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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 1997
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 0-19123
FOGELMAN MORTGAGE L.P. I
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(Exact name of registrant as specified in its charter)
Tennessee 62-1317805
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One Seaport Plaza, New York, New York 10292-0128
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 214-3500
Securities registered pursuant to Section 12(g) of the Act:
Depositary Units
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Title of class
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 CK No _
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ CK ]
DOCUMENTS INCORPORATED BY REFERENCE
Amended and Restated Certificate and Agreement of Limited Partnership dated
November 12, 1986, included as part of the Registration Statement (File No.
33-8596) filed with the Securities and Exchange Commission on November 26, 1986
pursuant to Rule 424(b) under the Securities Act of 1933, as amended on December
31, 1991 and on December 24, 1992, is incorporated by reference into Part IV of
this Annual Report on Form 10-K
Annual Report to Unitholders for the year ended December 31, 1997 is
incorporated by reference into Parts II and IV of this Annual Report on Form
10-K
Index to exhibits can be found on pages 9 through 11.
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This Annual Report on Form 10-K/A for the Registrant for the
year ended December 31, 1997 is being filed to include herewith
certain exhibits under Item 14(a) not previously included in the
original Form 10-K filing on March 31, 1998.
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FOGELMAN MORTGAGE L.P. I
(a limited partnership)
Table of Contents
<TABLE>
<CAPTION>
PART I PAGE
<S> <C> <C>
Item 1 Business......................................................................... 3
Item 2 Properties....................................................................... 5
Item 3 Legal Proceedings................................................................ 5
Item 4 Submission of Matters to a Vote of Unitholders................................... 5
PART II
Item 5 Market for Registrant's Units and Related Unitholder Matters..................... 5
Item 6 Selected Financial Data.......................................................... 6
Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations..................................................................... 6
Item 8 Financial Statements and Supplementary Data...................................... 6
Item 9 Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 6
PART III
Item 10 Directors and Executive Officers of the Registrant............................... 6
Item 11 Executive Compensation........................................................... 7
Item 12 Security Ownership of Certain Beneficial Owners and Management................... 8
Item 13 Certain Relationships and Related Transactions................................... 8
PART IV
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.................. 9
Financial Statements and Financial Statement Schedules........................... 9
Exhibits......................................................................... 9
Reports on Form 8-K.............................................................. 11
SIGNATURES................................................................................. 14
</TABLE>
2
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PART I
Item 1. Business
General
Fogelman Mortgage L.P. I (the 'Registrant'), a Tennessee limited partnership,
was formed on September 4, 1986 and will terminate on December 31, 2016 unless
terminated sooner under the provisions of the Amended and Restated Certificate
and Agreement of Limited Partnership, as amended (the 'Partnership Agreement').
(See the discussion below concerning the Payoff Agreement and the possible
earlier termination of the Partnership.) The Registrant was formed to invest in
mortgage loans with the proceeds raised from the initial sale of 54,200
depositary units ('Units'). The Registrant invested in two mortgage loans (the
'Mortgage Loans'), which provided construction and permanent financing for the
development of two multi-family residential apartment complexes. The
Registrant's fiscal year for book and tax purposes ends on December 31.
The Mortgage Loans consist of: (1) a loan (the 'Pointe Royal Loan') in the
face amount of $22,745,000 made to FPI Royal View, Ltd., L.P. ('Pointe Royal'),
which is secured by a first mortgage and related security documents encumbering
the Pointe Royal Apartments, which is a 437 unit residential rental property
located in Overland Park, Kansas (the 'Pointe Royal Property'); and (2) a loan
(the 'Westmont Loan') in the face amount of $23,320,000 made to FPI
Chesterfield, L.P. ('Westmont' and together with Pointe Royal, the
'Partnerships'), which is secured by a first mortgage and related security
documents that encumber the Westmont Apartments, a 489 unit residential rental
property located in Chesterfield, Missouri (the 'Westmont Property' and together
with the Pointe Royal Property, the 'Properties'). Fogelman Enterprises, L.P., a
Delaware limited partnership ('FELP'), and Avron B. Fogelman, an individual
('ABF') are the general partners of each of the Partnerships.
On January 30, 1998, the Registrant entered into an agreement (the 'Payoff
Agreement') with FELP and ABF which supersedes the November 26, 1997 agreement
previously entered into by the parties. Through its general partner,
Prudential-Bache Properties, Inc. ('PBP'), the Registrant has advised FELP that
the Registrant will accept the Payoff Amount, as hereinafter defined, in full
satisfaction of the Mortgage Loans if the Transactions, as hereinafter defined,
are approved by a majority in interest of the unitholders of the Registrant. PBP
has received a written opinion from its advisor to the effect that the offer to
payoff the Mortgage Loans pursuant to the terms of the Payoff Agreement (the
'Transactions') are fair to the Registrant and the Unitholders from a financial
point of view. If the Transactions are approved by the Unitholders, the
Registrant intends to consummate the Transactions, distribute the Payoff Amount
(net of expenses) and the remaining net assets of the Registrant and liquidate
the Registrant.
Pursuant to the Payoff Agreement, FELP has agreed to pay to the Registrant
the payoff amount ('Payoff Amount') of $48,000,000 and an amount, if any, by
which the aggregate amount of interest paid to the Registrant by the
Partnerships in respect of the Mortgage Loans for the period from October 1,
1997, through the closing of the Transactions is less than the interest on the
face amount of the Mortgage Loans during such period calculated at an annual
rate of 7.7%.
The Transactions must be consummated not later than May 29, 1998.
The Registrant is engaged solely in the business of investing in mortgage
loans; therefore, presentation of industry segment information is not
applicable. For more information regarding the Registrant's operations, see Item
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations.
General Partner
The general partner of the Registrant is Prudential-Bache Properties, Inc.
('PBP' or the 'General Partner').
3
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Mortgage Loans and Properties Underlying Mortgage Loans
The Pointe Royal project, which secures the Pointe Royal Loan, is located in
Overland Park, Kansas and is a townhouse apartment community consisting of 52
buildings on approximately 35 acres of land. As of December 31, 1997, the
monthly rents at the Pointe Royal project range from $610 to $930.
The Westmont project, which secures the Westmont Loan, is located in
Chesterfield, Missouri and is an apartment community consisting of 25 buildings
on approximately 58 acres of land. As of December 31, 1997, the monthly rents at
the Westmont project range from $605 to $840.
<TABLE>
<CAPTION>
Information on
Underlying Properties
---------------------------------------
Original Interest Average
Amount of Rate on Average Monthly
Mortgage Mortgage Maturity Occupancy Rental Rental Units
Property Closing Date Loan Loan Date Rates Rates Available
- ---------------- --------------- ----------- ------------ -------------- --------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Pointe Royal
Overland Park,
Kansas April 23, 1987 $22,745,000 9.5% April 23, 1999 96.7% $793 437
Westmont
Chesterfield,
Missouri July 8, 1987 23,320,000 9.5 July 8, 1999 96.7 710 489
- ---------------
Average occupancy and rental rates are for the twelve months ended December 31, 1997.
</TABLE>
The interest pay rate on the Mortgage Loans has been modified and is equal to
the net property cash flow generated by the respective Properties payable
monthly (4.5% for 1997), with the difference between the amount actually paid
and the original pay rate of 9.5% per annum being accounted for in a separate
account for each Property, which itself bears interest at 9.5% per annum
('Unpaid Interest'). The Mortgage Loans require current payments of interest
only with balloon payments of the entire principal and Unpaid Interest amounts
due from sale or refinancing proceeds or upon maturity. The ultimate
collectibility of the Unpaid Interest as well as the full principal of the
Mortgage Loans will depend upon the value of the underlying properties which are
currently estimated, based on third party appraisals, to be less than the
amounts due. However, the estimated property values exceed the Registrant's
carrying amount of the Mortgage Loans, which is recorded based upon the equity
method of accounting. A full appraisal for both properties was obtained in 1997.
The values of Pointe Royal and Westmont estimated in the appraisal reports were
$24,200,000 and $25,600,000, respectively, as of April 15, 1997. (See above
discussion of proposed payoff of Mortgage Loans.)
Following is the interest received from each of the Registrant's Mortgage
Loans as a percentage of total interest received and the equity income on the
underlying properties as a percentage of total equity income:
<TABLE>
<CAPTION>
Interest Received Equity Income
---------------------- ----------------------
1997 1996 1995 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
---- ---- ---- ---- ---- ----
Pointe Royal 34.6% 43.2% 49.4% 43.5% 44.3% 46.8%
Westmont 65.4% 56.8% 50.6% 56.5% 55.7% 53.2%
</TABLE>
For summary financial statements of the underlying properties, see Note F to
the financial statements in the Registrant's Annual Report to Unitholders for
the year ended December 31, 1997 ('Registrant's Annual Report') which is filed
as an exhibit hereto.
Competition
The General Partner has formed various entities to engage in businesses which
may be competitive with the Registrant. Both of the Properties collateralizing
the Mortgage Loans are located in markets where the property manager manages
other apartment complexes.
The Registrant's business is affected by competition to the extent that the
underlying properties from which it derives interest payments are subject to
competition from neighboring properties. The Westmont
4
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apartments are located in the St. Louis metropolitan area and the Pointe Royal
apartments are located in the Kansas City metropolitan area. The Properties'
occupancy and rental rates are comparable to their competitors. However, the
value of the Properties has declined between the two most recent appraisals and
may continue to decline as construction with newer and superior amenities adds
to the competitive pressure on the property values, particularly in Overland,
Park, Kansas where the Pointe Royal Apartments is located.
Employees
The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partner and its affiliates pursuant
to the Partnership Agreement. The General Partner receives compensation and
reimbursement of expenses in connection with such activities as described in
Sections 9 and 10 of the Partnership Agreement. See Note E to the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
Item 2. Properties
The Registrant does not own or lease any property.
Item 3. Legal Proceedings
None
Item 4. Submission of Matters to a Vote of Unitholders
None
PART II
Item 5. Market for Registrant's Units and Related Unitholder Matters
As of March 5, 1998 there were 4,979 holders of record owning 54,200 Units. A
significant secondary market for the Units has not developed and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in the Partnership Agreement limiting the ability of a
Unitholder to transfer Units. Consequently, holders of Units may not be able to
liquidate their investments in the event of an emergency or for any other
reason.
The following per Unit cash distributions were paid to Unitholders during the
following calendar quarters.
<TABLE>
<CAPTION>
Quarter Ended 1997 1996
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- ------------------- ------ ------
March 31 $15.63 $15.00
June 30 15.63 15.63
September 30 11.50 15.63
December 31 11.50 15.63
</TABLE>
There are no material legal restrictions upon the Registrant's present or
future ability to make distributions in accordance with the provisions of the
Partnership Agreement. Cash distributions paid in 1997 were funded from current
and prior undistributed cash flow from operations. Approximately $2,023,000 and
$1,291,000 of the distributions paid to Unitholders during 1997 and 1996,
respectively, represent a return of capital on a generally accepted accounting
principles (GAAP) basis. The return of capital on a GAAP basis is calculated as
Unitholder distributions less net income allocated to Unitholders. The
Registrant currently does not expect that quarterly cash distributions will
continue to be paid in the future subject to the approval by the Unitholders of
the proposed disposition of the Mortgage Loans. (See Item 1 above for discussion
of proposed payoff of Mortgage Loans.) However, if the Mortgage Loans are paid
off pursuant to the Payoff Agreement, distributions of the net Payoff Amount and
the remaining assets will be made to Unitholders.
5
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Item 6. Selected Financial Data
The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto on pages 2 through 9 of the Registrant's Annual
Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------
1997 1996 1995 1994 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Equity income from the
underlying properties $ 1,633,515 $ 2,557,797 $ 2,166,858 $ 2,267,243 $ 2,082,554
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income $ 1,157,009 $ 2,314,871 $ 1,929,656 $ 1,997,698 $ 1,773,686
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Net income per Unit $ 16.93 $ 38.08 $ 31.04 $ 32.28 $ 28.19
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total assets $26,408,195 $28,321,329 $29,783,810 $31,191,034 $32,349,343
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Total Unitholder
distributions $ 2,940,892 $ 3,354,437 $ 3,116,500 $ 2,981,000 $ 2,879,387
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Unitholder
distributions per Unit $ 54.26 $ 61.89 $ 57.50 $ 55.00 $ 53.13
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This information is incorporated by reference to pages 10 and 11 of the
Registrant's Annual Report which is filed as an exhibit hereto.
Item 8. Financial Statements and Supplementary Data
The financial statements are incorporated by reference to pages 2 through 9
of the Registrant's Annual Report which is filed as an exhibit hereto.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Reference is made to the Registrant's Current Report on Form 8-K dated May
14, 1996, as filed with the Securities and Exchange Commission on May 16, 1996
regarding the change in the Registrant's certifying accountant from Deloitte &
Touche LLP to Price Waterhouse LLP.
PART III
Item 10. Directors and Executive Officers of the Registrant
There are no directors or executive officers of the Registrant. The
Registrant is managed by the General Partner.
Section 16(a) Beneficial Ownership Reporting Compliance
The Registrant, the Registrant's General Partner and its directors and
executive officers, and any persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Forms 3, 4 and 5. Such executive officers, directors and
Unitholders who own greater than ten percent of the Registrant's Units are
required by Securities and Exchange Commission regulations to furnish the
Registrant with copies of all Forms 3, 4 or 5 they file. All of these filing
requirements were satisfied on a timely basis. In making these disclosures, the
Registrant has relied solely on written representations of the General Partner's
directors and executive officers and Unitholders who own greater than ten
percent of the Registrant's Units or copies of the reports they have filed with
the Securities and Exchange Commission during and with respect to its most
recent fiscal year.
6
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Prudential-Bache Properties, Inc.
The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
Name Position
Brian J. Martin President, Chief Executive Officer,
Chairman of the Board of Directors
and Director
Barbara J. Brooks Vice President--Finance and Chief
Financial Officer
Eugene D. Burak Vice President and Chief Accounting Officer
Chester A. Piskorowski Senior Vice President
Frank W. Giordano Director
Nathalie P. Maio Director
BRIAN J. MARTIN, age 47, is the President, Chief Executive Officer, Chairman of
the Board of Directors and a Director of PBP. He is a Senior Vice President of
Prudential Securities Incorporated ('PSI'), an affiliate of PBP. Mr. Martin also
serves in various capacities for certain other affiliated companies. Mr. Martin
joined PSI in 1980. Mr. Martin is a member of the Pennsylvania Bar.
BARBARA J. BROOKS, age 49, is the Vice President--Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
EUGENE D. BURAK, age 52, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
CHESTER A. PISKOROWSKI, age 54, is a Senior Vice President of PBP. He is a
Senior Vice President of PSI and is the Senior Manager of the Specialty Finance
Asset Management area. Mr. Piskorowski has held several positions within PSI
since April 1972. Mr. Piskorowski is a member of the New York and Federal Bars.
FRANK W. GIORDANO, age 55, is a Director of PBP. He is a Senior Vice President
and Senior Counsel of PSI. Mr. Giordano also serves in various capacities for
other affiliated companies. He has been with PSI since July 1967.
NATHALIE P. MAIO, age 47, is a Director of PBP. She is a Senior Vice President
and Deputy General Counsel of PSI and supervises non-litigation legal work for
PSI. She joined PSI's Law Department in 1983; presently, she also serves in
various capacities for other affiliated companies.
Thomas F. Lynch, III ceased to serve as President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of Prudential-Bache
Properties, Inc. effective May 2, 1997. Effective May 2, 1997, Brian J. Martin
was elected President, Chief Executive Officer, Chairman of the Board of
Directors and a Director of Prudential-Bache Properties, Inc.
There are no family relationships among any of the foregoing directors or
officers. All of the foregoing officers and/or directors have indefinite terms.
Item 11. Executive Compensation
The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and officers of the General Partner for their
services. Certain officers and directors of the General Partner receive
compensation from affiliates of the General Partner, not from the Registrant,
for services performed for various affiliated entities, which may include
services performed for the Registrant; however, the General Partner believes
that any compensation attributable to services performed for the Registrant is
immaterial. See Item 13 Certain Relationships and Related Transactions for
information regarding reimbursement to the General Partner for services provided
to the Registrant.
7
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Item 12. Security Ownership of Certain Beneficial Owners and Management
As of March 5, 1998, no director or officer of the General Partner owns
directly or beneficially any interest in the voting securities of the General
Partner.
As of March 5, 1998, no director or officer of the General Partner owns
directly or beneficially any of the Units issued by the Registrant.
As of March 5, 1998, no beneficial owners who are neither a director nor
officer of the General Partner beneficially own more than five percent of the
Units issued by the Registrant.
Item 13. Certain Relationships and Related Transactions
The Registrant has and will continue to have certain relationships with the
General Partner and its affiliates. However, there have been no direct financial
transactions between the Registrant and the directors or officers of the General
Partner.
Reference is made to Notes A and E to the financial statements in the
Registrant's Annual Report, which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.
8
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PART IV
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<CAPTION>
Page in
Annual Report
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Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) 1. Financial Statements and Report of Independent Accountants--incorporated by
reference to the Registrant's Annual Report which is filed as an exhibit
hereto
Reports of Independent Accountants:
2
Report of Independent Accountants at December 31, 1997 and 1996 and for
the years then ended
2A
Independent Auditors' Report for the year ended December 31, 1995
Financial Statements:
3
Statements of Financial Condition--December 31, 1997 and 1996
4
Statements of Operations--Three years ended December 31, 1997
4
Statements of Changes in Partners' Capital--Three years ended
December 31, 1997
5
Statements of Cash Flows--Three years ended December 31, 1997
6
Notes to Financial Statements
2. Financial Statement Schedule and Report of Independent Accountants
Report of Independent Accountants on Financial Statement Schedule
Schedule:
IV--Mortgage Loans on Real Estate--December 31, 1997
Separate Financial Statements for Pointe Royal Project and Westmont Project
Financial Statements:
Report of Independent Auditors
Statements of Assets, Liabilities and Project Deficit--December 31, 1997
and 1996
Statements of Revenues and Expenses and Changes in Project Deficit--Three
years ended December 31, 1997
Statements of Cash Flows--Three years ended December 31, 1997
Notes to Financial Statements
All other schedules have been omitted because they are not applicable or
the required information is included in the financial statements or notes
thereto.
</TABLE>
<TABLE>
<C> <S> <C>
3. Exhibits
Description:
3.1 Amended and Restated Certificate and Agreement of Limited Partnership dated
November 12, 1986 (incorporated by reference to Registration Statement No.
33-8596 filed November 26, 1986)
3.2 Second Amendment to Amended and Restated Certificate and Agreement of
Limited Partnership dated December 24, 1992 (incorporated by reference to
the Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
</TABLE>
9
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<TABLE>
<C> <S> <C>
10.1 Loan Agreement dated as of April 23, 1987 and amended as of July 7, 1987,
between FPI Royal View, Ltd., L.P. and the Registrant (filed herewith)
10.2 Loan Agreement dated as of July 8, 1987, between FPI Chesterfield, L.P. and
the Registrant (filed herewith)
10.3 Promissory Note Modification Agreement dated as of April 23, 1987 between
FPI Royal View, Ltd., L.P. and The Merchants Bank (filed herewith)
10.4 Promissory Note Modification Agreement dated as of January 1, 1990 between
FPI Chesterfield, L.P. and the Registrant (filed herewith)
10.5 Amendment to Loan Agreement dated as of January 1, 1990 between the
Registrant and FPI Chesterfield, L.P. (filed herewith)
10.6 Second Amendment to Loan Agreement dated as of January 1, 1990 between the
Registrant and FPI Royal View, Ltd., L.P. (filed herewith)
10.7 Deed of Trust, Assignment of Rents and Leases and Security Agreement dated
as of July 8, 1987 and amended as of January 1, 1990 between FPI
Chesterfield, L.P. and the Registrant (filed herewith)
10.8 Second Promissory Note Modification Agreement dated as of January 1, 1990
between FPI Royal View, Ltd., L.P. and the Registrant (filed herewith)
10.9 Mortgage and Security Agreement Modification Agreement dated as of April 23,
1987 and amended as of January 1, 1990 between FPI Royal View Ltd., L.P. and
the Registrant (filed herewith)
10.10 Guaranty dated as of July 8, 1987 by Avron B. Fogelman ('ABF') in favor of
the Registrant with respect to the indebtedness of FPI Chesterfield, L.P.
(filed herewith)
10.11 Guaranty dated as of April 23, 1987 by ABF in favor of the Registrant with
respect to the indebtedness of FPI Royal View Ltd., L.P. (filed herewith)
10.12 Assignment of Partnership Interest by Fogelman Assignor L.P., Inc. to
Prudential-Bache Investor Services II, Inc. dated December 14, 1992
(incorporated by reference to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1992)
10.13 Assignment of Partnership Interest by Fogelman Mortgage Partners I, Inc. to
Prudential-Bache Properties, Inc. dated December 14, 1992 (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992)
10.14 Assignment of Partnership Interest by ABF to Prudential-Bache Properties,
Inc. dated December 14, 1992 (incorporated by reference to the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1992)
10.15 Second Amendment to Loan Agreement dated as of December 24, 1992 between the
Registrant and FPI Chesterfield, L.P. (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
10.16 Release, Discharge and Cancellation of Guaranty between the Registrant and
Avron B. Fogelman dated December 24, 1992 (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
10.17 Third Amendment to Loan Agreement dated December 24, 1992 between the Regis-
trant and FPI Royal View, Ltd., L.P. (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
10.18 Amended and Restated Payoff Agreement dated January 30, 1998 between the
Registrant, Fogelman Enterprises, L.P. and ABF (filed herewith)
</TABLE>
10
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<TABLE>
<C> <S> <C>
13.1 Registrant's Annual Report to Unitholders for the year ended December 31,
1997 (with the exception of the information and data incorporated by
reference in Items 7 and 8 of this Annual Report on Form 10-K, no other
information or data appearing in the Registrant's Annual Report is to be
deemed filed as part of this report)
16.1 Letter dated May 15, 1996 from Deloitte & Touche LLP to the Securities and
Exchange Commission regarding change in certifying accountant (incorporated
by reference to Exhibit 16.1 to the Registrant's Current Report on Form 8-K
dated May 14, 1996)
19.1 First Amendment to Amended and Restated Certificate and Agreement of Limited
Partnership dated December 31, 1991 (incorporated by reference to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
1992)
19.2 Amended Stipulation of Settlement dated February 25, 1992 (incorporated by
reference to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992)
27 Financial Data Schedule (filed herewith)
</TABLE>
<TABLE>
<C> <S> <C>
(b) Reports on Form 8-K
Registrant's Current Report on Form 8-K dated November 26, 1997, as filed with the
Securities and Exchange Commission on December 10, 1997 relating to Item 5
regarding the entering into an agreement to payoff the Registrant's two mortgage
loans.
Registrant's Current Report on Form 8-K dated January 30, 1998, as filed with the
Securities and Exchange Commission on February 5, 1998 relating to Item 5
regarding the entering into a revised agreement to payoff the Registrant's two
mortgage loans.
</TABLE>
11
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Price Waterhouse LLP (LOGO)
1177 Avenue of the Americas
New York, NY 10036
Telephone 212 596-7000
Facsimile 212 596-8910
Report of Independent Accountants on
Financial Statement Schedule
February 13, 1998
To the Unitholders and
General Partner of Fogelman Mortgage L.P. I
Our audit of the financial statements referred to in our report dated February
13, 1998 appearing in the 1997 Annual Report to Unitholders of Fogelman Mortgage
L.P. I (which report and financial statements are incorporated by reference in
this Annual Report on Form 10-K) also included an audit of the Financial
Statement Schedule listed in Item 14(a) of this Form 10-K. In our opinion, this
Financial Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the related
financial statements.
/s/ Price Waterhouse LLP
12
<PAGE>
FOGELMAN MORTGAGE L.P. I
Schedule IV--Mortgage Loans On Real Estate
December 31, 1997
MORTGAGE LOANS ON REAL ESTATE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Periodic
Final maturity payment Face amount of
Description Interest rate date terms Prior liens mortgage
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Pointe Royal
First Mortgage Loan (A) 9.5%(C) April 23, 1999 (C) None $22,745,000
Westmont
First Mortgage Loan (B) 9.5%(C) July 8, 1999 (C) None 23,320,000
---------------
$46,065,000
---------------
---------------
<CAPTION>
Carrying amount of
Description mortgage (D)
- --------------------------------------------------------------
<S> <C>
Pointe Royal
First Mortgage Loan (A) $ 13,236,500
Westmont
First Mortgage Loan (B) 12,465,246
------------------
$ 25,701,746
------------------
------------------
</TABLE>
(A) Multi-family residential apartment complex--Overland Park, Kansas
(B) Multi-family residential apartment complex--Chesterfield, Missouri
(C) The interest pay rate has been modified and is equal to the net property
cash flow generated by the respective Properties payable monthly (4.5% for
1997), with the difference between the amount actually paid and the original
pay rate of 9.5% per annum being accounted for in a separate account for
each Property, which itself bears interest at 9.5% per annum. The Mortgage
Loans require current payments of interest only with balloon payments of the
entire principal and Unpaid Interest amounts due from sale or refinancing
proceeds or upon maturity (the twelfth anniversary of the respective loan
closing dates). The Mortgage Loans as of December 31, 1997, may be prepaid
in whole with no prepayment penalty.
(D) See Note C to the financial statements in the Registrant's Annual Report
which is filed as an exhibit hereto. No principal amount of the loans is
subject to delinquent interest because the loans have been modified to a
cash flow basis.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Fogelman Mortgage L.P. I
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Eugene D. Burak Date: April 20, 1998
----------------------------------------
Eugene D. Burak
Vice President and Chief Accounting
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partner) and on
the dates indicated.
By: Prudential-Bache Properties, Inc.
A Delaware corporation, General Partner
By: /s/ Brian J. Martin Date: April 20, 1998
----------------------------------------
Brian J. Martin
President, Chief Executive Officer,
Chairman of the Board of Directors and
Director
By: /s/ Barbara J. Brooks Date: April 20, 1998
----------------------------------------
Barbara J. Brooks
Vice President-Finance and Chief
Financial Officer
By: /s/ Eugene D. Burak Date: April 20, 1998
----------------------------------------
Eugene D. Burak
Vice President
By: /s/ Frank W. Giordano Date: April 20, 1998
----------------------------------------
Frank W. Giordano
Director
By: /s/ Nathalie P. Maio Date: April 20, 1998
----------------------------------------
Nathalie P. Maio
Director
14
<PAGE>
FOGELMAN MORTGAGE L.P. I
AND
FPI ROYAL VIEW, LTD., L.P.
a Kansas Limited Partnership
LOAN AGREEMENT
Dated as of April 23, 1987
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions 1
SECTION 1.2 Accounting Terms 5
SECTION 1.3 Rules of Construction 5
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
SECTION 2.1 Representations and Covenants
of the Borrower 5
ARTICLE III
TITLE INSURANCE
SECTION 3.1 Title Insurance 6
ARTICLE IV
CONSTRUCTION OF THE PROJECT;
INSTALLATION OF EQUIPMENT
SECTION 4.1 Construction of the Project;
Installation of Equipment 6
SECTION 4.2 Disbursement of Facility Note Proceeds 7
SECTION 4.3 Application of Facility Note Proceeds 8
SECTION 4.4 Certificate of Completion 9
SECTION 4.5 Completion by the Borrower 10
SECTION 4.6 Facility Supervisor 10
SECTION 4.7 Remedies to be Pursued Against
Contractors and Subcontractors
and their Sureties 10
SECTION 4.8 Assignment: Plans, Specifications and
Contract Documents Relating to
the Improvements 11
ARTICLE V PAYMENT PROVISIONS
SECTION 5.1 Amount of Loan 11
SECTION 5.2 Loan Term 11
SECTION 5.3 Loan Repayments 11
SECTION 5.4 credit Toward Payments 12
SECTION 5.5 Obligations of Borrower Hereunder
Unconditional 12
SECTION 5.6 Payment of Additional Moneys for
Prepayment of Facility Note 13
SECTION 5.7 Exculpatory Provisions 13
<PAGE>
ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
SECTION 6.1 Maintenance and Modifications of
Land and Facility by the Borrower 14
SECTION 6.2 Taxes, Assessments and Utility Charges 14
SECTION 6.3 Insurance Required 15
SECTION 6.4 Additional Provisions
Respecting Insurance 16
SECTION 6.5 Application of Net Proceeds of Insurance 16
SECTION 6.6 Right of the Issuer to Pay Taxes,
Insurance Premiums and other Charges 16
SECTION 6.7 Installation of Additional Equipment 17
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
SECTION 7.1 Damage or Destruction 17
SECTION 7.2 Condemnation 20
SECTION 7.3 Special Circumstances 21
ARTICLE VIII SPECIAL COVENANTS
SECTION 8.1 No Warranty of Condition or Suitability
by the Issuer 22
SECTION 8.2 Hold Harmless 22
SECTION 8.3 Right to Inspect the Facility 22
SECTION 8.4 Qualification in the State 22
SECTION 8.5 Books of Record and Account;
Financial Statements 22
SECTION 8.6 Compliance with Orders, Ordinances, Etc 22
SECTION 8.7 Discharge of Liens and Encumbrances 23
SECTION 8.8 Borrower to Provide Survey 23
SECTION 8.9 Annual Certificate of the Borrower 23
ARTICLE IX TRANSFER OF CERTAIN LAND; ASSIGNMENTS
AND LEASING; PLEDGE OF CERTAIN INTERESTS
SECTION 9.1 Restriction of Transfer of Facility;
Transfer of Certain Land 24
SECTION 9.2 Assignment and Leasing 24
SECTION 9.3 Mortgage and Pledge of Security
Interests to the Issuer 25
SECTION 9.4 Removal of Equipment 25
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Events of Default Defined 25
SECTION 10.2 Remedies of Default 27
SECTION 10.3 Remedies Cumulative 28
SECTION 10.4 Agreement to Pay Attorneys' Fees and
Expenses 28
SECTION 10.5 No Additional Waiver implied
by One Waiver 28
SECTION 10.6 Appointment of Receiver 28
<PAGE>
ARTICLE XI
ACCELERATION OF LOAN PAYMENTS
SECTION 11.1 Acceleration of Loan Repayments 29
SECTION 11.2 Conditions to Acceleration
of Loan Repayments 29
SECTION 11.3 Amounts Remaining on Deposit
with the Issuer
Upon Payment of the Facility Note 30
SECTION 11.4 The Issuer to Execute
Cancellation of Facility Note 30
ARTICLE XII
CLOSING
SECTION 12.1 Closing Documents 30
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices 32
SECTION 13.2 Binding Effect 32
SECTION 13.3 Severability 33
SECTION 13.4 Amendments, Changes and Modifications 33
SECTION 13.5 Execution of Counterparts 33
SECTION 13.6 Applicable Law 33
SECTION 13.7 Recording and Filing 33
SECTION 13.8 Table of Contents and Section
Headings not Controlling 33
SECTION 13.9 Survival 33
SECTION 13.10 Consents 33
SECTION 13.11 Instruments of
Further Assurance 33
SECTION 13.12 Payments Due on Saturdays, Sundays
and Holidays 34
Acknowledgements
Exhibit A -- DESCRIPTION OF LAND/LEASEHOLD INTEREST
Exhibit B -- PERMITTED ENCUMBRANCES
Exhibit C -- REQUISITION
<PAGE>
THIS LOAN AGREEMENT, dated as of April 23, 1987, by and between Fogelman
Mortgage L.P. I, a Tennessee limited partnership, having its office at 5400
Poplar Avenue, Memphis, Tennessee 38119, (the 'Issuer'), and FPI Royal View,
Ltd., L.P., a Kansas limited partnership, having its office at 5400 Poplar
Avenue, Memphis, Tennessee 38119, (the 'Borrower').
W I T N E S S E T H :
WHEREAS, Issuer has agreed to lend to Borrower and Borrower has agreed to borrow
from Issuer the Sum of $22,745,000 for providing and financing the Cost of the
Facility as defined below, upon the terms and conditions hereinafter set forth
in this Agreement; and
WHEREAS, said Facility shall consist of a 437-unit multi-family housing facility
with all recreational amenities appurtenant thereto (the 'Project') plus certain
equipment and other personal property used in connection therewith (the
'Equipment') to be located on certain real property owned by the Borrower
situated on the real estate described on Exhibit A attached hereto and by
reference made a part hereof (the 'Land') in the City of Overland Park, Kansas,
and constructed and equipped with the proceeds of the Facility Note (the Land,
Project and Equipment collectively are referred to as the 'Facility'); and
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto hereby formally covenant,
agree and bind themselves as follows, to wit:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following words and terms as used in this Loan
Agreement shall have the following meanings unless the context or use indicates
another or different meaning or intent:
'Accountant' means a firm of independent certified public accountants of
recognized standing, selected by the Borrower.
'Agreement' means this Loan Agreement by and between the Issuer and the
Borrower, as the same may be amended from time to time.
'Authorized Investments' means (i) obligations of any state or the United
States of America or (ii) obligations the principal and interest of which are
guaranteed by any state or the United States of America or (iii) obligations of
any agency or instrumentality of the United States of America or any state which
may from time to time be legally purchased within the State or (iv) certificates
of deposit issued by, or time
- - 1 -
<PAGE>
deposits with any bank, trust company or national banking association having
undivided capital and surplus aggregating at least $100,000,000 or (v) any other
investments which are authorized by law for the investment of the Issuer's
funds, to the extent permitted by law.
'Authorized Representative' means, in the case of the Issuer, any individual
general partner or member of the management committee; and, in the case of the
Borrower, the President or any Senior Vice-President of the corporate general
partner; and, in the case of both, such additional persons as, at the time, are
designated to act in behalf of the Issuer or the Borrower, as the case may be,
by a written certificate furnished to the other party, containing the specimen
signature of each such person and signed by an Authorized Representative of such
party.
'Borrower' means FPI Royal View, Ltd., L.P., a Kansas Limited Partnership, its
successors and assigns.
'Closing Date' means the date of delivery on which the Facility Note Proceeds
are advanced to the Trustee for the use and benefit of Borrower.
'Completion Date' means the date on which Borrower receives a final Certificate
of Occupancy or similar permit from the appropriate governmental agencies having
jurisdiction over the Facility.
'Condemnation' means the taking, or transfer in lieu of any such taking under
threat thereof, of any interest in or right to use the Facility under the
exercise of the power of eminent domain by any governmental or
quasi-governmental entity or other Person acting under governmental authority.
'Construction Fund' means the fund so designated in Section 2.01 of the Trust
Indenture.
'Construction Period' means, with respect to the Facility, the period (a)
beginning on the earlier of (i) the date of commencement of the construction and
equipping of such Facility, or (ii) the Closing Date and (b) ending on the
Completion Date.
'Contract Term' means the period commencing with the Closing Date and continuing
until the Facility Note and interest thereon has been paid in full.
'Cost of the Facility' means all those costs and items of expense enumerated in
Section 4.3(a) hereof.
'Equipment' means all machinery, equipment and other personal property owned by
Borrower and used exclusively in connection with the Project or the Land with
such additions thereto, substitutions therefor and replacements thereof as may
- - 2 -
<PAGE>
exist from time to time in accordance with the provisions of the Agreement.
'Event of Default' or 'Default' means an event of default, as defined in
Article X of this Agreement, or in the Facility Note, the Mortgage or the
Guaranty.
'Facility' means the Land, Project and Equipment.
'Facility Note' means the Pointe Royal Multi-Family Housing Facility Note
(Overland Park, Johnson County, Kansas) executed and delivered by the Borrower
pursuant to Section 5.3(a) hereof to evidence its obligation to repay the Loan.
'Facility Note Proceeds' means the amount of the Facility Note which Issuer has
agreed to lend to Borrower and which is deposited into the Construction Fund.
'Facility Supervisor' means Construction Analysis Systems, Inc. or such other
person or persons who at the time shall have been designated as such pursuant to
the provisions of Section 4.6 of this Agreement.
'Guarantor' means Avron B. Fogelman, as guarantor under the Guaranty.
'Guaranty' means the agreement by and between the Guarantor and Issuer, dated as
of April 23, 1987, by which the Guarantor guarantees to Issuer the full and
prompt payment, when due, of all or a portion of the principal, and interest on
the Facility Note and completion of the Facility in accordance with the Plans
and Specifications which shall include construction of the Project and
installation of the Equipment and at a date not later than the date provided in
Section 4.1 hereof.
'Independent Counsel' means an attorney or attorneys or firm or firms of
attorneys duly admitted to practice law before the highest court of any state of
the United States of America or in the District of Columbia and not a full time
employee of the Issuer or the Borrower.
'Issuer' means Fogelman Mortgage L.P. I
'Land' means the real estate located on Antioch and 123rd Streets in the City of
Overland Park, Kansas, and more particularly described in Exhibit A attached
hereto, and subject to the Lien of the Mortgage.
'Lien' means any interest in Property securing an obligation owed to a Person
whether such interest is based on the common law, statute or contract, and
including but not limited to the security interest arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
- - 3 -
<PAGE>
or bailment for security purposes. The term 'Lien' includes reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other similar title exceptions and encumbrances,
including but not limited to mechanics, materialmen's warehousemen's, carriers'
and other similar encumbrances, affecting real property. For the purposes of
this Agreement, a Person shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
'Loan' means the loan to the Borrower made pursuant to Section 5.1 of this
Agreement from Facility Note Proceeds.
'Loan Repayments' means the payments of principal and interest on the Facility
Note.
'Mortgage' means the Mortgage, Assignment of Rents and Leases and Security
Agreement dated as of April 23, 1987, from the Borrower, with respect to its fee
simple interest in the Facility to the Mortgagee (as defined in the Mortgage)
for the benefit of Issuer as, security for payment of the Facility Note.
'Net Proceeds' means so much of the gross proceeds with respect to which that
term is used as remain after payment of all expenses, costs and taxes
(including attorneys' fees) incurred in obtaining such gross proceeds.
'Permitted Encumbrances' means (i) liens described in Exhibit B attached hereto,
(ii) this Agreement and the Mortgage, (iii) utility, access and other easements
and rights of way, restrictions and exceptions that do not impair the utility
or the value of the Property affected thereby for the purposes for which it is
intended, (iv) mechanics', materialmen's, warehousemen's, carriers' and other
similar liens to the extent permitted by Section 8.7(b) hereof, and (v) liens
for taxes and all other inchoate liens at the time not delinquent.
'Person' means an individual, partnership, corporation, trust or unincorporated
organization, and a governmental agency or political subdivision thereof.
'Plans and Specifications' means the final plans and specifications for the
Facility approved in writing by Issuer and a supervising architect or engineer
selected by Issuer, as the same may be implemented and detailed from time to
time and as the same may be revised from time to time prior to the Completion
Date in accordance with Section 4.1 of this Agreement. The Plans and
Specifications must be approved by all applicable local, state and federal
authorities.
- - 4 -
<PAGE>
'Prime Rate' means the prime rate charged by Citibank N.A. as such rate may be
changed from time to time with any such change becoming effective simultaneously
with each such change.
'Project' means all those buildings, improvements, equipment, structures and
other related facilities (i) affixed or attached to the Land, (ii) financed with
the Facility Note Proceeds or of any payment by the Borrower pursuant to Section
4.5 hereof and constituting a 437-unit multi-family housing facility with all
recreational amenities appurtenant thereto and (iii) not part of the Equipment.
'Property' means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
'Requisition' means a requisition substantially in the form of Exhibit C
attached to this Agreement.
'State' means the State of Kansas.
'Trust Indenture' means that certain trust indenture to be entered into by and
between the Issuer and the Trustee on or before the Closing Date.
'Trustee' means the person named as such in the Trust Indenture.
Section 1.2. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statement referred to in Section 8.5.
Section 1.3. Rules of Construction. Words of the masculine gender shall be
deemed and construed to include correlative words of the feminine and neuter
genders. Unless the context shall otherwise indicate, the words importing the
singular number shall include the plural and vice versa, and words importing
persons shall include firms, associations and corporations, including public
bodies, as well as natural persons.
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
Section 2.1. Representations and Covenants of the Borrower. The Borrower makes
the following representations and covenants as the basis for the undertakings on
its part herein contained.
(a) The Borrower is a Kansas limited partnership and
(i) has been duly created under the laws of the State of
Kansas; and (ii) has power and lawful authority to enter
- - 5 -
<PAGE>
into this Agreement, the Facility Note and the Mortgage, and has executed and
delivered this Agreement, the Facility Note and the Mortgage.
(b) Neither the execution and delivery of this Agreement, the Facility Note or
the Mortgage, the consummation of the transactions contemplated hereby or
thereby nor the fulfillment of or compliance with the provisions of this
Agreement, the Facility Note or the Mortgage will, in any material respect,
conflict with or result in a breach of any of the terms, conditions or
provisions of any restriction or any agreement or instrument to which the
Borrower is a party or by which it or the Facility is bound, or will constitute
a default under any of the foregoing, or result in the creation or imposition of
any Lien of any nature upon any of the Property of the Borrower under the terms
of any such instrument or agreement.
ARTICLE III
TITLE INSURANCE
Section 3.1. Title Insurance. The Borrower has obtained or will obtain, and
throughout the Contract Term will maintain in force, title insurance from a land
title insurance company acceptable to Issuer in an amount equal to $22,745,000
insuring a valid first Lien on the Facility with only such exceptions as are
approved in advance by Issuer. The policy shall contain no exceptions for
mechanic's or materialmen's liens and shall be otherwise satisfactory in form
and substance to Issuer. At the time of each disbursement under this Agreement,
Issuer may require the title company to search title to the date of such advance
and to endorse the title policy to reflect no additional liens or encumbrances.
ARTICLE IV
CONSTRUCTION OF THE PROJECT; INSTALLATION OF EQUIPMENT
Section 4.1. Construction of the Project; Installation of Equipment. (a) The
Borrower agrees that it will construct the Project and install the Equipment or
cause the Project to be constructed and the Equipment to be installed in
accordance with the Plans and Specifications and will cause the construction of
the Project to be completed no later than September 30, 1988.
(b) The Borrower may not revise the Plans and Specifications without the prior
written consent of Issuer which consent may not be unreasonably withheld or
delayed, but may be subject to such reasonable conditions as Issuer may deem
appropriate.
(c) Title to all materials, equipment, machinery and other items of Property
which may be incorporated or installed in the
- - 6 -
<PAGE>
Facility shall vest in the Borrower immediately upon incorporation or
installation in the Facility, whichever shall first occur, and shall immediately
thereupon become subject to the Lien of the Mortgage. The Borrower shall
execute, deliver and record or file all instruments necessary or appropriate to
so vest title in the Borrower and shall take all action necessary or
appropriate to subject such materials, equipment, machinery and other items of
Property to the Lien of the Mortgage and to protect such title against claims of
any third persons.
