AGREEMENT OF SALE
THIS AGREEMENT OF SALE (this "Agreement"), entered into as of the 21st day
of February, 1996, by and between MID-AMERICA APARTMENTS, L.P., a Tennessee
limited partnership ("Purchaser"), and BALCOR REALTY INVESTORS 86 SERIES I A
REAL ESTATE LIMITED PARTNERSHIP, an Illinois limited partnership ("Seller").
WITNESSETH:
1. PURCHASE AND SALE. Purchaser agrees to purchase and Seller agrees to sell
at the price of Fourteen Million One Hundred Thousand And No/100 Dollars
($14,100,000.00) (the "Purchase Price"), that certain property commonly known
as Lakeside Apartments located in the City of Jacksonville, State of Florida,
and legally described and depicted on Exhibit A attached hereto (the
"Property"). Included in the Purchase Price is all of the personal property set
forth in Exhibit B (the "Personal Property").
2. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as follows:
(a) Upon the execution of this Agreement, the sum of Three Hundred
Thousand And No/100 Dollars ($300,000.00) (the "Earnest Money") to be held in
escrow by and in accordance with the provisions of the Escrow Agreement
("Escrow Agreement") attached hereto as Exhibit C; and
(b) 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 COMMITMENT AND SURVEY.
A. Attached hereto as Exhibit D is a copy of a title commitment for an
owner's standard title insurance policy issued by Near North National Title
Corporation as agent for First American Title Insurance Company (hereinafter
referred to as "Title Insurer") dated February 9, 1996 for the Property (the
"Title Commitment"). For purposes of this Agreement, "Permitted Exceptions"
shall mean: (a) the general printed exceptions contained in the standard title
policy to be issued by Title Insurer based on the Title Commitment; (b) general
real estate taxes not yet due and payable; (c) matters shown on the "Survey"
(hereinafter defined) which do not constitute a "Survey Defect" (as hereinafter
defined); (d) matters caused by the actions of Purchaser; and (e) the title
exceptions set forth in Schedule B of the Title Commitment as Numbers 2 through
19 inclusive, to the extent that same affect the Property. All the other
exceptions to title shall be referred to as "Unpermitted Exceptions". The
Title Commitment shall be conclusive evidence of good title as therein shown as
to all matters to be insured by the title policy, subject only to the
exceptions therein stated. On the Closing Date, Title Insurer shall deliver to
Purchaser a standard title policy in conformance with the previously delivered
Title Commitment, subject only to Permitted Exceptions (the "Title Policy").
Purchaser and Seller shall evenly divide all costs associated with the Title
Commitment and Title Policy, including any endorsements to, or extended
coverage on, the Title Policy.
B. On or before March 5, 1996, Seller shall deliver to Purchaser an ALTA
survey of the Property (the "Survey"). Purchaser and Seller shall evenly
divide all costs associated with the Survey.
4. PAYMENT OF CLOSING COSTS.
A. In addition to the costs set forth in Paragraphs 3A and B, Purchaser and
Seller shall evenly divide the cost 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 and all other closing charges of the Title Insurer in
connection with this transaction.
5. CONDITION OF TITLE.
A. If, prior to Closing, a date-down to the Title Commitment or the Survey
disclose an Unpermitted Exception (other than the current financing secured by
the Property, which will be satisfied at Closing), Seller shall have thirty
(30) days from the date of the date-down to the Title Commitment to (i) bond
over, cure and/or have any Unpermitted Exceptions which, in the aggregate, do
not exceed $50,000.00 (a "Minor Unpermitted Exception"), removed from the Title
Commitment or to have the Title Insurer commit to insure against loss or damage
(together with the commitment to reissue the appropriate endorsement for the
benefit of Purchaser's financings and sale at no cost to Purchaser) that may be
occasioned by such Minor Unpermitted Exceptions at no additional premium to
Purchaser, or (ii) have the right, but not the obligation, to bond over, cure
and/or have any Unpermitted Exceptions which, in the aggregate, equals or
exceeds $50,000.00, removed from the Title Commitment or to have the Title
Insurer commit to insure against loss or damage (together with the commitment
to reissue the appropriate endorsement for the benefit of Purchaser's
financings and sale at no cost to Purchaser) that may be occasioned by such
Unpermitted Exceptions at no additional premium to Purchaser. 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; provided, however, and notwithstanding anything contained
herein to the contrary, if the Unpermitted Exception which gives rise to
Purchaser's right to terminate was recorded against the Property as a result of
the affirmative, willful action of Seller (and not by any unrelated third
party) with the intention to prevent the sale of the Property in accordance
with the terms hereof or if Seller is able to bond over, cure or remove a Minor
Unpermitted Exception for a cost not to exceed $50,000 or the Title Insurer is
willing to insure over a Minor Unpermitted Exception for a cost not to exceed
$50,000 in accordance with the terms hereof and Seller fails to expend said
funds in either case, then Purchaser shall have the additional rights contained
in Paragraph 11 herein. Absent notice from Purchaser to Seller in accordance
with the terms hereof, 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 5A, 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.
