<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 19, 1996
Lutheran Brotherhood Realty Fund I, a California limited partnership
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(Exact name of registrant as specified in its charter)
California 0-17617 94-3046442
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
625 Fourth Avenue South, Minneapolis, MN 55415
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (612) 339-8091
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(Former name or former address, if changed since last report.)
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Item 2. Acquisition or Disposition of Assets.
On July 13, 1996, Worthington Green Associates (the "Seller"), a Minnesota
joint venture in which Lutheran Brotherhood Realty Fund I, a California
limited partnership (the "Registrant") is the managing venturer, entered
into a Purchase and Sale Agreement (the "Agreement") with TGM Realty Corp
#5, a Delaware corporation, for the sale by Seller of all its right, title
and interest in and to the Village at Worthington Green (the "Village") in
Columbus, Ohio. The Village is a 176 unit residential apartment complex
which the Seller has owned since September 29, 1989. The Registrant will
receive 19.3% of the net sales proceeds.
The sale of the Village closed on August 19, 1996 and the Seller received
cash consideration in the amount of $6,449,004, subject to certain
adjustments set forth in the Agreement. The Registrant's share of this
consideration is $1,244,658. The Registrant, as the managing venturer of
the Seller, listed the Village through a professional real estate brokerage
firm. The Registrant's Limited Partners approved a liquidation proposal on
July 3, 1996, relating to the sale of the Registrant's owned property and
properties owned by the joint ventures in which the Registrant is a co-
venturer. This sale of the Village is part of the liquidation process.
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Item 7. Financial Statements, Proforma Information and Exhibits.
(a) Financial statements of business acquired - not applicable.
(b) Proforma Financial Information of Lutheran Brotherhood Realty
Fund I
(i) Proforma Balance Sheet at June 30, 1996 (unaudited)
(ii) Proforma Statement of Operations for the year ended
December 31, 1995 (unaudited)
(iii) Proforma Statement of Operations for the six months
ended June 30, 1996 (unaudited)
(b) Exhibits.
(10)(a) Purchase and Sale Agreement for the Village at
Worthington Green dated July 13, 1996.
Item 7(b)(i) Proforma Financial Information
The following unaudited condensed proforma balance sheet presents the
financial position of Lutheran Brotherhood Realty Fund I on June 30, 1996,
assuming that the sale of The Village at Worthington Green occurred on that
date. The Village at Worthington Green was sold on August 19, 1996.
<PAGE>
<TABLE>
Lutheran Brotherhood Realty Fund I
Proforma Balance Sheet
June 30, 1996
(thousands)
(unaudited)
<CAPTION>
Sale of The Village Proforma
ASSETS June 30, 1996 at Worthington Green June 30, 1996
<S> <C> <C> <C>
Real estate investment, at cost - net $1,903 $1,903
Investments in joint ventures 2,155 (507) 1,648
Cash and cash equivalents 643 1,245 1,888
Deferred charges (net) and other assets 37 37
------ ----- ------
Total Assets $4,738 $738 $5,476
====== ===== ======
LIABILITIES & PARTNER'S EQUITY
Accounts payable and other liabilities $50 $50
Partners' equity 4,688 738 5,426
------ ----- ------
Total Liabilities & Partners' Equity $4,738 $738 $5,476
====== ===== ======
</TABLE>
See accompanying notes to proforma balance sheet.
Lutheran Brotherhood Realty Fund I
Notes to Proforma Balance Sheet
June 30, 1996
(unaudited)
Note 1. Basis of presentation
The unaudited condensed proforma balance sheet of Lutheran Brotherhood
Realty Fund I ("the Partnership") presents the financial position of the
Partnership on June 30, 1996, assuming that the sale of The Village at
Worthington Green, occurred on that date. The Village at Worthington Green
was sold on August 19, 1996.
Note 2. Proforma adjustments
(a) Investment in Joint Ventures - This adjustment eliminates the
Partnership's net investment in the The Village at Worthington Green
property at June 30, 1996.
(b) Cash - This adjustment represents the Partnership's approximate share
of net proceeds received from the sale of The Village at Worthington
Green.
(c) Partners' Equity - This adjustment represents the net gain on sale
which would have been realized by the Partnership had the The Village
at Worthington Green property been sold on June 30, 1996.
Item 7(b)(ii) Proforma Financial Information
The following unaudited condensed proforma statement of operations presents
the results of operations of Lutheran Brotherhood Realty Fund I (the
Partnership) for the year ended December 31, 1995 assuming that the sale of
The Village at Worthington Green occurred on January 1, 1995. The Village
at Worthington Green was sold on August 19, 1996. The proforma statement of
operations does not present the net gain on sale of investment property
which the Partnership realized from the sale.
This statement should be read in conjunction with the other proforma
financial statements and notes thereto and the discussion of the property
contained in Item 2 included elsewhere in this Form 8-K.
<PAGE>
<TABLE>
Lutheran Brotherhood Realty Fund I
Proforma Statement of Operations
For the Year Ended December 31, 1995
(thousands except per share amounts)
(unaudited)
<CAPTION>
Sale of The
Village at Proforma
Year Ended Worthington Year Ended
Dec. 31, 1995 Green Dec. 31, 1995
<S> <C> <C> <C>
Revenue:
Rental $516 $516
Interest 30 30
Equity in joint venture capital 168 (52) 116
---- ---- ----
Total revenue 714 (52) 662
---- ---- ----
Expenses:
Property operations 267 267
Depreciation and amortization 90 90
Administrative 93 93
---- ---- ----
Total expenses 450 450
---- ---- ----
Net income $264 ($52) $212
==== ===== ====
Net income per weighted
average number of limited
partnership units outstanding $4.14 ($0.82) $3.32
===== ===== =====
Distributions per weighted
average limited partnership
units outstanding $4.00 $4.00
===== ===== =====
</TABLE>
See accompanying notes to proforma statement of operations.
Lutheran Brotherhood Realty Fund I
Notes to Proforma Statement of Operations
For the Year Ended December 31, 1995
(unaudited)
Note 1. Basis of presentation
The unaudited condensed proforma statement of operations of Lutheran
Brotherhood Realty Fund I ("the Partnership") presents the results of
operations for the Partnership for the year ended December 31, 1995 assuming
that the sale of The Village at Worthington Green occurred on January 1,
1995. The Village at Worthington Green was sold on August 19, 1996. The
proforma statement of operations does not present the net gain on sale of
investment property which the Partnership realized from the sale.
Note 2. Proforma adjustments
(a) Equity in joint venture capital - This adjustment eliminates net income
relating to the Partnership's interest in the The Village at
Worthington Green for the year ended December 31, 1995.
Item 7(b)(iii) Proforma Financial Information
The following unaudited condensed proforma statement of operations presents
the results of operations of Lutheran Brotherhood Realty Fund I (the
Partnership) for the six months ended June 30, 1996 assuming that the sale
of The Village at Worthington Green occurred on January 1, 1996. The
Village at Worthington Green was sold on August 19, 1996. The proforma
statement of operations does not present the net gain on sale of investment
property which the Partnership realized from the sale.
This statement should be read in conjunction with the other proforma
financial statements and notes thereto and the discussion of the property
contained in Item 2 included elsewhere in this Form 8-K.
<PAGE>
<TABLE>
Lutheran Brotherhood Realty Fund I
Proforma Statement of Operations
For the six months ended June 30, 1996
(thousands except per share amounts)
(unaudited)
<CAPTION>
Sale of The Proforma
Six Months Village at Six Months
Ended Worthington Ended
June 30, 1996 Green June 30, 1996
<S> <C> <C> <C>
Revenue:
Rental $260 $260
Interest 15 15
Equity in joint venture capital 86 (38) 48
---- ----- ----
Total revenue 361 (38) 323
---- ----- ----
Expenses:
Property operations 99 99
Depreciation and amortization 46 46
Administrative 104 104
---- ----- ----
Total expenses 249 249
---- ----- ----
Net income $112 ($38) $74
==== ===== ===
Net income per weighted
average number of limited
partnership units outstanding $1.76 ($0.60) $1.16
===== ====== =====
Distributions per weighted
average limited partnership
units outstanding $2.00 $2.00
===== ====== =====
</TABLE>
See accompanying notes to proforma statement of operations.
Lutheran Brotherhood Realty Fund I
Notes to Proforma Statement of Operations
For the Six Months Ended June 30, 1996
(unaudited)
Note 1. Basis of presentation
The unaudited condensed proforma statement of operations of Lutheran
Brotherhood Realty Fund I ("the Partnership") presents the results of
operations for the Partnership for the six months ended June 30, 1996
assuming that the sale of The Village at Worthington Green occurred on
January 1, 1996. The Village at Worthington Green was sold on August 19,
1996. The proforma statement of operations does not present the net gain on
sale of investment property which the Partnership realized from the sale.