Section 4.2. Disbursement of Facility Note Proceeds. All Facility Note Proceeds
shall be deposited in the Construction Fund and thereafter shall be disbursed by
the Trustee in accordance with the terms of the Trust Indenture to pay for the
Cost of the Facility as follows:
(a) Not less than five (5) banking days before the date on which Borrower
desires a disbursement from the Construction Fund, Borrower shall submit to
Trustee a Requisition accompanied by a cost breakdown showing by trade the cost
of work on, and the cost of materials incorporated into, the Facility or stored
securely on the Land or in a bonded warehouse to the date of the Requisition,
together with supporting billings from subcontractors and materialmen covering
the requested funding. The Requisition must be signed either as originals or as
copies by (i) an Authorized Representative of Borrower and (ii) either John
Doggett, William Byrnes or Ronald Byrnes, on behalf of the General Contractor,
and (iii) the Facilities Supervisor. The cost breakdown shall also show the
percentage of completion of each line-item on Borrower's detailed estimate of
the costs of the Facility as approved by Issuer, and the accuracy of the cost
breakdown shall be certified by Borrower and the General Contractor or, as to
any items not within the scope of a general contract, by the contractors
directly responsible to Borrower for such items. The completed construction on
the Facility will be reviewed at the time each Requisition is submitted by the
Facilities Supervisor who will certify to Issuer as to the cost of completed
construction, percentage of completion and compliance with the Plans and
Specifications for the Facility.
(b) Borrower shall have no right to request or receive any disbursement from the
Construction Fund until all of the following conditions precedent shall have
been fully met:
(i) Borrower shall have delivered to Issuer a Requisition meeting
the requirements of subparagraph (a) immediately above.
(ii) Borrower shall not be in default in the performance of the
terms and provisions of this Agreement or the Mortgage.
(iii) Borrower shall have furnished waivers of liens and receipts of
payment as to the General Contractor and each subcontractor for
all work performed to the date of the
- - 7 -
<PAGE>
immediately preceding Requisition at the time such Requisition is submitted.
(iv) The title insurance company insuring the title to the Facility shall issue
a title continuation or endorsement showing that the fee simple title thereto is
clear of liens (other than the matters described in its title policy) to the
date of such disbursement and that no financing statements affecting the
Facility, or any part thereof, other than in favor of Issuer, have been filed.
(v) The Facilities Supervisor shall have certified to Issuer that all
construction work which has been completed is in substantial conformity with the
Plans and Specifications. In addition, the Facilities Supervisor shall
recommend the amount, if any, to be disbursed and state that the amount
requested for construction cost is correct for that stage of construction, and
shall set forth such details concerning construction as Issuer shall request
from time to time, including, but not limited to (i) a statement that the
portion of the Facility then completed has been constructed in a good and
workmanlike manner and in substantial compliance with all applicable laws,
ordinances and building codes, (ii) a schedule of work in place, materials
stored securely on the Land and materials stored in a bonded warehouse, (iii)
the extent of completion of the Facility and the value thereof, (iv) the
estimated cost of completing construction in accordance with the Plans and
Specifications, (v) a statement that sufficient work has been completed to
warrant the draw being requested, (vi) a statement that the amount indicated to
be complete is accurate, (vii) a statement that there have been no material
deviations from the Plans and Specifications except as previously approved in
writing by Issuer.
(vi) If requested by Issuer in a writing delivered to Borrower (with a copy
delivered to the Trustee) following installation of building foundations, Issuer
shall have received a survey showing that all such foundations are within the
boundary lines of the Land and in compliance with all applicable setback,
location and area requirements and that there is no material change in
conditions which could adversely affect the security for the Facility Note.
(vii) The sum of the funds requisitioned, plus all prior disbursements to
Borrower, plus undisbursed portions of the Construction Fund held by Trustee
shall be sufficient, in the sole opinion of Issuer, to complete the Project
substantially in accordance with the Plans and Specifications.
Section 4.3. Application of Facility Note Proceeds. (a) Substantially all of the
Facility Note Proceeds shall be applied in accordance with the Budget referred
to in Section 12.1 (18) to pay the following costs and expenses in connection
with the Facility, and for no other purpose:
- - 8 -
<PAGE>
(i) the cost of preparing the Plans and Specifications for the Facility
(including any preliminary study or planning of the Facility or any aspect
thereof),
(ii) all costs of acquiring, constructing, equipping and installing the Facility
(including architectural, engineering and supervisory services with respect
thereto),
(iii) all fees, taxes, charges and other expenses for recording or filing, as
the case may be, this Agreement, any other agreements contemplated hereby, any
financing statements and any title curative documents that the Issuer may deem
desirable in order to create or protect the title to the Facility and any
security interest contemplated by the Mortgage.
(iv) the premium on any title insurance procured on the Facility and any fees or
expenses in connection with any actions or proceedings that the Issuer may deem
desirable in order to perfect or protect the title to the Facility, except for
removing Permitted Encumbrances,
(v) the cost of insurance maintained pursuant to Section 6.3 hereof,
(vi) interest payable under the Facility Note,
(vii) all legal, accounting and any other fees, costs
and expenses incurred in connection with the preparation and execution of the
Facility Note, the Mortgage, this Agreement and all other documents in
connection herewith, with the acquisition of title to the Facility and with any
other transaction contemplated by this Agreement or the Mortgage,
(viii) any administrative fees reflected in the budget approved by the Issuer,
and
(ix) reimbursement to the Borrower for any of the above-enumerated costs and
expenses.
(b) Notwithstanding anything contained in this Section 4.3 to the contrary, the
Facility Note Proceeds which are not required for immediate use or disbursement
may be invested and reinvested for the benefit of Borrower in accordance with
the terms of the Trust Indenture. Neither the Issuer nor its officers or
employees shall be liable for any depreciation in the value of any investments
made pursuant to this Section or for any loss arising from any such investment.
Section 4.4. Certificate of Completion. Completion of the Facility shall be
evidenced by (a) the issuance of a final Certificate of Occupancy or similar
permit from the appropriate
- - 9 -
<PAGE>
governmental agencies having jurisdiction over the Facility, and (b) a
certificate filed with the Issuer signed by the Facility Supervisor stating that
(i) the construction and equipping of the Facility has been completed in
accordance with the Plans and Specifications therefor and (ii) the payment of
all labor, service, materials and supplies used in such construction and
equipping and all other items of the Cost of the Facility has been made or
provided for.
Section 4.5. Completion by the Borrower. Upon a determination by Issuer that the
Net Proceeds of the Facility Note are not sufficient to pay in full all costs of
construction and equipping the Facility, and written notice by Issuer to
Borrower of the amount of funds so required in addition to the Net Proceeds of
the Facility Note, Borrower shall deliver to Issuer the amount of such
additional funds or in lieu thereof, a satisfactory letter of credit or
certificate of deposit which Issuer shall deposit in the Construction Fund. Such
sums shall be deposited in the Construction Fund. Title to all portions of the
Facility constructed or equipped at the Borrower's cost shall immediately upon
such installation or construction vest in the Borrower and be subject to the
Lien of the Mortgage. The Borrower shall execute, deliver and record or file
such instruments as Issuer may request in order to create or protect its Lien to
such portions of the Facility.
Section 4.6. Facility Supervisor. The Facility Supervisor shall be acceptable to
Issuer and Borrower. The Borrower, by a certificate delivered to Issuer and a
Facility Supervisor, may remove an incumbent Facility Supervisor, with the prior
written consent of Issuer, at any time without cause. In the event a Facility
Supervisor shall be so removed or should become unavailable or unable to take
any action or make any certificate provided for in this Agreement, another
Facility Supervisor shall thereupon be appointed by a certificate of the
Borrower delivered to Issuer, with the prior written approval of Issuer. If the
Borrower fails to deliver such certificate to Issuer within fifteen (15) days
following the date of removal of a Facility Supervisor or the date when a
Facility Supervisor becomes unavailable or unable to take any of such actions,
as the case may be, the Issuer, by a certificate delivered to the Borrower may
appoint as a successor any engineer or engineering firm registered and qualified
to practice the profession of engineering under the laws of the State and not a
full time employee of the Issuer or the Borrower. Borrower shall be responsible
for paying all fees of the Facility Supervisor.
Section 4.7. Remedies to be Pursued Against Contractors and Subcontractors and
their Sureties. In the event of default of any contractor or subcontractor under
any contract made by it in connection with the Facility or in the event of a
breach of warranty with respect to any materials, workmanship, or performance
guaranty, the Borrower shall promptly proceed, either separately or in
conjunction with others, to exhaust the
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<PAGE>
remedies of the Borrower against the contractor or subcontractor so in
default and against each surety on a bond, if any, for the performance of such
contract. The Borrower agrees to advise the Issuer of the steps it intends to
take in connection with any such default. The Borrower may prosecute or defend
any action or proceeding or take any other action involving any such contractor,
subcontractor or surety which the Borrower deems reasonably necessary.
Section 4.8. Assignment: Plans, Specifications and Contract Documents Relating
to the Improvements. Borrower hereby makes a present assignment to the
Issuer, its successors and assigns of: (i) the right to possess and use all the
Plans and Specifications prepared by it or for it or at its direction for the
purpose of completing the Facility; (ii) all of Borrower's rights in and to the
construction contract; and (iii) all of Borrower's rights under any and all
permits, contracts, agreements, certificates and any other documents or
agreements of any kind or nature whatsoever which are used, entered into or held
by Borrower in connection with Borrower's acquisition of the Land or
the construction and equipping of the Facility. Issuer shall exercise its rights
under this assignment only in the event the Borrower fails to construct and
complete the Project and Equipment in accordance with the terms and provisions
of this Agreement or following the occurrence of an Event of Default hereunder.
ARTICLE V
PAYMENT PROVISIONS
Section 5.1. Amount of Loan. For the purpose of paying the Cost of the Facility,
the Issuer shall make and the Borrower shall receive the Loan in the principal
sum of $22,745,000 upon the terms and conditions of this Agreement, said Loan to
be disbursed upon presentation of Requisitions by Borrower as provided in
Section 4.2 hereof and in the Trust Indenture.
Section 5.2. Loan Term. This Agreement shall be effective concurrently with the
initial delivery of the Facility Note and shall continue in force and effect
until the principal of, prepayment penalty, if any, and interest on the Facility
Note have been fully paid together with all sums to which the Issuer is entitled
from the Borrower under this Agreement and the Facility Note.
Section 5.3. Loan Repayments. (a) The Borrower shall evidence its obligation to
repay the Loan by executing and delivering to the Issuer the Facility Note .
(b) In addition to the payments pursuant to the Facility Note, the Borrower
shall pay to the Issuer, within thirty (30) days of the receipt of demand
therefor, an amount equal to the sum of the administrative fees and reasonable
expenses of the Issuer incurred (i) by reason of the Issuer's financing of the
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<PAGE>
Facility (ii) in connection with the carrying out of the Issuer's duties
and obligations under this Agreement, the payment of which is not otherwise
provided for under this Agreement and (iii) all reasonable fees, charges and
expenses Issuer incurred under the Mortgage.
(c) The Borrower agrees to make the above mentioned payments, without any
further notice, in lawful money of the United States of America as, at the time
of payment, shall be legal tender for the payment of public and private debts.
In the event the Borrower shall fail to timely make any payment required under
the Facility Note, the Borrower shall pay the same together with interest
thereon at a rate equal to the greater of sixteen percent (16%) or two and
one-half percent (2 1/2%) per annum above the Prime Rate from the date on which
such payment was due until the date on which such payment is made.
Section 5.4. Credit Toward Payments. The following amounts (to the extent, if
any, which such amounts shall not have previously been the basis for a credit)
shall be credited against the principal payment to be made by the Borrower
pursuant to the Facility Note in inverse order of maturity, and such payment
shall be accordingly reduced to the extent of any such credit:
(i) the amount by which the Net Proceeds of insurance maintained pursuant to
Section 6.3(a) hereof exceed the cost of replacing, repairing, rebuilding or
restoring the Facility, to the extent provided in Section 7.1 hereof; and
(ii) the amount by which the Net Proceeds of any Condemnation award exceed the
cost of restoring the Facility or acquiring Substitute Facilities, to the extent
provided in Section 7.2 hereof.
Section 5.5. Obligations of the Borrower Hereunder Unconditional. Subject to
Section 5.7 hereof and the exculpatory provisions contained in the Facility
Note, the obligations of the Borrower to make the payments required under the
Facility Note and to perform and observe any and all of the other covenants and
agreements on its part contained herein shall be a general obligation of the
Borrower and shall be absolute and unconditional irrespective of any defense or
any rights of setoff, recoupment or counterclaim it may otherwise have against
the Issuer. The Borrower agrees it will not (i) suspend, discontinue or abate
any payment required by the Facility Note or (ii) fail to observe any of its
other covenants or agreements in this Agreement or (iii) except as provided in
Section 11.1 hereof, terminate this Agreement for any cause whatsoever
including, without limiting the generality of the foregoing, failure to complete
the Facility, failure of the Borrower or any lessee of the Borrower to occupy or
to use the Facility as contemplated in this Agreement or otherwise, any defect
in the title, design, operation, merchantability, fitness
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<PAGE>
or condition of the Facility or in the suitability of the Facility for the
Borrower's purposes or needs, failure of consideration, destruction of or damage
to the Facility, commercial frustration of purpose, or the taking by
Condemnation of title to or the use of all or any part of the Facility, any
change in the tax or other laws of the United States of America or of the State
or any political subdivision or either. Nothing contained in this Section 5.5
shall be construed to release the Issuer from the performance of any of the
agreements on its part contained in this Agreement, and in the event the Issuer
should fail to perform any such agreement, the Borrower may institute such
action against the Issuer as the Borrower may deem necessary to compel
performance.
Section 5.6. Payment of Additional Moneys for Prepayment of Facility Note. The
Borrower may pay moneys (in addition to any other moneys required or permitted
to be paid pursuant to this Agreement) to Issuer to be applied to the prepayment
of the Facility Note at such time or times and on such terms and conditions as
may be provided in such Facility Note.
<PAGE>
Section 5.7. Exculpatory Provisions. Notwithstanding any other provision of this
Agreement and Facility Note, Mortgage or Trust Indenture to the contrary, in the
event of any non-payment under this Agreement, Facility Note, Mortgage or Trust
Indenture, neither the Borrower nor any of its partners shall have any personal
liability hereunder, and no holder of this Agreement, Facility Note, Mortgage or
Trust Indenture shall ask or take or cause to be asked or taken personal
judgment against the Borrower or any of its partners for any payment required to
be made under this Agreement, Facility Note, Mortgage or Trust Indenture, it
being understood that said holder of this Agreement, Facility Note, Mortgage or
Trust Indenture will look solely to the revenues and receipts derived from this
Agreement, Facility Note, Mortgage or Trust Indenture, and no other property or
assets of the Borrower or any of its partners shall be subject to levy,
execution or other enforcement procedure for the satisfaction of the
indebtedness evidenced by this Agreement, Facility Note, Mortgage or Trust
Indenture; provided, that the foregoing provisions of this Section 5.7. (a)
shall not constitute a waiver of any indebtedness evidenced by this Agreement,
Facility Note, Mortgage or Trust Indenture and shall not limit the rights of
Issuer under any guaranty executed in connection with the Facility Note, (b)
shall not limit the right of the holder of this Agreement to exercise its rights
hereunder or under the Facility Note, Mortgage or Trust Indenture so long as no
judgment then in the nature of a deficiency judgment shall be asked or taken
against the Borrower or any of its partners, and (c) shall not limit the right
of the holder of this Agreement, Facility Note, Mortgage or Trust Indenture to
seek a deficiency judgment to the extent of any fraud or willful misconduct on
the part of Borrower or any of its general partners.
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<PAGE>
ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 6.1. Maintenance and Modifications of Land and Facility by the Borrower.
(a) The Borrower agrees that during the Contract Term it will (i) keep the
Facility in as reasonably safe condition as its operations shall permit; and
(ii) make all reasonably necessary repairs and replacements to the Facility.
(b) The Borrower from time to time may, after prior written approval from
Issuer, which approval shall not be unreasonably withheld or delayed, make any
structural additions, modifications or improvements to the Facility or any part
thereof which it may deem desirable. All such structural additions,
modifications or improvements so made by the Borrower shall become a part of the
Facility and shall become subject to the Lien of the Mortgage.
Section 6.2. Taxes, Assessments and Utility Charges. (a) The Borrower agrees to
pay, before they become delinquent, (i) all taxes and governmental charges of
any kind whatsoever which may at any time be lawfully assessed or levied against
or with respect to the Facility, (ii) all utility and other charges,
including, without limitation, 'service charges', incurred or imposed for the
operation, maintenance, use, upkeep and improvement of the Facility, and (iii)
all assessments and charges of any kind whatsoever lawfully made by any
governmental body for public improvements; provided that, with respect to
special assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the Borrower shall be obligated under this
Agreement to pay only such installments as are required to be paid during the
Contract Term.
(b) The Borrower may, after written notice to the Issuer of its intention to do
so, in good faith contest any such taxes, assessments and other charges. In the
event of any such contest, the Borrower may permit the taxes, assessments or
other charges so contested to remain unpaid during the period of such contest
and any appeal therefrom.
(c) If an Event of Default hereunder shall have occurred, the Issuer may require
the Borrower to make monthly deposits with the Trustee, in an interest bearing
account, of a sum equal to one-twelfth of the yearly taxes and assessments which
may be levied against the Facility. The amount of such taxes and assessments,
when unknown, shall be estimated by the Issuer. Such deposits shall be used by
the Issuer to pay such taxes and assessments when due. Any insufficiency of such
account to pay such charges when due, shall be paid by the Borrower to the
Issuer on demand. If, by reason of any Event of Default by the Borrower under
any provision hereof the Issuer declares the Facility Note to be due and
payable, the Issuer may then apply any funds in said account against the
obligation secured by the
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<PAGE>
Mortgage. The enforceability of the covenants relating to taxes and
assessments herein otherwise provided shall not be affected except insofar as
those obligations have been met by compliance with this paragraph. After an
event of Default hereunder shall have occurred, the Issuer may from time to
time, at its option, waive, and after any such waiver reinstate, any and all
provisions hereof requiring such deposits, by notice to the Borrower in writing.
While any such waiver is in effect, the Borrower shall pay taxes and assessments
as herein above provided.
Section 6.3. Insurance Required. At all times throughout the Contract Term,
including without limitation during the Construction Period, the Borrower shall
maintain, or cause to be maintained, insurance naming the Issuer as an
additional insured against such risks and for such amounts as are customarily
insured against by businesses operating facilities of like size and type as the
Facility paying, as the same become due and payable, all premiums in respect
thereto, including, but shall not necessarily be limited to:
(a) Builder's Risk or contractors multiple peril (all-risk) insurance during the
Construction Period and thereafter insurance against loss or damage by fire,
lightning and other casualties, including vandalism and malicious mischief,
boiler explosion, sprinkler leakage, rental loss or business interruption (in an
amount equal to 25% of gross rental income) with a broad-form extended coverage
endorsement, such insurance to be in an amount not less than the full insurable
value of the Facility, exclusive of excavations and foundations.
Such insurance may be maintained under a blanket insurance policy or policies
covering not only the Facility but other Properties as well.
(b) Insurance against loss or losses from liabilities imposed by law or assumed
in any written contract and arising from personal injury and death or damage to
the Property of others caused by any accident or occurrence, with limits of not
less than $1,000,000.00 per accident or occurrence on account of personal
injury, including death resulting therefrom and $1,000,000.00 per accident or
occurrence on account of damage to the Property of others, excluding liability
imposed upon the Borrower by any applicable workmen's compensation law; and a
blanket excess liability policy in the amount not less than $4,000,000.00,
protecting the Borrower against any loss or liability or damage for personal
injury or Property damage.
(c) Workmen's Compensation insurance, disability benefits insurance, and any
other form of insurance which the Issuer or the Borrower are required by law to
provide, covering loss resulting from injury, sickness, disability or death of
employees of the Borrower who are located at or assigned to the Facility.
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<PAGE>
Section 6.4. Additional Provisions Respecting Insurance. (a) All insurance
required by Section 6.3 hereof shall be procured and maintained in financially
sound and generally recognized responsible insurance companies selected by the
Borrower and authorized to write such insurance in the State and of the type and
scope of coverage and in the amounts of coverage as required hereunder. Such
insurance may be written with deductible amounts comparable to those on similar
policies carried by other companies engaged in businesses similar in size,
character and other respects to those in which the Borrower is engaged. All
policies evidencing such insurance shall provide for (i) payment of the losses
to the Borrower and the Issuer as their respective interests may appear, and
(ii) at least thirty (30 days written notice of the cancellation thereof to the
Borrower and the Issuer and (iii) shall comply with Paragraph 9 of the Mortgage.
The policies required by Section 6.3 (a) hereof shall contain standard mortgagee
clauses requiring that all Net Proceeds of insurance resulting from any claim in
excess of $250,000.00 for loss or damage covered thereby be directly paid to the
Issuer.
(b) All such policies of insurance, or a certificate or certificates of the
insurers that such insurance is in force and effect, shall be deposited with the
Issuer on or before the Closing Date. The Borrower shall deliver to the Issuer
on or before the renewal date of each such policy, each year thereafter a
certificate reciting that there is in full force and effect, with a term
covering at least the next succeeding year, insurance in the amounts and of the
types required by Section 6.3 and 6.4 hereof. Prior to expiration of any such
policy, the Borrower shall furnish the Issuer evidence that the policy has been
renewed or replaced or is no longer required by this Agreement.
Section 6.5. Application of Net Proceeds of Insurance. The Net Proceeds of the
insurance carried pursuant to the provisions of Section 6.3 hereof shall be
applied as follows: (i) the Net Proceeds of the insurance required by Section
6.3(a) hereof shall be applied as provided in Section 7.1 hereof and (ii) the
Net Proceeds of the insurance required by Section 6.3(b) hereof shall be applied
toward extinguishment or satisfaction of the liability with respect to which
such insurance proceeds may be paid.
Section 6.6. Right of the Issuer to Pay Taxes, Insurance Premiums and other
Charges. If the Borrower fails (i) to pay any tax, assessment or other
governmental charge required to be paid by Section 6.2 hereof or (ii) to
maintain, or acquire any insurance required to be maintained by Section 6.3
hereof, the Issuer may pay such tax, assessment or other governmental charge or
the premium, or acquire such insurance. No such payment by the Issuer shall
affect or impair any rights of the Issuer hereunder arising in consequence of
such failure by the
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<PAGE>
Borrower. The Borrower shall reimburse the Issuer for any amount so paid by
the Issuer pursuant to this Section 6.6, together with interest thereon from the
date of payment by the Issuer at the rate provided in the Facility Note and such
amount, together with such interest, shall become additional indebtedness
secured by the mortgage as provided in Paragraph 14 thereof.
Section 6.7. Installation of Additional Equipment. The Borrower from time to
time may install additional machinery, equipment or other personal property in
the Facility (which may be attached or affixed to the Facility), and such
machinery, equipment or other personal property shall become, or be deemed to
become, a part of the Facility unless the same is not a replacement for or
substitution of Equipment as defined herein. The Borrower from time to time may,
with the consent of the Issuer, which consent shall not be unreasonably withheld
or delayed, remove or permit the removal of such machinery, equipment and other
personal property; provided that any such removal of such machinery, equipment
or other personal property shall not adversely affect the structural integrity
of the Facility or impair the overall operating efficiency of the Facility for
the purposes for which it is intended and that any such Lien shall not attach to
any other part of the Facility and provided further that if any damage is
occasioned to the Facility by such removal, the Borrower agrees to promptly
repair such damage at its own expense.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage or Destruction. (a) If the Facility shall be damaged or
destroyed (in whole or in part) at any time during the Contract Term:
(i) there shall be no abatement or reduction in the amounts payable by the
Borrower under this Agreement or the Facility Note,
(ii) the Borrower shall promptly give written notice thereof to the Issuer,
and
(iii) except as otherwise provided in subsection (b) of this Section 7.1 and
subject to the requirements set forth below in this Section 7.1, the Borrower
shall promptly, upon receipt of insurance proceeds, if any, which are
available, replace, repair, rebuild or restore the Facility to substantially
the same condition and value as an operating entity as existed prior to such
damage or destruction, (with such changes, alterations and modifications as
may be desired by the Borrower and approved by the Issuer which approval shall
not be unreasonably withheld or delayed).
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<PAGE>
If the claim for loss resulting from such damage or destruction is not greater
than $250,000.00, the Borrower shall apply, or cause to be applied, to the
replacement, repair, rebuilding or restoration of the Facility so much as may be
necessary of any Net Proceeds of insurance resulting from claims for such
losses.
If the claim for loss resulting from such damage or destruction exceeds
$250,000.00, all Net Proceeds of insurance shall be paid to and held by the
Issuer in a separate account. The Net Proceeds shall be available for the
replacement, repair, rebuilding or restoration of the Facility subject to the
satisfaction of the following conditions:
(i) the Plans and Specifications for the replacement, repair, rebuilding or
restoration on the Facility have been delivered to and approved by the Issuer
(which approval shall not be unreasonably withheld or delayed);
(ii) Borrower has deposited with the Issuer the amount by which the estimated
costs of such work exceeds the Net Proceeds available;
(iii) the Net Proceeds and funds provided by Borrower shall be disbursed in
accordance with Requisitions submitted by Borrower to the Issuer.
If the above conditions are not satisfied, the Net
Proceeds shall be applied to the principal
balance of the Facility Note. The Issuer, upon receipt of a certificate of the
Authorized Representative of the Borrower that payments are required by such
purpose, shall apply so much as may be necessary of the Net Proceeds of such
insurance to the payment of the costs of such replacement, repair, rebuilding or
restoration, either on completion thereof or as the work progresses, at the
option of the Borrower. Pending the expenditure of such Net Proceeds, the Issuer
shall invest and reinvest the Net Proceeds in such investments and in such
manner as directed by an Authorized Representative of the Borrower. Neither the
Issuer nor its officers, partners or employees shall be liable for any
depreciation in the value of any investments made pursuant to this Section for
any loss arising from any such investment.
In the event such Net Proceeds are not sufficient to pay in full the costs of
such replacement, repair, rebuilding or restoration, the Borrower shall
nonetheless complete, or cause to be completed, the work thereof and pay from
its own moneys, or cause to be paid, that portion of the costs thereof in excess
of such Net Proceeds.
All such replacements, repairs, rebuilding or restoration made pursuant to this
Section 7.1, whether or not requiring the expenditure of the Borrower's own
money, shall automatically
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become a part of the Facility as if the same were specifically described
herein.
Any balance of such Net Proceeds remaining after
payment of all the costs of such replacement, repair,
rebuilding or restoration shall be
applied immediately to prepay the Facility Note.
(b) The Borrower shall not be obligated, or in the
case of an Event of Default under (iii) below, permitted to
replace, repair, rebuild or
restore the Facility, and the Net Proceeds of the insurance
shall not be applied as provided in subsection (a) of this
Section 7.1, if:
(i) the Borrower shall notify the Issuer that,
in its sole judgment, it does not deem it practical or
desirable to so replace, repair, rebuild
or restore the Facility, or
(ii) the Borrower shall exercise its option to
accelerate this Agreement pursuant to Section 11.1 hereof, or
(iii) an Event of Default under Section 10.1
hereof shall have occurred and shall have continued for 30
days. If any event specified in
this Section 7.1(b) shall occur, the total amount of Net
Proceeds collected under any and all policies of insurance
covering the damage or
destruction of the Facility shall be paid to the Issuer who
shall:
(x) apply such Net Proceeds to prepay the Facility
Note, or
(y) apply such Net Proceeds to the payment of the
amounts required to be paid by Section 10.2
hereof, if an Event of Default shall have occurred and shall
have continued for thirty (30) days.
(c) If the Facility Note and interest thereon have
been fully paid or provision therefor has been made, all
such Net Proceeds shall be paid
to the Borrower.
(d) The Borrower may adjust all claims under any
policies of insurance required by Section 6.3(a) hereof
(with consent of the Issuer,
which consent shall not be unreasonably withheld or delayed,
if the claim exceeds $250,000.00) but shall not settle for
less than the reasonably
anticipated cost of replacement, repair, rebuilding or
restoration without the consent of the Issuer, which consent
shall not be unreasonably withheld or delayed.
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PAGE
<PAGE>
Section 7.2. Condemnation. (a) If at any time during the Contract Term the whole
or any part of title to, or the use of, the Facility shall be taken by
Condemnation, there shall be no abatement or reduction in the amounts payable
by the Borrower under this Agreement or under the Facility Note.
Except as otherwise provided in subsection (b) of this Section 7.2, the Borrower
shall promptly restore the Facility (excluding any Land taken by Condemnation)
to substantially the same condition and value as an operating entity as existed
prior to such condemnation; or
If the claim for loss resulting from such Condemnation is not greater than
$250,000.00, the Borrower shall apply, or cause to be applied, to the
replacement, repair, rebuilding or restoration of the Facility so much as may be
necessary of any Net Proceeds of any Condemnation award resulting from claims
for such Condemnation.
If the claim for loss resulting from such Condemnation exceeds $250,000.00, all
Net Proceeds of any Condemnation award shall be paid to and held by the Issuer
in a separate account. The Issuer, upon receipt of a certificate of the
Authorized Representative of the Borrower that payments are required for such
purpose, shall apply so much as may be necessary of the Net Proceeds of such
Condemnation award to the payment of the costs of such replacement, repair,
rebuilding or restoration, either on completion thereof or as the work
progresses, at the option of the Borrower. Pending the expenditure of such Net
Proceeds, the Issuer shall invest the Net Proceeds in such investments and in
such manner as is directed by an Authorized Representative of the Borrower.
Neither the Issuer nor its officers, partners or employees shall be liable for
any depreciation in the value of any investments made pursuant to this Section
for any loss arising from any such investment.
In the event such Net Proceeds of any Condemnation award are not sufficient to
pay in full the costs of such restoration of the Facility, the Borrower shall
nonetheless complete, or cause to be completed, such restoration and shall pay
from its own moneys, or cause to be paid, that portion of the costs thereof in
excess of such Net Proceeds.
The Facility, as so restored, whether or not requiring the expenditure of the
Borrower's own moneys, shall automatically become part of the Facility and
subject to the Lien of the Mortgage as if the same were specifically described
herein.
Any balance of such Net Proceeds of any Condemnation award remaining after
payment of all costs of such restoration shall be invested by the Issuer as
provided above and used only to pay amounts next due pursuant to the Facility
Note, as an Authorized Representative of the Borrower may direct the Issuer in
writing from time to time.
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<PAGE>
(b) The Borrower shall not be obligated, or in the case of an Event of Default
under (iii) below, permitted to restore the Facility and the Net Proceeds of any
Condemnation award shall not be applied as provided in Section 7.2(a), if:
(i) the Borrower shall notify the Issuer that, in its sole judgment, it does not
deem it practical or desirable to so restore the Facility, or
(ii) the Borrower shall exercise its option to accelerate this Agreement
pursuant to Section 11.1 hereof, or
(iii) an Event of Default under Section 10.1 hereof shall have occurred and
shall have continued for (thirty) 30 days.
If any event specified in this Section 7.2(b) shall occur, the Net Proceeds of
any Condemnation award shall be paid to the Issuer who shall:
(x) apply such Net Proceeds to repay the Facility
Note, or
(y) apply such Net Proceeds to the payment of the
amounts required to be paid by Section 10.2 hereof, if an Event
of Default shall have occurred and shall have continued for (30) days.
(c) If the Facility Note and interest thereon has been fully paid or provision
therefor has been made, all such Net Proceeds shall be paid to the Borrower for
its own purposes.
<PAGE>
(d) The Issuer shall cooperate fully with the Borrower in the handling and
conduct of any Condemnation proceeding with respect to the Facility.
Section 7.3. Special Circumstances. (a) Anything herein to the contrary
notwithstanding, if more than fifty percent (50%) of the buildings of the
Facility shall be damaged or destroyed and such damage or destruction cannot, in
the reasonable opinion of the Borrower, be replaced, repaired, rebuilt or
restored within twelve (12) months from the date of such damage or destruction,
Issuer shall have the right at its election to either permit Borrower to use Net
Proceeds as provided in Section 7.1 or to apply such Net Proceeds to prepay the
Facility Note. Issuer shall notify Borrower of its election within thirty (30)
days after Borrower has notified Issuer of such damage or destruction. (b)
Anything herein to the contrary notwithstanding, if more than twenty-five
percent (25%) of the buildings of the Facility shall be taken by condemnation,
Issuer shall have the right at its election to either permit Borrower to use Net
Proceeds as provided in Section 7.2 or to apply such Net Proceeds
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<PAGE>
to prepay the Facility Note. Issuer shall notify Borrower of its election
within thirty (30) days after Borrower has notified Issuer of such condemnation.
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. No Warranty of Condition or Suitability by the Issuer. THE ISSUER
MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION, TITLE,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OF THE FACILITY OR THAT IT IS OR
WILL BE SUITABLE FOR THE BORROWER'S PURPOSES OR NEEDS.
Section 8.2. Hold Harmless Provisions. The Borrower hereby releases the Issuer
from, agrees that the Issuer shall not be liable for and agrees to indemnify and
hold the Issuer, its partners, directors, officers, employees and agents
harmless from and against any and all liability for loss or damage to Property
or injury to or death of any and all persons that may be occasioned by any cause
whatsoever pertaining to the Facility or arising by reason of or in connection
with the occupation or the use thereof or the presence on, in or about the
Facility. Nothing contained herein shall inure to the benefit of any insurance
company or insurer by way of subrogation or otherwise.
Section 8.3. Right to Inspect the Facility. The Issuer or its duly authorized
agents shall have the right to inspect the Facility at all reasonable times
prior to and after completion, provided reasonable notice thereof is given to
Borrower prior thereto.
Section 8.4. Qualification in the State. Throughout the Contract Term, the
Borrower shall continue to be duly authorized to transact business in the State.
Section 8.5. Books of Record and Account; Financial Statements. (a) The Borrower
agrees to maintain proper accounts, records and books in which full and correct
entries shall be made, in accordance with generally accepted accounting
principles, of all business and affairs of the Borrower with respect to
Facility.
(b) The Borrower agrees it will furnish to the Issuer as soon as available but
in no event more than one hundred and twenty (120) days after the end of each of
its fiscal years, a copy of its completed financial statement, and an operating
statement regarding the Facility including an itemized account of gross annual
income and expenditure reflecting in detail the operations of the Facility.
Section 8.6. Compliance with Orders, Ordinances, Etc. (a) The Borrower agrees
that it will, throughout the Contract Term, promptly comply with all statutes,
codes, laws, including all existing environmental laws, rules and regulations,
acts,
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<PAGE>
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, permits, licenses, authorizations, directions
and requirements of all
federal, state, county, municipal and other governments,
departments, commissions, boards, companies or associations
insuring the Facility,
courts, authorities, officials and officers, foreseen or
unforeseen, ordinary or extraordinary, which now or at any
time hereafter may be
applicable to the Facility or any part thereof, or to any
use, manner of use or condition of the Facility or any
part thereof.
(b) Notwithstanding the provisions of subsection
(a) of this Section 8.6, the Borrower may, after written
notice to the Issuer of its
intention to do so, in good faith contest the validity or
the applicability of any requirement of the nature referred
to in such subsection (a). In
such event, the Borrower may fail to comply with the
requirement or requirements so contested during the
period of such contest and any appeal
therefrom.
Section 8.7. Discharge of Liens and Encumbrances. (a)
The Borrower shall not permit or create or suffer to be
permitted or created any Lien, except for Permitted Encumbrances,
upon the Facility or any part thereof by reason of any labor,
services, or material rendered or supplied or
claimed to be rendered or supplied with respect to the Facility
or any part thereof.
(b) Notwithstanding the provisions of subsection (a)
of this Section 8.7, the Borrower may, after written notice
to the Issuer of its intention to do so, in good faith contest
any such Lien. In such event, the Borrower may permit the
items so contested to remain undischarged
and unsatisfied during the period of such contest and any
appeal therefrom, provided that during the period of any
appeal a bond assuring the
payment of such Lien shall, if requested by the Issuer, be
posted with the Issuer.
Section 8.8. Borrower to Provide Survey. The Borrower agrees
to furnish a survey prepared by an approved surveyor, and acceptable
to the title insurance company, showing the location of the Facility
and other improvements (including parking areas), means of ingress
and egress, all easements, other common facilities and all other
title exceptions able to be located thereon and showing that the
Facility and other improvements
are constructed within the lot and applicable setback restrictions.
Section 8.9. Annual Certificate of the Borrower. The Borrower
covenants that it will furnish to the Issuer on or before February
15 of each year a certificate of the Borrower signed by a general
partner stating that the Borrower has made a review of its
activities during the preceding
calendar year for the purpose of determining whether or not
the Borrower has complied with all of the terms, provisions
and conditions of this
Agreement and the Borrower has kept, observed, performed and
fulfilled each and every covenant, provision and condition
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<PAGE>
of this Agreement on its part to be performed and is not in Default in the
performance or observance of any of the terms, covenants, provisions hereof, or
if the Borrower shall be in Default such certificate shall specify all such
Defaults and the nature thereof.
ARTICLE IX
TRANSFER OF CERTAIN LAND; ASSIGNMENT AND LEASING;
PLEDGE OF CERTAIN INTERESTS
Section 9.1. Restriction of Transfer of Facility; Transfer of Certain Land.
(a) During the Contract Term, the Borrower shall not sell, convey, transfer,
lease, encumber or otherwise dispose of the Facility or any part thereof or any
interest therein, except for Permitted Encumbrances and except as otherwise
provided in Sections 9.1(b), 9.1(c), 9.2 and 9.4 of this Agreement.
(b) With the prior written consent of the Issuer (which consent may not be
unreasonably withheld or delayed but may be subject to such reasonable
conditions as the Issuer may deem appropriate), the Borrower from time to time
may release from the provisions of this Agreement any part of, or interest in,
the Facility which is not necessary, desirable or useful. In such event, the
Borrower, at the Borrower's sole cost and expense, shall execute and deliver,
and request the Issuer to execute and deliver, any and all instruments necessary
or appropriate to so release such part of, or interest in, the Facility and
convey such title thereto or interest therein, free from this Agreement and the
Lien of the Mortgage, to such Person as the Borrower may designate.
(c) The Borrower shall have the right to transfer all or a portion of the
Facility (directly or indirectly) to an entity or entities affiliated with Avron
B. Fogelman ('Fogelman'), provided that (i) Fogelman maintains an interest in
the Facility, direct or indirect, of not less than ten percent (10%) and if
transferee is a partnership, such interest must be that of a general partner;
(ii) the transferee entity consists of not more than fifteen (15) individuals,
partners or shareholders; and (iii) Fogelman Management Corporation continues to
act in the capacity of property manager.
(d) No conveyance of any improvements or interest therein affected under the
provisions of this Section 9.1 shall entitle the Borrower to any abatement or
diminution of the amounts payable hereunder or under the Facility Note.
Section 9.2. Assignment and Leasing. This Agreement may not be assigned in whole
or in part and the Facility may not be leased as a whole or, except in the
ordinary course of Borrower's business, in part by the Borrower, without the
prior written consent of the Issuer, which consent shall not be unreasonably
withheld or delayed. In such event, any such assignment,
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<PAGE>
leasing, or subleasing as the case may be, shall be subject to the
following conditions:
(i) No assignment or lease shall relieve the Borrower from primary liability for
any of its obligations hereunder or under the Facility Note; and
(ii) The Borrower shall, within ten (10) days after delivery thereof, furnish or
cause to be furnished to the Issuer a true and complete copy of each such
assignment.
Section 9.3. Mortgage and Pledge of Security Interests to Issuer. The Borrower
has, pursuant to the Mortgage, granted to a mortgage trustee (as defined in the
Mortgage) for the benefit of the Issuer, a security interest in the Facility.
Section 9.4. Removal of Equipment. (a) In any instance where the Borrower
determines that any item of Equipment has become inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary, the Borrower may remove such item or
Equipment and may sell, trade-in, exchange or otherwise dispose of the same, as
a whole or in part, free from the Lien of the Mortgage, provided that no such
removal or disposition shall adversely affect the function or capacity of the
Facility.
(b) The Borrower shall execute and deliver, and shall request the Issuer to
execute and deliver, to the Borrower all instruments necessary or appropriate to
enable the Borrower to sell or otherwise dispose of any such item of Equipment
free from the Lien of the Mortgage. The Borrower shall pay any costs (including
counsel fees) incurred in transferring title to and releasing from the Lien of
the Mortgage any item of Equipment removed pursuant to this Section 9.4.
(c) The removal of any item of Equipment pursuant to this section 9.4 shall not
entitle the Borrower to any abatement or diminution of the amounts payable under
this Agreement or the Facility Note.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined. (a) The following shall be 'Events of
Default' under this Agreement and the terms 'Event of Default' or 'Default'
shall mean, whenever they are used in this Agreement, any one or more of the
following events:
(1) The occurrence of an 'Event of Default' under the Facility Note, the
Mortgage, the Guaranty, or by Borrower under the contract with the General
Contractor referred to in Section 12.1(15) (subject to any applicable notice and
cure periods);
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<PAGE>
(2) The failure by the Borrower to observe and perform any covenant, condition
or agreement hereunder on its part to be observed or performed (except
obligations referred to in Section 2.1(1) of the Facility Note) for a period of
thirty (30) days after written notice, specifying such failure and requesting
that it be remedied, given to the Borrower by the Issuer;
(3) Any representation or warranty of the Borrower set
forth in this Agreement is untrue or incorrect in any material respect;
(4) The filing by the Borrower of a voluntary petition in bankruptcy, or the
failure by the Borrower within sixty (60) days to lift any execution,
garnishment or attachment of such consequence as will impair its ability to
carry on its operations at the Facility, or the Borrower is generally not paying
its debts as such debts become due, or within one hundred twenty 120 days before
the date of the filing of a petition in bankruptcy, a custodian, other than a
trustee, receiver or agent appointed or authorized to take charge of less than
substantially all of the property of the Borrower for the purpose of enforcing a
Lien against such property, was appointed or took possession, or the assignment
of assets by the Borrower for the benefit of its creditors, or the entry by the
Borrower into a wage earner or similar agreement with its creditors, or an
appointment by final order, judgment or decree of a court of competent
jurisdiction of a receiver, trustee or custodian of the whole or a substantial
portion of the Properties of the Borrower (unless such receiver, trustee or
custodian is removed or discharged within sixty (60) days of the date of his
qualifications); and
(b) Notwithstanding the provisions of Section 10.1(a), if by reason of force
majeure either party hereto shall be unable in whole or in part to carry out
their obligations under this Agreement and if such party shall give notice and
full particulars of such force majeure in writing to the other party, within a
reasonable time after the occurrence of the event or cause relied upon, the
obligations under this Agreement of the party giving such notice, so far as they
are affected by such force majeure, shall be suspended during the continuance of
the inability, which shall include a reasonable time for the removal of the
effect thereof, but such suspension shall not be for a period in excess of one
year. The suspension of such obligations for such period pursuant to this
subsection (b) shall not be deemed an Event of Default under this Section 10.1.
