repurchase
Interests from Limited Partners pursuant to the terms set forth in the
Partnership Agreement.
At the sole discretion of the General Partner and subject to certain
limitations, amounts placed in the Repurchase Fund were used to repurchase
Interests from existing Limited Partners. During 1996, the General Partner used
amounts placed in the Repurchase Fund to repurchase 637 Interests from Limited
Partners at a cost of $89,787. In February 1997, the Partnership discontinued
the repurchase of Interests from Limited Partners. An amount not to exceed that
originally allocated to the Repurchase Fund will be returned to the Partnership
at liquidation if necessary to permit payment to the Limited Partners of their
"Original Capital" plus any deficiency in their "Liquidation Preference," as
defined in the Partnership Agreement.
<PAGE>
Subject to the provisions of the Partnership Agreement, "Net Cash Proceeds"
which are available for distribution will be distributed only to the Limited
Partners until such time as the Limited Partners have received a return of
their "Original Capital" and their "Liquidation Preference"; thereafter, the
remaining "Net Cash Proceeds" will be distributed 90% to the Limited Partners
and 10% to the General Partner. The General Partner's share shall be returned
to the Partnership if necessary to permit payment to the Limited Partners of
any deficiency in the return of their Original Capital and their Preferential
Cumulative Distribution on Adjusted Original Capital of 10% per annum.
5. Provision for Investment Property Writedown:
In 1996, the General Partner determined that an impairment of the asset value
of the Evanston Plaza Shopping Center located in Evanston, Illinois, had
occurred. As a result, the property was written down by $4,782,000, to an
amount representing the Partnership's estimate of the property's sales value,
less estimated closing costs. The decline in value is attributable to a
decline in occupancy at the property, certain tenant bankruptcies and an
overall softness in the retail market.
6. Management Agreements:
As of December 31, 1996, both of the properties owned by the Partnership are
under management agreements with a third-party management company. These
management agreements provide for annual fees of 5% of gross operating receipts
for the residential property, and a range of 3% to 6% of gross operating
receipts for the commercial property.
7. Investment in Joint Venture with Affiliates:
In 1995, the Partnership and three affiliates (the "Participants") acquired
title to the 45 West 45th Street Office Building. Profits and losses, all
capital contributions and distributions were allocated in accordance with the
Participants' original funding percentages. The Partnership's sharing
percentage was 15.22%. In November 1996, the Participants sold the property in
an all cash sale for $10,300,000. From the proceeds of the sale, the joint
venture paid $579,075 in selling costs. In connection with the sale of this
property, the Participants recognized a recovery of a previously established
loss allowance of $2,473,000 and a gain of $461,185, totaling $2,934,185 of
which $446,583 was the Partnership's share. During 1995, the Partnership
recognized losses of $376,391 as its share of the reduction in the carrying
value of the property. These amounts are included in the Partnership's
participation in income (loss) of joint venture with affiliates. In addition,
during 1996 and 1995, the Partnership received distributions from the joint
venture totaling $1,534,680 and $17,790, respectively, and made contributions
of $15,934 and $95,901, respectively.
The following information has been summarized from the financial statements of
the joint venture for the year ended December 31, 1996:
Total income $1,962,936
Income before gain on sale 1,980
Gain on sale 461,185
Net income 2,936,165
<PAGE>
8. Tax Accounting:
The Partnership keeps its books in accordance with the Internal Revenue Code,
rules and regulations promulgated thereunder and existing interpretations
thereof. The accompanying financial statements, which are prepared in
accordance with generally accepted accounting principles, will differ from the
tax returns due to the different treatment of various items as specified in the
Internal Revenue Code. During 1996, the Partnership recognized a net loss of
$2,849,269 for financial statement purposes and taxable net income of
$1,904,815 for the same period.
9. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates are:
Year Ended Year Ended Year Ended
12/31/96 12/31/95 12/31/94
-------------- -------------- --------------
Paid Payable Paid Payable Paid Payable
------ ------- ------ ------- ------ -------
Mortgage servicing fees None None $1,484 None $ 8,750 $ 729
Property management fees None None None None 281,422 None
Reimbursement of expenses
to the General Partner,
at cost:
Accounting $9,977 $7,653 41,297 $3,023 48,642 20,809
Data processing 2,007 1,025 14,275 1,034 26,543 5,752
Investor communica-
tions None None 7,470 None 18,961 6,461
Legal 8,578 6,579 12,945 1,493 8,311 3,497
Portfolio management 54,674 41,937 73,979 10,736 27,917 12,020
Other 2,585 1,983 6,121 None 11,434 5,378
The Partnership participates in an insurance deductible program with other
affiliated partnerships in which the program pays claims up to the amount of
the deductible under the master insurance policies for its properties. The
program is administered by an affiliate of the General Partner who receives no
fee for administering the program, however, the General Partner is reimbursed
for expenses. The Partnership paid premiums to the deductible insurance program
of $4,582, $19,410 and $26,864 for 1996, 1995 and 1994, respectively.
Allegiance Realty Group, Inc., an affiliate of the General Partner, managed
both of the Partnership's properties until the affiliate was sold to a third
party in November 1994.
<PAGE>
10. Contingencies:
(a) The Partnership is currently involved in a lawsuit whereby the Partnership,
the General Partner and certain third parties have been named as defendants
seeking damages relating to tender offers to purchase interests in the
Partnership and nine affiliated partnerships initiated by the third party
defendants in 1996. The defendants continue to vigorously contest this action.
The action has been dismissed with prejudice and plaintiffs have filed an
appeal. It is not determinable at this time whether or not an unfavorable
decision in this action would have a material adverse impact on the financial
position, operations and liquidity of the Partnership. The Partnership believes
it has meritorious defenses to contest the claims.
(b) The Partnership is currently involved in a lawsuit whereby the Partnership
and certain affiliates have been named as defendants alleging certain federal
securities law violations with regard to the adequacy and accuracy of
disclosures of information concerning, as well as the marketing efforts related
to, the offering of the Limited Partnership Interests of the Partnership. The
defendants continue to vigorously contest this action. A plaintiff class has
not yet been certified, and no determination of the merits have been made. It
is not determinable at this time whether or not an unfavorable decision in this
action would have a material adverse impact on the financial position,
operations and liquidity of the Partnership. The Partnership believes it has
meritorious defenses to contest the claims.
11. Rentals under Operating Leases:
The Partnership receives rental income from the leasing of space at the
Evanston Plaza Shopping Center under operating leases. The minimum future
rentals (excluding amounts representing executory costs such as taxes,
maintenance and insurance) based on operating leases held at December 31, 1996
are approximately as follows:
1997 $ 1,360,000
1998 1,333,000
1999 1,367,000
2000 1,343,000
2001 1,333,000
Thereafter 5,842,000
-----------
$12,578,000
===========
These rentals include amounts relating to land leases which the Partnership
entered into with certain tenants of the shopping center.
Minimum rentals do not include amounts which may be received from certain
tenants based upon a percentage of their gross sales in excess of stipulated
minimums. Percentage rentals were not significant during 1996, 1995 and 1994.
The Partnership is subject to the usual business risks regarding the collection
of the rentals.
<PAGE>
Approximately 25%, 17% and 13% of the space at Evanston Plaza Shopping Center
is leased to Office Depot, Frank's Nursery and Kids R Us, respectively. Of the
Partnership's total rental income recognized during 1996, 25%, 17% and 16%
relates to Office Depot, Frank's Nursery and Kids R Us, respectively. Office
Depot's lease runs through September 2002, Frank's Nursery's lease runs through
August 2007 and Kids R Us lease runs through January 2014.
12. Fair Values of Financial Instruments:
As of December 31, 1996 and 1995, the carrying amounts of cash and cash
equivalents, accounts and accrued interest receivable and accounts payable
approximate fair value.
13. Subsequent Event:
In January 1997, the Partnership paid a distribution of $2,055,720 ($11.11 per
Taxable Interest and $11.08 per Tax-exempt Interest) to the holders of Limited
Partnership Interests. This distribution represents the regular quarterly
distribution of Cash Flow for the fourth quarter of 1996 of $2.29 per Taxable
Interest and $2.26 per Tax-exempt Interest and a special distribution of $8.82
per Taxable and Tax-exempt Interest as a return of Original Capital from the
November 1996 sale of the 45 West 45th Street Office Building.
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1996
<CAPTION>
Col. A Col. B Col. C Col. D
- --------------------- -------- -------------------- ---------------------------------
Initial Cost Cost Adjustments
to Partnership Subsequent to Acquistion
-------------------- ---------------------------------
Buildings Carrying Reduction
Encum- and Im- Improve- Costs of Basis
Description brances Land provements ments (a) (b)
- --------------------- ------- -------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Evanston Plaza Shopping
Center, approx.
170,000 sq. ft. in
Evanston, IL None $5,075,000 $13,425,000 $1,091,667 $389,461 $(7,164,640)
Gleneagles Apartments,
292 units in Dade
County, FL None 2,270,000 11,130,000 208,453
---------- ----------- ---------- -------- -----------
Total $7,345,000 $24,555,000 $1,091,667 $597,914 $(7,164,640)
========== =========== ========== ======== ===========
</TABLE>
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
<TABLE>
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
as of December 31, 1996
<CAPTION>
Col. A Col. E Col. F Col. G Col. H Col. I
- ------------------- -------------------------------- -------- -------- ------ --------------
Gross Amounts at Which Life Upon
Carried at Close of Period Which Depre-
-------------------------------- ciation in
Buildings Accumulated Date Date Latest Income
and Im- Total Deprecia- of Con- Acq- Statement
Description Land provements (c)(d) tion(d) struction uired is Computed
- ------------------- --------- ----------- ----------- ----------- --------- ------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Evanston Plaza Shopping
Center, approx.