B. Seller agrees to convey fee simple title to the Property to Purchaser by
special warranty deed ("Deed") in recordable form subject only to the Permitted
Exceptions and any Unpermitted Exceptions waived by Purchaser.
6. CONDEMNATION, EMINENT DOMAIN, DAMAGE AND CASUALTY.
A. Except as provided in any indemnity provisions of this Agreement, Seller
shall bear all risk of loss with respect to the Property up to the earlier of
the dates upon which either possession or title is transferred to Purchaser in
accordance with this Agreement. Notwithstanding the foregoing, in the event of
damage to the Property by fire or other casualty prior to the Closing Date,
repair of which would cost less than or equal to $100,000.00 (as determined by
Seller in good faith) Purchaser shall not have the right to terminate its
obligations under this Agreement by reason thereof, but Seller shall have the
right to elect to either repair and restore the Property (in which case the
Closing Date shall be extended until completion of such restoration) or to
assign and transfer to Purchaser on the Closing Date all of Seller's right,
title and interest in and to all insurance proceeds paid or payable to Seller
on account of such fire or casualty, including, without limitation, proceeds of
lost rental insurance for the period commencing with the Closing Date through
the period of Purchaser's repair, to the extent said lost rental insurance
covers Purchaser's loss in rental insurance and Seller shall pay to Purchaser
at the Closing the amount of Seller's insurance deductible. Seller shall
promptly notify Purchaser in writing of any such fire or other casualty and
Seller's determination of the cost to repair the damage caused thereby. In the
event of damage to the Property by fire or other casualty prior to the Closing
Date, repair of which would cost in excess of $100,000.00 (as determined by
Seller in good faith), then this Agreement may be terminated at the option of
Purchaser, which option shall be exercised, if at all, by Purchaser's written
notice thereof to Seller within five (5) business days after Purchaser receives
written notice of such fire or other casualty and Seller's determination of the
amount of such damages, and upon the exercise of such option by Purchaser this
Agreement shall become null and void, the Earnest Money deposited by Purchaser
shall be returned to Purchaser together with interest thereon, and neither
party shall have any further liability or obligations hereunder except for
Purchaser's obligations to indemnify Seller and restore the Property, as set
forth more fully in Paragraph 7. 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,
including, without limitation, proceeds of lost rental insurance for the period
commencing with the Closing Date through the period of Purchaser's repair, to
the extent said lost rental insurance covers Purchaser's loss in rental
insurance and Seller shall pay to Purchaser at the Closing the amount of
Seller's insurance deductible.
B. If between the date of this Agreement and the Closing Date, any
condemnation or eminent domain proceedings are initiated which might result in
the taking of any part of the Property or the taking or closing of any right of
access to the Property, Seller shall immediately notify Purchaser of such
occurrence. In the event that the taking of any part of the Property shall:
(i) materially impair access to the Property; (ii) cause any material
non-compliance with any applicable law, ordinance, rule or regulation of any
federal, state or local authority or governmental agencies having jurisdiction
over the Property or any portion thereof; or (iii) materially and adversely
impairs the use of the Property as it is currently being operated (hereinafter
collectively referred to as a "Material Event"), Purchaser may:
(a) 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, except
for Purchaser's obligations to indemnify Seller and restore the Property, as
set forth more fully in Paragraph 7; or
(b) 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 and give
Purchaser the right of approval as to the amount of any award.
Purchaser shall then notify Seller, within five (5) business days after
Purchaser's receipt of Seller's notice, whether Purchaser elects to exercise
its rights under subparagraph (a) or subparagraph (b) of this Paragraph 6B.
Closing shall be delayed, if necessary, until Purchaser makes such election.
If Purchaser fails to make an election within such five (5) business day
period, Purchaser shall be deemed to have elected to exercise its rights under
subparagraph (b).
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 and give Purchaser the right of
approval as to the amount of any award.
7. INSPECTION AND AS-IS CONDITION.
A. Seller has delivered to Purchaser copies of the current rent roll for the
Property, the most recent tax and insurance bills, utility account numbers,
service contracts, and unaudited year end 1994 and 1995 operating statements.