Notwithstanding anything to the contrary in this subsection (b), an event of
force majeure shall not excuse, delay or in any way diminish the obligations of
the Borrower to make the payments required by the Facility Note and Section 6.2
hereof, to obtain and continue in full force and effect the insurance required
by Section 6.3 hereof, to provide the indemnity required by Section 8.2 hereof
and to comply with the provisions of Section 11.1 hereof. The term 'force
majeure' as used herein shall include,
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<PAGE>
without limitation, acts of God, strikes, lockouts or other industrial
disturbances, acts of public enemies, orders of any kind of the government of
the United States of America or of the State or any of their departments,
agencies, governmental subdivisions, or officials, or any civil or military
authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fire, hurricanes, storms, floods, washouts, droughts, arrests, restraint of
government and people, civil disturbances, explosions, breakage or accident to
machinery, transmission pipes or canals, partial or entire failure of utilities,
or any other cause or event not reasonably within the control of the party
claiming such inability. It is agreed that the settlement of strikes, lockouts
and other industrial disturbances shall be entirely within the discretion of the
party having difficulty, and the party having difficulty shall not be required
to settle any strike, lockout and other industrial disturbances by acceding to
the demands of the opposing party or parties.
Section 10.2. Remedies on Default. (a) Whenever any Event of Default shall have
occurred and be continuing, the Issuer may, to the extent permitted by law, take
any one or more of the following remedial steps:
(1) Declare, by written notice to the Borrower, to be immediately due and
payable; whereupon the same shall become immediately due and payable: (i) all
unpaid sums payable pursuant to the Facility Note and (ii) all other payments
due under this Agreement.
(2) Pursuant to the terms of the Mortgage, exclude the Borrower and any lessees
from possession of the Facility and take possession thereof (without being
liable for prosecution or damages therefor), sell the Facility, subject to
Permitted Encumbrances, at public or private sale, as a whole or piecemeal, for
such consideration as may be deemed appropriate under the then existing
conditions, and hold the Borrower liable, subject to the provisions contained in
Section 5.7 hereof, for the amount, if any, by which the aggregate unpaid sums
payable pursuant to the Facility Note (computed in accordance with Section
10.2(a)(1)(i) hereof) exceed the Net Proceeds received upon such sale.
(3) Take any other available action to enforce the security interest in the
Facility granted to the Issuer pursuant to the Mortgage.
(4) Take any other action at law or in equity which may appear necessary or
desirable to collect the payments then due or thereafter to become due, to
secure possession of the Facility, and to enforce the obligations, agreements or
covenants of the Borrower under this Agreement.
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<PAGE>
(b) Any sums paid to the Issuer as a consequence of any action taken pursuant to
Section 10.2 shall be applied to the payment of the Facility Note.
(c) No action taken pursuant to this Section 10.2 (including repossession of the
Facility) shall relieve the Borrower from its obligation to make all payments
required by the Facility Note subject to the provisions contained in section 5.7
hereof.
Section 10.3. Remedies, Cumulative. No remedy herein conferred upon or reserved
to the Issuer is intended to be exclusive of any other available remedy, but
each and every such remedy shall be cumulative and in addition to every other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient.
Section 10.4. Agreement to Pay Attorneys' Fees and Expenses. In the event the
Borrower should default under any of the provisions of this Agreement and the
Issuer should employ attorneys or incur other expenses for the collection of
amounts payable hereunder or the enforcement of performance or observance of any
obligations or agreements on the part of the Borrower herein contained, the
Borrower shall, on demand therefor, pay to the Issuer the reasonable fees of
such attorneys and such other expenses so incurred.
Section 10.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained herein should be breached by either party and thereafter
waived by the other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder.
Section 10.6. Appointment of Receiver. The Borrower further covenants that upon
the happening of any Event of Default and thereafter during the continuance of
such Event of Default unless the same shall have been waived as hereinbefore
provided, the Issuer shall be entitled as a matter of right if it shall so
elect, (i) forthwith and without declaring the principal of the Facility Note to
be due and payable, or (ii) after declaring the same to be due and payable, or
(iii) upon the commencement of any foreclosure of the Mortgage or action to
enforce the specific performance thereof or in aid thereof or (iv) upon the
commencement of any other proceeding, judicial or otherwise, to enforce any
right of the Issuer to institute such actions or proceedings at law or in equity
for the appointment of a receiver or receivers of the Facility and all the
earnings, revenues, rents, issues, profits and income thereof, with such powers
as the court making such appointment shall confer.
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<PAGE>
ARTICLE XI
ACCELERATION OF LOAN REPAYMENTS
Section 11.1. Acceleration of Loan Repayments. (a) The Borrower shall have the
option to accelerate payment of all of the Loan Repayments, during the years and
with certain prepayment premiums more specifically described as follows: (i) For
a period of five (5) years from the date of the Note, no prepayment shall be
made or permitted in respect to the principal amount of the Facility Note;
(ii) At any time during the sixth year from the date of the Facility Note, the
Borrower may prepay in whole, but not in part, the principal amount of the
Facility Note upon the payment of a prepayment penalty equal to five percent
(5%) of the outstanding principal balance;
(iii) Thereafter, the prepayment penalty shall decrease one (1) percentage point
per year until there exists no prepayment penalty during the eleventh and
twelfth years; and
(iv) Any such prepayment penalty shall be in addition to any Contingent Interest
(as defined in the Facility Note) otherwise payable.
(b) If the Borrower exercises its option to prepay the Loan pursuant to the
provisions of this Section 11.1, it shall file with the Issuer a certificate
signed by an Authorized Representative of the Borrower stating the Borrower's
intention to do so pursuant to this Section 11.1 and shall comply with the
requirements set forth in Section 11.2 hereof. All prepayments shall be applied
to the principal payments due on the Facility Note in the inverse order of its
maturity.
(c) No prepayment resulting from the application of all or any portion of Net
Insurance Proceeds or Net Condemnation Proceeds to the Facility Note shall be
prohibited by or require the payment of a prepayment penalty pursuant
to this Section 11.1.
Section 11.2. Conditions to Acceleration of Loan Repayments. In the event the
Borrower exercises its option, or is required, to accelerate the Loan Repayments
in accordance with any provision of Section 11.1 hereof, the Borrower shall pay
the Issuer an amount certified by the Issuer to be sufficient to pay the
outstanding principal amount of the Facility Note, together with all interest on
such Facility Note which will accrue to the date of prepayment and an amount
sufficient to pay all other fees, expenses or charges, if any, due and payable
or to become due and payable under this Agreement, the Mortgage and the Facility
Note and not otherwise paid or provided for. The certificate required to be
filed pursuant to this Section 11.2 shall be made, which date shall be not less
than forty-five (45)
- - 29 -
<PAGE>
nor more than ninety (90) days from the date such certificate is filed with
the Issuer.
Section 11.3. Amounts Remaining on Deposit with the Issuer upon Payment of the
Facility Note. After payment in full of the Facility Note and the interest
thereon and payment of all fees, charges, expenses and other amounts required to
be paid under this Agreement, the Mortgage and the Guaranty, all amounts on
deposit with the Issuer, if any, shall belong to and be paid to the Borrower by
the Issuer.
Section 11.4. The Issuer to Execute Cancellation of Facility Note. After payment
in full of the Facility Note as provided in this Agreement, the Issuer will
return said Facility Note to the Borrower, stamped 'paid in full' or with some
other similar notation reflecting the satisfaction of the Borrower's obligations
thereunder.
ARTICLE XII
CLOSING
Section 12.1. Closing Documents. At the closing on the Closing Date, Borrower
shall deliver, or shall have delivered, to the Issuer the following:
(1) Facility Note.
(2) Mortgage.
(3) Trust Indenture.
(4) Guaranty in the form and substance required by Issuer executed by Guarantor.
(5) Agreement for Construction Evaluation and Monitoring services.
(6) Sample Lease Agreement approved by Issuer and to be used to lease space in
the Facility.
(7) Financing statements.
(8) Insurance Policies or certificates thereof as to coverages required hereby.
(9) Such documents and instruments as may be required to designate and evidence
the authority of persons authorized by Borrower to apply for and sign any
documents required to be executed in connection with advances hereafter made
under this Agreement.
(10) Satisfactory proof that all laws, regulations and zoning requirements have
been complied with and that all required approvals, permits and licenses
- - 30 -
<PAGE>
necessary for the development of the Project (including utilities, water, storm
and sanitary sewer facilities) have been obtained and are in full force and
effect.
(11) Standard ALTA Mortgagee's Title Insurance Policy in form and content
and issued by a title insurance company satisfactory to Issuer, agreeing to
insure Issuer in the amount of the Facility Note and providing that the Mortgage
has the dignity and priority required by Issuer. The Policy shall contain no
exceptions unless specifically approved by Issuer in writing.
(12) Such documents and instruments as may be required by Issuer to evidence
the good standing, status, organization or authority of persons,
partnerships and corporations executing any agreement or document
hereunder or required hereafter by Issuer.
(13) Evidence that real estate taxes are current.
(14) Certified copies of partnership agreements,
certificates of limited partnership, corporate charters and by-laws and
amendments thereto of Borrower and any corporate partners thereof.
(15) Fully executed duplicate originals of the contract with the General
Contractor.
(16) Agreements of the General Contractor and Facility Supervisor to continue
performance on behalf of the Issuer at Issuer's option and request without
additional costs above their respective agreed contract prices in the event of
any default by the Borrower in compliance with and performance of any term,
covenant, condition, or warranty contained in any present or future agreement
between Borrower and Issuer, and an authorization by the General Contractor for
Issuer to use any applicable Plans and Specifications without any additional
costs.
(17) Copies of all necessary building permits.
(18) Detailed estimate of
Project costs (Budget) satisfactory to Issuer executed by Borrower
to be updated from time to time as such budget changes.
The Budget shall set forth all proposed expenditures as
well as a projected schedule of disbursements.
(19) Surveys: boundary, foundation and completion (when
appropriate and as required by Issuer), locating all
improvements, easements, setback lines, encroachments, rights-of-way, and
improvements in
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<PAGE>
form and substance satisfactory to Issuer including evidence that the Land is
not in an area designated by the Secretary of the United States Department of
Housing and Urban Development as an area having special flood hazards.
(20) One copy of complete Plans and Specifications approved in writing by
Borrower, Issuer, Facility Supervisor and General Contractor.
(21) Current certificate that there has been no material adverse change in the
financial statements of Borrower and Guarantor.
(22) An independent appraisal indicating a loan to value ratio of not more than
85%.
(23) Opinion Letter of Borrower's Counsel in form and substance satisfactory to
Issuer.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if sent by mail, by
private courier or delivery service or by telegraph or telex, when received. All
mail shall be sent by registered mail or telex, when received. All mail shall be
sent by registered mail, return receipt requested, postage prepaid, addressed as
follows:
To the Issuer: Fogelman Mortgage L.P. I
c/o Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street
New York, NY 10038
Attn: Chester A. Piskorowski
To the Borrower: FPI Royal View, Ltd., L.P.
c/o Fogelman Properties, Inc.
5400 Poplar Avenue
Memphis, TN 38119
Attn: Morris J. Kriger
The Issuer or the Borrower, may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates and
other communications shall be sent.
Section 13.2. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Issuer, the Borrower and their respective successors
and assigns.
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<PAGE>
Section 13.3. Severability. In the event any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
Section 13.4. Amendments, Changes and Modifications. This Agreement may not be
amended, changed, modified, altered or terminated without concurring written
consents of the Borrower and the Issuer.
Section 13.5. Execution of Counterparts. This Agreement
may be executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the
same instrument.
Section 13.6. Applicable Law. This Agreement shall be governed exclusively by
the applicable laws of the State of Kansas.
Section 13.7. Recording and Filing. (a) The Mortgage and financing statements
creating the security interest of the Issuer in the Facility and in all amounts
payable hereunder and under the Facility Note shall be recorded or filed, as the
case may be, in the Office of the Register of Deeds of Johnson County, Kansas,
or in such other office as may at the time be provided by law as the proper
place for the recordation or filing hereof.
(b) The Issuer and the Borrower shall execute and deliver all instruments and
shall furnish all information necessary or appropriate to protect any security
interest created or contemplated by this Agreement and the Mortgage.
Section 13.8. Table of Contents and Section Headings Not Controlling. The Table
of Contents and the Headings of the several sections in this Agreement have been
prepared for convenience of reference only and shall not control, affect the
meaning or be taken as an interpretation of any provision of this Agreement.
Section 13-9. Survival. This Agreement shall remain in full force and effect
until all amounts payable under this Agreement, the Facility Note,
the Guaranty and the Mortgage shall have been paid in full.
Section 13.10. Consents. Whenever any party's consent is
required hereunder no such consent shall be unreasonably withheld or delayed.
Section 13.11. Instruments of Further Assurance. The Borrower covenants that it
will do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, such supplemental agreements and such further.acts,
instruments, financing statements and other documents as the Issuer may
reasonably require for the better assuring, pledging
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<PAGE>
and assigning unto the Issuer the property and revenues
herein described, to the payment of the principal of,
prepayment penalty, if any, and
interest on the Facility Note. This Agreement, the Mortgage,
all supplements to this Agreement and the Mortgage, the
Facility Note, and all other documents, instruments or policies of insurance
required by the Issuer shall be delivered to and held by
Issuer.
Section 13.12. Payments Due on Saturdays, Sundays and
Holidays. In any case where the date for any payment due
under this Agreement
or the Facility Note shall be a Saturday, a Sunday or a
legal holiday or a day on which banking institutions in the
city or county of payment are
authorized by law to close, then payment need not be made on
such date but may be made on the next succeeding business
day not a Saturday, a
Sunday or a legal holiday or a day upon which banking
institutions are authorized by law to close with the same
force and effect as if made on
the date fixed for payment, and no interest shall accrue for
the period after such date.
IN WITNESS WHEREOF, the Issuer and the Borrower have
caused this Loan Agreement to be executed in their
respective names on this 23rd day of April 1987.
FOGELMAN MORTGAGE L.P. I
By: FOGELMAN MORTGAGE PARTNERS I, INC.
General Partner
By: /s/ L. Don Campbell, Jr.
-------------------------------------
FPI ROYAL VIEW, LTD., L.P.
By: FOGELMAN PROPERTIES, INC.,
General Partner
By: /s/ Morris J. Kriger
-------------------------------------
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<PAGE>
EXHIBIT A
Legal Description
Lot 1, 'ROYAL VIEW', FIRST PLAT, a subdivision in the City of
Overland Park, Johnson County, Kansas.
<PAGE>
EXHIBIT B
Permitted Encumbrances
<PAGE>
EXHIBIT C
REQUISITION FOR PAYMENT AND REIMBURSEMENT
Dated: _______________________
To Fogelman Mortgage L. P. 1:
The undersigned Borrower, pursuant to Article IV of that certain Loan
Agreement dated as of April _______ , 1987 (the 'Loan Agreement') by and
between FPI Royal View, Ltd., L.P., a Kansas limited
partnership, (the 'Borrower') and FOGELMAN MORTGAGE L.P. I, a Tennessee limited
partnership, (the 'Issuer'), hereby requests disbursement to the Borrower of
_________________________ from the Interest Account and ____________________
from the Project Account pursuant to the Loan Agreement, to
pay the Cost of the Facility (as defined in the Loan Agreement).
The Borrower does hereby certify (i) that this disbursement is for an authorized
use of the proceeds pursuant to Section 4.3 of the Loan Agreement; (ii) that
none of the above payments to be made have formed the basis for any payment
theretofore made for the proceeds; (iii) that each item for which payment has
above been requested to be made is provided for in Section 4.3 of the Loan
Agreement and is or was necessary in connection with the Facility; (iv) the
Facility is being and has been constructed and equipped substantially in
accordance with all applicable ordinances, statutes and requirements of the
regulatory authorities having jurisdiction; (v) that the Facility as constructed
and equipped does not encroach upon any easement or right of way; and (vi) that
the cost breakdown attached hereto as Exhibit A is accurate.
The General Contractor does hereby certify that the cost breakdown
attached hereto as Exhibit A is accurate.
BORROWER GENERAL CONTRACTOR
FPI ROYAL VIEW, LTD., L.P. FOGELMAN/BYRNES & DOGGETT, INC.
By: Fogelman Properties, Inc.
General Partner
By:__________________________ By:______________________________
MICHAEL H. HIRSCH DAVID W. JACOBS
<PAGE>
FACILITIES SUPERVISOR
CERTIFICATE
The Facilities Supervisor being that same entity designated as 'Consultant'
in that Construction Evaluation and Monitoring Services dated February 27,
1987, by and between Construction Analysis Systems, Inc. and Fogelman Mortgage
L.P. I does hereby certify (i) that all construction work has been
completed in substantial conformity with and
there have been no material deviations from the Plans and Specifications;
(ii) that the amount of the requested disbursement with respect to 'hard
cost' from the Project Account is correct and sufficient work
has been completed to warrant the requested disbursement;
(iii) that the portion of the facility completed to
the date hereof has been constructed in a workmanlike manner and in substantial
compliance with the Plans and Specifications which such Plans and
Specifications are in conformance with generally accepted design criteria and
appropriate building codes and ordinances; and (iv) that the cost breakdown
attached hereto as Exhibit A is accurate with respect to the (a) schedule of
work in place and materials store securely on the land or in a bonded
warehouse; (b) extent of completion of the Facility and the value thereof; and
(c) remaining funds in the Project Fund are reasonably adequate to complete
construction of the Facility in accordance with the Plans and Specifications.
FACILITIES SUPERVISOR
CONSTRUCTION ANALYSIS
SYSTEMS, INC.
By:_______________________
<PAGE>
AMENDMENT TO
LOAN AGREEMENT
This Amendment to Loan Agreement is made and entered into as of
July 7, 1987, by and between Fogelman Mortgage L.P. I, a Tennessee Limited
Partnership, having its office at 5400 Poplar Avenue, Memphis, Tennessee, 38119,
(the 'Issuer') and FPI Royal View, Ltd., L.P., a Kansas Limited Partnership,
having its office at 5400 Poplar Avenue, Memphis, Tennessee 38119, (the
'Borrower').
WITNESSETH: WHEREAS, Issuer and Borrower entered into that certain Loan
Agreement, dated April 23, 1987; and WHEREAS, Issuer and Borrower now desire to
amend said Loan Agreement; NOW THEREFORE in consideration of the mutual promises
and covenants contained herein, Issuer and Borrower hereby agree as follows:
1. The term 'Facilities Supervisor' shall be changed to
'Construction Consultant' and all references to 'Facilities Supervisor'
throughout the Loan Agreement and relating documents shall be changed to
'Construction Consultant'.
<PAGE>
2. The form of certificate to be furnished by the
Construction Consultant in connection with each requested disbursement by
Borrower shall be changed from the form presently being used to the form on
Exhibit A attached hereto and incorporated herein by reference.
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Amendment
to Loan Agreement to be executed in their respective names on
this 7th day of July, 1987.
Fogelman Mortgage L.P. I
By: Fogelman Mortgage Partners I, Inc.,
General Partner
By: /s/ L. Don Campbell, Jr.
------------------------
L. Don Campbell, Jr.
Vice President
FPI Royal View, Ltd., L.P.
By: Fogelman Properties, Inc.,
General Partner
By: /s/ L. Don Campbell, Jr.
------------------------
L. Don Campbell, Jr.
Vice President
<PAGE>
CONSTRUCTION CONSULTANT
CERTIFICATE
EXHIBIT A
The Construction Consultant, being that same entity designated as 'Consultant'
in that Construction Evaluation and Monitoring Services dated February 27,
1987, by and between Construction Analysis Systems, Inc. and Fogelman Mortgage
L.P. I does hereby certify (i) that all construction work has been completed
in substantial conformity with, and, to the best of our knowledge, there have
been no material deviations from, the Plans and Specifications to the extent
such could be determined during our periodic on site observations and except as
noted in our periodic reports; (ii) that the amount of the requested
disbursement with respect to 'hard costs' from the Project Account appears
correct, and sufficient work has been completed to warrant the requested
disbursement; (iii) that the portion of the Facility completed to the date
hereof has been constructed in a workmanlike manner and in substantial
compliance with the Plans and Specifications to the extent such could be
determined during our periodic on site observations and except as noted in our
periodic reports; (iv) that the cost breakdown attached hereto as Exhibit A is
accurate with respect to the (a) schedule of work in place and materials stored
securely on the land or in a bonded warehouse; (b) extent of completion of the
Facility and the value thereof; and (c) remaining funds in the Project Fund are
reasonably adequate to complete construction of the Facility in accordance with
the Plans and Specifications and except as noted in our periodic reports.
CONSTRUCTION CONSULTANT
CONSTRUCTION ANALYSIS SYSTEMS, INC.
By:________________________
Title:_____________________
Date: _____________________
<PAGE>
CERTIFICATE DESIGNATING BORROWER REPRESENTATIVE
FMLP I
5400 Poplar Avenue
Memphis, TN 38119
First Tennessee Bank
National Association
P. O. Box 84
Memphis, TN 38103
The person named below is hereby designated Borrower
Representative of FPI Royal View, Ltd., L.P., a Kansas limited partnership (the
'Borrower'), under a certain Loan Agreement dated as of April 23, 1987, by and
between the Borrower and FMLP I (the 'Issuer') and under that certain Trust
Indenture dated as of April 23, 1987, by and between the Issuer and First
Tennessee Bank National Association, as trustee, and the signature appearing
opposite his name is the genuine signature of such person:
Title Name Signature
Borrower Representative Michael Hirsch /s/ Michael H. Hirsch
The above-named person shall serve in such capacity until such time
as his successor shall have been appointed.
Dated: April 23, 1987
FPI Royal View, Ltd., L.P.
a Kansas limited partnership
By: Fogelman Properties, Inc.
General Partners
/s/ Michael H. Hirsch
-------------------------
Michael H. Hirsch
Senior Vice President
<PAGE>
FOGELMAN MORTGAGE L.P. I
AND
FPI CHESTERFIELD, LTD.
a Missouri Limited Partnership
LOAN AGREEMENT
Dated as of July 8, 1987
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions 1
SECTION 1.2 Accounting Terms 5
SECTION 1.3 Rules of Construction 5
ARTICLE II
REPRESENTATIONS AND COVENANTS
SECTION 2.1 Representations and Covenants of the Borrower 5
ARTICLE III
FACILITY SITE AND TITLE INSURANCE
SECTION 3.1 Title Insurance 6
ARTICLE IV
CONSTRUCTION OF THE PROJECT; INSTALLATION OF EQUIPMENT;
ISSUANCE OF THE BOND
SECTION 4.1 Construction of the Project 6
SECTION 4.2 Disbursement of Facility Note Proceeds 7
SECTION 4.3 Application of Facility Note Proceeds 8
SECTION 4.4 Certificate of Completion 9
SECTION 4.5 Completion by the Borrower 10
SECTION 4.6 Construction Consultant 10
SECTION 4.7 Remedies to be Pursued Against Contractors
and Subcontractors and their Sureties 10
SECTION 4.8 Assignment: Plans, Specifications and Contract
Documents Relating to the Improvements 11
ARTICLE V
PAYMENT PROVISIONS
SECTION 5.1 Amount of Loan 11
SECTION 5.2 Loan Term 11
SECTION 5.3 Loan Repayments 11
SECTION 5.4 Credit Toward Payments 12
SECTION 5.5 Obligations of Borrower Hereunder Unconditional 12
SECTION 5.6 Payment of Additional Moneys for
Prepayment of Facility Note 13
SECTION 5.7 Exculpatory Provisions 13
<PAGE>
ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
SECTION 6.1 Maintenance and Modifications of Land and
Facility by the Borrower 14
SECTION 6.2 Taxes, Assessments and Utility Charges 14
SECTION 6.3 Insurance Required 15
SECTION 6.4 Additional Provisions Respecting Insurance 16
SECTION 6.5 Application of Net Proceeds of Insurance 16
SECTION 6.6 Right of the Issuer to Pay Taxes,
Insurance Premiums and Other Charges 16
SECTION 6.7 Installation of Additional Equipment 17
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
SECTION 7.1 Damage or Destruction 17
SECTION 7.2 Condemnation 20
SECTION 7.3 Special circumstances 21
ARTICLE VIII
SPECIAL COVENANTS
SECTION 8.1 No Warranty of Condition or Suitability
by the Issuer 22
SECTION 8.2 Hold Harmless Provisions 22
SECTION 8.3 Right to Inspect the Facility 22
SECTION 8.4 Qualification in the State 22
SECTION 8.5 Books of Record and Account; Financial Statements 22
SECTION 8.6 Compliance with Orders, Ordinances, Etc 22
SECTION 8.7 Discharge of Liens and Encumbrances 23
SECTION 8.8 Borrower to Provide Survey 23
SECTION 8.9 Annual Certificate of the Borrower 23
ARTICLE IX
TRANSFER OF CERTAIN LAND; ASSIGNMENTS
AND LEASING; PLEDGE OF CERTAIN INTERESTS
SECTION 9.1 Restriction of Transfer of Facility;
Transfer of Certain Land 24
SECTION 9.2 Assignment and Leasing 24
SECTION 9.3 Mortgage and Pledge of Security Interests
to the Issuer 25
SECTION 9.4 Removal of Equipment 25
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1 Events of Default Defined 25
SECTION 10.2 Remedies of Default 27
SECTION 10.3 Remedies Cumulative 28
SECTION 10.4 Agreement to Pay Attorneys' Fees and Expenses 28
SECTION 10.5 No Additional Waiver implied by One Waiver 28
SECTION 10.6 Appointment of Receiver 28
<PAGE>
ARTICLE XI
ACCELERATION OF LOAN PAYMENTS
SECTION 11.1 Acceleration of Loan Repayments 29
SECTION 11.2 Conditions to Acceleration of Loan Repayments 29
SECTION 11.3 Amounts Remaining on Deposit with the
Issuer Upon Payment of the Facility Note 30
ARTICLE XII
CLOSING
SECTION 12.1 Closing Documents 30
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1 Notices 32
SECTION 13.2 Binding Effect 32
SECTION 13.3 Severability 32
SECTION 13.4 Amendments, Changes and Modifications 32
SECTION 13.5 Execution of Counterparts 33
SECTION 13.6 Applicable Law 33
SECTION 13.7 Recording and Filing 33
SECTION 13.8 Table of Contents and Section Headings not
Controlling 33
SECTION 13.9 Survival 33
SECTION 13.10 Consents 33
SECTION 13.11 Instruments of Further Assurance 33
SECTION 13.12 Payments Due on Saturdays, Sundays and
Holidays 34
Acknowledgements
Exhibit A -- DESCRIPTION OF LAND/LEASEHOLD INTEREST
Exhibit B -- PERMITTED ENCUMBRANCES
Exhibit C -- REQUISITION
<PAGE>
THIS LOAN AGREEMENT, dated as of July 8, 1987, by and between Fogelman Mortgage
L.P. I, a Tennessee limited partnership, having its office at 5400 Poplar
Avenue, Memphis, Tennessee 38119, (the 'Issuer'), and FPI Chesterfield, Ltd., a
Missouri limited partnership, having its office at 5400 Poplar Avenue,
Memphis, Tennessee 38119, (the 'Borrower').
W I T N E S S E T H :
WHEREAS, Issuer has agreed to lend to Borrower and Borrower has agreed to borrow
from Issuer the Sum of $23,320,000 for providing and financing the Cost of the
Facility as defined below, upon the terms and conditions hereinafter set forth
in this Agreement; and
WHEREAS, said Facility shall consist of a 489-unit multi-family housing facility
with all recreational amenities appurtenant thereto (the 'Project') plus certain
equipment and other personal property used in connection therewith (the
'Equipment') to be located on certain real property owned by the Borrower
situated on the real estate described on Exhibit A attached hereto and by
reference made a part hereof (the 'Land') in the City of Chesterfield, Missouri,
and constructed and equipped with the proceeds of the Facility Note (the Land,
Project and Equipment collectively are referred to as the 'Facility'); and
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto hereby formally covenant,
agree and bind themselves as follows, to wit:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following words and terms as used in this Loan
Agreement shall have the following meanings unless the context or use indicates
another or different meaning or intent:
'Accountant' means a firm of independent certified public accountants of
recognized standing, selected by the Borrower.
'Agreement' means this Loan Agreement by and between the issuer and the
Borrower, as the same may be amended from time to time.
'Authorized Investments' means (i) obligations of any state or the United
States of America or (ii) obligations the principal and interest of which are
guaranteed by any state or the United States of America or (iii) obligations of
any agency or instrumentality of the United States of America or any state which
may from time to time be legally purchased within the State or (iv) certificates
of deposit issued by, or time
- - 1 -
<PAGE>
deposits with any bank, trust company or national
banking association having undivided capital and surplus aggregating at least
$100,000,000 or (v) any other investments which are authorized by law for the
investment of the Issuer's funds, to the extent permitted by law.
'Authorized Representative' means, in the case of the Issuer, any individual
general partner or member of the management committee; and, in the case of the
Borrower , the President or any Senior vice-President of the corporate general
partner; and, in the case of both, such additional persons as, at the time, are
designated to act in behalf of the Issuer or the Borrower, as the case may be,
by a written certificate furnished to the other party, containing the specimen
signature of each such person and signed by an Authorized Representative of
such party.
'Borrower' means FPI Chesterfield, Ltd., a Missouri Limited Partnership, its
successors and assigns.
'Closing Date' means the date of delivery on which the Facility Note Proceeds
are advanced to the Trustee for the use and benefit of Borrower.
'Completion Date' means the date on which Borrower receives a final Certificate
of Occupancy or similar permit from the appropriate governmental agencies
having jurisdiction over the Facility.
'Condemnation' means the taking, or transfer in lieu of any such taking under
threat thereof, of any interest in or right to use the Facility under the
exercise of the power of eminent domain by any governmental or
quasi-governmental entity or other Person acting under governmental authority.
'Construction Consultant' ' means Construction Analysis Systems, Inc. or such
other person or persons who at the time shall have been designated as such
pursuant to the provisions of Section 4.6 of this Agreement.
'Construction Fund' means the fund so designated in section 2.01 of the Trust
Indenture.
'Construction Period' means, with respect to the Facility, the period (a)
beginning on the earlier of (i) the date of commencement of the construction
and equipping of such Facility, or (ii) the Closing Date and (b) ending on the
Completion Date.
'Contract Term' ' means the period commencing with the Closing Date and
continuing until the Facility Note and interest thereon has been paid in full.
'Cost of the Facility' means all those costs and items of expense enumerated in
Section 4.3(a) hereof.
- - 2 -
<PAGE>
'Equipment' means all machinery, equipment and other personal property owned
by Borrower and used exclusively in connection with the Project or the Land with
such additions thereto, substitutions therefor and replacements thereof as may
exist from time to time in accordance with the provisions of the Agreement.
'Event of Default' or 'Default' means an event of default, as defined in Article
X of this Agreement, or in the Facility Note, the Mortgage or the Guaranty.
'Facility' means the Land, Project and Equipment.
'Facility Note' means the Westbury Park Multi-Family Housing Facility Note
(Chesterfield, St. Louis County, Missouri) executed and delivered by the
Borrower pursuant to Section 5.3(a) hereof to evidence its obligation to repay
the Loan.
'Facility Note Proceeds' means the amount of the Facility Note which Issuer has
agreed to lend to Borrower and which is deposited into the Construction Fund.
'Guarantor' means Avron B. Fogelman, as guarantor under the Guaranty.
'Guaranty' means the agreement by and between the Guarantor and Issuer, dated
as of July 14, 1987, by which the Guarantor guarantees to Issuer the full and
prompt payment, when due, of all or a portion of the principal, and interest on
the Facility Note and completion of the Facility in accordance with the Plans
and Specifications which shall include construction of the Project and
installation of the Equipment and at a date not later than the date provided in
Section 4.1 hereof.
'Independent Counsel' means an attorney or attorneys or firm or firms of
attorneys duly admitted to practice law before the highest court of any state of
the United States of America or in the District of Columbia and not a full time
employee of the Issuer or the Borrower.
'Issuer' means Fogelman Mortgage L.P. I
'Land' means the real estate located on Baxter Road Extension, west of Clarkson
Road in the City of Chesterfield, Missouri, and more particularly described in
Exhibit A attached hereto, and subject to the Lien of the Mortgage.
'Lien' means any interest in Property securing an obligation owed to a Person
whether such interest is based on the common law, statute or contract, and
including but not limited to the security interest arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
- - 3 -
<PAGE>
or bailment for security purposes. The term 'Lien' includes reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other similar title exceptions and encumbrances,
including but not limited to mechanics, materialmen's warehousemen's carriers'
and other similar encumbrances, affecting real property. For the purposes of
this Agreement, a Person shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
'Loan' means the loan to the Borrower made pursuant to section 5.1 of this
Agreement from Facility Note Proceeds.
'Loan Repayments' means the payments of principal and interest on the Facility
Note.
'Mortgage' means the Deed of Trust, Assignment of Rents and Leases and Security
Agreement dated as of July 14, 1987, from the Borrower, with respect to its fee
simple interest in the Facility to the Mortgage Trustee (as defined in the
Mortgage) for the benefit of Issuer as, security for payment of the Facility
Note.
'Net Proceeds' means so much of the gross proceeds with respect to which that
term is used as remain after payment of all expenses, costs and taxes (including
attorneys' fees) incurred in obtaining such gross proceeds.
'Permitted Encumbrances' means (i) liens described in Exhibit B attached hereto,
(ii) this Agreement and the Mortgage, (iii) utility, access and other easements
and rights of way, restrictions and exceptions that do not impair the utility or
the value of the Property affected thereby for the purposes for which it is
intended, (iv) mechanics', materialmen's, warehousemen's, carriers' and other
similar liens to the extent permitted by Section 8.7(b) hereof, and (v) liens
for taxes and all other inchoate liens at the time not delinquent.
'Person' means an individual, partnership, corporation, trust or unincorporated
organization, and a governmental agency or political subdivision thereof.
'Plans and Specifications' means the final plans and specifications for the
Facility approved in writing by Issuer and a supervising architect or engineer
selected by Issuer, as the same may be implemented and detailed from time to
time and as the same may be revised from time to time prior to the Completion
Date in accordance with Section 4.1 of this Agreement. The Plans and
Specifications must be approved by all applicable local, state and federal
authorities.
- - 4 -
<PAGE>
'Prime Rate' means the prime rate charged by Citibank N.A. as such rate may be
changed from time to time with any such change becoming effective simultaneously
with each such change.
'Project' means all those buildings, improvements, equipment, structures and
other related facilities (i) affixed or attached to the Land, (ii) financed with
the Facility Note Proceeds or of any payment by the Borrower pursuant to Section
4.5 hereof and constituting a 489-unit multi-family housing facility with all
recreational amenities appurtenant thereto and (iii) not part of the Equipment.
'Property' means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
'Requisition' means a requisition substantially in the form of Exhibit C
attached to this Agreement.
'State' means the State of Missouri.
'Trust Indenture' means that certain trust indenture to be entered into by and
between the Issuer and the Trustee on or before the Closing Date.
'Trustee' means the person named as such in the Trust Indenture.
Section 1.2. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those Applied in the preparation of the financial
statement referred to in Section 8.5.
Section 1.3. Rules of Construction. Words of the masculine gender shall be
deemed and construed to include correlative words of the feminine and neuter
genders. Unless the context shall otherwise indicate, the words importing the
singular number shall include the plural and vice versa, and words importing
persons shall include firms, associations and corporations, including public
bodies, as well as natural persons.
ARTICLE II
REPRESENTATIONS AND COVENANTS OF BORROWER
Section 2.1. Representations and Covenants of the Borrower. The Borrower makes
the following representations and covenants as the basis for the undertakings on
its part herein contained.
(a) The Borrower is a Missouri limited partnership an (i) has been duly created
under the laws of the State of Missouri; and (ii) has power and lawful authority
to
- - 5 -
<PAGE>
enter into this Agreement, the Facility Note and the Mortgage, and has executed
and delivered this Agreement, the Facility Note and the Mortgage.
(b) Neither the execution and delivery of this Agreement, the Facility Note or
the Mortgage, the consummation of the transactions contemplated hereby or
thereby nor the fulfillment of or compliance with the provisions of this
Agreement, the Facility Note or the Mortgage will, in any material respect,
conflict with or result in a breach of any of the terms, conditions or
provisions of any restriction or any agreement or instrument to which the
Borrower is a party or by which it or the Facility is bound, or will
constitute a default under any of the foregoing, or result in the creation or
imposition of any Lien of any nature upon any of the Property of the Borrower
under the terms of any such instrument or agreement.
ARTICLE III
TITLE INSURANCE
Section 3.1. Title Insurance. The Borrower has obtained or will obtain, and
throughout the Contract Term will maintain in force, title insurance from a land
title insurance company acceptable to Issuer in an amount equal to $23,320,000
insuring a valid first Lien on the Facility with only such exceptions as are
approved in advance by Issuer. The policy shall contain no exceptions for
mechanic's or materialmen's liens and shall be otherwise satisfactory in form
and substance to Issuer. At the time of each disbursement under this Agreement,
Issuer may require the title company to search title to the date of such advance
and to endorse the title policy to reflect no additional liens or encumbrances.
ARTICLE IV
CONSTRUCTION OF THE PROJECT; INSTALLATION OF EQUIPMENT
Section 4.1. Construction of the Project; Installation of Equipment. (a) The
Borrower agrees that it will construct the Project and install the Equipment or
cause the Project to be constructed and the Equipment to be installed in
accordance with the Plans and Specifications and will cause the construction of
the Project to be completed no later than September 1, 1989.
(b) The Borrower may not revise the Plans and Specifications without the prior
written consent of Issuer which consent may not be unreasonably withheld or
delayed, but may be subject to such reasonable conditions as Issuer may deem
appropriate.
(c) Title to all materials, equipment, machinery and other items of Property
which may be incorporated or installed in the
- - 6 -
<PAGE>
Facility shall vest in the Borrower immediately upon incorporation or
installation in the Facility, whichever shall first occur, and shall immediately
thereupon become subject to the Lien of the Mortgage. The Borrower shall
execute, deliver and record or file all instruments necessary or appropriate to
so vest title in the Borrower and shall take all action necessary or
appropriate to subject such materials, equipment, machinery and other items of
Property to the Lien of the Mortgage and to protect such title against claims of
any third persons.
Section 4.2. Disbursement of Facility Note Proceeds. All Facility Note Proceeds
shall be deposited in the Construction Fund and thereafter shall be disbursed by
the Trustee in accordance with the terms of the Trust Indenture to pay for
the Cost of the Facility as follows:
(a) Not less than five (5) banking days before the date on which Borrower
desires a disbursement from the Construction Fund, Borrower shall submit to
Trustee a Requisition accompanied by a cost breakdown showing by trade the cost
of work on, and the cost of materials incorporated into, the Facility or stored
securely on the Land or in a bonded warehouse to the date of the Requisition,
together with supporting billings from subcontractors and materialmen covering
the requested funding. The Requisition must be signed either as originals or as
copies by (i) an Authorized Representative of Borrower and (ii) either John
Doggett, William Byrnes or Ronald Byrnes, on behalf of the General Contractor,
and (iii) the Construction Consultant. The cost breakdown shall also show the
percentage of completion of each line-item on Borrower's detailed estimate of
the costs of the Facility as approved by Issuer, and the accuracy of the cost
breakdown shall be certified by Borrower and the General Contractor or, as to
any items not within the scope of a general contract, by the contractors
directly responsible to Borrower for such items. The completed construction on
the Facility will be reviewed at the time each Requisition is submitted by the
Construction Consultant who will certify to Issuer as to the cost of completed
construction, percentage of completion and compliance with the Plans and
Specifications for the Facility.
(b) Borrower shall have no right to request or receive any disbursement from the
Construction Fund until all of the following conditions precedent shall have
been fully met:
(i)Borrower shall have delivered to Issuer a Requisition meeting
the requirements of subparagraph (a) immediately above.
(ii)Borrower shall not be in default in the performance of the
terms and provisions of this Agreement or the Mortgage.
(iii) Borrower shall have furnished waivers of liens and receipts of payment as
to the General Contractor and each subcontractor for all work performed to the
date of the
- - 7 -
<PAGE>
immediately preceding Requisition at the time such Requisition is
submitted.
(iv) The title insurance company insuring the title to the Facility shall
issue a title continuation or endorsement showing that the fee simple title
thereto is clear of liens (other than the matters described in its title
policy) to the date of such disbursement and that no financing statements
affecting the Facility, or any part thereof, other than in favor of Issuer,
have been filed.
(v) The Construction Consultant shall have certified to Issuer that
all construction work which has been completed is in substantial
conformity with the Plans and Specifications. In addition, the
Construction Consultant shall recommend the amount, if any, to be
disbursed and state that the amount requested for construction cost is
correct for that stage of construction, and shall set forth such details
concerning construction as Issuer shall request from time to time,
including, but not limited to (i) a statement that the portion of the
Facility then completed has been constructed in a good and workmanlike manner
and in substantial compliance with all applicable laws, ordinances and
building codes, (ii) a schedule of work in place, materials stored securely
on the Land and materials stored in a bonded warehouse, (iii) the extent
of completion of the Facility and the value thereof, (iv) the estimated cost
of completing construction in accordance with the Plans and
Specifications, (v) a statement that sufficient work has been completed to
warrant the draw being requested, (vi) a statement that the amount
indicated to be complete is accurate, (vii) a statement that there have
been no material deviations from the Plans and Specifications except as
previously approved in writing by Issuer.
(vi) If requested by Issuer in a writing delivered to Borrower (with a
copy delivered to the Trustee) following installation of building
foundations, Issuer shall have received a survey showing that all such
foundations are within the boundary lines of the Land and in compliance
with all applicable setback, location and area requirements and that there
is no material change in conditions which could adversely affect the
security for the Facility Note.
(vii) The sum of the funds requisitioned, plus all prior
disbursements to Borrower, plus undisbursed portions of the Construction
Fund held by Trustee shall be sufficient, in the sole opinion of Issuer, to
complete the Project substantially in accordance with the Plans and
Specifications.
Section 4.3. Application of Facility Note Proceeds. (a) Substantially all
of the Facility Note Proceeds shall be applied in accordance with the
Budget referred to in Section 12.1 (18) to pay the following costs and
expenses in connection with the Facility, and for no other purpose:
- - 8 -
<PAGE>
(i) the cost of preparing the Plans and
Specifications for the Facility (including any preliminary study or planning of
the Facility or any aspect thereof),
(ii) all costs of acquiring, constructing, equipping and installing the Facility
(including architectural, engineering and supervisory services with respect
thereto),
(iii) all fees, taxes, charges and other expenses for recording or filing, as
the case may be, this Agreement, any other agreements contemplated hereby, any
financing statements and any title curative documents that the Issuer may deem
desirable in order to create or protect the title to the Facility and any
security interest contemplated by the Mortgage.
