UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31,1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from
to
Commission file number 0-11987
Krupp Realty Limited Partnership-IV
Massachusetts
04-2772783
(State or other jurisdiction of
(IRS employer
incorporation or organization)
identification no.)
One Beacon Street, Boston, Massachusetts
02108
(Address of principal executive offices)
(Zip Code)
(617) 523-7722
(Registrant's telephone number, including
area code)
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the
registrant was required to file such reports),
and (2) has been subject to such filing
requirements for the past 90 days. Yes X
No
The total number of pages in this document is
13.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1.CONSOLIDATED FINANCIAL STATEMENTS
This form 10-Q contains forward-looking
statements within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.
Actual results could differ materially from
those projected in the forward-looking
statements as a result of a number of factors,
including those identified herein.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
(Unaudited)
March 31, December 31,
1999 1998
Multi-family apartment complexes, net of
accumulated depreciation of $23,627,670
<S> <C> <C>
and $23,263,961, respectively (Note 3) $11,417,758 $11,585,489
Cash and cash equivalents 662,052 774,230
Prepaid expenses and other assets 407,205 795,705
Deferred expenses, net of accumulated
amortization of $241,094 and $256,510,
respectively (Notes 2 and 3) 106,505 90,528
Total assets $12,593,520 $13,245,952
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage notes payable (Notes 2 and 3) $16,782,705 $16,933,049
Due to affiliates (Note 5) 85,151 10,734
Other liabilities 540,557 938,569
Total liabilities 17,408,413 17,882,352
Partners' deficit (Note 4):
Investor Limited Partners
(30,000 Units outstanding) (3,149,223) (2,979,654)
Original Limited Partner (1,358,969) (1,351,830)
General Partners (306,701) (304,916)
Total Partners' deficit (4,814,893) (4,636,400)
Total liabilities and Partners' deficit $12,593,520 $13,245,952
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
Revenue:
<S> <C> <C>
Rental $1,718,127 $1,950,181
Other income 12,745 23,398
Total revenue 1,730,872 1,973,579
Expenses:
Operating (Note 5) 419,744 565,146
Maintenance 128,997 104,318
Real estate taxes 188,983 206,577
Management fees (Note 5) 65,202 81,661
General and administrative (Note 5) 30,530 30,338
Depreciation and amortization 378,182 486,774
Interest 306,293 336,643
Total expenses 1,517,931 1,811,457
Income before minority interest, gain on
sale of property and extraordinary loss 212,941 162,122
Minority interest (1,651) (1,447)
Gain on sale of property (Note 3) - 2,979,330
Income before extraordinary loss 211,290 3,140,005
Extraordinary loss from early
extinguishment of debt (Note 3) - (389,523)
Net income $ 211,290 $2,750,482
Allocation of net income (Note 4):
Investor Limited Partners
(30,000 Units outstanding):
Income before gain on sale of property
and extraordinary loss $ 200,725 $ 152,641
Gain on sale of property - 2,949,537
Extraordinary loss - (385,628)
Net income $ 200,725 $2,716,550
Investor Limited Partners Per Unit:
Income before gain on sale of property
and extraordinary loss $ 6.69 $ 5.08
Gain on sale of property - 98.32
Extraordinary loss - (12.85)
Net income $ 6.69 $ 90.55
</TABLE>
Continued
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS, Continued
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
Original Limited Partner
(100 Units outstanding):
Income before gain on sale of property
<S> <C> <C>
and extraordinary loss $ 8,452 $ 6,427
Gain on sale of property - -
Extraordinary loss - -
Net income $ 8,452 $ 6,427
General Partners:
Income before gain on sale of property
and extraordinary loss $ 2,113 $ 1,607
Gain on sale of property - 29,793
Extraordinary loss - (3,895)
Net income $ 2,113 $ 27,505
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months Ended March 31,
1999 1998
Cash flows from operating activities:
Net income $211,290 $2,750,482
Adjustment to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 378,182 486,774
Interest earned on repair escrow - (12,898)
Gain on sale of property - (2,979,330)
Extraordinary loss from early extinguishment
of debt - 389,523
Changes in assets and liabilities:
Decrease in prepaid expenses and other assets 388,500 445,521
Decrease in other liabilities (399,049)(549,729)
Increase in due to affiliates 74,417 59,641
Releases from real estate tax and insurance escrows
due to sale of property - 33,722
Net cash provided by operating activities 653,340 623,706
Cash flows from investing activities:
Deposits to replacement reserve and repair
escrows - (10,769)
Withdrawals from replacement reserve and repair
escrows - 315,159
Release from replacement reserve escrow due to
sale of property - 11,493
Decrease in deferred expenses - 3,191
Increase in other liabilities for fixed asset
additions 1,037 10,035
Additions to fixed assets (195,978)(330,907)
Proceeds from sale of property, net - 5,724,255
Net cash provided by (used in)investing
activities (194,941) 5,722,457