Purchaser has completed its due diligence review of the Property and the
aforesaid delivered materials.
Purchaser agrees that as a condition to being allowed on the Property to
conduct its due diligence, Purchaser agrees to restore the Property to the
condition existing prior to the performance of such tests or investigations by
or on behalf of Purchaser if there is damage to the Property caused by
Purchaser's investigations or inspection of the Property. Purchaser shall
defend, indemnify and hold Seller and any affiliate, parent of Seller, and all
shareholders, employees, officers and directors of Seller or Seller's affiliate
or parent (hereinafter collectively referred to as "Affiliate of Seller")
harmless from any and all liability, cost and expense (including without
limitation, reasonable attorney's fees, court costs and costs of appeal)
suffered or incurred by Seller or Affiliates of Seller for injury to persons or
property caused by Purchaser's investigations and inspection of the Property.
Purchaser shall undertake its obligation to defend set forth in the preceding
sentence using attorneys selected by Purchaser and reasonably acceptable to
Seller.
B. Notwithstanding anything contained in this Paragraph 7, if on or prior to
5:00 p.m. Chicago time on March 7, 1996 (said period being herein referred to
as the "Environmental Review Period"), Purchaser delivers to Seller an
"Inspection Report" (as hereinafter defined) establishing in accordance with
this Paragraph 7, an "Environmental Material Defect" (as hereinafter defined),
then Purchaser shall have the right to elect, by written notice delivered
simultaneously with the delivery of the Inspection Report, to terminate this
Agreement (the "Termination Notice") in which case the Earnest Money deposited
by Purchaser shall be immediately returned to Purchaser together with all
interest earned thereon and thereupon neither party shall have any rights
against the other or any further liability to the other, except for Purchaser's
obligations pursuant to Paragraph (A) hereof and as otherwise specifically set
forth in this Agreement to survive the termination hereof. In the event
Purchaser fails to deliver the Termination Notice as aforesaid, then Purchaser
shall purchase the Property subject to all Environmental Material Defects
without any credit against the Purchase Price.
C. In order to establish an Environmental Material Defect, Purchaser shall be
required to deliver to Seller prior to the expiration of the Environmental
Review Period a copy of the inspection report(s) reflecting the particular
defect(s) (collectively, the "Inspection Report"). The term "Environmental
Material Defect" shall mean: (i) the existence of "Hazardous Materials" (as
hereinafter defined) located in, on or under the Property in violation of any
"Environmental Laws" (as hereinafter defined); or (ii) the existence of an
environmental condition at the Property which is reasonably likely to result in
significant damages to Purchaser as a consequence of Purchaser's ownership of
the Property.
D. No later than three (3) business days following Purchaser's receipt of the
Survey, Purchaser shall advise Seller, in writing (the "Survey Notice"),
whether or not the Survey identifies encroachments or other items which are not
acceptable to Purchaser based on commercially reasonable standards ("Survey
Defects") and, if the Survey identifies Survey Defects, Purchaser shall deliver
to Seller, as part of the Survey Notice a detailed statement identifying the
Survey Defects. If Purchaser fails to deliver the Survey Notice to Purchaser
during said three (3) business day period, then Purchaser shall be deemed to
have accepted the Survey and to have agreed to take title to the Property
subject to all items set forth on the Survey. If the Survey Notice identifies
Survey Defects, Seller shall have three (3) business days following Seller's
receipt of the Survey Notice to advise Purchaser, in writing, whether or not
Seller elects to cure the Survey Defects or terminate this Agreement. If
Seller either: (i) fails to so advise Purchaser during said three (3) business
day period; or (ii) if Seller advises Purchaser that Seller elects not to cure
the Survey Defects, then this Agreement shall automatically terminate 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. If Seller elects to cure
the Survey Defects then Seller shall have thirty (30) days to cure the Survey
Defects (which cure may include causing the Title Insurer to insure over the
Survey Defects at Seller's sole cost and expense) and the Closing Date shall be
extended if necessary to give effect to the foregoing thirty (30) day period.