Note 2. Proforma adjustments
(a) Equity in joint venture capital - This adjustment eliminates net income
relating to the Partnership's interest in the The Village at
Worthington Green for the six months ended June 30, 1996.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LUTHERAN BROTHERHOOD REALTY FUND I,
a California limited partnership
By: Lutheran Brotherhood Real Estate
Products Company,
Its General Partner
Date: August 28, 1996 By: /s/ Mitchell F. Felchle
--------------------------------
Mitchell F. Felchle
President
Date: August 28, 1996 By: /s/ Anita J.T. Young
--------------------------------
Anita J.T. Young
Treasurer
(Chief Financial Officer)
<PAGE>
INDEX TO EXHIBIT
EXHIBIT NUMBER PAGE IN
REGISTRATION
STATEMENT
10(a) Purchase and Sale Agreement
for the Village at Worthington
Green dated July 13, 1996
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement ("Agreement") is made and entered into
this 13th day of July, 1996, by and between WORTHINGTON GREEN ASSOCIATES, a
Minnesota joint venture consisting of LUTHERAN BROTHERHOOD REALTY FUND I
LIMITED PARTNERSHIP, a California limited partnership, and LUTHERAN
BROTHERHOOD, a Minnesota corporation ("Seller"), and TGM REALTY CORP. #5, a
Delaware corporation ("Purchaser").
1. Sale and Purchase of Property.
1.1 Seller agrees to sell and convey to Purchaser, and Purchaser agrees
to pay the Purchase Price (hereinafter defined) and to purchase and take
from Seller, subject to the terms and conditions herein contained: (i) a
parcel of real property located at the southeast corner of Hard Road and
Smoky Row Road, in the City of Columbus, County of Franklin, State of Ohio,
legally described on Exhibit A attached hereto and hereby made a part
hereof (hereinafter called "Land"); (ii) the 176 unit residential apartment
complex, together with all other buildings and improvements located thereon,
(hereinafter collectively called "Buildings," whether one [1] or more);
(iii) all appurtenances, hereditaments, privileges and easements belonging
to the Land and Buildings; (iv) all fixtures, equipment, furnishings,
appliances and other items of tangible and intangible personal property
which are owned by Seller, are now or hereafter located in the Buildings or
on the Land, and are used in connection with the maintenance or operation
thereof, (the "Personal Property"), (v) all leases, licenses and other
occupancy agreements (collectively, the "Leases") covering space situate at
or within the Land and Buildings and any claim or right to claim against a
tenant or occupant (collectively, the "Tenants") under any Lease and all
security deposits paid or deposited by Tenants in accordance with the
Leases, except as set forth in Section 7.5.5 hereof, (vi) all of Seller's
rights in and to contractual rights and intangibles with respect to the
operation, maintenance, repair and improvement of the Land and Buildings,
including service and maintenance agreements, construction, material and
labor contracts, utility agreements and other contractual arrangements, all
to the extent designated by the provisions of this Agreement (collectively,
the "Contracts"), (vii) governmental permits, licenses, certificates and
approvals in connection with the ownership of the Property (collectively,
the "Licenses") and warranties of any contractor, manufacturer or
materialman, and (viii) all of Seller's interest in the right to the use of
the trade name "Village at Worthington Green" (the "Trade Name") in
connection with the Property (all the property described in clauses (i)
through (iii) and (v) through (viii) in this Section 1.1 being hereinafter
collectively referred to as the "Property").
2. Purchase Price; Earnest Money.
2.1 Purchaser agrees to pay Six Million Three Hundred Ten Thousand Five
Hundred Seventy Five and No/100ths Dollars ($6,310,575.00) ("Purchase
Price") for the Property. The Purchase Price shall be payable as follows:
2.1.1 Three Hundred Thousand and No/100ths Dollars ($300,000.00) earnest
money (said sum, together with all interest accrued thereon, the "Earnest
Money"), which sum, within two (2) Business Days after Purchaser's counsel,
Bachner, Tally, Polevoy & Misher LLP, receives two (2) fully executed
counterparts of this Agreement, shall be deposited in escrow with Capital
City Title Agency, Inc., as escrow agent ("Escrow Agent"), and shall be
placed in an interest bearing account with Huntington National Bank ("Escrow
Account").
2.1.2 The balance of the Purchase Price, together with the sum
attributable to Personal Property as set forth in the Bill of Sale annexed
hereto as Exhibit F shall be paid to Seller in certified funds or by wire
transfer of good funds on the Closing Date (as that term is hereinafter
defined).
2.2 All interest earned on the Escrow Money shall be retained in the
Escrow Account until the Earnest Money is paid out of such account in
accordance with this Agreement, at which time all accrued interest shall be
paid to Seller, unless this Agreement is terminated by Purchaser for default
by Seller or pursuant to any other right of Purchaser to terminate this
Agreement set forth herein, in which event all accrued interest shall be
paid to Purchaser. If such interest is paid to Seller for any reason other
than a default by Purchaser, it shall be credited to payment of a portion of
the Purchase Price.
3. Seller's Warranties. To induce Purchaser to enter into this
Agreement, Seller makes the following representations and warranties, each
of which is material and is relied upon by Purchaser. As used herein, the
phrases "to the best of Seller's knowledge", or "to its knowledge" or the
like, refers only to the actual knowledge of Clifford W. Habeck, Assistant
Vice President of Lutheran Brotherhood and Assistant Vice President of
Lutheran Brotherhood Real Estate Products Company and Seller need not have
conducted any investigation.
3.1.1 To the best of Seller's knowledge, Seller has not received any
notice from any state or local authority having jurisdiction over the
Property of any violation of any law, statute, ordinance, code, governmental
rule or regulation, or private covenant or restriction, affecting the
Property.
3.1.2 To the best of Seller's knowledge, Seller has not received any
notice of any liabilities which affect the Property or the Personal
Property, except ad valorem real estate taxes, special assessments and
utility bills, or notice of any litigation or threatened litigation with
respect to Seller or the Property or the Personal Property which may have an
adverse effect on the transaction contemplated by this Agreement, the
Property or the Personal Property or Seller's interest in the Property or
the Personal Property, or any pending or anticipated condemnation of any
part of the Property.
3.1.3 To the best of Seller's knowledge, Seller has not received any
notice of the existence, in, on or under the Property, of any Hazardous
Materials in violation of environmental law. "Hazardous Materials" shall
mean substances defined as "Hazardous Substances, Hazardous Materials or
Toxic Substances" in the Comprehensive Environmental Response Compensation
and Liability Act of 1980, as amended, (12 USC Sec. 6901 et. seq.), or in
any other Federal or State environmental law, statute, regulation, ordinance
or code. Seller shall cooperate fully with Purchaser and Purchaser's
representatives in investigating the history of the Property.
3.1.4 To the best of Seller's knowledge, Seller has not received any
notice of any work completed, commenced or contemplated, which will or may
result in any special assessments against the Property, other than special
assessments which are levied as of the Effective Date (as hereinafter
defined). Based solely upon the special assessment search in the Commitment
(as hereinafter defined) there are no outstanding special assessments
effecting the Property as of the date of the Commitment.
3.1.5 Lutheran Brotherhood Realty Fund I Limited Partnership, a
California limited partnership, ("Realty Fund") holds record title to the
Property solely as nominee of the Seller pursuant to the terms of Seller's
joint venture agreement and in such capacity is the fee owner of the
Property. Seller and Realty Fund have full and lawful power and authority,
on behalf of the Seller, to execute, deliver and perform this Agreement and
all documents which Seller is required hereby to execute, deliver and
perform, and to sell the Property and the Personal Property.
3.1.6 To the best of Seller's knowledge, the most current, correct and
complete schedule of tenancies and security deposits, as of the date of such
document, is as set forth on attached Exhibit B.
3.1.7 To the best of Seller's knowledge, the most current list of
service contracts, as of the date of such document , is as set forth on
attached Exhibit C.
3.1.8 To the best of Seller's knowledge, the financial operating
statement(s) for the Property that have been or will be delivered by Seller
to Purchaser do not materially mis-state the results of operation of the
Property for the periods reflected in such statements.
3.1.9 All lease commissions incurred in connection with Leases entered
into by Seller or its agents will be paid in full prior to closing. At
Closing there shall be no continuing or exclusive brokerage agreements as to
the Property or any of the space at the Property unless such agreements
shall have been approved in writing and assumed by Purchaser, in Purchaser's
sole discretion.
3.1.10 To the best of Seller's knowledge, Seller has no tradenames,
trademarks or copyrights used in connection with or applicable to the
Property, other than the Trade Name.
3.1.11 Seller and Realty Fund are not "foreign persons" as such term is
defined in Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended.
3.1.12 To the best of Seller's knowledge, the current schedule of
Personal Property owned by Seller, as of the date of such document, is as
set forth on attached Exhibit D.