170,000 sq. ft. in
Evanston, IL $3,389,029 $9,427,459 $12,816,488 $5,040,658 1987 11/87 (e)
Gleneagles Apartments,
292 units in Dade
County, FL 2,305,312 11,303,141 13,608,453 4,939,380 1987 6/87 (e)
---------- ----------- ----------- ----------
Total $5,694,341 $20,730,600 $26,424,941 $9,980,038
========== =========== =========== ==========
See Notes (a) through (e) following.
</TABLE>
<PAGE>
BALCOR EQUITY PENSION INVESTORS-IV
A REAL ESTATE LIMITED PARTNERSHIP
(An Illinois Limited Partnership)
NOTES TO SCHEDULE III
(a) Consists of acquisition fees, legal fees, appraisal fees, title costs and
other related professional fees.
(b) The carrying basis of the Evanston Plaza Shopping Center was reduced in
1996 and 1991 due to a permanent impairment in the value of the property. In
addition, any payments to and receipts from the seller under a master lease
agreement were treated as adjustments to the basis of the property.
(c) The aggregate cost of land for Federal income tax purposes is $7,487,141
and the aggregate cost of buildings and improvements for Federal income tax
purposes is $26,441,518. The total of these assets is $33,928,659.
(d) Reconciliation of Real Estate
-----------------------------
1996 1995 1994
---------- ---------- ----------
Balance at beginning of year $31,206,941 $31,206,941 $31,206,941
Deduction during year:
Investment property writedown (4,782,000)
----------- ----------- -----------
Balance at end of year $26,424,941 $31,206,941 $31,206,941
=========== =========== ===========
Reconciliation of Accumulated Depreciation
------------------------------------------
1996 1995 1994
---------- ---------- ----------
Balance at beginning of year $9,171,989 $8,363,940 $7,555,891
Depreciation expense for
the year 808,049 808,049 808,049
---------- ---------- ----------
Balance at end of year $9,980,038 $9,171,989 $8,363,940
========== ========== ==========
(e) Depreciation expense is computed based upon the following estimated useful
lives:
Buildings and improvements 25 to 30 years
Furniture and fixtures 5 years
<PAGE>
AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS AMENDMENT TO AGREEMENT OF SALE (this "Amendment") is made and entered
into as of the 10th day of November, 1996, between CEEBRAID-SIGNAL CORPORATION,
a Florida corporation ("Purchaser"), GLENEAGLES INVESTORS A REAL ESTATE LIMITED
PARTNERSHIP, an Illinois Limited Partnership ("Seller") and PARTNERS TITLE
COMPANY, agent for Chicago Title Insurance Company ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale entered into as of October 24, 1996 (the "Original Agreement"), pursuant
to which Seller agreed to sell to Purchaser, and Purchaser agreed to purchase
from Seller, the "Property" (as defined in the Original Agreement);
WHEREAS, Seller, Purchaser and Escrow Agent are parties to that certain
Escrow Agreement entered into as of October ___, 1996 (the "Original Escrow
Agreement");
WHEREAS, Seller and Purchaser now desire to amend the Original Agreement
and the Original Escrow Agreement pursuant to the terms and provisions set
forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements contained herein, the payment of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Purchaser hereby agree as follows:
1. All capitalized terms used in this Amendment, to the extent not
otherwise expressly defined herein, shall have the same meanings ascribed to
such terms in the Original Agreement.
2. Lines one (1) and two (2) of Paragraph 8 of the Original Agreement
are hereby deleted in their entirety, and the following is hereby inserted in
lieu thereof: "8. CLOSING. The Closing ("Closing") of this transaction shall
be on January 6, 1997 ("Closing Date"), at the office of the Title Insurer, at
which time Seller shall deliver".
3. Line one (1) of Paragraph 2 of the Escrow Agreement is hereby deleted
in its entirety and the following is hereby inserted in lieu thereof: "On
January 6, 1996, or at such other date as Seller and Purchaser may, in".
4. Except as amended herein, the terms and conditions of the Original
Agreement and the Original Escrow Agreement shall continue in full force and
effect and are hereby ratified in their entirety.
5. This Amendment may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
<PAGE>
6. The parties hereto agree and acknowledge that a facsimile copy of any
party's signature on this Amendment shall be enforceable against such party as
an original.
Executed as of the date first written above.
PURCHASER:
CEEBRAID-SIGNAL CORPORATION,
a Florida corporation
By: /s/Richard Schlesinger
---------------------------------
Name: Richard Schlesinger
---------------------------------
Its: Managing Director
---------------------------------
SELLER:
GLENEAGLES INVESTORS A REAL ESTATE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Equity Partners-IV, 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
--------------------------------
Its: SR. V.P.
--------------------------------
ESCROW AGENT:
PARTNERS TITLE COMPANY, agent for Chicago Title
Insurance
By:
------------------------------------
Name:
------------------------------------
Its:
------------------------------------
<PAGE>
SECOND AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS SECOND AMENDMENT TO AGREEMENT OF SALE (this "Second Amendment") is
made and entered into as of the 3rd day of January, 1996, between
CEEBRAID-SIGNAL CORPORATION, a Florida corporation ("Purchaser"), GLENEAGLES
INVESTORS A REAL ESTATE LIMITED PARTNERSHIP, an Illinois Limited Partnership
("Seller") and PARTNERS TITLE COMPANY, agent for Chicago Title Insurance
Company ("Escrow Agent").
W I T N E S S E T H:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale entered into as of October 24, 1996 (as heretofore amended, the
"Agreement"), pursuant to which Seller agreed to sell to Purchaser, and
Purchaser agreed to purchase from Seller, the "Property" (as defined in the
Agreement);
WHEREAS, Seller, Purchaser and Escrow Agent are parties to that certain
Escrow Agreement entered into as of October , 1996 (as heretofore amended,
the "Escrow Agreement");
WHEREAS, Seller and Purchaser now desire to amend the Agreement and the
Escrow Agreement pursuant to the terms and provisions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements contained herein, the payment of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Purchaser hereby agree as follows:
1. All capitalized terms used in this Amendment, to the extent not
otherwise expressly defined herein, shall have the same meanings ascribed to
such terms in the Agreement.
2. Lines one (1) and two (2) of Paragraph 8 of the Agreement are hereby
deleted in their entirety, and the following is hereby inserted in lieu
thereof: "8. CLOSING. The Closing ("Closing") of this transaction shall be on
January 15, 1997 ("Closing Date"), at the office of the Title Insurer, at which
time Seller shall deliver".
3. Line one (1) of Paragraph 2 of the Escrow Agreement is hereby deleted
in its entirety and the following is hereby inserted in lieu thereof: "On
January 15, 1996, or at such other date as Seller and Purchaser may, in".
4. Except as amended herein, the terms and conditions of the Agreement
and the Escrow Agreement shall continue in full force and effect and are hereby
ratified in their entirety.
5. This Amendment may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement.
<PAGE>
6. The parties hereto agree and acknowledge that a facsimile copy of any
party's signature on this Amendment shall be enforceable against such party as
an original.
Executed as of the date first written above.
PURCHASER:
CEEBRAID-SIGNAL CORPORATION,
a Florida corporation
By: /s/Richard Schlesinger
-----------------------------------
Name:Richard Schlesinger
-----------------------------------
Its: Managing Director
-----------------------------------
SELLER:
GLENEAGLES INVESTORS A REAL ESTATE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Equity Partners-IV, 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
----------------------------------
Its: SR. V.P.
----------------------------------
ESCROW AGENT:
PARTNERS TITLE COMPANY, agent for
Chicago Title Insurance
By:
-------------------------------
Name:
-------------------------------
Its:
-------------------------------
<PAGE>
THIRD AMENDMENT TO AGREEMENT OF SALE AND ESCROW AGREEMENT
THIS THIRD AMENDMENT TO AGREEMENT OF SALE (this "Third Amendment") is made
and entered into as of the 15th day of January, 1997, between CEEBRAID-SIGNAL
CORPORATION, a Florida corporation ("Purchaser"), GLENEAGLES INVESTORS A REAL
ESTATE LIMITED PARTNERSHIP, an Illinois Limited Partnership ("Seller") and
PARTNERS TITLE COMPANY, agent for Chicago Title Insurance Company ("Escrow
Agent").
WITNESSETH:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale entered into as of October 24, 1996 (as heretofore amended, the
"Agreement"), pursuant to which Seller agreed to sell to Purchaser, and
Purchaser agreed to purchase from Seller, the "Property" (as defined in the
Agreement);
WHEREAS, Seller, Purchaser and Escrow Agent are parties to that certain
Escrow Agreement entered into as of October , 1996 (as heretofore amended,
the "Escrow Agreement");
WHEREAS, Seller and Purchaser now desire to amend the Agreement and the
Escrow Agreement pursuant to the terms and provisions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements contained herein, the payment of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Purchaser hereby agree as follows:
1. All capitalized terms used in this amendment, to the extent not
otherwise expressly defined herein, shall have the same meanings ascribed to
such terms in the Agreement.
2. Lines one (1) and two (2) of Paragraph 8 of the Agreement are hereby
deleted in their entirety, and the following is hereby inserted in lieu
thereof:
"8. CLOSING. The Closing ("Closing") of this transaction shall be on
January 31, 1997 ("Closing Date"), at the office of the Title Insurer, at which
time Seller shall deliver...."
3. Purchaser and Seller instruct Escrow Agent to release to Seller the
$200,000 Earnest Money deposit currently held by Escrow Agent. At the closing,
the Earnest Money deposit shall be credited against the Purchase Price. In the
event Purchaser fails to close on the Closing Date as amended herein, Seller
shall have no additional remedy against Purchaser, since the Earnest Money
deposit under the Agreement is hereby being transferred to the Seller.
Therefore, Paragraph 10 of the Agreement is hereby deleted.
4. The Escrow Agreement is hereby terminated, as of the Escrow Agent's
transfer of the Earnest Money deposit to Seller.
<PAGE>
5. Except as amended herein, the terms and conditions of the Agreement
and the Escrow Agreement shall continue in full force and effect and are hereby
ratified in their entirety.