E. Purchaser acknowledges and agrees that it will be purchasing the Property
based solely upon its inspections and investigations of the Property, and that
Purchaser will be purchasing the Property "AS IS" and "WITH ALL FAULTS", based
upon the condition of the Property as of the date of this Agreement, 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 other representations or
warranties of any kind upon which Purchaser is relying as to any matters
concerning the Property, including, but not limited to, the condition of the
land or any improvements comprising the Property, the existence or
non-existence of any hazardous materials or substances, economic projections or
market studies concerning the Property, any development rights, taxes, bonds,
covenants, conditions and restrictions affecting the Property, water or water
rights, topography, drainage, soil, subsoil of the Property, the utilities
serving the Property or any zoning, environmental or building laws, rules or
regulations affecting the Property. Seller makes no representation or warranty
that the Property complies with Title III of the Americans with Disabilities
Act or any fire code or building code. Except with respect to a breach by
Seller of any representation or warranty expressly contained herein, 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, and
except with respect to a breach by Seller of any representation or warranty
expressly contained herein, Purchaser hereby agrees not to assert any claims
for contribution, cost recovery or otherwise, against Seller, relating directly
or indirectly to the existence of asbestos or hazardous materials or substances
on, or environmental conditions of, the Property, whether known or unknown. As
used herein, the term "hazardous materials or substances" means (i) hazardous
wastes, hazardous substances, hazardous constituents, toxic substances or
related materials, whether solids, liquids or gases, including but not limited
to substances defined as "hazardous wastes," "hazardous substances," "toxic
substances," "pollutants," "contaminants," "radioactive materials," or other
similar designations in, or otherwise subject to regulation under, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substance
Control Act ("TSCA"), 15 U.S.C. Section 2601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 9601. et seq.; the Clear Water Act
("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et
seq.; and in any permits, licenses, approvals, plans, rules, regulations or
ordinances adopted, or other criteria and guidelines promulgated pursuant to
the preceding laws or other similar federal, state or local laws, regulations,
rules or ordinance now or hereafter in effect relating to environmental matters
(collectively the "Environmental Laws"); and (ii) any other substances,
constituents or wastes subject to any applicable federal, state or local law,
regulator or ordinance, including any Environmental Law, now or hereafter in
effect, including but not limited to (A) petroleum, (B) refined petroleum
products, (C) waste oil, (D) waste aviation or motor vehicle fuel and (E)
asbestos. Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health risks to
persons who are exposed to it over time. Levels of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from the county
public health unit. Seller makes no representation regarding the levels of
radon at the Property.
F. 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 the representations and warranties of Seller
expressly contained herein and releases Seller from any liability with respect
to such historical information, except with respect to a breach of a
representation or warranty of Seller contained herein.
8. CLOSING. The closing of this transaction (the "Closing") shall be on the
later to occur of: (a) four business days following Purchaser's receipt of the
Survey; or (b) March 12, 1996 (the "Closing Date"), at the office of Title
Insurer, Jacksonville, Florida, 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
Florida, or at the option of either party, the Closing shall be a "New York
style" closing at which the Purchaser shall wire the Purchase Price to Title
Insurer on the Closing Date and prior to the release of the Purchase Price to
Seller, Purchaser shall receive the Title Policy or marked up commitment dated
the date of the Closing Date. In the event of a New York style closing, Seller
shall deliver to Title Insurer any customary affidavit in connection with a New
York style closing. Purchaser and Seller shall evenly divide all closing and
escrow fees.
9. CLOSING DOCUMENTS.
A. On the Closing Date, Purchaser shall deliver to Seller an executed closing
statement, the balance of the Purchase Price, an assumption of the documents
set forth in Paragraph 9.B.(iii) and (iv) 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.
B. On the Closing Date, Seller shall deliver to Purchaser the following:
(i)the Deed (in the form of Exhibit E attached hereto), subject to
Permitted Exceptions and those Unpermitted Exceptions waived by Purchaser;
(ii)a special warranty bill of sale conveying the Personal Property (in
the form of Exhibit F attached hereto);
(iii)assignment and assumption of intangible property (in the form
attached hereto as Exhibit G);
(iv)an assignment and assumption of leases and security deposits (in the
form attached hereto as Exhibit H);
(v)non-foreign affidavit (in the form of Exhibit I attached hereto);
(vi)original, and/or copies of, leases affecting the Property in Seller's
possession;
(vii)all documents and instruments reasonably required by the Title
Insurer to issue the Title Policy;
(viii)possession of the Property to Purchaser;
(ix)an executed closing statement;
(x)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 J);
and
(xi)an updated rent roll.
10. DEFAULT BY PURCHASER. ALL EARNEST MONEY DEPOSITED INTO THE ESCROW IS TO
SECURE THE TIMELY PERFORMANCE BY PURCHASER OF ITS OBLIGATIONS AND UNDERTAKINGS
UNDER THIS AGREEMENT. IN THE EVENT 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 PURSUANT TO PARAGRAPH
7(A) HEREOF. THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
EVENT OF A DEFAULT BY PURCHASER, WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO
DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE
THAT THE EARNEST MONEY HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES'
REASONABLE ESTIMATE OF SELLER'S DAMAGES.