3.1.13 Neither Seller nor, to the best of Seller's knowledge, any of
Seller's general partners is the subject of any existing or pending or (to
the best of Seller's knowledge) threatened or contemplated bankruptcy,
solvency or other debtor's relief proceeding.
3.1.14 To the best of Seller's knowledge, Seller has paid all taxes due
and payable with respect to the Personal Property.
3.2 The representations and warranties set forth in this Article 3 shall
be updated and deemed remade as of the Closing Date; and said
representations and warranties, as so remade, and the indemnity obligation
set forth below, shall survive the Closing for a period of six (6) months
after the Closing Date; provided, however, the representations set forth in
Sections 3.1.5, 3.1.11 and 3.1.13 hereof shall survive the Closing Date for
an unlimited period of time. As a condition precedent to Purchaser's
obligations at Closing, all of Seller's representations and warranties as
updated provided in this Section 3 shall be true and correct, in all
material respects, as of the Closing. Seller shall indemnify and hold
Purchaser harmless from and against any and all claims, actions, judgments,
liabilities, obligations, liens, damages, penalties, fines, costs and
expenses, including but not limited to attorneys' fees and court costs
(prior to trial, at trial and on appeal), foreseen or unforeseen, asserted
against, imposed on, or suffered or incurred by Purchaser (or the Property),
directly or indirectly arising out of or in connection with any breach or
untruth of the representations and warranties set forth in this Article 3,
subject to the applicable survival period, including without limitation such
representations and warranties as are set forth in Section 3.1.3 hereof.
Notwithstanding anything contained in this Agreement to the contrary, there
shall be no liability on the part of the Seller for breaches of any of the
representations, warranties and certifications which are made by Seller as
set forth herein (collectively the "Representations"), of which Purchaser
had actual knowledge before Closing. "Actual knowledge" of Purchaser shall
include the then present knowledge of Purchaser or its representatives of
facts or circumstances known or disclosed to Purchaser or which can be
reasonably obtained from the documents, inquiries, interviews, reports or
investigations provided to or made by Purchaser. If Purchaser has actual
knowledge of one or more breaches of Representations, then Purchaser shall
elect one of the following as its sole and exclusive remedy: (i) to close
this transaction (including without limitation Purchaser's right to commence
an action for specific performance of the sale of the Property and the
Personal Property), in which event such breaches of Representations shall be
deemed waived and Purchaser shall have no right to bring any lawsuit or
other legal action against Seller for such breaches of Representations or
(ii) to terminate this Agreement, upon which termination the Earnest Money
and all interest earned thereon shall be returned to Purchaser and neither
party hereto shall have any further obligations to the other party hereunder
other than the indemnity and confidentiality obligation set forth
hereinafter. Upon the election of one of the exclusive remedies in the
preceding sentence the other remedy shall be deemed waived and no longer
available to Purchaser, provided that if Purchaser has elected the remedy of
clause (i) in the preceding sentence, Purchaser shall not be deemed to have
waived its rights and remedies set forth elsewhere in this Agreement for any
matters other than breaches of such Representations. There shall be no
prohibition on Purchaser maintaining an action for damages against Seller
after the Closing if, after the Closing, Purchaser obtains actual knowledge
that any Representations are breached, subject, however, to the survival
periods set forth above.
EXCEPT FOR THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS
SECTION 3, PURCHASER WARRANTS AND ACKNOWLEDGES TO AND AGREES WITH SELLER
THAT PURCHASER IS PURCHASING THE PROPERTY, SUBJECT TO SECTION 4.1 AND
SECTION 10 HEREOF, IN ITS "AS-IS, WHERE IS" CONDITION "WITH ALL FAULTS" AS
OF THE CLOSING DATE AND SPECIFICALLY AND EXPRESSLY WITHOUT ANY WARRANTIES,
REPRESENTATIONS OR GUARANTEES, EITHER EXPRESS OR IMPLIED, AS TO ITS
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, MERCHANTABILITY, OR ANY OTHER
WARRANTY OF ANY KIND, NATURE OR TYPE WHATSOEVER FROM OR ON BEHALF OF SELLER.
EXCEPT FOR THE REPRESENTATIONS OF SELLER EXPRESSLY SET FORTH IN THIS SECTION
3, SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION,
ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING (A) THE
VALUE, NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT
LIMITATION, THE WATER, SOIL, AND GEOLOGY; (B) THE INCOME TO BE DERIVED FROM
THE PROPERTY; (C) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES
AND USES WHICH PURCHASER MAY CONDUCT THEREON, INCLUDING THE POSSIBILITIES
FOR FUTURE DEVELOPMENT OF THE PROPERTY; (D) THE COMPLIANCE OF OR BY THE
PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF
ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY; (E) THE HABITABILITY,
MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF THE PROPERTY; (F) THE MANNER OR QUALITY OF THE CONSTRUCTION OR
MATERIALS, IF ANY, INCORPORATED INTO THE PROPERTY; (G) THE MANNER, QUALITY,
STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY; (H) THE PRESENCE OR
ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR ADJACENT TO THE PROPERTY OR
ANY OTHER ENVIRONMENTAL MATTER OR CONDITION OF THE PROPERTY; OR (I) ANY
OTHER MATTER WITH RESPECT TO THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES
THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER CONTAINED IN
THIS SECTION 3, ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER WITH
RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT
SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH
INFORMATION AND MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS
OF SUCH INFORMATION. SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY
ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE
PROPERTY, OR THE OPERATION THEREOF FURNISHED BY ANY REAL ESTATE BROKER,
AGENT, EMPLOYEE, SERVANT OR OTHER PERSON, EXCEPT OF THE EXPRESS
REPRESENTATIONS SET FORTH IN THIS SECTION 3. PURCHASER FURTHER ACKNOWLEDGES
AND AGREES THAT PURCHASER IS A SOPHISTICATED AND EXPERIENCED PURCHASER OF
PROPERTIES SUCH AS THIS PROPERTY AND HAS BEEN DULY REPRESENTED BY COUNSEL IN
CONNECTION WITH THE NEGOTIATION OF THIS AGREEMENT. EXCEPT AS OTHERWISE
PROVIDED HEREIN, SELLER HAS NO AGREEMENT TO ALTER, REPAIR OR IMPROVE ANY OF
THE PROPERTY.
4. Seller's Covenants. Seller agrees and covenants with Purchaser as
follows:
4.1 Between the Effective Date and the Closing Date, Seller shall (i)
maintain and operate the Property and Personal Property in at least as good
condition as exists on the Effective Date, ordinary wear and tear of normal
use and damage by casualty or condemnation excepted, (ii) comply with the
terms of all Leases and perform any work required under any Leases or other
applicable agreements. (iii) make reasonable efforts in accordance with its
current business practice: to renew existing leases, to enter into new
leases for vacant units for a term not less than six (6) months (provided,
however, that existing tenants may be renewed on a month-to-month basis) and
not exceeding twelve (12) months at market rent, to file evictions and to
collect rents and other payments due from tenants thereof.
4.2 Between the Effective Date and the Closing Date, Seller shall keep
the Property and Personal Property insured against fire, lightning, theft,
vandalism, malicious mischief and all other risks and casualties covered by
standard extended coverage and "all-risk" endorsements, in an amount equal
to its full replacement cost.
4.3 Between the Effective Date and the Closing Date, except in the event
of an emergency, Seller shall not enter into any new management agreement or
other Contract relating to the Property, nor modify any existing Contract,
without Purchaser's prior written consent, unless the Contract may be
terminated at any time, without cause, and without penalty to Purchaser on
not more than thirty (30) days' written notice.
4.4 To the best of Seller's ability, Seller shall cause all Seller's
work or other obligations as landlord required to be performed prior to
Closing Date pursuant to Leases to be fully performed and paid for before
the Closing Date. All Seller's work performed or materials furnished up to
the Closing which are or may become a lien on the Property shall be paid for
at or prior to the Closing, and the provisions of this sentence shall
survive the Closing for a period of one hundred and five days.
4.5 Seller further agrees that between the Effective Date and the
Closing Date, Seller shall:
4.5.1 Place any apartment now vacant or becoming vacant in the same
rentable condition ready for occupancy in the manner previously implemented
by Seller.
4.5.2 Pay, in the normal course of business, and, in any event, prior to
Closing, sums due for work, materials or services furnished of otherwise
incurred in the ownership and operation of the Property and Personal
Property up to the Closing Date.
4.5.3 Not grant or transfer any interest in the Property or Personal
Property including any air and development rights.
4.5.4 Make reasonable efforts to comply with all known violations of any
governmental requirements applicable to the Property or the Personal
Property. Seller shall immediately deliver to Purchaser any notice of such
a violation hereafter received. If such a violation is discovered prior to
the Closing Date, including but not limited to any violation disclosed by a
code compliance audit or certificate of occupancy inspection, Seller shall
have the right, but not the obligation, to correct the violation prior to
the Closing Date.