6. This Amendment may be executed in multiple counterparts, each of
which shall be deemed to be an original, but all of which shall constitute one
in the same agreement.
7. The parties herein agree and acknowledge that a facsimile copy of
any party's signature on this Amendment shall be enforceable against such party
as an original.
Executed as of the date first written above.
PURCHASER:
CEEBRAID-SIGNAL CORPORATION,
a Florida corporation
By: /s/ Richard Schlesinger
--------------------------------
Name: Richard Schlesinger
--------------------------------
Its: Managing Director
--------------------------------
SELLER:
GLENEAGLES INVESTORS A REAL ESTATE
PARTNERSHIP, an Illinois limited partnership
By: Balcor Equity Partners-IV, an Illinois
general partnership, its general
partner
By: The Balcor Company, a Delaware
corporation, a general partner
By: /s/ John K. Powell, Jr.
--------------------------------
Name:
--------------------------------
Its:
--------------------------------
<PAGE>
FOURTH AMENDMENT TO AGREEMENT OF SALE
THIS FOURTH AMENDMENT TO AGREEMENT OF SALE ( "Amendment") is made and
entered into as of the 31st day of January, 1997, between CEEBRAID-SIGNAL
CORPORATION, a Florida corporation ("Purchaser"), GLENEAGLES INVESTORS A REAL
ESTATE LIMITED PARTNERSHIP, an Illinois Limited Partnership ("Seller").
WITNESSETH:
WHEREAS, Seller and Purchaser are parties to that certain Agreement of
Sale entered into as of October 24, 1996 (as heretofore amended, the "
Agreement"), pursuant to which Seller agreed to sell to Purchaser, and
Purchaser agreed to purchase from Seller, the "Property" (as defined in the
Agreement); and
WHEREAS, Seller and Purchaser now desire to amend the Agreement pursuant
to the terms and provisions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and mutual
agreements contained herein, the payment of Ten and No/100 Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Seller and Purchaser hereby agree as follows:
1. All capitalized terms used in this amendment, to the extent not
otherwise expressly defined herein, shall have the same meanings ascribed to
such terms in the Agreement.
2. Lines 1 and 2 of paragraph 8 of the Agreement are hereby deleted
in their entirety, and the following is hereby inserted in lieu thereof:
"8. CLOSING. The Closing ("Closing") of this transaction shall be on
February 28, 1997 ("Closing Date"), at the office of the title insurer, at this
time Seller shall deliver...."
3. Purchaser , simultaneously with the execution of this Amendment, is
depositing an additional $100,000 Earnest Money Deposit with Seller, which
amount shall be credited against the Purchase Price at Closing. At this time,
the Earnest Money Deposit totals $300,000. In the event of default of
Purchaser under this Agreement, Seller's remedy shall be limited to retaining
the $300,000 Earnest Money Deposit as stated in Paragraph 10 of the Agreement,
except as otherwise provided in Paragraphs 16.b and 17 of the Agreement.
4. Except as amended herein, the terms and conditions of the Agreement
shall continue in full force and effect and are hereby ratified in their
entirety.
5. This Amendment may be executed in multiple counterparts, each of
which shall be deemed an original, but all of which shall constitute one in
the same agreement.
6. The parties herein agree and acknowledge that a facsimile copy of
any party's signature on this Amendment shall be enforceable against such party
as an original.
<PAGE>
Executed as of the date first written above.
PURCHASER:
CEEBRAID-SIGNAL CORPORATION,
a Florida corporation
By: /s/ Richard Schlesinger
----------------------------------
Name: Richard Schlesinger
----------------------------------
Its: Managing Director
----------------------------------
SELLER:
GLENEAGLES INVESTORS A REAL ESTATE
PARTNERSHIP, an Illinois limited partnership
By: Balcor Equity Partners-IV, 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
--------------------------------
Its: Sr. V.P.
--------------------------------
<PAGE>
KATTEN MUCHIN & ZAVIS
525 WEST MONROE STREET * SUITE 1600
CHICAGO, ILLINOIS 60661-3693
February 25, 1997
VIA FACSIMILE
David Layman, Esq.
Greenberg, Traurig
777 South Flagler Drive, Suite 310-E
West Palm Beach, Florida 33401
Re: Agreement of Sale dated October 24, 1996 between CEEBRAID-SIGNAL
CORPORATION, a Florida corporation ("Purchaser") and GLENEAGLES
INVESTORS A REAL ESTATE LIMITED PARTNERSHIP, an Illinois limited
partnership ("Seller") for property commonly known as the Gleneagles
Apartments, Miami, Florida (as heretofore amended, the "Agreement")
Dear David:
At my client's request, I am writing to evidence the Seller's agreement to
extend the Closing Date (as said term is defined in the Agreement) until March
13, 1997.
Please call me if you have any comments or questions.
Very truly yours,
/s/ Stephen J. Levy
-------------------------------
Stephen J. Levy
sjl/269539
cc: Ms. Gloria Reyes Doreck (via facsimile)
Mr. Al Lieberman (via facsimile)
Daniel J. Perlman, Esq.
<PAGE>
CHICAGO TITLE INSURANCE AGENCY, INC.
3067 East Commercial Boulevard * Fort Lauderdale, Florida 33308-4383
Fort Lauderdale 954/771-4300 * Miami 305/944-2588
TELECOPY NO. 945/771-6934
March 14, 1997
Via Federal Express
Stephen J. Levy, Esquire
Katten Muchin And Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Re: Gleneagle Apartments
Dade County, Florida
Our File No. 19516
Dear Mr. Levy:
Pursuant to the joint instructions received from Gloria Reyes Doreck and
yourself by telephone this afternoon, we are returning herewith the originals
of those certain documents which were being held in Escrow by our Agency
pursuant to your Escrow Trust Instructions dated January 13, 1997 and March 7,
1997 covering the above subject property.
It is my understanding that subject transaction has been cancelled.
We trust that our Agency will be of service to you and your client in the
immediate future.
Very truly yours,
/s/ Dennis F. Peters
- -------------------------------
Dennis F. Peters, CLS
President
DFP/mm
Enclosures
ccs: Partners Title Company (w/o encls)
Attn: Gloria Reyes Doreck
David M. Layman, Esq. (w/o encls)
Andrew D. Rooker, Esq. (w/o encls)
ChicagoTitle Insurance Company
Attn: Pat Noska
<PAGE>
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), is entered into as of the 18th
day of March, 1997, by and between CROSSTOWN ASSET CORP. I, a Delaware
corporation ("Purchaser"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, not personally but as Trustee under Trust Agreement dated April 24,
1987 and known as Trust Number 102332-03 ("Trust") and EVANSTON PLAZA INVESTORS
A REAL ESTATE LIMITED PARTNERSHIP, an Illinois limited partnership
("Beneficiary") (Trust and Beneficiary are hereinafter together referred to as
"Seller").
W I T N E S S E T H:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Eight Million One Hundred Thousand And No/100 Dollars
($8,100,000.00) (the "Purchase Price"), the following property commonly known
as Evanston Plaza, Evanston, Illinois (collectively, the "Property"):
1.1. The land located in Cook County, Illinois, and legally described on
Exhibit A attached hereto, together with all easements, appurtenances and
hereditaments thereto (the "Land") together with all buildings, structures,
fixtures and improvements located thereon (the "Improvements"). The Land and
Improvements are collectively referred to herein as the "Real Property";
1.2. The items of personal property set forth on Exhibit B attached hereto
(the "Personal Property");
1.3. The tenant leases with respect to the Property listed on the rent
roll attached hereto as Exhibit M (the "Leases");
1.4. All licenses and permits relating to the Real Property or the
Personal Property, including all certificates of occupancy and other permits,
licenses or approvals issued under applicable law set forth on Exhibit P (the
"Permits");
1.5. The service contracts and agreements listed on Exhibit H (the
"Contracts");
1.6. All warranties and guaranties given to, assigned to or benefiting the
Seller, the Real Property or the Personal Property, to the extent assignable
without cost to Seller (the "Warranties"); and
1.7. All records (exclusive of computer software) of Seller relating to
the operation and physical condition of the Property to the extent in Seller's
possession, including (a) all records regarding real estate taxes and
assessments, insurance, maintenance, repairs, capital improvements and
services, (b) all environmental, soil and engineering reports and studies,
including all drafts and letters and other documents which describe or limit
the scope of such tests, reports or studies), (c) all originals and copies of
surveys, blueprints, plans and specifications regarding the Real Property and
the Personal Property, and (d) equipment manuals, excluding all appraisals,
internal memoranda to Seller's asset management committee and all software
(collectively, the "Records").
<PAGE>
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
2.1. Within two (2) business days of execution of this Agreement, the sum
of Eighty-One Thousand And No/100ths Dollars ($81,000.00) (the "Earnest Money")
to be held in escrow by and in accordance with the provisions of the Escrow
Agreement ("Escrow Agreements") attached hereto as Exhibit C;
2.2. On or before the expiration of the "Inspection Period" (as
hereinafter defined), Purchaser shall deposit an additional Sixty-Four Thousand
Eight Hundred And No/100ths Dollars ($64,800.00) to be held by and in
accordance with the provisions of the Escrow Agreement (the "Additional Earnest
Money", which, to the extent deposited, shall be included within the definition
of "Earnest Money"); and
2.3. On the "Closing Date" (hereinafter defined), the balance of the
Purchase Price, adjusted in accordance with the prorations, by federally wired
"immediately available" funds, on or before 11:00 a.m. Chicago time.
3. TITLE REVIEW.
3.1. Title Evidence. As soon as reasonably practical following the mutual
execution and delivery of this Agreement, Seller shall furnish the following
title evidence to Purchaser ("Title Evidence"):
3.1.1. A commitment to insure title to the Real Property (the
"Commitment") issued by Near North National Title Corporation as agent for
First American Title Insurance Company (the "Title Insurer"). The commitment
shall (a) be issued on ALTA Owner's Form B-1970 (revised 10-17-70) in an amount
equal to the Purchase Price, (b) show Seller as owner of the Real Property, (c)
commit to delete all of the so-called "standard exceptions" to coverage, and
(d) include legible copies of all documents, instruments and matters shown as
exceptions or referenced therein.