(iv) the premium on any title insurance procured on the Facility and any fees or
expenses in connection with any actions or proceedings that the Issuer may deem
desirable in order to perfect or protect the title to the Facility, except for
removing Permitted Encumbrances,
(v) the cost of insurance maintained pursuant to Section 6.3 hereof,
(vi) interest payable under the Facility Note,
(vii) all legal, accounting and any other fees, costs and expenses incurred in
connection with the preparation and execution of the Facility Note, the
Mortgage, this Agreement and all other documents in connection herewith, with
the acquisition of title to the Facility and with any other transaction
contemplated by this Agreement or the Mortgage,
(viii) any administrative fees reflected in the budget approved by the Issuer,
and
(ix) reimbursement to the Borrower for any of the above-enumerated costs and
expenses.
(b) Notwithstanding anything contained in this Section 4.3 to the contract the
Facility Note Proceeds which are not required for immediate use or disbursement
may be invested and reinvested for the benefit of Borrower in accordance with
the terms of the Trust Indenture. Neither the Issuer nor its officers or
employees shall be liable for any depreciation in the value of any investments
made pursuant to this Section or for any loss arising from any such investment.
Section 4.4. Certificate of Completion. Completion of the Facility shall be
evidenced by (a) the issuance of a final Certificate of Occupancy or similar
permit from the appropriate
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<PAGE>
governmental agencies having jurisdiction over the Facility, and (b) a
certificate filed with the Issuer signed by the Construction Consultant
stating that (i) the construction and equipping of the Facility has been
completed in accordance with the Plans and Specifications therefor and (ii)
the payment of all labor, service, materials and supplies used in such
construction and equipping and all other items of the Cost of the Facility has
been made or provided for.
Section 4.5. Completion by the Borrower. Upon a determination by Issuer that the
Net Proceeds of the Facility Note are not sufficient to pay in full all costs of
construction and equipping the Facility, and written notice by Issuer to
Borrower of the amount of funds so required in addition to the Net Proceeds of
the Facility Note, Borrower shall deliver to Issuer the amount of such
additional funds or in lieu thereof, a satisfactory letter of credit or
certificate of deposit which Issuer shall deposit in the Construction Fund. Such
sums shall be deposited in the Construction Fund. Title to all portions of the
Facility constructed or equipped at the Borrower's cost shall immediately upon
such installation or construction vest in the Borrower and be subject to the
Lien of the Mortgage. The Borrower shall execute, deliver and record or file
such instruments as Issuer may request in order to create or protect its Lien to
such portions of the Facility.
Section 4.6. Construction Consultant. The Construction Consultant shall be
acceptable to Issuer and Borrower. The Borrower, by a certificate delivered to
Issuer and a Construction Consultant, may remove an incumbent Construction
Consultant, with the prior written consent of Issuer, at any time without cause.
In the event a Construction Consultant shall be so removed or should become
unavailable or unable to take any action or make any certificate provided for in
this Agreement, another Construction Consultant shall thereupon be appointed by
a certificate of the Borrower delivered to Issuer, with the prior written
approval of Issuer. If the Borrower fails to deliver such certificate to Issuer
within fifteen (15) days following the date of removal of a Construction
Consultant or the date when a Construction Consultant becomes unavailable or
unable to take any of such actions, as the case may be, the Issuer, by a
certificate delivered to the Borrower may appoint as a successor any engineer or
engineering firm registered and qualified to practice the profession of
engineering under the laws of the State and not a full time employee of the
Issuer or the Borrower. Borrower shall be responsible for paying all fees of the
Construction Consultant.
<PAGE>
Section 4.7. Remedies to be Pursued Against Contractors and Subcontractors and
their Sureties. In the event of default of any contractor or subcontractor under
any contract made by it in connection with the Facility or in the event of a
breach of warranty with respect to any materials, workmanship, or performance
guaranty, the Borrower shall promptly proceed, either separately or in
conjunction with others, to exhaust the
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<PAGE>
remedies of the Borrower against the contractor or subcontractor so in
default and against each surety on a bond, if any, for the performance of such
contract. The Borrower agrees to advise the Issuer of the steps it intends to
take in connection with any such default. The Borrower may prosecute or defend
any action or proceeding or take any other action involving any such contractor,
subcontractor or surety which the Borrower deems reasonably necessary.
Section 4.8. Assignment: Plans, Specifications and Contract Documents Relating
to the Improvements. Borrower hereby makes a present assignment to the
Issuer, its successors and assigns of: (i) the right to possess and use all the
Plans and Specifications prepared by it or for it or at its direction for the
purpose of completing the Facility; (ii) all of Borrower's rights in and to the
construction contract; and (iii) all of Borrower's rights under any and all
permits, contracts, agreements, certificates and any other documents or
agreements of any kind or nature whatsoever which are used, entered into or held
by Borrower in connection with Borrower's acquisition of the Land or the
construction and equipping of the Facility. Issuer shall exercise its rights
under this assignment only in the event the Borrower fails to construct and
complete the Project and Equipment in accordance with the terms and provisions
of this Agreement or following the occurrence of an Event of Default hereunder.
ARTICLE V
PAYMENT PROVISIONS
Section 5.1. Amount of Loan. For the purpose of paying the Cost of the Facility,
the Issuer shall make and the Borrower shall receive the Loan in the principal
sum of $23,320,000 upon the terms and conditions of this Agreement, said Loan to
be disbursed upon presentation of Requisitions by Borrower as provided in
Section 4.2 hereof and in the Trust Indenture.
Section 5.2. Loan Term. This Agreement shall be effective concurrently with the
initial delivery of the Facility Note and shall continue in force and effect
until the principal of, prepayment penalty, if any, and interest on the
Facility Note have been fully paid together with all sums to which the Issuer is
entitled from the Borrower under this Agreement and the Facility Note.
Section 5.3. Loan Repayments. (a) The Borrower shall evidence its obligation to
repay the Loan by executing and delivering to the Issuer the Facility Note .
(b) In addition to the payments pursuant to the Facility Note, the Borrower
shall pay to the Issuer, within thirty (30) days of the receipt of demand
therefor, an amount equal to the sum of the administrative fees and reasonable
expenses of the Issuer incurred (i) by reason of the Issuer's financing of the
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Facility (ii) in connection with the carrying out of the Issuer's duties and
obligations under this Agreement, the payment of which is not otherwise provided
for under this Agreement and (iii) all reasonable fees, charges and expenses
Issuer incurred under the Mortgage.
(c) The Borrower agrees to make the above mentioned payments, without
any further notice, in lawful money of the United States of America as, at the
time of payment, shall be legal tender for the payment of public and private
debts. In the event the Borrower shall fail to timely make any payment required
under the Facility Note, the Borrower shall pay the same together with
interest thereon at a rate equal to the greater of sixteen percent (16%) or
two and one-half percent (2 1/2%) per annum above the Prime Rate from
the date on which such payment was due until the date on which
such payment is made.
Section 5.4. Credit Toward Payments. The following amounts (to the
extent, if any, which such amounts shall not have previously been the basis
for a credit) shall be credited against the principal payment to be made by the
Borrower pursuant to the Facility Note in inverse order of maturity, and such
payment shall be accordingly reduced to the extent of any such credit:
(i) the amount by which the Net Proceeds of insurance maintained pursuant to
Section 6.3(a) hereof exceed the cost of replacing, repairing, rebuilding or
restoring the Facility, to the extent provided in Section 7.1 hereof; and
(ii) the amount by which the Net Proceeds of any Condemnation award exceed the
cost of restoring the Facility or acquiring Substitute Facilities, to the extent
provided in Section 7.2 hereof.
Section 5.5. Obligations of the Borrower Hereunder Unconditional. Subject to
Section 5.7 hereof and the exculpatory provisions contained in the Facility
Note, the obligations of the Borrower to make the payments required under the
Facility Note and to perform and observe any and all of the other covenants and
agreements on its part contained herein shall be a general obligation of the
Borrower and shall be absolute and unconditional irrespective of any defense or
any rights of setoff, recoupment or counterclaim it may otherwise have against
the Issuer. The Borrower agrees it will not (i) suspend, discontinue or abate
any payment required by the Facility Note, or (ii) fail to observe any of its
other covenants or agreements in this Agreement or (iii) except as provided in
Section 11.1 hereof, terminate this Agreement for any cause whatsoever
including, without limiting the generality of the foregoing, failure to complete
the Facility, failure of the Borrower or any lessee of the Borrower to occupy or
to use the Facility as contemplated in this Agreement or otherwise, any defect
in the title, design, operation, merchantability, fitness
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<PAGE>
or condition of the Facility or in the suitability of the Facility for the
Borrower's purposes or needs, failure of consideration, destruction of or damage
to the Facility, commercial frustration of purpose, or the taking by
Condemnation of title to or the use of all or any part of the Facility, any
change in the tax or other laws of the United States of America or of the State
or any political subdivision or either. Nothing contained in this Section 5.5
shall be construed to release the Issuer from the performance of any of the
agreements on its part contained in this Agreement, and in the event the Issuer
should fail to perform any such agreement, the Borrower may institute such
action against the Issuer as the Borrower may deem necessary to compel
performance.
Section 5.6. Payment of Additional Moneys for Prepayment of Facility Note. The
Borrower may pay moneys (in addition to any other moneys required or permitted
to be paid pursuant to this Agreement) to Issuer to be applied to the prepayment
of the Facility Note at such time or times and on such terms and conditions as
may be provided in such Facility Note.
Section 5.7. Exculpatory Provisions. Notwithstanding any other provision of this
Agreement and Facility Note, Mortgage or Trust Indenture to the contrary, in the
event of any non-payment under this Agreement, Facility Note, Mortgage or Trust
Indenture, neither the Borrower nor any of its partners shall have any personal
liability hereunder, and no holder of this Agreement, Facility Note, Mortgage or
Trust Indenture shall ask or take or cause to be asked or taken personal
judgement against the Borrower or any of its partners for any payment required
to be made under this Agreement, Facility Note, Mortgage or Trust Indenture, it
being understood that said holder of this Agreement, Facility Note, Mortgage or
Trust Indenture will look solely to the revenues and receipts derived from this
Agreement, Facility Note, Mortgage or Trust Indenture, and no other property or
assets of the Borrower or any of its partners shall be subject to levy,
execution or other enforcement procedure for the satisfaction of the
indebtedness evidenced by this Agreement, Facility Note, Mortgage or Trust
Indenture; provided, that the foregoing provisions of this Section 5.7. (a)
shall not constitute a waiver of any indebtedness evidenced by this Agreement,
Facility Note, Mortgage or Trust Indenture and shall not limit the rights of
Issuer under any guaranty executed in connection with the Facility Note, (b)
shall not limit the right of the holder of this Agreement to exercise its rights
hereunder or under the Facility Note, Mortgage or Trust Indenture so long as no
judgment then in the nature of a deficiency judgment shall be asked or taken
against the Borrower or any of its partners, and (c) shall not limit the right
of the holder of this Agreement, Facility Note, Mortgage or Trust Indenture to
seek a deficiency judgment to the extent of any fraud or willful misconduct on
the part of Borrower or any of its general partners.
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<PAGE>
ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 6.1. Maintenance and Modifications of Land and Facility by the
Borrower. (a) The Borrower agrees that during the Contract Term it will (i) keep
the Facility in as reasonably safe condition as its operations shall permit; and
(ii) make all reasonably necessary repairs and replacements to the Facility.
(b) The Borrower from time to time may, after prior written approval from
Issuer, which approval shall not be unreasonably withheld or delayed, make any
structural additions, modifications or improvements to the Facility or any part
thereof which it may deem desirable. All such structural additions,
modifications or improvements so made by the Borrower shall become a part of the
Facility and shall become subject to the Lien of the Mortgage.
Section 6.2. Taxes, Assessments and Utility Charges. (a) The Borrower
agrees to pay, before they become delinquent, (i) all taxes and governmental
charges of any kind whatsoever which may at any time be lawfully assessed
or levied against or with respect to the Facility, (ii) all utility
and other charges, including without limitation, 'service charges',
incurred or imposed for the operation, maintenance, use, upkeep and
improvement of the Facility, and (iii) all
assessments and charges of any kind whatsoever lawfully
made by any governmental body for public improvements; provided that, with
respect to special assessments or other governmental charges that may
lawfully be paid in installments over a period of years, the Borrower shall
be obligated under this Agreement to pay only such installments as are
required to be paid during the Contract Term.
(b) The Borrower may, after written notice to the Issuer of its intention to do
so, in good faith contest any such taxes, assessments and other charges. In the
event of any such contest, the Borrower may permit the taxes, assessments or
other charges so contested to remain unpaid during the period of such contest
and any appeal therefrom.
(c) If an Event of Defaullt hereunder shall have occurred, the Issuer may
require the Borrower to make monthly deposits with the Trustee, in an interest
bearing account, of a sum equal to one-twelfth of the yearly taxes
and assessments which may be levied against the Facility. The amount of
such taxes and assessments, when unknown, shall be estimated by the
Issuer. Such deposits
shall be used by the Issuer to pay such taxes and assessments when due. Any
insufficiency of such account to pay such charges when due, shall be paid by
the Borrower to the Issuer on demand. If, by reason of any Event of Default by
the Borrower under any provision hereof the Issuer declares the Facility
Note to be due and payable, the Issuer may then apply any funds in said
account against the obligation secured by the
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<PAGE>
Mortgage. The enforcability of the covenants relating to taxes and
assessments herein otherwise provided shall not be affected except insofar as
those obligations have been met by compliance with this paragraph.
After an event of
Default hereunder shall have occurred, the Issuer may from time to time, at its
option, waive, and after any such waiver reinstate, any and all provisions
hereof requiring such deposits, by notice to the Borrower in writing. While any
such waiver is in effect, the Borrower shall pay taxes and assessments as
herein above provided.
Section 6.3. Insurance Required. At all times throughout the Contract Term,
including without limitation during the Construction Period, the Borrower shall
maintain, or cause to be maintained, insurance naming the Issuer as an
additional insured against such risks and for such amounts as are customarily ,
insured against by businesses operating facilities of like size and type as the
Facility paying, as the same become due and payable, all premiums in respect
thereto, including, but shall not necessarily be limited to:
(a) Builder's Risk or contractors multiple peril (all-risk) insurance during the
Construction Period and thereafter insurance against loss or damage by fire,
lightning and other casualties, including vandalism and malicious,mischief,
boiler explosion, sprinkler leakage, rental loss or business interruption (in an
amount equal to 25% of gross rental income) with a broad-form extended coverage
endorsement, such insurance to be in an amount not less than the full insurable
value of the Facility, exclusive of excavations and foundations.
Such insurance may be maintained under a blanket insurance policy or policies
covering not only the Facility but other Properties as well.
(b) Insurance against loss or losses from liabilities imposed by law or assumed
in any written contract and arising from personal injury and death or damage to
the Property of others caused by any accident or occurrence, with limits of not
less than $1,000,000.00 per accident or occurrence on account of personal
injury, including death resulting therefrom and $1,000,000.00 per accident or
occurrence on account of damage to the Property of others, excluding liability
imposed upon the Borrower by any applicable workmen's compensation law; and a
blanket excess liability policy in the amount not less than $4,000,000.00,
protecting the Borrower against any loss or liability or damage for personal
injury or Property damage.
(c) Workmen's Compensation insurance, disability benefits insurance, and any
other form of insurance which the Issuer or the Borrower are required by law to
provide, covering loss resulting from inquiry, sickness, disability or death of
employees of the Borrower who are located at or assigned to the Facility.
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<PAGE>
Section 6.4. Additional Provisions Respecting Insurance. (a) All insurance
required by Section 6.3 hereof shall be procured and maintained in financially
sound and generally recognized responsible insurance companies selected by the
Borrower and authorized to write such insurance in the State and of the type and
scope of coverage and in the amounts of coverage as required hereunder. Such
insurance may be written with deductible amounts comparable to those on similar
policies carried by other companies engaged in businesses similar in size,
character and other respects to those in which the Borrower is engaged. All
policies evidencing such insurance shall provide for (i) payment of the losses
to the Borrower and the Issuer as their respective interests may appear, and
(ii) at least thirty (30 days written notice of the cancellation thereof to the
Borrower and the Issuer and (iii) shall comply with Paragraph 9 of the Mortgage.
The policies required by Section 6.3 (a) hereof shall contain standard
mortgagee clauses requiring that all Net Proceeds of insurance resulting from
any claim in excess of $250,000.00 for loss or damage covered thereby be
directly paid to the Issuer.
(b) All such policies of insurance, or a certificate or certificates of the
insurers that such insurance is in force and effect, shall be deposited with
the Issuer on or before the Closing Date. The Borrower shall deliver to the
Issuer on or before the renewal date of each such policy, each year thereafter a
certificate reciting that there is in full force and effect, with a term
covering at least the next succeeding year, insurance in the amounts and of the
types required by Section 6.3 and 6.4 hereof. Prior to expiration of any such
policy, the Borrower shall furnish the issuer evidence that the policy has been
renewed or replaced or is no longer required by this Agreement.
Section 6.5. Application of Net Proceeds of Insurance. The Net Proceeds of the
insurance carried pursuant to the provisions of Section 6.3 hereof shall be
applied as follows: (i) the Net Proceeds of the insurance required by Section
6.3(a) hereof shall be applied as provided in Section 7.1 hereof and (ii) the
Net Proceeds of the insurance required by Section 6.3(b) hereof shall be applied
toward extinguishment or satisfaction of the liability with respect to which
such insurance proceeds may be paid.
Section 6.6. Right of the Issuer to Pay Taxes, Insurance Premiums and other
Charges. If the Borrower fails (i) to pay any tax, assessment or other
governmental charge required to be paid by Section 6.2 hereof or (ii) to
maintain, or acquire any insurance required to be maintained by Section 6.3
hereof, the Issuer may pay such tax, assessment or other governmental charge or
the premium, or acquire such insurance. No such payment by the Issuer shall
affect or impair any rights of the Issuer hereunder arising in consequence of
such failure by the
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<PAGE>
Borrower. The Borrower shall reimburse the Issuer for any amount so paid by
the Issuer pursuant to this Section 6.6, together with interest thereon from the
date of payment by the Issuer at the rate provided in the Facility Note and such
amount, together with such interest, shall become additional indebtedness
secured by the mortgage as provided in Paragraph 14 thereof.
Section 6.7. Installation of Additional Equipment. The Borrower from time to
time may install additional machinery equipment or other personal property in
the Facility (which may be attached or affixed to the Facility), and such
machinery, equipment or other personal property shall become, or be deemed to
become, a part of the Facility unless the same is not a replacement for or
substitution of Equipment as defined herein. The Borrower from time to time may,
with the consent of the Issuer, which consent shall not be unreasonably withheld
or delayed, remove or permit the removal of such machinery, equipment and other
personal property; provided that any such removal of such machinery, equipment
or other personal property shall not adversely affect the structural integrity
of the Facility or impair the overall operating efficiency of the Facility for
the purposes for which it is intended and that any such Lien shall not attach to
any other part of the Facility and provided further that if any damage is
occasioned to the Facility by such removal, the Borrower agrees to promptly
repair such damage at its own expense.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage or Destruction (a) If the Facility shall be damaged or
destroyed (in whole or in part) at any time during the Contract Term:
(i) there shall be no abatement or reduction in the
amounts payable by the Borrower under this Agreement or the Facility Note,
(ii) the Borrower shall promptly give written notice thereof to the Issuer, and
(iii) except as otherwise provided in subsection (b) of this Section 7.1 and
subject to the requirements set forth below in this Section 7.1, the Borrower
shall promptly, upon receipt of insurance proceeds, if any, which are available,
replace, repair, rebuild or restore the Facility to substantially the same
condition and value as an operating entity as existed prior to such damage or
destruction, (with such changes, alterations and modifications as may be desired
by the Borrower and approved by the Issuer which approval shall not be
unreasonably withheld or delayed).
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<PAGE>
If the claim for loss resulting from such damage or destruction is not greater
than $250,000.00, the Borrower shall apply, or cause to be applied, to the
replacement, repair, rebuilding or restoration of the Facility so much as may be
necessary of any Net Proceeds of insurance resulting from claims for such
losses.
If the claim for loss resulting from such damage or destruction exceeds
$250,000.00, all Net Proceeds of insurance shall be paid to and held by the
Issuer in a separate account. The Net Proceeds shall be available for the
replacement, repair, rebuilding or restoration of the Facility subject to the
satisfaction of the following conditions:
(i) the Plans and Specifications for the replacement, repair, rebuilding or
restoration on the Facility have been delivered to and approved by the Issuer
(which approval shall not be unreasonably withheld or delayed);
(ii) Borrower has deposited with the Issuer the amount by which the estimated
costs of such work exceeds the Net Proceeds available;
(iii) the Net Proceeds and funds provided by Borrower shall be disbursed in
accordance with Requisitions submitted by Borrower to the Issuer.
If the above conditions are not satisfied, the Net Proceeds shall be applied
to the principal balance of the Facility Note. The Issuer, upon receipt of a
certificate of the Authorized Representative of the Borrower that payments are
required by such purpose, shall apply so much as may be necessary of the Net
Proceeds of such insurance to the payment of the costs of such replacement,
repair, rebuilding or restoration, either on completion thereof or as the work
progresses, at the option of the Borrower. Pending the expenditure of such Net
Proceeds, the Issuer shall invest and reinvest the Net Proceeds in such
investments and in such manner as directed by an Authorized Representative of
the Borrower. Neither the Issuer nor its officers, partners or employees shall
be liable for any depreciation in the value of any investments made pursuant
to this Section for any loss arising from any such investment.
In the event such Net Proceeds are not sufficient to pay in full the costs of
such replacement, repair, rebuilding or restoration, the Borrower shall
nonetheless complete, or cause to be completed, the work thereof and pay from
its own moneys, or cause to be paid, that portion of the costs thereof in excess
of such Net Proceeds.
All such replacements, repairs, rebuilding or restoration made pursuant to this
Section 7.1, whether or not requiring the expenditure of the Borrower's own
money, shall automatically
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become a part of the Facility as if the same were specifically described
herein.
Any balance of such Net Proceeds remaining after payment of all the costs of
such replacement, repair, rebuilding or restoration shall be applied immediately
to prepay the Facility Note.
(b) The Borrower shall not be obligated, or in the case of an Event of Default
under (iii) below, permitted to replace, repair, rebuild or restore the
Facility, and the Net Proceeds of the insurance shall not be applied as provided
in subsection (a) of this Section 7.1, if:
(i) the Borrower shall notify the Issuer that, in its sole judgment, it does not
deem it practical or desirable to so replace, repair, rebuild or restore the
Facility, or
(ii) the Borrower shall exercise its option to accelerate this Agreement
pursuant to Section 11.1 hereof, or
(iii) an Event of Default under Section 10.1 hereof shall have occurred and
shall have continued for 30 days. If any event specified in this Section 7.1(b)
shall occur, the total amount of Net Proceeds collected under any and all
policies of insurance covering the damage or destruction of the Facility shall
be paid to the Issuer who shall:
(x) apply such Net Proceeds to prepay the Facility
Note, or
(y) apply such Net Proceeds to the payment of the
amounts required to be paid by Section 10.2 hereof, if an Event of Default
shall have occurred and shall have continued for thirty (30) days.
(c) If the Facility Note and interest thereon have been fully paid or provision
therefor has been made, all such Net Proceeds shall be paid to the Borrower.
(d) The Borrower may adjust all claims under any policies of insurance required
by Section 6.3(a) hereof (with consent of the Issuer, which consent shall not
be unreasonably withheld or delayed, if the claim exceeds $250,000.00) but shall
not settle for less than the reasonably anticipated cost of replacement, repair,
rebuilding or restoration without the consent of the Issuer, which consent shall
not be unreasonably withheld or delayed.
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<PAGE>
Section 7.2. Condemnation. (a) If at any time during the Contract Term the whole
or any part of title to, or the use of, the Facility shall be taken by
Condemnation, there shall be no abatement or reduction in the amounts payable by
the Borrower under this Agreement or under the Facility Note.
Except as otherwise provided in subsection (b) of this Section 7.2, the Borrower
shall promptly restore the Facility (excluding any Land taken by Condemnation)
to substantially the same condition and value as an operating entity as existed
prior to such condemnation; or
If the claim for loss resulting from such Condemnation is not greater than
$250,000.00, the Borrower shall apply, or cause to be applied, to the
replacement, repair, rebuilding or restoration of the Facility so much as may be
necessary of any Net Proceeds of any Condemnation award resulting from claims
for such Condemnation.
If the claim for loss resulting from such Condemnation exceeds $250,000.00, all
Net Proceeds of any Condemnation award shall be paid to and held by the Issuer
in a separate account. The Issuer, upon receipt of a certificate of the
Authorized Representative of the Borrower that payments are required for such
purpose, shall apply so much as may be necessary of the Net Proceeds of such
Condemnation award to the payment of the costs of such replacement, repair,
rebuilding or restoration, either on completion thereof or as the work
progresses, at the option of the Borrower. Pending the expenditure of such Net
Proceeds, the Issuer shall invest the Net Proceeds in such investments and in
such manner as is directed by an Authorized Representative of the Borrower.
Neither the Issuer nor its officers, partners or employees shall be liable for
any depreciation in the value of any investments made pursuant to this Section
for any loss arising from any such investment.
In the event such Net Proceeds of any Condemnation award are not sufficient to
pay in full the costs of such restoration of the Facility, the Borrower shall
nonetheless complete, or cause to be completed, such restoration and shall pay
from its own moneys, or cause to be paid, that portion of the costs thereof in
excess of such Net Proceeds.
The Facility, as so restored, whether or not requiring the expenditure of the
Borrower's own moneys, shall automatically become part of the Facility and
subject to the Lien of the Mortgage as if the same were specifically described
herein.
Any balance of such Net Proceeds of any Condemnation award remaining after
payment of all costs of such restoration shall be invested by the Issuer as
provided above and used only to pay amounts next due pursuant to the Facility
Note, as an Authorized Representative of the Borrower may direct the
Issuer in writing from time to time.
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<PAGE>
(b) The Borrower shall not be obligated, or in the case of an Event of Default
under (iii) below, permitted to restore the Facility and the Net Proceeds of any
Condemnation award shall not be applied as provided in Section 7.2(a), if:
(i) the Borrower shall notify the Issuer that, in its sole judgment, it does not
deem it practical or desirable to so restore the Facility, or
(ii) the Borrower shall exercise its option to accelerate this Agreement
pursuant to Section 11.1 hereof, or
(iii) an Event of Default under Section 10.1 hereof shall have occurred and
shall have continued for (thirty) 30 days.
If any event specified in this Section 7.2(b) shall occur, the Net Proceeds of
any Condemnation award shall be paid to the Issuer who shall:
(x) apply such Net Proceeds to repay the Facility
Note, or
(y) apply such Net Proceeds to the payment of the
amounts required to be paid by Section 10.2 hereof, if an Event of Default shall
have occurred and shall have continued for (30) days.
(c) If the Facility Note and interest thereon has been fully paid or provision
therefor has been made, all such Net Proceeds shall be paid to the Borrower for
its own purposes.
(d) The Issuer shall cooperate fully with the Borrower in the handling and
conduct of any Condemnation proceeding with respect to the Facility.
Section 7.3. Special Circumstances. (a) Anything herein to the contrary
notwithstanding, if more than fifty percent (50%) of the buildings of the
Facility shall be damaged or destroyed and such damage or destruction cannot, in
the reasonable opinion of the Borrower, be replaced, repaired, rebuilt or
restored within twelve (12) months from the date of such damage or destruction,
Issuer shall have the right at its election to either permit Borrower to use Net
Proceeds as provided in Section 7.1 or to apply such Net Proceeds to prepay the
Facility Note. Issuer shall notify Borrower of its election within thirty (30)
days after Borrower has notified Issuer of such damage or destruction. (b)
Anything herein to the contrary notwithstanding, if more than twenty-five
percent (25%) of the buildings of the Facility shall be taken by condemnation,
Issuer shall have the right at its election to either permit Borrower to use Net
Proceeds as provided in Section 7.2 or to apply such Net Proceeds
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<PAGE>
to prepay the Facility Note. Issuer shall notify Borrower of its election within
thirty (30) days after Borrower has notified Issuer of such condemnation.
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. No Warranty of Condition or Suitability by the Issuer. THE ISSUER
MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION, TITLE,
DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OF THE FACILITY OR THAT IT IS OR
WILL BE SUITABLE FOR THE BORROWER'S PURPOSES OR NEEDS.
Section 8.2. Hold Harmless Provisions. The Borrower hereby releases the Issuer
from, agrees that the Issuer shall not be liable for and agrees to indemnify and
hold the Issuer, its partners, directors, officers, employees and agents
harmless from and against any and all liability for loss or damage to Property
or injury to or death of any and all persons that may be occasioned by any cause
whatsoever pertaining to the Facility or arising by reason of or in connection
with the occupation or the use thereof or the presence on, in or about the
Facility. Nothing contained herein shall inure to the benefit of any insurance
company or insurer by way of subrogation or otherwise.
Section 8.3. Right to Inspect the Facility. The Issuer or its duly authorized
agents shall have the right to inspect the Facility at all reasonable times
prior to and after completion,
provided reasonable notice thereof is given to Borrower prior thereto.
Section 8.4. Qualification in the State. Throughout the Contract Term, the
Borrower shall continue to be duly authorized to transact business in the State.
Section 8.5. Books of Record and Account; Financial Statements. (a) The
Borrower agrees to maintain proper accounts, records and books in which full and
correct entries shall be made, in accordance with generally accepted accounting
principles, of all business and affairs of the Borrower with respect to
Facility.
(b) The Borrower agrees it will furnish to the Issuer as soon as available but
in no event more than one hundred and twenty (120) days after the end of each of
its fiscal years, a copy of its completed financial statement, and an operating
statement regarding the Facility including an itemized account of gross annual
income and expenditures reflecting in detail the operations of the Facility.
Section 8.6. Compliance with orders, Ordinances, Etc. (a) The Borrower agrees
that it will, throughout the Contract Term, promptly comply with all statutes,
codes, laws, including all existing environmental laws, rules and regulations,
acts,
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<PAGE>
ordinances, orders, judgments, decrees, injunctions, rules, regulations,
permits, licenses, authorizations, directions and requirements of all
federal, state, county, municipal and other governments, departments,
commissions, boards, companies or associations insuring the Facility, courts,
authorities, officials and officers, foreseen or unforeseen, ordinary or
extraordinary, which now or at any time hereafter may be applicable to the
Facility or any part thereof, or to any use, manner of use or condition of the
Facility or any part thereof.
(b) Notwithstanding the provisions of subsection (a) of this Section 8.6, the
Borrower may, after written notice to the Issuer of its intention to do so, in
good faith contest the validity or the applicability of any requirement of the
nature referred to in such subsection (a). In such event, the Borrower may fail
to comply with the requirement or requirements so contested during the period of
such contest and any appeal therefrom.
Section 8.7. Discharge of Liens and Encumbrances. (a) The Borrower shall not
permit or create or suffer to be permitted or created any Lien, except for
Permitted Encumbrances, upon the Facility or any part thereof by reason of any
labor, services, or material rendered or supplied or claimed to be rendered or
supplied with respect to the Facility or any part thereof.
<PAGE>
(b) Notwithstanding the provisions of subsection (a) of this Section 8.7, the
Borrower may, after written notice to the Issuer of its intention to do so, in
good faith contest any such Lien. In such event, the Borrower may permit the
items so contested to remain undischarged and unsatisfied during the period of
such contest and any appeal therefrom, provided that during the period of any
appeal a bond assuring the payment of such Lien shall, if requested by the
Issuer, be posted with the Issuer.
Section 8.8. Borrower to Provide Survey. The Borrower agrees to furnish a survey
prepared by an approved surveyor, and acceptable to the title insurance company,
showing the location of the Facility and other improvements (including parking
areas), means of ingress and egress, all easements, other common facilities and
all other title exceptions able to be located thereon and showing that the
Facility and other improvements are constructed within the lot and applicable
setback restrictions.
Section 8.9. Annual Certificate of the Borrower. The Borrower covenants that it
will furnish to the Issuer on or before February 15 of each year a certificate
of the Borrower signed by a general partner stating that the Borrower has made a
review of its activities during the preceding calendar year for the purpose of
determining whether or not the Borrower has complied with all of the terms,
provisions and conditions of this Agreement and the Borrower has kept, observed,
performed and fulfilled each and every covenant, provision and condition
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<PAGE>
of this Agreement on its part to be performed and is not in Default in the
performance or observance of any of the terms, covenants, provisions hereof, or
if the Borrower shall be in Default such certificate shall specify all such
Defaults and the nature thereof.
ARTICLE IX
TRANSFER OF CERTAIN LAND; ASSIGNMENT
AND LEASING; PLEDGE OF CERTAIN INTERESTS
Section 9.1. Restriction of Transfer of Facility; Transfer of Certain Land. (a)
During the Contract Term, the Borrower shall not sell, convey, transfer, lease,
encumber or otherwise dispose of the Facility or any part thereof or any
interest therein, except for Permitted Encumbrances and except as otherwise
provided in Sections 9.1(b), 9.1(c), 9.2 and 9.4 of this Agreement.
(b) With the prior written consent of the Issuer (which consent may not be
unreasonably withheld or delayed but may be subject to such reasonable
conditions as the Issuer may deem appropriate), the Borrower from time to time
may release from the provisions of this Agreement any part of, or interest in,
the Facility which is not necessary, desirable or useful. In such event, the
Borrower, at the Borrower's sole cost and expense, shall execute and deliver,
and request the Issuer to execute and deliver, any and all instruments
necessary or appropriate to so release such part of, or interest in, the
Facility and convey such title thereto or interest therein, free from this
Agreement and the Lien of the Mortgage, to such Person as the Borrower may
designate.
(c) The Borrower shall have the right to transfer all or a portion of the
Facility (directly or indirectly) to an entity or entities affiliated with Avron
B. Fogelman ('Fogelman'), provided that (i) Fogelman maintains an interest in
the Facility, direct or indirect, of not less than ten percent (10%) and if
transferee is a partnership, such interest must be that of a general partner;
(ii) the transferee entity consists of not more than fifteen (15) individuals,
partners or shareholders; and (iii) Fogelman Management Corporation continues to
act in the capacity of property manager.
(d) No conveyance of any improvements or interest therein affected under the
provisions of this Section 9.1 shall entitle the Borrower to any abatement or
diminution of the amounts payable hereunder or under the Facility Note.
Section 9.2. Assignment and Leasing. This Agreement may not be assigned in whole
or in part and the Facility may not be leased as a whole or, except in the
ordinary course of Borrower's business, in part by the Borrower, without the
prior written consent of the Issuer, which consent shall not be unreasonably
withheld or delayed. In such event, any such assignment,
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<PAGE>
leasing, or subleasing as the case may be, shall be subject to the following
conditions:
(i) No assignment or lease shall relieve the Borrower from primary liability
for any of its obligations hereunder or under the Facility Note; and
(ii) The Borrower shall, within ten (10) days after delivery thereof, furnish or
cause to be furnished to the Issuer a true and complete copy of each such
assignment.
Section 9.3. Mortgage and Pledge of Security Interests to Issuer. The Borrower
has, pursuant to the Mortgage, granted to a Mortgage Trustee (as defined in the
Mortgage) for the benefit of the Issuer, a security interest in the Facility.
Section 9.4. Removal of Equipment. (a) In any instance where the Borrower
determines that any item of Equipment has become inadequate, obsolete, worn out,
unsuitable, undesirable or unnecessary, the Borrower may remove such item or
Equipment and may sell, trade-in, exchange or otherwise dispose of the same, as
a whole or in part, free from the Lien of the Mortgage, provided that no such
removal or disposition shall adversely affect the function or capacity of the
Facility.
(b) The Borrower shall execute and deliver, and shall request the Issuer to
execute and deliver, to the Borrower all instruments necessary or appropriate to
enable the Borrower to sell or otherwise dispose of any such item of Equipment
free from the Lien of the Mortgage. The Borrower shall pay any costs (including
counsel fees) incurred in transferring title to and releasing from the Lien of
the Mortgage any item of Equipment removed pursuant to this Section 9.4.
(c) The removal of any item of Equipment pursuant to this Section 9.4 shall not
entitle the Borrower to any abatement or diminution of the amounts payable under
this Agreement or the Facility Note.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined. (a) The following shall be 'Events of
Default' under this Agreement and the terms 'Event of Default' or 'Default'
shall mean, whenever they are used in this Agreement, any one or more of the
following events:
(1) The occurrence of an 'Event of Default' under the Facility Note, the
Mortgage, the Guaranty, or by Borrower under the contract with the General
Contractor referred to in Section 12.1(15) (subject to any applicable notice and
cure periods);
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<PAGE>
(2) The failure by the Borrower to observe and perform any covenant, condition
or agreement hereunder on its part to be observed or performed (except
obligations referred to in Section 2.1(1) of the Facility Note) for a period of
thirty (30) days after written notice, specifying such failure and requesting
that it be remedied, given to the Borrower by the Issuer;
(3) Any representation or warranty of the Borrower set forth in this Agreement
is untrue or incorrect in any material respect;
(4) The filing by the Borrower of a voluntary petition in bankruptcy, or the
failure by the Borrower within sixty (60) days to lift any execution,
garnishment or attachment of such consequence as will impair its ability to
carry on its operations at the Facility, or the Borrower is generally not paying
its debts as such debts become due, or within one hundred twenty 120 days before
the date of the filing of a petition in bankruptcy, a custodian, other than a
trustee, receiver or agent appointed or authorized to take charge of less than
substantially all of the property of the Borrower for the purpose of enforcing a
Lien against such property, was appointed or took possession, or the assignment
of assets by the Borrower for the benefit of its creditors, or the entry by the
Borrower into a wage earner or similar agreement with its creditors, or an
appointment by final order, judgment or decree of a court of competent
jurisdiction of a receiver, trustee or custodian of the whole or a substantial
portion of the Properties of the Borrower (unless such receiver, trustee or
custodian is removed or discharged within sixty (60) days of the date of his
qualifications); and
(b) Notwithstanding the provisions of Section 10.1(a), if by reason of force
majeure either party hereto shall be unable in whole or in part to carry out
their obligations under this Agreement and if such party shall give notice and
full particulars of such force majeure in writing to the other party, within a
reasonable time after the occurrence of the event or cause relied upon, the
obligations under this Agreement of the party giving such notice, so far as they
are affected by such force majeure, shall be suspended during the continuance of
the inability, which shall include a reasonable time for the removal of the
effect thereof, but such suspension shall not be for a period in excess of one
year. The suspension of such obligations for such period pursuant to this
subsection (b) shall not be deemed an Event of Default under this Section 10.1.
Notwithstanding anything to the contrary in this subsection (b), an event of
force majeure shall not excuse, delay or in any way diminish the obligations of
the Borrower to make the payments required by the Facility Note and Section 6.2
hereof, to obtain and continue in full force and effect the insurance required
by Section 6.3 hereof, to provide the indemnity required by Section 8.2 hereof
and to comply with the provisions of Section 11.1 hereof. The term 'force
majeure' as used herein shall include,
<PAGE>
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<PAGE>
without limitation, acts of God, strikes, lockouts or other industrial
disturbances, acts of public enemies, orders of any kind of the government of
the United States of America or of the State or any of their departments,
agencies, governmental subdivisions, or officials, or any civil or military
authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fire, hurricanes, storms, floods, washouts, droughts, arrests, restraint of
government and people, civil disturbances, explosions, breakage or accident to
machinery, transmission pipes or canals, partial or entire failure of utilities,
or any other cause or event not reasonably within the control of the party
claiming such inability. It is agreed that the settlement of strikes, lockouts
and other industrial disturbances shall be entirely within the discretion of the
party having difficulty, and the party having difficulty shall not be required
to settle any strike, lockout and other industrial disturbances by acceding to
the demands of the opposing party or parties.
Section 10.2. Remedies on Default. (a) Whenever any Event of Default shall have
occurred and be continuing, the Issuer may, to the extent permitted by law,
take any one or more of the following remedial steps:
(1) Declare, by written notice to the Borrower, to be immediately due and
payable; whereupon the same shall become immediately due and payable: (i) all
unpaid sums payable pursuant to the Facility Note and (ii) all other payments
due under this Agreement.
(2) Pursuant to the terms of the Mortgage, exclude the Borrower and any lessees
from possession of the Facility and take possession thereof (without being
liable for prosecution or damages therefor), sell the Facility, subject to
Permitted Encumbrances, at public or private sale, as a whole or piecemeal, for
such consideration as may be deemed appropriate under the then existing
conditions, and hold the Borrower liable, subject to the provisions contained in
Section 5.7 hereof, for the amount, if any, by which the aggregate unpaid sums
payable pursuant to the Facility Note (computed in accordance with Section
10.2(a)(1)(i) hereof) exceed the Net Proceeds received upon such sale.
(3) Take any other available action to enforce the security interest in the
Facility granted to the Issuer pursuant to the Mortgage.
(4) Take any other action at law or in equity which may appear necessary or
desirable to collect the payments then due or thereafter to become due, to
secure possession of the Facility, and to enforce the obligations, agreements or
covenants of the Borrower under this Agreement.
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<PAGE>
(b) Any sums paid to the Issuer as a consequence of any action taken pursuant to
Section 10.2 shall be applied to the payment of the Facility Note.
(c) No action taken pursuant to this Section 10.2 (including repossession of the
Facility) shall relieve the Borrower from its obligation to make all payments
required by the Facility Note subject to the provisions contained in Section 5.7
hereof.
Section 10.3. Remedies Cumulative. No remedy herein conferred upon or reserved
to the Issuer is intended to be exclusive of any other available remedy, but
each and every such remedy shall be cumulative and in addition to every other
remedy given under this Agreement or now or hereafter existing at law or in
equity. No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient.
<PAGE>
Section 10.4. Agreement to Pay Attorneys' Fees and Expenses. In the event the
Borrower should default under any of the provisions of this Agreement and the
Issuer should employ attorneys or incur other expenses for the collection of
amounts payable hereunder or the enforcement of performance or observance of any
obligations or agreements on the part of the Borrower herein contained, the
Borrower shall, on demand therefor, pay to the Issuer the reasonable fees of
such attorneys and such other expenses so incurred.
Section 10.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained herein should be breached by either party and thereafter
waived by the other party, such waiver shall be limited to the particular breach
so waived and shall not be deemed to waive any other breach hereunder.
Section 10.6. Appointment of Receiver. The Borrower further covenants that upon
the happening of any Event of Default and thereafter during the continuance of
such Event of Default unless the same shall have been waived as hereinbefore
provided, the Issuer shall be entitled as a matter of right if it shall so
elect, (i) forthwith and without declaring the principal of the Facility Note
to be due and payable, or (ii) after declaring the same to be due and payable,
or (iii) upon the commencement of any foreclosure of the Mortgage or action to
enforce the specific performance thereof or in aid thereof or (iv) upon the
commencement of any other proceeding, judicial or otherwise, to enforce any
right of the Issuer to institute such actions or proceedings at law or in equity
for the appointment of a receiver or receivers of the Facility and all the
earnings, revenues, rents, issues, profits and income thereof, with such powers
as the court making such appointment shall confer.