Cash flows from financing activities:
Principal payments on mortgage notes payable (150,344) (194,737)
Distributions (389,783) (589,425)
Repayment of mortgage note payable - (2,638,042)
Increase in deferred expenses (30,450) -
Payment of prepayment premium - (335,863)
Net cash used in financing
activities (570,577)(3,758,067)
Net increase (decrease) in cash and cash equivalents
(112,178) 2,588,096
Cash and cash equivalents, beginning of period774,230 402,621
Cash and cash equivalents, end of period $662,052$2,990,717
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1)Accounting Policies
Certain information and footnote disclosures
normally included in financial statements
prepared in accordance with generally accepted
accounting principles have been condensed or
omitted in this report on Form 10-Q pursuant
to the Rules and Regulations of the Securities
and Exchange Commission. In the opinion of
the General Partners of Krupp Realty Limited
Partnership-IV and Subsidiaries (the
"Partnership"), the disclosures contained in
this report are adequate to make the
information presented not misleading. See
Notes to Consolidated Financial Statements
included in the Partnership's Annual Report on
Form 10-K for the year ended December 31, 1998
for additional information relevant to
significant accounting policies followed by
the Partnership.
The consolidated financial statements present
consolidated assets, liabilities and
operations of Pavillion Partners, Ltd.,
Westbridge Partners, Ltd., and Krupp Realty
Limited Partnership-IV. Westcop Corporation
has a 1% interest in the operations of
Westbridge Partners, Ltd. and Pavillion
Partners, Ltd. At March 31, 1999 and December
31, 1998, minority interest of $14,058 and
$15,709, respectively, is included in other
assets.
In the opinion of the General Partners of the
Partnership, the accompanying unaudited
consolidated financial statements reflect all
adjustments (consisting of only normal
recurring accruals) necessary to present
fairly the Partnership's consolidated
financial position as of March 31, 1999 and
its results of operations and cash flows for
the three months ended March 31, 1999 and
1998. Certain prior period balances have been
reclassified to conform with current period
consolidated financial statement presentation.
The results of operations for the three months
ended March 31, 1999 are not necessarily
indicative of the results which may be
expected for the full year. See Management's
Discussion and Analysis of Financial Condition
and Results of Operations included in this
report.
(2)Mortgage Notes Payable
On February 28, 1999, the Partnership
completed the refinancing of Walden Pond
Apartments' mortgage notes payable of
$5,500,000 and $900,000 with monthly principal
payments of $6,500 and $1,100, respectively,
and interest payments at the Contract rate of
interest equal to the greater of (a) 0.5% per
annum in excess of prime rate, or (b) 8% per
annum. The mortgage notes mature on February
28, 2001 and may be prepaid in whole, but not
in part, without a prepayment premium with 45
days prior written notice. The Partnership
paid closing costs of $30,450 for the
refinancing.
Continued<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(3)Sale of Property
On March 31, 1998, the Partnership sold Indian
Run Apartments ("Indian Run"), a 256-unit
multi-family apartment complex, located in
Abilene, Texas, to an unaffiliated third
party. The Partnership received $5,850,000,
less repayment of the mortgage note payable
and interest of $2,658,664 and closing costs
of $138,518. For financial reporting
purposes, the Partnership realized a gain of
$2,979,330 on the sale as of March 31, 1998.
The Partnership realized a final gain of
$2,960,743 on the sale as of December 31,
1998. The gain was calculated as the
difference between the property's selling
price less net book value of the property and
closing costs.
In conjunction with the sale of the property
on March 31, 1998, the Partnership prepaid the
mortgage note. As a result of the retirement
of debt, the Partnership incurred a prepayment
premium of $335,863. The prepayment premium,
as well as unamortized deferred mortgage costs
of $53,660, are reported in the Consolidated
Statement of Operations as an extraordinary
loss from early extinguishment of debt.
(4)Changes in Partners' Deficit
A summary of changes in Partners' deficit for
the three months ended March 31, 1999 is as
follows:
<TABLE>
<CAPTION>
Investor Original Total
Limited Limited General Partners'
Partners Partner Partners Deficit
Balance at
<S> <C> <C> <C> <C>
December 31, 1998 $(2,979,654)$(1,351,830)$(304,916)$(4,636,400)
Net income 200,725 8,452 2,113 211,290
Distributions (370,294) (15,591) (3,898) (389,783)
Balance at
March 31, 1999 $(3,149,223)$(1,358,969)$(306,701)$(4,814,893)
</TABLE>
Continued<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(5)Related Party Transactions
The Partnership pays property management fees
to an affiliate of the General Partners for
management services. Pursuant to the
management agreements, management fees are
payable monthly at a rate of 5% of the gross
receipts from the properties under management.
