SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1997
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
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EXCHANGE ACT OF 1934.
For the transition period from to
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Commission file number 0-13233
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BALCOR PENSION INVESTORS-V
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(Exact name of registrant as specified in its charter)
Illinois 36-3254673
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2355 Waukegan Road
Bannockburn, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 267-1600
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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
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<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
BALANCE SHEETS
March 31, 1997 and December 31, 1996
(Unaudited)
ASSETS
1997 1996
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Cash and cash equivalents $ 18,103,074 $ 67,655,936
Escrow deposits - restricted 53,335 95,243
Accounts and accrued interest receivable 602,828 665,695
Prepaid expenses 4,324 38,651
Deferred expenses, net of accumulated
amortization of $133,699 in 1996 196,549
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18,763,561 68,652,074
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Investment in first mortgage loan receivable 6,015,968 6,015,968
Less:
Allowance for potential loan losses 2,102,000 2,102,000
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Net investment in loan receivable 3,913,968 3,913,968
Real estate held for sale (net of
allowance of $2,711,056 in 1996) 6,606,724
Investment in joint ventures - affiliates 3,067,085 3,042,286
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6,981,053 13,562,978
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$ 25,744,614 $ 82,215,052
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LIABILITIES AND PARTNERS' CAPITAL
Accounts and accrued interest payable $ 171,195 $ 978,110
Due to affiliates 138,197 150,580
Other liabilities, principally escrow
deposits and accrued real estate taxes 101,109 145,394
Security deposits 81,774
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Total liabilities 410,501 1,355,858
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Commitments and contingencies
Limited Partners' capital
(439,305 Interests issued
and outstanding) 24,859,411 80,322,266
General Partner's capital 474,702 536,928
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Total partners' capital 25,334,113 80,859,194
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$ 25,744,614 $ 82,215,052
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF INCOME AND EXPENSES
for the quarters ended March 31, 1997 and 1996
(Unaudited)
1997 1996
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Income:
Interest on loans receivable and
investment in acquisition loan $ 129,188 $ 1,043,529
Less interest on loan payable -
underlying mortgage 50,699
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Net interest income on loans receivable 129,188 992,830
Interest on short-term investments 355,196 243,266
Participation in income of
joint ventures-affiliates 92,699 104,879
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Total income 577,083 1,340,975
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Expenses:
Loss (income) from operations of real
estate held for sale 101,944 (1,351,784)
Amortization of deferred expenses 196,549 10,035
Administrative 290,691 168,854
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Total expenses 589,184 (1,172,895)
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(Loss) income before equity in loss from
investment in acquisition loan (12,101) 2,513,870
Equity in loss from investment
in acquisition loan (19,508)
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Net (loss) income $ (12,101) $ 2,494,362
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Net (loss) income allocated to General
Partner $ (1,210) $ 249,436
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Net (loss) income allocated to Limited
Partners $ (10,891) $ 2,244,926
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Net (loss) income per Limited Partnership
Interest (439,305 issued and outstanding) $ (0.02) $ 5.11
============== ===============
Distribution to General Partner $ 244,059 $ 244,059
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Settlement distribution to Limited Partners $ 99,534 None
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Distribution to Limited Partners $ 55,352,430 $ 2,196,525
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Distribution per Limited
Partnership Interest $ 126.00 $ 5.00
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The accompanying notes are an integral part of the financial statements.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
for the quarters ended March 31, 1997 and 1996
(Unaudited)
1997 1996
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Operating activities:
Net (loss) income $ (12,101) $ 2,494,362
Adjustments to reconcile net (loss)
income to net cash used in or provided
by operating activites
Equity in loss from investment
in acquisition loan 19,508
Participation in income of
joint ventures - affiliates (92,699) (104,879)
Amortization of deferred expenses 196,549 10,035
Net change in:
Escrow deposits - restricted 41,908 (108,173)
Accounts and accrued
interest receivable 62,867 (301,794)
Prepaid expenses 34,327 109,049
Accounts and accrued
interest payable (806,915) (94,577)
Due to affiliates (12,383) 18,900
Other liabilities (44,285) 42,593
Security deposits (81,774) (2,170)
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Net cash used in or provided by
operating activities (714,506) 2,082,854
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Investing activities:
Proceeds from sale of real estate 6,900,000
Costs incurred in connection with
the sale of real estate (293,276)
Distributions from joint
ventures - affiliates 67,900 160,984
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Net cash provided by investing activities 6,674,624 160,984
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Financing activities:
Distribution to Limited Partners (55,451,964) (2,196,525)
Distribution to General Partner (244,059) (244,059)
Contribution from General Partner 183,043
Principal payments on loan payable
- underlying mortgage (10,145)
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Net cash used in financing activities (55,512,980) (2,450,729)
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Net change in cash and cash equivalents (49,552,862) (206,891)
Cash and cash equivalents at
beginning of period 67,655,936 17,680,262
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Cash and cash equivalents at end of period $ 18,103,074 $ 17,473,371
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The accompanying notes are an integral part of the financial statements.<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
1. Accounting Policy:
(a) In the opinion of management, all adjustments necessary for a fair
presentation have been made to the accompanying statements for the quarter
ended March 31, 1997, and all such adjustments are of a normal and recurring
nature.
(b) A reclassification has been made to the previously reported 1996 financial
statements in order to provide comparability with the 1997 statements. This
reclassification has not changed the 1996 results.
2. Partnership Termination:
The Partnership Agreement provides for the dissolution of the Partnership upon
the occurrence of certain events, including the disposition of all interests in
real estate. During 1996, eight properties were sold including one in which the
Partnership held a minority joint venture interest. During 1997, the
Partnership sold the Harbor Bay office building. Currently, the General Partner
has entered into a contract to sell the loan collateralized by the remaining
property, Whispering Hills Apartments in which the Partnership holds a minority
joint venture interest. The Partnership is seeking repayment of its remaining
loan. The timing of the termination of the Partnership and final distribution
of cash will depend upon the nature and extent of liabilities and contingencies
which exist or may arise. Such contingencies may include legal and other fees
stemming from litigation involving the Partnership including, but not limited
to, the lawsuit discussed in Note 5 of Notes to Financial Statements. In the
absence of any contingency, the reserves will be paid within twelve months of
the last property being sold or loan being repaid. In the event a contingency
exists, reserves may be held by the Partnership for a longer period of time.
3. Transactions with Affiliates:
Fees and expenses paid and payable by the Partnership to affiliates for the
quarter ended March 31, 1997 are:
Paid Payable
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Mortgage servicing fees $ 5,219 $ 1,630
Reimbursement of expenses to
the General Partner, at cost 36,521 136,568
The General Partner made a contribution to the Partnership of $183,043 in
connection with the settlement of certain litigation as further discussed in
Note 6 of Notes to Financial Statements.<PAGE>
4. Investment in Joint Venture - Affiliate:
The Partnership has classified the Whispering Hills Apartments first mortgage
loan investment as an investment in joint venture - affiliate. This investment
represents a joint venture between the Partnership and an affiliate. Profits
and losses are allocated 25% to the Partnership and 75% to the affiliate. The
following information has been summarized from the financial statements of the
joint venture:
1997
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Net investment in real estate as of March 31 $14,263,000
Total liabilities as of March 31 200,369
Total income 673,429
Net income 370,795
5. Contingency:
The Partnership is currently involved in a lawsuit whereby the Partnership the
General Partner and certain third parties have been named as defendants seeking
damages relating to tender offers to purchase interests in the Partnership and
nine affiliated partnerships initiated by the third party defendants in 1996.
