FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
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 0-15546
ANGELES PARTNERS XV
(Exact name of small business issuer as specified in its charter)
California 95-4046025
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
ANGELES PARTNERS XV
STATEMENT OF NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
June 30, 1998
Assets
Cash $ 361
Other assets 5
Investment properties 4,128
4,494
Liabilities
Property taxes 93
Interest 3,254
Other liabilities 29
Notes payable, including $3,082
in default 6,967
Estimated costs during the period
of liquidation 113
10,456
Net liabilities in liquidation $(5,962)
See Accompanying Notes to Financial Statements
b)
ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
Six Months Ended June 30, 1998
Net liabilities in liquidation at December 31, 1997 $ (6,273)
Changes in net liabilities in liquidation
attributed to:
Increase in cash 6
Increase in other assets 1
Decrease in accrued taxes 18
Increase in accrued interest (388)
Increase in other liabilities (29)
Decrease in estimated costs during the period
of liquidation 703
Net liabilities in liquidation at June 30, 1998 $ (5,962)
See Accompanying Notes to Financial Statements
b)
ANGELES PARTNERS XV
STATEMENT OF CHANGES IN NET LIABILITIES IN LIQUIDATION
(Unaudited)
(in thousands)
Six Months Ended June 30, 1997
Net liabilities in liquidation at December 31, 1996 $ (4,025)
Changes in net liabilities in liquidation
attributed to:
Increase in cash 55
Increase in other assets 3
Increase in accrued taxes (65)
Increase in accrued interest (325)
Decrease in estimated costs during the period
of liquidation 212
Net liabilities in liquidation at June 30, 1997 $ (4,145)
See Accompanying Notes to Financial Statements
e)
ANGELES PARTNERS XV
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
As of December 31, 1994, Angeles Partnership XV (the "Partnership") adopted the
liquidation basis of accounting. The Partnership had experienced significant
recurring operating losses. In March 1995, the lender on the non-recourse debt
secured by the Marina Plaza notified the Partnership that this debt was in
default and initiated foreclosure proceedings. Marina Plaza was placed in
receivership in June 1995, and was foreclosed upon on August 1, 1995. In
addition, the Partnership was in default on recourse indebtedness totaling
$3,500,000 due to Angeles Mortgage Investment Trust ("AMIT"). Of this debt,
$1,500,000 was secured by one of the remaining Cleveland Industrial Complex
("Cleveland") buildings and AMIT placed the property in receivership in January
1995, and foreclosed on the property on September 6, 1995. AMIT also
foreclosed on another of the Cleveland buildings on August 23, 1995. The
remaining $2,000,000 was recourse to the Partnership and AMIT received a
default judgment against the Partnership on January 18, 1995. As a result of
the foreclosure on the Cleveland building on August 23, 1995, this judgment was
reduced by $500,000. In July of 1996, AMIT entered a complaint for foreclosure
and other relief against the Partnership. On July 26, 1996, the remaining
Cleveland Properties were placed in receivership. The receiver is authorized
to collect the rents, profits and all income derived from the properties, to
maintain the premises, and otherwise preserve, manage, maintain and protect
such properties. On July 28, 1998, the Partnership executed an Agreement for
Deed in Lieu of Foreclosure by and between the Partnership and AMIT, a
California business trust. Pursuant thereto, the Partnership conveyed to AMIT
in lieu of mortgage foreclosure. Angeles Realty Corporation II, the general
partner, did not believe that it was in the Partnership's best interest to
contest this foreclosure action because there is no equity in the property or
Partnership. Furthermore, the Partnership does not have the funds with which
to contest this action. Any remaining cash will be used to cover the costs of
liquidating the Partnership. The Partnership does not intend nor does it have
the ability to purchase any additional properties and the Managing General
Partner has decided to liquidate the Partnership during the third or fourth
quarter of 1998. Although the Partnership has $5,962,000 in net liabilities in
liquidation at June 30, 1998, neither the general partners nor the limited
partners will be required to contribute additional capital to cover this
amount.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at December 31,
1994, from the going concern basis of accounting to the liquidation basis of
accounting. Consequently, assets have been valued at estimated net realizable
value and liabilities are presented at their estimated settlement amounts,
including estimated costs associated with carrying out the liquidation. The
valuation of assets and liabilities necessarily requires many estimates and
assumptions and there are substantial uncertainties in carrying out the
liquidation. The actual realization of assets and settlement of liabilities
could be higher or lower than amounts indicated and is based upon the Managing
General Partner's estimates as of the date of the financial statements.