4.5.5 Promptly advise Purchaser of any litigation or governmental
proceeding to which Seller becomes a party affecting the Property or the
Personal Property. There shall be no such litigation or proceeding pending
at Closing having a potential adverse effect upon the Property or the
Personal Property or Seller's ability to convey the Property or the Personal
Property to Purchaser.
4.5.6 Not undertake or permit any structural modification or structural
additions to the Property;
4.5.7 Not create (or agree to create) any exception to or covenant,
restriction, easement or other lien or security interest on or affecting the
Property or the Personal Property which will not be released at Closing.
4.5.8 Terminate, effective on Closing, all employees or agents employed
by Seller at or in connection with the Property, without cost or expense to
Purchaser, including but not limited to Seller's managing agent.
4.5.9 Terminate prior to Closing or (at Purchaser's election) assign on
the Closing Date any litigation or eviction proceedings against any Tenant
which is ongoing as of such date.
4.5.10 Afford Purchaser and its representatives full access to the
Property and to Seller's books, records and files relating to the Property,
at reasonable times requested by Purchaser up to and including the Closing
Date.
4.5.11 Not apply any Tenant's security deposit to the discharge of such
Tenant's obligations unless such Tenant has vacated such Tenant's demised
premises, except as provided in Section 7.5.5 hereof.
4.5.12 Cause to be released and discharged of record any encumbrances or
liens, if any, of which Purchaser gives written notice to Seller affecting
any of the Personal Property described on the schedule of Personal Property
annexed hereto on Exhibit D or any other Personal Property owned by Seller
and which is subject to this Agreement . Purchaser shall provide Seller
with copies of the Purchaser's UCC or other due diligence searches regarding
the Personal Property, obtained at Purchaser's expense during the Inspection
Period, which Seller shall be entitled to rely upon.
4.5.13 There shall be no real estate tax or personal property tax
protests or proceedings affecting the Property or the Personal Property,
respectively, as of the Closing Date, unless such proceedings are approved
in writing and assumed by Purchaser.
4.5.14 Both Seller and Realty Fund, on behalf of Seller have full and
lawful power and authority to execute, deliver and perform this Agreement
and all documents which Seller and/or Realty Fund, respectively, is required
hereby to execute, deliver and perform, and to sell the Property and the
Personal Property
4.5.15 All lease commissions incurred in connection with Leases entered
into by Seller or its agents will be paid in full prior to closing. At
Closing, there shall be no continuing or exclusive brokerage agreements as
to the Property or any of the space at the Property unless such agreements
shall have been approved in writing and assumed by Purchaser, in Purchaser's
sole discretion.
As a condition precedent to Purchaser's obligations at Closing, Seller
shall have complied in all material respects with the covenants in this
Section 4. The conditions precedent in this Section 4 shall not be
construed as representations or warranties and in the event Seller has not
complied with the covenants in this Section 4 in any respect, there shall be
no liability on behalf of Seller for the non-compliance of those covenants,
provided, however, if Seller intentionally breaches any covenants in this
Section 4 in any material respect, Purchaser may elect one of the following
as its sole and exclusive remedy: (i) to commence an action for specific
performance of the material covenants which Seller intentionally so breached
in this Section 4 together with the specific performance of the sale of the
Property under this Agreement, in which event all such non-compliance with
any other covenants not so raised shall be deemed waived, or (ii) to
terminate this Agreement, in which event the Earnest Money and all interest
earned thereon shall be returned to Purchaser and neither party hereto shall
have any further obligations to the other party hereunder other than the
indemnity and confidentiality obligations set forth herein. Upon the
election of the one of the exclusive remedies in the preceding sentence the
other remedy shall be deemed waived and longer available to Purchaser,
provided that if Purchaser has elected the remedy of clause (i) in the
preceding sentence, Purchaser shall not be deemed to have waived its rights
and remedies set forth elsewhere in this Agreement for any matters other
than such covenants intentionally so breached. Provided however that
Purchaser must commence any action for specific performance under this
Agreement against Seller within six (6) months of the Effective Date, or it
shall be deemed to have waived its rights under clause (i) above.
4.6 Seller shall not commence any action against a Tenant after the
Closing for past due rents, or any other obligation under the Tenant's
lease. The preceding sentence shall survive Closing.
5. Review and Inspection by Purchaser.
5.1 Purchaser's obligation to perform under this Agreement is hereby
made expressly contingent and conditional upon the occurrence, fulfillment,
satisfaction or performance of each of the following conditions (hereinafter
called "Purchaser's Conditions") on or before a date Twenty-Five (25) days
after the Effective Date (herein called "Inspection Period"):
5.1.1 The physical condition of the Property and the Personal Property,
the availability of adequate utilities and services thereto, and the
conformance thereof with applicable laws, statutes, ordinances, codes,
orders, decrees, rules and regulations (hereinafter called "Governmental
Requirements"), being acceptable to Purchaser, in Purchaser's sole
discretion; and the Property being free of pollutants, hazardous waste and
other Hazardous Materials, as determined by Purchaser in Purchaser's sole
discretion. Purchaser shall order and obtain its own environmental
assessments regarding the condition of the Property. Seller has and shall
continue to provide Purchaser with access, during normal business hours, to
all existing engineering reports, surveys, plans, specifications,
warranties, guaranties, certificates, licenses, permits, authorizations,
approvals and other records relating to the physical condition or use of the
Property and the Personal Property which Seller has in its possession, if
any. Purchaser may make copies of any thereof at Purchaser's sole cost and
expense. Purchaser may also, at any time during the Inspection Period,
after making arrangements 24 hours in advance thereof with Seller's property
manager, itself or by its agents, consultants or representatives, enter upon
and inspect the Property and all records kept thereon during normal business
hours; provided, however, that no such entry or inspection shall interfere
with the operation of the Property by Seller or the rights of Tenants of the
Property or cause any intentional or unintentional physical damage to the
Property, unless such damage is promptly repaired by Purchaser to Seller's
reasonable satisfaction. Any such entry or inspection shall be at the sole
and entire cost, risk and expense of Purchaser. Purchaser agrees to
indemnify Seller against, and to hold Seller harmless from, any and all
costs, expenses, claims, causes of action and/or damages resulting from any
such entry upon or inspection of the Property, whether from or for bodily
injury, personal injury, death, property damage or otherwise, including but
not limited to damage to the Property and to the property of Tenants
thereof, and agrees to pay all costs of defending any claims therefor by any
third party, and of prosecuting any claims therefor by Seller, including
court costs and reasonable attorneys' fees. The agreement set forth in the
preceding sentence hereof shall survive and remain enforceable after the
closing (hereinafter called "Closing") of the sale of the Property pursuant
hereto and the execution and delivery of the Deed (as that term is
hereinafter defined) or any other termination of this Agreement. Purchaser
shall not contact Tenants of the Property except through Seller or its
property manager after providing Seller with 24 hours advance notice.
During the Inspection Period, Seller shall cooperate with Purchaser in its
inspection of the Property and the Personal Property, including but not
limited to, furnishing to Purchaser such existing information, materials and
documents as Purchaser may reasonably request and making its managing agent
of the Property and other on-site employees available to Purchaser.
Purchaser acknowledges that Purchaser has been given access to and entered
upon the Property for inspection prior to the Effective Date and Purchaser
agrees that the indemnity obligations set forth above shall retroactively
apply to any such early entry or inspection by Purchaser.
5.1.2 All existing Leases, Contracts and agreements relating to the
Building, the current rent roll from the Building (hereinafter called "Rent
Roll"), and all books, records and files of Seller maintained with Seller's
third party property manager relating to the operation of the Property and
the Personal Property and the income and expenses thereof (hereinafter
called "Records"), being acceptable to Purchaser in its sole discretion.
Seller has provided to Purchaser and to its agents, consultants or
representatives copies of the Contracts and the Rent Roll, and has and shall
continue to provide access to Purchaser and such agents, consultants and
representatives, during normal business hours, to the original Leases and to
the Records for Purchaser's review thereof. Purchaser acknowledges prior
receipt of the Records including to the extent such exist and are in
Seller's possession the following: (i) copies of Licenses, building
permits, certificates of occupancy, (ii) architectural drawings and plans
and specifications which are available to Seller with respect to the
Buildings, (iii) maintenance costs of the Property and the Personal Property
for the past three (3) years, or such lesser period as the Property may have
been owned by Seller, (iv) a copy of tax bills, (v) copies of any reports of
a licensed pest control contractor reporting as to evidence of the presence
of wood destroying insects or other infestation at the Property, (vi) copies
of all reports, studies, and other written material in Seller's possession
relating to the determination as to whether any Hazardous Materials exist at
the Property and as to any work performed or proposed in connection with any
Hazardous Materials at any time located at the Property, and (vii) a summary
of managerial costs for the past three (3) years. If Purchaser, its
agents, consultants or representatives enter upon the Property or into the
offices of Seller's property manager to update its review of the Records,
such entry shall be made only during normal business hours, after making
prior arrangements therefor with Seller or its property manager, and
Purchaser's agreements to indemnify and hold harmless set forth in Section
5.1.1 hereof shall apply to such entry. Purchaser acknowledges and agrees
that the confidentiality obligations of Purchaser in Section 5.3
retroactively applies to all Records, Leases, documents and information
received from Seller or obtained from the Property prior to the Effective
Date.