11. SELLER'S DEFAULT. IF THIS SALE IS NOT COMPLETED BECAUSE OF SELLER'S
DEFAULT, PURCHASER'S SOLE REMEDY SHALL BE THE RETURN OF ALL EARNEST MONEY
TOGETHER WITH ANY INTEREST ACCRUED THEREON, AND THIS AGREEMENT SHALL THEN
BECOME NULL AND VOID AND OF NO EFFECT AND THE PARTIES SHALL HAVE NO FURTHER
LIABILITY TO EACH OTHER AT LAW OR IN EQUITY, EXCEPT FOR PURCHASER'S OBLIGATIONS
TO INDEMNIFY SELLER AND RESTORE THE PROPERTY AS SET FORTH MORE FULLY IN
PARAGRAPH 7 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 $200,000 IN THE AGGREGATE.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO THE CONTRARY, IF SELLER'S DEFAULT
IS (i) ITS (AND NOT AN UNRELATED THIRD PARTY'S) AFFIRMATIVE, WILLFUL ACTION
WHICH RESULTS IN THE RECORDING OF AN ENCUMBRANCE AGAINST THE PROPERTY WITH THE
INTENTION TO PREVENT THE SALE OF THE PROPERTY IN ACCORDANCE WITH THE TERMS
HEREOF AND WHICH GIVES RISE TO PURCHASER'S RIGHT TO TERMINATE THIS AGREEMENT
PURSUANT TO PARAGRAPH 5 HEREOF; (ii) ITS FAILURE TO EXPEND UP TO $50,000 IF (a)
SELLER IS ABLE TO BOND OVER, CURE OR REMOVE A MINOR UNPERMITTED EXCEPTION FOR A
COST NOT TO EXCEED $50,000 OR (b) THE TITLE INSURER IS WILLING TO INSURE OVER A
MINOR UNPERMITTED EXCEPTION FOR A COST NOT TO EXCEED $50,000 IN ACCORDANCE WITH
THE TERMS HEREOF OR (iii) ITS REFUSAL TO DELIVER THE DEED, THEN PURCHASER WILL
BE ENTITLED TO SUE FOR SPECIFIC PERFORMANCE.
12. PRORATIONS.
A. 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; 1995 (if not paid) and 1996 real
and personal property taxes; and other similar items shall be adjusted ratably
as of 12:01 a.m. on the Closing Date. Assessments of record payable in
installments which are due subsequent to the Closing Date shall be paid by
Purchaser. If the amount of any of the items to be prorated is not then
ascertainable, the adjustments thereof shall be on the basis of the most recent
ascertainable data. The parties agree to re-prorate the proration items within
forty-five (45) days after the date of Closing, except as to delinquent rent
referred to in Paragraph 12B below.
B. All sums paid following the Closing Date by any tenant of the Property who
is indebted under a lease for any period prior to and including the Closing
Date after the payment to Purchaser of all then current basic rent shall be
deemed a "Post-Closing Receipt" until such time as all such indebtedness is
paid in full. Within ten (10) days following each receipt by Purchaser of a
Post-Closing Receipt, Purchaser shall pay such Post-Closing Receipt to Seller.
For a period of sixty days following Closing, Purchaser shall send monthly
collection notices to tenants residing at the Property owing Post-Closing
Receipts. Within 90 days after the Closing Date, Purchaser shall deliver to
Seller a reconciliation statement of Post-Closing Receipts through the first 60
days after the Closing Date. Upon the delivery of the Post-Closing Receipts
reconciliation, Purchaser shall deliver to Seller any Post-Closing Receipts
owing to Seller and not previously delivered to Seller in accordance with the
terms hereof. At Seller's expense, Seller retains the right to conduct an
audit, at reasonable times and upon reasonable notice, of Purchaser's books and
records to verify the accuracy of the Post-Closing Receipts reconciliation
statement and upon the verification of additional funds owing to Seller,
Purchaser shall pay to Seller said additional Post-Closing Receipts. Seller
shall deliver to Purchaser any sums received by Seller after the Closing Date
which relate to the period of time prior to the Closing Date, along with an
accounting identifying any such sums. Paragraph 12B of this Agreement shall
survive the Closing and the delivery and recording of the Deed.
13. RECORDING. This Agreement shall not be recorded and the act of recording
by Purchaser shall be an act of default hereunder by Purchaser and subject to
the provisions of Paragraph 10.