The investment properties were adjusted to their estimated net realizable
values. The net realizable values were based on independent appraisals as of
December 31, 1997. The statement of net liabilities in liquidation as of June
30, 1998, includes approximately $113,000 of accrued costs, net of income,
that the Managing General Partner estimates will be incurred during the period
of liquidation, based on the assumption that the liquidation process will be
completed during the third or fourth quarter of 1998. These costs include
anticipated legal fees, administrative expenses, net of estimated income from
property operations. Because the success in realization of assets and the
settlement of liabilities is based on the Managing General Partner's best
estimates, the liquidation period may be shorter than projected or it may be
extended beyond the projected period.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
partnership activities. The Managing General Partner is wholly-owned by Insignia
Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc.
("Insignia"). The Partnership Agreement provides for payments to affiliates for
services and as reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The day to day management of the remaining investment
properties are managed by a third party receiver, which was court appointed.
The following amounts were paid or accrued to the Managing General Partner and
affiliates during the six months ended June 30, 1998 and 1997:
1998 1997
(in thousands)
Reimbursement for services of affiliates $ 20 $ 31
For the period of January 1, 1997 through August 31, 1997, the Partnership
insured its properties under a master policy through an agency affiliated with
the Managing General Partner with an insurer unaffiliated with the Managing
General Partner. An affiliate of the Managing General Partner acquired, in the
acquisition of a business, certain financial obligations from an insurance
agency which was later acquired by the agent who placed the master policy. The
current agent assumed the financial obligations to the affiliate of the
Managing General Partner, which receives payments on these obligations from the
agent. The amount of the Partnership's insurance premiums accruing to the
benefit of the affiliate of the Managing General Partner by virtue of the
agent's obligations is not significant.
In November 1992, Angeles Acceptance Pool ("AAP"), a Delaware limited
partnership was organized to acquire and hold the obligations evidencing the
working capital loan previously provided by Angeles Capital Investment, Inc.
("ACII"). Angeles Corporation ("Angeles") is the 99% limited partner of AAP and
Angeles Acceptance Directives, Inc.("AAD"), an affiliate of the Managing General
Partner, was, until April 14, 1995, the 1% General Partner of AAP. On April 14,
1995, as part of a settlement of claims between affiliates of the Managing
General Partner and Angeles, AAD resigned as general partner of AAP and
simultaneously received a 1/2% limited partner interest in AAP. An affiliate
of Angeles now serves as the general partner of AAP. AAP's working capital loan
funded the Partnership's operating deficits in prior years. Total indebtedness,
which is included as a note payable, was approximately $1,582,000 and is in
default at June 30, 1998.
AMIT, a real estate investment trust, has provided secondary financing to the
Partnership secured by the Partnership's investment properties known as
Cleveland Industrial and Marina Plaza. One of the notes in the amount of
$600,000 secured by one of the Cleveland Industrial buildings was assumed by the
purchaser of the building during 1994. Total AMIT indebtedness at June 30, 1998,
is $1,500,000, plus accrued interest of approximately $2,360,000. Total
interest charges were approximately $297,000 and $249,000 for the six months
ended June 30, 1998 and 1997, respectively.
In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The
terms of the Class B Shares provide that they are convertible, in whole or in
part, into Class A Common Shares on the basis of one Class A Share for every 49
Class B Shares (however, in connection with the settlement agreement described
in the following paragraph, MAE GP agreed not to convert the Class B Shares so
long as AMIT's option is outstanding). These Class B Shares entitle the holder
to receive 1% of the distributions of net cash distributed by AMIT (however, in
connection with the settlement agreement described in the following paragraph,
MAE GP agreed to waive its right to receive dividends and distributions so long
as AMIT's option is outstanding). The holder of the Class B Shares is also
entitled to vote on the same basis as the holders of Class A Shares, providing
the holder with approximately 39% of the total voting power of AMIT (unless and
until converted to Class A Shares, in which case the percentage of the vote
controlled represented by such Shares would approximate 1.3% of the total voting
power of AMIT).