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<PAGE>
ARTICLE XI
ACCELERATION OF LOAN REPAYMENTS
Section 11.1. Acceleration of Loan Repayments. (a) The Borrower shall have the
option to accelerate payment of all of the Loan Repayments, during the years and
with certain prepayment premiums more specifically described as follows:
(i) For a period of five (5) years from the date of the Facility Note, no
prepayment shall be made or permitted in respect to the principal amount of
the Facility Note;
(ii) At any time during the sixth year from the date of the Facility Note, the
Borrower may prepay in whole, but not in part, the principal amount of the
Facility Note upon the payment of a prepayment penalty equal to five percent
(5%) of the outstanding principal balance;
(iii) Thereafter, the prepayment penalty shall decrease one (1) percentage
point per year until there exists no prepayment penalty during the
eleventh and twelfth years; and
(iv) Any such prepayment penalty shall be in addition to any Contingent
Interest (as defined in the Facility Note) otherwise payable.
(b) If the Borrower exercises its option to prepay the Loan pursuant to the
provisions of this Section 11.1, it shall file with the Issuer a certificate
signed by an Authorized Representative of the Borrower stating the Borrower's
intention to do so pursuant to this Section 11.1 and shall comply with the
requirements set forth in Section 11.2 hereof. All prepayments shall be
applied to the principal payments due on the Facility Note in the inverse
order of its maturity.
(c) No prepayment resulting from the application of all or any portion of Net
Insurance Proceeds or Net Condemnation Proceeds to the Facility Note shall be
prohibited by or require the payment of a prepayment penalty pursuant to this
Section 11.1.
Section 11.2. Conditions to Acceleration of Loan Repayments. In the event the
Borrower exercises its option, or is required, to accelerate the Loan Repayments
in accordance with any provision of Section 11.1 hereof, the Borrower shall pay
the Issuer an amount certified by the Issuer to be sufficient to pay the
outstanding principal amount of the Facility Note, together with all interest on
such Facility Note which will accrue to the date of prepayment and an amount
sufficient to pay all other fees, expenses or charges, if any, due and payable
or to become due and payable under this Agreement, the Mortgage and the Facility
Note and not otherwise paid or provided for. The certificate required to be
filed pursuant to this Section 11.2 shall be made, which date shall be not less
than forty-five (45)
- - 29 -
<PAGE>
nor more than ninety (90) days from the date such certificate is filed with
the Issuer.
Section 11.3. Amounts Remaining on Deposit with the Issuer upon Payment of the
Facility Note. After payment in full of the Facility Note and the interest
thereon and payment of all fees, charges, expenses and other amounts required to
be paid under this Agreement, the Mortgage and the Guaranty, all amounts on
deposit with the Issuer, if any, shall belong to and be paid to the Borrower by
the Issuer.
Section 11.4. The Issuer to Execute Cancellation of Facility Note. After
payment in full of the Facility Note as provided in this Agreement, the Issuer
will return said Facility Note to the Borrower, stamped 'paid in full' or with
some other similar notation reflecting the satisfaction of the Borrower's
obligations thereunder.
ARTICLE XII
CLOSING
Section 12.1. Closing Documents. At the closing on the Closing Date, Borrower
shall deliver, or shall have delivered, to the Issuer the following:
(1) Facility Note.
(2) Mortgage.
(3) Trust Indenture.
(4) Guaranty in the form and substance required by Issuer executed by
Guarantor.
(5) Agreement for Construction Evaluation and Monitoring Services.
(6) Sample Lease Agreement approved by Issuer and to be used to lease space in
the Facility.
(7) Financing statements.
(8) Insurance Policies or certificates thereof as to coverages required hereby.
(9) Such documents and instruments as may be required to designate and evidence
the authority of persons authorized by Borrower to apply for and sign any
documents required to be executed in connection with advances hereafter made
under this Agreement.
(10) Satisfactory proof that all laws, regulations and
zoning requirements have been complied with and that
all required approvals, permits and licenses
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<PAGE>
necessary for the development of the Project (including utilities, water, storm
and sanitary sewer facilities) have been obtained and are in full force and
effect.
(11) Standard ALTA Mortgagee's Title Insurance Policy in form and
content and issued by a title insurance company satisfactory to Issuer,
agreeing to insure Issuer in the amount of the Facility Note and providing that
the Mortgage has the dignity and priority required by Issuer. The Policy shall
contain no exceptions unless specifically approved by Issuer in writing.
(12) Such documents and instruments as may be required by Issuer to evidence the
good standing, status, organization or authority of persons, partnerships and
corporations executing any agreement or document hereunder or required hereafter
by Issuer.
(13) Evidence that real estate taxes are current.
(14) Certified copies of partnership agreements,
certificates of limited partnership, corporate charters and by-laws and
amendments thereto of Borrower and any corporate partners thereof.
(15) Fully executed duplicate originals of the contract with the General
Contractor.
(16) Agreements of the General Contractor and Facility Supervisor to continue
performance on behalf of the Issuer at Issuer's option and request without
additional costs above their respective agreed contract prices in the event of
any default by the Borrower in compliance with and performance of any term,
covenant, condition, or warranty contained in any present or future agreement
between Borrower and Issuer, and an authorization by the General Contractor for
Issuer to use any applicable Plans and Specifications without any additional
costs.
(17) Copies of all necessary building permits.
(18) Detailed estimate of Project costs (Budget)
satisfactory to Issuer executed by Borrower to be updated from time to time as
such budget changes. The Budget shall set forth all proposed expenditures as
well as a projected schedule of disbursements.
(19) Surveys: boundary, foundation and completion (when appropriate and as
required by Issuer), locating all improvements, easements, setback lines,
encroachments, rights-of-way, and improvements in
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<PAGE>
form and substance satisfactory to Issuer including evidence that the Land is
not in an area designated by the Secretary of the United States Department of
Housing and Urban Development as an area having special flood hazards.
(20) One copy of complete Plans and Specifications approved in writing by
Borrower, Issuer, Facility Supervisor and General Contractor.
(21) Current certificate that there has been no material
adverse change in the financial statements of Borrower and Guarantor.
(22) An independent appraisal indicating a loan to value
ratio of not more than 85%.
(23) Opinion Letter of Borrower's Counsel in form and
substance satisfactory to Issuer.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if sent by mail, by
private courier or delivery service or by telegraph or telex, when received. All
mail shall be sent by registered mail or telex, when received. All mail shall be
sent by registered mail, return receipt requested, postage prepaid, addressed as
follows:
To the Issuer: Fogelman Mortgage L.P.I
c/o Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street
New York, NY 10038
Attn: Chester A. Piskorowski
To the Borrower: FPI Chesterfield, Ltd.
c/o Fogelman Properties, Ltd.
5400 Poplar Avenue
Memphis, TN 38119
Attn: Morris J. Kriger
The Issuer or the Borrower, may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates and
other communications shall be sent.
Section 13.2. Binding Effect. This Agreement shall inure to the benefit of and
shall be binding upon the Issuer, the Borrower and their respective successors
and assigns.
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<PAGE>
Section 13.3. Severability. In the event any provision of this Agreement shall
be held invalid or unenforceable by any court of competent jurisdiction, such
holding shall not invalidate or render unenforceable any other provision hereof.
Section 13.4. Amendments, Changes and Modifications. This Agreement may not be
amended, changed, modified, altered or terminated without concurring written
consents of the Borrower and the Issuer.
Section 13.5. Execution of Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 13.6. Applicable Law. This Agreement shall be governed exclusively by
the applicable laws of the State of Missouri.
Section 13.7. Recording and Filing. (a) The Mortgage and financing statements
creating the security interest of the Issuer in the Facility and in all amounts
payable hereunder and under the Facility Note shall be recorded or filed, as
the case may be, in the Office of the Recorder of Deeds of St. Louis County,
Missouri, or in such other office as may at the time be provided by law as the
proper place for the recordation or filing hereof.
(b) The Issuer and the Borrower shall execute and deliver all instruments and
shall furnish all information necessary or appropriate to protect any security
interest created or contemplated by this Agreement and the Mortgage.
Section 13.8. Table of Contents and Section Headings Not Controlling. The Table
of Contents and the Headings of the several sections in this Agreement have been
prepared for convenience of reference only and shall not control, affect the
meaning or be taken as an interpretation of any provision of this Agreement.
Section 13.9. Survival. This Agreement shall remain in full force and effect
until all amounts payable under this
Agreement, the Facility Note, the Guaranty and the Mortgage shall have been
paid in full.
Section 13.10. Consents. Whenever any party's consent is required hereunder no
such consent shall be unreasonably withheld or delayed.
Section 13.11. Instruments of Further Assurance. The Borrower covenants that it
will do, execute, acknowledged and deliver, or cause to be done, executed,
acknowledged and delivered, such supplemental agreements and such further acts,
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<PAGE>
instruments, financing statements and other documents as the Issuer
may reasonably require for the better assuring, pledging and assigning unto the
Issuer the property and revenues herein described, to the payment of the
principal of, prepayment penalty, if any, and interest on the Facility Note.
This Agreement, the Mortgage, all supplements to this Agreement and the
Mortgage, the Facility Note, and all other documents, instruments or policies
of insurance required by the Issuer shall be delivered to and held by Issuer.
Section 13.12. Payments Due on Saturdays, Sundays and Holidays. In any case
where the date for any payment due under this Agreement or the Facility Note
shall be a Saturday, a Sunday or a legal holiday or a day on which banking
institutions in the city or county of payment are authorized by law to close,
then payment need not be made on such date but may be made on the next
succeeding business day not a Saturday, a Sunday or a legal holiday or a day
upon which banking institutions are authorized by law to close with the same
force and effect as if made on the date fixed for payment, and no interest
shall accrue for the period after such date.
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan Agreement
to be executed in their respective names on this 8th day of July, 1987.
FOGELMAN MORTGAGE L.P. I
By: FOGELMAN MORTGAGE PARTNERS I, INC.,
General Partner
By
---------------------------------
FPI CHESTERFIELD, LTD.,
By: FOGELMAN PROPERTIES, INC.,
General Partner
By
---------------------------------
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<PAGE>
EXHIBIT B
Permitted Encumbrances
<PAGE>
This Instrument Prepared by and Return to:
MORRIS J. KRIGER
5400 Poplar Avenue
Memphis, TN 38119
PROMISSORY NOTE
MODIFICATION AGREEMENT
THIS AGREEMENT made and entered into this 23rd day of April, 1987, by and
between FPI Royal View, Ltd., L.P., a Kansas limited partnership, hereinafter
referred to as 'Maker', and The Merchants Bank, a Missouri banking
corporation, hereinafter referred to as 'Bank';
W I T N E S S E T H
WHEREAS, Maker has heretofore executed and delivered to Bank a Promissory Note,
dated March 2, 1987, in the original principal sum of $20,000,000, payable to
the order of Bank ('Note');
NOW THEREFORE, in consideration of the debts and trusts aforesaid and of the sum
of $1.00 and other good and valuable considerations, each to the other in hand
paid, receipt whereof is hereby acknowledged, it is hereby mutually covenanted
and agreed as follows:
1. The Note is hereby amended to read as set forth in Exhibit A attached hereto
and by reference made a part hereof.
2. This Agreement does not create any new or further indebtedness or additional
liability of any party not originally liable under the terms of the Note, except
that the principal amount of the Note is increased from $20,000,000 to
$22,745,000. Nothing contained herein shall adversely affect or invalidate the
security now held by Bank, nor impair nor release any covenant, condition or
agreement in said Note, which, except as modified by this Agreement shall
continue in full force and effect in accordance with its original terms.
3. Bank agrees, upon the execution of this Agreement, to make a notation on
said Note as follows: 'This Note is modified by Promissory Note Modification
Agreement dated April 23, 1987'.
4. The agreements herein shall bind, and the benefits hereof shall inure to,
the respective successors and assigns of the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed the day and year first
above written by the duly authorized general partners of Maker and a duly
authorized officer of Bank.
FPI ROYAL VIEW, LTD., L.P.,
a Kansas limited partnership
By: /s/ Avron B. Fogelman
--------------------------
AVRON B. FOGELMAN
General Partner
By: FOGELMAN PROPERTIES, INC.,
General Partner
By: /s/ Avron B. Fogelman
------------------------
AVRON B. FOGELMAN
President
<PAGE>
THE MERCHANTS BANK
By: /s/ Michael J. Caffrey
------------------------
<PAGE>
EXHIBIT A
POINTE ROYAL MULTI-FAMILY HOUSING FACILITY NOTE
(Overland Park, Johnson County, Kansas)
$22,745,000 Overland Park, Kansas
April 23, 1987
FOR VALUE RECEIVED, FPI ROYAL VIEW, LTD., L.P., A Kansas limited partnership,
(the "Borrower", which term shall be construed to include the successors and
assigns of the Borrower), promises to pay to the order of THE MERCHANTS BANK,
(the "Issuer", which term shall be construed to include the successors and
assigns of the Issuer), the principal sum of TWENTY-TWO MILLION SEVEN HUNDRED
FORTY-FIVE THOUSAND DOLLARS ($22,745,000), together with interest on the
principal balance from time to time unpaid as more particularly set forth
below. Interest shall be computed by the "exact method", that is, the product
resulting when multiplying the rate of interest by the principal balance
outstanding divided by the number of days in the Loan Year in which the month
for which interest is being paid occurs, multiplied by the actual number of
days interest has accrued. A Loan Year is that twelve (12) month period
commencing on April 23, and ending on April 22.
ARTICLE I
1.1 Payment of Principal. The principal amount of the indebtedness evidenced
hereby is and shall be due and payable, on April 23, 1999, being that date
twelve (12) years from the date hereof.
1.2 Prepayment of Principal. For a period of five (5) years from the date
hereof, no prepayment shall be made or permitted in respect to the principal
amount hereof. At any time thereafter, the Borrower may prepay in whole, but
not in part, the said principal indebtedness. If such prepayment is made
during the sixth year from the date hereof, the Borrower shall pay a prepayment
penalty equal to five percent (5%) of the outstanding principal balance.
Thereafter, the prepayment penalty shall decrease one (1) percentage point per
year until there exists no prepayment penalty during the eleventh and twelfth
years. Any prepayment penalty due hereunder shall be in addition to any
Contingent Interest (as defined below) otherwise payable. For purposes of
this Section 1.2 and the computation of any penalty due hereunder,
"prepayment" shall include any
<PAGE>
acceleration due to the occurrence of an event of default, but shall not
include any principal reduction required because of any damage, destruction or
condemnation of the Facility.
1.3 Payment of Interest. Commencing on the first day of the month next
following the date of this Note, and continuing on the first day of each
succeeding month thereafter to and including the date of payment of the full
principal amount hereof, Borrower shall pay Basic Interest. Further, commencing
on the earlier of (i) February 15 of the year next following the Completion
Date or (ii) February 15, 1989, Borrower shall submit a statement establishing
the amount of and shall pay Contingent Interest, if any, due in respect to
Property Cash Flow. Additional Contingent Interest due in respect to Property
Cash Flow shall thereafter be payable on February 15 of each succeeding year
until final payment of the principal amount of this Note, at which time all
Contingent Interest due in respect to Property Cash Flow accrued and unpaid,
and all Contingent Interest due in respect of Sale or Refinancing Proceeds,
shall be due and payable.
1.4 Basic Interest. Basic Interest means an amount computed on the principal
balance hereof equal to, and shall be payable, at the rate of (a) ten and
one-half percent (10.50%) per annum from the date hereof to and including the
Completion Date, and (b) nine and one-half percent (9.5%) per annum
thereafter, until payment in full of the principal hereof.
1.5 Contingent Interest. "Contingent Interest" means an amount computed on the
basis of, and is payable from Property Cash Flow and Sale or Refinancing
Proceeds, and in amounts equal to a percentage of Property Cash Flow and Sale
or Refinancing Proceeds as follows:
(a) 75% thereof until the total interest (Basic Interest plus Contingent
Interest) paid on this Note shall have been in an amount which results in a
yield of 10.75% per annum on the principal amount of this Note computed on a
cumulative but non-compounded basis from the earlier of (i) January 1, 1989 or
(ii) the Completion Date; and
(b) 50% of the remaining balance thereof until the total interest (Basic
Interest plus Contingent Interest) paid on this Note shall have been in an
amount which results in a yield of 12.75% per annum on the principal amount of
this Note computed on a cumulative but non-compounded basis from the earlier
of (i) January 1, 1989 or (ii) the Completion Date; and
(c) 25% of the remaining balance thereof from the earlier of (i) January 1,
1989 or (ii) the Completion Date.
- - 2 -
<PAGE>
The following words and terms as used herein shall have the following
meanings:
"Property Cash Flow" means, with respect to any fiscal year (or portion
thereof) after the Completion Date, all cash receipts derived from the
operation of the Facility (exclusive of Sale or Refinancing Proceeds), less
cash receipts used to pay operating expenses including interest (other than
Contingent Interest).
"Sale or Refinancing Proceeds" means (a) the cash received by the Borrower
from the sale or disposition of the Facility, after retirement of all amounts
of outstanding principal on the Facility Note and less all expenses related to
the sale or disposition, including commissions, or (b) the Appraised Value of
the Facility less the outstanding principal of the Facility Note and less an
estimated amount equal to the usual expenses related to a sale or disposition,
including commissions.
1.6 Interest Savings Clause. Notwithstanding any provision herein to the
contrary, no interest hereon shall be payable to the extent that such exceeds
the amount permitted to be paid by Borrower or received by Issuer under
applicable law. To the extent that any payments are made and received in
violation of the provisions hereof, such payments shall be treated in all
respects as principal payments subject to the provisions of Section 1.2 of
this Note, notwithstanding which such partial prepayment shall be permitted
without any penalty which would otherwise be payable thereunder.
1.7 Place and Form of Payment. All payments of principal, premium, if any, and
interest on this Note shall be made for the account of the Issuer to
Prudential-Bache Properties, Inc., One Seaport Plaza, 199 Water Street, New
York, New York 10038, Attn: Chester A. Piskorowski, or at any other place
designated by its successors or assigns, in lawful money of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts, on each payment date described above.
1.8 Collateral. This Note is secured by the Mortgage made by the Borrower for
the benefit of the Issuer, and Borrower does hereby covenant to abide by and
to comply with each and every term, covenant, provision, stipulation, promise,
agreement and condition set forth in the Mortgage.
1.9 Default Rate. From and after the occurrence of an Event of Default, the
Basic Interest shall be payable at a rate equal to the greater of (i) the
Prime Rate plus two and one-half percent (2.5%) per annum or (ii) sixteen
percent (16%) per annum from and after the date such Event of Default occurred
and until such event of default shall be cured.
- - 3 -
<PAGE>
ARTICLE II
DEFAULTS BY BORROWER
2.1 Events of Default Defined. The following shall be "Events of Default"
under this Note:
(a) The failure by the Borrower to pay or cause to be paid, on the date
required, any installment of principal, premium or interest payable under this
Note, however, the Borrower shall be entitled to cure such Default by making
such principal and interest payment within ten (10) days after the giving of
written notice from Issuer notifying the Borrower of its failure to make said
payment; or
(b) The failure by the Borrower to observe and perform any covenant, condition
or agreement under this Note (other than payment of principal and interest
under this Note) or under the Loan Agreement of even date between Borrower and
Issuer, or the Mortgage on its part to be observed or performed for a period
of thirty (30) days after the giving of written notice, specifying such
failure and requesting that it be remedied, given to the Borrower by the
Issuer.
2.2 Remedies upon the Happening of any Event of Default.
(a) If an Event of Default shall have occurred and be continuing, Issuer, by
notice in writing to the Borrower may declare the unpaid balance of this Note
to be immediately due and payable and upon any such declaration, the same shall
become and shall be immediately due and payable notwithstanding anything to
the contrary contained in this Note or in the Mortgage. In such event, the
Borrower, subject to the exculpatory provisions contained herein shall pay the
Issuer an amount equal to the sum of (i) the total principal, premium, if any,
and interest on the Note, plus (ii) all costs and expenses of collection,
including a reasonable compensation to Issuer, its agents and attorneys (to
the extent permitted by applicable law), and any reasonable expenses or
liabilities incurred by Issuer.
(b) If the Borrower shall fail forthwith to pay such amounts upon demand,
Issuer may institute any actions or proceedings at law or in equity for the
collection of such amounts, may prosecute any such action or proceeding to
judgment or final decree against the Borrower and may collect out of the
property of the Borrower, subject to the lien of the Mortgage, the moneys
adjudged or decreed to be payable in any manner provided by law.
(c) In case there shall be pending proceedings for the bankruptcy or for the
reorganization of the Borrower under Federal or State bankruptcy laws or any
other
- - 4 -
<PAGE>
applicable law, or in case a custodian, receiver or trustee shall have been
appointed for the property of the Borrower or in the case of any other
similar judicial proceedings relative to the Borrower, or to the creditors
or property of the Borrower, Issuer may, by intervention in such proceedings
or otherwise, file and prove a claim or claims for the whole amount specified
in Section 2.2(a) hereof, and may take such other action as may be necessary
or advisable to collect and receive any moneys or other property payable or
deliverable on any such claims. Any custodian, receiver, assignee or trustee
in bankruptcy or reorganization is hereby authorized to make such payments to
Issuer.
(d) If Issuer shall have proceeded to enforce any right under this Note and
such proceeding shall have been discontinued or abandoned for any reason or
shall have been determined adversely to Issuer, the Borrower and Issuer shall
be restored respectively to their several positions and rights hereunder, and
all rights, remedies and powers of the Borrower and Issuer shall continue as
though no such proceeding had been taken.
ARTICLE III
MISCELLANEOUS
3.1 Waivers. The Borrower expressly waives protest, demand, presentment and
notice of dishonor, and agrees that this Note may be extended, in whole or in
part, without limit as to the number of such extensions or the period or
periods thereof and without notice to it and without affecting its liability
thereon.
3.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if sent by mail, by private courier or
delivery service, or by telegraph or telex, when received. All mail shall be
sent by registered mail, return receipt requested, postage prepaid, addressed
as follows:
To the Issuer: Fogelman Mortgage L.P. I
c/o Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street
New York, NY 10038
Attn: Chester A. Piskorowski
To the Borrower: FPI Royal View, Ltd., L.P.
c/o Fogelman Properties, Inc.
5400 Poplar Avenue
Memphis, TN 38119
Attn: Morris J. Kriger
- -5-
<PAGE>
The issuer or the Borrower, may, by notice given hereunder, designate any
further or different addresses to which subsequent notices, certificates and
other communications shall be sent.
3.3 Exculpatory Provisions. Notwithstanding any other
provision of this Note to the contrary, in the event of any non-payment under
this Note, neither the Borrower nor any of its partners shall have any
personal liability hereunder, and no holder of this Note shall ask or take or
cause to be asked or taken personal judgment against the Borrower or any of
its partners for any payment required to be made under this Note, it being
understood that said holder of this Note will look solely to the revenues and
receipts derived from this Note, and any instrument securing the payment
thereof, and no other property or assets of the Borrower or any of its
partners shall be subject to levy, execution or other enforcement procedure
for the satisfaction of the indebtedness evidenced by this Note; provided, that
the foregoing provisions shall not constitute a waiver of any indebtedness
evidenced by this Note and shall not limit the rights of Issuer under any
guaranty executed in connection with the Note, and shall not limit the right
of the holder of this Note to exercise its rights hereunder or under any
instrument securing the payment hereof so long as no judgment then in the
nature of a deficiency judgment shall be asked or taken against the Borrower
or any of its partners.
3.4 Loan Agreement. The terms and conditions of the Loan Agreement attached
hereto as Exhibit A are incorporated herein and made a part hereof by
reference, as if fully set forth herein verbatim.
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed on the
day and year first above written.
FPI ROYAL VIEW, LTD., L.P.
By: Fogelman Properties, Inc.,
General Partner
Attest:
- ------------------------------ By: -----------------------
- 6 -
<PAGE>
PROMISSORY NOTE
MODIFICATION AGREEMENT
THIS AGREEMENT made and entered into as of the 1st day of January, 1990
by and between FPI Chesterfield, L.P. (formerly known as FPI Chesterfield,
Ltd.), a Missouri limited partnership, hereinafter referred to as the
"Borrower" and Fogelman Mortgage L.P. I, a Tennessee limited partnership,
hereinafter referred to as the "Issuer". Capitalized terms used but not defined
herein shall have the respective meanings set forth in the Note (as hereinafter
defined).
W I T N E S S E T H
WHEREAS, the Borrower has heretofore executed and delivered to the Issuer a
Promissory Note (the "Note"), dated July 8, 1987, in the original principal
sum of $23,320,000, payable to the order of the Issuer;
WHEREAS, in connection with the Consensual Reorganization of the Business and
Affairs of Avron B. Fogelman and Related Entities as of July 31, 1990 it is
required that certain modifications be made to the Note after an independent
DOC #347668
<PAGE>
advisor has rendered an opinion that such proposed modifications are fair and
reasonable;
WHEREAS, Prudential-Bache Properties, Inc., a general partner of the
Issuer, contracted with Marshall & Stevens, Incorporated ("Marshall") to
analyze the proposed modifications; and
WHEREAS, Marshall has rendered an opinion that the proposed
modifications "... are fair from a financial point of view and would be
considered reasonable and commercially acceptable to a prudent general
partner."
NOW, THEREFORE, in consideration of the debts and trusts aforesaid and of
the sum of $1.00 and other good and valuable consideration, each to the other
in hand paid, receipt whereof is hereby acknowledged, it is
hereby mutually covenanted and agreed as follows:
1. Section 1.4 of the Note shall be amended in its entirety to read as
follows:
"Section 1.4 Basic interest. (a) Basic Interest means an amount (the
"Base Amount") computed on the principal balance hereof equal to, and shall be
payable at the rate of (i) ten and one-half percent (10.5%) per annum from
April 23, 1987 to and including the Completion Date; and (ii) nine
and one-half percent (9.5%) per annum (the "Base Rate") thereafter
until payment in full of the principal hereof; provided, however, that if the
Base Amount for any given month exceeds Property Cash Flow for that month and
there are no funds in the Cash Collateral
DOC #347668 2
<PAGE>
Account (as hereinafter defined), then Basic Interest for such month shall be
equal to the amount of Property Cash Flow for such month. The difference
between the Base Amount and Property Cash Flow shall be accounted
for in a separate account (the "Accrued Interest Account") which shall bear
interest at the Base Rate. The Borrower shall be obligated to pay to the Issuer
the amounts accounted for in the Accrued Interest Account on the terms
described in subparagraph (b) of this Section 1.4.
(b) For any month that Property Cash Flow exceeds the Base Amount, such
excess shall be applied toward the obligation, if any, accounted for in the
Accrued Interest Account until such obligation has been paid in full;
thereafter, any such excess shall be paid to the Issuer, and the Issuer shall
deposit such excess in a separate account (the "Cash Collateral Account") to
be held by the Issuer as additional security for Borrower's obligations
hereunder and applied by the Issuer as hereinafter provided. To the extent
that the Base Amount exceeds Property Cash Flow for any month in which funds
are being held by the Issuer in the Cash Collateral Account, an amount equal
to the lesser of (i) the amount by which the Base Amount exceeds Property Cash
Flow for that month or (ii) the balance of the Cash Collateral Account, shall
be payable to the Issuer. All payments required to be paid currently or
accrued under subparagraphs (a) and (b) of this Section 1.4 shall be
included within the meaning of the term "Basic Interest."
DOC #347668 3
<PAGE>
(c) If Property Cash Flow exceeds the Base Amount for six (6) consecutive
months after the obligation accounted for in the Accrued Interest Account has
been paid in full, then the funds in the Cash Collateral Account shall be
deemed to be Contingent Interest (as hereinafter defined) and shall be paid
and distributed as provided in Section 1.5 hereof.
(d) If not sooner paid, the balance, if any, of the Borrower's obligation
accounted for in the Accrued Interest Account shall be due and payable upon
the earliest of (i) the sale or disposition of the Facility (as such term is
defined in the Loan Agreement dated as of July 8, 1987 between the Issuer and
the Borrower); (ii) the refinancing of the indebtedness evidenced hereby; or
(iii) the maturity of this Note, whether by acceleration or otherwise."
2. The following phrase shall be inserted after the word "and" in line
two of Section 1.5 of the Note:
", subject to Section 1.4,"
3. Section 1.9 of the Note shall be amended in its entirety to read as
follows:
"1.9 Default Rate. From and after the occurrence of an Event of Default, the
Base Rate shall be equal to the greater of (i) the Prime Rate plus two and
one-half percent (2.5%) per annum and (ii) sixteen percent (16%) per annum
from and after the date such Event of Default occurred and until such
Event of Default has been cured."
DOC #347668 4
<PAGE>
4. There shall be added to the Note a Section 1.10, which shall read as
follows:
"Section 1.10 Escrow Account. (a) The Borrower shall establish an
interest-bearing account (the "Escrow Account") with an escrow agent
acceptable to the Issuer and shall deposit into the Escrow Account the
sum of $144,432. Commencing on June 1, 1990, and on the first day of each
month thereafter during the term of this Note, the Borrower shall make
deposits ("Escrow Deposits") into the Escrow Account in an amount equal to
one-twelfth (1/12) of the estimated annual real estate tax liability of the
Borrower for the current twelve-month period in which such taxes are due.
(b) Commencing in 1991, and each year thereafter during the term of
this Note, on the first day of the month following the month in which the
Borrower pays its real estate taxes for the preceding twelve-month period (or,
if paid in more than one installment, the month of the final installment
thereof) [the "Final Installment"], the Escrow Deposits shall be adjusted to
equal one-twelfth (1/12) of the Borrower's estimated real estate tax liability
for the succeeding twelve-month period, after first deducting from such
estimated liability the amount of any balance remaining in the Escrow Account
after payment of the Final Installment.
(c) Thirty (30) days before the date when any installment of real estate taxes
would become delinquent, the Borrower shall present to the Escrow Agent a copy
of the bill for
DOC #347668 5
<PAGE>
such installment of real estate taxes, and the Escrow Agent shall immediately
release funds from the Escrow Account to the Borrower in the amount of such
installment (to the extent there exist such funds in the Escrow Account) and
the Borrower shall pay and discharge such real estate tax liabilities prior to
their becoming delinquent and prior to the assessment of any penalties
thereon.
(d) In the event that the funds in the Escrow Account are insufficient to pay
any installment of real estate taxes, then the Borrower shall pay the amount
of such deficiency. If after payment of any Final Installment there is a
balance remaining in the Escrow Account, such balance shall be applied as
described in subparagraph (b) of this Section 1.10."
5. This Agreement does not create any new or further indebtedness or
additional liability of any party not originally liable under the terms of
the Note nor does it release or increase the liability of any guarantor
thereof. Nothing contained herein shall adversely affect or invalidate the
security now held by the Issuer, nor impair nor release any covenant,
condition or agreement in the Note, which, except as modified by this
Agreement, shall continue in full force and effect in accordance with its
terms.
6. The Issuer agrees, upon the execution of this Agreement, to make a
notation on the Note as follows: "This Note is modified by
that certain Promissory Note Modification Agreement dated as of January 1,
1990".
DOC #347668 6
<PAGE>
7. The agreements herein shall bind, and the benefits hereof shall
inure to, the respective successors and assigns of the parties hereto.
8. By his execution hereof in his capacity as general partner of the
Borrower, Avron B. Fogelman acknowledges that this Agreement satisfies all
notice requirements contained in the first sentence of Paragraph 6 of that
certain Guaranty, dated as of July 8, 1987, by Avron B. Fogelman in favor of
the Issuer in respect of the indebtedness evidenced by the Note.
IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written by the duly authorized general partners of the
Borrower and the Issuer.
FPI CHESTERFIELD, L.P.,
a Missouri limited partnership
By: /s/ Avron B. Fogelman
----------------------------
Avron B. Fogelman
General Partner
FOGELMAN MORTGAGE L.P. I,
a Tennessee limited partnership
By: PRUDENTIAL-BACHE PROPERTIES, INC.,
a Delaware corporation
General Partner
By: /s/ Chester A. Piskorowski
--------------------------
Chester A. Piskorowski
Vice President
DOC #347668 7
<PAGE>
AMENDMENT TO LOAN AGREEMENT
AMENDMENT TO LOAN AGREEMENT (the "Amendment"), dated as of January 1, 1990,
among FOGELMAN MORTGAGE L.P. I (the "Issuer") and FPI CHESTERFIELD, L.P.
(formerly known as FPI Chesterfield, Ltd.) (the "Borrower"). Capitalized terms
used but not defined herein shall have the respective meanings set forth in
the Loan Agreement referred to below.
WHEREAS, the parties hereto are parties to a Loan Agreement dated as of
July 8, 1987 (the "Loan Agreement");
WHEREAS, in connection with the Consensual Reorganization of the Business and
Affairs of Avron B. Fogelman and Related Entities as of July 31, 1990, it is
required that certain modifications be made to the Loan Agreement;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Section 5.3(c) of the Loan Agreement shall be amended by removing the
phrase "greater of sixteen percent (16%) or two and one-half percent (2 1/2%)
per annum above the Prime Rate" from lines 7 through 9 and replacing such
phrase with the following:
"default rate provided in Section 1.9 thereof"
2. Section 6.2(a) of the Loan Agreement shall be amended in its
entirety to read as follows:
"(a) The Borrower agrees to (i) make such deposits in the Escrow Account
(as such term is defined in the Facility Note) as are required by the Facility
Note; (ii) pay, before they
DOC #347664
<PAGE>
become delinquent, all taxes and governmental charges of any kind whatsoever
which may at any time be lawfully assessed against or with respect to the
Facility; (iii) pay, before they become delinquent, all utility and other
charges, including, without limitation, "service charges", incurred or imposed
for the operation, maintenance, use, upkeep and improvement of the Facility, and
(iv) pay, before they become delinquent, all assessments and charges of any kind
whatsoever lawfully made by any governmental body for public improvements;
provided that, with respect to special assessments or other governmental charges
that may lawfully be paid in installments over a period of years, the Borrower
shall be obligated under this Agreement to pay only such installments as are
required to be paid during the Contract Term."
3. Section 6.2(c) of the Loan Agreement shall be amended in its
entirety to read as follows:
"(c) If an Event of Default hereunder shall have occurred, the Issuer may
require the Borrower to make monthly deposits with an escrow agent acceptable to
Issuer, in an interest-bearing account, of a sum equal to one-twelfth of the
yearly assessments which may be levied against the Facility. The amount of such
assessments, when unknown, shall be estimated by the Issuer. Such deposits shall
be used to pay such assessments when due. Any insufficiency of such account to
pay such charges when due, shall be paid by the Borrower. If, by reason of any
Event of Default by the Borrower under any provision hereof the
DOC #347664 2
<PAGE>
Issuer declares the Facility Note to be due and payable, the Issuer may then
apply any funds in said account and any funds in the Escrow Account (as such
term is defined in the Facility Note) against the obligation secured by the
Mortgage. The enforceability of the covenants relating to taxes and assessments
herein otherwise provided shall not be affected except insofar as those
obligations have been met by compliance with this paragraph. After an event of
Default hereunder shall have occurred, the Issuer may from time to time, at its
option, waive, and after any such waiver reinstate, any and all provisions
hereof requiring such deposits, by notice to the Borrower in writing. While any
such waiver is in effect, the Borrower shall pay assessments as herein above
provided and taxes as provided in the Facility Note."
4. The following phrase shall be inserted into line 4 of Section 10.2(a)(1) of
the Loan Agreement immediately following the phrase "pursuant to the Facility
Note":
", which sums shall include such obligations as are
accounted for in the Accrued Interest Account (as such
term is defined in the Facility Note),"
5. The following phrase shall be inserted into line 3
of Section ll.l(a)(ii) of the Loan Agreement immediately
following the phrase "the Facility Note":
", which amount shall include such obligations as are accounted for
in the Accrued Interest Account (as such term is defined in the
Facility Note),"
DOC #347664 3
<PAGE>
6. The following parenthetical phrase shall be inserted into line 8 of
Section 11.2 of the Loan Agreement immediately following the phrase "date of
prepayment":
"(including such obligations as are accounted for in the Accrued Interest
Account [as such term is defined in the Facility Note])"
7. Except as expressly amended hereby, all of the terms of the Loan Agreement
shall remain and continue in full force and effect and are hereby confirmed in
all respects.
8. This Amendment may be signed in two counterparts, each of which shall be an
original, with the same effect as if the signatures thereto and hereto were
upon the same instrument.
9. This Amendment shall become effective as of the date hereof upon the
execution hereof by each of the parties hereto.
DOC #347664 4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to Loan
Agreement to be duly executed as of the date first above written.
FOGELMAN MORTGAGE L.P. I
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ Chester A. Piskorowski
--------------------------
Chester A. Piskorowski
Vice President
FPI CHESTERFIELD, L.P.
By: Fogelman Properties, Inc.,
General Partner
By /s/ L. Don Campbell, Jr.
---------------------------
L. Don Campbell, Jr.
Executive Vice President
DOC #347664 5
<PAGE>
SECOND AMENDMENT TO LOAN AGREEMENT
SECOND AMENDMENT TO LOAN AGREEMENT (the "Second Amendment") , dated as of
January 1, 1990, among FOGELMAN MORTGAGE L.P. I (the "Issuer") and FPI ROYAL
VIEW, LTD., L.P. (the "Borrower"). Capitalized terms used but not defined
herein shall have the respective meanings set forth in the Loan Agreement
referred to below.
WHEREAS, the parties hereto are parties to a Loan Agreement dated as of
April 23, 1987 which was amended by a certain Amendment to Loan Agreement
dated as of July 7, 1987 (as amended, the "Loan Agreement");
WHEREAS, in connection with the Consensual Reorganization of the Business and
Affairs of Avron B. Fogelman and Related Entities as of July 31, 1990, it is
required that certain modifications be made to the Loan Agreement;
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. Section 5.3(c) of the Loan Agreement shall be amended by removing the
phrase "greater of sixteen percent (16%) or two and one-half percent (2 1/2%)
per annum above the Prime Rate" from lines 7 through 9 and replacing such
phrase with the following:
" default rate provided in Section 1.9 thereof"
2. Section 6.2(a) of the Loan Agreement shall be amended in its
entirety to read as follows:
"(a) The Borrower agrees to (i) make such deposits in the Escrow Account
(as such term is defined in the Facility Note)
DOC #341795
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as are required by the Facility Note; (ii) pay, before they become delinquent,
all taxes and governmental charges of any kind whatsoever which may at any time
be lawfully assessed against or with respect to the Facility; (iii) pay, before
they become delinquent, all utility and other charges, including, without.
limitation, "service charges", incurred or imposed for the operation,
maintenance, use, upkeep and improvement of the Facility, and (iv) pay, before
they become delinquent, all assessments and charges of any kind whatsoever
lawfully made by any governmental body for public improvements; provided that,
with respect to special assessments or other governmental charges that may
lawfully be paid in installments over a period of years, the Borrower shall be
obligated under this Agreement to pay only such installments as are required to
be paid during the Contract Term."
3. Section 6.2(c) of the Loan Agreement, shall be amended in its entirety to
read as follows:
"(c) If an Event of Default hereunder shall have occurred, the Issuer may
require the Borrower to make monthly deposits with an escrow agent acceptable
to Issuer, in an interest-bearing account, of a sum equal to one-twelfth of the
yearly assessments which may be levied against the Facility. The amount of such
assessments, when unknown, shall be estimated by the Issuer. Such deposits shall
be used to pay such assessments when due. Any insufficiency of such account to
pay such charges when due, shall be paid by the Borrower. If, by reason of any
DOC #341795 2
<PAGE>
Event of Default by the Borrower under any provision hereof the Issuer declares
the Facility Note to be due and payable, the Issuer may then apply any funds in
said account and any funds in the Escrow Account (as such term is defined in the
Facility Note) against the obligation secured by the Mortgage. The
enforceability of the covenants relating to taxes and assessments herein
otherwise provided shall not be affected except insofar as those obligations
have been met by compliance with this paragraph. After an event of Default
hereunder shall have occurred, the Issuer may from time to time, at its option,
waive, and after any such waiver reinstate, any and all provisions hereof
requiring such deposits, by notice to the Borrower in writing. While any such
waiver is in effect, the Borrower shall pay assessments as herein above provided
and taxes as provided in the Facility Note."
4. The following phrase shall be inserted into line 4 of Section 10.2(a)(1) of
the Loan Agreement immediately following the phrase "pursuant to the Facility
Note":
", which sums shall include such obligations as are accounted for in the
Accrued Interest Account (as such term is defined in the Facility Note),"
5. The following phrase shall be inserted into line 3 of Section ll.l(a)(ii)
of the Loan Agreement immediately following the phrase "the Facility Note":
DOC #341795 3
<PAGE>
", which amount shall include such obligations as are accounted for in the
Accrued Interest Account (as such term is defined in the Facility Note),"
6. The following parenthetical phrase shall be inserted into line 8 of Section
11.2 of the Loan Agreement immediately following the phrase "date of
prepayment":
"(including such obligations as are accounted for in the Accrued Interest
Account (as such term is defined in the Facility Note])"
7. Except as expressly amended hereby, all of the terms of the Loan Agreement
shall remain and continue in full force and effect and are hereby confirmed in
all respects.
8. This Second Amendment may be signed in two counterparts, each of which
shall be an original with the same effect as if the signatures thereto and
hereto were upon the same instrument.
DOC #341795 4
<PAGE>
9. This Second Amendment shall become effective as of the date hereof upon the
execution hereof by each of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to
Loan Agreement to be duly executed as of the date first above written.
FOGELMAN MORTGAGE L.P. I
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ Chester A. Piskorowski
----------------------------
Chester A. Piskorowski
President
FPI ROYAL VIEW, LTD., L.P.
By: Fogelman Properties, Inc.,
General Partner
By: /s/ L. Don Campbell, Jr.
------------------------
L. Don Campbell, Jr.
Executive Vice President
DOC #341795 5
<PAGE>
DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
This Deed of Trust is a mortgage of both real and personal property and is,
among other things, a security agreement and chattel mortgage affecting
chattels and personal property situated on realty.
THIS DEED OF TRUST, ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT
(hereinafter "Deed of Trust") made and entered into as of the 8 day of July,
1987, by and between FPI CHESTERFIELD, LTD., a Missouri Limited Partnership,
with offices at 5400 Poplar Avenue, Memphis, Tennessee 38119 (sometimes
hereinafter referred to as the "Mortgagors") , and William P. Foley of the
County of St. Louis, State of Missouri, ("Mortgage Trustee"), for the benefit
of Fogelman Mortgage L. P. I with offices at 5400 Poplar Avenue, Memphis,
Tennessee 38119, as holder of the Facility Note (as hereinafter defined)
("Beneficiary") and all future holders from time to time of the Facility Note.