14. ASSIGNMENT. The Purchaser shall not have the right to assign its interest
in this Agreement without the prior written consent of the Seller. Any
assignment or transfer of, or attempt to assign or transfer, Purchaser's
interest in this Agreement shall be an act of default hereunder by Purchaser
and subject to the provisions of Paragraph 10.
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: (i) to CB Commercial Real Estate Group, Inc. (to be paid by Seller)
("Seller's Broker"); and (ii) Insignia Mortgage and Financial Group (to be paid
by Purchaser) ("Purchaser's Broker"). Seller's commission to Seller's Broker
shall only be payable out of the proceeds of the sale of the Property in the
event the transaction set forth herein closes. Purchaser's commission to
Purchaser's Broker shall only be payable in the event the transaction set forth
herein closes. Purchaser hereby agrees to indemnify, defend and hold Seller
harmless from any claim whatsoever (including without limitation, reasonable
attorney's fees, court costs and costs of appeal) from anyone claiming by or
through Purchaser for any fee, commission or compensation on account of this
Agreement, its negotiation or the sale hereby contemplated other than claims
of Seller's Broker (or anyone claiming by, through or under Seller's Broker).
Seller hereby agrees to indemnify, defend and hold Purchaser harmless from any
claim whatsoever (including without limitation, reasonable attorney's fees,
court costs and costs of appeal) from anyone claiming by or through Seller for
any fee, commission or compensation on account of this Agreement, its
negotiation or the sale hereby contemplated other than claims of Purchaser's
Broker (or anyone claiming by, through or under Purchaser's Broker). The
indemnifying party shall undertake its obligations set forth in this
Paragraph 15 using attorneys selected by the indemnifying party and reasonably
acceptable to the indemnified party. The provisions of this Paragraph 15 will
survive the Closing and delivery of the Deed.
16. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
A. Any reference herein to Seller's knowledge, representation, warranty or
notice of any matter or thing shall only mean such knowledge or notice that has
actually been received by Phillip Schechter or Michael Becker (asset manager of
the Property and who is in a position to have a basis for having knowledge with
respect to the Property) (hereinafter collectively referred to as the "Seller's
Representatives"), and any representation or warranty of the Seller is based
upon those matters of which the Seller's Representatives have actual knowledge.
Any knowledge or notice given, had or received by any of Seller's agents,
servants or employees (other than Seller's Representatives) shall not be
imputed to Seller, the general partner or limited partners of Seller, the
subpartners of the general partner or limited partners of Seller or Seller's
Representatives.
B. Subject to the limitations set forth in Paragraph A of this Paragraph 16,
Seller hereby makes the following representations and warranties, which
representations and warranties are made to the Seller's knowledge and which
shall, subject to Paragraph 16C, be remade at Closing:
(i)Except for the matter disclosed on Exhibit N, Seller has no knowledge
of any pending or threatened litigation, claim, cause of action or
administrative proceeding concerning the Property;
(ii)The rent roll attached hereto as Exhibit L and which shall be updated
as of the Closing Date accurately sets forth the number of tenants then in
possession of the Property as of the date of said rent roll, contains an
accurate summary of the rental obligations, the expiration date, the
security deposit and the delinquencies of each such tenancy as of the date
of said rent roll;
(iv)That the tenant leases evidencing such tenancies referred to in the
rent roll are in full force and effect and have not been amended or
modified except as set forth in the rent roll or the leases made available
to Purchaser for Purchaser's review;
(v)Seller has received no notice of any material default on the part of
Seller under any said tenant leases;
(vi)Except as set forth in the rent roll, no tenant under the leases as of
the date of the rent roll is in material default of the payment of rent;
(vii)That Seller will not collect any of the rent or other sums arising or
accruing under any of the said tenant leases in advance of the time when
they come due except for the benefit of Purchaser (and Seller retains
ownership of all accounts receivable for rents due for periods of time
prior to the Closing);
(viii)The Seller has not given or suffered any assignment, pledge or
encumbrance with respect to any of the tenant leases or its interests
thereunder except as additional collateral for the existing loan secured
by the Property;
(ix)Pending the Closing, Seller will not without the prior consent of
Purchaser convey all or any portion of the Property;
(x)Except as shown on Exhibit M, there are no service contracts which in
any manner affect or otherwise relate to the Property or the tenant
leases;
(xi)Seller has full right, power and authority to enter into this
Agreement and consummate the transaction contemplated hereby;
(xii)Seller and all persons or entities having beneficial interests in the
Property are "United States Persons," as defined in Section 1445(f)(3) and
Section 7701(g) of the Internal Revenue Code of 1986, as amended, and the
purchase of the Property by Purchaser as contemplated herein will not be
subject to the withholding requirements of Section 1445(a) of the Code;
(xiii)Seller has not received any notice from any governmental authority
having jurisdiction over the Property of any uncured violation of any
Environmental Law with respect to the Property. Seller has not
commissioned any environmental report with respect to the Property.