As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an
option to acquire the Class B Shares owned by it. This option can be exercised
at the end of 10 years or when all loans made by AMIT to partnerships which were
affiliated with MAE GP as of November 9, 1994 (which is the date of execution of
a definitive Settlement Agreement) have been paid in full. In connection with
such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing
(which occurred April 14, 1995) as payment for the option. If and when the
option is exercised, AMIT will be required to remit to MAE GP an additional
$94,000.
Simultaneously with the execution of the option and as part of the settlement,
MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that
the holder of the Class B Shares is permitted to vote those Shares on all
matters except those involving transactions between AMIT and MAE GP affiliated
borrowers or the election of any MAE GP affiliate as an officer or trustee of
AMIT. With respect to such matters, the trustees of AMIT are required to vote
(pursuant to the irrevocable proxy) the Class B Shares (as a single block) in
the same manner as a majority of the Class A Shares are voted (to be determined
without consideration of the votes of "Excess Class A Shares" (as defined in
Section 6.13 of AMIT's Declaration of Trust)).
Between its acquisition of the Class B Shares (in November 1992) and March 31,
1995, MAE GP declined to vote these Shares. Since that date, MAE GP voted its
Shares at the 1995 and 1996 annual meetings in connection with the election of
trustees and other matters. In February 1998, MAE GP was merged into IPT, and in
connection with that merger, MAE GP dividended all of the Class B Shares to its
sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a result,
MAE, as the holder of the Class B Shares, is now subject to the terms of the
settlement agreement, option and irrevocable proxy described in the two
preceding paragraphs. Neither MAE GP nor MAE has exerted or has any current
intention to exert any management control over or participate in the management
of AMIT. However, subject to the terms of the proxy described below, MAE may
choose to vote the Class B Shares or otherwise exercise its rights as a
shareholder of AMIT as it deems appropriate in the future.
Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE
and Insignia (which provides property management and partnership administration
services to the Partnership), owned 96,800 Class A Shares of AMIT at June 30,
1998. These Class A Shares represent approximately 2.2% of the total voting
power of AMIT.
On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in
principle contemplating, among other things, a business combination of AMIT and
IPT, which was then owned 98% by Insignia and its affiliates. On July 18, 1997,
IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to
which (subject to shareholder approval and certain other conditions, including
the receipt by AMIT of a fairness opinion from its investment bankers) AMIT
would be merged with and into IPT, with each Class A Share and Class B Share
being converted into 1.625 and 0.0332 Common Shares of IPT, respectively. The
foregoing exchange ratios are subject to adjustment to account for dividends
paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1,
1997. It is anticipated that Insignia and its affiliates (including MAE) would
own approximately 57% of post-merger IPT if this transaction is consummated.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in IPT,
with Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust. The closing, which is anticipated to happen in
September or October of 1998, is subject to customary conditions, including
government approvals and the approval of Insignia's shareholders. If the
closing occurs, AIMCO will then control the Managing General Partner of the
Partnership. It is not anticipated that this transaction will have a material
effect on the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OR OPERATION
Results of Operations, Liquidity and Capital Resources
As of December 31, 1994, the Partnership adopted the liquidation basis of
accounting. The Partnership had experienced significant recurring operating
losses. In March 1995, the lender on the non-recourse debt secured by Marina
Plaza notified the Partnership that this debt was in default and initiated
foreclosure proceedings. Marina Plaza was placed in receivership in June 1995,
and was foreclosed upon on August 1, 1995. The Partnership was in default on
recourse indebtedness totaling $3,500,000 due to AMIT. Of this debt, $1,500,000
was secured by one of the remaining Cleveland buildings and AMIT placed the
property in receivership in January 1995, and foreclosed on it September 6,
1995. AMIT also foreclosed on another of the Cleveland buildings on August 23,
1995. The remaining $2,000,000 was recourse to the Partnership and AMIT
received a default judgment against the Partnership on January 18, 1995. As a
result of the foreclosure on the Cleveland building on August 23, 1995, this
judgment was reduced by $500,000. In July of 1996, AMIT entered a complaint for
foreclosure and other relief against the Partnership. On July 26, 1996, the
remaining Cleveland Properties were placed in receivership. The receiver is
authorized to collect the rents, profits and all income derived from the
properties, to maintain the premises, and otherwise preserve, manage, maintain
and protect such properties. On July 28, 1998, the Partnership executed an
Agreement for Deed in Lieu of Foreclosure by and between the Partnership and
AMIT, a California business trust. Pursuant thereto, the Partnership conveyed
to AMIT in lieu of mortgage foreclosure. Angeles Realty Corporation II, the
general partner, did not believe that it was in the Partnership's best interest
to contest this foreclosure action because there is no equity in the property
or Partnership. Furthermore, the Partnership does not have the funds with
which to contest this action. Any remaining cash will be used to cover the
costs of liquidating the Partnership. The Managing General Partner intends to
liquidate the Partnership during the third or fourth quarter of 1998. Although
the Partnership has $5,962,000 in net liabilities in liquidation at June 30,
1998, neither the general partners nor the limited partners will be required to
contribute additional capital to cover this amount.