The defendants continue to vigorously contest this action. This action has been
dismissed with prejudice and plaintiffs have filed an appeal. It is not
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the financial position, operations and
liquidity of the Partnership. The Partnership believes it has meritorious
defenses to contest the claims.
6. Settlement of Litigation:
A settlement received final approval by the court in November 1996 in the class
action, Paul Williams and Beverly Kennedy, et. at. v. Balcor Pension
Investors-V, et. al. upon the terms described in the notice to class members in
September 1996. The General Partner made a contribution of $183,043 to the
Partnership from which the plaintiffs' counsel received $18,304 pursuant to the
settlement agreement. In February 1997, the General Partner made a settlement
payment of $164,739 ($0.38 per $500 Interest) to members of the class pursuant
to the settlement. Of the total settlement amount, $99,534 was paid to original
investors who held their Limited Partnership Interests at the date of the
settlement and was recorded as a distribution to Limited Partners in the
Financial Statements. The remaining portion of the settlement of $65,205 was
paid to original investors who previously sold their Interests in the
Partnership. This amount was recorded as an administrative expense in the
Financial Statements. The settlement had no material impact on the Partnership.
<PAGE>
7. Disposition of Property Acquired Through Foreclosure:
In January 1997, the Partnership sold the Harbor Bay office building in an all
cash sale for $6,900,000. From the proceeds of the sale, the Partnership paid
$293,276 in selling costs. The basis of the property was $9,611,056. For
financial statement purposes, the Partnership did not recognize a gain or loss
on the sale of this property. The Partnership wrote off $2,711,056 of the
basis against the previously established allowance.
8. Subsequent Event:
In April 1997, the Partnership made a distribution of $14,475,100 ($32.95 per
Interest) to the holders of Limited Partnership Interests representing a
regular quarterly distribution of Cash Flow of $5.00 per Interest for the first
quarter of 1997 and a special distribution of $27.95 per Interest primarily
from proceeds received from the Harbor Bay office building and the 1996
property and note receivable sales.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS
Balcor Pension Investors-V (the "Partnership") is a limited partnership formed
in 1983 to invest in wrap-around mortgage loans, first mortgage loans and, to a
lesser extent, junior mortgage loans. The Partnership raised $219,652,500 from
sales of Limited Partnership Interests and utilized these proceeds to fund
thirty-four loans. The Harbor Bay office building was sold in January 1997.
There is currently one loan outstanding in the Partnership's portfolio, and the
Partnership owns one investment in joint venture with affiliate.
Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1996 for a more complete understanding of
the Partnership's financial position.
Operations
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Summary of Operations
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Due primarily to the seven property sales, one loan repayment and two loan
sales in 1996, the Partnership generated a net loss during 1997 as compared to
income during 1996. Further discussion of the Partnership's operations is
summarized below.
1997 Compared to 1996
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Discussions of fluctuations between 1997 and 1996 refer to the quarters ended
March 31, 1997 and 1996.
Net interest income on loans receivable decreased in 1997 as compared to 1996
due primarily to the repayment of the Seven Trails Apartments wrap-around loan
receivable, and the sales of The Glen Apartments loan receivable and the Noland
Fashion Square acquisition loan in 1996.
Due to higher average cash balances in 1997 resulting from the property and
loan sales in 1996, interest on short-term investments increased during 1997 as
compared to 1996. A majority of the proceeds received from the sales was
distributed to Partners in January 1997.
Participation in joint ventures with affiliates represents the Partnership's
share of the property operations from the Whispering Hills Apartments and the
45 West 45th Street Office Building. Primarily as a result of the sale of the
45 West 45th Street Office Building in 1996, participation in income of joint
ventures with affiliates decreased during 1997 as compared to 1996.
<PAGE>
Provisions are charged to income when the General Partner believes an
impairment has occurred to the value of its properties or in a borrower's
ability to repay a loan or in the value of the collateral property.
Determinations of fair value are made periodically on the basis of performance
under the terms of the loan agreement and assessments of property operations.
Determinations of fair value represent estimations based on many variables
which affect the value of real estate, including economic and demographic
conditions. During 1997 and 1996, the Partnership did not recognize any
provisions related to its loans or real estate held for sale. During 1997, an
allowance of $2,711,056 related to the Harbor Bay office building was written
off in connection with the sale of the property.
Income from operations of real estate held for sale represents net property
operations generated by the properties the Partnership has acquired through
foreclosure. Real estate held for sale generated income in 1996; however, due
to the sales of seven properties in 1996 and the sale of the Harbor Bay office
building in January 1997, a loss was generated in 1997. The loss in 1997
resulted primarily from the payment of the final operating expenses related to
properties sold in 1996 and expenses related to the Harbor Bay office building
which was sold in January 1997.
In connection with the sale of the Harbor Bay office building in 1997, the
Partnership wrote-off the remaining unamortized leasing commissions related to
the property which resulted in an increase in amortization expense during 1997
as compared to 1996.
The Partnership incurred higher postage and printing costs in connection with a
response to a tender offer during 1997. In addition, the General Partner made
a payment in connection with the settlement of a class action lawsuit to
investors who previously sold their Interests in the Partnership which was
classified as an administrative expense. See Note 6 of Notes to Financial
Statements for additional information. As a result, administrative expenses
increased during 1997 as compared to 1996.
Liquidity and Capital Resources
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The cash position of the Partnership decreased by approximately $49,553,000 as
of March 31, 1997 when compared to December 31, 1996 primarily as a result of a
distribution to Limited Partners in January 1997. Cash of approximately
$715,000 was used in operating activities primarily to pay expenses related to
sold properties and administrative expenses. These payments were partially
offset by interest income from the Partnership's loan receivable and short-term
investments. The Partnership's investing activities generated cash of
approximately $68,000 from a distribution from a joint venture with an
affiliate and approximately $6,607,000 of net proceeds from the sale of the
Harbor Bay office building. Cash of approximately $55,513,000 was used in
financing activities consisting primarily of a distribution to Limited
Partners.
The Partnership classifies the cash flow performance of its properties as
either positive, a marginal deficit or a significant deficit. A deficit is
considered to be significant if it exceeds $250,000 annually or 20% of the
property's rental and service income. The Partnership defines cash flow
generated from its properties as an amount equal to the property's revenue
receipts less property related expenditures. The property in which the
Partnership holds a minority joint venture interest with an affiliate, the
<PAGE>
Whispering Hills Apartments, generated positive cash flow during 1997 and 1996.
The Harbor Bay office building generated positive cash flow during 1996 and
prior to its sale in January 1997. All seven of the Partnership's properties
which were sold in 1996 generated positive cash flow prior to their sales in
1996. The property in which the Partnership held a joint venture interest with
affiliates, the 45 West 45th Street Office Building, generated positive cash
flow prior to its sale in 1996.
