FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.........to.........
Commission file number 0-11137
CENTURY PROPERTIES FUND XVII
(Exact name of small business issuer as specified in its charter)
California 94-2782037
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED BALANCE SHEET
(Unaudited)
September 30, 1998
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 5,018
Receivables and deposits 890
Restricted escrows 1,284
Other assets 484
Investment properties
Land $ 7,078
Buildings and related personal property 60,668
67,746
Less accumulated depreciation (32,075) 35,671
$ 43,347
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 144
Tenant security deposit liabilities 278
Accrued property taxes 597
Other liabilities 319
Mortgage notes payable 41,168
Partners' Capital (Deficit)
General partner's $ (7,632)
Limited partners' (75,000 units issued
and outstanding) 8,473 841
$ 43,347
See Accompanying Notes to Consolidated Financial Statements
b)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Rental income $ 3,308 $ 3,150 $ 9,723 $ 9,187
Other income 199 215 593 598
Total revenues 3,507 3,365 10,316 9,785
Expenses:
Operating 1,531 1,382 4,077 3,939
General and administrative 69 77 213 208
Depreciation 631 569 1,784 1,673
Interest 885 908 2,762 2,732
Property taxes 194 198 583 581
Loss on disposal of property -- -- 36 64
Total expenses 3,310 3,134 9,455 9,197
Net income before
extraordinary loss $ 197 $ 231 $ 861 $ 588
Extraordinary loss on debt
refinancing (96) -- (96) --
Net income $ 101 $ 231 $ 765 $ 588
Net income allocated to
general partner (11.8%) $ 12 $ 27 $ 90 $ 69
Net income allocated to
limited partners (88.2%) 89 204 675 519
$ 101 $ 231 $ 765 $ 588
Net income before extraordinary
loss per limited partnership
unit $ 2.32 $ 2.72 $ 10.13 $ 6.92
Extraordinary loss per limited
partnership unit (1.13) -- (1.13) --
Net income per limited
partnership unit $ 1.19 $ 2.72 $ 9.00 $ 6.92
Distribution per limited
partnership unit $ 39.15 $ -- $ 39.15 $ --
See Accompanying Notes to Consolidated Financial Statements
c)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 75,000 $ -- $75,000 $75,000
Partners' (deficit) capital at
December 31, 1997 75,000 $(7,329) $10,734 $ 3,405
Distributions to partners (393) (2,936) (3,329)
Net income for the nine
months ended September 30, 1998 -- 90 675 765
Partners' (deficit) capital at
September 30, 1998 75,000 $(7,632) $ 8,473 $ 841
See Accompanying Notes to Consolidated Financial Statements
d)
CENTURY PROPERTIES FUND XVII
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net income $ 765 $ 588
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,784 1,673
Amortization of loan costs and debt discounts 1,211 1,105
Extraordinary loss on debt refinancing 96 --
Loss on disposal of property 36 64
Change in accounts:
Receivables and deposits 145 (298)
Other assets -- (59)
Accounts payable (62) (201)
Tenant security deposit liabilities 14 4
Accrued property taxes 7 8
Other liabilities (31) 79
Net cash provided by operating activities 3,965 2,963
Cash flows from investing activities:
Net deposits to restricted escrows (332) (38)
Property improvements and replacements (1,673) (837)
Net cash used in investing activities (2,005) (875)
Cash flows from financing activities:
Payments on mortgage notes payable (313) (300)
Payoff of mortgage notes payable (10,684) --
Proceeds from debt refinancing 13,700 --
Loan costs (327) --
Distribution to partners (3,329) --
Net cash used in financing activities (953) (300)
Net increase in cash and cash equivalents 1,007 1,788
Cash and cash equivalents at beginning of period 4,011 4,441
Cash and cash equivalents at end of period $ 5,018 $6,229
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,585 $1,593
See Accompanying Notes to Consolidated Financial Statements
e)
CENTURY PROPERTIES FUND XVII
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Century
Properties Fund XVII (the "Partnership") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of Fox Capital Management Corporation ("FCMC" or the "Managing
General Partner"), all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and nine month periods ended September 30, 1998, are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's annual
report on Form 10-KSB for the year ended December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
Fox Partners, a California general partnership, is the general partner of the
Partnership. The general partners of Fox Partners are FCMC, a California
corporation, Fox Realty Investors ("FRI"), a California general partnership, and
Fox Partners 82, a California general partnership. NPI Equity Investments II,
Inc., a Florida corporation ("NPI Equity"), is the general partner of FRI.
Insignia Properties Trust ("IPT") is the sole shareholder of both FCMC and NPI
Equity.
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership agreement provides for payments to
affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. The following payments were made to the
Managing General Partner and/or its affiliates in 1998 and 1997:
Nine Months Ended
September 30,
1998 1997
(in thousands)
Property management fees (included in operating expenses) $507 $481
Reimbursement for services of affiliates, including
approximately $43,000 and $10,000 in construction
oversight reimbursements during the nine months ended
September 30, 1998 and 1997, respectively (included in
investment properties, general and administrative
expenses and operating expenses) 160 127
In addition, the Partnership paid approximately $27,000 in loan costs related to
the refinancing of mortgages at Creekside Apartments and The Lodge Apartments
during the nine months ended September 30, 1998. No loan costs were paid in
1997. These loan costs are included in other assets and are amortized as
interest expense over the terms of the loan agreements.
For the period from January 1, 1997 through August 31, 1997, the Partnership
insured its properties under a master policy through an agency affiliated with
the Managing General Partner, but with an insurer unaffiliated with the Managing
General Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
agent assumed the financial obligations to the affiliate of the Managing General
Partner which received payments on these obligations from the agent. The amount
of the Partnership's insurance premiums that accrued to the benefit of the
affiliate of the Managing General Partner by virtue of the agent's obligations
was not significant.
On August 28, 1997, an affiliate of the Managing General Partner ("the
Purchaser") commenced a tender offer for limited partnership interests in the
partnership. The Purchaser offered to purchase up to 22,500 of the outstanding
units of limited partnership interest in the Partnership, at $225.00 per Unit,
net to the seller in cash. On October 6, 1997, the Purchaser closed the tender
offer and acquired 3,369.5 Units of limited partnership interest.