AAP's working capital loan funded the Partnership's operating deficits in prior
years. Total indebtedness, which is included as a note payable, was
approximately $1,582,000 and is in default at June 30, 1998. Total interest
charges for this loan were approximately $83,000 for both the six month periods
ended June 30, 1998 and 1997.
As a result of the decision to liquidate the Partnership, the Partnership
changed its basis of accounting for its financial statements at December 31,
1994, from the going concern basis of accounting to the liquidation basis of
accounting. Consequently, assets have been valued at their estimated net
realizable value and liabilities are presented at their estimated settlement
amounts, including estimated costs associated with carrying out the liquidation.
The valuation of assets and liabilities necessarily requires many estimates and
assumptions and there are substantial uncertainties in carrying out the
liquidation. The actual realization of assets and settlement of liabilities
could be higher or lower than amounts indicated and is based upon the Managing
General Partner's estimates as of the date of the financial statements.
The investment properties were adjusted to their estimated net realizable value.
The estimated net realizable value for the three Cleveland buildings remaining
at June 30, 1998, was based on independent appraisals as of December 31, 1997.
The statement of net liabilities in liquidation as of June 30, 1998, includes
approximately $113,000 of accrued costs, net of income, that the Managing
General Partner estimates will be incurred during the period of liquidation,
based on the assumption that the liquidation process will be completed during
the third or fourth quarter of 1998. These costs include anticipated legal fees
and administrative expenses, less income from property operations. Because the
success in realization of assets and the settlement of liabilities is based on
the Managing General Partner's best estimates, the liquidation period may be
shorter than projected or it may be extended beyond the projected period.
For the six months ended June 30, 1998, the Partnership recorded a decrease in
the estimated costs during the period of liquidation of approximately $703,000.
This decrease is primarily due to the payment of liquidation charges and a
decrease in the estimated costs to liquidate as a result of the deed in lieu of
foreclosure which occurred on July 28, 1998.
Year 2000
The Partnership is dependent upon the Managing General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Managing General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA
FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia and its affiliates of
interests in certain general partner entities, past tender offers by Insignia
affiliates as well as a recently announced agreement between Insignia and AIMCO.
The complaint seeks monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 24, 1998, the Managing General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs have filed an amended complaint. The Managing General
Partner believes the action to be without merit, and intends to vigorously
defend it.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Managing General Partner of the Partnership
believes that all such pending or outstanding litigation will be resolved
without a material adverse effect upon the business, financial condition, or
operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10.14, Agreement for Deed-in-Lieu-of-Foreclosure, by and
between Angeles Partners XV and Angeles Mortgage Investment Trust
("AMIT"), dated July 28, 1998, conveying the Cleveland properties, two
located in Strongeville, Ohio and one located in Solon, Ohio to AMIT.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
b) Reports on Form 8-K filed during the quarter ended June 30, 1998:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANGELES PARTNERS XV
By: Angeles Realty Corporation II
Its Managing General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President and Director
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President
and Chief Accounting Officer
Date: August 14, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Angeles Partners XV 1998 Second Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000788331
<NAME> ANGELES PARTNERS XV
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 361
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 4,128
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,494
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 6,967
0
0
<COMMON> 0
<OTHER-SE> (5,962)
<TOTAL-LIABILITY-AND-EQUITY> 4,494
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
AGREEMENT FOR DEED-IN-LIEU-OF-FORECLOSURE
Parties: Angeles Partners XV, a California limited partnership ("Borrower");
and Angeles Mortgage Investment Trust, a California business trust
("Lender")
Property: Property in Cuyahoga County, Ohio. The property is legally described
in Schedule 1 attached hereto.