The Partnership also reimburses affiliates of
the General Partners for certain expenses
incurred in connection with the operation of
the Partnership and its properties, including
administrative expenses.
Amounts accrued or paid to the General
Partners' affiliates were as follows:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1999 1998
<S> <C> <C>
Property management fees $ 65,202 $ 81,661
Expense reimbursements 27,795 38,952
Charged to operations $ 92,997 $120,613
</TABLE>
Due to affiliates consisted of expense
reimbursements of $85,151 and $10,734 at
March 31, 1999 and December 31, 1998,
respectively.
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Item 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management's Discussion and Analysis of
Financial Condition and Results of Operations
contains forward-looking statements including
those concerning Management's expectations
regarding the future financial performance and
future events. These forward-looking
statements involve significant risk and
uncertainties, including those described
herein. Actual results may differ materially
from those anticipated by such forward-looking
statements.
Liquidity and Capital Resources
The Partnership's ability to generate cash
adequate to meet its needs is dependent
primarily upon the operations of its remaining
real estate investments. Such ability would
also be impacted by the future availability of
bank borrowings, and upon the future
refinancing and sale of the Partnership's real
estate investments. These sources of
liquidity will be used by the Partnership for
payment of expenses related to real estate
operations, capital improvements, debt service
and other expenses. Cash flow, if any as
calculated under Section 8.2(a) of the
Partnership Agreement, will then be available
for distribution to the Partners.
The General Partners, on an ongoing basis,
assess the current and future liquidity needs
in determining the levels of working capital
reserves the Partnership should maintain.
Adjustments to distributions are made when
appropriate to reflect such assessments. Due
to improved operations during the last half of
1998, the General Partners increased the
distribution rate from $9.33 per Unit paid in
August, 1998 to $24.69 per Unit, beginning
with the distribution paid in February, 1999.
The Partnership made a special distribution of
$2,034,000, $67.12 per Unit, during the second
quarter of 1998 based on the remaining
proceeds from the sale of Indian Run
Apartments.
On March 31, 1998, the Partnership sold Indian
Run to an unaffiliated third party. The
Partnership received $5,850,000, less
repayment of the mortgage note payable and
interest of $2,658,664 and closing costs of
$138,528. Proceeds from the sale were
retained to fund liabilities of the
Partnership and reserves for contingent
liabilities. The balance of the reserves
remaining after satisfaction of such
contingencies were distributed in accordance
with the Partnership Agreement.
On February 28, 1999, the Partnership
completed the refinancing of Walden Pond
Apartments' mortgage notes payable of
$5,500,000 and $900,000 which mature on
February 28, 2001. The Partnership paid
closing costs of $30,450 for the refinancing
(see Note 2).
The Partnership apartment markets are currently
experiencing an increase in competition from recently
renovated existing properties and new construction.
The General Partners are in the process of evaluating
strategies to improve the competitiveness, which may
include the possibility of additional capital expenditures
to modernize the Partnership's properties.
The General Partners of the Partnership have
conducted an assessment of the Partnership's
core internal and external computer
information systems and have taken the further
necessary steps to understand the nature and
extent of the work required to make its
systems Year 2000 ready in those situations in
which it is required to do so. The Year 2000
readiness issue concerns the inability of
computerized information systems to accurately
calculate, store or use a date after 1999.
This could result in a system failure or
miscalculations causing disruptions of
operations. The Year 2000 issue affects
virtually all companies and all organizations.
Continued
KRUPP REALTY LIMITED PARTNERSHIP-IV AND
SUBSIDIARIES
Liquidity and Capital Resources, Continued
In this regard, the General Partners of the
Partnership, along with certain affiliates,
began a computer systems project in 1997 to
significantly upgrade its existing hardware
and software. The General Partners completed
the testing and conversion of the financial
accounting operating systems in February 1998.
As a result, the General Partners have
generated operating efficiencies and believe
their financial accounting operating systems
are Year 2000 ready. Costs incurred by the
Partnership are not significant to date.
There are no other systems or software that
the Partnership is using at the present time.