During 1996, eight of the Partnership's properties were sold including one in
which the Partnership held a minority joint venture interest. During January
1997, the Partnership sold the Harbor Bay office building. Currently, the
General Partner has entered into a contract to sell the loan collateralized by
the remaining property, Whispering Hills Apartments for a sale price of
$17,200,000, in which the Partnership holds a minority joint venture interest.
See Item 5. Other Information for additional information regarding the sale
terms. The Partnership is seeking repayment of its remaining loan. The timing
of the termination of the Partnership and final distribution of cash will
depend upon the nature and extent of liabilities and contingencies which exist
or may arise. Such contingencies may include legal and other fees stemming from
litigation involving the Partnership including, but not limited to, the lawsuit
discussed in Note 5 of Notes to the Financial Statements. In the absence of any
contingency, the reserves will be paid within twelve months of the last
property being sold or loan being repaid. In the event a contingency exists,
reserves may be held by the Partnership for a longer period of time.
The Meadow Run Apartments first mortgage loan matured in July 1996. The
Partnership negotiated an extension of the loan until December 1996 to allow
the borrower additional time to secure alternate financing. The loan came due
in December 1996 and the borrower is currently pursuing alternate financing and
continues to make monthly interest payments to the Partnership.
In January 1997, the Partnership sold the Harbor Bay office building in an all
cash sale for $6,900,000. From the proceeds of the sale the Partnership paid
$293,276 in selling costs. The net proceeds were distributed to the Limited
Partners in April 1997. See Note 7 of Notes to the Financial Statements for
additional information.
Pursuant to the sale agreement for the Huntington Meadows Apartments, $200,000
was retained by the Partnership and was unavailable for distribution until
February 1997, at which time the funds were released to the Partnership. Also,
pursuant to the sale agreement for the 45 West 45th Street Office Building, in
which the Partnership held a minority joint venture interest, $500,000 was
retained by the joint venture and was unavailable for distribution until April
1997, at which time $108,701 of the funds were released to the Partnership.
In February 1997, the General Partner made a settlement payment of $164,739
($.38 per Interest) to members of the class pursuant to the settlement approved
by the court in November 1996 in the Paul Williams and Beverly Kennedy et. at.
v. Balcor Pension Investors-V, et. al. class action lawsuit. The General
Partner made a contribution of $183,043 to the Partnership of which the
plaintiff's counsel received $18,304 pursuant to the settlement agreement. Of
the total settlement amount, $99,534 was paid to the original investors who
held their Limited Partnership Interests at the date of the settlement and was
recorded as a distribution to Limited Partners in the Financial Statements. The
remaining portion of the settlement of $65,205 was paid to original investors
who previously had sold their Interests in the Partnership. This amount was
recorded as an administrative expense in the Financial Statements.
<PAGE>
In April 1997, the Partnership paid a distribution of $14,475,100 ($32.95 per
Interest) to the holders of Limited Partnership Interests representing the
regular quarterly distribution of Cash Flow of $5.00 per Interest for the first
quarter of 1997 and a special distribution of $27.95 per Interest primarily
from proceeds received from the Harbor Bay office building and the 1996
property and note receivable sales. Including the April 1997 distribution,
Limited Partners have received cash distributions totaling $758.85 per $500
Interest. Of this amount, $420.12 has been Cash Flow from operations and
$338.73 represents a return of Original Capital. In April 1997, the
Partnership also paid $183,044 to the General Partner as its distributive share
of Cash Flow for the first quarter of 1997 and made a contribution to the Early
Investment Incentive Fund of $61,015. Future distributions will be made from
available proceeds from the sale of the Partnership's remaining joint venture
property and the repayment of its remaining loan. The General Partner, on
behalf of the Partnership, has retained what it believes is an appropriate
amount of working capital to meet current cash or liquidity requirements which
may occur.
In February 1997, the Partnership discontinued the repurchase of Interests from
Limited Partners.
Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate. Lower interest rates
may increase the probability that borrowers' may seek prepayment of the
Partnership's loan whereas rising interest rates decrease the yields on the
loans and make prepayment less likely.
Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
BALCOR PENSION INVESTORS-V
(An Illinois Limited Partnership)
PART II - OTHER INFORMATION
Item 5. Other Information
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Whispering Hills Apartments
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In 1987, the Partnership and an affiliate (together, the "Participants"),
funded a $15,700,000 first mortgage loan (the "Loan") collateralized by a first
mortgage on the Whispering Hills Apartments, Overland Park, Kansas. The
Partnership funded $3,925,000 (25%) of the Loan. The Participants subsequently
funded an additional $4,889,508 towards the Loan, of which $1,102,708 was
contributed by the Partnership. In 1994, pursuant to the settlement of a
lawsuit relating to the property, the Participants received from the borrower a
$1,125,000 payment, which was applied to the outstanding principal amount of
the loan, $281,250 of which was the Partnership's share.
Pursuant to an agreement (the "Agreement") dated March 15, 1989, the
Participants have the right to negotiate a sale of the property to a third
party. Unless the borrower purchases the Loan for a sale price equal to the
proposed sale price of the property, the borrower is obligated to agree to any
such sale provided further that the proposed sale price exceeds the then
appraised value of the property.
The Participants have marketed the property for sale and the best offer
received was for $17,200,000. The borrower has exercised its option and on May
6, 1997 the Participants entered into a contract (the "Loan Contract") to sell
the Loan to the current owners of the property for a sale price of $17,200,000
plus the property's net cash flow for the period May 1 through the closing
date, as defined below. Pursuant to the terms of the Loan Contract, the
Participants have written down the outstanding principal balance of the Loan to
$17,200,000, representing a write-off of $2,264,508. The owner has deposited
$350,000 into an escrow account as earnest money. The remainder of the sale
price is payable in cash at closing, scheduled for May 30, 1997. From the
proceeds of the sale, the Participants will pay a sale commission to an
unaffiliated party which provided property management services for other
properties owned by the Partnership of $344,000. The Participants will receive
the remaining sale proceeds of $16,856,000, less closing costs, of which the
Partnership's share is expected to be $4,214,000. Neither the General Partner
nor any affiliate will receive a brokerage commission in connection with the
sale of the Loan. The General Partner will be reimbursed by the Partnership for
actual expenses incurred in connection with the sale.
It is possible that the owners may fail to complete the purchase of the Loan.
In such event, the Participants intend to proceed with a sale of the property
to the third party. The Participants also have the option to proceed with a
foreclosure of the property.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits:
(4) Form of Subscription Agreement set forth as Exhibit 4.1 to Amendment No. 1
dated January 16, 1984 to the Partnership's Registration Statement on Form S-11
(Registration No. 2-87662) and Form of Confirmation regarding Interests in the
Registrant set forth as Exhibit 4.2 to the Partnership's Report on Form 10-Q
for the quarter ended September 31, 1992 (Commission File No. 0-13233) are
incorporated herein by reference.
(10)(a)(i) Agreement of Sale and attachments thereto relating to the sale of
the Granada Apartments, Tampa, Florida previously filed as Exhibit (2)(a)(i) to
the Partnership's Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the Granada
Apartments, Tampa, Florida previously filed as Exhibit (2)(a)(ii) to the
Partnership's Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the
Granada Apartments, Tampa, Florida previously filed as Exhibit (99)(b) to the
Partnership's Current Report on Form 8-K dated October 3, 1996 is incorporated
herein by reference.