WITNESSETH, that the said Mortgagors, for and in consideration of the debt and
trust hereinafter described and created, and of the sum of One Dollar paid by
the said Mortgage Trustee, the receipt of which is hereby acknowledged, do by
these presents grant, bargain and sell, convey and confirm unto the said
Mortgage Trustee, the following described improvements and real estate
(hereinafter the "Land") situated on Baxter Road Extension west of Clarkson
Road in the City of Chesterfield, County of St. Louis, and State of Missouri,
and more particularly described by metes and bounds on Exhibit A attached
hereto and by reference made a part hereof.
Subject to easements, conditions, restrictions and rights-of-way of record.
Together with all improvements thereon including but not limited to a 489-unit
multi-family housing facility with all recreational amenities appurtenant
thereto, whether now existing or hereafter constructed.
Together with all furniture, furnishings, fixtures and equipment now or
hereafter owned by Mortgagors and attached to the Land and Improvements (as
hereinafter defined), including without limiting the foregoing, all electrical,
heating, air conditioning, lighting and plumbing fixtures, appliances and all
window screens, shades, awnings and storm sashes, whether now
owned or hereafter acquired located on or used in connection with the
aforementioned Land and Improvements, together with all substitutions,
additions and replacements, and proceeds thereof.
This Deed of Trust, Assignment of Rents and Leases and Security Agreement is
being re-recorded for the purpose of correcting the legal description
Together with all the rights, privileges, easements and appurtenances thereto
attached or belonging, and the rents, issues and profits, thereof.
FURTHER WITNESSETH, that the said Mortgagors, do by these presents, grant to
Beneficiary a security interest in all materials purchased or delivered for
construction of the Project and in the Equipment (as both capitalized terms
are hereinafter defined) located on or used in connection with the operation
of the Facility (as hereinafter defined) together with all proceeds and
profits therefrom.
TO HAVE AND TO HOLD the same, together with all buildings, fixtures and
appurtenances hereafter to the same belonging, unto the said Mortgage Trustee,
and to his successor or successors in this trust forever, and possession of
said Facility is now delivered unto the said Mortgage Trustee including the
right to collect rents as hereinafter set forth.
IN TRUST, however, for the following purposes:
WHEREAS, the Beneficiary has agreed to lend to the Mortgagors the sum of
$23,320,000 pursuant to a Loan Agreement (the "Agreement") by and between the
Beneficiary and the Mortgagors to enable the Mortgagors to construct on the
Land a 489-unit multi-family housing facility with all recreational amenities
appurtenant thereto (the "Project") and to provide certain equipment in
connection therewith (the "Equipment") located in the City of Chesterfield,
St. Louis County, Missouri, (the Land, Project and Equipment collectively
referred to as the "Facility");
WHEREAS, the said Mortgagors, being justly indebted to Beneficiary for
Twenty-Three Million Three Hundred Twenty Thousand Dollars ($23,320,000),
have, to secure said principal and interest to be earned thereon, executed
and delivered to Beneficiary, the Westbury Park Multi-Family Housing Facility
Note (Chesterfield, St. Louis County, Missouri) (the "Facility Note") of even
date herewith, expressed to be for value received drawn to the order of
Beneficiary, and payable at the offices of Beneficiary upon the terms and at
the rates of interest therein stated; and
WHEREAS the Mortgagors wish to further secure the payment of the Facility Note
and the payment and performance of Mortgagor's other obligations under the
Agreement.
NOW, THEREFORE, the Mortgagors have executed this Deed of Trust for the
purpose of securing:
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<PAGE>
1. The payment of all indebtedness as provided in the Facility Note, and any
extensions or modifications thereof;
2. The payment of all other moneys secured hereby; and
3. The performance of all of the covenants, conditions, stipulations and
agreements herein contained or contained in the Agreement and the Facility
Note.
The Mortgagors do further hereby covenant, warrant and agree as follows:
4. The Mortgagors will timely make or cause to be made, all payments and
perform, or cause to be performed, all agreements, conditions and obligations
on their part required to be made and performed under the Agreement and
Facility Note.
5. The Mortgagors will not knowingly permit or suffer the use of any of the
Facility for any purpose other than the use for which the same was intended at
the time this Deed of Trust was executed.
6. Subject to the provisions of Section 7.2 of the Agreement, the Mortgagors
hereby assign to Beneficiary any awards which may become due by reason of the
taking by condemnation or eminent domain of the whole or any part of said
Facility or any rights appurtenant thereto, including any award for change of
grade of streets.
7. The Mortgagors hereby covenant to keep or cause to be kept the Project on
said Land in good repair and in tenantable condition, without any liability on
the part of the Mortgage Trustee to any person for damages or failure to
repair. That Mortgagors shall not permit the construction of any extension,
addition or new structure on the Land, nor the removal or demolition of the
same in whole or in part, except to the extent expressly permitted by the
Agreement. All right, title and interest of the Mortgagors in and to all
extensions, improvements, betterments, renewals, substitutes and replacements
of, and all additions and appurtenances to, the Facility, hereafter acquired
by or released to the Mortgagors or constructed, assembled or placed by the
Mortgagors on the Land, and all conversions of the security constituted
thereby, immediately upon such acquisition, release, construction, assembling,
placement or conversion, as the case may be, and in each such case, without
any further mortgage, conveyance, assignment or other act by the Mortgagors,
shall become subject to the lien of this Deed of Trust as fully and
completely, and with the same effect, as though now owned by the Mortgagors
and specifically described in the granting clause hereof, but at any and all
times the Mortgagors will execute and deliver to the Mortgage Trustee any and
all such further assurances, mortgages, conveyances or assignments thereof as
the Mortgage Trustee may reasonably require for the purpose of expressly and
specifically subjecting the same to the lien of this Deed of Trust.
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<PAGE>
8. Pursuant to Section 6.2(a) of the Agreement, the Mortgagors will pay before
they become delinquent all taxes, assessments, water rates, sewer rents and
other charges of every type or nature assessed or which may be assessed against
the Facility or any part thereof or upon the interest of Beneficiary in said
Facility or upon any personal property, without any deduction, defalcation or
abatement, and will pay, when due, any other taxes (including corporate taxes),
assessments or charges, claims or encumbrances that might become a lien prior
to the lien of this Deed of Trust or encumbrances that might have priority in
distribution of the proceeds of a judicial sale.
9. Upon request of Beneficiary the Mortgagors will produce or cause to be
produced to Beneficiary or Mortgage Trustee not later than ten (10) days before
the date on which any taxes, assessments, water and sewer rents and other
charges bear interest or penalties, paid receipts for all such taxes,
assessments, water and sewer rents and other charges.
10. Subject to Section 6.2(b) of the Agreement, the Mortgagors may in good
faith contest, by proper legal proceedings, the validity or amount of any tax
or assessment which the Mortgagors have agreed to pay under this Deed of
Trust, provided that the Mortgagors will pay such contested item and all costs
and penalties, if any, at least thirty (30) days before the date such Facility
may be sold by the taxing authorities because of nonpayment of said tax or
assessment.
11. The Mortgagors shall at all times at the cost and expense of the
Mortgagors cause all of the Facility of any insurable nature to be constantly
insured against loss or damage by fire; and such other casualties and hazards,
as is required by Sections 6.3 and 6.4 of the Agreement; and, subject to
Section 6.4 of the Agreement, all such policies of insurance shall be so
written as to make any loss occurring thereunder payable by standard mortgage
clause attached thereto to Beneficiary and the Mortgagors as their interests
may appear, irrespective of, and which may not be invalidated by, an act or
default of the Mortgagors, and all such policies, or a certificate or
certificates of the insurers or of an insurance agency satisfactory to
Beneficiary, showing that such policies, with such mortgage clauses, are in
force, shall be deposited with the Mortgage Trustee as additional security
hereunder. Notice of loss or damage to the Facility shall be given to the
Mortgage Trustee hereunder, the Facility shall be repaired or rebuilt in
accordance with Article VII of the Agreement, and the proceeds of any such
insurance shall be applied in the manner provided in Section 7.1 of the
Agreement.
If the Facility covered hereby, or any part thereof, shall be damaged by fire
or other hazard against which insurance is held as hereinabove provided, the
amounts paid by any insurance company in pursuance of the contract of
insurance, to the extent
- - 4 -
<PAGE>
of the indebtedness then remaining unpaid, shall be paid to Beneficiary and the
Mortgagors in accordance with Article VII of the Agreement, and applied to the
debt or released for the repairing or rebuilding of the Facility pursuant to
Section 7.1 of the Agreement.
12. Any insurance policies required by this Deed of Trust shall provide that
any loss thereunder payable to Beneficiary and the Mortgagors, as their
respective interests may appear, shall be payable notwithstanding any act or
negligence of the Mortgagors or of any lessee or other occupant of any portion
of the Facility, which would otherwise result in a forfeiture of such
insurance, and that in no event shall such policy be canceled without at least
thirty (30) days' prior written notice to the Mortgage Trustee and Beneficiary,
and such policies shall contain no endorsement permitting cancellation for
default in payment of a loan whereby the premium has been financed.
13. The Mortgagors have a good title in fee simple to all of the Facility free
and clear of all prior encumbrances except for Permitted Encumbrances (as
defined in the Agreement) and will warrant and defend the same against all
lawful claims and mechanics' or other liens of all persons whomsoever.
14. By this instrument, the Mortgagors grant to Beneficiary a security
interest in the Equipment (as defined in the Agreement). Except as provided by
Section 9.4 of the Agreement, the Mortgagors shall not permit any of said
Equipment to be removed from the Facility without the written consent of
Beneficiary. If any Event of Default (as hereafter defined) shall occur and
Beneficiary shall declare the balance of the Facility Note immediately due and
payable in accordance with the terms and conditions hereof, Beneficiary shall
be entitled to exercise all of the rights and remedies of a secured party
under the Uniform Commercial Code as it may then be in force in the State of
Missouri. The Mortgagors warrant the title to the fixtures, chattels and
personal property, if any, covered by this Deed of Trust and warrant and
represent that all of the same are free of all prior liens and encumbrances
except for Permitted Encumbrances (as defined in the Agreement), if any.
Without the written consent of Beneficiary, no prior security interest will be
created or suffered to be created on the Facility, other than Permitted
Encumbrances (as defined in the Agreement), together with any amendments or
supplements thereto, with respect to any goods, fixtures, equipment,
appliances, or articles of personal property now attached to or used or
hereafter attached to or used in connection with the Facility.
15. The Mortgagors represent and warrant that (a) it is a duly created and
validly existing limited partnership created under the laws of the State of
Missouri; and (b) it has the full power and authority to execute this
Deed of Trust and all instruments collateral hereto.
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<PAGE>
16. If Mortgagors default under any prior mortgage or deed of trust or
fail to cause to be paid any claim, lien or encumbrance which shall be prior
to this Deed of Trust, or to pay, when due, any tax or assessment, or any
insurance premium, or to keep the Facility in repair as aforesaid, or shall
commit or permit waste, or if there be commenced any action or proceeding
affecting the Facility or the title thereto, then Beneficiary, at its
option, may pay such claim, lien, encumbrance, tax, assessment or premium
with right of subrogation thereunder; may procure such abstracts or other
evidence of title as it deems necessary; may make such repairs and take such
steps as it deems advisable to prevent or cure such waste; and may appear in
any such action or proceeding and retain counsel therein and take such action
therein as it deems advisable, and for any of such purposes it may advance
such sums of money as it deems necessary. No such payment by Beneficiary
shall impair or affect any of its rights hereunder arising in consequence of
such failure by the Mortgagors. The Mortgagors shall reimburse Beneficiary for
any amount so paid by Beneficiary pursuant to this Paragraph 16, together with
interest thereon from the date of payment by Beneficiary at the rate provided
in the Facility Note and such amount, together with such interest, shall
become additional indebtedness secured by this Deed of Trust. Beneficiary
shall have the right to foreclose for any such amount not so repaid or for any
unpaid installment of principal or interest, subject to the lien of this Deed
of Trust for the balance of the Facility Note not then due.
17. The Mortgagors agree to execute and deliver to Beneficiary from time to
time on demand, security agreements and financing statements and such other
instruments as it may require, in order to impose the lien hereof on the
goods, fixtures, equipment, appliances and articles of personal property
heretofore referred to.
18. Neither the value of the Facility nor the lien of this Deed of Trust will
be diminished or impaired in any way by any act or omission of the Mortgagors
and the Mortgagors will not do or permit to be done to, in, upon or about said
Facility or any part thereof, anything that may in any way impair the value
thereof, or weaken, diminish or impair the security of this Deed of Trust.
19. The Mortgagors (a) will not remove or demolish the buildings now or
hereafter erected upon the Land, nor alter the design or structural character
of any building now or hereafter erected upon the Land so as to diminish the
value thereof, unless the Beneficiary shall first consent thereto in writing;
(b) will not, except as permitted by the Agreement, sell said Facility without
prior written approval of the Beneficiary, which approval shall not be
unreasonably withheld or delayed; (c) will comply with all laws, ordinances,
regulations, covenants, conditions and restrictions which, if not so complied
with, adversely
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<PAGE>
affect the Facility; and (d) will not permit the transfer, sale, conveyance,
lease, encumbrance or other disposition of the Facility in any manner
prohibited in Article IX of the Agreement.
20. The Mortgagors will protect, save harmless and indemnify Mortgage Trustee
and Beneficiary from and against any and all claims, liabilities, costs and
expenses, of whatever nature, which may arise or result, directly or
indirectly, by reason of the use or occupation of the Facility or any part
thereof.
21. Notwithstanding any other provision of this Deed of Trust to the contrary,
in the event of any non-payment or non-performance under this Deed of Trust,
neither the Mortgagors nor any of their partners shall have any personal
liability hereunder, and no holder of this Deed of Trust, shall ask or take or
cause to be asked or taken personal judgment against the Mortgagors or any of
their partners for any matter required to be paid, performed or observed under
this Deed of Trust, it being understood that said holder of this Deed of Trust
will look solely to the Facility, and no other property or assets of the
Mortgagors or any of their partners shall be subject to levy, execution of
other enforcement procedure for the satisfaction of the indebtedness evidenced
or secured by this Deed of Trust; provided, that the foregoing provisions of
this Paragraph 21 (a) shall not constitute a waiver of any indebtedness
evidenced by the Facility Note secured by this Deed of Trust; (b) shall not
limit the right of the Beneficiary to exercise its rights hereunder so long
as no judgment then in the nature of a deficiency judgment shall be asked or
taken against the Mortgagors or any of their partners; and (c) shall not limit
the rights of the Beneficiary under any guaranty delivered in connection with
the Facility Note.
22. Should the Mortgage Trustee appointed herein, or his successor, or
Beneficiary or its successors or assigns, be made defendant in any suit
involving the title to any of the Facility hereby conveyed, or involving the
validity or priority of the lien of this Deed of Trust, then it is agreed that
in every such case (including all appeals) an attorney's fee in reasonable
amount shall be fixed by the court in which said suit may be pending, and may
be adjudged in favor of the attorney or attorneys of record representing the
said parties, or any of them, therein, which fee shall be adjudged against the
Mortgagors, subject to the provisions of Paragraph 21 hereof, on motion made
therefor as a part of the costs of such proceedings, and that such reasonable
costs and expenses of the said parties, or any of them, shall also be fixed
and adjudged as costs therein by the court, and it is agreed that all such
fees, costs, and expenses of every such proceeding shall be adjudged against
said Mortgagors, and when so adjudged shall be secured by this Deed of Trust,
subject to the provisions of Paragraph 21 hereof.
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<PAGE>
23. Pursuant to Article VIII of the Agreement, the Mortgagors shall cause to
be furnished to Beneficiary financial and operating statements of the
Facility. Such statements shall be delivered to Beneficiary at its offices
within the times provided in the Agreement.
24. All of the grants, covenants terms, provisions, warranties, agreements and
conditions herein shall run with the Land and shall apply to, bind and inure
to the benefit of, the successors and assigns of the Mortgagors and the
successors and assigns of Beneficiary and the Mortgage Trustee.
25. It is hereby expressly provided and agreed by Mortgagors that in the event
any one or more of the following events, each of which shall be, and is hereby
defined as, an "Event of Default", shall occur, to wit:
(a) The occurrence of an "Event of Default" under the Agreement, Facility
Note or Guaranty (as defined in the Agreement);
(b) The failure by the Mortgagors to observe or perform any term, condition or
obligation to be observed or performed by them under this Deed of Trust
for a period of thirty (30) days after their receipt of written notice
from Beneficiary or Mortgage Trustee, specifying such failure and
requesting that it be remedied;
(c) The Mortgagors should become insolvent either in the equity or bankruptcy
definition of the term, or if a voluntary or involuntary petition in
bankruptcy of the Mortgagors is filed and such involuntary petition is not
discharged within sixty (60) days after such filing, or if the Mortgagors
make an assignment for the benefit of their creditors, or if a receiver,
custodian or trustee is appointed for the Mortgagors' business or property
and such receiver, custodian or trustee is not discharged within sixty (60)
days after such appointment, or if the Mortgagors' interest in the
Facility shall pass by operation of law as the result of any creditor's
action, suit or proceeding; or
(d) If any warranty of the Mortgagors contained herein shall prove to be in
any material respect incorrect or if there shall be any other breach of
such warranty;
THEN AND IN EACH AND EVERY SUCH EVENT:
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<PAGE>
(e) The balance of the principal of the Facility Note then outstanding and
unpaid and the accrued interest thereon shall, at the option of
Beneficiary, become and be due and payable immediately.
(f) Beneficiary may without prior demand or notice and without declaring the
unpaid principal of the Facility Note to be then due and payable, or after
declaring such principal to be due and payable, and without regard to the
value of the Facility or any part thereof, (i) enforce payment of the
Facility Note, and (ii) enforce performance of any terms of this Deed of
Trust, the Agreement or the Facility Note.
(g) Upon demand of Mortgage Trustee, the Mortgagors shall forthwith surrender
to Mortgage Trustee the actual possession of all of the Facility and it
shall be lawful (whether or not the Mortgagors have so surrendered
possession) for Mortgage Trustee, either personally or by agents or
attorneys, forthwith to enter into or upon the Facility and to exclude the
Mortgagors, the agents and servants of the Mortgagors, and all parties
claiming by, through or under the Mortgagors, wholly therefrom, and
Mortgage Trustee shall thereupon be (solely and exclusively) entitled to
possession of said Facility and every part thereof, and to use, operate,
manage and control the same, either personally or by managers, agents,
servants or attorneys, for the benefit of Beneficiary, to the fullest
extent authorized by law; and upon every such entry, the Mortgage Trustee
may, from time to time, at the expense of the Mortgagors, make all
necessary and proper repairs and replacements to the Facility, as the
Mortgage Trustee may deem judicious;
(h) The Mortgage Trustee, at the request of Beneficiary, shall proceed to sell,
either by himself or by agent or attorney, the Facility and every part
thereof at public venue or outcry to the highest bidder for cash in hand
at the customary place in the County of St. Louis, Missouri, after first
giving notice as now required by Sections 443.310 and 443.320, RSMo, and
upon such sale Mortgage Trustee shall receive the proceeds of such sale
and shall execute and deliver deed or deeds or other instruments of
conveyance, assignment and transfer of the property sold, to the
purchaser or purchasers thereof; and
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<PAGE>
(i) The Mortgage Trustee may proceed by suit or suits at law or in equity as
Mortgage Trustee may be advised by counsel to protect the security
interest herein or to foreclose this Deed of Trust, and in such event
Mortgage Trustee and the Beneficiary shall be entitled to reasonable fees
for the Mortgage Trustee's services and the services of their attorneys
and agents, and for all expenses, costs and outlays, including, without
limitations, all costs, expenses and attorney's fees in connection with
any appeal proceedings. Upon or at any time after the filing of any suit to
foreclose the lien hereof, Mortgage Trustee shall be entitled as a matter
of right to the appointment of a receiver of the Facility, either before
or after sale, without notice and without regard to the solvency or
insolvency of the Mortgagors at the time of the application for such
receiver, and without regard to the then value of the Facility. The
Mortgage Trustee may be appointed as such receiver. Such receiver shall
have full power to collect the rents, issues and profits from the
Facility and all other powers necessary or incidental for the protection,
possession, control, management and operation of the Facility.
Upon such sale or sales made by Mortgage Trustee under power herein granted,
or upon any sale or sales under or by virtue of any judicial proceedings: (i)
the whole of the Facility, real, personal and mixed, may be sold in one parcel
as an entirety, or the Facility may be sold in separate parcels as may be
determined by the Mortgage Trustee in his discretion; (ii) Mortgage Trustee
shall receive the proceeds of such sale or sales and shall execute and deliver
deed or deeds or other appropriate instruments of conveyance, assignment or
transfer, of the property sold, to the purchaser or purchasers thereof, and
any deed or other instrument of conveyance, assignment or transfer made and
delivered by Mortgage Trustee in pursuance of the powers granted and conferred
herein, and all recitals therein contained shall be prima facie evidence of
the facts therein set forth; (iii) any such sale or sales shall operate to
divest the Mortgagors of all right, title, interest, claim and demand, either
at law or in equity, under statute or otherwise, in and to the Facility and
every part thereof so sold and shall be a perpetual bar, both in law or equity,
against the Mortgagors and any and all persons claiming or to claim from,
through or under Mortgagors; and (iv) at any such sale or sales Beneficiary may
bid for and purchase the Facility or any part thereof and may make payment
therefor by presenting to Mortgage Trustee the Facility Note hereby secured so
that there may be endorsed as
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<PAGE>
paid thereon the amount of such bid which is to be applied to the payment of
said Facility Note as herein provided.
Upon the foreclosure and sale of the Facility, or any part thereof, the
proceeds of such sale or sales shall be applied as follows: First, to the
cost and expense of executing this trust, including reasonable compensation of
Mortgage Trustee and reasonable attorney's fees, publication fees, cost of
procuring title certificates, continuing abstracts, and title searches
or examinations reasonably necessary or proper; next, to the payment of any
and all costs and expenses of the Beneficiary incurred in the collection of
the indebtedness secured hereby, including reasonable attorney's fees, with
interest thereon as hereinabove provided; next, to the payment of the balance
of the indebtedness evidenced by the Facility Note secured hereby, including
any and all advances, with interest thereon as therein provided; and any
surplus thereafter shall be paid to the Mortgagors.
Each time it shall become necessary to issue an advertisement of foreclosure,
and sale is not had, the Mortgage Trustee shall be entitled to receive the sum
of Fifty Dollars ($50.00) for services and the amount of all advertising
charges from the Mortgagors, all of which shall be further secured hereby.
The Mortgage Trustee may resign at any time by written instrument to that
effect delivered to Beneficiary. Beneficiary shall be entitled to remove, at
any time or from time to time, the Mortgage Trustee and to select a successor
in trust to the Mortgage Trustee. In case of the death, removal, resignation,
refusal to act, or otherwise being unable to act of the Mortgage Trustee,
Beneficiary shall be entitled to select and appoint a successor Mortgage
Trustee hereunder by an instrument duly executed, acknowledged and recorded in
the manner and form for conveyances of real estate in the State of Missouri,
and any such successor Mortgage Trustee shall thereupon succeed as Mortgage
Trustee hereunder and to all of the rights, powers, duties, obligations, and
estate of said Mortgage Trustee as if specifically named herein, provided no
defect or irregularity in the resignation or removal of said Mortgage Trustee
or in the appointment of a successor Mortgage Trustee or in the execution and
recording of such instrument shall affect the validity of said resignation,
removal, or appointment or any act or thing done by such successor Mortgage
Trustee pursuant thereto.
It is agreed that Mortgage Trustee shall not be disqualified from acting as
Mortgage Trustee hereunder or from performing any of the duties of Mortgage
Trustee, or from exercising the rights, powers and remedies herein granted, by
reason of the fact that the Mortgage Trustee is an officer, employee or
stockholder of Beneficiary or is interested, directly or indirectly, as the
holder of the Facility Note hereby secured. The Mortgagors hereby expressly
consent to Mortgage Trustee
- - 11 -
<PAGE>
acting as Mortgage Trustee irrespective of the fact that Mortgage Trustee
might be otherwise disqualified for any of the foregoing reasons, and that
any interest which Mortgage Trustee or any successor Mortgage Trustee shall
have or may acquire in the obligations hereby secured, or the Facility hereby
conveyed, shall neither interfere with nor prevent his acting as Mortgage
Trustee or from purchasing said Facility at said sale or sales, and all
parties waive an objection to Mortgage Trustee having or acquiring any such
interest in the obligations or property aforesaid and continuing to act as
Mortgage Trustee.
26. No remedy herein conferred upon or reserved to Mortgage Trustee or
Beneficiary is intended to be exclusive of any other remedy, but every remedy
herein provided shall be cumulative, and shall be in addition to every other
remedy given hereunder or now or hereafter existing at law or in equity, or by
statute; and every power and remedy given by the Deed of Trust to Mortgage
Trustee or to Beneficiary may be exercised from time to time and as often as
may be deemed expedient. No delay or omission by Mortgage Trustee or by
Beneficiary to exercise any right or power arising from any default shall
impair any such right or power or shall be construed to be a waiver of any
default or an acquiescence therein. In case Mortgage Trustee shall have
proceeded to enforce any right under this Deed of Trust by foreclosure, entry
or otherwise, and such proceedings shall have been discontinued or abandoned
because of waiver or for any other reason, or shall have been determined
adversely, then, and in such and every such case, the Mortgagors and
Mortgage Trustee shall severally and respectively be restored to their former
positions and rights hereunder in respect of the Land and Facility, and all
rights, remedies and powers of Beneficiary shall continue as though no such
proceedings had been taken.
The Mortgage Trustee covenants faithfully to perform and fulfill the trust
herein created, being liable, however, only for willful negligence or
misconduct.
The Mortgaqe Trustee hereby lets said Facility to the Mortgagors until this
instrument be released and satisfied, or until an Event of Default hereunder,
upon the following terms and conditions, to-wit: the Mortgagors and every and
all persons claiming or possessing such Facility, or any part thereof, by,
through or under them shall pay rent therefor during said term at the rate of
one cent (1 cent) per month, payable upon demand, and shall and will surrender
immediate peaceable possession of said Facility, and any and every part
thereof to the Mortgage Trustee, immediately upon such default and notice or
demand therefor and said Mortgage Trustee may thereupon rent the same for the
account of the holders of the Facility Note, until foreclosure is had and
during any proceeding to redeem and then deliver possession to the purchaser
at the Mortgage Trustee's sale.
- - 12 -
<PAGE>
This Deed of Trust and all provisions hereof, except as otherwise provided,
shall extend to and be binding upon the Mortgagors and all parties claiming
by, through or under the Mortgagors. The term "Beneficiary" shall be deemed to
mean and include the endorsee(s), transferee(s), or the holder(s) at the time
being of the Facility Note hereinabove described, and the successor or
successors and assigns of Beneficiary, and the term "Mortgage Trustee" shall
be deemed to mean and include any successor or successors of the Mortgage
Trustee in the trust hereby created; and the covenants and agreements shall
bind and inure to the benefit of the heirs, successors and assigns of the
Mortgagors and the successor in trust of the Mortgage Trustee and the
endorsee(s), transferee(s) and successors of Beneficiary.
Until an Event of Default as herein defined shall occur, the Mortgagors shall
be entitled to remain in possession of the Facility, and if the Mortgagors
shall well and truly pay or cause to be paid to Beneficiary the said principal
with interest thereon, and the other obligations and covenants hereby secured
as and when the same shall become due and payable under the terms of said
Facility Note, then this trust shall cease and be void and the Facility
hereinbefore conveyed shall be released at the cost of the Mortgagors.
27. A waiver, in one or more instances, of any of the terms and provisions of
this Deed of Trust shall apply to the particular instance or instances, at the
particular time or times only, and shall not be deemed to be a continuing
waiver.
28. All notices, demands, requests and other communications hereunder shall be
in writing and shall be deemed given if sent by mail, by private courier or
delivery service, or by telegraph or telex, when received. All mail shall be
sent by registered mail, return receipt requested, addressed to the respective
parties hereto at their respective addresses specified below or such other
addresses as either party may specify in writing to the other:
To the Mortgagors: FPI Chesterfield, Ltd.
c/o Fogelman Properties, Inc.
5400 Poplar Avenue
Memphis, Tennessee 38119
Attn: Morris J. Kriger
To Mortgage Trustee: William P. Foley
7980 Clayton Road
St. Louis, Missouri 63117
To Beneficiary: Fogelman Mortgage L.P. I
c/o Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street
New York, New York 10038
- - 13 -
<PAGE>
The Mortgagors, Beneficiary and the Mortgage Trustee may, by notice given
hereunder, designate any further or different address to which subsequent
notices, demands, requests and other communications shall be sent.
29. Mortgagors hereby assign and transfer to Beneficiary all rents, issues,
proceeds, revenues and income from the Facility, including all rents now due or
which may hereafter become due under all leases thereof, whether written or
verbal, now existing or hereafter made, as additional security for the
indebtedness secured hereby, and Beneficiary is given a prior and continuing
lien thereon. Mortgagors hereby appoint Beneficiary as their attorney-in-fact
with power to collect said rents, revenues and income with or without suit,
and apply the same, less expenses of collection, to said indebtedness;
provided, however, that Mortgagors may exercise all acts of ownership and
collection of rents, revenues and income until an Event of Default occurs
under the provisions of this Deed of Trust.
30. This Deed of Trust has been made in the State of Missouri and shall be
governed exclusively by the applicable laws of Missouri.
31. All capitalized, undefined terms used herein shall have the same meanings
as in the Loan Agreement of even date herewith between Beneficiary and
Mortgagors.
32. Whenever possible, each provision of this Mortgage is to be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Mortgage, or the application thereof to particular
circumstances, shall be ultra vires or prohibited by or invalid under
applicable law, such provision or its application to such circumstances shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or its application to all other
circumstances, or the remaining provisions of this Mortgage, which shall be
effective and valid.
- - 14 -
<PAGE>
IN WITNESS WHEREOF, the Mortgagors have executed this instrument, and Mortgage
Trustee, in token of his acceptance of the trust herein created, has affixed
his name hereto, the day and year first above written.
"Mortgagors"
FPI CHESTERFIELD, LTD.
Fogelman Properties, Inc.,
By: /s/ L. Don Campbell
------------------------------
L. Don Campbell
Title: Vice President
Attest: (Illegible Signature)
---------------------------
(SEAL)
- - 15 -
<PAGE>
STATE OF TENNESSEE )
) SS
COUNTY OF SHELBY )
On this 8th day of July, in the year 1987, before me, Nunda L. Mathis, a
Notary Public in and for said state, personally appeared L. Don Campbell, Jr.,
to me personally known, who, being by me duly sworn, did say that he is Vice
President of Fogelman Properties, Inc., general partner of FPI Chesterfield,
Ltd., a Missouri Limited Partnership, and that the said Deed of Trust was
signed in behalf of said corporation as general partner of said limited
partnership, and the seal affixed hereto is the seal of said corporation, and
further acknowledged said instrument to be the free act and deed of said
corporation on behalf of said limited partnership
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal.
/s/ Nunda L. Mathis
-------------------------------
Notary Public
Nunda L. Mathis
My Commission Expires: (SEAL)
March 13, 1989
- - 16 -
<PAGE>
STATE OF TENNESSEE )
) SS
COUNTY OF SHELBY )
On this 19th day of August, in the year 1987, before me, Nunda L. Mathis, a
Notary Public in and for said state, personally appeared L. Don Campbell, Jr.,
to me personally known, who, being by me duly sworn, did say that he is Vice
President of Fogelman Properties, Inc., general partner of FPI Chesterfield,
Ltd., a Missouri Limited Partnership, and that the said Deed of Declaration
was signed in behalf of said corporation as general partner of said limited
partnership, and acknowledged said instrument to be the free act and deed of
said corporation on behalf of said limited partnership
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal.
/s/ Nunda L. Mathis
--------------------------
Notary Public
Nunda L. Mathis
My Commission Expires: (SEAL)
March 13, 1989
<PAGE>
EXHIBIT A
Legal Description
A tract of land being in Section 16, Township 45 North, Range 4 East, St.
Louis County, Missouri, and being more particularly described as follows:
COMMENCING at the southwest corner of Lot 7 of Thomas K. Humphrey's Estate,
recorded in Plat Book 387, Page 492, of the City of St. Louis Records;
THENCE South 89 degrees 48 minutes 19 seconds East along the southerly line of
said Lot 7, a distance of 454.34 feet to the TRUE POINT OF BEGINNING;
THENCE continuing on the southerly lot line of Lot 7, South 89 degrees 48
minutes 19 seconds East 886.82 feet; THENCE South 89 degrees 57 minutes 15
seconds East along the southerly line of Lot 6 of Thomas K. Humphrey's Estate
895.07 feet to the westerly line of Lake Post Commons, recorded in Plat Book
178, Page 5, St. Louis County Records; THENCE South 00 degrees 08 minutes 23
seconds East along the westerly line of Lake Post Commons 1099.30 feet; THENCE
South 31 degrees 20 minutes 36 seconds East along the southwesterly line of Oak
Plat Number 2, recorded in Plat Book 177, Pages 82 and 83 a distance of 354.81
feet; THENCE South 29 degrees 42 minutes 36 seconds East along the westerly
line of Windsor Manor Condominium Plat 1, recorded in Plat Book 216, Page 69
and 70 a distance of 198.25 feet; THENCE North 71 degrees 50 minutes 12
seconds East along the southerly line of Windsor Manor Condominium Plat 1 a
distance of 511.59 feet; THENCE South 19 degrees 11 minutes 12 seconds East
along the westerly line of property now or formerly of Lucille H. Barr,
recorded in Deed Book 7629, Page 190 a distance of 196.31 feet; THENCE North
71 degrees 02 minutes 48 seconds along the southerly line of said Barr
property a distance of 158.53 feet; THENCE South 21 degrees 52 minutes 12
seconds East along the westerly line of property now or formerly of Jacob L.
Babbler, recorded in Deed Book 1534, Page 578 and also in Deed Book 1555,
Page 579 a distance of 468.04 feet; THENCE along the northwesterly line of
Clarkson Square Plat 1, recorded in Plat Book 218, Pages 42 and 43 the
following courses and distances: South 86 degrees 58 minutes 15 seconds West
204.01 feet, South 62 degrees 49 minutes 35 seconds West 170.80 feet, South 48
degrees 50 minutes 27 seconds West 248.75 feet; THENCE South 24 degrees 57
minutes 54 seconds West 134.75 feet; THENCE South 61 degrees 37 minutes 19
seconds West 243.62 feet; THENCE along the westerly right of way line of
Proposed Baxter Road the following courses and distances: North 28 degrees 22
minutes 41 seconds West 279.37 feet to a point of curvature; THENCE along a
curve to the left, radius equal to 940.00 feet, central angle equal to 20
degrees 58 minutes 26 seconds, an arc distance of 344.10 feet; THENCE North 49
degrees 21 minutes 07 seconds West 1623.36 feet to a point of curvature;
THENCE on a curve to the right, radius equal to 1535.00 feet, central angle
equal to 27 degrees 47 minutes 51 seconds, an arc distance of 744.72 feet;
THENCE North 21 degrees 33 minutes 16 seconds West 320.57 feet to a point of
curvature; THENCE on a curve to the left, radius equal to 1419.46 feet,
central angle equal to 00 degrees 25 minutes 34 seconds, an arc distance of
10.56 feet to the POINT OF BEGINNING.
Above described parcel contains 2,844,396 square feet or 65.298 acres and is
SUBJECT TO all easements, restrictions, reservations and conditions of record,
if any.
<PAGE>
EXHIBIT A
LAND DESCRIPTION
WESTMONT
65.298 Acres
August 26, 1986
A tract of land being in Section 16, Township 45 North, Range 4 East, St.
Louis County, Missouri, and being more particularly described as follows:
COMMENCING at the southwest corner of Lot 7 of Thomas K. Humphrey's Estate,
recorded in Plat Book 387, Page 492, of the City of St. Louis Records;
THENCE South 89 degrees 48 minutes 19 seconds East along the southerly line of
said Lot 7, a distance of 454.34 feet to the TRUE POINT OF BEGINNING; THENCE
continuing on the southerly lot line of Lot 7, South 89 degrees 48 minutes 19
seconds East 886.82 feet; THENCE South 89 degrees 57 minutes 15 seconds East
along the southerly line of Lot 6 of Thomas K. Humphrey's Estate 895.07 feet
to the westerly line of Lake Post Commons, recorded in Plat Book 178, Page 5,
St. Louis County Records; THENCE South 00 degrees 08 minutes 23 seconds East
along the westerly line of Lake Post Commons 1099.30 feet; THENCE South 31
degrees 20 minutes 36 seconds East along the southwesterly line of Oak Plat
Number 2, recorded in Plat Book 177, Pages 82 and 83 a distance of 354.81
feet; THENCE South 29 degrees 42 minutes 36 seconds East along the westerly
line of Windsor Manor Condominium Plat 1, recorded in Plat Book 216, Pages 69
and 70 a distance of 199.25 feet; THENCE North 71 degrees 50 minutes 12
seconds East along the southerly line of Windsor Manor Condominium Plat 1 a
distance of 511.59 feet; THENCE South 19 degrees 11 minutes 12 seconds East
along the westerly line of property now or formerly of Lucille H. Barr,
recorded in Deed Book 7629, Page 190 a distance of 196.31 feet; THENCE North
71 degrees 02 minutes 48 seconds along the southerly line of said Barr
property a distance of 158.53 feet; THENCE South 21 degrees 52 minutes 12
seconds East along the westerly line of property now or formerly of Jacob L.
Babbler, recorded in Deed Book 1534, Page 578 and also in Deed Book 1555, Page
579 a distance of 468.04 feet; THENCE along the northwesterly line of Clarkson
Square Plat 1, recorded in Plat Book 218, Pages 42 and 43 the following
courses and distances: South 86 degrees 58 minutes 15 seconds West 204.01
feet, South 62 degrees 49 minutes 35 seconds West 170.80 feet, South 48
degrees 50 minutes 27 seconds West 248.75 feet; THENCE South 24 degrees 57
minutes 54 seconds West 134.75 feet; THENCE South 61 degrees 37 minutes 19
seconds West 243.62 feet; THENCE along the westerly right of way line of
Proposed Baxter Road the following courses and distances: North 28 degrees 22
minutes 41 seconds West 279.37 feet to a point of curvature; THENCE along a
curve to the left, radius equal to 940.00 feet, central angle equal to 20
degrees 58 minutes 26 seconds, an arc distance of 344.10 feet; THENCE North
49 degrees 21 minutes 07 seconds West 1623.35 feet to a point of curvature;
THENCE on a curve to the right, radius equal to 1535.00 feet, central angle
equal to 27 degrees 47 minutes 51 seconds, an arc distance of 744.71 feet;
THENCE North 21 degrees 33 minutes 16 seconds West 320.57 feet to a point
of curvature; THENCE on a curve to the left, radius equal to 1419.46 feet,
central angle equal to 00 degrees 25 minutes 34 seconds, an arc distance of
10.56 feet to the POINT OF BEGINNING.
Above described parcel contains 2,844,396 square feet or 65.298 acres and
is SUBJECT TO all easements, restrictions, reservations and conditions of
record, if any.
anb
0541L
<PAGE>
RECORD AND RETURN TO:
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022
Attention: Charles Rosenzweig, Esq.
FIRST AMENDMENT TO
DEED OF TRUST, ASSIGNMENT OF
RENTS AND LEASES AND SECURITY AGREEMENT
THIS AGREEMENT made and entered into as of the 1st day of January, 1990 by and
between FPI CHESTERFIELD, L.P. (formerly known as FPI Chesterfield, Ltd.),
a Missouri limited partnership with offices at 5400 Poplar Avenue, Memphis,
Tennessee 38119, hereinafter referred to as "Grantor," and FOGELMAN
MORTGAGE, L.P. I, a Tennessee limited partnership with offices at 5400
Poplar Avenue, Memphis, Tennessee 38119, hereinafter referred to as
"Beneficiary";
W I T N E S S E T H:
WHEREAS, Grantor and Beneficiary have heretofore entered into that certain
Loan Agreement (the "Loan Agreement") dated as of July 8, 1987 whereby, among
other things, Beneficiary agreed to lend Grantor the principal amount of
$23,320,000;
WHEREAS, Grantor has heretofore executed and delivered to Beneficiary that
certain Westmont Multi-Family Housing Facility Note (the "Note") dated July 8,
1987 in the original principal amount of $23,320,000;
WHEREAS, Grantor has heretofore executed and delivered to Beneficiary
that certain Deed of Trust, Assignment of Rents and Leases and Security
Agreement (the "Deed of Trust") dated as of July 8, 1987 and filed for record
on July 21, 1987 in Book 8189, Page 2364 of the Register of Deeds of St. Louis
County, State of Missouri, securing the Note and constituting a first lien on
the premises more particularly described on Schedule A attached hereto;
WHEREAS, in connection with the Consensual Reorganization of the Business
Affairs of Avron B. Fogelman and Related Entities as of July 31, 1990, Grantor
and Beneficiary have executed and delivered (i) that certain Promissory Note
Modification Agreement dated of even date herewith (the "Note
DOC #348224
<PAGE>
Modification") and (ii) that certain Amendment to Loan Agreement dated of even
date herewith (the "Amendment to Loan Agreement"); and
WHEREAS, the parties hereto desire to amend the Deed of Trust in connection
with the execution and delivery of the Note Modification and the Amendment to
Loan Agreement.
NOW THEREFORE, and in consideration of the sum of $10.00 cash in hand paid
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Modification of Deed of Trust.
(a) All references in the Deed of Trust to the Note shall be deemed to
refer to the Note as amended by the Note Modification.
(b) All references in the Deed of Trust to the Loan Agreement shall be deemed
to refer to the Loan Agreement as amended by the Amendment to Loan Agreement.
(c) The terms, covenants and conditions of the Loan Agreement, as amended
by the Amendment to Loan Agreement, are hereby incorporated in, and made a
part of, the Deed of Trust. In the event of any inconsistency between the
terms of the Deed of Trust and the terms of the Loan Agreement, the terms of
the Loan Agreement shall govern.
2. Full Force and Effect. Except as specifically modified hereby, the terms
and conditions of the Deed of Trust are hereby ratified and confirmed and
remain in full force and effect.
3. Successors and Assigns. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns.
DOC #348224 2
<PAGE>
4. Counterparts. This Agreement may be signed in two counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Deed of Trust, Assignment of Rents and Leases and Security Agreement to be
duly executed and delivered as of the date first above written.
GRANTOR:
FPI CHESTERFIELD, L.P.
By: Fogelman Properties, Inc.,
General Partner
By: /s/ L. Don Campbell, Jr.
----------------------------
Name: L. Don Campbell, Jr.