The General Partners of the Partnership are
currently in the process of identifying,
evaluating and remedying the Partnership's
Year 2000 compliance issues with respect to
its non-financial systems, such as computer
controlled elevators, boilers, chillers or
other miscellaneous systems. The General
Partners are in the process of completing the
Partnership's Year 2000 compliance initiatives
at its properties. Based on their
identification and assessment efforts to date,
the General Partners believe that certain of
the computer equipment and software the
Partnership currently uses will require
modification or replacement. However, the
General Partners do not believe that the
future efforts to achieve the Partnership's
Year 2000 compliance initiatives will result
in material cost to the Partnership or
significantly interrupt services or
operations.
The General Partners of the Partnership are in
the process of evaluating the potential
adverse impact that could result from the
failure of material third-party service
providers (including but not limited to its
banks and telecommunications providers) and
significant vendors to be Year 2000 ready. No
estimate can be made at this time as to the
impact of the readiness of such third parties.
However, if any of the third party service
providers cease to conduct business due to
Year 2000 related problems, the General
Partners expect to be able to contract with
alternate providers without experiencing any
material adverse effects on the Partnership's
financial condition and results of operations.
The Partnership is in the process of
coordinating their contingency plan with the
property manager in charge of operations.
Operations
The following discussion relates to the
operations of the Partnership and its
properties (Fenland Field, Pavillion and
Walden Pond Apartments) for the three months
ended March 31, 1999 and 1998. The sale of
Indian Run on March 31, 1998, significantly
impacts the comparability of the Partnership's
operations between these periods.
Net income, net of Indian Run's activity,
increased for the three months ended March 31,
1999 when compared to the same period in 1998
as the increase in total revenue more than
offset the increase in total expenses. The
increase in total revenue is a result of
rental rate increases implemented at Walden
Pond and Pavillion Apartments, as well as an
increase in occupancy at Pavillion Apartments.
Interest income decreased due to higher cash
and cash equivalents balances available for
investment in 1998, a result of the sale of
Indian Run Apartments in 1998.
Continued
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
Operations, Continued
Total expenses for the three months ended
March 31, 1999, net of Indian Run's activity,
increased as compared to the three months
ended March 31, 1998 with increases in
maintenance, real estate taxes and interest
expenses, partially offset by a decrease in
operating expense. Maintenance increased due
to landscaping and other exterior
beautification upgrades at Pavillion and snow
removal expenditures at Fenland Field. Real
estate taxes increased as a result of the
reassessments of Walden Pond and Pavillion
Apartments' property value by the local taxing
authority. Interest expense increased with
the refinancing of Walden Pond Apartments'
mortgage notes payable (see Note 2).
Operating expense decreased primarily due to a
reduction in insurance liability and workers
compensation expense at the Partnership's
properties, due to lower claims experience.
<PAGE>
KRUPP REALTY LIMITED PARTNERSHIP-IV AND SUBSIDIARIES
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Walden Pond Apartments
(10.1) First Renewal, Extension and Modification
Agreements dated February 28, 1999 between
Westbridge Partners, Ltd. and FirstTrust
Savings Bank.
(b) Reports on Form 8-K
Response: None
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Krupp Realty Limited Partnership-IV
(Registrant)
BY:/s/Wayne H. Zarozny
Wayne H. Zarozny
Treasurer and Chief Accounting
Officer of the Krupp
Corporation,a General Partner.
DATE: May 14, 1999
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Krupp
Realty Fund 4 Financial Statements for the three months ended March 31, 1999
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 662,052
<SECURITIES> 0
<RECEIVABLES> 7,530<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 399,675
<PP&E> 35,393,027<F2>
<DEPRECIATION> (23,868,764)<F3>
<TOTAL-ASSETS> 12,593,520
<CURRENT-LIABILITIES> 625,708
<BONDS> 16,782,705<F4>
0
0
<COMMON> (4,814,893)<F5>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,593,520
<SALES> 0
<TOTAL-REVENUES> 1,730,872<F6>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,211,638<F7>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 306,293
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 1,651<F8>
<CHANGES> 0
<NET-INCOME> 211,290<F9>
<EPS-PRIMARY> 0<F9>
<EPS-DILUTED> 0<F9>
<FN>
<F1>Includes all receivables grouped in"prepaid expenses and other assets" on the
Balance Sheet.
<F2>Multi-family complexes of $35,045,428 and deferred expenses of $347,599.
<F3>Accumulated depreciation of $23,627,670 and accumulated amortization of
deferred expenses of $241,094.
<F4>Represents mortgage notes payable.
<F5>Represents total defecit of the General Partners and Limited Partners of
($306,701)and ($4,508,192), respectively.
<F6>Includes all revenue of the Partnership.
<F7>Includes operating expenses of $644,473, real estate taxes of $188,983 and
depreciation and amortization of $378,182.
<F8>Includes minority interest of ($1,651).
<F9>Net income allocated $2,113 to the General Partners and $209,177 to the
Limited Partners. Average net income per Unit of Limited Partners interest
is $6.69 on 30,000 Units outstanding.