3.1.2. A current survey of the Property (the "Survey"), prepared
and certified by a registered land surveyor licensed in the jurisdiction in
which the Real Property is located reasonably satisfactory to Purchaser. The
Survey shall (a) conform to the "Minimum Standard Detail Requirement for Land
Title Surveys" as adopted in 1992 by the American Land Title Association and
the American Congress on Surveying & Mapping, and (b) contain a certification
to Purchaser, Title Insurer and any other party designated by Purchaser
substantially in the form attached hereto as Exhibit D, to the extent possible.
The Title Evidence shall be deemed received by Purchaser for purposes of
Section 3.2 only when a Commitment and Survey conforming to the foregoing
requirements have been received by Purchaser.
3.2. Purchaser's Objections and Requirements. Purchaser shall be allowed
until the later to occur of (i) the end of the Inspection Period, or (ii) ten
(10) business days after receipt of the last of the Title Evidence, for
examination thereof and making any objections to the form and/or content of the
same. Any objections not made within said period shall be deemed to be waived
by Purchaser and shall be "Permitted Exceptions". Purchaser's objections may
<PAGE>
include additional requirements with regard to the Title Evidence based upon
its initial review of the same, including requiring (a) satisfaction of Title
Insurer's requirements as set forth in the Commitment, (b) deletion of all the
so-called "standard exceptions" to coverage, and (c) affirmative insurance of
any easements appurtenant to the Real Property.
3.3. Correction of Title. Seller shall have the right, but not the
obligation to cure any objections made by Purchaser pursuant to Section 3.2.
Seller shall provide Purchaser with notice within five (5) business days of
Purchaser's objection stating whether Seller intends to cure any objection. If
Seller elects to cure any objection, Seller shall be allowed thirty (30) days
after the making of Purchaser's objections to cure the same and shall
diligently proceed and use all reasonable efforts to do so. Pending such cure,
the Closing shall be postponed to the extent necessary to accommodate such time
period; provided however, Seller shall not be allowed any additional time
beyond the originally scheduled Closing Date to discharge or satisfy any
mortgage, judgment or other monetary lien set forth on the original Commitment.
Upon such cure, the Closing (hereinafter defined) shall be held on the later of
(a) the Closing Date and (b) the first business day occurring five (5) days
after the date such cure is completed. If Seller elects not to cure any
objection or if such cure is not completed within said thirty (30) day period,
Purchaser shall have the option to do any of the following:
3.3.1. Terminate this Agreement.
3.3.2. Withhold from the Purchase Price an amount which in the
reasonable judgement of Title Insurer is sufficient to discharge at Closing any
mortgage, judgment or other monetary lien objected to by Purchaser only in the
event such lien appears on the original Commitment. Any amount so withheld
shall be placed in escrow with Title Insurer pending cure and satisfaction. If
Seller has not discharged such mortgage, judgment or other monetary lien within
thirty (30) days after Closing, Purchaser may then proceed in its discretion to
do so and charge the reasonable costs of cure (including reasonable attorneys'
fees) against the amount so escrowed; or
3.3.3. Waive one or more of its objections and proceed to Closing
and such exceptions to title which are waived by Purchaser shall be deemed
additional "Permitted Exceptions" and Purchaser shall have no right to deduct
any amount against the Purchase Price except in connection with Paragraph
3.3.2.
3.4. Cost of Title Evidence and Title Policy. In the event that the
Closing occurs, Purchaser agrees to reimburse Seller for one-half of the cost
of obtaining the Title Evidence. Seller and Purchaser each agree to pay
one-half of the costs of the Title Policy (as hereinafter defined) and
Purchaser shall pay for all of the costs of any endorsements to, or extended
coverage on, the Title Policy.
3.5. Date Downs to Title. If, prior to Closing but after the end of the
Inspection Period, a date-down to the Commitment discloses any new exception
which is not a Permitted Exception ("Unpermitted Exception"), Seller shall
provide Purchaser with notice within five (5) business days of notice by
<PAGE>
Purchaser to Seller of the existence of such Unpermitted Exception stating
whether Seller intends to cure any objection. If Seller elects to cure any
objection, Seller shall have thirty (30) days from the date of receipt by
Seller of such notice, at Seller's expense, to (i) cure and/or, subject to
Purchaser's reasonable approval, have any Unpermitted Exceptions which, in the
aggregate, do not exceed $25,000.00, removed from the Commitment or to have the
Title Insurer commit to insure against loss or damage that may be occasioned by
such Unpermitted Exceptions, or (ii) have the right, but not the obligation, to
cure and/or, subject to Purchaser's reasonable approval, have any Unpermitted
Exceptions which, in the aggregate, equal or exceed $25,000.00, removed from
the 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 3.5,
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.
4. PAYMENT OF CLOSING COSTS. Purchaser and Seller shall each pay for
one-half of the costs of the documentary or transfer stamps to be paid with
reference to the "Deed" (hereinafter defined) and all other stamps, intangible,
transfer, documentary, recording, sales tax and surtax imposed by law with
reference to any other sale documents delivered in connection with the sale of
the Property to Purchaser and all other charges of the Title Insurer in
connection with this transaction. Seller will be solely responsible for
payment of all water charges and will provide evidence of such payment to Title
Insurer at Closing.
5. CONDITIONS TO PURCHASER'S OBLIGATIONS TO CLOSE. The obligations of
Purchaser under this Agreement are contingent upon each of the following:
5.1. Estoppel Certificates. The following terms have been defined as
follows for convenience of reference:
5.1.1. "Tenant Certificate" means a certificate, commonly known as
an estoppel certificate, signed by a tenant with respect to its Lease, either
in the form set forth on Exhibit L hereto or on such other form as is
substantially consistent with the requirements of the tenant's lease for such
certificates and shall also mean an estoppel certificate from Toys "R" Us, Inc.
as party to the Reciprocal Easement and Operation Agreement dated June 9, 1986
and recorded June 27, 1986 as Document No. 86264888 ("REA"), in the form
required by the REA.
<PAGE>
5.1.2. "Seller Tenant Certificate" means a Tenant Certificate
signed by the Seller with respect to a particular Lease for which the Tenant in
question has failed to execute and deliver a Tenant Certificate, in which case
the Seller Tenant Certificate shall be in the form of Exhibit L, provided that
a Seller Tenant Certificate shall in all cases be limited to Seller's knowledge
as defined in Paragraph 16.1 above.
5.1.3. "Qualification" means any assertion in a Tenant Certificate
or Seller Tenant Certificate (whether in the form of Exhibit L or otherwise) of
(i) a claim, counterclaim, offset or defense against the landlord, (ii) a
default on the part of the landlord, (iii) unpaid credits, allowances or other
sums due from the landlord prior to the date of the estoppel (other than
disclosed on Exhibit M, Exhibit N or Exhibit Q attached hereto), (iv) an
unfulfilled construction or other obligation on the part of the landlord prior
to the date of estoppel (other than disclosed on Exhibit M, Exhibit N or
Exhibit Q attached hereto), (v) information which is contrary (in an adverse
respect to the landlord) (x) to the information contained in the rent roll
attached hereto as Exhibit M, or (y) to the information pertaining to tenant
allowances and concessions and leasing commissions contained on Exhibit N or
(vi) the existence of any of the following which are not set forth in the
Lease: rights of tenant to terminate the Lease, rights of tenant to purchase
any part of the Property, rights of tenant to expand the leased premises or
renew the term of the Lease, or rights of tenants to exclusives;
5.1.4. "Unacceptable Qualification" means any Qualification other
than the following:
(a) a Qualification which is expressly disclosed on the rent roll
attached hereto as Exhibit M or the schedules attached hereto as Exhibit N or
Exhibit Q or a Qualification relating to non-payment of March, 1997 or April,
1997 rent, provided the same is not as a result of a default by Seller or the
condition of the roof;
(b) a Qualification expressly disclosed on the other Exhibits
attached hereto and made a part hereof; or
(c) Leaps and Bounds (Discovery Zone) going dark and any other
tenant's right to go dark or terminate its Lease as a result thereof.
5.1.5. If a Qualification is not an Unacceptable Qualification, it
shall not affect Purchaser's obligations to close hereunder or give rise to any
liability from Seller to Purchaser.
5.1.6. Seller shall promptly upon execution of this Agreement
request a Tenant Certificate in the form of Exhibit L from all tenants, and
shall in good faith pursue the collection of the same. Seller shall deliver to
Purchaser, upon Seller's receipt thereof, all Tenant Certificates signed by
tenants (whether in the form of Exhibit L or otherwise).
5.1.7. It shall be a condition to Purchaser's obligations
hereunder (the "Estoppel Condition") that Purchaser shall have received
estoppel certificates as required pursuant to Paragraph 17 and the Toys R Us
<PAGE>
estoppel certificate described in Paragraph 5.1.1. Notwithstanding the
foregoing to the contrary, Seller shall not have satisfied the Estoppel
Condition if any of the Tenant Certificates received by Seller or Seller Tenant
Certificates disclose Unacceptable Qualifications other than Unacceptable
Qualifications that can be cured by the payment of money or for which Purchaser
can be compensated as set forth below and with an "Estoppel Qualification Sum"
(hereinafter defined) of less than $100,000 per tenant and $250,000 in the
aggregate. The "Estoppel Qualification Sum" shall mean the following:
(i) if the claim asserted arises out of a defect which can be cured,
with the expenditure of money on a one time basis, such as a physical defect,
then such sum shall be calculated by a reasonable estimate of the cost to
repair or remediate said defect; and
(ii) if the claim asserted affects a continuing obligation of a
tenant under the lease, such as the payment of rent, then the claim shall be
calculated by (i) determining the amount of the claim on a per annum basis,
(ii) multiplying said amount by the number of years or partial years said claim
would affect the monetary obligations under the lease and (iii) discounting
said product on a present value basis using a discount rate of 10% per annum.