(iv) Second Amendment to Agreement of Sale relating to the sale of Granada
Apartments, Tampa, Florida previously filed as Exhibit (10)(a)(iv) to the
Partnership's Current Report on Form 10-Q for the quarter ended September 30,
1996, is incorporated herein by reference.
(b)(i) Agreement of Sale and attachments thereto relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (2)(b)(i) to
the Partnership's Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (2)(b)(ii) to
the Partnership's Current Report on Form 8-K dated September 17, 1996 is
incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the
Plantation Apartments, Tampa, Florida previously filed as Exhibit (99)(c) to
the Partnerships Current Report on Form 8-K dated October 3, 1996 is
incorporated herein by reference.
(iv) Second Amendment to Agreement of Sale relating to the sale of Plantation
Apartments, Tampa, Florida previously filed as Exhibit (10)(b)(iv) to the
Partnership's Current Report on Form 10-Q for the quarter ended September 30,
1996, is incorporated herein by reference.
(c)(i) Agreement of Sale and attachments thereto relating to the sale of the
The Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(2)(c)(i) to the Partnership's Current Report on Form 8-K dated September 17,
1996 is incorporated herein by reference.
<PAGE>
(ii) First Amendment to Agreement of Sale relating to the sale of the The
Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(2)(c)(ii) to the Partnership's Current Report on Form 8-K dated September 17,
1996 is incorporated herein by reference.
(iii) Letter Agreement dated October 7, 1996, relating to the sale of the The
Glades on Ulmerton Apartments, Largo, Florida previously filed as Exhibit
(99)(d) to the Partnership's Current Report on Form 8-K dated October 3, 1996
is incorporated herein by reference.
(d)(i) Agreement of Sale and attachments thereto relating to the sale of the
Union Tower office building, Lakewood, Colorado previously filed as Exhibit (2)
to the Partnership's Current Report on Form 8-K dated October 10, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the Union
Tower office building, Lakewood, Colorado previously filed as Exhibit
(10)(d)(ii) to the Partnership's Current Report on Form 10-Q for the quarter
ended September 30, 1996, is incorporated herein by reference.
(e) Purchase and Sale Agreement relating to the sale of the first mortgage loan
secured by The Glen Apartments, Fairfax County, Virginia previously filed as
Exhibit (10)(e) to the Partnership's Current Report on Form 10-K for the
quarter ended December 31, 1996, is incorporated herein by reference.
(f)(i) Agreement of Sale and attachments thereto relating to the sale of the
1420 Harbor Bay Parkway, Alameda, California previously filed as Exhibit (2)(a)
to the Partnership's Current Report on Form 8-K dated December 6, 1996 is
incorporated herein by reference.
(ii) First Amendment to Agreement of Sale relating to the sale of the 1420
Harbor Bay Parkway, Alameda, California previously filed as Exhibit (2)(b) to
the Partnership's Current Report on Form 8-K dated December 6, 1996 is
incorporated herein by reference.
(iii) Second Amendment to Agreement of Sale relating to the sale of the 1420
Harbor Bay Parkway, Alameda, California previously filed as Exhibit
(10)(f)(iii) to the Partnership's Current Report on Form 10-K for the quarter
ended December 31, 1996, is incorporated herein by reference.
(iv) Third Amendment to Agreement of Sale relating to the sale of the 1420
Harbor Bay Parkway, Alameda, California previously filed as Exhibit (10)(f)(iv)
to the Partnership's Current Report on Form 10-K for the quarter ended December
31, 1996, is incorporated herein by reference.
(g) Agreement to Purchase Loan Documents relating to the sale of first mortgage
loan secured by Whispering Hills Apartments, Overland Park, Kansas is attached
hereto.
<PAGE>
(16) Letter from Ernst & Young LLP dated September 19, 1995 regarding the
change in the Partnership's certifying accountant previously filed as Exhibit
16 to the Partnerships Report on Form 8-K/A dated October 27, 1995 (Commission
File No. 0-13233) is hereby incorporated herein by reference.
(27) Financial Data Schedule of the registrant for the quarter ending March 31,
1997 is attached hereto.
(b) Reports on Form 8-K: No reports were filed on Form 8-K during the quarter
ended March 31, 1997.
<PAGE>
SIGNATURES
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.
BALCOR PENSION INVESTORS-V
By: /s/Thomas E. Meador
----------------------------------------
Thomas E. Meador
President and Chief Executive Officer
(Principal Executive Officer) of Balcor
Mortgage Advisors-V, the General Partner
By: /s/Jayne A. Kosik
----------------------------------------
Jayne A. Kosik
Managing Director and Chief Financial
Officer (Principal Accounting Officer) of
Balcor Mortgage Advisors-V, the General
Partner
Date: May 14, 1997
-----------------
<PAGE>
AGREEMENT TO PURCHASE LOAN DOCUMENTS
THIS AGREEMENT TO PURCHASE LOAN DOCUMENTS (this "Agreement") is made as of
the 23rd day of April, 1997, by and between BALCOR MORTGAGE ADVISORS, INC.
("Balcor") and MICHAEL P. HARRIS, ARNOLD L. PORATH, JOHN P. LOWNEY, JR. and KAY
S. LOWNEY, AS TRUSTEES OF THE JKL TRUST and STEPHEN D. MOSES (in their capacity
as the makers of the Note and the other Loan Documents defined below,
collectively, the "Borrower" and in their capacity as purchaser of the Note
and the other Loan Documents, collectively, "Purchaser").
R E C I T A L S
A. Balcor is the owner and holder of that certain Secured Promissory Note
Secured By Mortgage and Security Agreement made by Messrs Harris, Porath and
Moses and payable to the order of Balcor (as amended, the "Note").
B. The Note is secured, inter alia, by a Mortgage and Security Agreement
(as amended, the "Mortgage") executed by Borrower in favor of Balcor with
respect to real property and improvements commonly known as Whispering Hills
Apartments in Overland Park, Kansas (the "Property"). The Note, the Mortgage
and the other documents, agreements and instruments which evidence and/or
secure the loans evidenced by the Note, including, without limitation, the
documents, agreements and instruments set forth on Exhibit C, are hereinafter
referred to collectively as the "Loan Documents".
C. Borrower is the owner of the Property.
D. Pursuant to the terms of the Agreement dated as of March 15, 1989,
among Balcor, Borrower and Balcor Property Management, Inc., as amended (the
"March 15, 1989 Agreement"), Balcor has proposed to Borrower that Borrower sell
the Property to Equity Residential Properties Trust ("Equity") for a purchase
price of Seventeen Million Two Hundred Thousand and No/100 Dollars
($17,200,000.00).
E. Pursuant to the terms of the March 15, 1989 Agreement, Borrower has
the right to purchase the Loan Documents from Balcor for the same amount as the
purchase price to be paid by Equity (i.e. Seventeen Million Two Hundred
Thousand and No/100 Dollars [$17,200,000.00]).
F. Borrower has elected to purchase the Loan Documents from Balcor for a
purchase price of $17,200,000.