5.1.3 Seller has delivered, at Seller's expense, a commitment for an
owner's policy of title insurance (ALTA 1992 Form) ("Commitment") (i) issued
by Capital City Title Agency, Inc. as agent for First American Title
Insurance Company ("Title Insurer") covering the Land and Buildings, (ii)
with the amount of coverage equal to the full Purchase Price, (iii)
containing tax and special assessment searches with respect to the Property,
and (iv) showing title to the Property in the name of Lutheran Brotherhood
Realty Fund I Limited Partnership, subject only to such encumbrances as
Purchaser may accept in its sole discretion. The Commitment shall include a
complete copy of each document listed as an exception to title or otherwise
referred to therein. Purchaser shall be allowed to the end of the
Inspection Period to examine said title and the making of any objections
thereto, said objections to be made in writing or deemed to have been
waived; provided, however, that Purchaser may make objections to title after
that date, if the matters giving rise thereto come to its attention for the
first time thereafter (all of Purchaser's objections to title given in
accordance with this sentence are herein called "Non-Permitted Exceptions").
If any objections to title are made, Seller, at Seller's option, shall be
allowed the number of days remaining until the Closing Date in which to
attempt to cure said objections. If title is not made marketable by Seller,
or the objections thereto are not insured over by Title Insurer or waived by
Purchaser, prior to the Closing Date, then Purchaser may, at its option, and
as its sole remedies, either (y) terminate this Agreement by written notice
to Seller, in which event all Earnest Money, plus all interest earned
thereon, shall be paid to Purchaser, and neither party hereto shall have any
further liabilities or obligations to the other party hereunder other than
the indemnity and confidentiality obligations set forth herein; or (z) elect
to waive said objections and take title to the Property subject thereto,
without any reduction in the Purchase Price. Notwithstanding anything
contained herein to the contrary, Seller shall be obligated to cause to be
removed from record title or insured over by Title Insurer at Seller's cost
and expense, (i) any Non-Permitted Exceptions to record title which are
caused by, result from or arise out of Seller's intentional default under
its obligations under this Agreement between the Effective Date and the
Closing Date, including but not limited to Seller's failure to pay real
estate taxes, and (ii) any lien, charge or encumbrance on the Property
and/or Personal Property which secures a debt created by Seller, including,
but not limited to a mortgage, deed of trust or other security interest, a
mechanic's lien, a materialman's lien or Seller's confession of any judgment
which creates a lien against the Property and/or Personal Property. (Any
Non-Permitted Exception described in clause (i) or (ii) of the immediately
preceding sentence is herein called a "Seller Caused Non-Permitted
Exception.") If Seller fails to remove or cause the Title Insurer to insure
over any Seller Caused Non-Permitted Exception, Purchaser, nevertheless, may
elect (at or prior to the Closing) to consummate the transaction provided
for herein subject to any such Seller Caused Non-Permitted Exception as may
exist as of the Closing with a credit against the balance of the Purchase
Price payable at the Closing equal to (y) the sum reasonably agreed by
Seller and Purchaser which is necessary to remove such Seller Caused Non-
Permitted Exception which can be satisfied by a liquidated amount, or (z)
for any such Seller Caused Non-Permitted Exception which cannot be satisfied
by payment of a liquidated amount, a reasonably estimated reduction in the
fair market value of the Property and/or Personal Property as agreed upon
the Seller and Purchaser. If the parties can not so agree on the reasonable
reduction to the Purchase Price, then Purchaser may elect one of the
following as its sole and exclusive remedy: (i) to commence an action for
specific performance of the sale of the Property and/or Personal Property
under this Agreement and such reasonable credit against the balance of the
Purchase Price for the Seller Caused Non-Permitted Exception shall be
reasonably determined by a court of competent jurisdiction or (ii) to
terminate this Agreement, thereupon, this Agreement shall be terminated in
which case all Earnest Money including interest shall be returned to
Purchaser and the parties shall be relieved of all further obligations
hereunder, except for the Indemnity and confidentiality obligations herein
contained. Upon the election of the one of the exclusive remedies in the
preceding sentence the other remedy shall be deemed waived and longer
available to Purchaser provided that if Purchaser has elected the remedy of
clause (i) in the preceding sentence, Purchaser shall not be deemed to have
waived its rights and remedies set forth elsewhere in this Agreement for any
matters other than such Seller Caused Non-Permitted Exceptions. Provided
however that Purchaser must commence any action for specific performance
under this Agreement against Seller within six (6) months of the Effective
Date, or it shall be deemed to have waived its rights under clause (i)
above.
5.1.4 Promptly after the date hereof, Purchaser shall order, at
Purchaser's expense, an updated ALTA/ACSM survey of the Property ("Survey"),
certified as of a current date in favor of Purchaser and Title Insurer,
prepared by a registered land surveyor acceptable to Purchaser. The Survey
shall be sufficient detail to permit the Title Insurer to delete the
standard printed survey exception in the title insurance policy.
5.2 Seller agrees to cooperate with Purchaser in Purchaser's efforts to
fulfill, satisfy and/or perform Purchaser's Conditions. Seller shall afford
Purchaser and its representatives full access to the Property and to
Seller's records relating to the Property, at reasonable times. All of the
Purchaser's Conditions are for the benefit of Purchaser and may be waived in
writing by Purchaser at any time prior to the expiration of Inspection
Period. If any of the Purchaser's Conditions has not occurred or have not
been fulfilled, satisfied or performed as determined by Purchaser, in
Purchaser's sole discretion, before the expiration of the Inspection Period,
Purchaser may so notify Seller, in writing, on or before the end of the
Inspection Period, in which event all Earnest Money (and any interest earned
thereon) shall be paid to Purchaser, and this Agreement shall be deemed to
be null, void, terminated and of no further force or effect, except as
herein to the contrary expressly provided. If such notice is not so given
on or prior to the Inspection Period with respect to any of the Purchaser's
Conditions, said Purchaser's Conditions shall be deemed to be waived and,
subject to the other provisions of this Agreement, Purchaser shall be
required to close in accordance herewith.
5.3 Purchaser agrees to keep all information relating to the Property
provided to it by Seller or obtained by Purchaser in the course of its
review and inspection provided for herein confidential until the Closing has
occurred, provided that Purchaser may disclose any of such information to
its attorneys, accountants, engineers and other advisors, who are involved
with Purchaser's acquisition and investigation of the Property, and to
return to Seller all copies and information relating to the Property
provided to Purchaser by Seller or made by Purchaser in the course of said
review and inspection, if Closing does not close for any reason other than a
default by Seller. The obligations of the Purchaser under this Section 5.3
shall survive any termination of this Agreement
5.4 It shall be a condition precedent to Purchaser's obligations to
close the transaction which is the subject of this Agreement that the
Property and the Personal Property be in substantially the same material
physical and operating condition at Closing as it is in on the earlier to
occur of the (i) expiration of the Inspection Period, or (ii) last day of
Purchaser's inspection of the Buildings, subject, however, to normal wear
and tear. Seller shall afford Purchaser access to the Property and the
Personal Property and to Seller's records relating to the Property and the
Personal Property at reasonable times requested by Purchaser up to and
including the Closing Date to verify that no material changes have occurred.
6. Intentionally Left Blank
7. Closing
7.1 Unless changed as herein provided or by mutual agreement, the
Closing shall take place at the office of Escrow Agent, Suite 3100, 41 South
High Street, Columbus Ohio, commencing at 9:00 A.M. ten (10) days after the
expiration of Purchaser's Inspection Period ("Closing Date"). Provided,
however, the parties agree that Closing Date shall not occur during the
first 10 days of any calendar month and in such event the parties agree to
postpone the closing date until after the 10th day of the month.
7.2 At the Closing, Seller shall execute or cause to be executed by the
record owner or other party as applicable and, where appropriate,
acknowledge and/or deliver the following documents, to be prepared by
Seller's counsel and to be in the forms annexed hereto, or if not so
annexed, in form and substance mutually satisfactory to Seller and
Purchaser:
7.2.1 A limited warranty deed in recordable form ("Deed"), subject only
to encumbrances and to such other exceptions which Purchaser has accepted or
is deemed to have accepted pursuant to Section 5.1.3 hereof in the form of
Exhibit E annexed hereto ("Permitted Encumbrances"), which Deed shall
contain the legal description of the boundaries of the Land as shown on the
Purchaser's Survey of the Property.