NOTE C - DISTRIBUTION TO PARTNERS
A cash distribution from operations of approximately $3,329,000 was paid during
the nine months ended September 30, 1998. Of this amount, approximately
$393,000 was paid to the general partners and approximately $2,936,000 ($39.15
per unit) was paid to the limited partners. Subsequent to September 30, 1998, a
distribution of proceeds from the refinancing of the mortgage loans encumbering
Creekside Apartments and the Lodge Apartments of approximately $2,000,000 was
paid. No distributions were made during the nine months ended September 30,
1997.
NOTE D - REFINANCING AND EXTRAORDINARY LOSS
On August 24, 1998, the Partnership refinanced the mortgages encumbering
Creekside Apartments and The Lodge Apartments. The refinancing of Creekside
Apartments replaced indebtedness of approximately $5,091,000 with a new mortgage
in the amount of $6,500,000. The refinancing of The Lodge Apartments replaced
indebtedness of approximately $5,593,000 with a new mortgage in the amount of
$7,200,000. Both of the new mortgages carry a stated interest rate of 6.43%.
Interest on both of the old mortgages was 7.875%. Payments on both mortgage
loans are due on the first day of each month beginning on October 1, 1998 until
the loans mature on September 1, 2008. The Partnership received net proceeds
from these refinancings in the aggregate amount of $2,689,000 of which
$2,000,000 was paid as a distribution to the partners during October 1998. In
addition, the Partnership was required to establish escrows with the lender for
repairs, insurance and tax costs. Total capitalized loan costs were
approximately $327,000 at September 30, 1998. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $96,000
due to the write-off of unamortized loan costs.
NOTE E - TRANSFER OF CONTROL; SUBSEQUENT EVENT
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired approximately
51% of the outstanding common shares of beneficial interest of IPT, the entity
which controls the General Partner of the Partnership. Also, effective October
1, 1998 IPT and AIMCO entered into an Agreement and plan of Merger pursuant to
which IPT is to be merged with and into AIMCO or a subsidiary of AIMCO (the "IPT
Merger"). The IPT Merger requires the approval of the holders of a majority of
the outstanding IPT Shares. AIMCO has agreed to vote all of the IPT Shares
owned by it in favor of the IPT Merger and has granted an irrevocable limited
proxy to unaffiliated representatives of IPT to vote the IPT Shares acquired by
AIMCO and its subsidiaries in favor of the IPT Merger. As a result of AIMCO's
ownership and its agreement, the vote of no other holder of IPT is required to
approve the merger. The Managing General Partner does not believe that this
transaction will have a material effect on the affairs and operations of the
Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of five apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1998 and 1997:
Average Occupancy
Property 1998 1997
Cherry Creek Gardens Apartments
Englewood, Colorado 95% 95%
Creekside Apartments
Denver, Colorado 97% 96%
The Lodge Apartments
Denver, Colorado 97% 97%
The Village in the Woods Apartments
Cypress, Texas 95% 95%
Cooper's Pond Apartments
Tampa, Florida 97% 95%
The Partnership generated net income for the nine months ended September 30,
1998, of approximately $765,000 compared to net income of approximately $588,000
for the corresponding period of 1997. For the three months ended September 30,
1998, the Partnership generated net income of approximately $101,000 compared to
net income of approximately $231,000 for the three months ended September 30,
1997. The increase in net income for the nine months ended September 30, 1998,
as compared to the nine months ended September 30, 1997, is primarily
attributable to an increase in rental income, which more than offset increases
in operating expense and depreciation expense and the extraordinary loss on debt
refinancing. The increase in rental income is primarily due to increases in
average occupancy at Creekside Apartments and Cooper's Pond Apartments, and an
increase in market rent at all the Partnership's investment properties.
Partially mitigating the increase in rental income were increases in operating
and depreciation expense. The increase in operating expense is primarily due to
an increase in advertising expense at all the Partnership's investment
properties and to an increase in utility expenses at Cherry Creek Gardens
Apartments, Creekside Apartments and The Lodge Apartments. The increase in
depreciation expense is due to an increase in depreciable assets as a result of
improvements made at all the Partnership's investment properties. Also
offsetting the increase in net income is an extraordinary loss on early
extinguishment of debt of approximately $96,000 as a result of the refinancing
of Creekside Apartments and The Lodge Apartments as discussed in "Item 1. Note D
- - Refinancing and Extraordinary Loss." Included in operating expenses for the
nine months ended September 30, 1998, is approximately $270,000 of major repairs
and maintenance comprised primarily of exterior painting, landscaping, exterior
building improvements, gutter repairs, and parking lot repairs. Included in
operating expenses for the nine months ended September 30, 1997, is
approximately $200,000 of major repairs and maintenance comprised primarily of
exterior building improvements and landscaping.
The decrease in net income for the three months periods ended September 30,
1998, is primarily attributable to the extraordinary loss on early
extinguishment of debt, as discussed above and to increases in operating and
depreciation expense. The increase in operating expense is primarily due to
increases in exterior painting expenses at Creekside Apartments resulting from a
wood replacement project performed in 1998. The increase in depreciation expense
is due to an increase in depreciable assets as a result of improvements made at
all the Partnership's investment properties. Partially offsetting the
extraordinary loss on early extinguishment of debt and the increases in
operating and depreciation expense was an increase in rental income as discussed
above.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expense. As part of this plan, the Managing General Partner attempts to protect
the Partnership from the burden of inflation-related increases in expenses by
increasing rents and maintaining a high overall occupancy level. However, due
to changing market conditions, which can result in the use of rental concessions
and rental reductions to offset softening market conditions, there is no
guarantee that the Managing General Partner will be able to sustain such a plan.
On August 24, 1998, the Partnership refinanced the mortgages encumbering
Creekside Apartments and The Lodge Apartments. The refinancing of Creekside
Apartments replaced indebtedness of approximately $5,091,000 with a new mortgage
in the amount of $6,500,000. The refinancing of The Lodge Apartments replaced
indebtedness of approximately $5,593,000 with a new mortgage in the amount of
$7,200,000. Both of the new mortgages carry a stated interest rate of 6.43%.
Interest on both of the old mortgages was 7.875%. Payments on both mortgage
loans are due on the first day of each month beginning on October 1, 1998 until
the loans mature on September 1, 2008. The Partnership received net proceeds
from these refinancings in the aggregate amount of $2,689,000 of which
$2,000,000 was paid as a distribution to the partners during October 1998. In
addition, the Partnership was required to establish escrows with the lender for
repairs, insurance and tax costs. Total capitalized loan costs were
approximately $327,000 at September 30, 1998. The Partnership recognized an
extraordinary loss on the early extinguishment of debt of approximately $96,000
due to the write-off of unamortized loan costs.