G. Borrower anticipates entering into an Agreement of Contribution and
Sale (the "Sale Agreement") pursuant to which Borrower will sell and contribute
the Property to Whispering Hills Apartments, L.L.C., a Kansas limited liability
company ("Whispering Hills"). Except in the limited circumstances set forth in
Section 5B of this Agreement, the sale and contribution of the Property by
Borrower to Whispering Hills pursuant to the Sale Agreement is not a condition
precedent to Borrower's obligation to perform hereunder and, except in the
limited circumstances set forth in Section 5B of this Agreement, Borrower's
obligation to perform hereunder is not contingent upon the performance by
Whispering Hills of its obligations under the Sale Agreement.
<PAGE>
H. Borrower and Balcor desire to enter into this Agreement to set forth,
among other things, the terms and provisions pursuant to which Balcor shall
sell to Purchaser and Purchaser shall purchase from Balcor the Loan Documents.
NOW, THEREFORE, for and in consideration of the foregoing recitals, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. RECITALS. The foregoing recitals are deemed part of this Agreement
and are incorporated herein by this reference.
2. PURCHASE AND SALE. Purchaser agrees to purchase from Balcor and
Balcor agrees to sell to Purchaser the Loan Documents at the price of
$17,200,000 (the "Purchase Price"). In addition, at "Closing" (as hereinafter
defined), Purchaser shall pay to Seller an amount equal to the "Positive Cash
Flow" (as defined in the March 15, 1989 Agreement) for the period April 1, 1997
through and including April 20, 1997.
3. PURCHASE PRICE. The Purchase Price shall be paid by Purchaser as
follows:
a. On or before April 14, 1997, the sum of Two Hundred Fifty
Thousand and No/100 Dollars ($250,000.00) (said sum together with any interest
earned thereon if and when deposited, and together with the additional $100,000
"Closing Extension Fee" described in Section 4 hereof if and when deposited
shall hereinafter be referred to as the "Earnest Money") to be held in escrow
by and in accordance with the provisions of the Escrow Agreement ("Escrow
Agreement") attached hereto as Exhibit A;
b. On the "Closing Date" (hereinafter defined), the Purchase Price,
by federally wired "immediately available" funds, on or before 2:00 p.m Chicago
time. Balcor will distribute the Purchase Price in accordance with the terms
of the March 15, 1989 Agreement.
4. CLOSING. The closing (the "Closing") of the sale and delivery of the
Loan Documents from Balcor to Purchaser shall take place at such place as may
be mutually agreed upon by the parties hereto, on April 30, 1997 (the "Closing
Date"). Notwithstanding anything to the contrary contained within this
Paragraph 4, Purchaser shall have the right to extend the Closing Date until
May 30, 1997 (the "Alternate Closing Date") by the payment of One Hundred
Thousand and No/100 Dollars ($100,000.00) to Escrow Agent prior to the Closing
Date (the "Closing Extension Fee"). The Closing Extension Fee shall be held by
Escrow Agent but shall be credited against the Purchase Price at Closing, so
long as Purchaser has not defaulted in its obligations hereunder. This
transaction shall be closed through an escrow with the Escrow Agent set forth
on Exhibit A in accordance with the general provisions of the usual and
customary form of escrow for similar transactions in Kansas.
<PAGE>
5. PURCHASER DEFAULT.
A. All Earnest Money deposited into the escrow is to secure the
timely performance by Purchaser of its obligations and undertakings under this
Agreement. In the event of a default by Purchaser under the provisions of this
Agreement, Balcor shall retain all of the theretofore deposited Earnest Money
as Seller's sole right to damages (provided, however, such default by Borrower
hereunder shall also cause an immediate default by Borrower under the Loan
Documents [without any grace or cure periods], unless: (i) Borrower enters
into the Sale Agreement; (ii) such default by Borrower hereunder is as a result
of a default by Whispering Hills under the Sale Agreement; and (iii) Purchaser
is diligently and in good faith exercising its remedies against Whispering
Hills as a consequence of such default). The parties have agreed that Balcor's
actual damages, in the event of a default by Purchaser, would be extremely
difficult or impractical to determine. The parties acknowledge that the
Earnest Money (to the extent deposited) has been agreed upon, after
negotiation, as the parties' reasonable estimate of Balcor's damages. Except
as set forth in Sections 5B and 5C hereof, the theretofore deposited Earnest
Money is non-refundable but shall be applied by Balcor against the Purchase
Price at Closing, so long as Purchaser has not defaulted hereunder.
B. Notwithstanding anything contained herein to the contrary, if
Whispering Hills terminates (but does not default under) the Sale Agreement
pursuant to Sections 4, 7A, 7B or 24A, 24B or 24C (but solely with respect to
the representations or warranties contained in Sections 19B(1),(3)(7) and(10))
thereof then, notwithstanding anything in the Sale Agreement to the contrary,
so long as: (i) such termination is solely as a result of an event or condition
first discovered, arising or notice of which was received from and after the
date of the Sale Agreement (except with respect to a termination pursuant to
Section 4 of the Sale Agreement, in which case the applicable date shall be
April 1, 1997 rather the date of the Sale Agreement); and (ii) the election to
terminate by Whispering Hills is neither as a consequence of default by
Borrower under the Sale Agreement nor the result of any willful, intentional or
grossly negligent act (or failure to act) of Borrower, and as a consequence of
such termination by Whispering Hills, Purchaser is unable to perform hereunder,
Purchaser shall not be in "default" hereunder and Purchaser shall have the
right to terminate this Agreement by promptly giving written notice of such
election to terminate to Balcor (and in all events on or before three (3)
business days following the termination of the Sale Agreement). If written
notice is not received by Balcor pursuant to this Section 5B on or before such
date, then the right of Purchaser to terminate this Agreement pursuant to this
Section 5B shall be forever waived. If Purchaser terminates this Agreement by
written notice to Balcor on or before the required date, the Earnest Money and
Closing Extension Fee, if applicable, paid by Purchaser shall be immediately
returned to Purchaser and, except as set forth in Sections 5C and 6 below,
neither Purchaser nor Balcor shall have any right, obligation or liability
under this Agreement.
<PAGE>
C. If Purchaser terminates this Agreement pursuant to Section 5B
above, or otherwise (including, without limitation, a termination as a
consequence of a failure by Purchaser to deposit the Earnest Money on or before
April 14, 1997), Purchaser shall proceed diligently and in good faith to
finalize a purchase agreement to sell the Property to Equity and shall
thereafter diligently and in good faith perform its obligations under such
purchase agreement.
6. BALCOR'S REMEDIES. Notwithstanding anything to the contrary in this
Agreement, in the event Purchaser commits a default hereunder or defaults under
the purchase agreement with Equity, if applicable, which default is not cured
within any applicable grace or cure period, if any, or in the event of the
occurrence of any default or event of default under any of the Loan Documents
prior to the Closing Date, which is not cured within any applicable cure period
therefor as set forth under the provisions of the Loan Documents, Balcor may,
at its election, in its sole discretion, commence to exercise and enforce all
of its rights and remedies under such Loan Documents, including, without
limitation, the foreclosure of Balcor's interest in the property encumbered by
such Loan Documents and/or terminating this Agreement. In addition, Balcor
shall have the remedies provided for in Section 5A hereof. In no event shall
Balcor's exercise and enforcement of its rights and remedies as aforesaid
extend the Closing Date. In the event of such exercise, Purchaser agrees that
it shall not submit, contend, allege or otherwise rely on the existence of this
Agreement and/or Purchaser's rights hereunder as an affirmative defense in any
foreclosure action brought by Balcor in connection with the Loan Documents.