7.2.2 A limited warranty bill of sale conveying to Purchaser fixtures,
equipment, appliances, furnishings and all Personal Property, owned by
Seller, located at and used in connection with the Property in the form of
Exhibit F annexed hereto.
7.2.3 Evidence satisfactory to Purchaser and Title Insurer that this
Agreement, the Deed and all other Closing documents have been validly
authorized, executed and delivered by and on behalf of Seller, and any
affidavits, indemnities, undertakings or other agreements reasonably
approved by Seller and reasonably required by Title Insurer to issue the
Title Policy (as hereinafter defined).
7.2.4 The originals of all Leases and Contracts and copies of all other
files, books and records relating to the Property, to the extent possessed
by Seller, including copies of all site plans, blueprints, plans,
specifications and operating manuals relating to the Property and copies of
all building permits, certificates of occupancy and other records relating
to zoning, utilities and construction of the Improvements on the Property,
together with an assignment by Seller of all of its right, title and
interest therein to Purchaser.
7.2.5 All documents required to be delivered by Seller to Purchaser
pursuant to any other provisions of this Agreement.
7.2.6 Assignment of all of the Leases, of any guarantees thereof, of the
security and other deposits and all advance rental payments collected or
received by Seller which Seller is required to credit to Purchaser
hereunder, in the form of Exhibit G annexed hereto. Purchaser shall join in
the assignment document.
7.2.7 Assignment of all Contracts; of all warranties, guarantees,
permits, Licenses and certificates applicable or relating to the Property,
to the extent assignable and not otherwise terminated in accordance
herewith, and of all rights of Seller to use the name "The Village at
Worthington Green" and any other name(s) and logotype(s) used by Seller in
connection with the Property in the form Exhibit H annexed hereto.
Purchaser shall join in the assignment document to assume all the Seller's
obligations after the Closing.
7.2.8 Transferor's certifications stating that Seller and Lutheran
Brotherhood Realty Fund I Limited Partnership are not foreign persons,
foreign corporations, foreign partnerships, foreign trusts or foreign
estates (as those terms are defined in the United States Internal Revenue
Code and the Income Tax Regulations promulgated thereunder ["Code"]) and
setting forth such other information as may be required by Section 1445(b)
(2) of the Code or any amendment or replacement thereof in the form of
Exhibit I annexed hereto.
7.2.9 A Seller's affidavit stating that there are no outstanding,
unsatisfied judgments, tax liens or bankruptcies against or involving Seller
or the Property, that there has been no skill, labor or material furnished
to the Property for which mechanics' liens could be filed, and that there
are no other unrecorded interests in the Property (except Leases which
Seller has provided to Purchaser).
7.2.10 A Tenant Form Letter in the form of Exhibit K annexed hereto
signed by the landlord of each Lease, which letter shall be delivered to
each of the Tenants by Purchaser.
7.2.11 An updated rent roll for the Property in the form of the Rent
Roll annexed hereto as Exhibit B, certified to the best of Seller's
knowledge to be true and correct as of the Closing Date.
7.2.12 All keys and combinations to all locks on the Buildings.
7.2.13 A certificate from Seller that no proceeding for the reduction of
real or personal property taxes is on-going as of the Closing Date which
certification will survive for a period of 6 months.
7.2.14 A telephone transfer form obtained by Purchaser for mutual
execution by the parties.
7.2.15 A receipt from CB Commercial as to the payment of the commission
outlined in Section 8.2 hereof and a release by CB Commercial to TGM Realty
Corp. #5 and/or its assignee hereunder from any other claims for brokerage
commissions in connection with the transaction which is the subject of this
Agreement in form prepared by Purchaser.
7.2.16 A Post Closing Adjustment Letter in the form of Exhibit J annexed
hereto.
7.2.17 Seller shall deliver to Purchaser's Counsel, in escrow, all
Closing documents to be prepared by Seller and signed by Purchaser not less
than five (5) days prior to the Closing Date for execution by Purchaser.
Purchaser's Counsel shall deliver such executed original documents signed by
Purchaser, in escrow, to the Escrow Agent, to be held in escrow, pending
instructions from Seller to Escrow Agent as to delivery of the documents at
the Closing.
7.3 At the Closing, Seller and Purchaser shall cause to be delivered to
the Escrow Agent such other instruments and documents as may be necessary
and appropriate in order to complete the Closing of the transaction which is
the subject of this Agreement. It shall be a condition precedent to
Purchaser's obligation to close this transaction that the Title Insurer
issues to Purchaser at Closing an ALTA owner's title insurance policy (ALTA
Form 10/17/92) with extended coverage, provided that the exclusion from
coverage for Seller's bankruptcy, insolvency and similar creditors' rights
laws shall be omitted from such policy issued by the Title Insurer (the
"Title Policy"), which Title Policy shall (i) be effective as of the time of
the recordation of the Deed, (ii) insure Purchaser in the full amount of the
Purchase Price, and (iii) not contain any Non-Permitted Exceptions.
7.4 On the Closing Date, Purchaser shall direct the Escrow Agent to pay
to Seller the Purchase Price and the sum attributable to the Personal
Property as set forth in the Bill of Sale, and Seller shall deliver
possession of the Property to Purchaser, subject only to Permitted
Encumbrances, including the rights of Tenants, as tenants only, under
Leases.
7.5 Seller and Purchaser shall execute a closing statement to be
prepared by the Escrow Agent upon which the following adjustments shall be
made as of the close of business on the day immediately preceding the
Closing (the "Adjustment Date") at the Closing:
7.5.1 Rents, as and when collected shall be prorated as of the
Adjustment Date. If as of the Adjustment Date, there are rents owed by
Tenants for the month in which the Closing occurs, then the first monies
received from said Tenant or Tenants shall be received on account of or in
payment of such past due rents and (i) if Purchaser receives said past due
rents, Seller's aforesaid share thereof shall be remitted by Purchaser to
Seller, and (ii) if Seller receives such past due rents, Purchaser's
aforesaid share thereof shall be promptly remitted by Seller to Purchaser.
With respect to any arrearages for periods prior to the month in which the
Closing occurs, Purchaser shall pay such arrearages to Seller as and when
collected from the monies received from such Tenant provided such Tenant is
otherwise current in its rent as of the month Purchaser receives such
payment of arrearages. With respect to rents for any period subsequent to
the month in which the Closing occurs that may be received by Seller, Seller
shall promptly remit such rents to Purchaser. Purchaser shall provide
monthly collections and delinquency reports to Seller for a period of six
months after Closing with respect only to Tenants having arrearages for
periods prior to the month in which the Closing occurs and still in
occupancy of the demised premises as of the Closing Date. Purchaser shall
not, verbally or in writing, release or waive any such past due rents owed
to Seller, but Purchaser shall not be required to bring legal actions
against Tenants for such past due rents owed to Seller.
7.5.2 All real estate taxes and installments of special assessments
levied in 1995 which are to be paid in 1996 shall be prorated between the
parties on a 365 day year basis as of the date one year before the actual
Adjustment Date based upon the applicable tax bill, such proration to be
final. Purchaser shall be responsible for the portion of 1995 taxes and
installments of special assessments payable for the period including and
after the date one year before the actual Adjustment Date, as well as taxes
and installments of special assessments levied with respect to the 1996 tax
year and thereafter. Purchaser shall pay all special assessments, if any,
payable with respect to the 1996 tax year and in the years thereafter.
7.5.3 Amounts paid or payable in respect of any Contracts assigned to
Purchaser pursuant to the Assignment of Contracts in the form of Exhibit H
annexed hereto, including but not limited to, any up-front "bonus" or
retainer payments made in consideration of entering into any Contract (which
up-front "bonus" or retainer payments, if any, shall be prorated as of the
Adjustment Date based upon the unexpired term of the Contract).
7.5.4 All other operating expenses of or for the Property shall be
prorated as of the Adjustment Date. Seller shall cause to be paid all
charges for deliveries made and services rendered and all other operating
costs of the Property up to the Adjustment Date. Any items on order but
undelivered as of the Adjustment Date will be reviewed and accepted or
canceled in Purchaser's discretion. Final readings and final billings for
utilities will be made, if possible as of the Adjustment Date. Seller shall
also cause to be paid all outstanding amounts due as of such reading.
Seller shall also be entitled to any applicable refunds of security deposits
with any utility companies. If final readings and billings cannot be
obtained as of the Adjustment Date, the final bills, when received, shall be
prorated based upon the number of days Seller owned the Property in such
final billing period. Seller shall be responsible for all management and
leasing fees under Seller's property management contracts and all of
Seller's property management contracts shall terminate on the Closing Date.
Except as set forth in Section 3.1.9 hereof, Purchaser shall be responsible
for all expenses of or for the Property accrued or applicable to the period
on or following the Adjustment Date.