</FN>
</TABLE>
Loan No. 2883614
FIRST RENEWAL, EXTENSION
AND MODIFICATION AGREEMENT
THIS FIRST RENEWAL, EXTENSION AND
MODIFICATION AGREEMENT (this "Agreement") is
entered into as of February 28, 1999, by and
between FIRSTRUST SAVINGS BANK, a Pennsylvania
chartered savings bank ("Lender"), and
WESTBRIDGE PARTNERS, LTD., a Texas limited
partnership ("Borrower"), on the following
terms and conditions:
RECITALS:
A. University Mortgage Acquisition
Corp. ("UMAC"") and Borrower entered into a
loan to Borrower in the amount of up to
$5,500,000 (the "Loan"), as evidenced by that
Promissory Note dated February 28, 1992, in
the stated principal amount of $5,500,000,
executed by Borrower, bearing interest and
being payable to the order of UMAC as therein
provided (the "Note");
B. The Loan is further evidenced and/or
secured by (i) that Renewal Multifamily Deed
of Trust, Assignment of Rents, Security
Agreement (the "Deed of Trust"), dated
February 28, 1992, executed by Borrower, filed
for recording in the Office of the County
Clerk of Harris County, Texas under Clerk's
File No. N627941 and recorded at Film Code No.
###-##-####, et seq., of the Real Property
Records of Harris County, Texas, and
encumbering the real and other property
situated in Harris County, Texas and described
therein (the "Property"), (ii) that Assignment
of Rents and Leases (the "Assignment of
Rents"), dated February 18, 1992, executed by
Borrower, filed for recording in the Office of
the County Clerk of Harris County, Texas under
Clerk's File No. N627942 and recorded at Film
Code No. ###-##-####, et seq., of the Real
Property Records of Harris County, Texas, and
assigning to Lender the rents and leases of
the Property, and (iii) the liens and security
interests created under other documents and
instruments (the Note, the Deed of Trust, the
Assignment of Rents, and all other documents
and instruments evidencing, securing,
governing or otherwise pertaining to the Loan
being hereinafter collectively called the
"Loan Documents");
C.UMAC assigned and transferred the Note, the
Deed of Trust, the Assignment of Rents and the
other Loan Documents to Lender under that
instrument dated August 7, 1992 and filed for
recording in the Office of the County Clerk of
Harris County, Texas under Clerk's File
No. N816683; and
D. Borrower has requested Lender to extend
the maturity date of the Loan and to modify
the terms of the Note and the other Loan
Documents, and Lender has agreed to such
extension and modification of the Note and the
other Loan Documents on the terms and
conditions set forth below;
AGREEMENTS:
NOW, THEREFORE, in consideration of the
premises and other good and valuable
consideration, including the payment by
Borrower to Lender of an extension fee in the
amount of $25,950, the receipt of which by
Lender is a condition precedent to the
effectiveness of this Agreement, Borrower and
Lender agree as follows:
1. Modification of Payment Terms. The
payment terms of the Note are hereby modified
as follows:
1.1 Maturity Date. The term of the
Loan and the Note is amended to mature on
February 28, 2001, and the maturity date of
the Note is hereby modified and amended to be
February 28, 2001.
1.2 Contract Rate. From and after
the date hereof, the Loan and the Note shall
bear interest at a rate equal to the greater
of (a) one-half percent (0.5%) per annum in
excess of the Prime Rate, or (b) eight percent
(8%) per annum (the "Contract Rate"). As used
herein, "Prime Rate" shall mean the highest
prime rate (or base rate) reported in the
Money Rates column or section of The Wall
Street Journal published on the second
business day of the month preceding the month
in which a payment of interest and/or
principal is due on the Loan, as having been
the rate in effect for corporate loans at
large U.S. money center commercial banks
(whether or not such rate has actually been
charged by any such bank) as of the first
calendar day of such month for which such rate
is published. If The Wall Street Journal
ceases publication of the Prime Rate, the
"Prime Rate" shall mean the prime rate (or
commercial reference rate) announced by Lender
(whether or not such rate has actually been
charged by Lender).
1.3 Payments. Borrower hereby
renews and extends the Note, the Deed of
Trust, the Assignment of Rents, and all of the
other Loan Documents. From and after the date
hereof Borrower shall make payments on the
Note to Lender as follows:
(1) Interest. On the first (1st)
day of each month commencing March 1,
1999, and continuing to and including
February 1, 2001, Borrower shall pay to
Lender all accrued but unpaid interest on
the Note at the Contract Rate. A final
payment of principal, interest and other
charges under the Loan shall be due and
payable on the maturity date of the Note,
as modified under Section 1.1 of this
Agreement.