If the Unacceptable Qualifications have an Estoppel Qualification Sum of
less than $100,000 per tenant and $250,000 in the aggregate, then Seller shall
either (i) grant Purchaser a credit at Closing for an amount equal to the
Estoppel Qualification Sum, or (ii) cure all conditions giving rise to an
Unacceptable Qualification on or before the Closing. The determination to
perform the covenant contained in subparagraphs (i) or (ii) in the preceding
sentence shall be made by Seller in its sole discretion. Provided Seller
performs its covenant in this Paragraph 5.1.7, the disclosure of Unacceptable
Qualifications having an Estoppel Qualification Sum of less than $100,000 per
tenant and $250,000 in the aggregate shall not affect Purchaser's obligations
to close hereunder or give rise to any additional liability from Seller to
Purchaser.
5.1.8. If Seller delivers any Seller Tenant Certificates, then
upon receipt after Closing by Purchaser of a Tenant Certificate from a tenant
under a Lease for whom Seller has executed and delivered a Seller Tenant
Certificate at Closing, the Seller Tenant Certificate executed and delivered by
Seller at Closing shall become null and void and the Tenant Certificate
received from the tenant shall be substituted therefor, solely to the extent
that the information contained in the Tenant Certificate is the same as the
information set forth in the Seller Tenant Certificate. Seller's liability
under Seller Tenant Certificates shall be limited pursuant to Paragraph 18
herein.
5.2. Title Policy. On the Closing Date, Title Insurer shall be
irrevocably committed to issue to Purchaser the title policy pursuant to the
Commitment with respect to the Real Property and any appurtenant easements
designated by Purchaser pursuant to Section 3.2, subject only to the Permitted
Exceptions (the "Title Policy").
<PAGE>
5.3. Seller's Representations and Warranties. On the Closing Date, each
of the representations and warranties of Seller in Section 16 shall be true and
correct in all material respects as if the same were made on the Closing Date;
provided, however, that if the status of any of the tenancies changes from the
date of the rent roll attached hereto as Exhibit M and the date of the rent
roll delivered at Closing, provided the change in status is not caused by a
breach by Seller of its obligations under any Lease, 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.
5.4. No Material Adverse Charge. On the Closing Date, there shall not
have been any "Material Adverse Change" (as hereinafter defined) with respect
to the Property. For the purposes of this Paragraph 5.4, "Material Adverse
Change" shall mean solely that after the date hereof, any tenant or tenants
leasing in the aggregate in excess of 50,000 square feet of the Property become
entitled to terminate their lease, but shall not include Leaps and Bounds
(Discovery Zone) going dark or any other termination rights of other tenants as
a result thereof.
5.5. Seller's Obligations. On the Closing Date, Seller shall have
performed all of the obligations required to be performed by Seller under this
Agreement as and when required under this Agreement.
If any conditions in this Paragraph 5 have not been satisfied on or before
the Closing Date, then Purchaser may terminate this Agreement by notice to
Seller on or before the Closing Date. To the extent that any of the conditions
in this Paragraph 5 require satisfaction of Purchaser, such satisfaction shall
be determined by Purchaser in its reasonable discretion. The conditions in
this Paragraph 5 are specifically stated and for the sole benefit of Purchaser.
Purchaser in its discretion may unilaterally waive (conditionally or
absolutely) the fulfillment of any one or more of the conditions, or any part
thereof, by notice to Seller, without any offset against the Purchase Price or
claim against Seller. Seller shall not take or authorize, directly or
indirectly, any action that modifies or changes the circumstances upon which
the conditions set forth in this Paragraph 5 were deemed satisfied or waived by
Purchaser without Purchaser's consent.
6. DAMAGE AND CASUALTY; CONDEMNATION.
6.1. Damage and Casualty. 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 Closing Date. Notwithstanding the
foregoing, in the event of damage to the Property by fire or other casualty
prior to the Closing Date, repair of which would cost less than or equal to
$100,000.00 (as determined by Seller and Purchaser in good faith) Purchaser
shall not have the right to terminate its obligations under this Agreement by
reason thereof, unless otherwise specifically set forth herein, 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
<PAGE>
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 in addition, Seller
shall pay to Purchaser the amount of any deductible maintained by Seller under
any insurance policy covering such fire or casualty. 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
and Purchaser 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 fifteen (15) business days after
Purchaser receives written notice of such fire or other casualty (which notice
shall specifically call Purchaser's attention to this Paragraph 6.1 and state
that Purchaser has fifteen (15) business days to respond), 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 in addition, Seller shall pay to Purchaser the amount of any deductible
maintained by Seller under any insurance policy covered by such fire or
casualty. Seller represents, warrants and covenants that it will maintain
property damage insurance insuring the Property for its full replacement cost
during the executory period of this Agreement.
6.2. Condemnation. 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, which notice shall specifically call Purchaser's attention
to this Paragraph 6.2 and state that Purchaser has fifteen (15) business days
to respond. In the event that the taking of any part of the Property shall:
(i) materially impair access to or parking on 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 referred to as a "Material Event"), Purchaser may:
6.2.1. terminate this Agreement by written notice to Seller, in
which event the Earnest Money deposited by Purchaser, together with interest
thereon, shall be returned to Purchaser and all rights and obligations of the
parties hereunder with respect to the closing of this transaction will cease;
or
6.2.2. proceed with the Closing, in which event Seller shall assign
to Purchaser all of Seller's right, title and interest in and to any award made
in connection with such condemnation or eminent domain proceedings.
<PAGE>
Purchaser shall notify Seller, within fifteen (15) 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 fifteen (15) 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. Inspection Period. During the period commencing on January 22, 1997
and ending at 5:00 p.m. Chicago time on April 8, 1997 (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, and to conduct and prepare such studies, tests and
surveys as Purchaser may deem reasonably necessary and appropriate. In
connection with Purchaser's review of the Property, Seller has delivered to
Purchaser complete and accurate copies of the following: the Leases, the
Contracts, the Permits in Seller's possession, the Warranties in Seller's
possession, the Records in Seller's possession, the current rent roll for the
Property, the most recent tax and insurance bills, utility account numbers, and
year end 1995 and year end 1996 operating statements, and plans and
specifications for the Improvements in Seller's possession.
All of the foregoing tests, investigations and studies to be conducted
under this Paragraph 7.1 by Purchaser shall be at Purchaser's sole cost and
expense and Purchaser shall restore the Property to the condition existing
prior to the performance of such tests or investigations by or on behalf of
Purchaser. Purchaser shall defend, indemnify and hold Seller and any
affiliate, parent of Seller, and all shareholders, employees, officers and
directors of Seller or Seller's affiliate or parent (hereinafter collectively
referred to as "Affiliates of Seller") harmless from any and all liability,
cost and expense (including without limitation, reasonable attorney's fees,
court costs and costs of appeal) suffered or incurred by Seller or Affiliates
of Seller for injury to persons or property caused by Purchaser's
investigations and inspection of the Property. Purchaser shall undertake its
obligation to defend set forth in the preceding sentence using attorneys
selected by Purchaser and reasonably acceptable to Purchaser.
Prior to commencing any such tests, studies and investigations, Purchaser
shall furnish to Seller a certificate of insurance evidencing comprehensive
general public liability insurance insuring the person, firm or entity
performing such tests, studies and investigations and listing Seller and
Purchaser as additional insureds thereunder.
<PAGE>
If Purchaser is dissatisfied with the results of the tests, studies or
investigations performed or information received pursuant to this Paragraph
7.1, Purchaser shall have the right to terminate this Agreement by giving
written notice of such termination to Seller at any time prior to the
expiration of the Inspection Period. If written notice is not received by
Seller pursuant to this Paragraph 7.1 prior to the expiration of the Inspection
Period, then the right of Purchaser to terminate this Agreement pursuant to
this Paragraph 7.1 shall be waived. If Purchaser terminates this Agreement by
written notice to Seller prior to the expiration of the Inspection Period: (i)
Purchaser shall promptly deliver to Seller copies of all studies, reports and
other investigations obtained by Purchaser in connection with its due diligence
during the Inspection Period; and (ii) the Earnest Money deposited by Purchaser
shall be immediately paid to Purchaser, together with any interest earned
thereon, and neither Purchaser nor Seller shall have any right, obligation or
liability under this Agreement, except for Purchaser's obligation to indemnify
Seller and restore the Property, as more fully set forth in this Paragraph 7.1.
Notwithstanding anything contained herein to the contrary, the terms of this
Paragraph 7.1, shall survive the Closing and the delivery of the Deed and
termination of this Agreement.
7.2. As-Is. 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 except as
otherwise specifically set forth in this Agreement, 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 Land or the Improvements, 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. Except as specifically set forth herein, Seller makes no
representation or warranty that the Property complies with Title III of the
Americans with Disabilities Act or any fire code or building code. Purchaser
hereby releases Seller and the Affiliates of Seller from any and all liability
in connection with any claims which Purchaser may have against Seller or the
Affiliates of Seller relating directly or indirectly to the existence of
asbestos or Hazardous Materials on, or environmental conditions of, the
Property, whether known or unknown; provided, however, that Purchaser may
assert claims for contribution or cost recovery against Seller or the
Affiliates of Seller, relating directly or indirectly to the existence of
asbestos or Hazardous Materials on, or environmental conditions of, the
Property, whether known or unknown, only in the event that Purchaser is sued by
a third party in connection therewith. As used herein, "Environmental Laws"
<PAGE>
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. Except as expressly set forth herein,
Seller makes no representation or warranty that such material is complete or
accurate or that Purchaser will achieve similar financial or other results with
respect to the operations of the Property, it being acknowledged by Purchaser
that Seller's operation of the Property and allocations of revenues or expenses
may be vastly different than Purchaser may be able to attain. Purchaser
acknowledges that it is a sophisticated and experienced purchaser of real
estate and further that Purchaser has relied upon its own investigation and
inquiry with respect to the operation of the Property and releases Seller and
the Affiliates of Seller from any liability with respect to such historical
information. Notwithstanding anything contained herein to the contrary, the
terms of this Paragraph 7.3 shall survive the Closing and the delivery of the
Deed and termination of this Agreement.