At September 30, 1998, the Partnership had cash and cash equivalents of
approximately $5,018,000 compared to approximately $6,229,000 at September 30,
1997. For the nine months ended September 30, 1998, net cash increased
approximately $1,007,000 compared to an increase of approximately $1,788,000 for
the corresponding period of 1997. Net cash provided by operating activities
increased primarily as a result of an increase in net income, as discussed
above. Also contributing to the increase in cash provided by operating
activities was an increase in cash received from receivables and deposits and a
decrease in cash used for accounts payable due to the timing of receipts and
payments. Net cash used in investing activities increased due to increases in
property improvements and replacements and net deposits to restricted escrows
required by the terms of the new debt agreements. Net cash used in financing
activities increased primarily due to distributions, of approximately
$3,329,000, paid to the partners in 1998. There were no distributions paid
during 1997. Partially offsetting the distributions paid to the partners were
net proceeds, of approximately $2,689,000, from the refinancing of Creekside
Apartments and The Lodge Apartments during the third quarter of 1998, as
discussed above.
An affiliate of the Managing General Partner has made available to the
Partnership a credit line of up to $150,000 per property owned by the
Partnership. The Partnership has no outstanding amounts due under this line of
credit. Based on present plans, the Managing General Partner does not
anticipate the need to borrow in the near future. Other than cash and cash
equivalents, the line of credit is the Partnership's only unused source of
liquidity.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, State and local legal and regulatory requirements. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The Managing General Partner is currently assessing the need for capital
improvements at each of the Partnership's properties. To the extent that
additional capital improvements are required, the Partnership's distributable
cash flow, if any, may be adversely effected. The mortgage indebtedness of
$41,168,000, net of discount, is amortized over varying periods with maturity
dates ranging from July 1999 at Cooper's Pond Apartments to September 2008.
Although there can be no assurance that it will be able to do so, the Managing
General Partner believes it will be able to refinance the debt maturing in July
1999. The Managing General Partner will attempt to refinance such indebtedness
or sell the properties prior to such maturity date. If the properties cannot be
refinanced or sold for a sufficient amount, the Partnership will risk losing
such properties through foreclosure. Cash distributions of approximately
$3,329,000 were paid during the nine months ended September 30, 1998.
Subsequent to September 30, 1998, a distribution from refinancings of
approximately $2,000,000 was paid. No distributions were made during the nine
months ended September 30, 1997. Future cash distributions will depend on the
level of net cash generated from operations, refinancings, property sales, and
the availability of cash reserves. The Partnership's distribution policy will
be reviewed on a quarterly basis. There can be no assurance, however, that the
Partnership will generate sufficient funds from operations to permit
distributions to its partners in 1998 or subsequent periods.
Transfer of Control; Subsequent Event
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired approximately
51% of the outstanding common shares of beneficial interest of Insignia
Properties Trust ("IPT"), the entity which controls the General Partner of the
Partnership. Also, effective October 1, 1998 IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares.
AIMCO has agreed to vote all of the IPT Shares owned by it in favor of the IPT
Merger and has granted an irrevocable limited proxy to unaffiliated
representatives of IPT to vote the IPT Shares acquired by AIMCO and its
subsidiaries in favor of the IPT Merger. As a result of AIMCO's ownership and
its agreement, the vote of no other holder of IPT is required to approve the
merger. The Managing General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.
Year 2000
GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE
YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Partnership is
dependent upon the Managing General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Managing Agent has determined that it will be required to modify or replace
significant portions of its software and certain hardware so that those systems
will properly utilize dates beyond December 31, 1999. The Managing Agent
presently believes that with modifications or replacements of existing software
and certain hardware, the Year 2000 Issue can be mitigated. However, if such
modifications and replacements are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Managing
Agent and the Partnership.
STATUS OF PROGRESS IN BECOMING YEAR 2000 COMPLIANT
The Managing Agent's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing and implementation. To date, the
Managing Agent has fully completed its assessment of all information systems
that could be significantly affected by the Year 2000, and has begun the
remediation, testing and implementation phase on both hardware and software
systems. Assessments are continuing in regards to embedded systems in operating
equipment. The Managing Agent anticipates having all phases complete by June 1,
1999.
In addition to the areas the Partnership is relying on the Managing Agent to
verify compliance with, the Partnership has certain operating equipment,
primarily at the property sites, which needed to be evaluated for Year 2000
compliance. The focus of the Managing General Partner was to the security
systems, elevators, heating-ventilation-air-conditioning systems, telephone
systems and switches, and sprinkler systems. The Managing General Partner is
currently engaged in the identification of all non-compliant operational
systems, and is in the process of estimating the costs associated with any
potential modifications or replacements needed to such systems in order for them
to be Year 2000 compliant. It is not expected that such costs would have a
material adverse affect upon the operations of the Partnership.
RISK ASSOCIATED WITH THE YEAR 2000
The Managing General Partner believes that the Managing Agent has an effective
program in place to resolve the Year 2000 issue in a timely manner and has
appropriate contingency plans in place for critical applications that could
affect the Partnership's operations. To date, the Managing General Partner is
not aware of any external agent with a Year 2000 issue that would materially
impact the Partnership's results of operations, liquidity or capital resources.
However, the Managing General Partner has no means of ensuring that external
agents will be Year 2000 compliant. The Managing General Partner does not
believe that the inability of external agents to complete their Year 2000
resolution process in a timely manner will have a material impact on the
financial position or results of operations of the Partnership. However, the
effect of non-compliance by external agents is not readily determinable.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date of
this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The Plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at the time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates as well as a recently
announced agreement between Insignia and AIMCO. The complaint seeks monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Managing General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner has filed demurrers to the
amended complaint, which are scheduled to be heard on January 8, 1999. The
Managing General Partner believes the action to be without merit, and intends to
vigorously defend it.
On July 30, 1998 certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties LLC. v.