(2) Principal. In addition to
monthly payments of interest hereunder,
on the first (1st) day of each month,
commencing March 1, 1999, Borrower shall
make a payment to Lender equal to $6,500,
such payment to be applied in reduction
of the principal balance of the Note.
(3) Prepayment. Upon not less than
forty-five (45) days prior written notice
to Lender, Borrower may prepay the Loan,
in whole but not in part, without
prepayment premium.
2. Modification of Loan Documents Generally. The Deed of
Trust, the Assignment of Rents, and the other Loan Documents are
further modified, renewed and extended, to provide that all
references therein to the Note shall mean and refer to the Note,
as renewed, extended and modified by this Agreement.
3. Liens. In conjunction with the
renewal, extension and modification of the
Note, the Deed of Trust, the Assignment of
Rents, and the other Loan Documents, Borrower
hereby agrees that such renewal, extension and
modification shall in no manner affect or
impair the Note or the liens, assignments and
security interests under the Deed of Trust and
the other Loan Documents, and that said liens,
assignments and security interests shall not
in any manner be waived, the purpose of this
Agreement being simply to renew, extend and
modify the Note, the Deed of Trust, the
Assignment of Rents, and the other Loan
Documents, and Borrower further agrees that,
as modified by this Agreement, all terms and
provisions of the Note, the Deed of Trust, the
Assignment of Rents, and the other Loan
Documents shall be and remain in full force
and effect as therein written.
4. No Defenses. Borrower hereby
covenants and warrants that Lender is not in
default in the performance of any of its
obligations or warranties under the Loan
Documents; that there are no defenses,
counterclaims or offsets to the Loan
Documents; and that all of the provisions of
the Loan Documents are in full force and
effect.
5. Costs. Borrower agrees to pay all
costs incurred in connection with the
execution and consummation of this Agreement,
including but not limited to, all recording
costs and the fees and expenses of Lender's
counsel.
6. Maximum Amount. All agreements
between Borrower and Lender, whether now
existing or hereafter arising and whether
written or oral, are hereby expressly limited
so that in no contingency, whether by reason
of acceleration of the maturity of the Note or
otherwise, shall the interest contracted for,
charged, received, paid or agreed to be paid
to the holder of the Note exceed the maximum
amount permissible under applicable law. If,
from any circumstance whatsoever, interest
would otherwise be payable to the holder of
the Note in excess of the maximum lawful
amount, the interest payable to the holder of
the Note shall be reduced to the maximum
amount permitted by applicable law; and if
from any circumstance the holder of the Note
shall ever receive anything of value deemed
interest in excess of the maximum amount
allowed by applicable law, an amount equal to
any excessive interest shall be applied to the
reduction of the principal amount owing under
the Note, and not to the payment of interest,
or if such excessive interest exceeds such
unpaid balance of principal of the Note, such
excess shall be refunded to Borrower. All
interest paid or agreed to be paid to the
holder of the Note shall, to the extent
permitted by applicable law, be amortized,
prorated, allocated and spread throughout the
full term of the Note, (including the period
of any renewal or extension thereof) so that
the interest on the Note shall not exceed the
maximum amount permitted by applicable law.
This Section 6 shall control all agreements
between Borrower and the holder of the Note.
Executed effective as of the date first set forth above.
LENDER: FIRSTRUST SAVINGS BANK, a
Pennsylvania-chartered savings bank
By:/s/ William F. Bruckner
William F. Bruckner, Vice
President
BORROWER: WESTBRIDGE PARTNERS, LTD.,
a Texas limited partnership
By: WEST COP CORPORATION,
a Texas corporation, General
Partner
By:/s/ Stephen C. Parthum
Stephen C. Parthum, Duly
Authorized Agent
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF MONTGOMERY
This instrument was acknowledged before me on February 22,
1999, by WILLIAM F. BRUCKNER, Vice President of FIRSTRUST SAVINGS
BANK, a Pennsylvania chartered savings bank, on behalf of said
savings bank.
(SEAL) /s/ Rose Tirado Turner
Notary Public, Commonwealth of
Pennsylvania
Rose Tirado Turner
Printed name of notary
My Commission Expires:November 20,
2000
STATE OF GEORGIA
COUNTY OF COBB
This instrument was acknowledged before me on February 18,
1999, by STEPHEN C. PARTHUM, Duly Authorized Agent of WEST COP
CORPORATION, a Texas corporation and General Partner of WESTBRIDGE
PARTNERS, LTD., a Texas limited partnership, on behalf of said
corporation and said limited partnership.