8. CLOSING. The closing of this transaction (the "Closing") shall be on
April 30, 1997 (the "Closing Date"), at the office of Seller's attorney,
Chicago, Illinois at which time Seller shall deliver possession of the Property
to Purchaser. This transaction shall be closed through an escrow with Title
Insurer, in accordance with the general provisions of the usual and customary
form of deed and money escrow for similar transactions in Illinois, or at the
<PAGE>
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. Closing Statement. 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. Seller's Deliveries. On the Closing Date, Seller shall deliver to
Purchaser the following:
9.2.1. the trustee's deed (the "Deed") (in the form of Exhibit E
attached hereto), in recordable form conveying fee simple title to the Real
Property to Purchaser subject only to Permitted Exceptions;
9.2.2. a special warranty bill of sale conveying the Personal
Property to Purchaser free and clear of any liens, claims or encumbrances (in
the form of Exhibit F attached hereto);
9.2.3. an assignment and assumption of intangible property (in the
form attached hereto as Exhibit G), including, without limitation, the
Contracts, the Permits, the Warranties and the Records;
9.2.4. an assignment and assumption of Leases and security
deposits (in the form attached hereto as Exhibit I);
9.2.5. a certificate in the form of Exhibit O certifying that the
representations and warranties set forth in Paragraph 16.2 are true and correct
as of the Closing Date as if made on the Closing Date subject to the
limitations contained in Paragraph 5.3 hereof, and subject to the limitations
on survival and liability set forth herein;
9.2.6. non-foreign affidavit (in the form of Exhibit J attached
hereto);
9.2.7. original copies, or duplicate copies if originals are not
available, of the Leases, the Contracts, the Permits, the Warranties and the
Records (which shall be delivered at the Property);
9.2.8. all documents and instruments reasonably required by the
Title Insurer to issue the Title Policy;
9.2.9. possession of the Property to Purchaser, subject to the
terms of the Leases;
<PAGE>
9.2.10. evidence of the termination of the management agreement and
any other contracts or agreements which are not Contracts;
9.2.11. 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
9.2.12. an updated rent roll in the same form as Exhibit M
certified by Seller to be true and correct as of the Closing Date;
9.2.13. an original estoppel certificate addressed to Purchaser in
the form of Exhibit L (or containing such modifications as are permitted
hereunder) from each tenant of the Property (or from Seller, to the extent
permitted by Paragraph 17);
9.2.14. an opinion of Seller's counsel, dated as of the Closing
Date and in form reasonably satisfactory to Purchaser, that Beneficiary has
been duly formed under the laws of the State of Illinois and is in good
standing under the laws of the jurisdiction in which the Property is located,
that Beneficiary is duly qualified to transact business in the jurisdiction in
which the property is located, that Beneficiary has the requisite power and
authority to enter into and perform this Agreement and the documents and
instruments required to be executed and delivered by Seller pursuant to this
Agreement, and that such documents and instruments have been duly authorized by
all necessary partnership action on the part of Beneficiary and have been duly
executed and delivered and that Beneficiary is the sole beneficiary of Trust
and Beneficiary has the right to cause Trust to sell the Property; and
9.2.15. a certified copy of the Trust Agreement.
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, 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 AND PURCHASER'S RIGHT TO RECEIVE FROM SELLER ITS ACTUAL, DOCUMENTED
THIRD PARTY EXPENSES INCURRED IN THE PERFORMANCE OF ITS DUE DILIGENCE HEREUNDER
AND THE PREPARATION OF THIS AGREEMENT, NOT TO EXCEED $75,000 IN THE AGGREGATE.
<PAGE>
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT
IS ITS REFUSAL TO DELIVER THE CLOSING DOCUMENTS SET FORTH IN PARAGRAPH 9.2.1-8,
and 9.2.10-12 HEREOF, THEN PURCHASER WILL BE ENTITLED TO SUE FOR SPECIFIC
PERFORMANCE.
12. PRORATIONS.
12.1. Prorations Generally. Rents (exclusive of delinquent rents, but
including prepaid rents); refundable security deposits (which will be assigned
to and assumed by Purchaser and credited to Purchaser at Closing); water and
other utility charges; fuels; prepaid operating expenses; management fees
payable to Insignia Management Co. not to exceed 6% of gross rent; real and
personal property taxes prorated on a "net" basis (i.e. adjusted for all
tenants' liability, if any, for such items); operating expenses which are
reimbursable by the tenants for the period prior to the Closing Date less any
amount previously paid by the Tenants shall be credited to Seller; and other
similar items shall be adjusted ratably as of 11:59 p.m. on the Closing Date,
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. Where the Leases impose on tenants obligations for taxes,
common area expenses, operating expenses or additional charges of any other
nature, and where Seller shall have collected any portion thereof in excess of
amounts incurred by Seller for such items for the period prior to the Closing
Date, then there shall be an adjustment and credit given to Purchaser at the
Closing for such excess amounts collected. In addition, prorations shall be
made at Closing as required pursuant to Paragraph 26 hereof. 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. Seller agrees to assign to Purchaser any and all rights to any
protest by Seller of 1996 real property taxes and Purchaser shall be
responsible for any amount, if any, due any tenants of the Property relating to
any such real property tax refund received by Purchaser.
12.2. Post-Closing Receipts. In the event that any rentals for any of
the Leases remain unpaid at the Closing Date, Purchaser shall use reasonable
efforts after the Closing Date to collect such rentals and promptly deliver all
rentals so collected ("Post-Closing Receipts") to Seller; provided, however,
that Purchaser shall not be required to institute any legal actions as a means
of attempting to collect such rentals. In the event that any tenant's legal
right to possession has been terminated prior to the end of the Inspection
Period, Seller retains all rights to any delinquent rent from such tenant,
including the right to institute any legal actions as a means of attempting to
collect such rentals. In the event that any tenant is delinquent in the
payment of rent by more than 60 days as of the end of the Inspection Period,
but such tenant's legal right to possession has not been terminated, all such
delinquent rent received by Purchaser after Closing shall belong to Purchaser.
All other delinquent rentals received by Purchaser prior to November 30, 1997
shall be applied first to amounts owing Seller, and then to pay any current
obligations of the tenant(s) in question, and Seller waives the right to
institute any legal actions as a means of attempting to collect such rentals.
<PAGE>
Seller retains the right to conduct an audit, at reasonable times and upon
reasonable notice, but not after December 31, 1997, 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.
12.3. Percentage Rent. Percentage rent payable under the Leases shall
be prorated as of the Closing Date as follows:
12.3.1. Any percentage rent attributable to a specified period
("Percentage Rent Period") ending prior to the Closing Date shall be promptly
paid over to the Seller if and when collected. Seller shall be entitled to all
percentage rent attributable to the period prior to Closing Date for any
Percentage Rent Period ending prior to Closing Date. Paragraph 12.3.1 of this
Agreement shall survive the Closing and the delivery and recording of the Deed.
12.3.2. Percentage rent payable with respect to a Percentage Rent
Period a portion of which occurs prior to the Closing Date and a portion of
which occurs subsequent to the Closing Date shall be apportioned between
Purchaser and Seller on the basis of their respective period of ownership
during the applicable Percentage Rent Period and shall be calculated in the
following manner. Seller shall be entitled to a percentage rent proration
determined by (x) multiplying the amount of the total gross sales from the most
recently completed and not estimated Percentage Rent Period by the applicable
formula for percentage rent contained in the applicable Lease, (y) multiplying
such product by 80% (reflecting a discount rate of 20%) and (z) then
multiplying such product by a fraction, the numerator of which shall be the
total number of days in the current Percentage Rent Period prior to the Closing
Date and the denominator of which shall be the total number of days in the
current Percentage Rent Period (in order to allocate the correct time period to
each party). Purchaser shall be entitled to the remainder of such percentage
rent. Notwithstanding the foregoing, Seller shall not receive any proration of
percentage rent pursuant to this paragraph 12.3.2 with respect to any tenant
which has gone dark prior to Closing. This percentage rent proration will
obviate the need to perform a future reconciliation.
12.3.3. Fretter's. Seller agrees that upon Closing, Seller shall
waive any right to proceed against Fretter, Inc. for any delinquencies or
amounts owed by Fretter, Inc. to Seller, as of the Closing Date, including,
without limitation, the matters covered by the litigation identified on Exhibit
Q. Seller agrees to dismiss any such actions it brought with prejudice.
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.
Notwithstanding the foregoing, Purchaser shall have the right to assign its
interest in this Agreement without the prior written consent of the Seller to
<PAGE>
any entity which, directly or indirectly, controls, is controlled by or is
under common control with Purchaser or Cargill Financial Services Corporation,
but such assignment shall not release Purchaser from its obligations hereunder.
If any assignee of Purchaser under this Agreement petitions or applies for
relief in bankruptcy or said assignee is adjudicated as a bankrupt or
insolvent, or said assignee files any petition, application for relief or
answer-seeking or acquiescing in any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief for itself under any
present or future federal, state or other statute, law, code or regulation
relating to bankruptcy, insolvency, or other relief for debtors (collectively,
a "Bankruptcy Filing") on or before the Closing Date, said Bankruptcy Filing
shall be a default under this Agreement and Purchaser shall indemnify Seller
for all costs, attorney's fees and expenses of Seller resulting from Seller's
efforts to obtain the Earnest Money as liquidated damages and to clear title to
the Property from any encumbrance resulting from the Bankruptcy Filing.