Notwithstanding the foregoing to the contrary, if: (i) Purchaser is in default
hereunder as a result of a default by Whispering Hills under the Sale Agreement
(if entered into); and (ii) Purchaser is diligently and in good faith
exercising its remedies against Whispering Hills as a consequence of such
default, then the default by Purchaser hereunder shall not constitute a default
by Purchaser under the Loan Documents (but shall constitute a default hereunder
allowing Balcor to retain the Earnest Money and the Closing Extension Fee, if
applicable).
7. WIRE INSTRUCTIONS. The Purchase Price shall be payable
contemporaneously with the Closing. Purchaser shall pay the Purchase Price to
Balcor, by federal wire funds transfer no later than 2:00 p.m. Chicago time on
the Closing Date. Such wire transfer shall be made to:
The Northern Trust Company of Chicago
ABA #: 071 000 152
Account Name: Balcor Pension Investors VII
Account #: 85030
With a telephone notification of same to John Johnsen (847-317-4341).
8. BALCOR DELIVERIES. At the Closing, upon Purchaser's payment of the
Purchase Price as aforesaid and in exchange therefor, Balcor shall execute and
deliver to Purchaser, at Purchaser's election, either (i) an Assignment of Loan
Documents substantially in the form annexed hereto as Exhibit B and all other
documents necessary to transfer Balcor's ownership in the Note and the other
<PAGE>
Loan Documents to Purchaser including, without limitation, the original note
endorsed without recourse or warranty; or (ii) a satisfaction of mortgage, the
Note marked "paid" and all other documents necessary to cancel the indebtedness
evidenced by the Loan Documents and release or terminate all liens in favor of
Balcor with respect to the Property. In addition, at Closing Balcor will
deliver to Purchaser originals or certified copies of each of the Loan
Documents listed on Exhibit A to the Assignment of Loan Documents attached
hereto as Exhibit B. To the extent not delivered at Closing, following the
Closing, Balcor shall use good faith efforts to deliver to Purchaser all other
material Loan Documents in Balcor's possession.
9. PURCHASER'S DELIVERIES. At the Closing, Purchaser shall deliver to
Lender the Purchase Price. In addition, at the Closing, Purchaser shall pay to
Balcor the portion of the Positive Cash Flow which Purchaser is required to pay
to Balcor as described in Section 2 above.
10. REPRESENTATIONS AND WARRANTIES. The parties hereto hereby represent
and warrant to the other as follows.
A. Each Purchaser represents and warrants to Balcor as of the date
hereof and the Closing Date that it has the legal right to execute, deliver,
perform, enter into and consummate all transactions contemplated by this
Agreement, and (ii) Purchaser or its agents has reviewed the Note and other
Loan Documents to its full satisfaction.
B. Balcor represents and warrants to Purchaser as of the date hereof and
the Closing Date that:
(i) Balcor is a validly existing Illinois corporation in good
standing under the laws of the State of Illinois.
(ii) Balcor has the full power, authority and legal right to execute,
deliver, perform, enter into and consummate all transactions contemplated by
this Agreement.
(iii) Balcor is the owner of record of the Note and other Loan
Documents which Note and other Loan Documents are unencumbered and lien free.
(iv) Balcor is currently in possession of the mortgage file, if any,
for the Note, as such files exist.
(v) To the best of Balcor's knowledge, the Note and other Loan
Documents are in full force and effect and neither Balcor nor Borrower is
currently in default in the performance of its obligations under the Note and
other Loan Documents and there is no uncured breach presently existing by
Balcor under the Note and other Loan Documents.
<PAGE>
11. WAIVER.
A. Borrower hereby represents and warrants to, and covenants with,
Balcor that as of the date hereof and as of the Closing Date, or the Alternate
Closing Date, if applicable, (a) Borrower has no defenses, offsets or
counterclaims of any kind or nature whatsoever against Balcor with respect to
the Loan Documents or the transactions contemplated therein, or any action
previously taken or not taken by Balcor with respect thereto or with respect to
any security interest, encumbrance, lien or collateral in connection therewith
to secure the liabilities of Borrower thereunder and (b) Balcor has fully
performed all obligations to Borrower which it may have had or has on and as of
the date hereof. Without limiting the generality of the foregoing, Borrower,
on its own behalf and on the behalf of its past, present and future
representatives, partners, agents, employees, servants, affiliates and related
companies, successors and assigns (hereinafter referred to as the "Borrowing
Group"), effective upon the Closing, hereby waives, releases and forever
discharges Balcor and its past, present and future officers, directors,
subsidiary and affiliated entities or companies, agents, servants, employees,
shareholders, representatives, successors, assigns, attorneys, accountants,
assets and properties, as the case may be (hereinafter referred to as the
"Lender Group") from and against all manner of actions, cause and causes of
action, suits, debts, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises,
obligations, liabilities, costs, expenses, losses, damages, judgments,
executions, claims and demands, of whatever kind and nature, in law or in
equity, whether known or unknown, whether or not concealed or hidden, arising
out of or relating to any matter, cause or thing whatsoever, that any of the
Borrowing Group, jointly or severally, may have had, or now have or that may
subsequently accrue against the Lender Group by reason of any matter or thing
whatsoever, arising out of or in any way connected to the loan contemplated by
or through the Loan Documents. Borrower acknowledges and agrees that Balcor is
specifically relying upon the representations, warranties, covenants and
agreements contained herein and that such representations, warranties,
covenants, and agreements constitute a material inducement to enter into the
transactions contemplated in this Agreement.
B. Effective upon the Closing, Balcor on behalf of itself and the Lender
Group, shall waive, releases and forever discharge the Borrowing Group from and
against all manner of actions, cause and causes of action, suits, debts, sums
of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, obligations, liabilities,
costs, expenses, losses, damages, judgments, executions, claims and demands, of
whatever kind and nature, in law or in equity, whether known or unknown,
whether or not concealed or hidden, arising out of or relating to any matter,
cause or thing whatsoever, that any of the Lender Group, jointly or severally,
may have had, or now have or that may subsequently accrue against the Borrowing
Group by reason of any matter or thing whatsoever, arising out of or in any way
connected to the loan contemplated by or through the Loan Documents other than
the obligations of Borrower contained in Sections 27 and 30 hereof which shall
survive the Closing. Balcor acknowledges and agrees that Borrower is
specifically relying upon the representations, warranties, covenants and
<PAGE>
agreements contained herein and that such representations, warranties,
covenants, and agreements constitute a material inducement to enter into the
transactions contemplated in this Agreement. Nothing in this Section 11.B. is
intended, nor shall it be construed, to release the Borrower's obligations to
pay the Loan, or to perform from and after the date hereof its covenants under
the Loan Documents, which Loan and Loan Documents, as modified herein and in
the Second Modification of Loan Documents attached hereto, remain in full force
and effect.