(xiv)Seller has not received written notice from any third party of any
structural defects that would render the Property unusable as an apartment
complex.
C. If at any time after the execution of this Agreement, either Purchaser or
Seller become aware of information which makes a representation and warranty
contained in this Agreement to become untrue in any material respect, said
party shall promptly disclosure 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. Notwithstanding anything contained herein to the contrary, if
the status of any of the tenancies changes from the date of the rent roll
attached hereto and the date of the rent roll delivered at Closing, provided
the change in status is not caused by a breach of Seller's covenants contained
in Paragraph 16(D) herein, then Purchaser shall not have the right to terminate
this Agreement or make any claim for a breach of a representation or warranty
hereunder involving the rent roll or tenancies thereunder. Purchaser and
Seller are prohibited from making any claims against the other party hereto
after the Closing with respect to any breaches of the other party's
representations and warranties contained in this Agreement that the claiming
party has actual knowledge of prior to the Closing. The parties agree that the
representations contained herein shall survive Closing for a period of sixty
(60) days (i.e., the claiming party shall have no right to make any claims
against the other party for a breach of a representation or warranty after the
expiration of sixty (60) days immediately following Closing).
D. Seller covenants to operate and manage the Property in the same manner
that it has managed, maintained and operated the Property during the period of
Seller's ownership, subject to reasonable wear and tear and casualty.
17. LIMITATION OF LIABILITY. Neither any of Seller's respective partners
(whether general partners, limited partners or any level of sub-partner) nor
any beneficiaries, shareholders, officers, 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
aggregate liability of Seller, 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 set forth herein shall
be $250,000; provided, however, in no way shall this sentence or the following
sentence preclude Purchaser's right of specific performance contained in
Paragraph 11 herein. Purchaser hereby waives for itself and anyone who may
claim by, through or under Purchaser any and all rights to sue or recover from
Seller any amount greater than said limit. Seller further agrees not to
distribute $250,000 of the proceeds of the Purchase Price to its partners for
the longer of (i) sixty (60) days after the Closing and (ii) final resolution
of any claims by Purchaser and asserted in writing against Seller prior to the
expiration of the sixtieth (60th) day after the Closing 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 thirty (30) days after such notice to Purchaser; otherwise
said notice with respect to the Claim in question shall no longer prevent
Seller from distributing the proceeds.
18. TIME OF ESSENCE. Time is of the essence of this Agreement.
19. NOTICES. Any notice or demand which either party hereto is required or
may desire to give or deliver to or make upon the other party shall be in
writing and may be personally delivered, facsimile delivered or given or made
by overnight courier such as Federal Express or made by United States
registered or certified mail addressed as follows:
TO SELLER: c/o The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: Ilona Adams
with copies to: The Balcor Company
Bannockburn Lake Office Plaza
2355 Waukegan Road
Suite A200
Bannockburn, Illinois 60015
Attention: Alan Lieberman
(847) 317-4360
(847) 317-4462 (FAX)
and to: Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Andrew Small, Esq.
(312) 902-5489
(312) 902-1061 (FAX)
TO PURCHASER: c/o Mid-America Apartment Communities, Inc.
6584 Poplar Avenue
Suite 340
Memphis, Tennessee 38138
Attention: Donald Aldridge
(901) 682-6600
(901) 682-6667 (FAX)
and one copy to: Apperson, Crump, Duzane & Maxwell
1755 Kirby Parkway
Suite 100
Memphis, Tennessee 38120
Attention: John Maxwell
(901) 756-6300
(901) 757-1296 (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, on the same day if sent by facsimile transmission prior to 5:00 p.m.
Chicago time (provided, however, if the notice or demand is not accepted by the
recipient's fax machine after 10 attempts by the sender to fax the notice or
demand and the sender advises the recipient by phone of the specific nature of
the notice or demand prior to 5:00 p.m. Chicago time on the same day the sender
is attempting to send its notice or demand by facsimile and if the sender sends
the notice or demand to the recipient by overnight courier to be delivered on
the first business day following the day that the notice or demand was
attempted to be given by fax, then the notice or demand shall be deemed given
on the date the sender attempted to send the facsimile) or on the 4th business
day after the same is deposited in the United States Mail as registered or
certified matter, addressed as above provided, with postage thereon fully
prepaid. Any such notice, demand or document not given, delivered or made by
registered or certified mail or by overnight courier as aforesaid shall be
deemed to be given, delivered or made upon receipt of the same by the party to
whom the same is to be given, delivered or made. Copies of all notices shall
be served upon the Escrow Agent.