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 Mid-America Real Estate Corp. and Insignia Mortgage and
Investment Company, Inc. (to be paid by Seller). Seller's commission to
Mid-America Real Estate Corp. and Insignia Mortgage and Investment Company,
Inc. 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 Mid-America Real
Estate Corp. and Insignia Mortgage and Investment Company, Inc. 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 Michael Conter (the asset manager responsible for the Property) or
Seller's property manager responsible for the management of the Property (the
"Seller's Representative"), and any representation or warranty of the Seller
that is qualified to Seller's knowledge is based upon those matters of which
the Seller's Representative has actual knowledge. Any knowledge or notice
given, had or received by any of Seller's agents, servants or employees shall
not be imputed to Seller, the general partner or limited partners of Seller,
the subpartners of the general partner or limited partners of Seller or
Seller's Representative. Seller hereby covenants to deliver a copy of this
Agreement to Seller's property manager, and to instruct such property manager
to review the Agreement and notify Seller's Representative of any and all
information known to such property manager regarding the representations and
warranties contained herein.
<PAGE>
16.2. Subject to the limitations set forth in Paragraph 16.1, Trust
hereby makes the following representations and Beneficiary hereby makes the
following representations and warranties:
16.2.1.Seller has not entered into any contracts for the sale of any
of the Property other than this Agreement. Seller has received no notice of
and has no knowledge of any rights of first refusal or first offer, options to
purchase any of the Property or any other rights or agreements which may delay
or prevent this transaction.
16.2.2.To Seller's knowledge, there has been no labor or material of
any kind furnished to or for the benefit of the Property at Seller's request
for which payment in full has not been made, except in connection with tenant
improvements as set forth on Exhibit N attached hereto.
16.2.3.No person or entity is entitled to possession of any of the
Property, other than Seller, the tenants under the Leases or otherwise pursuant
to a recorded instrument.
16.2.4.Seller has received no notice of and has no knowledge of any
pending or threatened condemnation or transfer in lieu thereof affecting any of
the Property, nor has Seller agreed or committed to dedicate any of the
Property.
16.2.5.Seller has received no notice of and has no knowledge of any
pending or threatened action which would impair access to the Property.
16.2.6.Seller has received no notice and has no knowledge of any
actual or threatened curtailment, cancellation or suspension of any utilities
serving the Property.
16.2.7.Seller has received no notice of and has no knowledge of any
action, litigation, investigation or proceeding of any kind pending or
threatened against Seller or any of the Property which materially and
adversely affect the value of the Property except as set forth in EXHIBIT Q
attached hereto.
16.2.8.Seller has received no notice of and has no knowledge of any
uncured default under any easement agreement or joint operation agreement
affecting the Property, and Seller has no knowledge of any amendment or
modification to such agreements except as of record.
16.2.9.Seller has not received written notice of any violation of
any Environmental Laws, statute, rule, law, obligation, ordinance, or other
legal regulation or requirement pertaining to the use, maintenance, ownership,
or operation of the Property, which such violation has not been cured without
waiver or variance of the applicable Environmental Laws.
16.2.10. To Seller's knowledge, there are no leases or
possessory rights in favor of any party, service or maintenance contracts,
equipment leases or other contracts regarding any of the Property except for
the Leases, the Contracts and any matters of record.
<PAGE>
16.2.11. To Seller's knowledge, Seller has delivered to
Purchaser true, correct and complete copies of each Contract and their
respective amendments. Seller has received no notice and has no knowledge that
either Seller or any other party under a Contract is in default of their
respective obligations and liabilities thereunder. To Seller's knowledge,
except for the Contracts, there are no other service or maintenance contracts,
equipment leases or other contracts regarding any of the Property which will
not be terminated on or before the Closing Date.
16.2.12. To Seller's knowledge, Seller has delivered Purchaser
true, correct and complete copies of the Records.
16.2.13. To Seller's knowledge, Seller has delivered to
Purchaser true, correct and complete copies of each Lease and their respective
amendments. To Seller's knowledge, the information regarding the Leases
contained in the rent roll attached as Exhibit M is true, correct and complete
as of the date set forth therein. Seller has received no notice and has no
knowledge that either Seller or the applicable tenant is in default of their
respective obligations and liabilities under any of the Leases, including those
provisions relating to bankruptcy or insolvency.
16.2.14. To Seller's knowledge, Seller has delivered to
Purchaser true, correct and complete copies of each Permit in Seller's
possession and their respective amendments. Seller has received no notice and
has no knowledge (a) that Seller is in default of its obligations and
liabilities under any of the Permits, or (b) of any actual or threatened
cancellation or suspension of any Permit, or (c) that any additional licenses
or permits are required under applicable law to operate the Property as it is
now operated.
16.2.15. To Seller's knowledge, Seller has delivered to
Purchaser true, correct and complete copies of each Warranty in Seller's
possession and their respective amendments. Seller has received no notice that
either Seller or the applicable warrantor is in default of their respective
obligations and liabilities under any of the Warranties.
16.2.16. No management, leasing or maintenance personnel or
agents employed in connection with the operation of the Property have the right
to continue such employment after Closing except pursuant to a Contract. No
person or entity is entitled to claim any brokerage or leasing commissions or
other payments with respect to any of the Property, including regarding any of
the Leases, except as set forth in Exhibit N.
16.2.17. Beneficiary has been duly formed under the laws of the
State of Illinois and is in good standing under the laws of the jurisdiction in
which the Property is located, is duly qualified to transact business in the
jurisdiction in which the Property is located, and has the requisite power and
authority to enter into and perform this Agreement and the document sand
instruments required to be executed and delivered by Beneficiary pursuant
hereto. This Agreement has been duly executed and delivered by Beneficiary and
is a valid and binding obligation of Seller enforceable in accordance with its
terms. This Agreement and the documents and instruments required to be
<PAGE>
executed and delivered by Seller pursuant hereto have each been duly authorized
by all necessary partnership action on the part of Beneficiary and that such
execution, delivery and performance does and will not conflict with or result
in a violation of Beneficiary's partnership agreement or any judgment, order or
decree of any court or arbiter to which Seller is a party, or any agreement to
which Seller and/or any of the Property is bound or subject including the
Contracts and the Leases.
16.2.18. Beneficiary has not (i) made a general assignment for
the benefit of creditors, (ii) filed any involuntary petition in bankruptcy or
suffered the filing of any involuntary petition by its creditors, (iii)
suffered the appointment of a receiver to take possession of all or
substantially all of its assets, (iv) suffered the attachment or other judicial
seizure of all or substantially all of its assets, (v) admitted in writing its
inability to pay its debts as they come due, or (vi) made an offer of
settlement, extension or composition to its creditors generally.
16.2.19. Seller is not a "foreign person", "foreign
partnership", "foreign trust" or "foreign estate" as those terms are defined in
Section 1445 of the Internal Revenue Code.
16.2.20. Seller shall at all times prior to the Closing operate
and maintain the Property in substantially the same manner as it is now
operated and maintained, ordinary wear and tear and damage by fire and casualty
excepted.
16.2.21. Beneficiary is the sole beneficiary of the Trust, and
has the authority to cause the Trust to convey the Property.
16.3. Purchaser hereby represents and warrants to Seller that
Purchaser has the full right, power and authority to execute and deliver this
Agreement and consummate the transactions contemplated herein.
16.4. If at any time after the execution of this Agreement, either
Purchaser or Seller becomes aware of information which makes a representation
and warranty contained in this Agreement to become untrue in any material
respect, said party shall promptly disclose said information to the other party
hereto. Provided the party making the representation or warranty did not take
any deliberate actions to cause the representation or warranty in question to
become untrue in any material respect, said party shall not be in default under
this Agreement and the sole remedy of the other party shall be to terminate
this Agreement. Except as set forth in Paragraph 5.4, 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 by Seller of its obligations under any Lease, then
Purchaser shall not have the right to terminate this Agreement or make any
claim for a breach of a representation or warranty hereunder involving the rent
roll or tenancies thereunder. Purchaser and Seller are prohibited from making
any claims against the other party hereto after the Closing with respect to any
breaches of the other party's representations and warranties contained in this
Agreement that the claiming party has actual knowledge of prior to the Closing.
<PAGE>
16.5. The parties agree that the representations contained herein
shall survive Closing until November 30, 1997. The claiming party shall have
no right to make any claims against the other party for a breach of a
representation or warranty unless the claiming party delivers written notice of
such claim to the other party before November 30, 1997.
17. ESTOPPEL CERTIFICATES. Promptly following the mutual execution and
delivery of this Agreement, Seller shall diligently proceed and use its
diligent efforts to obtain estoppel certificates in the form of Exhibit L from
each of the tenants under the Leases. If a tenant shall fail or refuse to
deliver an estoppel certificate with respect to its Lease on or before the
Closing Date, Seller shall execute and deliver to Purchaser at Closing an
estoppel certificate with respect to such Lease in substitution from such
tenant based on the knowledge of Seller as set forth in Paragraph 16.1;
provided, however, such certificate of Seller shall not be deemed to have
satisfied the condition in Paragraph 5.1, except as to Leases of up to 50% of
the rentable square feet leased pursuant to Leases of 7,500 square feet or
less. Seller's liability under Seller Tenant Certificates shall be limited
pursuant to Paragraph 16.5 and 18 herein.
18. LIMITATION OF LIABILITY. None of the Affiliates of Seller, nor any of
Seller's or the Affiliates of Seller's 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. Notwithstanding anything contained herein
to the contrary, Purchaser hereby agrees that the maximum liability of Seller
after the Closing, in connection with, arising out of or in any way related to
a breach by Seller under this Agreement or any document or conveyance agreement
in connection with the transaction, shall be $405,000.00. Seller further
agrees not to distribute $405,000.00 of the proceeds of the Purchase Price to
its partners until the later of (i) November 30, 1997 and (ii) final resolution
of any claims by Purchaser and asserted in writing against Seller prior to
November 30, 1997 in accordance with the terms of this Agreement ("Claims");
provided, however, that if any Claims are disputed by Seller, Seller shall have
the right, by written notice to Purchaser, to require Purchaser to file suit in
a court of competent jurisdiction within ninety (90) days after such notice to
Purchaser. If no suit is filed by such date, said notice with respect to the
Claim in question shall no longer prevent Seller from distributing the
proceeds.