Title: Executive Vice President
BENEFICIARY:
FOGELMAN MORTGAGE, L.P. I
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ Chester A. Piskorowski
-----------------------------
Name: Chester A. Piskorowski
Title: Vice President
DOC #348224 3
<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK)
On this 14 day of January, 1991, before me, appeared Chester A. Piskorowski
to me personally known, who being by me duly sworn, did say that, he is the
Vice President of Prudential-Bache Properties, Inc., a Delaware corporation
and a general partner of Fogelman Mortgage, L.P. I, a Tennessee limited
partnership, and that said instrument was signed on behalf of said corporation
by authority of its Board of Directors as a general partner of said
partnership, and acknowledged said instrument to be the free act and deed of
said corporation as a general partner of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at my office in New York, New York, the day and year last above written.
/s/ Michelle Lavacca
-----------------------------
Notary Public in and for said
County and State
My Commission Expires:
- ------------------------
(Seal)
DOC #348224
<PAGE>
STATE OF TENNESSEE )
) ss:
COUNTY OF SHELBY )
On this 16th day of January, 1991, before me, appeared L. Don Campbell, Jr.
to me personally known, who being by me duly sworn, did say that he is the
Executive Vice President of Fogelman Properties, Inc., a Tennessee corporation
and a general partner of FPI Chesterfield, L.P., a Missouri limited
partnership, and that said instrument was signed on behalf of said corporation
by authority of its Board of Directors as a general partner of said
partnership, and acknowledged said instrument to be the free act and deed of
said corporation as a general partner of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at my office in Memphis, Tennessee, the day and year last above written.
/s/ M. Elaine Green
-----------------------------
Notary Public in and for said
County and State
(Seal)
My Commission Expires:
My Commission Expires June 20, 1992
DOC #348224
<PAGE>
SCHEDULE A
LAND DESCRIPTION
WESTMONT
65.298 Acres
A tract of land being in Section 16, Township 45 North, Range 4 East, St.
Louis County, Missouri, and being more particularly described as follows:
COMMENCING at the southwest corner of Lot 7 of Thomas K. Humphrey's Estate,
recorded in Plat Book 387, Page 492, of the City of St. Louis Records; THENCE
South 89 degrees 48 minutes 19 seconds East along the southerly line of said
Lot 7, a distance of 454.34 feet to the TRUE POINT OF BEGINNING; THENCE
continuing on the southerly lot line of Lot 7, South 89 degrees 48 minutes 19
seconds East 886.82 feet; THENCE South 89 degrees 57 minutes 15 seconds East
along the southerly line of Lot 6 of Thomas K. Humphrey's Estate 895.07 feet
to the westerly line of Lake Post Commons, recorded in Plat Book 178, Page 5,
St. Louis County Records; THENCE South 00 degrees 08 minutes 23 seconds East
along the westerly line of Lake Post Commons 1099.30 feet; THENCE South 31
degrees 20 minutes 36 seconds East along the southwesterly line of Oak Plat
Number 2, recorded in Plat Book 177, Pages 82 and 83 a distance of 354.81
feet; THENCE South 29 degrees 42 minutes 36 seconds East along the westerly
line of Windsor Manor Condominium Plat 1, recorded in Plat Book 216, Pages 69
and 70 a distance of 199.25 feet; THENCE North 71 degrees 50 minutes 12 seconds
East along the southerly line of Windsor Manor Condominium Plat 1 a distance of
511.59 feet; THENCE South 19 degrees 11 minutes 12 seconds East along the
westerly line of property now or formerly of Lucille H. Barr, recorded in Deed
Book 7629, Page 190 a distance of 196.31 feet; THENCE North 71 degrees 02
minutes 48 seconds along the southerly line of said Barr property a distance
of 158.53 feet; THENCE South 21 degrees 52 minutes 12 seconds East along the
westerly line of property now or formerly of Jacob L. Babbler, recorded in Deed
Book 1534, Page 578 and also in Deed Book 1555, Page 579 a distance of 468.04
feet; THENCE along the northwesterly line of Clarkson Square Plat 1, recorded
in Plat Book 218, Pages 42 and 43 the following courses and distances: South 86
degrees 58 minutes 15 seconds West 204.01 feet, South 62 degrees 49 minutes 35
seconds West 170.80 feet, South 48 degrees 50 minutes 27 seconds West 248.75
feet; THENCE South 24 degrees 57 minutes 54 seconds West 134.75 feet; THENCE
South 61 degrees 37 minutes 19 seconds West 243.62 feet; THENCE along the
westerly right of way line of Proposed Baxter Road the following courses and
distances: North 28 degrees 22 minutes 41 seconds West 279.37 feet to a point
of curvature; THENCE along a curve to the left, radius equal to 940.00 feet,
central angle equal to 20 degrees 58 minutes 26 seconds, an arc distance of
344.10 feet; THENCE North 49 degrees 21 minutes 07 seconds West 1623.35 feet
to a point of curvature; THENCE on a curve to the right, radius equal to
1535.00 feet, central angle equal to 27 degrees 47 minutes 51 seconds, an arc
distance of 744.71 feet; THENCE North 21 degrees 33 minutes 16 seconds West
320.57 feet to a point of curvature; THENCE on a curve to the left, radius
equal to 1419.46 feet, central angle equal to 00 degrees 25 minutes 34
seconds, an arc distance of 10.56 feet to the POINT OF BEGINNING.
Above described parcel contains 2,844,396 square feet or 65.298 acres and
is SUBJECT TO all easements, restrictions, reservations and conditions of
record, if any.
<PAGE>
SECOND PROMISSORY NOTE
MODIFICATION AGREEMENT
THIS AGREEMENT made and entered into as of the 1st day of January, 1990 by and
between FPI Royal View, Ltd., L.P., a Kansas limited partnership, hereinafter
referred to as the "Borrower" and Fogelman Mortgage L.P. I, a Tennessee
limited partnership, hereinafter referred to as the "Issuer". Capitalized
terms used but not defined herein shall have the respective meanings set forth
in the Amended Note (as hereinafter defined).
W I T N E S S E T H
WHEREAS, the Borrower has heretofore executed and delivered to The Merchants
Bank, a Missouri banking corporation (the "Bank"), a Promissory Note
(the "Original Note"), dated March 2, 1987, in the original principal sum of
$20,000,000, payable to the order of the Bank;
WHEREAS, the Borrower and the Bank entered into a Promissory Note Modification
Agreement, dated April 23, 1987 (the "Modification Agreement"), which modified
and restated the terms of the Original Note (a copy of which Modification
Agreement is
DOC #338311
<PAGE>
attached hereto as Exhibit A) (the Original Note as modified and restated by
the Modification Agreement shall be referred to hereinafter as the "Amended
Note");
WHEREAS, the Bank and the Issuer entered into an Assignment, dated April 23,
1987, pursuant to which, among other things, the Amended Note was assigned by
the Bank to the Issuer;
WHEREAS, in connection with the Consensual Reorganization of the Business and
Affairs of Avron B. Fogelman and Related Entities as of July 31, 1990 it is
required that certain modifications be made to the Amended Note after an
independent advisor has rendered an opinion that such proposed modifications
are fair and reasonable;
WHEREAS, Prudential-Bache Properties, Inc., a general partner of the Issuer,
contracted with Marshall & Stevens, Incorporated ("Marshall") to analyze the
proposed modifications; and
WHEREAS, Marshall has rendered an opinion that the proposed
modifications ". . . are fair from a financial point of view and would be
considered reasonable and commercially acceptable to a prudent general
partner."
NOW, THEREFORE, in consideration of the debts and trusts aforesaid and of the
sum of $1.00 and other good and valuable consideration, each to the other in
hand paid, receipt whereof is hereby acknowledged, it is hereby mutually
covenanted and agreed as follows:
DOC #338311 2
<PAGE>
1. The Preamble to the Amended Note shall be amended to delete from line 4
thereof the phrase "THE MERCHANTS BANK" and replace such phrase with the
following:
"FOGELMAN MORTGAGE L.P. I, a Tennessee limited partnership (as successor in
interest to The Merchants Bank)."
2. Section 1.4 of the Amended Note shall be amended in its entirety to
read as follows:
"Section 1.4 Basic Interest. (a) Basic Interest means an amount (the
"Base Amount") computed on the principal balance hereof equal to, and shall be
payable at the rate of (i) ten and one-half percent (10.5%) per annum from
April 23, 1987 to and including the Completion Date; and (ii) nine and
one-half percent (9.5%) per annum (the "Base Rate") thereafter until payment
in full of the principal hereof; provided, however, that if the Base Amount
for any given month exceeds Property Cash Flow for that month and there are no
funds in the Cash Collateral Account (as hereinafter defined), then Basic
Interest for such month shall be equal to the amount of Property Cash Flow for
such month. The difference between the Base Amount and Property Cash Flow
shall be accounted for in a separate account (the "Accrued Interest Account")
which shall bear interest at the Base Rate. The Borrower shall be obligated to
pay to the Issuer the amounts accounted for in the Accrued Interest Account on
the terms described in subparagraph (b) of this Section 1.4.
(b) For any month that Property Cash Flow exceeds the Base Amount, such excess
shall be applied toward the obligation,
DOC #338311 3
<PAGE>
if any, accounted for in the Accrued Interest Account until such obligation has
been paid in full; thereafter, any such excess shall be paid to the Issuer,
and the Issuer shall deposit such excess in a separate account (the "Cash
Collateral Account") to be held by the Issuer as additional security for
Borrower's obligations hereunder and applied by the Issuer as hereinafter
provided. To the extent that the Base Amount exceeds Property Cash Flow for
any month in which funds are being held by the Issuer in the Cash Collateral
Account, an amount equal to the lesser of (i) the amount by which the Base
Amount exceeds Property Cash Flow for that month or (ii) the balance of the
Cash Collateral Account, shall be payable to the Issuer. All payments required
to be paid currently or accrued under subparagraphs (a) and (b) of this
Section 1.4 shall be included within the meaning of the term "Basic
Interest."
(c) If Property Cash Flow exceeds the Base Amount for six (6) consecutive
months after the obligation accounted for in the Accrued Interest Account has
been paid in full, then the funds in the Cash Collateral Account shall be
deemed to be Contingent Interest (as hereinafter defined) and shall be paid
and distributed as provided in Section 1.5 hereof.
(d) If not sooner paid, the balance, if any, of the Borrower's obligation
accounted for in the Accrued Interest Account shall be due and payable upon
the earliest of (i) the sale or disposition of the Facility (as such term is
defined in the Loan Agreement dated as of April 23, 1987 between the Issuer
DOC #338311 4
<PAGE>
and the Borrower); (ii) the refinancing of the indebtedness evidenced hereby;
or (iii) the maturity of this Note, whether by acceleration or otherwise."
3. The following phrase shall be inserted after the word "and" in line two of
Section 1.5 of the Amended Note:
", subject to Section 1.4,"
4. Section 1.9 of the Amended Note shall be amended in its entirety to read as
follows:
"1.9 Default Rate. From and after the occurrence of an Event of Default, the
Base Rate shall be equal to the greater of (i) the Prime Rate plus two and
one-half percent (2.5%) per annum and (ii) sixteen percent (16%) per annum
from and after the date such Event of Default occurred and until such Event of
Default has been cured."
5. There shall be added to the Amended Note a Section 1.10, which shall read
as follows:
"Section 1.10 Escrow Account. (a) The Borrower shall establish an
interest-bearing account (the "Escrow Account") with an escrow agent
acceptable to the Issuer and shall deposit into the Escrow Account the sum of
$76,036. Commencing on June 1, 1990, and on the first day of each month
thereafter during the term of this Note, the Borrower shall make deposits
("Escrow Deposits") into the Escrow Account in an amount equal to one-twelfth
(1/12) of the estimated annual real estate tax liability of the Borrower for
the current twelve-month period in which such taxes are due.
DOC #338311 5
<PAGE>
(b) Commencing in 1991, and each year thereafter during the term of this Note,
on the first day of the month following the month in which the Borrower pays
its real estate taxes for the preceding twelve-month period (or, if paid in
more than one installment, the month of the final installment thereof) [the
"Final Installment''], the Escrow Deposits shall be adjusted to equal
one-twelfth (1/12) of the Borrower's estimated real estate tax liability for
the succeeding twelve-month period, after first deducting from such estimated
liability the amount of any balance remaining in the Escrow Account after
payment of the Final Installment.
(c) Thirty (30) days before the date when any installment of real estate taxes
would become delinquent, the Borrower shall present to the Escrow Agent a
copy of the bill for such installment of real estate taxes, and the Escrow
Agent shall immediately release funds from the Escrow Account to the Borrower
in the amount of such installment (to the extent there exist such funds in the
Escrow Account) and the Borrower shall pay and discharge such real estate tax
liabilities prior to their becoming delinquent and prior to the assessment of
any penalties thereon.
(d) In the event that the funds in the Escrow Account are insufficient to pay
any installment of real estate taxes, then the Borrower shall pay the amount
of such deficiency. If after payment of any Final Installment there is a
balance
DOC #338311 6
<PAGE>
remaining in the Escrow Account, such balance shall be applied as described in
subparagraph (b) of this Section 1.10."
6. This Agreement does not create any new or further indebtedness or
additional liability of any party not originally liable under the terms of the
Amended Note nor does it release or increase the liability of any guarantor
thereof. Nothing contained herein shall adversely affect or invalidate the
security now held by the Issuer, nor impair nor release any covenant,
condition or agreement in the Amended Note, which, except as modified by this
Agreement, shall continue in full force and effect in accordance with its
terms.
7. Issuer agrees, upon the execution of this Agreement, to make a notation on
the Amended Note as follows: "This Note is modified by that certain Second
Promissory Note Modification Agreement dated as of January 1, 1990".
8. The agreements herein shall bind, and the benefits hereof shall inure to,
the respective successors and assigns of the parties hereto.
9. By his execution hereof in his capacity as general partner of the Borrower,
Avron B. Fogelman acknowledges that this Agreement satisfies all notice
requirements contained in the first sentence of Paragraph 6 of that certain
Guaranty, dated as of April 23, 1987, by Avron B. Fogelman in favor of the
Issuer in respect of the indebtedness evidenced by the Amended Note.
DOC #338311 7
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed as of the date and year
first above written by the duly authorized general partners of the Borrower
and the Issuer.
FPI ROYAL VIEW, LTD., L.P.,
a Kansas limited partnership
By: /s/ Avron B. Fogelman
-------------------------
Avron B. Fogelman
General Partner
FOGELMAN MORTGAGE, L.P. I,
a Tennessee limited partnership
By: PRUDENTIAL-BACHE PROPERTIES, INC.,
a Delaware corporation
General Partner
By: /s/ Chester A. Piskorowski
-----------------------------
Chester A. Piskorowski
Vice President
DOC #338311 8
<PAGE>
This Instrument Prepared by and Return to:
MORRIS J. KRIGER
5400 Poplar Avenue
Memphis, TN 38119
MORTGAGE AND SECURITY AGREEMENT
MODIFICATION AGREEMENT
THIS AGREEMENT made and entered into this 23rd day of April, 1987, by and
between FPI ROYAL VIEW, LTD., L.P., hereinafter referred to as "Mortgagor or
Debtor" and THE MERCHANTS BANK, a Missouri banking corporation, hereinafter
referred to as "Mortgagee or Secured Party";
W I T N E S S E T H
WHEREAS, Mortgagor has heretofore executed and delivered to Mortgagee a
Promissory Note, dated March 2, 1987, in the original principal sum of
$20,000,000, payable to the order of Mortgagee ("Note");
WHEREAS, Mortgagor has heretofore executed and delivered to Mortgagee a
Mortgage, dated March 2, 1987, securing the Note described above, and filed
for record on March 3, 1987, and recorded under Volume 2527, Page 746,
constituting a first lien on the premises more particularly described therein
("Mortgage"); and
WHEREAS, Debtor has heretofore executed and delivered to Secured Party a
Security Agreement, dated March 2, 1987, additionally securing the Note
described above ("Security Agreement"); and
NOW THEREFORE, in consideration of the debts and trusts aforesaid and of the
sum of $1.00 and other good and valuable considerations, each to the other in
hand paid, receipt whereof is hereby acknowledged, it is hereby mutually
covenanted and agreed as follows:
1. The Mortgage and the Security Agreement are hereby consolidated and amended
by combining both of them into one instrument to read as set forth in Exhibit
A attached hereto and by reference made a part hereof.
2. This Agreement does not create or secure any new or further indebtedness or
additional liability of any party not originally liable under the terms of the
Mortgage and Security Agreement, except that the principal amount of the Note
is increased from $20,000,000 to $22,745,000. Nothing contained herein shall
adversely affect or invalidate the security now held by Mortgagee or Secured
Party, nor impair nor release any covenant, condition or agreement in said
Mortgage or said Security Agreement, which, except as modified by this
Agreement shall continue in full force and effect in accordance with their
original terms.
<PAGE>
3. The agreements herein shall bind, and the benefits hereof shall inure to,
the respective successors and assigns of the parties hereto.
IN WITNESS WHEREOF, this Agreement has been executed the day and year first
above written by the duly authorized general partners of Mortgagor and Debtor
and a duly authorized officer of Mortgagee and Secured Party.
FPI ROYAL VIEW, LTD., L.P.,
a Kansas limited partnership
By: /s/ Avron B. Fogelman
------------------------------
AVRON B. FOGELMAN
General Partner of Mortgagor
and Debtor
By: FOGELMAN PROPERTIES, INC.
General Partner
By /s/ Avron B. Fogelman
---------------------------
AVRON B. FOGELMAN
President
THE MERCHANTS BANK
By: /s/ Michael J. Caffrey
------------------------------
Officer of Mortgagee and
Secured Party
<PAGE>
STATE OF MISSOURI )
) ss.
COUNTY OF JACKSON )
On this 23rd day of April, 1987, before me, appeared Michael J. Caffrey to me
personally known, who being by me duly sworn, did say that he is the Senior
Vice President of THE MERCHANTS BANK, a Missouri banking corporation, and that
said instrument was signed on behalf of said corporation by authority of its
Board of Directors, and acknowledged said instrument to be the free act and
deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at my office in Kansas City, Missouri, the day and year last above written.
/s/ Janice K. Lattrell
-----------------------------
Notary Public in and for said
County and State
My Commission Expires:
3-12-90
- ----------------------
(SEAL)
<PAGE>
STATE OF TENNESSEE )
) ss.
COUNTY OF SHELBY )
On this 23rd day of April, 1987, before me, appeared Avron B. Fogelman, to me
personally known to be a general partner of FPI Royal View, Ltd., L.P., a
Kansas limited partnership, and the person described in and who executed the
foregoing instrument on behalf of said limited partnership and Avron B.
Fogelman being by me duly sworn acknowledged that said instrument is the free
act and deed of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at my office in Memphis, Tennessee, the day and year last above written.
/s/ M. Elaine Green
-----------------------------
Notary Public in and for said
County and State
My Commission Expires:
- ----------------------
<PAGE>
STATE OF TENNESSEE )
) ss.
COUNTY OF SHELBY )
On this 23rd day of April, 1987, before me, appeared Avron B. Fogelman to me
personally known, who being by me duly sworn, did say that he is the President
of Fogelman Properties, Inc., a Tennessee corporation and a general partner of
FPI Royal View, Ltd., L.P., a Kansas limited partnership, and that said
instrument was signed on behalf of said corporation by authority of its Board
of Directors as a general partner of said partnership, and acknowledged said
instrument to be the free act and deed of said corporation as a general
partner of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at my office in Memphis, Tennessee, the day and year last above written.
/s/ M. Elaine Green
-----------------------------
Notary Public in and for said
County and State
(SEAL)
My Commission Expires:
- ----------------------
<PAGE>
EXHIBIT A
MORTGAGE, ASSIGNMENT OF RENTS AND LEASES
AND SECURITY AGREEMENT
This Mortgage is a mortgage of both real and personal property and is, among
other things, a security agreement and chattel mortgage affecting chattels and
personal property situated on realty.
THIS MORTGAGE, ASSIGNMENT OF RENTS AND LEASES AND SECURITY AGREEMENT
(hereinafter "Mortgage") made and entered into as of the 23rd day of April,
1987, by FPI ROYAL VIEW, LTD., L.P., a Kansas limited partnership, with
offices at 5400 Poplar Avenue, Memphis, Tennessee 38119 (the "Mortgagor"), to
THE MERCHANTS BANK, a Missouri banking corporation, as holder of the Facility
Note (as hereinafter defined) (the "Mortgagee") and all future holders from
time to time of the Facility Note.
WITNESSETH, that the Mortgagor, for and in consideration of the debt
hereinafter described and created, and of the sum of One Dollar paid by the
Mortgagee, the receipt of which is hereby acknowledged, do by these presents
grant, bargain and sell, convey and confirm unto the Mortgagee the following
described improvements and real estate (hereinafter the "Land") situated on
Antioch and 123rd Streets in the City of Overland Park, County of Johnson, and
State of Kansas, to wit:
Lot 1, "ROYAL VIEW" FIRST PLAT, a subdivision in the city of Overland Park,
Johnson County, Kansas.
Subject to all easements, conditions, restrictions and rights-of-way of
record.
Together with all improvements thereon including but not limited to a 437-unit
multi-family housing facility with all recreational amenities appurtenant
thereto, whether now existing or hereafter constructed.
(page 2 intentionally omitted)
<PAGE>
Together with all furniture, furnishings, fixtures and equipment now or
hereafter owned by Mortgagor and attached to the Land and Improvements (as
hereinafter defined), including without limiting the foregoing, all
electrical, heating, air conditioning, lighting and plumbing fixtures,
appliances and all window screens, shades, awnings and storm sashes, whether
now owned or hereafter acquired located on or used in connection with the
aforementioned Land and Improvements, together with all substitutions,
additions and replacements, and proceeds thereof.
Together with all the rights, privileges, easements and appurtenances
thereto attached or belonging, and the rents, issues and profits, thereof.
FURTHER WITNESSETH, that the Mortgagor does by these presents grant to
Mortgagee a security interest in all materials purchased or delivered for
construction of the Project and in the Equipment (as both capitalized terms
are hereinafter defined) located on or used in connection with the operation
of the Facility (as hereinafter defined) together with all proceeds and
profits therefrom.
TO HAVE AND TO HOLD the same, together with all buildings, fixtures and
appurtenances hereafter to the same belonging, unto the Mortgagee, and to its
successor or successors forever, and possession of said Facility is now
delivered unto the Mortgagee, including the right to collect rents as
hereinafter set forth.
WHEREAS, the Mortgagee has agreed to lend to the Mortgagor the sum of
$22,745,000 pursuant to a Loan Agreement (the "Agreement") by and between the
Mortgagee and the Mortgagor to enable the Mortgagor to construct on the Land a
437-unit multi-family housing facility with all recreational amenities
appurtenant thereto (the "Project") and to provide certain equipment in
connection therewith (the "Equipment") located in the City of Overland Park,
Johnson County, Kansas, (the Land, Project and Equipment collectively referred
to as the "Facility");
WHEREAS, the Mortgagor, being justly indebted to the Mortgagee for Twenty-Two
Million Seven Hundred Forty-Five Thousand Dollars ($22,745,000), has, to
secure said principal and interest to be earned thereon, executed and
delivered to the Mortgagee, the Pointe Royal Multi-Family Housing Facility
Note (Overland Park, Johnson County, Kansas) (the "Facility Note") of even
date herewith, expressed to be for value received drawn to the order of the
Mortgagee, and payable at the offices of the Mortgagee upon the terms and at
the rates of interest therein stated; and
- - 3 -
<PAGE>
WHEREAS, the Mortgagor wishes to further secure the payment of the Facility
Note and the payment and performance of Mortgagor's other obligations under
the Agreement.
NOW, THEREFORE, the Mortgagor has executed this Mortgage for the purpose of
securing:
1. The payment of all indebtedness as provided in the Facility Note,
and any extentions or modifications thereof;
2. The payment of all other moneys secured hereby; and
3. The performance of all of the covenants, conditions, stipulations and
agreements herein contained or contained in the Agreement and the Facility
Note.
The Mortgagor does further hereby covenant, warrant and agree as follows:
4. The Mortgagor will timely make or cause to be made, all payments and
perform, or cause to be performed, all agreements, conditions and obligations
on its part required to be made and performed under the Agreement and Facility
Note.
5. The Mortgagor will not knowingly permit or suffer the use of any of the
Facility for any purpose other than the use for which the same was intended at
the time this Mortgage was executed.
6. Subject to the provisions of Section 7.2 of the Agreement, the Mortgagor
hereby assigns to the Mortgagee any awards which may become due by reason of
the taking by condemnation or eminent domain of the whole or any part of the
Facility or any rights appurtenant thereto, including any award for change of
grade of streets.
7. The Mortgagor hereby covenants to keep or cause to be kept the Project on
the Land in good repair and in tenantable condition, without any liability on
the part of the Mortgagee to any person for damages or failure to repair. The
Mortgagor shall not permit the construction of any extension, addition or new
structure on the Land, nor the removal or demolition of the same in whole or
in part, except to the extent expressly permitted by the Agreement. All right,
title and interest of the Mortgagor in and to all extensions, improvements,
betterments, renewals, substitutes and replacements of, and all additions and
appurtenances to, the Facility, hereafter acquired by or released to the
Mortgagor or constructed, assembled or placed by the Mortgagor on the Land,
and all conversions of the security constituted thereby, immediately upon such
acquisition, release, construction, assembling, placement or conversion, as
the case may be, and in
- - 4 -
<PAGE>
each such case, without any further mortgage, conveyance, assignment or other
act by the Mortgagor, shall become subject to the lien of this Mortgagee as
fully and completely, and with the same effect, as though now owned by the
Mortgagor and specifically described in the granting clause hereof, but at any
and at all times the Mortgagor will execute and deliver to the Mortgagee any
and all such further assurances, mortgages, conveyances or assignments
thereof as the Mortgagee may reasonably require for the purpose of expressly
and specifically subjecting the same to the lien of this Mortgage.
8. Pursuant to Section 6.2(a) of the Agreement, the Mortgagor will pay before
they become delinquent all taxes, assessments, water rates, sewer rents and
other charges of every type or nature assessed or which may be assessed
against the Facility or any part thereof or upon the interest of the
Mortgagee in said Facility or upon any personal property, without any
deduction, defalcation or abatement, and will pay, when due, any other taxes
(including corporate taxes), assessments or charges, claims or encumbrances
that might become a lien prior to the lien of this Mortgage or encumbrances
that might have priority in distribution of the proceeds of a judicial sale.
9. Upon request of the Mortgagee the Mortgagor will produce or cause to be
produced to the Mortgagee not later than ten (10) days before the date on
which any taxes, assessments, water and sewer rents and other charges bear
interest or penalties, paid receipts for all such taxes, assessments, water
and sewer rents and other charges.
10. Subject to Section 6.2(b) of the Agreement, the Mortgagor may in good
faith contest, by proper legal proceedings, the validity or amount of any tax
or assessment which the Mortgagor has agreed to pay under this Mortgage,
provided that the Mortgagor will pay such contested item and all costs and
penalties, if any, at least thirty (30) days before the date such Facility may
be sold by the taxing authorities because of nonpayment of said tax or
assessment.
11. The Mortgagor shall, at all times at the cost and expense of the Mortgagor,
cause all of the Facility of any insurable nature to be constantly insured
against loss or damage by fire; and such other casualties and hazards, as is
required by Sections 6.3 and 6.4 of the Agreement; and, subject to Section 6.4
of the Agreement, all such policies of insurance shall be so written as to
make any loss occurring thereunder payable by standard mortgage clause
attached thereto to the Mortgagee and the Mortgagor as their interests may
appear, irrespective of, and which may not be invalidated by, an act or default
of the Mortgagor, and all such policies, or a certificate or certificates of
the insurers or of an insurance agency satisfactory to the Mortgagee, showing
that such policies, with such Mortgage
- - 5 -
<PAGE>
clauses, are in force, shall be deposited with the Mortgagee as additional
security hereunder. Notice of loss or damage to the Facility shall be given to
the Mortgagee hereunder, the Facility shall be repaired or rebuilt in
accordance with Article VII of the Agreement, and the proceeds of any such
insurance shall be applied in the manner provided in Section 7.1 of the
Agreement.
If the Facility covered hereby, or any part thereof, shall be damaged by fire
or other hazard against which insurance is held as hereinabove provided, the
amounts paid by any insurance company in pursuance of the contract of
insurance, to the extent of the indebtedness then remaining unpaid, shall be
paid to the Mortgagee and the Mortgagor in accordance with Article VII of the
Agreement, and applied to the debt or released for the repairing or rebuilding
of the Facility pursuant to Section 7.1 of the Agreement.
12. Any insurance policies required by this Mortgage shall provide that any
loss thereunder payable to the Mortgagee and the Mortgagor, as their
respective interests may appear, shall be payable notwithstanding any act or
negligence of the Mortgagor or of any lessee or other occupant of any portion
of the Facility, which would otherwise result in a forfeiture of such
insurance, and that in no event shall such policy be cancelled without at
least thirty (30) days' prior written notice to the Mortgagee, and such
policies shall contain no endorsement permitting cancellation for default in
payment of a loan whereby the premium has been financed.
13. The Mortgagor has a good title in fee simple to all of the Facility free
and clear of all prior encumbrances except for Permitted Encumbrances (as
defined in the Agreement) and will warrant and defend the same against all
lawful claims and mechanics' or other liens of all persons whomsoever.
14. By this instrument, the Mortgagor grants to the Mortgagee a security
interest in the Equipment (as defined in the Agreement). Except as provided by
Section 9.4 of the Agreement, the Mortgagor shall not permit any of the
Equipment to be removed from the Facility without the written consent of the
Mortgagee. If any Event of Default (as hereafter defined) shall occur and the
Mortgagee shall declare the balance of the Facility Note immediately due and
payable in accordance with the terms and conditions hereof, the Mortgagee
shall be entitled to exercise all of the rights and remedies of a secured
party under the Uniform Commercial Code as it may then be in force in the
State of Kansas. The Mortgagor warrants the title to the fixtures, chattels
and personal property, if any, covered by this Mortgage and warrants and
represents that all of the same are free of all prior liens and encumbrances
except for Permitted Encumbrances (as defined in the Agreement), if any.
Without the written consent of the Mortgagee, no prior security interest
will be
- - 6 -
<PAGE>
created or suffered to be created on the Facility, other than Permitted
Encumbrances (as defined in the Agreement), together with any amendments or
supplements thereto, with respect to any goods, fixtures, equipment,
appliances, or articles of personal property now attached to or used or
hereafter attached to or used in connection with the Facility.
15. The Mortgagor represents and warrants that (a) it is a duly created and
validly existing limited partnership created under the laws of the State of
Kansas; and (b) it has the full power and authority to execute this Mortgage
and all instruments collateral hereto.
16. If Mortgagor defaults under any prior mortgage or deed of trust or fails
to cause to be paid any claim, lien or encumbrance which shall be prior to
this Mortgage, or to pay, when due, any tax or assessment, or any insurance
premium, or to keep the Facility in repair as aforesaid, or shall commit or
permit waste, or if there be commenced by action or proceeding affecting the
Facility or the title thereto, then the Mortgagee, at its option, may pay such
claim, lien, encumbrance, tax, assessment or premium with right of subrogation
thereunder; may procure such abstracts or other evidence of title as it deems
necessary; may make such repairs and take such steps as it deems advisable to
prevent or cure such waste; and may appear in any such action or proceeding
and retain counsel therein and take such action therein as it deems advisable,
and for any of such purposes it may advance such sums of money as it deems
necessary. No such payment by the Mortgagee shall impair or affect any of its
rights hereunder arising in consequence of such failure by the Mortgagor. The
Mortgagor shall reimburse the Mortgagee for any amount so paid by the
Mortgagee pursuant to this Paragraph 16, together with interest thereon from
the date of payment by the Mortgagee at the rate provided in the Facility Note
and such amount, together with such interest, shall become additional
indebtedness secured by this Mortgage. The Mortgagee shall have the right to
foreclose for any such amount not so repaid or for any unpaid installment of
principal or interest, subject to the lien of this Mortgage for the balance of
the Facility Note not then due.
17. The Mortgagor agrees to execute and deliver to the Mortgagee from time to
time on demand, security agreements and financing statements and such other
instruments as it may require in order to impose the lien hereof on the goods,
fixtures, equipment, appliances and articles of personal property
heretofore referred to.
18. Neither the value of the Facility nor the lien of this Mortgage will be
diminished or impaired in any way by any act or omission of the Mortgagor and
the Mortgagor will not do or permit to be done to, in, upon or about the
Facility, or any part
- - 7 -
<PAGE>
thereof, anything that may in any way impair the value thereof, or weaken,
diminish or impair the security of this Mortgage.
19. The Mortgagor (a) will not remove or demolish the buildings now or
hereafter erected upon the Land, nor alter the design or structural character
of any building now or hereafter erected upon the Land so as to diminish the
value thereof, unless the Mortgagee shall first consent thereto in writing;
(b) will not, except as permitted by the Agreement, sell the Facility without
prior written approval of the Mortgagee, which approval shall not be
unreasonably withheld or delayed; (c) will comply with all laws, ordinances,
regulations, covenants, conditions and restrictions which, if not so complied
with, adversely affect the Facility; and (d) will not permit the transfer,
sale, conveyance, lease, encumbrance or other disposition of the Facility in
any manner prohibited in Article IX of the Agreement.
20. The Mortgagor will protect, save harmless and indemnify the Mortgagee from
and against any and all claims, liabilities, costs and expenses, of whatever
nature, which may arise or result, directly or indirectly, by reason of the
use or occupation of the Facility or any part thereof.
21. Notwithstanding any other provision of this Mortgage to the contrary, in
the event of any non-payment or non-performance under this Mortgage, neither
the Mortgagor nor any of its partners shall have any personal liability
hereunder, and no holder of this Mortgage shall ask or take or cause to be
asked or taken personal judgment against the Mortgagor or any of its partners
for any manner required to be paid, performed or observed under this Mortgage,
it being understood that said holder of this Mortgage will look solely to the
Facility, and no other property or assets of the Mortgagor or any of its
partners shall be subject to levy, execution or other enforcement procedure for
the satisfaction of the indebtedness evidenced or secured by this Mortgage;
provided, that the foregoing provisions of this Paragraph 21 (a) shall not
constitute a waiver of any indebtedness evidenced by the Facility Note; (b)
shall not limit the right of the Mortgagee to exercise its rights hereunder so
long as no judgment then in the nature of a deficiency judgment shall be
asked or taken against the Mortgagor or any of its partners; and (c) shall
not limit the rights of the Mortgagee under any guaranty delivered in
connection with the Facility Note.
22. Should the Mortgagee or its successors or assigns be made defendant in any
suit involving the title to any of the Facility, or involving the validity or
priority of the lien of this Mortgage, then it is agreed that in every such
case, to the extent permitted by applicable law, an attorney's fee in
reasonable amount shall be fixed by the court in which said suit may be
pending, and may be adjudged in favor of the attorney or attorneys of record
representing the Mortgagee or its successors or
- - 8 -
<PAGE>
assigns therein, which fee shall be adjudged against the Mortgagor, subject to
the provisions of Paragraph 21 hereof, on motion made therefor as a part of
the costs of such proceedings, and that such reasonable costs and expenses of
said parties, or any of them, shall also be fixed and adjudged as costs
therein by the court, and it is agreed that all such fees, costs, and expenses
of every such proceeding shall be adjudged against the Mortgagor, and when so
adjudged shall be secured by this Mortgage, subject to the provisions of
Paragraph 21 hereof.
23. Pursuant to Article VIII of the Agreement, the Mortgagor shall cause to be
furnished to the Mortgagee financial and operating statements of the Facility.
Such statements shall be delivered to the Mortgagee at its offices within the
times provided in the Agreement.
24. All of the grants, covenants, terms, provisions, warranties, agreements
and conditions herein shall run with the Land and shall apply to, bind and
inure to the benefit of, the successors and assigns of the Mortgagor and the
successors and assigns of the Mortgagee.
25. It is hereby expressly provided and agreed by Mortgagor that in the event
any one or more of the following events, each of which shall be, and is hereby
defined as, an "Event of Default", shall occur, to wit:
(a) The occurrence of an "Event of Default" under the Agreement, Facility Note
or Guaranty (as defined in the Agreement);
(b) The failure by the Mortgagor to observe or perform any term, condition or
obligation to be observed or performed by it under this Mortgage for a period
of thirty (30) days after its receipt of written notice from the Mortgagee,
specifying such failure and requesting that it be remedied;
(c) The Mortgagor should become insolvent either in the equity or bankruptcy
definition of the term, or if a voluntary or involuntary petition in
bankruptcy of the Mortgagor is filed and such involuntary petition is not
discharged within sixty (60) days after such filing, or if the Mortgagor makes
an assignment for the benefit of its creditors, or if a receiver, custodian or
trustee is appointed for the Mortgagor's business or property and such
receiver, custodian or trustee is not discharged within sixty (60) days after
such appointment, or if the Mortgagor's interest
- - 9 -
<PAGE>
in the Facility shall pass by operation of law as the result of any creditor's
action, suit or proceeding; or
(d) If any warranty of the Mortgagor contained herein shall prove to be in any
material respect incorrect or if there shall be any other breach of such
warranty;
THEN AND IN EACH AND EVERY SUCH EVENT:
(e) The balance of the principal of the Facility Note then outstanding and
unpaid and the accrued interest thereon shall, at the option of the Mortgagee,
become and be due and payable immediately;
(f) The Mortgagee may without prior demand or notice and without declaring the
unpaid principal of the Facility Note to be then due and payable, or after
declaring such principal to be due and payable, and without regard to the
value of the Facility or any part thereof, (i) enforce payment of the Facility
Note, and (ii) enforce performance of any terms of this Mortgage, the
Agreement or the Facility Note;
(g) Upon demand of the Mortgagee, the Mortgagor shall forthwith surrender to
the Mortgagee the actual possession of all of the Facility and it shall be
lawful (whether or not the Mortgagor has so surrendered possession) for the
Mortgagee, either personally or by agents or attorneys, forthwith to enter
into or upon the Facility and to exclude the Mortgagor, the agents and
servants of the Mortgagor, and all parties claiming by, through or under the
Mortgagor, wholly therefrom, and the Mortgagee shall thereupon be (solely and
exclusively) entitled to possession of the Facility and every part thereof,
and to use, operate, manage and control the same, either personally or by
managers, agents, servants or attorneys, for its own benefit, to the fullest
extent authorized by law; and upon every such entry, the Mortgagee may, from
time to time, at the expense of the Mortgagor, make all necessary and proper
repairs and replacements to the Facility as the Mortgagee may deem judicious;
and
- - 10 -
<PAGE>
(h) The Mortgagee may proceed by suit or suits at law or in equity as the
Mortgagee may be advised by counsel to protect the security interest herein or
to foreclose this Mortgage, and in such event the Mortgagee shall be entitled
to (i) a judgment for all sums due under the Facility Note, this Mortgage
and all other documents securing the Facility Note, all expenses, costs and
outlays incurred in enforcing all of the foregoing, and, to the extent
permitted by applicable law, reasonable fees for the services of its attorneys
and agents, and (ii) a decree for the sale of the Facility in satisfaction of
said judgment. Upon or at any time after the filing of any suit to foreclose
the lien hereof, the Mortgagee shall be entitled as a matter of right to the
appointment of a receiver of the Facility, either before or after sale,
without notice and without regard to the solvency or insolvency of the
Mortgagor at the time of the application for such receiver, and without regard
to the then value of the Facility. The Mortgagee may be appointed as such
receiver. Such receiver shall have full power to collect the rents, issues and
profits from the Facility and all other powers necessary or incidental for the
protection, possession, control, management and operation of the Facility.
Upon any sale or sales under or by virtue of any judicial proceedings: (i) the
whole of the Facility, real, personal and mixed, may be sold in one parcel as
an entirety, or the Facility may be sold in separate parcels as may be
determined by the Mortgagee in its discretion; (ii) any such sale or sales
shall operate to divest the Mortgagor of all right, title, interest, claim and
demand, either at law or in equity, under statute or otherwise, in and to the
Facility and every part thereof so sold and shall be a perpetual bar, both in
law or equity, against the Mortgagor and any and all persons claiming or to
claim from, through or under the Mortgagor; and (iii) at any such sale or
sales the Mortgagee may bid for and purchase the Facility or any part thereof
and may make payment therefor by presenting the Facility Note hereby secured
so that there may be endorsed as paid thereon the amount of such bid which is
to be applied to the payment of Facility Note as herein provided.
Upon the foreclosure and sale of the Facility, or any part thereof, the
proceeds of such sale or sales shall be applied as follows: First, to the
costs and expenses of the Mortgagee incurred in the collection of the
indebtedness secured by this
- - 11 -
<PAGE>
Mortgage, including, to the extent permitted by applicable law, reasonable
attorneys' fees and the cost of procuring title certificates, continuing
abstracts, and title searches or examinations reasonably necessary or proper;
next, to the payment of the balance of the indebtedness evidenced by the
Facility Note secured hereby, with interest thereon as therein provided; next,
to any junior lienholders, in order of their priority, and any surplus
thereafter shall be paid to the Mortgagor.
26. No remedy herein conferred upon or reserved to the Mortgagee is intended
to be exclusive of any other remedy, but every remedy herein provided shall be
cumulative, and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity, or by statute; and every power
and remedy given by this Mortgage to the Mortgagee may be exercised from time
to time and as often as may be deemed expedient. No delay or omission by the
Mortgagee to exercise any right or power arising from any default shall impair
any such right or power or shall be construed to be a waiver of any default or
an acquiescence therein. In case the Mortgagee shall have proceeded to enforce
any right under this Mortgage by foreclosure, entry or otherwise, and such
proceedings shall have been discontinued or abandoned because of waiver or for
any other reason, or shall have been determined adversely, then, and in such
and every such case, the Mortgagor and the Mortgagee shall severally and
respectively be restored to their former positions and rights hereunder in
respect of the Land and the Facility, and all rights, remedies and powers
of the Mortgagee shall continue as though no such proceedings had been taken.
The Mortgagee hereby lets the Facility to the Mortgagor until this instrument
be released and satisfied, or until an Event of Default hereunder, upon the
following terms and conditions, to-wit: the Mortgagor and every and all
persons claiming or possessing the Facility, or any part thereof, by, through
or under them shall pay rent therefor during said term at the rate of one cent
per month, payable upon demand, and shall and will surrender immediate
peaceable possession of Facility, and any and every part thereof, to the
Mortgagee immediately upon such default and notice or demand therefor and the
Mortgagee may thereupon rent the same for its own account until foreclosure is
had and during any proceeding to redeem and then deliver possession to the
purchaser at the foreclosure sale.
This Mortgage and all provisions hereof, except as otherwise provided, shall
extend to and be binding upon the Mortgagor and all parties claiming by,
through or under the Mortgagor. The term "Mortgagee" shall be deemed to mean
and include the endorsee(s), transferee(s), or the holder(s) at the time being
of the Facility Note hereinabove described and the successor or successors and
assigns of the Mortgagee; and the
- - 12 -
<PAGE>
covenants and agreements of this Mortgage shall bind and inure to the benefit
of the heirs, successors and assigns of the Mortgagor and the endorsee(s),
transferee(s) and successors of the Mortgagee.