Insignia Financial Group, Inc. in the Superior Court of the State of California,
County of Los Angeles. The action involves 44 real estate limited partnerships
(including the Partnership) in which the plaintiffs allegedly own interests and
which Insignia Affiliates allegedly manage or control (the "Subject
Partnerships"). The complaint names as defendants Insignia, several Insignia
Affiliates alleged to be managing partners of the defendant limited
partnerships, the Partnership and the Managing General Partner. Plaintiffs
allege that they have requested from, but have been denied by each of the
Subject Partnerships, lists of their respective limited partners for the purpose
of making tender offers to purchase up to 4.9% of the limited partner units of
each of the Subject Partnerships. The complaint also alleges that certain of
the defendants made tender offers to purchase limited partner units in many of
the Subject Partnerships, with the alleged result that plaintiffs have been
deprived of the benefits they would have realized from ownership of the
additional units. The plaintiffs assert eleven causes of action, including
breach of contract, unfair business practices, and violations of the partnership
statutes of the states in which the Subject Partnerships are organized.
Plaintiffs seek compensatory, punitive and treble damages. The Managing General
Partner filed an answer to the complaint on September 15, 1998. The Managing
General Partner believes the claims to be without merit and intends to defend
the action vigorously.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Managing General Partner believes all such
pending or outstanding litigation will be resolved without a material adverse
effect upon the business, financial condition or operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
The exhibits listed on the accompanying Index to Exhibits are filed as
part of this Quarterly Report and incorporated in this Quarterly
Report as set forth in said index.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CENTURY PROPERTIES FUND XVII
By: Fox Capital Management Corporation,
Its Managing General Partner
By: /s/Patrick Foye
Patrick Foye
Executive Vice President
By: /s/Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
(Duly Authorized Officer)
Date: November 12, 1998
Century Properties Fund XVII
Exhibit Index
Exhibit Number Description of Exhibit
10.1 Multifamily Note dated August 24, 1998, by and between
Apartment Lodge 17 A LLC, a Colorado limited liability
company and Newport Mortgage Company, L.P. a Texas limited
partnership.
10.2 Multifamily Note dated August 24, 1998, by and between
Apartment Creek 17 A LLC, a Colorado limited liability
company and Newport Mortgage Company, L.P., a Texas limited
partnership.
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Century Properties Fund XVII 1998 Third Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000356472
<NAME> CENTURY PROPERTIES FUND XVII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 5,018
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 67,746
<DEPRECIATION> 32,075
<TOTAL-ASSETS> 43,347
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 41,168
0
0
<COMMON> 0
<OTHER-SE> 841
<TOTAL-LIABILITY-AND-EQUITY> 43,347
<SALES> 0
<TOTAL-REVENUES> 10,316
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 9,455
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,762
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 765
<EPS-PRIMARY> 9.00<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
MULTIFAMILY NOTE
US $7,200,000.00 August 24, 1998
FOR VALUE RECEIVED, the undersigned ("BORROWER") jointly and severally (if
more than one) promises to pay to the order of NEWPORT MORTGAGE COMPANY, L.P.,
a Texas limited partnership, the principal sum of Seven Million Two Hundred
Thousand Dollars (US $7,200,000.00), with interest on the unpaid principal
balance at the annual rate of six and 43/100 percent (6.43%).
1. DEFINED TERMS. As used in this Note, (i) the term "LENDER" means the
holder of this Note, and (ii) the term "INDEBTEDNESS" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. Event of Default, Key
Principal and other capitalized terms used but not defined in this Note shall
have the meanings given to such terms in the Security Instrument (as defined in
Paragraph 5).
2. ADDRESS FOR PAYMENT. All payments due under this Note shall be
payable at 8411 Preston Road, Suite 680, Dallas, Texas 75225, or such other
place as may be designated by written notice to Borrower from or on behalf of
Lender.
3. PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Forty-Five Thousand, One Hundred Seventy-Seven and 95/100 Dollars
(US $45,177.95), shall be payable on the first day of each month beginning on
October 1, 1998, until the entire unpaid principal balance evidenced by this
Note is fully paid. Any accrued interest remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on September 1, 2008 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "MATURITY DATE"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.
4. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender's discretion. Borrower agrees that neither Lender's
acceptance of a payment from Borrower in an amount that is less than all amounts
then due and payable nor Lender's application of such payment shall constitute
or be deemed to constitute either a waiver of the unpaid amounts or an accord
and satisfaction.
5. SECURITY. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "SECURITY INSTRUMENT"), and reference is made to the Security
Instrument for other rights of Lender concerning the collateral for the
Indebtedness.
6. ACCELERATION. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. LATE CHARGE. If any monthly amount payable under this Note or under
the Security Instrument or any other Loan Document is not received by Lender
within 10 days after the amount is due, Borrower shall pay to Lender,
immediately and without demand by Lender, a late charge equal to 5 percent of
such amount. Borrower acknowledges that its failure to make timely payments
will cause Lender to incur additional expenses in servicing and processing the
loan evidenced by this Note (the "LOAN"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. DEFAULT RATE. So long as any monthly installment or any other payment
due under this Note remains past due for 30 days or more, interest under this
Note shall accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or other payment due, as
applicable, at a rate (the "DEFAULT RATE") equal to the lesser of 4 percentage
points above the rate stated in the first paragraph of this Note or the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment or payment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment or other payment due under this Note is delinquent for more
than 30 days, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. LIMITS ON PERSONAL LIABILITY.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit
or impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default, all Rents to which Lender is entitled under Section 3(a) of the
Security Instrument and the amount of all security deposits collected by
Borrower from tenants then in residence; (2) failure of Borrower to apply all
insurance proceeds and condemnation proceeds as required by the Security
Instrument; (3) failure of Borrower to comply with Section 14(d) or (e) of the
Security Instrument relating to the delivery of books and records, statements,
schedules and reports; (4) fraud or written material misrepresentation by
Borrower, Key Principal or any officer, director, partner, member or employee of
Borrower in connection with the application for or creation of the Indebtedness
or any request for any action or consent by Lender; or (5) failure to apply
Rents, first, to the payment of reasonable operating expenses (other than
Property management fees that are not currently payable pursuant to the terms of
an Assignment of Management Agreement or any other agreement with Lender
executed in connection with the Loan) and then to amounts ("DEBT SERVICE
AMOUNTS") payable under this Note, the Security Instrument or any other Loan
Document (except that Borrower will not be personally liable (i) to the extent
that Borrower lacks the legal right to direct the disbursement of such sums
because of a bankruptcy, receivership or similar judicial proceeding, or (ii)
with respect to Rents that are distributed in any calendar year if Borrower has
paid all operating expenses and Debt Service Amounts for that calendar year).