19. TIME OF ESSENCE. Time is of the essence of this Agreement.
20. 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:
<PAGE>
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A-200
Bannockburn, Illinois 60015
Attention: James Mendelson
(847) 317-4367
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Daniel J. Perlman, Esq.
(312) 902-5532
(312) 902-1061 (FAX)
TO PURCHASER: c/o Ellis Partners, Inc.
351 California Street, Suite 1150
San Francisco, CA 94104
Attention: Harold A. Ellis, Jr.
(415) 391-9800
(415) 391-4711 (FAX)
with copies to: Cargill Financial Services Corporation
6000 Clearwater Drive
Minnetonka, MN 55345
Attention: Tim Clark
(612) 984-3449
(612) 984-3905 (FAX)
and to: Faegre & Benson LLP
2200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402-3901
Attention: Matthew R. Bogart
(612) 336-3435
(612) 336-3026 (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
<PAGE>
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 sent to the Escrow Agent.
21. 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. 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 each of the Purchaser and the Seller.
Within two (2) business days after its receipt of a fully-executed counterpart
of this Agreement and the Escrow Agreement, Purchaser agrees to deposit the
Earnest Money with Escrow Agent pursuant to the terms of the Escrow Agreement.
22. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of Illinois.
23. 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.
24. 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.
25. 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.
26. NEW LEASES. On or before ten (10) business days prior to the expiration
of the Inspection Period, Seller may execute any new lease or modify or renew
any existing lease affecting the Property without Purchaser's consent. Seller
shall deliver a copy of any such new lease or existing lease modification or
renewal (together with an estimation of the "New Lease Costs" (as hereinafter
defined)), as applicable, to Purchaser within ten (10) business days of
execution by Seller and the new tenant or existing tenant, as applicable, but
in any event on or before ten (10) business days prior to the expiration of the
Inspection Period. In the event Purchaser disapproves of such new lease or
existing lease modification or renewal, Purchaser's sole remedy shall be to
terminate this Agreement in accordance with Paragraph 7 hereof. In the event
<PAGE>
that Purchaser does not terminate this Agreement as aforesaid, Purchaser shall
be responsible for the costs of all tenant improvements and leasing commissions
associated with the negotiation and execution of any such new lease or existing
lease modification or renewal ("New Lease Costs") and Purchaser shall assume
all such obligations at the Closing. Seller shall receive a credit at Closing
for any New Lease Cost incurred by Seller prior to Closing.
After the date ten (10) business days prior to the expiration of the
Inspection Period, Seller shall not execute any new lease or existing lease
modification or renewal affecting the Property without Purchaser's prior
written consent. Purchaser's consent shall be deemed given if Purchaser has
not responded to the contrary within ten (10) business days after Seller's
written request and Purchaser's receipt of such new lease or existing lease
modification or renewal (together with an estimation of the New Lease Costs).
If approved by Purchaser, a complete copy of any such new lease or existing
lease modification or renewal shall be delivered to Purchaser within ten (10)
days of the full execution thereof. All New Lease Costs shall be paid by
Purchaser and Purchaser shall assume all such obligations at the Closing and
Seller shall receive a credit at Closing for any New Lease Costs incurred by
Seller prior to Closing.
Purchaser acknowledges that there currently exists the unsatisfied tenant
improvement obligations and leasing commissions set forth on Exhibit N attached
hereto. Seller agrees to pay the unsatisfied leasing commission obligations
and tenant improvement obligations set forth on Exhibit N on or before the
Closing or credit Purchaser for the amount of said unsatisfied obligation and
Purchaser shall assume all obligations therefor at Closing.
27. SELLER'S POSSESSION. All references herein to "Seller's possession" shall
mean in the possession of Seller and the property manager of the Property.
28. EXECUTION BY THE BALCOR COMPANY. The Balcor Company executes this
Agreement solely for the purpose of assuring to Purchaser that if the Seller
fails to withhold or pay the sums required of Seller pursuant to Paragraph 18
and if Purchaser is successful in any claims asserted against the Seller for a
breach of a representation or warranty, then The Balcor Company shall pay to
Purchaser the amount of such claim(s), the total of which shall not exceed
$405,000.00. Purchaser may name The Balcor Company in any suit against Seller,
provided that Purchaser may not name The Balcor Company in any suit unless
Seller is also named therein.
29. COSTS OF LITIGATION. If either party to this Agreement shall institute an
action or proceeding against the other party relating to this Agreement, the
unsuccessful party in such action or proceeding shall reimburse the successful
party for its disbursements incurred in connection therewith and for its
reasonable attorney fees actually incurred; provided, however, that the
aggregate liability of Seller in connection with this Agreement, including
Seller's liability under this Paragraph 29, shall be limited in accordance with
Paragraph 18 hereof.
<PAGE>
30. NEGOTIATION WITH TENANTS. Purchaser shall have the right during the
Inspection Period and at any time prior to the Closing Date to contact and
negotiate with any current, former or potential tenant or occupant of the
Property. Purchaser shall inform such party that it is not the owner of the
Property and any agreement that Purchaser and such party enter into shall
specifically state that it is contingent on Purchaser acquiring the Property.
In the event that Purchaser does not acquire the Property, Purchaser shall
deliver a copy of all such agreements to Seller.
31. IRPTA. Seller and Purchaser do hereby indicate that they are aware of the
purpose and intent of the Illinois Responsible Property Transfer Act (the
"Act") and the disclosure document referred to in the Act and the parties
hereby waive the thirty (30) day time period specified in subsection (a) of
Section 4 of the Act. The parties hereby agree and consent to delivery of said
disclosure document, if a disclosure document is required by the Act in this
case, on or before the date on which the transfer of the Property is to become
final. If Seller does not deliver the above-referenced disclosure statement,
it shall deliver a certification to Purchaser that such disclosure document is
not required by the Act with respect to the Property.
32. LAND TRUST EXCULPATION. This instrument is executed by American National
Bank and Trust Company of Chicago, not personally but solely as Trustee, as
aforesaid. All the covenants and conditions to be performed hereunder by
American National Bank and Trust Company of Chicago are undertaken by it solely
as Trustee, as aforesaid and not individually, and no personal liability shall
be asserted or be enforceable against American National Bank and Trust Company
of Chicago by reason of any of the covenants, statements, representations or
warranties contained in this instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of
the date first set forth above.
PURCHASER:
CROSSTOWN ASSET CORP. I, a Delaware corporation
By: /s/ Thomas Haller
---------------------------------
Name: Thomas Haller
---------------------------------
Its: Vice President
---------------------------------
SELLER:
TRUST:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, not personally, but as Trustee under
Trust Agreement Dated April 24, 1987, and known
as Trust No. 102332-03
By: /s/Eileen Neary
----------------------------------
Name: Eileen Neary
----------------------------------
Its: Trust Officer
----------------------------------
BENEFICIARY:
EVANSTON PLAZA INVESTORS A REAL ESTATE LIMITED
PARTNERSHIP, an Illinois limited partnership
By: Balcor Equity Partners-IV, an Illinois
general partnership, its general partner
By: The Balcor Company, a Delaware
corporation, its general partner
By: /s/ John K. Powell, Jr.
----------------------------------
Name: John K. Powell, Jr.
----------------------------------
Its: Senior Vice President
----------------------------------
<PAGE>
JOINDER
The undersigned executes this joinder solely for the purposes of
effectuating its obligations arising under Paragraph 28 of this Agreement.
THE BALCOR COMPANY, a Delaware corporation
By: /s/ John K. Powell, Jr.
---------------------------------
Name: John K. Powell, Jr.
---------------------------------
Its: Senior Vice President
---------------------------------
<PAGE>
[Evanston Plaza]
Al Lieberman of Insignia Mortgage and Investment Company, Inc. ("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 11/20, 1996_ between Seller and Seller's Broker (the "Listing
Agreement"). Seller's Broker also acknowledges that payment of the aforesaid
fee or commission is conditioned upon the Closing and the receipt of the
Purchase Price by the Seller. Seller's Broker agrees to deliver a receipt to
the Seller at the Closing for the fee or commission due Seller's Broker and a
release, in the appropriate form, stating that no other fees or commissions are
due to it from Seller or Purchaser.
INSIGNIA MORTGAGE AND
INVESTMENT COMPANY, INC.
By: /s/ Al Lieberman
---------------------------------
<PAGE>
[Evanston Plaza]
_________________ of Mid-America Real Estate Corp. ("Seller's Co-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 Co-Broker (the
"Listing Agreement"). Seller's Co-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 Co-Broker agrees to deliver a
receipt to the Seller at the Closing for the fee or commission due Seller's
Co-Broker and a release, in the appropriate form, stating that no other fees or
commissions are due to it from Seller or Purchaser.
MID-AMERICA REAL ESTATE CORP.
By:
----------------------------------
<PAGE>
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Survey Certification
E - Deed
F - Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Service Contracts
I - Assignment and Assumption of Leases and Security Deposits
J - Non-Foreign Affidavit
K - Notice to Tenants
L - Tenant Certificate
M - Rent Roll
N - Leasing Commissions and Tenant Improvements
O - Reaffirmation of Representations and Warranties and
Certification of Rent Roll
P - Permits
Q - Disclosed Litigation
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 5185
<SECURITIES> 0
<RECEIVABLES> 139
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5362
<PP&E> 26425
<DEPRECIATION> 9980
<TOTAL-ASSETS> 21924
<CURRENT-LIABILITIES> 1149
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 20775
<TOTAL-LIABILITY-AND-EQUITY> 21924
<SALES> 0
<TOTAL-REVENUES> 5327
<CGS> 0
<TOTAL-COSTS> 2142
<OTHER-EXPENSES> 1252
<LOSS-PROVISION> 4782
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2849)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2849)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2849)
<EPS-PRIMARY> (16.54)
<EPS-DILUTED> (16.54)
</TABLE>