12. ENVIRONMENTAL. Purchaser acknowledges and agrees that, except as may
hereinafter be specifically set forth in this Agreement, it will be purchasing
the Loan Documents based upon the condition of the Property as of the date of
this Agreement "AS IS" and "WITH ALL FAULTS" subject to reasonable wear and
tear and loss by fire or other casualty or condemnation from the date of this
Agreement until the Closing Date or, if applicable, the Alternate Closing Date.
Without limiting the foregoing, Purchaser acknowledges that, except as may
otherwise be specifically set forth elsewhere in this Agreement, neither Balcor
nor its consultants, brokers or agents have made any other representations or
warranties of any kind upon which Purchaser is relying as to any matters
concerning the Property, including, but not limited to, the condition of the
land or any improvements, the existence or nonexistence of asbestos, lead in
water, lead in paint, radon, underground or above ground storage tanks,
petroleum, toxic waste or any "Hazardous Materials" or "Hazardous Substances"
(as such terms are defined below), the tenants of the Property or the leases
affecting the Property, economic projections or market studies concerning the
Property, any development rights, taxes, bonds, covenants, conditions and
restrictions affecting the Property, water or water rights, topography,
drainage, soil, subsoil of the Property, the utilities serving the Property or
any zoning, environmental or building laws, rules or regulations affecting the
Property. Balcor makes no representation that the Property complies with Title
III of the Americans With Disabilities Act and, except as may hereinafter be
specifically set forth in this Agreement, Balcor makes no representation that
the Property complies with any fire codes or building codes. Purchaser hereby
releases Balcor from any and all liability in connection with any claims which
Purchaser may have against Balcor, and Purchaser hereby agrees not to assert
any claims, for damage, loss, compensation, contribution, cost recovery or
otherwise, against Balcor, whether in tort, contract, or otherwise, relating
directly or indirectly to the existence of asbestos or Hazardous Materials or
Hazardous Substances on, or environmental conditions of, the Property, or
arising under the "Environmental Laws" (as such term is hereinafter defined),
or relating in any way to the quality of the indoor or outdoor environment at
the Property. This release shall survive the Closing. As used herein, the
term "Hazardous Materials" or "Hazardous Substances" means (i) hazardous
wastes, hazardous materials, hazardous substances, hazardous constituents,
toxic substances or related materials, whether solids, liquids or gases,
including but not limited to substances defined as "hazardous wastes,"
"hazardous materials," "hazardous substances," "toxic substances,"
"pollutants," "contaminants," "radioactive materials," or other similar
designations in, or otherwise subject to regulation under, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
<PAGE>
("CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 9601, et seq.; the Clean Water Act
("CWA"), 33 U.S.C. Section 1251 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300f et seq.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 et
seq.; and in any permits, licenses, approvals, plans, rules, regulations or
ordinances adopted, or other criteria and guidelines promulgated pursuant to
the preceding laws or other similar federal, state or local laws, regulations,
rules or ordinance now or hereafter in effect relating to environmental matters
(collectively the "Environmental Laws"); and (ii) any other substances,
constituents or wastes subject to any applicable federal, state or local law,
regulation or ordinance, including any Environmental Law, now or hereafter in
effect, including but not limited to (A) petroleum, (B) refined petroleum
products, (C) waste oil, (D) waste aviation or motor vehicle fuel, (E)
asbestos, (F) lead in water, paint or elsewhere, (G) radon, (H) Polychlorinated
Biphenyls (PCB's) and (I) ureaformaldehyde. The Borrowing Group hereby waives,
releases and forever discharges the Lender Group from and against all manner of
actions, cause and causes of action, suits, debts, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, obligations, liabilities, costs, expenses, losses,
damages, judgments, executions, claims and demands, of whatever kind and
nature, in law or in equity, whether known or unknown, whether or not concealed
or hidden, arising out of or relating to the environmental condition of the
Property, or any Hazardous Materials, Hazardous Substances or Environmental
Laws affecting the Property. The terms of this Paragraph shall survive the
Closing.
13. NO RECOURSE OR WARRANTY. The sale of the Loan Documents shall be
irrevocable and without representation, warranty or recourse to Balcor, except
as expressly set forth in this Agreement. No officer, partner, affiliate,
shareholder, director, agent or employee of Balcor shall have any personal
liability of any kind or nature for or by reason of any matter or thing
whatsoever under or in connection with, arising out of, or in any way related
to this Agreement or the transactions provided for herein and Purchaser, its
affiliates and all persons claiming by, through or under Purchaser or its
affiliates, hereby waive any and all right to sue or recover on account of any
such personal liability, whether real or claimed.
14. ACKNOWLEDGEMENT. Except as expressly set forth in this Agreement,
Balcor makes no representations concerning the Loan Documents and hereby
disclaims all warranties of any kind or nature whatsoever whether expressed or
implied. Purchaser acknowledges that this is an arms-length transaction and
that Purchaser is not relying upon any representation of any kind or nature
made by Balcor (or any other person or entity on behalf of Balcor) in entering
into and consummating the transactions contemplated under this Agreement other
than those set forth above (provided, however, Purchaser's reliance on said
representations set forth hereinabove shall be subject to the limitations on
recourse set forth in Paragraph 10 above).
<PAGE>
15. BROKER. The parties hereto hereby each represent and warrant to the
other that neither has retained the services of a broker in connection with
this transaction except for Insignia Mortgage and Investment Company ("Balcor's
Broker") retained by Balcor and whose commission will be paid by Balcor.
Purchaser and Balcor each will indemnify and hold harmless the other from all
broker's commissions, finder's fees or consultant's fees due on account of the
transactions herein contemplated to any broker, finder or consultant claiming
to have acted on its behalf other than Balcor's Broker. The indemnification
hereunder shall survive the Closing. Balcor represents to Purchaser that no
portion of the commission being paid to Balcor's Broker is being paid to
Balcor.
16. NOTICE. All notices or other communications ("Notices") given under
this Agreement shall be in writing and shall be sent by either (a) registered
or certified mail, return receipt requested, postage prepaid, or (b) overnight
courier service (with receipt requested), postage prepaid, addressed as follows
(or at such other address as a party may have previously specified by Notice to
the other parties):
(a) if to Purchaser, to:
Michael P. Harris, Arnold L. Porath
John P. Lowney, Jr. and Kay S. Lowney,
as Trustees of the JKL Trust and Stephen D. Moses
c/o ALP Associates
12400 Wilshire Boulevard, Suite 1450
Los Angeles, California 90025
(310) 826-9504 (FAX)
with a copy to:
Spencer, Fane, Britt & Browne
500/40 Corporate Woods
Overland Park, Kansas 66225
Attn: Nick Badgerow and Richard H. Hertel
(913) 345-0736 (FAX)
(b) if to Balcor, to:
Balcor Mortgage Advisors, Inc.
Bannockburn Lake Office Plaza
2355 Waukegan Road, Suite A200
Bannockburn, Illinois 60015
Attn: Teri Thompson
(847) 317-4452 (FAX)
and
Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661
Attn: Andrew D. Small, Esq.