7.5.5 Seller shall credit to Purchaser the amount of all damage, escrow,
security or pet deposits collected or received by Seller with respect to any
Tenants of the Property and which belong to such Tenants pursuant to their
Leases or in accordance with law, including any required interest accrued
thereon as of the Closing Date which must be paid to such Tenants pursuant
to their Leases or any applicable statute. Notwithstanding the above,
Purchaser agrees that Seller may retain and not credit to Purchaser up to
four tenant deposits for Tenants who are delinquent in the payment of their
rent for any month prior to the month in which Closing occurs in return for
Purchaser being released from any responsibility to Seller for collecting
such delinquent amounts.
7.5.6 If at any time any of the amounts to be apportioned under Sections
7.5.3 or 7.5.4 hereof cannot be calculated with complete precision because
the amount or amounts of one (1) or more items included in such calculation
are not then known, such calculation shall be made on the basis of
reasonable estimates by Seller and Purchaser of the amount or amounts of the
item or items in question, subject to adjustment (by additional payment by
Purchaser to Seller or by refund from Seller to Purchaser) when the actual
amount or amounts of such item or items becomes known. Promptly after the
actual amount of any such item becomes known to either party hereto, such
party shall notify the other thereof and shall include in such notice the
amount of any required adjustment. If such adjustment requires an
additional payment by Purchaser to Seller, Purchaser shall make such payment
to Seller simultaneously with its giving of, or within twenty (20) days
after its receipt of, such notice, as the case may be. If such adjustment
requires a refund by Seller to Purchaser, Seller shall make such refund
simultaneously with its giving of, or within twenty (20) days after its
receipt of, such notice, as the case may be. The obligations of this
Section 7.5.6 shall survive and remain enforceable after the Closing of the
sale of the Property for a period of six months.
7.5.7 If such prorations result in a payment due to Purchaser, then
Purchaser shall receive credit toward the portion of the Purchase Price
payable at Closing. If such prorations result in a payment due Seller, then
the same shall be paid to Seller in addition to the portion of the Purchase
Price and the sum attributable to the Personal Property as set forth in the
Bill of Sale which is payable at Closing. The parties hereto shall endeavor
to prepare a schedule of prorations no less than five (5) days prior to
Closing.
7.6 Seller shall pay the abstracting and Commitment costs.
7.7 Seller shall pay the state transfer tax ($1 per $1,000.00) due with
respect to the Deed.
7.8 Any closing fee or escrow fee charged by the Escrow Agent or Title
Insurer (not to exceed $500.00) shall be paid equally by Seller and
Purchaser.
7.9 Purchaser shall pay the recording fees for the Deed and the title
premium due with respect to the Title Policy and any endorsements to the
Title Policy required by Purchaser. Seller shall pay all recording fees for
documents required to be recorded to clear title, if any.
7.10 Purchaser shall pay the $183,425.00 brokerage commission to CB
Commercial at Closing in accordance with Section 8.2.
7.11 Each party shall pay the fees of its own attorneys and accountants
incurred in connection with the negotiation, execution and performance of
this Agreement.
7.12 Purchaser agrees to provide its own casualty, liability and other
insurance coverage for the Property and Personal Property on the Closing
Date and upon the completion of the Closing, Seller may cancel and terminate
all of its casualty, liability and other insurance coverage relating to the
Property .
8. Miscellaneous.
8.1 All the terms of this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the respective legal representatives,
successors and assigns of Seller and Purchaser; provided, however, that
Purchaser may not assign its rights hereunder without the prior written
consent of Seller. Notwithstanding the foregoing, Purchaser shall have the
right to assign this Agreement to an entity which is wholly owned by
Purchaser or to any other entity which is wholly owned by the Public
Employees Retirement System of Ohio which assignee will assume and be bound
by all obligations of Purchaser under this Agreement. In the event of any
such assignment and assumption, Seller agrees to execute any documents
required to be delivered under this Agreement to or in the name of
Purchaser's assignee and agrees that all surviving representations and
warranties of Seller hereunder shall be deemed to run in favor of, and be
enforceable by said assignee as if it were the Purchaser hereunder. The
provisions of this Section shall survive the Closing.
8.2 Each of the parties hereto represents that such party has not
incurred and is not paying any brokerage fee or commission, finder's fee or
other selling commission or fee as a result of the transaction described
herein, except that Purchaser has agreed to pay a brokerage fee or
commission to CB Commercial in the event Closing occurs in the amount of
$183,425.00, which amount Seller represents to Purchaser is the full amount
of the commission owed to CB Commercial in connection with this transaction,
and each party hereto agrees to indemnify the other against, and to hold the
other harmless from, any claim for any such brokerage fee or commission,
finder's fee or other selling commission or fee incurred as a result of the
agreements or actions of the indemnifying party, and any costs and expenses
incurred in defending against any such claim, including court costs and
reasonable attorneys' fees. The representations and agreements set forth in
this Section 8.2 shall survive the Closing or earlier termination of this
Agreement.
8.3 Any notice, request or other communication required or provided to
be given under this Agreement shall be in writing signed by the party giving
the same or by its attorneys, and shall be deemed sufficiently given when
(i) delivered personally upon receipt or (ii) deposited and mailed by
certified or registered mail, return receipt requested, postage prepaid, or,
(iii) delivered to Federal Express, UPS or other similar overnight courier
service, or (iv) transmitted by fax, provided such fax transmission is
confirmed within one Business Day thereafter in the manner set forth in
either clause (i), (ii) or (iii) of this sentence, addressed as follows:
To Seller: Lutheran Brotherhood
Attention: Clifford W. Habeck
625 Fourth Avenue South
Suite 1030
Minneapolis, Minnesota 55415
Fax: (612) 340-8458
To Purchaser: TGM Realty Corp. #5
c/o TGM Associates L.P.
650 Fifth Avenue, 28th Floor
New York, New York 10019
Attn: Thomas Gochberg
Fax: (212) 399-6310
With a copy to: Alan Linder, Esq.
Bachner, Tally, Polevoy & Misher LLP
380 Madison Avenue
New York, New York 10017-2590
Fax: (212) 682-5729
If required to Escrow Agent Capital City Title Agency, Inc.
Suite 3100
41 South High Street
Columbus, OH 43215-6194
or to such other party or such other address in the United States of
America as such party, by notice given as herein provided at least ten (10)
days prior to the effective date of said change or addition of address,
shall designate; provided, however, that no party hereto may require notice
to be sent to more than two (2) addresses. Any notice given in any other
manner shall be effective only upon receipt by the addressee.
8.4 This Agreement constitutes the entire and complete agreement of the
parties hereto with respect to the Property, shall supersede all prior
agreements (including any letter of intent) with respect thereto, and may be
modified only in writing. If any term or provision of this Agreement or any
application thereof shall be invalid or unenforceable, the remainder of this
Agreement and any other application of such term or provision shall not be
affected thereby. This Agreement shall be construed and interpreted under
and governed by the laws of the State of Ohio. This Agreement or any
memorandum of this Agreement shall not be recorded in any public record
relating to the Property.
8.5 All Exhibits which are annexed to this Agreement are part of this
Agreement and are incorporated herein by reference.
8.6 The provisions of this Agreement are for the sole benefit of the
parties to this Agreement and their successors and assigns and shall not
give rise to any rights by or on behalf of anyone other than such parties.
8.7 This Agreement may be executed in any number of counterparts, each
of which shall, when executed, be deemed to be an original and all of which
shall be deemed to be one and the same instrument.
8.8 Seller will, whenever and as often as it shall be reasonably
requested so to do by Purchaser, and Purchaser will, whenever and as often
as it shall be reasonably requested so to do by Seller, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, any and
all conveyances, assignments, correction instruments and all other
instruments and documents as may be reasonably necessary in order to
complete the transaction which is the subject of this Agreement and to carry
out the intent and purposes of this Agreement. All such instruments and
documents shall be satisfactory to the respective attorneys for Purchaser
and Seller in the exercise of their reasonable discretion. The provisions
of this Section shall survive the Closing.
8.9 All days or time periods described in this Agreement shall be based
upon calendar days. If the date for performance of any act pursuant to this
Agreement is not a Business Day, then such act shall be performed on the
next succeeding Business Day. The term "Business Days" shall mean all days,
except Saturdays, Sundays and all days observed by the Federal Government as
legal holidays.
8.10 The Article headings or captions appearing herein are for
convenience only, are not a part of this Agreement and are not to be
considered in interpreting this Agreement.
8.11 In the event that any litigation arises under this Agreement, the
prevailing party (which term shall mean the party which obtains
substantially all of the relief sought by such party) shall be entitled to
recover, as a part of its judgment, reasonable attorneys' fees. In the
event Purchaser files an action for specific performance against Seller
which is dismissed prior to judgment,Seller shall be entitled to recover all
reasonable attorneys' fees in defending said action, unless such dismissal
was a result of Seller having completed the payment or performance of the
obligation that is the subject of the specific performance action after the
commencement of such action.