(c) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; or (2) a Transfer that
is an Event of Default under Section 21 of the Security Instrument.
(d) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "MORTGAGED PROPERTY" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default, or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. VOLUNTARY AND INVOLUNTARY PREPAYMENTS.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all (but not less than all) of
the unpaid principal balance of this Note on the last Business Day of a
calendar month if Borrower has given Lender at least 30 days prior notice
of its intention to make such prepayment. Such prepayment shall be made by
paying (A) the amount of principal being prepaid, (B) all accrued interest,
(C) all other sums due Lender at the time of such prepayment, and (D) the
prepayment premium calculated pursuant to Schedule A. For all purposes,
including the accrual of interest, any prepayment received by Lender on any
day other than the last calendar day of the month shall be deemed to have
been received on the last calendar day of such month. For purposes of this
Note, a "BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business.
(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid
principal balance of this Note outstanding at the time of the acceleration,
(A) all accrued interest and all other sums due Lender under this Note and
the other Loan Documents, and (B) the prepayment premium calculated
pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note
prior to the Maturity Date and in the absence of acceleration shall be
deemed to be a partial prepayment by Borrower, requiring the payment to
Lender by Borrower of a prepayment premium. The amount of any such partial
prepayment shall be computed so as to provide to Lender a prepayment
premium computed pursuant to Schedule A without Borrower having to pay out-
of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than 90
days before the Maturity Date, or (B) any prepayment occurring as a result of
the application of any insurance proceeds or condemnation award under the
Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any required prepayment of less than the unpaid principal balance of
this Note shall not extend or postpone the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender agrees
otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the loan evidenced by
this Note, and acknowledges that the terms of this Note are in other respects
more favorable to Borrower as a result of the Borrower's voluntary agreement to
the prepayment premium provisions.
11. COSTS AND EXPENSES. Borrower shall pay on demand all expenses and
costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. FORBEARANCE. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. WAIVERS. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower, Key Principal, and all
endorsers and guarantors of this Note and all other third party obligors.
14. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Borrower in connection with the
Loan is interpreted so that any interest or other charge provided for in any
Loan Document, whether considered separately or together with other charges
provided for in any other Loan Document, violates that law, and Borrower is
entitled to the benefit of that law, that interest or charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the unpaid principal balance of this Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
Indebtedness that constitutes interest, as well as all other charges made in
connection with the Indebtedness that constitute interest, shall be deemed to be
allocated and spread ratably over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.
15. COMMERCIAL PURPOSE. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. COUNTING OF DAYS. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. GOVERNING LAW. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. CAPTIONS. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. NOTICES. All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be given
in accordance with Section 31 of the Security Instrument.
20. CONSENT TO JURISDICTION AND VENUE. Borrower and Key Principal each
agrees that any controversy arising under or in relation to this Note shall be
litigated exclusively in the jurisdiction in which the Land is located (the
"PROPERTY JURISDICTION"). The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over
all controversies which shall arise under or in relation to this Note. Borrower
and Key Principal each irrevocably consents to service, jurisdiction, and venue
of such courts for any such litigation and waives any other venue to which it
might be entitled by virtue of domicile, habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER, KEY PRINCIPAL AND LENDER EACH (A)
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER, KEY PRINCIPAL AND
BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY
EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL.
ATTACHED SCHEDULES. THE FOLLOWING SCHEDULES ARE ATTACHED TO THIS NOTE:
| X | SCHEDULE A PREPAYMENT PREMIUM (REQUIRED)
| X | SCHEDULE B MODIFICATIONS TO MULTIFAMILY NOTE
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
BORROWER:
APARTMENT LODGE 17 A LLC,
A COLORADO LIMITED LIABILITY COMPANY
By: Fox Partners, a California general partnership, Manager
By: Fox Capital Management Corporation,
a California corporation, Managing General Partner
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr., Vice President
57-1071228
Borrower's Social Security/Employer ID No.
Fannie Mae Loan Number:______________________
ACKNOWLEDGMENT AND AGREEMENT OF KEY PRINCIPAL TO
PERSONAL LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY
Key Principal, who has an economic interest in Borrower or who will
otherwise obtain a material financial benefit from the Loan, hereby absolutely,
unconditionally and irrevocably agrees to pay to Lender, or its assigns, on
demand, all amounts for which Borrower is personally liable under Paragraph 9 of
the Multifamily Note to which this Acknowledgment is attached (the "NOTE"). The
obligations of Key Principal shall survive any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the Security Instrument. Lender may pursue its remedies
against Key Principal without first exhausting its remedies against the Borrower
or the Mortgaged Property. All capitalized terms used but not defined in this
Acknowledgment shall have the meanings given to such terms in the Security
Instrument. As used in this Acknowledgment, the term "Key Principal" (each if
more than one) shall mean only those individuals or entities that execute this
Acknowledgment.
The obligations of Key Principal shall be performed without demand by
Lender and shall be unconditional irrespective of the genuineness, validity, or
enforceability of the Note, or any other Loan Document, and without regard to
any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. Key Principal hereby waives the benefit
of all principles or provisions of law, which are or might be in conflict with
the terms of this Acknowledgment, and agrees that Key Principal's obligations
shall not be affected by any circumstances which might otherwise constitute a
legal or equitable discharge of a surety or a guarantor. Key Principal hereby
waives the benefits of any right of discharge and all other rights under any and
all statutes or other laws relating to guarantors or sureties, to the fullest
extent permitted by law, diligence in collecting the Indebtedness, presentment,
demand for payment, protest, all notices with respect to the Note including this
Acknowledgment, which may be required by statute, rule of law or otherwise to
preserve Lender's rights against Key Principal under this Acknowledgment,
including notice of acceptance, notice of any amendment of the Loan Documents,
notice of the occurrence of any default or Event of Default, notice of intent to
accelerate, notice of acceleration, notice of dishonor, notice of foreclosure,
notice of protest, notice of the incurring by Borrower of any obligation or
indebtedness and all rights to require Lender to (a) proceed against Borrower,
(b) proceed against any general partner of Borrower, (c) proceed against or
exhaust any collateral held by Lender to secure the repayment of the
Indebtedness, or (d) if Borrower is a partnership, pursue any other remedy it
may have against Borrower, or any general partner of Borrower. In addition, Key
Principal waives the benefit of C.R.S. Sections 13-50-101 through 13-50-103,
inclusive.