(312) 902-1061 (FAX)
<PAGE>
Notice given as provided above shall be deemed given (1) five business
days after the date mailed as aforesaid, or (2) the day delivered by overnight
courier. In addition, a notice of termination of this Agreement pursuant to
Section 5B above may also be delivered by fax so long as such notice of
termination is simultaneously sent by overnight courier in accordance with the
provisions set forth above. A notice given by fax shall be effective as of the
day delivered so long as a notice is simultaneously sent by overnight courier
in accordance with the provisions set forth above.
17. ENTIRE AGREEMENT. This Agreement, together with the exhibits,
contains the entire agreement between the parties respecting the matters herein
set forth and supersedes all prior agreements between the parties hereto about
such matters. Nothing in this Agreement shall be deemed to constitute an
amendment or modification of, and this Agreement shall not in any way amend or
modify, any of the Loan Documents.
18. SUCCESSORS AND ASSIGNS. This Agreement and the terms and provisions
hereof shall inure to the benefit of and be binding on the parties hereto and
their respective successors and assigns, as permitted. This Agreement may be
assigned or transferred at any time by Purchaser or Balcor only with the prior
written consent of the other party, which may be withheld for any reason;
provided, however, Balcor shall be permitted to assign this Agreement at any
time to any person or entity controlled by, controlling or under common control
with, directly or indirectly, Balcor or any successor in interest to the
Balcor, without the prior consent of Purchaser, provided that the Loan
Documents are concurrently therewith assigned to said assignee. Balcor hereby
consents to an assignment by Purchaser of its right to purchase the Loan
Documents for the Purchase Price, and to receive credit at Closing against the
Purchase Price for the Earnest Money (and Closing Extension Fee, if applicable)
deposited hereunder, and for the closing adjustments and closing costs
described in Section 27 hereof, to: (i) Whispering Hills; (ii) Mark Twain
Kansas City Bank; or (iii) Green Park Financial Limited Partnership; provided,
however, that no such assignment shall relieve Purchaser from its obligations
hereunder, including but not limited to its obligations to pay the "Positive
Cash Flow" amount described in Section 2 hereof. Notwithstanding any such
limited assignment, such assignee shall have no liability under this Agreement
to Balcor or Purchaser for any matter or thing whatsoever. Purchaser shall
deliver notice of any such assignment to Balcor immediately following such
assignment.
19. SURVIVAL. Except as otherwise provided in this Agreement to the
contrary, the representations, covenants and agreements of the parties under
this Agreement shall not survive the Closing but shall be merged therein.
20. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced under the laws of the State of Illinois.
21. MODIFICATION. Except as otherwise provided, this Agreement shall not
be modified or amended except by written agreement signed on behalf of both
Balcor and Purchaser by their respective authorized officer.
<PAGE>
22. ARM'S LENGTH. This Agreement has been negotiated at arm's length and
between persons sophisticated and knowledgeable in the matters dealt with in
this Agreement.
23. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Execution and delivery
of this Agreement by exchange of facsimile copies bearing the facsimile
signature of a party shall constitute a valid and binding execution and
delivery of this Agreement by such party. Such facsimile copies shall
constitute enforceable original documents.
24. HEADINGS. The headings and titles set forth herein are provided for
convenience and reference only and shall not be considered binding with respect
to the intent or content of any section hereof.
25. TIME OF THE ESSENCE. The parties hereto agree and acknowledge that
time is of the essence of this Agreement and the transactions contemplated
herein.
26. MARCH 15, 1989 AGREEMENT/WAIVER OF RIGHT OF FIRST REFUSAL. Except if
this Agreement is terminated pursuant to Section 5B hereof, Borrower does
hereby forever waive its right, as set forth in section 9(g) of the March 15,
1989 Agreement; provided, however, even if this Agreement is terminated
pursuant to Section 5B hereof, Borrower shall forever waive its rights in
Section 9(g) of the March 15, 1989 Agreement with respect to a sale of the
Property to Equity for a purchase price of not less than $17,200,000. In
addition, the March 15, 1989 Agreement shall automatically terminate and be of
no further force and effect immediately following the adjustment to the
estimate of Positive Cash flow required by paragraph 27 below and the
distribution by Balcor of the proceeds of the sale of the Loan Documents
pursuant to the March 15, 1989 Agreement. However, from and after the
Closing, the March 15, 1989 Agreement shall have no effect or impact on: (a)
the Property; (b) any assignee purchasing the Loan Documents as contemplated by
Section 18 hereof; or (c) the Loan Documents
27. PRORATION. Balcor acknowledges that the proceeds to be paid to
Balcor at Closing may be used to pay customary and reasonable title insurance
(commitment and policy), survey and closing and escrow costs, if any, (but
excluding any attorneys' fees) solely to the extent Purchaser is obligated to
pay such items under the Sale Agreement (if executed) as well as a customary
and appropriate proration of real estate taxes and the amount of security
deposits delivered by Purchaser to Balcor.
28. SECOND MODIFICATION. Immediately preceding the Closing, Balcor and
Borrower will execute and deliver a Second Modification of Loan Documents in
the form of Exhibit D hereto.
<PAGE>
29. NO MERGER. It is the intent of the parties hereto that, in the event
title to the property vests in the same person or entity which is also the
holder of the Note, Mortgage and the other Loan Documents, the Note, Mortgage
and the other Loan Documents shall remain in full force and effect and the
interest of such person or entity as the holder of the Note, Mortgage and Loan
Documents shall not merge with the interests of such person or entity as the
owner of the Property.
30. CONDITION SUBSEQUENT. Notwithstanding anything contained herein to
the contrary, if Purchaser fails to deposit the Earnest Money with the Escrow
Agent on or before April 14, 1997, then, subject to Section 5C hereof, this
Agreement shall terminate and be of no force and effect.
31. POSITIVE CASH FLOW. Attached hereto as Exhibit E is a letter (the
"Positive Cash Flow Letter") from Balcor to Borrower establishing the terms and
conditions pursuant to which the Positive Cash Flow shall be paid to Balcor.
Borrower hereby agrees to comply with those terms of the Positive Cash Flow
Letter applicable to the Borrower. The terms of the Positive Cash Flow Letter
applicable to the period following the Closing Date shall survive the Closing
and the delivery of the assignment of the Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
Executed By Balcor BALCOR MORTGAGE ADVISORS, INC.,
May 6, 1997 an Illinois corporation
By: /s/ Terri Thompson
---------------------------------
Name: Terri Thompson
---------------------------------
Its: Authorized Representative
---------------------------------
/s/ Michael P. Harris
---------------------------------
Michael P. Harris
/s/ Arnold L. Poratch
---------------------------------
Arnold L. Porath
/s/ John P. Lowney
---------------------------------
John P. Lowney, Trustee
/s/ Kay S. Lowney
---------------------------------
Kay S. Lowney, Trustee
/s/ Stephen D. Moses
---------------------------------
Stephen D. Moses
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 18103
<SECURITIES> 0
<RECEIVABLES> 603
<ALLOWANCES> 2102
<INVENTORY> 0
<CURRENT-ASSETS> 18764
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25745
<CURRENT-LIABILITIES> 411
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 25334
<TOTAL-LIABILITY-AND-EQUITY> 25745
<SALES> 0
<TOTAL-REVENUES> 577
<CGS> 0
<TOTAL-COSTS> 102
<OTHER-EXPENSES> 487
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