8.12 Any document executed and delivered by Worthington Green
Associates, a Minnesota joint venture, need only be executed by Realty Fund
as managing venturer of Worthington Green Associates and shall also be
binding upon said joint venture. This Section 8.12 shall survive the
Closing.
9. Default; Termination.
9.1 If Closing does not occur as and when provided in this Agreement
because of a default by Purchaser, then Seller shall be entitled, as its
sole and exclusive remedy, to receive the Earnest Money and all interest
thereon as liquidated damages and to terminate this Agreement by notice to
Purchaser and upon such termination neither party shall have any further
claims against, obligation to or rights against the other hereunder except
for the indemnity and confidentiality obligations set forth herein.
9.2 Except as to the contrary provided in Section 4.5 hereof, if Closing
does not occur as and when provided in this Agreement because of a default
by Seller, then Purchaser shall be entitled to elect one of the following
as its sole and exclusive remedies (i) to receive the Earnest Money and any
interest thereon and terminate this Agreement by notice to Seller and upon
such termination, except for the indemnity and confidentiality obligations
set forth herein neither party shall have any further claims against,
obligations to or rights against the other hereunder, or (ii) to enforce
the sale of the Property and the Personal Property to Purchaser under the
Agreement by an action for specific performance in accordance with the
limitations contained in this Agreement. Upon the election of the one of
the exclusive remedies in the preceding sentence the other remedy shall be
deemed waived and longer available to Purchaser. Provided however that
Purchaser must commence any action for specific performance under this
Agreement against Seller within six (6) months of the Effective Date, or it
shall be deemed to have waived its rights under clause (ii) in the preceding
sentence. Except as set forth in Section 3.2 (but subject to the
limitations therein contained), 8.2 and 9.3 hereof, Purchaser hereby waives
any right to recover damages from Seller for any default by Seller
hereunder.
9.3 In the event either party defaults with respect to any obligations
arising after Closing but subject to any applicable survival period, and
fails to cure such default within twenty (20) days after the date on which
such defaulting party receives written notice of such default from such
other party, the non-defaulting party shall have all legal rights and
remedies available at law or in equity.
9.4 Time is of the essence with respect to the Purchaser's Inspection
Period, the Closing Date, and all other dates set forth or provided for
herein.
9.5 The Effective Date of this Agreement shall be the day after the
Seller executes this Agreement provided Seller delivers two (2) fully
executed originals of this Agreement to Bachner, Tally, Polevoy & Misher LLP
by overnight courier. Seller shall fill in the date of this Agreement on
page 1 hereof as of the Effective Date.
10. Risk of Loss
10.1 The risk of loss or damage to the Property or the Personal Property
by fire or other casualty shall be borne by Seller. In the event that
damage, loss or destruction of the Property or the Personal Property or any
part thereof, by fire or other casualty, occurs prior to the Closing, Seller
shall promptly notify Purchaser of such damage, loss or destruction.
10.2 If the Property and/or the Personal Property is damaged by fire or
other casualty, and the damage, loss or destruction shall cost less than
$200,000 to repair, as mutually agreed upon by Seller and Purchaser,
Purchaser shall close the transaction which is the subject of this Agreement
with a credit against the Purchase Price and/or the sum payable under the
Bill of Sale, as the case may be, in an amount equal to the cost of
repairing such damage as mutually agreed upon by Seller and Purchaser;
provided, however, Purchaser shall have the right to elect to terminate
this Agreement if, as a result of such damage by fire or other casualty, the
Property may not, as a matter of applicable law, be rebuilt as it currently
exists, and if Purchaser so elects, the Earnest Money and any interest
thereon shall be promptly returned to Purchaser, and thereupon, this
Agreement shall be terminated and the parties hereto shall be relieved of
all further obligations and liability under this Agreement except for the
confidentiality and indemnity obligations herein contained.
10.3 If the Property and/or the Personal Property is damaged by fire or
other casualty and the damage, loss or destruction shall cost $200,000 or
more to repair, as mutually agreed upon by Seller and Purchaser, then Seller
shall, promptly after Purchaser's request therefor, deliver to Purchaser a
copy of the applicable insurance policies covering such fire or other
casualty, and Purchaser shall promptly, at its option, elect one of the
following:
10.3.1 To elect to terminate this Agreement, in which event the Earnest
Money and any interest thereon shall be promptly returned to Purchaser, and
thereupon, this Agreement shall be terminated, and the parties hereto shall
be relieved of all further obligations and liability under this Agreement;
except for the confidentiality and indemnity obligations herein contained;
or
10.3.2 To proceed with the Closing and receive (i) a credit against the
cash balance of the Purchase Price payable at Closing to the extent of
payments received by or on behalf of Seller prior to the Closing Date under
any applicable hazard or other casualty insurance policy or policies in
effect with respect to the Property, (ii) an assignment of Seller's rights
to any payments which may be payable subsequent to the Closing Date under
any applicable hazard or casualty insurance policy or policies in effect
with respect to the Property, (iii) an assignment of Seller's rights to
payments with respect to rents due subsequent to the Closing Date under any
rental insurance policy or policies with respect to the Property, and (iv) a
credit against the cash balance of the Purchase Price payable at the Closing
in an amount equal to the aggregate amount of the deductibles with respect
to all such hazard or casualty insurance policies described in (ii) above;
or
10.3.3 To close the transaction which is the subject of this Agreement
and receive a credit against the Purchase Price in an amount equal to
$200,000.
10.3.4 If Purchaser elects to exercise the option set forth in Section
10.3.2 hereof, then pending the Closing, Purchaser, and not Seller, shall
alone have the right to (i) adjust, compromise and settle with the insurance
company(s) with respect to the insurance policies described in and subject
to Section 10.3.2, and (ii) settle, compromise and contest such award or
proposed award relating to the Property, and Seller agrees to cooperate with
Purchaser with respect to the collection of any payments or awards or rights
to payments or awards so assigned to Purchaser. Purchaser agrees to
cooperate with Seller with respect to the collection and adjustment of any
payments or awards from such insurance companies which are not described in
and subject to Section 10.3.2 prior to Closing. Seller agrees not to settle
or compromise any such award or proposed award relating to the Property so
as to impair Purchaser's rights under Section 10.3.2 without the written
consent of Purchaser.
10.4 If, prior to Closing, any governmental authority or other entity
having condemnation authority shall institute an eminent domain proceeding
or take any steps preliminary thereto (including the giving of any direct or
indirect notice of intent to institute such proceedings) with regard to the
Land or Buildings, and the same is not dismissed beyond appeal on or before
ten (10) days prior to the Closing Date set forth in this Agreement, then
Seller shall promptly notify Purchaser thereof and Purchaser shall be
entitled to terminate this Agreement in which event, the provisions of
Section 10.3.1 hereof shall be applicable.
10.5 If the Property and/or the Personal Property is damaged by fire or
other casualty prior to the Closing and Purchaser is not notified by Seller
of such damage prior to the Closing, then to the extent that, subsequent to
the Closing, Purchaser promptly notifies Seller of such damage, Seller
shall, to the extent of the loss of value the Buildings as a result thereof,
(y) promptly deliver to Purchaser a sum equal to the payments theretofore
received by or on behalf of Seller under any applicable insurance policy
awarded for such loss of value, and (z) assign to Purchaser, Seller's rights
to any payments which may be payable under any applicable insurance policy
and cooperate with Purchaser in connection with any dealings between
Purchaser and any applicable insurance company in connection therewith. The
provisions of this Section shall survive the Closing.
SELLER:
WORTHINGTON GREEN ASSOCIATES,
a Minnesota Joint Venture,
as Equitable Owner.
By: LUTHERAN BROTHERHOOD REALTY
FUND I LIMITED PARTNERSHIP
a California limited partnership, a venturer
By: Lutheran Brotherhood Real Estate Products
Company, a Minnesota Corporation
Its: General Partner
By: /s/ Clifford W. Habeck
-----------------------------------
Its: Assistant Vice President
-----------------------------------
and
By: LUTHERAN BROTHERHOOD,
a Minnesota corporation, a venturer
By: /s/ Clifford W. Habeck
-----------------------------------
Its: Assistant Vice President
-----------------------------------
and
LUTHERAN BROTHERHOOD REALTY
FUND I LIMITED PARTNERSHIP,
a C alifornia limited partnership,
as Record Owner,
By: Lutheran Brotherhood Real Estate Products
Company, a Minnesota Corporation
Its: General Partner
Date of Execution: By: /s/ Clifford W. Habeck
July 12, 1996 -----------------------------------
- ------------------ Its: Assistant Vice President
-----------------------------------
PURCHASER:
TGM REALTY CORP. #5
a Delaware corporation
Date of Execution: By: /s/ Thomas Goochberg
July 12, 1996 -----------------------------------
- ------------------ Its: President
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