Date: July 28, 1998
R E C I T A L S
A. Borrower is the owner of fee simple title to the Property. Lender
is the owner of a judgment lien in Cuyahoga County Common Pleas Court Case No.
278338 in the original amount of $2,724,991.06 with 12.5% interest from January
18, 1995 and costs in the amount of $25.00, filed January 18, 1995 at 4:29 p.m.
as Cuyahoga County Common Pleas Judgment No. JL000738 (the "Judgment Lien").
B. As reflected in that certain Assignment of Mortgage dated as of
March 31, 1998 recorded in Volume 98-03753, Page 21 of the Cuyahoga County
Records, and that certain Assignment of Mortgage dated March 31, 1998 and
recorded in Volume 98-03753, Page 24 of the Cuyahoga County Records, Lender is
the holder of one first mortgage on the portion of the Property located in
Strongsville, Ohio, namely that certain Mortgage and Security Agreement dated
August 31, 1988 made by Angeles Partners XV, recorded in Volume 88-4558, Page 68
of the Cuyahoga County Records (the "Strongsville Mortgage"), and one first
mortgage on the portion of the Property located in Solon, Ohio, namely that
Mortgage and Security Agreement dated August 31, 1988 made by Angeles Partners
XV, recorded in Volume 88-4558, Page 26 of the Cuyahoga County Records (the
"Solon Mortgage," together with the Strongsville Mortgage, the "Mortgages"), as
well as the notes secured thereby (collectively, the "Notes").
C. The Property presently is the subject of a foreclosure action
styled Angeles Mortgage Investment Trust v. Angeles Partners XV, et al., No.
311749, pending in the Court of Common Pleas of Cuyahoga County, Ohio (the
"Action"), in which Lender has sought to foreclose the Judgment Lien and the
Mortgages. A receiver (the "Receiver") has been appointed in the Action to
preserve and maintain the Property and to collect all rents and income (the
"Income") from same. Final judgment has been entered in the Action, in the form
of that certain Magistrate's Decision, filed as of December 31, 1997 and adopted
by the Court as of January 23, 1998 (the "Magistrate's Decision").
D. As determined in the Magistrate's Decision, the amount owed by
Borrower as of August 19, 1997 on the debt secured by the Judgment Lien is
$2,224,991.06 plus interest. As of July 1, 1998, the amount owed with interest
is $3,477,622.77. As further determined in the Magistrate's Decision, the
amount owed by Borrower as of August 19, 1997 on the note secured by the
Strongsville Mortgage is $2,090,000 plus interest. As further determined in the
Magistrate's Decision, the amount owed by Borrower as of August 19, 1997 on the
note secured by the Solon Mortgage is $1,775,000, plus interest.
E. By side letter agreement (the "Letter Agreement") dated the date
hereof, Lender, upon the terms stated in the Letter Agreement, has agreed to
provide Borrower with a Credit (as that term is defined in the Letter Agreement)
upon the consummation of this agreement by the filing of the deeds (as defined
below) for record.
F. Lender, in its sole discretion, may elect to assign some or all
of its rights under this Agreement and/or direct that conveyance of the Property
be made to a purchaser designated by Lender.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
provisions and covenants made herein, and the receipt of other good and valuable
consideration, the receipt and sufficiency whereof are hereby acknowledged,
Borrower and Lender hereby agree that:
AGREEMENTS
1. Consideration. The consideration for the conveyance of the
Property to Lender by Borrower shall be the Credit. It is the intention of the
parties hereto that the delivery of the Deeds (as defined below) and the Credit
shall constitute a final and complete settlement of all obligations between them
arising from, related to or connected with the Property.