At any time without notice to Key Principal, and without affecting the
liability of Key Principal hereunder, (a) the time for payment of the principal
of or interest on the Indebtedness may be extended or the Indebtedness may be
renewed in whole or in part; (b) the time for Borrower's performance of or
compliance with any covenant or agreement contained in the Note, or any other
Loan Document, whether presently existing or hereinafter entered into, may be
extended or such performance or compliance may be waived; (c) the maturity of
the Indebtedness may be accelerated as provided in the Note or any other Loan
Document; (d) the Note or any other Loan Document may be modified or amended by
Lender and Borrower in any respect, including an increase in the principal
amount; and (e) any security for the Indebtedness may be modified, exchanged,
surrendered or otherwise dealt with or additional security may be pledged or
mortgaged for the Indebtedness.
Key Principal acknowledges that Key Principal has received a copy of the
Note and all other Loan Documents. Neither this Acknowledgment nor any of its
provisions may be waived, modified, amended, discharged, or terminated except by
an agreement in writing signed by the party against which the enforcement of the
waiver, modification, amendment, discharge, or termination is sought, and then
only to the extent set forth in that agreement. Key Principal agrees to notify
(in the manner for giving notices provided in Section 31 of the Security
Agreement) of any change of Key Principal's address within 10 Business Days
after such change of address occurs. Any notices to Key Principal shall be
given in the manner provided in Section 31 of the Security Instrument. Key
Principal agrees to be bound by Paragraphs 20 and 21 of the Note.
THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART OF, THE
NOTE. BY SIGNING THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO BECOME
AN ACCOMMODATION PARTY TO, OR AN ENDORSER OF, THE NOTE.
IN WITNESS WHEREOF, Key Principal has signed and delivered this
Acknowledgment or has caused this Acknowledgment to be signed and delivered by
its duly authorized representative.
KEY PRINCIPAL
N/A
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made during the first 9.5 years beginning on the
date of the Note (the "YIELD MAINTENANCE PERIOD"), the prepayment
premium shall be the greater of:
(i) 1% of the unpaid principal balance of this Note; or
(ii) The product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the difference obtained by subtracting from the
interest rate on this Note the yield rate (the "YIELD
RATE") on the 5.625% U.S. Treasury Security due May,
2008 (the "SPECIFIED U.S. TREASURY SECURITY"), as the
Yield Rate is reported in The Wall Street Journal on
the fifth Business Day preceding (x) the date notice of
prepayment is given to Lender where prepayment is
voluntary, or (y) the date Lender accelerates the Loan,
by
(C) the present value factor calculated using the following
formula:
1 - (1 + r)-n
r
[r = Yield Rate
n = the number of 365-day years (or 366-day
years, if applicable), and any fraction
thereof, remaining between the Prepayment
Date and the expiration of the Yield
Maintenance Period]
In the event that no Yield Rate is published for the
Specified U.S. Treasury Security, then the nearest
equivalent U.S. Treasury Security shall be selected at
Lender's discretion. If the publication of such Yield
Rates in The Wall Street Journal is discontinued,
Lender shall determine such Yield Rates from another
source selected by Lender.
For purposes of subparagraph (ii)(C), the "PREPAYMENT
DATE" shall be (x) in the case of a voluntary
prepayment, the date on which the prepayment is made,
and (y) in any other case, the date on which Lender
accelerates the unpaid principal balance of this Note.
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 90 days before the Maturity Date, the
prepayment premium shall be 1% of the unpaid principal balance of this
Note.
_______________________________
INITIAL(S)
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
MULTIFAMILY NOTE
US $6,500,000.00 August 24, 1998
FOR VALUE RECEIVED, the undersigned ("BORROWER") jointly and severally (if
more than one) promises to pay to the order of NEWPORT MORTGAGE COMPANY, L.P.,
a Texas limited partnership, the principal sum of SIX MILLION FIVE HUNDRED
THOUSAND AND NO/100 Dollars (US $6,500,000.00), with interest on the unpaid
principal balance at the annual rate of six and 43/100 percent (6.43%).
1. DEFINED TERMS. As used in this Note, (i) the term "LENDER" means the
holder of this Note, and (ii) the term "INDEBTEDNESS" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. Event of Default, Key
Principal and other capitalized terms used but not defined in this Note shall
have the meanings given to such terms in the Security Instrument (as defined in
Paragraph 5).
2. ADDRESS FOR PAYMENT. All payments due under this Note shall be
payable at 8411 Preston Road, Suite 680, Dallas, Texas 75225, or such other
place as may be designated by written notice to Borrower from or on behalf of
Lender.
3. PAYMENT OF PRINCIPAL AND INTEREST. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Forty Thousand, Seven Hundred Eighty-Five and 65/100 Dollars (US
$40,785.65), shall be payable on the first day of each month beginning on
October 1, 1998, until the entire unpaid principal balance evidenced by this
Note is fully paid. Any accrued interest remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on September 1, 2008 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "MATURITY DATE"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.
4. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less
than all amounts due and payable at such time, Lender may apply that payment to
amounts then due and payable in any manner and in any order determined by
Lender, in Lender's discretion. Borrower agrees that neither Lender's
acceptance of a payment from Borrower in an amount that is less than all amounts
then due and payable nor Lender's application of such payment shall constitute
or be deemed to constitute either a waiver of the unpaid amounts or an accord
and satisfaction.
5. SECURITY. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "SECURITY INSTRUMENT"), and reference is made to the Security
Instrument for other rights of Lender concerning the collateral for the
Indebtedness.