(SEAL) /s/ Carla Lee Thomason-Redding
Notary Public, State of Georgia
Carla Lee Thomason-Redding
Printed name of notary
My Commission Expires:October 30,
1999
<PAGE>
Loan No. 2916512
FIRST RENEWAL, EXTENSION
AND MODIFICATION AGREEMENT
THIS FIRST RENEWAL, EXTENSION AND MODIFICATION AGREEMENT (this
"Agreement") is entered into as of February 28, 1999, by and
between FIRSTRUST SAVINGS BANK, a Pennsylvania chartered savings
bank ("Lender"), and WESTBRIDGE PARTNERS, LTD., a Texas limited
partnership ("Borrower"), on the following terms and conditions:
RECITALS:
A. Lender and Borrower entered into that Loan Agreement
dated as of July 31, 1997 (the "Loan Agreement"), pursuant to which
Lender made a loan to Borrower in the amount of up to $900,000 (the
"Loan"), as evidenced by that Promissory Note dated July 31, 1997,
in the stated principal amount of $900,000, executed by Borrower,
bearing interest and being payable to the order of Lender as
therein provided (the "Note");
B. The Loan is further evidenced and/or secured by (i) that
Deed of Trust, Security Agreement and Fixture Filing (the "Deed of
Trust"), dated July 31, 1997, executed by Borrower, filed for
recording in the Office of the County Clerk of Harris County, Texas
under Clerk's File No. S606015 and recorded at Film Code No. 514-
48-0901, et seq., of the Real Property Records of Harris County,
Texas, and encumbering the real and other property situated in
Harris County, Texas and described therein (the "Property"), (ii)
that Assignment of Rents and Leases (the "Assignment of Rents"),
dated July 31, 1997, executed by Borrower, filed for recording in
the Office of the County Clerk of Harris County, Texas under
Clerk's File No. S606016 and recorded at Film Code No. 514-48-0917,
et seq., of the Real Property Records of Harris County, Texas, and
assigning to Lender the rents and leases of the Property, and (iii)
the liens and security interests created under other documents and
instruments (the Loan Agreement, the Note, the Deed of Trust, the
Assignment of Rents, and all other documents and instruments
evidencing, securing, governing or otherwise pertaining to the Loan
being hereinafter collectively called the "Loan Documents"); and
C. Borrower has requested Lender to extend the maturity date
of the Loan and to modify the terms of the Loan Agreement and the
Note, and Lender has agreed to such extension and modification of
the Loan Agreement and the Note, and the other Loan Documents on
the terms and conditions set forth below;
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, including the payment by Borrower
to Lender of an extension fee in the amount of $4,500, the receipt
of which by Lender is a condition precedent to the effectiveness of
this Agreement, Borrower and Lender agree as follows:
1. Modification of Payment Terms. The payment terms of the
Note are hereby modified as follows:
1.1 Maturity Date. The term of the Loan and the Note is
amended to mature on February 28, 2001, and the Maturity Date, as
such term is defined in the Loan Agreement, is hereby modified and
amended to be February 28, 2001.
1.2 Contract Rate. From and after the date hereof, as
used in the Loan Agreement, "Contract Rate" shall mean the rate of
interest equal to the greater of (a) one-half percent (0.5%) per
annum in excess of the Prime Rate, or (b) eight percent (8%) per
annum. As used herein, "Prime Rate" shall mean the highest prime
rate (or base rate) reported in the Money Rates column or section
of The Wall Street Journal published on the second business day of
the month preceding the month in which a payment of interest and/or
principal is due on the Loan, as having been the rate in effect for
corporate loans at large U.S. money center commercial banks
(whether or not such rate has actually been charged by any such
bank) as of the first calendar day of such month for which such
rate is published. If The Wall Street Journal ceases publication
of the Prime Rate, the "Prime Rate" shall mean the prime rate (or
commercial reference rate) announced by Lender (whether or not such
rate has actually been charged by Lender).
1.3 Payments. Borrower hereby renews and extends the
Note, the Deed of Trust, the Assignment of Rents, and all of the
other Loan Documents. From and after the date hereof Borrower
shall make payments on the Note to Lender as follows:
(1) Interest. On the first (1st) day of each month
commencing March 1, 1999, and continuing to and including
February 1, 2001, Borrower shall pay to Lender all accrued but
unpaid interest on the Note at the Contract Rate. A final
payment of principal, interest and other charges under the
Loan shall be due and payable on the Maturity Date, as
modified under Section 1.1 of this Agreement.
(2) Principal. In addition to monthly payments of
interest hereunder, on the first (1st) day of each month,
commencing March 1, 1999, Borrower shall make a payment to
Lender equal to $1,100, such payment to be applied in
reduction of the principal balance of the Note.