2. Conveyance. The Property shall be conveyed by Borrower to
Lender, or at Lender's option, to Lender's designee, in lieu of Lender
foreclosing upon the Judgment Lien and the Mortgages by a good and sufficient
limited warranty deed for each parcel of the Property (the "Deeds"), each
warranting the Property to be free and clear of liens and encumbrances by, from,
through, or under the Borrower except matters of record, including without
limitation, (a) liens and encumbrances of record, (b) zoning ordinances, (c)
easements and rights of way of record, (d) conditions, limitations, and
restrictions of record, and (e) the Mortgages.
3. Title Exceptions. Borrower and Lender have been furnished with a
Preliminary Judicial Report and a Final Judicial Report ("Judicial Reports")
issued by the Stewart Title Guaranty Company, Order No. ST 18846, showing title
to the Property to be subject to (a) taxes and assessments for the first half of
1998, (b) the Mortgages, (c) the Judgment Lien, (d) easement for sanitary sewer
from National Engineering and Constructing Company to the City of Strongsville,
dated August 4, 1964, filed for record September 8, 1964 and recorded in Volume
11186, Page 351 of Cuyahoga County Records, (e) easement for underground
utilities from National Engineering and Contracting Company to The Cleveland
Electric Illuminating Company and the Ohio Bell Telephone Company dated April
27, 1967, filed for record May 1, 1967 and recorded in Volume 12113, Page 753 of
Cuyahoga County Records (f) appurtenant easement for gas storage and
transmission system from Leonard P. Gilbert to Roger M. Haedinges, dated
November 13, 1975, filed for record November 25, 1975, and recorded in Volume
13895, Page 105 of Cuyahoga County Records, (g) easement for underground
utilities from Virginia Holding Corporation to the Cleveland Electric
Illuminating Company and The Ohio Bell Telephone Company dated June 29, 1970,
filed for record July 7, 1970 and recorded in Volume 12722, page 57 of Cuyahoga
County Records, (h) memorandum of lease agreement by and between Angeles
Partners XV and J. C. Penney Company, Inc., dated September 30, 1994 filed for
record January 18, 1995 and recorded in Volume 95-00348, Page 2 of Cuyahoga
County Records.
4. Representations and Warranties. Lender represents and warrants
that it has the power and authority to perform this Agreement, and that the
officer signing this Agreement on its behalf, is duly authorized.
5. Escrow. As promptly as possible, an in any event on or before
July 31, 1998, Lender shall deposit in escrow with the Squire, Sanders & Dempsey
L.L.P. the Letter Agreement reflecting the Credit. As promptly as possible, and
in any event, on or before July 31, 1998, Borrower shall deposit in escrow with
Squire, Sanders & Dempsey L.L.P., the Deeds. As promptly after the foregoing
items are deposited in escrow as is possible, and in any event within three (3)
business days after such items are deposited, Squire, Sanders & Dempsey L.L.P.
shall consummate the transaction provided for herein by (a) filing the Deeds for
record and (b) delivery of the Letter Agreement to Borrower.
6. Casualty and Condemnation. (a) In the case of damage or
destruction to the property before the Deeds are filed for record, Lender may at
its option terminate this agreement without further obligation under this
Agreement, or if Lender shall elect not to terminate this Agreement, the parties
to this Agreement shall close the transaction as contemplated in accordance with
the terms of this Agreement and Borrower shall assign to Lender or Lender's
designee all insurance proceeds, including rental loss insurance proceeds, if
any, for the period from and after the Deeds are filed until Property is fully
restored, for such damage or destruction.
(b) If before the Deeds are filed, any action, suit, or
proceeding to condemn or take all or any part of the Property under the powers
of eminent domain, is commenced, Lender shall have the right to terminate its
obligations under this Agreement by notice in writing to Borrower given before
the Deeds are filed. If the Lender shall elect not to terminate its obligations
under this Agreement, Lender shall receive an absolute assignment on the date
the relevant Deed is filed of the entire proceeds of or right to the
condemnation award. Borrower shall convey the Property less that part so taken
or subject to the condemnation proceeding, as the case may be.
7. Prorations. Taxes and assessments, tenant rents and utility
costs, shall not be prorated.
8. Expenses. Lender or Lender's designee shall pay the cost of
filing the Deed for record, and the title examination charges and related costs
of obtaining the Judicial Report.