6. ACCELERATION. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. LATE CHARGE. If any monthly amount payable under this Note or under
the Security Instrument or any other Loan Document is not received by Lender
within 10 days after the amount is due, Borrower shall pay to Lender,
immediately and without demand by Lender, a late charge equal to 5 percent of
such amount. Borrower acknowledges that its failure to make timely payments
will cause Lender to incur additional expenses in servicing and processing the
loan evidenced by this Note (the "LOAN"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. DEFAULT RATE. So long as any monthly installment or any other payment
due under this Note remains past due for 30 days or more, interest under this
Note shall accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or other payment due, as
applicable, at a rate (the "DEFAULT RATE") equal to the lesser of 4 percentage
points above the rate stated in the first paragraph of this Note or the maximum
interest rate which may be collected from Borrower under applicable law. If the
unpaid principal balance and all accrued interest are not paid in full on the
Maturity Date, the unpaid principal balance and all accrued interest shall bear
interest from the Maturity Date at the Default Rate. Borrower also acknowledges
that its failure to make timely payments will cause Lender to incur additional
expenses in servicing and processing the Loan, that, during the time that any
monthly installment or payment under this Note is delinquent for more than 30
days, Lender will incur additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other obligations and to take advantage of other investment opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment or other payment due under this Note is delinquent for more
than 30 days, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. LIMITS ON PERSONAL LIABILITY.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit
or impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default, all Rents to which Lender is entitled under Section 3(a) of the
Security Instrument and the amount of all security deposits collected by
Borrower from tenants then in residence; (2) failure of Borrower to apply all
insurance proceeds and condemnation proceeds as required by the Security
Instrument; (3) failure of Borrower to comply with Section 14(d) or (e) of the
Security Instrument relating to the delivery of books and records, statements,
schedules and reports; (4) fraud or written material misrepresentation by
Borrower, Key Principal or any officer, director, partner, member or employee of
Borrower in connection with the application for or creation of the Indebtedness
or any request for any action or consent by Lender; or (5) failure to apply
Rents, first, to the payment of reasonable operating expenses (other than
Property management fees that are not currently payable pursuant to the terms of
an Assignment of management Agreement or any other agreement with Lender
executed in connection with the Loan) and then to amounts ("DEBT SERVICE
AMOUNTS") payable under this Note, the Security Instrument or any other Loan
Document (except that Borrower will not be personally liable (i) to the extent
that Borrower lacks the legal right to direct the disbursement of such sums
because of a bankruptcy, receivership or similar judicial proceeding, or (ii)
with respect to Rents that are distributed in any calendar year if Borrower has
paid all operating expenses and Debt Service Amounts for that calendar year).
(c) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; or (2) a Transfer that
is an Event of Default under Section 21 of the Security Instrument.
(d) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "MORTGAGED PROPERTY" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default, or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. VOLUNTARY AND INVOLUNTARY PREPAYMENTS.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all (but not less than all) of
the unpaid principal balance of this Note on the last Business Day of a
calendar month if Borrower has given Lender at least 30 days prior notice
of its intention to make such prepayment. Such prepayment shall be made by
paying (A) the amount of principal being prepaid, (B) all accrued interest,
(C) all other sums due Lender at the time of such prepayment, and (D) the
prepayment premium calculated pursuant to Schedule A. For all purposes,
including the accrual of interest, any prepayment received by Lender on any
day other than the last calendar day of the month shall be deemed to have
been received on the last calendar day of such month. For purposes of this
Note, a "BUSINESS DAY" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business.
(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid
principal balance of this Note outstanding at the time of the acceleration,
(A) all accrued interest and all other sums due Lender under this Note and
the other Loan Documents, and (B) the prepayment premium calculated
pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note
prior to the Maturity Date and in the absence of acceleration shall be
deemed to be a partial prepayment by Borrower, requiring the payment to
Lender by Borrower of a prepayment premium. The amount of any such partial
prepayment shall be computed so as to provide to Lender a prepayment
premium computed pursuant to Schedule A without Borrower having to pay out-
of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than 90
days before the Maturity Date, or (B) any prepayment occurring as a result of
the application of any insurance proceeds or condemnation award under the
Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any required prepayment of less than the unpaid principal balance of
this Note shall not extend or postpone the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender agrees
otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the loan evidenced by
this Note, and acknowledges that the terms of this Note are in other respects
more favorable to Borrower as a result of the Borrower's voluntary agreement to
the prepayment premium provisions.
11. COSTS AND EXPENSES. Borrower shall pay on demand all expenses and
costs, including fees and out-of-pocket expenses of attorneys and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. FORBEARANCE. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. WAIVERS. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower, Key Principal, and all
endorsers and guarantors of this Note and all other third party obligors.
14. LOAN CHARGES. If any applicable law limiting the amount of interest
or other charges permitted to be collected from Borrower in connection with the
Loan is interpreted so that any interest or other charge provided for in any
Loan Document, whether considered separately or together with other charges
provided for in any other Loan Document, violates that law, and Borrower is
entitled to the benefit of that law, that interest or charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the unpaid principal balance of this Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
Indebtedness that constitutes interest, as well as all other charges made in
connection with the Indebtedness that constitute interest, shall be deemed to be
allocated and spread ratably over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.
15. COMMERCIAL PURPOSE. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. COUNTING OF DAYS. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. GOVERNING LAW. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. CAPTIONS. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. NOTICES. All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be given
in accordance with Section 31 of the Security Instrument.
20. CONSENT TO JURISDICTION AND VENUE. Borrower and Key Principal each
agrees that any controversy arising under or in relation to this Note shall be
litigated exclusively in the jurisdiction in which the Land is located (the
"PROPERTY JURISDICTION"). The state and federal courts and authorities with
jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over
all controversies which shall arise under or in relation to this Note. Borrower
and Key Principal irrevocably consents to service, jurisdiction, and venue of
such courts for any such litigation and waives any other venue to which it might
be entitled by virtue of domicile, habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER, KEY PRINCIPAL AND LENDER EACH (A)
AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF
THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER, KEY PRINCIPAL AND
BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY
JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR
IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY
EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL
COUNSEL.
ATTACHED SCHEDULES. THE FOLLOWING SCHEDULES ARE ATTACHED TO THIS NOTE:
| X | SCHEDULE A PREPAYMENT PREMIUM (REQUIRED)
| X | SCHEDULE B MODIFICATIONS TO MULTIFAMILY NOTE
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
BORROWER:
APARTMENT CREEK 17 A, LLC, a Colorado limited liability company
By: Fox Partners, a California general partnership, Manager
By: Fox Capital Management Corporation,
a California corporation, Managing General Partner
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr., Vice President
57-1071230
Borrower's Social Security/Employer ID No.