(3) Prepayment. Upon not less than forty-five (45)
days prior written notice to Lender, and upon simultaneous
payment of the First Mortgage Loan (as such term is defined in
the Loan Agreement), Borrower may prepay the Loan, in whole
but not in part, without prepayment premium.
2. Modification of Loan Documents Generally. The Deed of
Trust, the Assignment of Rents, and the other Loan Documents are
further modified, renewed and extended, to provide that all
references therein to the Loan Agreement and the Note shall mean
and refer to the Loan Agreement and the Note, as renewed, extended
and modified by this Agreement.
3. Liens. In conjunction with the renewal, extension and
modification of the Loan Agreement, the Note, the Deed of Trust,
the Assignment of Rents, and the other Loan Documents, Borrower
hereby agrees that such renewal, extension and modification shall
in no manner affect or impair the Note or the liens, assignments
and security interests under the Deed of Trust and the other Loan
Documents, and that said liens, assignments and security interests
shall not in any manner be waived, the purpose of this Agreement
being simply to renew, extend and modify the Loan Agreement, the
Note, the Deed of Trust, the Assignment of Rents, and the other
Loan Documents, and Borrower further agrees that, as modified by
this Agreement, all terms and provisions of the Loan Agreement, the
Note, the Deed of Trust, the Assignment of Rents, and the other
Loan Documents shall be and remain in full force and effect as
therein written.
4. No Defenses. Borrower hereby covenants and warrants that
Lender is not in default in the performance of any of its
obligations or warranties under the Loan Documents; that there are
no defenses, counterclaims or offsets to the Loan Documents; and
that all of the provisions of the Loan Documents are in full force
and effect.
5. Costs. Borrower agrees to pay all costs incurred in
connection with the execution and consummation of this Agreement,
including but not limited to, all recording costs and the fees and
expenses of Lender's counsel.
6. Maximum Amount. All agreements between Borrower and
Lender, whether now existing or hereafter arising and whether
written or oral, are hereby expressly limited so that in no
contingency, whether by reason of acceleration of the maturity of
the Note or otherwise, shall the interest contracted for, charged,
received, paid or agreed to be paid to the holder of the Note
exceed the maximum amount permissible under applicable law. If,
from any circumstance whatsoever, interest would otherwise be
payable to the holder of the Note in excess of the maximum lawful
amount, the interest payable to the holder of the Note shall be
reduced to the maximum amount permitted by applicable law; and if
from any circumstance the holder of the Note shall ever receive
anything of value deemed interest in excess of the maximum amount
allowed by applicable law, an amount equal to any excessive
interest shall be applied to the reduction of the principal amount
owing under the Note, and not to the payment of interest, or if
such excessive interest exceeds such unpaid balance of principal of
the Note, such excess shall be refunded to Borrower. All interest
paid or agreed to be paid to the holder of the Note shall, to the
extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of the Note,
(including the period of any renewal or extension thereof) so that
the interest on the Note shall not exceed the maximum amount
permitted by applicable law. This Section 6 shall control all
agreements between Borrower and the holder of the Note.
Executed effective as of the date first set forth above.
LENDER: FIRSTRUST SAVINGS BANK, a
Pennsylvania-chartered savings bank
By:/s/ William F. Bruckner
William F. Bruckner, Vice President
BORROWER: WESTBRIDGE PARTNERS, LTD.,
a Texas limited partnership
By: WEST COP CORPORATION,
a Texas corporation, General
Partner
By:/s/ Stephen C. Parthum
Stephen C. Parthum, Duly
Authorized Agent
COMMONWEALTH OF PENNSYLVANIA
COUNTY OF MONTGOMERY
This instrument was acknowledged before me on February 22,
1999, by WILLIAM F. BRUCKNER, Vice President of FIRSTRUST SAVINGS
BANK, a Pennsylvania chartered savings bank, on behalf of said
savings bank.
(SEAL) /s/ Rose Tirado Turner
Notary Public, Commonwealth of
Pennsylvania
Rose Tirado Turner
Printed name of notary
My Commission Expires:November 20,
2000
STATE OF GEORGIA
COUNTY OF COBB
This instrument was acknowledged before me on February 18,
1999, by STEPHEN C. PARTHUM, Duly Authorized Agent of WEST COP
CORPORATION, a Texas corporation and General Partner of WESTBRIDGE
PARTNERS, LTD., a Texas limited partnership, on behalf of said
corporation and said limited partnership.
(SEAL) /s/ Carla Lee Thomason-Redding
Notary Public, State of Georgia
Carla Lee Thomason-Redding
Printed name of notary
My Commission Expires: October 30,
1999