9. Dismissal of Action. Upon execution of this Agreement and
receipt by Squire, Sanders & Dempsey L.L.P. in escrow of the Deeds and Letter
Agreement, Lender shall file a Motion to Dismiss with regard to the Action in
the form attached hereto as Exhibit A.
10. Income Upon termination of the Receivership and discharge
of the Receiver, Lender shall be entitled to receive any income from the
Property in the possession of the Receiver following termination and approval of
the Receiver's final report. To this effect, Borrower shall execute the Agreed
Motion to Terminate Receivership attached hereto as Exhibit B.
11. Broker. Borrower represents that the Property is not listed
for sale with a real estate broker or agent, and Borrower and Lender agree that
upon the filing of the Deed for record, no commission or other payment shall be
due or payable to any entity or person.
12. Failure of Title. If for any reason whatsoever, the status
of the title changes between the date hereof and the date of closing, then at
the option of the Lender, this Agreement shall terminate, and Borrower and
Lender shall be released of all liabilities and obligations hereunder; provided,
however, that (a) the Lender may waive any title exception or defect which is
not among Title Exceptions, and (b) Borrower shall have thirty (30) days after
the change of status of title in which to cure the same unless the change is
acceptable to Lender. The parties acknowledge that the Property is subject to
an unrecorded Agreement of Lease by and between Hayes Corp. (predecessor in
interest to Borrower) and Westpark packaging, inc. ("Westpark"), dated March 29,
1983 as amended by Amendment of Lease Agreement dated August 24, 1984, First
Addendum to Lease dated August 30, 1988, Second Addendum to Lease dated March
21, 1991, Third Amendment of Lease dated October 23, 1992, Fourth Amendment of
Lease dated January 27, 1994 and Fifth Amendment to Lease Agreement dated
January 30, 1997 (collectively, the "Lease"). Pursuant to the Lease, Westpark
may have a right of first refusal with respect to some portion of the Property.
13. Restoration of Rights and Remedies. If for any reason
whatsoever this Agreement shall terminate and not be consummated in accordance
with its terms and conditions, the Lender shall be fully restored to all rights
and remedies which it has at law or in equity or pursuant to the Judgment Lien
or Mortgages, and Borrower shall not be entitled to, and shall not raise the
existence or termination of this Agreement as a defense to any action which
Lender may institute against Borrower pursuant to the Judgment Lien or
Mortgages.
14. Notices. All notices, demands and requests given or
required or desired to be given hereunder shall be in writing and shall be
delivered in person or by overnight express delivery or by United States
certified mail, return receipt requested, postage prepaid, as follows:
To Borrower: Angeles Partners XV
c/o Insignia Properties Trust
One Insignia Financial Plaza
Greenville, South Carolina 29602
Attention: John LeBeau
To Lender Angeles Mortgage Investment Trust
340 N. Westlake Blvd., Suite 230
Westlake Village, CA 91362
Attention: Anna Merguerian
with a copy to: Squire, Sanders & Dempsey
4900 Key Tower, 127 Public Square
Cleveland, Ohio 44114
Attention: Dynda A. Thomas
15. Counterparts. This Agreement may be executed in several
counterparts, each of which shall, for all purposes, be deemed an original. All
of such counterparts, taken together, shall constitute one and the same
agreement.
16. No Merger. It is the express intention of the Borrower and
the Lender that the mortgage estate created by the Judgment Lien, the Mortgages,
and fee ownership are not intended to merge as a result of the conveyances
contemplated hereby, but shall remain separate.
17. Entire Agreement. This Agreement, the Deeds, the Letter
Agreement and any other instrument delivered hereunder, constitutes the entire
agreement of the parties hereto as to the subject matter hereof, and there are
no agreements, representations, warranties or promises as to the subject matter
hereof which are not set forth herein.
18. Successors and Assigns. This Agreement shall be binding on
and inure to the benefit of Borrower and Lender, their respective successors,
assigns, grantees, and legal representatives.
Borrower and Lender have executed this Agreement by and through
their respective duly authorized officers and partners as of the date set forth
above.
ANGELES PARTNERS XV,
a California limited partnership
By: Angeles Realty Corporation II
a California Corporation
Its General Partner
By: /s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Its Vice President
ANGELES MORTGAGE INVESTMENT TRUST
a California business trust
By: /s/ Anna Merguerian
Anna Merguerian
Its Vice President