Fannie Mae Loan Number:_____________________
ACKNOWLEDGMENT AND AGREEMENT OF KEY PRINCIPAL TO
PERSONAL LIABILITY FOR EXCEPTIONS TO NON-RECOURSE LIABILITY
Key Principal, who has an economic interest in Borrower or who will
otherwise obtain a material financial benefit from the Loan, hereby absolutely,
unconditionally and irrevocably agrees to pay to Lender, or its assigns, on
demand, all amounts for which Borrower is personally liable under Paragraph 9 of
the Multifamily Note to which this Acknowledgment is attached (the "NOTE"). The
obligations of Key Principal shall survive any foreclosure proceeding, any
foreclosure sale, any delivery of any deed in lieu of foreclosure, and any
release of record of the Security Instrument. Lender may pursue its remedies
against Key Principal without first exhausting its remedies against the Borrower
or the Mortgaged Property. All capitalized terms used but not defined in this
Acknowledgment shall have the meanings given to such terms in the Security
Instrument. As used in this Acknowledgment, the term "Key Principal" (each if
more than one) shall mean only those individuals or entities that execute this
Acknowledgment.
The obligations of Key Principal shall be performed without demand by
Lender and shall be unconditional irrespective of the genuineness, validity, or
enforceability of the Note, or any other Loan Document, and without regard to
any other circumstance which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. Key Principal hereby waives the benefit
of all principles or provisions of law, which are or might be in conflict with
the terms of this Acknowledgment, and agrees that Key Principal's obligations
shall not be affected by any circumstances which might otherwise constitute a
legal or equitable discharge of a surety or a guarantor. Key Principal hereby
waives the benefits of any right of discharge and all other rights under any and
all statutes or other laws relating to guarantors or sureties, to the fullest
extent permitted by law, diligence in collecting the Indebtedness, presentment,
demand for payment, protest, all notices with respect to the Note including this
Acknowledgment, which may be required by statute, rule of law or otherwise to
preserve Lender's rights against Key Principal under this Acknowledgment,
including notice of acceptance, notice of any amendment of the Loan Documents,
notice of the occurrence of any default or Event of Default, notice of intent to
accelerate, notice of acceleration, notice of dishonor, notice of foreclosure,
notice of protest, notice of the incurring by Borrower of any obligation or
indebtedness and all rights to require Lender to (a) proceed against Borrower,
(b) proceed against any general partner of Borrower, (c) proceed against or
exhaust any collateral held by Lender to secure the repayment of the
Indebtedness, or (d) if Borrower is a partnership, pursue any other remedy it
may have against Borrower, or any general partner of Borrower. In addition, Key
Principal waives the benefit of C.R.S. Sections 13-50-101 through 13-50-103,
inclusive.
At any time without notice to Key Principal, and without affecting the
liability of Key Principal hereunder, (a) the time for payment of the principal
of or interest on the Indebtedness may be extended or the Indebtedness may be
renewed in whole or in part; (b) the time for Borrower's performance of or
compliance with any covenant or agreement contained in the Note, or any other
Loan Document, whether presently existing or hereinafter entered into, may be
extended or such performance or compliance may be waived; (c) the maturity of
the Indebtedness may be accelerated as provided in the Note or any other Loan
Document; (d) the Note or any other Loan Document may be modified or amended by
Lender and Borrower in any respect, including an increase in the principal
amount; and (e) any security for the Indebtedness may be modified, exchanged,
surrendered or otherwise dealt with or additional security may be pledged or
mortgaged for the Indebtedness.
Key Principal acknowledges that Key Principal has received a copy of the
Note and all other Loan Documents. Neither this Acknowledgment nor any of its
provisions may be waived, modified, amended, discharged, or terminated except by
an agreement in writing signed by the party against which the enforcement of the
waiver, modification, amendment, discharge, or termination is sought, and then
only to the extent set forth in that agreement. Key Principal agrees to notify
Lender (in the manner for giving notices provided in Section 31 of the Security
Instrument) of any change of Key Principal's address within 10 Business Days
after such change of address occurs. Any notices to Key Principal shall be
given in the manner provided in Section 31 of the Security Instrument. Key
Principal agrees to be bound by Paragraphs 20 and 21 of the Note.
THIS ACKNOWLEDGMENT IS AN INSTRUMENT SEPARATE FROM, AND NOT A PART OF, THE
NOTE. BY SIGNING THIS ACKNOWLEDGMENT, KEY PRINCIPAL DOES NOT INTEND TO BECOME
AN ACCOMMODATION PARTY TO, OR AN ENDORSER OF, THE NOTE.
IN WITNESS WHEREOF, Key Principal has signed and delivered this
Acknowledgment or has caused this Acknowledgment to be signed and delivered by
its duly authorized representative.
KEY PRINCIPAL:
N/A
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made during the first 9.5 years beginning on the
date of the Note (the "YIELD MAINTENANCE PERIOD"), the prepayment
premium shall be the greater of:
(i) 1% of the unpaid principal balance of this Note; or
(ii) The product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the difference obtained by subtracting from the
interest rate on this Note the yield rate (the "YIELD
RATE") on the 5.625% U.S. Treasury Security due May,
2008 (the "SPECIFIED U.S. TREASURY SECURITY"), as the
Yield Rate is reported in The Wall Street Journal on
the fifth Business Day preceding (x) the date notice of
prepayment is given to Lender where prepayment is
voluntary, or (y) the date Lender accelerates the Loan,
by
(C) the present value factor calculated using the following
formula:
1 - (1 + r)-n
r
[r = Yield Rate
n = the number of 365-day years (or 366-day
years, if applicable), and any fraction
thereof, remaining between the Prepayment
Date and the expiration of the Yield
Maintenance Period]
In the event that no Yield Rate is published for the
Specified U.S. Treasury Security, then the nearest
equivalent U.S. Treasury Security shall be selected at
Lender's discretion. If the publication of such Yield
Rates in The Wall Street Journal is discontinued,
Lender shall determine such Yield Rates from another
source selected by Lender.
For purposes of subparagraph (ii)(C), the "PREPAYMENT
DATE" shall be (x) in the case of a voluntary
prepayment, the date on which the prepayment is made,
and (y) in any other case, the date on which Lender
accelerates the unpaid principal balance of this Note.
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 90 days before the Maturity Date, the
prepayment premium shall be 1% of the unpaid principal balance of this
Note.
________________________________
INITIAL(S)
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