20. EXECUTION OF AGREEMENT AND ESCROW AGREEMENT. Purchaser will execute three
(3) copies of this Agreement and four (4) copies of the Escrow Agreement and
forward them to Seller for execution, accompanied with the Earnest Money
payable to the Escrow Agent set forth in the Escrow Agreement. Seller will
forward one (1) copy of the executed Agreement to Purchaser and will forward
the following to the Escrow Agent:
(1) Purchaser's check for the Earnest Money;
(2) One (1) fully executed copy of this Agreement; and
(3) Three (3) copies of the Escrow Agreement signed by the parties with a
direction to execute two (2) copies of the Escrow Agreement and deliver a fully
executed copy to each of the Purchaser and the Seller.
21. GOVERNING LAW. The provisions of this Agreement shall be governed by the
laws of the State of Florida.
22. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties and supersedes all other negotiations, understandings and
representations made by and between the parties and the agents, servants and
employees.
23. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
24. CAPTIONS. Paragraph titles or captions contained herein are inserted as a
matter of convenience and for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof.
25. SERVICE CONTRACTS. Attached hereto as Exhibit M is a list of service
contracts affecting the Property. Seller shall assign the service contracts to
Purchaser at Closing, and Purchaser shall assume responsibility and obligations
under the service contracts. Seller agrees not to enter into any other service
contracts affecting the Property. Seller agrees to terminate any and all
management agreements affecting the Property as of the Closing Date.
26. AUDIT. Seller will make available to Purchaser's representatives such
books, accounts and records necessary for Purchaser to conduct an audit of the
Property's preceding fiscal year. This audit will be conducted solely at
Purchaser's expense for the purpose of satisfying its requirements as a
publicly held entity. Seller agrees to execute and deliver a disclosure letter
prepared by the auditors of Purchaser in the form attached hereto as Exhibit K.
The terms of this Paragraph 26 shall survive the Closing for a period of one
(1) year after the Closing Date.
IN WITNESS WHEREOF, the parties hereto have put their hand and seal as of the
21st day of February, 1996.
PURCHASER:
MID-AMERICA APARTMENTS, L.P., a Tennessee limited
partnership
By:MID-AMERICA APARTMENT COMMUNITIES, INC., a
Tennessee corporation, its general partner
By: /s/Simon R.C. Wadsworth
--------------------------------------
Name: Simon R.C. Wadsworth
------------------------------------
Title: Executive Vice President
-----------------------------------
SELLER:
BALCOR REALTY INVESTORS 86 SERIES I A REAL ESTATE
LIMITED PARTNERSHIP, an Illinois limited partnership
By:Balcor Partners-XIX, an Illinois general
partnership, its general partner
By: The Balcor Company, a Delaware corporation,
a general partner
By: /s/Phillip Schechter
-------------------------------------
Name: Phillip Schechter
-----------------------------------
Title: Authorized Agent
----------------------------------
of CB Commercial Real Estate Group, 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 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 stating that no other fees or commissions are due to it from Seller or
Purchaser.
CB COMMERCIAL REAL ESTATE GROUP,
INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
of Insignia Mortgage and Financial Group ("Purchaser's
Broker") executed this Agreement in its capacity as a real estate broker and
acknowledges that the fee or commission due it from Purchaser as a result of
the transaction described in this Agreement is as set forth in that Agreement,
dated between Purchaser and Purchaser's Broker. Purchaser'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. Purchaser's Broker agrees to deliver a receipt to the Seller at the
Closing for the fee or commission due Purchaser's Broker and a release stating
that no other fees or commissions are due to it from Seller or Purchaser.
INSIGNIA MORTGAGE AND FINANCIAL
GROUP
By:
-----------------------
Name:
---------------------
Title:
--------------------
Exhibits
A - Legal
B - Personal Property
C - Escrow Agreement
D - Title Commitment
E - Special Warranty Deed
F - Special Warranty Bill of Sale
G - Assignment and Assumption of Intangible Property
H - Assignment and Assumption of Leases and Security Deposits
I - Non-Foreign Affidavit (FIRPTA Statement)
J - Notice to Tenants
K - Auditor's Disclosure Letter
L - Rent Roll
M - List of Service Contracts
N - Litigation