Until an Event of Default as herein defined shall occur, the Mortgagor shall
be entitled to remain in possession of the Facility, and if the Mortgagor shall
well and truly pay or cause to be paid to the Mortgagee all outstanding
indebtedness secured by this Mortgage, including, without limitation,
principal, interest, penalties and expenses, as and when and to the extent due
and payable under the Facility Note and this Mortgage, and perform all other
obligations and covenants hereby secured, then this Mortgage shall be void and
the lien on the Facility shall be released at the cost of the Mortgagor.
27. A waiver, in one or more instances, of any of the terms and provisions of
this Mortgage shall apply to the particular instance or instances, at the
particular time or times only, and shall not be deemed to be a continuing
waiver.
28. All notices, demands, requests and other communications hereunder shall
be in writing and shall be deemed given if sent by mail, by private courier or
delivery service, or by telegraph or telex, when received. All mail shall be
sent by registered mail, return receipt requested, addressed to the respective
parties hereto at their respective addresses specified below or such other
addresses as either party may specify in writing to the other:
To the Mortgagor:
c/o Fogelman Properties, Inc.
5400 Poplar Avenue
Memphis, Tennessee 38119
Attn: Morris J. Kriger
To the Mortgagee:
c/o Prudential-Bache Properties, Inc.
One Seaport Plaza
199 Water Street
New York, New York 10038
The Mortgagor and the Mortgagee may, by notice given hereunder, designate any
further or different address to which subsequent notices, demands, requests
and other communications shall be sent.
29. The Mortgagor hereby assigns and transfers to the Mortgagee all rents,
issues, proceeds, revenues and income from the Facility, including all rents
now due or which may hereafter become due under all leases thereof, whether
written or verbal, now existing or hereafter made, as additional security for
the
- - 13 -
<PAGE>
indebtedness secured hereby, and the Mortgagee is given a prior and continuing
lien thereon. The Mortgagor hereby appoints the Mortgagee as its
attorney-in-fact with power to collect said rents, revenues and income with or
without suit, and apply the same, less expenses of collection, to said
indebtedness; provided, however, that the Mortgagor may exercise all acts of
ownership and collection of rents, revenues and income until an Event of
Default occurs under the provisions of this Mortgage.
30. This Mortgage has been made in the State of Kansas and shall be governed
exclusively by the applicable laws of Kansas.
31. All capitalized, undefined terms used herein shall have the same meanings
as in the Loan Agreement of even date herewith between the Mortgagee and the
Mortgagor.
32. Mortgagor hereby expressly waives and releases any and all statutory and
equitable rights of redemption, including, but not limited to, all rights of
redemption under K.S.A. 60-2414.
33. Whenever possible, each provision of this Mortgage is to be interpreted in
such manner as to be effective and valid under applicable law, but if any
provision of this Mortgage, or the application thereof to particular
circumstances, shall be ultra vires or prohibited by or invalid under
applicable law, such provision or its application to such circumstances shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or its application to all other
circumstances, or the remaining provisions of this Mortgage, which shall be
effective and valid.
IN WITNESS WHEREOF, the Mortgagor has executed this instrument on the day and
year first above written.
"Mortgagor"
ATTEST: FPI ROYAL VIEW, LTD., L.P.
By: Fogelman Properties, Inc.,
(Seal) General Partner
By: -----------------------
- ------------------ Title: --------------------
Secretary
- - 14 -
<PAGE>
STATE OF TENNESSEE )
) ss.
COUNTY OF SHELBY )
On this ___ day of ________________, in the year 1986,
before me, __________________________________, a Notary
Public in and for said state, personally appeared _____________________, to
me personally known, who, being by me duly sworn, did say that he is Senior
Vice President of Fogelman Properties, Inc., general partner of FPI Royal
View, Ltd., L.P., a Kansas Limited Partnership, that said Mortgage was signed
on behalf of said corporation as general partner of said limited partnership,
and the seal affixed hereto is the seal of said corporation, and further
acknowledged said instrument to be the free act and deed of said corporation
on behalf of said limited partnership.
IN WITNESS WHEREOF, I have hereunder set my hand and affixed my official seal.
------------------------
Notary Public
My commission expires:
- ---------------------
- - 15 -
<PAGE>
RECORD AND RETURN TO:
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York , New York 10022
Attention: Charles Rosenzweig, Esq.
FIRST AMENDMENT
TO MORTGAGE AND SECURITY
AGREEMENT MODIFICATION AGREEMENT
THIS AGREEMENT made and entered into as of the 1st day of January, 1990 by
and between FPI ROYAL VIEW, LTD., L.P., a Kansas limited partnership,
hereinafter referred to as "Mortgagor," and FOGELMAN MORTGAGE L.P. I, a
Tennessee limited partnership, hereinafter referred to as "Mortgagee";
W I T N E S S E T H:
WHEREAS, Mortgagor has heretofore executed and delivered to The Merchants
Bank, a Missouri banking corporation (the "Bank"), that certain Promissory
Note (the "Original Note"), dated March 2, 1987, in the original principal
amount of $20,000,000, payable to the order of the Bank;
WHEREAS, Mortgagor has heretofore executed and delivered to the Bank that
certain Mortgage (the "Original Mortgage"), dated March 2, 1987 and filed for
record on March 3, 1987 in Volume 2527, Page 746 of the Register of Deeds for
the County of Johnson, State of Kansas, securing the Original Note and
constituting a first lien on the premises more particularly described on
Schedule A attached hereto;
WHEREAS, Mortgagor has heretofore executed and delivered to the Bank that
certain Security Agreement (the "Security Agreement"), dated March 2, 1987,
additionally securing the Original Note described above;
WHEREAS, Mortgagor and the Bank entered into that certain Promissory Note
Modification Agreement (the "Note Modification Agreement") dated April 23,
1987, which modified and restated the terms of the Original Note and increased
the principal amount of the indebtedness from $20,000,000 to $22,745,000 (the
Original Note as modified and restated by the Modification Agreement is
hereinafter referred to as the "Note");
WHEREAS, Mortgagor and the Bank entered into that certain Mortgage and
Security Agreement Modification Agreement dated April 23, 1987 and filed for
record on April 24, 1987 in
DOC #347601
<PAGE>
Volume 2565, Page 450 of the Register of Deeds for the County of Johnson,
State of Kansas (the "Mortgage Modification Agreement"), whereby the Original
Mortgage and the Security Agreement were consolidated and amended by combining
them into one instrument securing the principal amount of $22,745,000 (the
Original Mortgage as modified by the Mortgage Modification Agreement is
hereinafter referred to as the "Mortgage");
WHEREAS, the Bank and Mortgagee entered into that certain Assignment dated
April 23, 1987, pursuant to which, among other things, the Mortgage and the
Note were assigned by the Bank to the Lender;
WHEREAS, in connection with the $22,745,000 loan evidenced by the Note,
Mortgagor and Mortgagee entered into that certain Loan Agreement dated as of
April 23, 1987 which was amended by that certain Amendment to Loan Agreement
dated as of July 7, 1987 (as amended, the "Loan Agreement");
WHEREAS, in connection with the Consensual Reorganization of the Business
Affairs of Avron B. Fogelman and Related Entities as of July 31, 1990,
Mortgagor and Mortgagee have executed and delivered (i) that certain
Second Promissory Note Modification Agreement dated of even date herewith
(the "Second Note Modification Agreement") and (ii) that certain Second
Amendment to Loan Agreement dated of even date herewith (the "Second Amendment
to Loan Agreement"); and
WHEREAS, the parties hereto desire to amend the Mortgage in connection with
the execution and delivery of the Second Note Modification Agreement and the
Second Amendment to Loan Agreement.
NOW THEREFORE, and in consideration of the sum of $10.00 cash in hand paid
and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Modification of Mortgage.
(a) All references in the Mortgage to the Note shall be deemed to refer to
the Note as amended by the Second Note Modification Agreement.
(b) All references in the Mortgage to the Loan Agreement shall be deemed to
refer to the Loan Agreement as amended by the Second Amendment to Loan
Agreement.
(c) The terms, covenants and conditions of the Loan Agreement, as amended
by the Second Amendment to Loan Agreement, are hereby incorporated in, and
made a part of, the Mortgage. In the event of any inconsistency between the
terms of the Mortgage
DOC #347601 2
<PAGE>
and the terms of the Loan Agreement, the terms of the Loan Agreement shall
govern.
2. Full Force and Effect. Except as specifically modified hereby, the terms
and conditions of the Mortgage are hereby ratified and confirmed and remain in
full force and effect.
3. Successors and Assigns. This Agreement shall bind and inure to the benefit
of the parties hereto and their respective successors and assigns.
4. Counterparts. This Agreement may be signed in two counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to Mortgage and Security Agreement Modification Agreement to be duly executed
and delivered as of the date first above written.
MORTGAGOR:
FPI ROYAL VIEW, LTD., L.P.
By: Fogelman Properties, Inc.,
General Partner
By: /s/ L. Don Campbell, Jr.
----------------------------
Name: L. Don Campbell, Jr.
Title: Executive Vice President
MORTGAGEE:
FOGELMAN MORTGAGE, L.P. I
By: Prudential-Bache Properties, Inc.,
General Partner
By: /s/ Chester A. Piskorowski
----------------------------
Name: Chester A. Piskorowski
Title: Vice President
DOC #347601 3
<PAGE>
STATE OF NEW YORK )
) s.s.:
COUNTY OF NEW YORK)
On this 14th day of January, 1991, before me, appeared Chester A. Piskorowski
to me personally known, who being by me duly sworn, did say that he is the
Vice President of Prudential-Bache Properties, Inc., a Delaware corporation
and a general partner of Fogelman Mortgage, L.P. I, a Tennessee limited
partnership, and that said instrument was signed on behalf of said corporation
by authority of its Board of Directors as a general partner of said
partnership, and acknowledged said instrument to be the free act and deed of
said corporation as a general partner of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at my office in New York, New York, the day and year last above written.
/s/ Michelle Lavacca
-----------------------------
Notary Public in and for said
County and State
My Commission Expires:
- ----------------------
DOC #347601
<PAGE>
STATE OF TENNESSEE )
) s.s.:
COUNTY OF SHELBY )
On this 16th day of January, 1991, before me, appeared L. Don Campbell, Jr. to
me personally known, who being by me duly sworn, did say that he is the
Executive Vice President of Fogelman Properties, Inc., a Tennessee corporation
and a general partner of FPI Royal View Ltd. L.P., a Kansas limited
partnership, and that said instrument was signed on behalf of said corporation
by authority of its Board of Directors as a general partner of said
partnership, and acknowledged said instrument to be the free act and deed
of said corporation as a general partner of said partnership.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial seal
at my office in Memphis, Tennessee, the day and year last above written.
/s/ M. Elaine Green
-----------------------------
Notary Public in and for said
County and State
M. Elaine Green
My Commission Expires:
My Commission Expires June 20, 1992
- -----------------------------------
DOC #347601
<PAGE>
SCHEDULE A
Legal Description
Lot 1, "ROYAL VIEW" FIRST FLAT, a subdivision in the City of Overland Park,
Johnson County, Kansas.
DOC #379414
<PAGE>
GUARANTY
THIS GUARANTY dated as of July 8, 1987, by Avron B. Fogelman (hereinafter
the "Guarantor") in respect to an indebtedness of FPI Chesterfield, Ltd.
(the "Borrower") in favor of Fogelman Mortgage L.P. I ("Lender") evidenced by
the Westbury Park Multi-Family Housing Facility Note dated as of July 8, 1987
(the "Facility Note") in the principal amount of $23,320,000.
W I T N E S S E T H:
WHEREAS, the Guarantor is a resident of the State of Tennessee;
WHEREAS, Borrower is a Missouri limited partnership which wishes to borrow
from Lender $23,320,000 for the purpose of financing the acquisition,
construction and equipping of the Facility to be located on the Land.
WHEREAS, as a condition to lending such sum to Borrower, Lender requires that
the Guarantor execute and deliver this Guaranty.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Guarantor
hereby agrees for the benefit of Lender and any future holders of the Facility
Note as follows:
1. All capitalized, undefined terms used herein shall have the same meanings
as in the Loan Agreement of even date herewith between Borrower and Lender.
2. The Guarantor hereby guarantees: (a) that, subject to Section 10.1(b) of
the Loan Agreement, the Facility shall be completed in accordance with the
Plans and Specifications no later than September 1, 1989 , for which purposes
the construction of the Facility shall be deemed to be completed on the
Completion Date; (b) that Borrower shall fully and punctually pay and
discharge any and all proper costs and expenses directly attributable to the
construction and completion of the Facility, including the discharge of all
proper claims and demands for labor, materials, services and
<PAGE>
equipment used or obtained for or in connection with the construction and
completion of the Facility; (c) the prompt and complete payment to Lender of
all obligations and liabilities, except as limited in paragraph 11 below,
under and evidenced by the Facility Note (all such obligations and liabilities
being herein called the "Obligations"); and (d) the payment of any and all
expenses which may be paid or incurred by Lender in collecting any or all of
the Obligations and/or enforcing any rights under this Guaranty. Lender shall
give written notice to Guarantor of all defaults under or in respect to the
Obligations within five (5) days after discovery thereof by Lender.
3. If the Borrower shall fail to make any payment under the Facility Note
prior to an event of default thereunder (any such event being called herein a
"Default"), Lender is hereby authorized at any time or from time to time,
after five (5) days prior written notice to the Guarantor, to set off,
appropriate and apply all credits, indebtedness or claims (in each case
whether direct or indirect, or contingent or matured or unmatured) at any time
held or owing by Lender as a result of its holding the Facility Note to or for
the credit of the Guarantor, against and on account of the obligations and
liabilities of such Guarantor hereunder, as Lender may elect, although said
obligations, liabilities of, or claims against such Guarantor shall be
contingent or matured or unmatured.
4. Notwithstanding any payment or payments made by the Guarantor hereunder or
any set off or application of funds to the Guarantor by Lender, the Guarantor
shall not be entitled to be subrogated to any of the rights of Lender against
the Borrower, or to any collateral security or guarantee or right of offset
held by Lender for the satisfaction of the Obligations, until all amounts
owing to Lender by the Borrower pursuant to the terms of the Facility Note are
paid in full.
5. The Guarantor hereby consents, without the necessity of any reservation of
rights against such Guarantor, that any demand for satisfaction of the
Obligations made by Lender may be rescinded by Lender and any of the
Obligations continued, and the Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by Lender; and the Facility Note,
the Mortgage and the Loan Agreement or other guarantee or document in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as Lender may deem advisable from time to time, and any
collateral security or guarantee or right of offset at any time held by Lender
for the satisfaction of the Obligations may be sold, exchanged, waived,
surrendered or released (except a certain Deed of Trust, Assignment of Rents
and Leases and Security Agreement dated July 14, 1987, by
- - 2 -
<PAGE>
and between the Borrower and a mortgage trustee, named therein, for the
benefit of Lender) all without the necessity of any reservation of rights
against such Guarantor, who will remain bound hereunder, notwithstanding any
such renewal, extension, modification, acceleration, compromise, amendment,
supplement, termination, sale, exchange, waiver, surrender or release. Prior
to making any demand hereunder against the Guarantor, Lender shall give the
Guarantor five (5) days prior written notice of its intention so to do and
Lender may, but shall be under no obligation to, make a similar demand on the
Borrower, and any failure by Lender to make any such demand or to collect any
payments from the Borrower or any release of the Borrower shall not relieve
Guarantor of the obligations or liabilities hereunder, and shall not impair
or affect the rights and remedies, express or implied, or as a matter of law,
of Lender against Guarantor. For purposes hereof, "demand" shall include the
commencement and continuance of any legal proceedings.
6. Lender shall give the Guarantor five (5) days prior written notice of the
modification, renewal or extension of the Facility Note, the Mortgage or the
Loan Agreement. Notice or proof of reliance by Lender upon this Guaranty or
acceptance of this Guaranty, and the Facility Note, the Mortgage or the Loan
Agreement shall conclusively be deemed to have been created, contracted or
incurred in reliance upon this Guaranty, and all dealings between the Borrower
or such Guarantor and Lender shall likewise be conclusively presumed to have
been had or consummated in reliance upon this Guaranty. Except as otherwise
provided herein, the Guarantor waives diligence, presentment, protest, and
demand for payment or nonpayment to or upon the Borrower or such Guarantor
with respect to the Obligations. This Guaranty shall be construed as a
continuing, absolute and unconditional guarantee of payment without regard to
the validity, regularity or enforceability of the Facility Note, the Mortgage
or the Loan Agreement, any of the Obligations or any collateral security or
guarantee therefor or right of offset with respect thereto at any time or from
time to time held by Lender and without regard to any defense, setoff or
counterclaim which may at any time be available to or be asserted by the
Borrower against Lender, or by any other circumstance whatsoever (with or
without notice to or knowledge of the Borrower or Guarantor) which constitutes,
or might be construed to constitute, an equitable or legal discharge of the
Borrower for the Obligations, or of Guarantor under this Guaranty, in
bankruptcy or in any other instance, and the obligations and liabilities of
Guarantor hereunder shall not be conditioned or contingent upon the pursuit by
Lender or any other person at any time of any right or remedy against the
Borrower or against any other person which may be or become liable in respect
of all or any part of the Obligations or against any collateral security or
guarantee therefor or right of offset with respect thereto. This Guaranty
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon the Guarantor and his heirs and assigns, and
shall insure to the
- - 3 -
<PAGE>
benefit of Lender, and its successors, endorsees, transferees and assigns, and
for the benefit of any holder from time to time of the Facility Note, until
all the Obligations and the obligations of the Guarantor under this Guaranty
shall have been satisfied in full.
7. This Guaranty shall continue to be effective, or be reinstated, as the case
may be, if at any time payment of any of the Obligations is rescinded or must
otherwise be restored or returned by Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or
trustee or similar officer for, the Borrower or any substantial part of its
property, or otherwise, all as though such payments had not been made.
8. The Guarantor hereby guarantees that the Obligations, if monetary, will be
paid to Lender at 5400 Poplar Avenue, Memphis, TN 38119. All such payments
shall be made in lawful currency of the United States of America and in
immediately available funds.
9. In order to induce Lender to accept this guaranty, the Guarantor hereby
represents and warrants that:
(a) The Guarantor is a resident of the State of Tennessee and subject to the
laws of the State of Tennessee and has full power, authority and legal right
to own his property and to transact the business in which he is engaged;
(b) The Guarantor has full power, authority and legal right to execute and
deliver and to perform his obligations under this Guaranty, and has taken all
necessary legal action to authorize the guaranty hereunder on the terms and
conditions of this Guaranty and to authorize the execution, delivery and
performance of this Guaranty;
(c) This Guaranty constitutes a legal, valid and binding obligation of such
Guarantor enforceable in accordance with its terms;
(d) The execution, delivery and performance of this Guaranty will not violate
any provision of any law or regulation or order, decree or award of any court,
arbitrator or governmental authority, bureau or agency, or of any mortgage,
indenture, security agreement, contract or other undertaking to which
Guarantor as a party or which purports to be binding upon him or any of his
assets or result in the creation or imposition of any mortgage, pledge,
hypothecation, assignment, security interest, lien, charge or encumbrance or
preference, priority or title retention or other security arrangement of any
nature whatsoever on or with respect to any of the assets
- - 4 -
<PAGE>
of Guarantor pursuant to the provisions of any of the foregoing;
(e) All consents of other persons and all consents, licenses, approvals and
authorizations of, exemptions by, and registrations or declarations with, any
governmental authority, bureau or agency required in connection with the
execution, delivery, performance, validity or enforceability of this Guaranty
have been obtained and are in full force and effect;
(f) No litigation, arbitration or administrative proceeding of or before any
court, arbitrator or governmental authority, bureau or agency is currently
pending or, to the knowledge of Guarantor, threatened (i) with respect to any
of the transactions contemplated by this Guaranty or (ii) against or affecting
Guarantor, or any of his assets, which, if adversely determined, would have a
material adverse effect on the business, operations or financial condition of
Guarantor;
(g) At all times during the term of this Guaranty, Guarantor shall comply with
each of the following:
(i) Until the Completion Date, Guarantor shall maintain a net worth
computed in accordance with Generally Accepted Accounting Principles
consistent with those applied in preparation of financial statements of
individuals of not less than Seventy-Five Million Dollars ($75,000,000);
(ii) From and after the Completion Date and until, for not less than six (6)
consecutive months, the Net Operating Income derived from the operation of the
Facility is equal to or exceeds an amount equal to the then current Monthly
Basic Interest due pursuant to the Facility Note, Guarantor shall maintain a
net worth computed in accordance with Generally Accepted Accounting Principles
consistent with those applied in preparation of financial statements of
individuals of not less than Sixty-five Million Dollars ($65,000,000);
(iii) From and after the date described in Paragraph 9(g)(ii) hereof,
Guarantor shall maintain a net worth computed in accordance with Generally
Accepted Accounting Principles consistent with those applied in preparation of
financial statements of individuals of not less than Fifty Million Dollars
($50,000,000); and
(h) Guarantor shall, during the term of the Guaranty, deliver to Issuer on or
before April 1 of each year copies of Guarantor's financial statement for
the
- - 5 -
<PAGE>
immediately preceding calendar year, which financial statement shall be
prepared in accordance with Generally Accepted Accounting Principles
consistent with those applied in preparation of financial statements
of individuals and shall be certified by Guarantor as true and correct.
10. No failure to exercise and no delay in exercising, on the part of Lender,
any right, power or privilege hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege
preclude any other power or further exercise thereof, or the exercise of any
other power or right. The rights and remedies herein provided are cumulative
and not exclusive of any rights or remedies provided by law.
11. Notwithstanding any other provision of this Guaranty to the contrary, the
Guarantor's liability hereunder shall be limited as follows:
(a) In no event shall Guarantor have any liability for any Contingent
Interest due under the terms of the Facility Note;
(b) Upon the later of (i) three (3) years from the date of the Facility Note
or (ii) until for not less than six (6) consecutive months the Net Operating
Income (as defined below) derived from the operation of the Facility is equal
to or exceeds an amount equal to the then current monthly Basic Interest due
pursuant to the Facility Note multiplied by 110%, the Guarantor's liability
hereunder shall be limited to thirty percent (30%) of the principal amount of
the Facility Note; and
(c) Anything herein to the contrary notwithstanding, upon the later of (i)
three (3) years from the date of the Facility Note or (ii) until for not less
than six (6) consecutive months the Net Operating Income (as defined below)
derived from the operation of the Facility is equal to or exceeds an amount
equal to the then current monthly Basic Interest due pursuant to the Facility
Note multiplied by 120%, the Guarantor's liability hereunder shall be limited
to twenty percent (20%) of the principal amount of the Facility Note.
12. As used herein, the term "Net Operating Income" shall mean the excess of
Gross Receipts over Operating Expenses determined on an accrual basis in
accordance with generally accepted accounting principles except as otherwise
specifically provided herein and will be computed on a monthly basis.
(a) "Gross Receipts" shall mean (i) the rentals from residential tenants
determined on an accrual basis of accounting with a normal and customary
offset for bad debts, if necessary, (ii) charges to concessionaires,
fees
- - 6 -
<PAGE>
charged to licensees and all other gross income from all sources whatsoever,
earned by the owner of the Facility from tenants, concessionaires, licensees
or occupants of the Facility, arising out of the occupancy or use of the
Facility or any part thereof by said tenants, concessionaires, licensees or
occupants of the Facility including, without limitation, rents or fees
relating to the use of the utilities, common areas or recreational facilities,
tax or escalation payments (including payments for electricity under rent
inclusion plans), concession income, parking charges, income from vending
machines, such other gross income earned by the owner of the Facility for the
rental or use of furnishings, furniture or service furnished to said tenants,
concessionaires, licensees or occupants by Borrower, the fair rental value of
any models or employee apartments, and interest on monies held by the owner
of the Facility or the managing agent for the account of the owner (but not
including interest on capital contributions to the owning entity and held by
or for the account of the owner), and (iii) insurance proceeds received by the
owner of the Facility related either to loss of rents or business interruption
insurance or casualty insurance (in such latter event, excluding those amounts
paid to Issuer as principal repayment or used for restoration or replacement
related to such casualty).
(b) "Operating Expenses" shall mean only the following expenses and costs
payable by or for the account of the owner of the Facility which are, in the
aggregate, reasonable, normal and customary or any of the following expenses
and costs which are required by Issuer:
(i) Expenses (to the extent not included in the management fee and to the
extent not paid directly by tenants of the Facility) for electricity service
to the common areas of the Facility, water and sewer costs, the cost of
rubbish removal, and other services, legal and accounting fees relating to
the Facility and the fair rental value of any models or employee apartments.
(ii) A management fee of five (5%) percent of the amount of rents and
miscellaneous income related to the Facility collected including any security
deposit forfeitures payable to Fogelman Management Corporation or any managing
agent approved by Issuer (without Issuer's prior written consent, Borrower
shall not pay a management fee in excess of five (5%) percent of the amount
of rents and miscellaneous income related to the Facility collected).
(iii) Ad valorem real estate taxes and assessments incurred with respect to
any governmental
- - 7 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered on the day and year first above written.
/s/ Avron B. Fogelman
____________________________
AVRON B. FOGELMAN, GUARANTOR
ACCEPTED BY: FOGELMAN MORTGAGE L.P. I
By Fogelman Properties, Inc.
General Partner
By: /s/ L. Don Campbell, Jr.
_________________________
L. Don Campbell, Jr.
Vice President
- - 9 -
<PAGE>
GUARANTY
THIS GUARANTY dated as of April 23, 1987, by Avron B. Fogelman (hereinafter
the "Guarantor") in respect to an indebtedness of FPI Royal View, Ltd., L.P.
(the "Borrower") in favor of Fogelman Mortgage L.P. I ("Lender") evidenced by
the Pointe Royal Multi-Family Housing Facility Note dated as of April 23,
1987, (the "Facility Note") in the principal amount of $22,745,000.
W I T N E S S E T H:
WHEREAS, the Guarantor is a resident of the State of Tennessee;
WHEREAS, Borrower is a Kansas limited partnership which wishes to borrow
from Lender $22,745,000 for the purpose of financing the acquisition,
construction and equipping of the Facility to be located on the Land.
WHEREAS, as a condition to lending such sum to Borrower, Lender requires
that the Guarantor execute and deliver this Guaranty.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guarantor hereby agrees for the benefit of Lender and any future holders of
the Facility Note as follows:
1. All capitalized, undefined terms used herein shall have the same meanings
as in the Loan Agreement of even date herewith between Borrower and Lender.
2. The Guarantor hereby guarantees: (a) that, subject to Section 10.1(b) of
the Loan Agreement, the Facility shall be completed in accordance with the
Plans and Specifications no later than September 30, 1988, for which purposes
the construction of the Facility shall be deemed to be completed on the
Completion Date; (b) that Borrower shall fully and punctually pay and
discharge any and all proper costs and expenses directly attributable to the
construction and completion of the Facility, including the discharge of all
proper claims and demands for labor, materials, services and
<PAGE>
equipment used or obtained for or in connection with the construction and
completion of the Facility; (c) the prompt and complete payment to Lender of
all obligations and liabilities, except as limited in paragraph 11 below,
under and evidenced by the Facility Note (all such obligations and liabilities
being herein called the "Obligations"); and (d) the payment of any and all
expenses which may be paid or incurred by Lender in collecting any or all of
the Obligations and/or enforcing any rights under this Guaranty. Lender shall
give written notice to Guarantor of all defaults under or in respect to the
Obligations within file (5) days after discovery thereof by Lender.
3. If the Borrower shall fail to make any payment under the Facility Note
prior to an event of default thereunder (any such event being called herein a
"Default"), Lender is hereby authorized at any time or from time to time,
after five (5) days prior written notice to the Guarantor, to set off,
appropriate and apply all credits, indebtedness or claims (in each case
whether direct or indirect, or contingent or matured or unmatured) at any time
held or owing by Lender as a result of its holding the Facility Note to or for
the credit of the Guarantor, against and on account of the obligations and
liabilities of such Guarantor hereunder, as Lender may elect, although said
obligations, liabilities of, or claims against such Guarantor shall be
contingent or matured or unmatured.
4. Notwithstanding any payment or payments made by the Guarantor hereunder or
any set off or application of funds to the Guarantor by Lender, the Guarantor
shall not be entitled to be subrogated to any of the rights of Lender against
the Borrower, or to any collateral security or guarantee or right of offset
held by Lender for the satisfaction of the Obligations, until all amounts
owing to Lender by the Borrower pursuant to the terms of the Facility Note are
paid in full.
5. The Guarantor hereby consents, without the necessity of any reservation of
rights against such Guarantor, that any demand for satisfaction of the
Obligations made by Lender may be rescinded by Lender and any of the
Obligations continued, and the Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or guarantee
therefor or right of offset with respect thereto, may, from time to time, in
whole or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by Lender; and the Facility Note,
the Mortgage and the Loan Agreement or other guarantee or document in
connection therewith may be amended, modified, supplemented or terminated, in
whole or in part, as Lender may deem advisable from time to time, and any
collateral security or guarantee or right of offset at any time held by Lender
for the satisfaction of the Obligations may be sold, exchanged, waived,
surrendered or released (except a certain Mortgage, dated April 23, 1987,
- - 2 -
<PAGE>
by and between the Borrower and a Lender) all without the necessity of any
reservation of rights against such Guarantor, who will remain bound hereunder,
notwithstanding any such renewal, extension, modification, acceleration,
compromise, amendment, supplement, termination, sale, exchange, waiver,
surrender or release. Prior to making any demand hereunder against the
Guarantor, Lender shall give the Guarantor five (5) days prior written notice
of its intention so to do and Lender may, but shall be under no obligation to,
make a similar demand on the Borrower, and any failure by Lender to make any
such demand or to collect any payments from the Borrower or any release of the
Borrower shall not relieve Guarantor of the obligations or liabilities
hereunder, and shall not impair or affect the rights and remedies, express or
implied, or as a matter of law, of Lender against Guarantor. For purposes
hereof, "demand" shall include the commencement and continuance of any legal
proceedings.
6. Lender shall give the Guarantor five (5) days prior written notice
of the modification, renewal or extension of the Facility Note, the Mortgage
or the Loan Agreement. Notice or proof of reliance by Lender upon this
Guaranty or acceptance of this Guaranty, and the Facility Note, the Mortgage
or the Loan Agreement shall conclusively be deemed to have been created,
contracted or incurred in reliance upon this Guaranty, and all dealings
between the Borrower or such Guarantor and Lender shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guaranty. Except as otherwise provided herein, the Guarantor waives diligence,
presentment, protest, and demand for payment or nonpayment to or upon the
Borrower or such Guarantor with respect to the Obligations. This Guaranty
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to the validity, regularity or enforceability of the
Facility Note, the Mortgage or the Loan Agreement, any of the Obligations or
any collateral security or guarantee therefor or right of offset with
respect thereto at any time or from time to time held by Lender and without
regard to any defense, setoff or counterclaim which may at any time be
available to or be asserted by the Borrower against Lender, or by any other
circumstance whatsoever (with or without notice to or knowledge of the
Borrower or Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the
Obligations, or of Guarantor under this Guaranty, in bankruptcy or in any
other instance, and the obligations and liabilities of Guarantor hereunder
shall not be conditioned or contingent upon the pursuit by Lender or any other
person at any time of any right or remedy against the Borrower or against any
other person which may be or become liable in respect of all or any part of
the Obligations or against any collateral security or guarantee therefor
or right of offset with respect thereto. This Guaranty shall remain in full
force and effect and be binding in accordance with and to the extent of its
terms upon the Guarantor and his heirs and assigns, and shall insure to the
- - 3 -
<PAGE>
benefit of Lender, and its successors, endorsees, transferees and assigns, and
for the benefit of any holder from time to time of the Facility Note, until
all the Obligations and the obligations of the Guarantor under this Guaranty
shall have been satisfied in full.
7. This Guaranty shall continue to be effective, or be reinstated, as
the case may be, if at any time payment of any of the Obligations is rescinded
or must otherwise be restored or returned by Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Borrower, or
upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, the Borrower or any
substantial part of its property, or otherwise, all as though such payments
had not been made.
8. The Guarantor hereby guarantees that the Obligations, if monetary,
will be paid to Lender at 5400 Poplar Avenue, Memphis, Tennessee 38119. All
such payments shall be made in lawful currency of the United States of America
and in immediately available funds.
9. In order to induce Lender to accept this guaranty, the Guarantor
hereby represents and warrants that:
(a) The Guarantor is a resident of the State of Tennessee and subject
to the laws of the State of Tennessee and has full power, authority and legal
right to own his property and to transact the business in which he is engaged;
(b) The Guarantor has full power, authority and legal right to
execute and deliver, and to perform his obligations under this Guaranty, and
has taken all necessary legal action to authorize the guaranty hereunder on
the terms and conditions of this Guaranty and to authorize the execution,
delivery and performance of this Guaranty;
(c) This Guaranty constitutes a legal, valid and binding obligation
of such Guarantor enforceable in accordance with its terms;
(d) The execution, delivery and performance of this Guaranty will not
violate any provision of any law or regulation or order, decree or award of
any court, arbitrator or governmental authority, bureau or agency, or of any
mortgage, indenture, security agreement, contract or other undertaking to
which Guarantor is a party or which purports to be binding upon him or any of
his assets or result in the creation or imposition of any mortgage, pledge,
hypothecation, assignment, security interest, lien, charge or encumbrance or
preference, priority or title retention or other security arrangement of any
nature whatsoever on or with respect to any of the
- - 4 -
<PAGE>
assets of Guarantor pursuant to the provisions of any of the foregoing;
(e) All consents of other persons and all consents, licenses, approvals and
authorizations of, exemptions by, and registrations or declarations with, any
governmental authority, bureau or agency required in connection with the
execution, delivery, performance, validity or enforceability of this Guaranty
have been obtained and are in full force and effect;
(f) No litigation, arbitration or administrative proceeding of or
before any court, arbitrator or governmental authority, bureau or agency is
currently pending or, to the knowledge of Guarantor, threatened (i) with
respect to any of the transactions contemplated by this Guaranty or (ii)
against or affecting Guarantor, or any of his assets, which, if adversely
determined, would have a material adverse effect on the business, operations
or financial condition of Guarantor;
(g) At all times during the term of this Guaranty, Guarantor shall
comply with each of the following:
(i) Until the Completion Date, Guarantor shall maintain a net worth
computed in accordance with Generally Accepted Accounting Principles
consistent with those applied in preparation of financial statements of
individuals of not less than Seventy-Five Million Dollars ($75,000,000);
(ii) From and after the Completion Date and until, for not less than
six (6) consecutive months, the Net Operating Income derived from the
operation of the Facility is equal to or exceeds an amount equal to the then
current Monthly Basic Interest due pursuant to the Facility Note, Guarantor
shall maintain a net worth computed in accordance with Generally Accepted
Accounting Principles consistent with those applied in preparation of
financial statements of individuals of not less than Sixty-Five Million
Dollars ($65,000,000);
(iii) From and after the date described in Paragraph 9(g)(ii) hereof,
Guarantor shall maintain a net worth computed in accordance with Generally
Accepted Accounting Principles consistent with those applied in preparation of
financial statements of individuals of not less than Fifty Million Dollars
($50,000,000); and
(h) Guarantor shall, during the term of the Guaranty, deliver to
Issuer on or before April 1 of each year copies of Guarantor's financial
statement for the
- - 5 -
<PAGE>
immediately preceding calendar year, which financial statement shall be
prepared in accordance with Generally Accepted Accounting Principles
consistent with those applied in preparation of financial statements of
individuals and shall be certified by Guarantor as true and correct.
10. No failure to exercise and no delay in exercising, on the part of
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or
privilege preclude any other power or further exercise thereof, or the
exercise of any other power or right. The rights and remedies herein provided
are cumulative and not exclusive of any rights or remedies provided by law.
11. Notwithstanding any other provision of this Guaranty to the
contrary, the Guarantor's liability hereunder shall be limited as follows:
(a) In no event shall Guarantor have any liability for any Contingent Interest
due under the terms of the Facility Note;
(b) Upon the later of (i) three (3) years from the date of the Facility Note
or (ii) until for not less than six (6) consecutive months the Net Operating
Income (as defined below) derived from the operation of the Facility is equal
to or exceeds an amount equal to the then current monthly Basic Interest due
pursuant to the Facility Note multiplied by 110%, the Guarantor's liability
hereunder shall be limited to thirty percent (30%) of the principal amount of
the Facility Note; and
(c) Anything herein to the contrary notwithstanding, upon the later of (i)
three (3) years from the date of the Facility Note or (ii) until for not less
than six (6) consecutive months the Net Operating Income (as defined below)
derived from the operation of the Facility is equal to or exceeds an amount
equal to the then current monthly Basic Interest due pursuant to the Facility
Note multiplied by 120%, the Guarantor's liability hereunder shall be limited
to twenty percent (20%) of the principal amount of the Facility Note.
12. As used herein, the term "Net Operating Income" shall mean the excess of
Gross Receipts over Operating Expenses determined on an accrual basis in
accordance with generally accepted accounting principles except as otherwise
specifically provided herein and will be computed on a monthly basis.
(a) "Gross Receipts" shall mean (i) the rentals from residential tenants
determined on an accrual basis of accounting with a normal and customary
offset for bad debts, if necessary, (ii) charges to concessionaires,
- - 6 -
<PAGE>
fees charged to licensees and all other gross income from all sources
whatsoever, earned by the owner of the Facility from tenants, concessionaires,
licensees or occupants of the Facility, arising out of the occupancy or use of
the Facility or any part thereof by said tenants, concessionares, licensees or
occupants of the Facility including, without limitation, rents or fees relating
to the use of the utilities, common areas or recreational facilities, tax or
escalation payments (including payments for electricity under rent inclusion
plans), concession income, parking charges, income from vending machines, such
other gross income earned by the owner of the Facility for the rental or use of
furnishings, furniture or service furnished to said tenants, concessionares,
licensees or occupants by Borrower, the fair rental value of any models or
employee apartments, and interest on monies held by the owner of the Facility
or the managing agent for the account of the owner (but not including interest
on capital contributions to the owning entity and held by or for the account of
the owner), and (iii) insurance proceeds received by the owner of the Facility
related either to loss of rents or business interruption insurance or casualty
insurance (in such latter event, excluding those amounts paid to Issuer as
principal repayment or used for restoration or replacement related to such
casualty).
(b) "Operating Expenses" shall mean only the following expenses and costs
payable by or for the account of the owner of the Facility which are, in the
aggregate, reasonable, normal and customary or any of the following expenses
and costs which are required by Issuer:
(i) Expenses (to the extent not included in the management fee and to the
extent not paid directly by tenants of the Facility) for electricity service
to the common areas of the Facility, water and sewer costs, the cost of
rubbish removal, and other services, legal and accounting fees relating to the
Facility and the fair rental value of any models or employee apartments.
(ii) A management fee of five (5%) percent of the amount of rents and
miscellaneous income related to the Facility collected including any security
deposit forfeitures payable to Fogelman Management Corporation or any managing
agent approved by Issuer (without Issuer's prior written consent, Borrower
shall not pay a management fee in excess of five (5%) percent of the amount of
rents and miscellaneous income related to the Facility collected).
(iii) Ad valorem real estate taxes and assessments incurred with respect to
any governmental
- - 7 -
<PAGE>
body, authority or entity or any future taxes levied by any governmental
authority intended to replace such taxes in whole or in part.
(iv) Premiums for insurance (a) required pursuant to the Deed of Trust; or (b)
in such greater amount normally and customarily carried by like projects in
the area in which the Property is located.
(v) Expenses for payroll and employee benefits, renting and administrative
costs, interior painting and cleaning of apartments, routine exterior
painting and minor repairs and maintenance.
(vi) An annual amount equal to 2 1/2% of the Gross Receipts for all other
repairs, maintenance and replacements in connection with the operation of the
Facility.
(c) Except for those items specifically described in paragraph (b) above, no
other expenses shall be included in "Operating Expenses". In this connection,
"Operating Expenses" shall not include:
(i) Depreciation and any other non-cash charges.
(ii) Officers', directors' or partners' salaries or other similar expenses
paid or payable by the owner of the Facility.
(iii) Prepaid expenses not customarily prepaid in the ordinary course of
business.
(iv) Payments under any loan documents which are subordinate to the Security
Documents.
(v) Capital expenditures (meaning amounts spent in connection with the repair,
maintenance and replacement in connection with the operation of the Facility,
less amounts incurred under paragraphs (b)(v) and b(vi) above.)
13. No provision of this Guaranty shall be waived, amended or supplemented
except by a written instrument executed by the Guarantor and Lender. This
Guaranty shall be governed by and be construed and interpreted in accordance
with the law of the State of Tennessee.
14. This Guaranty shall be binding upon Guarantor and his heirs, executors,
legal representatives, successors and assigns.
- - 8 -
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered on the day and year first above written.
/s/ Avron B. Fogelman
____________________________
AVRON B. FOGELMAN, GUARANTOR
ACCEPTED BY: FOGELMAN MORTGAGE L.P. I
By: FOGELMAN MORTGAGE PARTNERS I, INC.,
General Partner
By: /s/ L. Don Campbell, Jr.
_________________________
L. Don Campbell, Jr.
Vice President
- - 9 -
<PAGE>
AMENDED AND RESTATED PAYOFF AGREEMENT
THIS AMENDED AND RESTATED PAYOFF AGREEMENT
("Agreement") is made and entered as of the 30th day of
January, 1998, into by and between FOGELMAN
ENTERPRISES, L.P., a Delaware limited partnership
("FELP"), AVRON B. FOGELMAN, an individual resident of
Memphis, Tennessee ("ABF" and together with FELP, the
"General Partners") and FOGELMAN MORTGAGE L.P. I, a
Tennessee limited partnership ("FMLP").
RECITALS:
A. FMLP is the holder of two mortgage loans
(collectively, the "Mortgage Loans"): (1) a loan (the
"Pointe Royal Loan") in the face amount of $22,745,000
made to FPI Royal View, Ltd., L.P. ("Royal View"),
which is secured by a first mortgage and related
security documents encumbering the Pointe Royal
Apartments, which is a 437 unit residential rental
property located in Overland Park, Kansas (the "Pointe
Royal Property"); and (2) a loan (the "Westmont Loan")
in the face amount of $23,320,000 made to FPI
Chesterfield, L.P. ("Chesterfield" and together with
Pointe Royal, the "Partnerships"), which is secured by
a first mortgage and related security documents that
encumber the Westmont Apartments, a 489 unit
residential rental property located in Chesterfield,
Missouri (the "Westmont Property" and together with the
Pointe Royal Property, the "Properties").
B. The Pointe Royal Loan matures on April 23,
1999, and the Westmont Loan matures on July 8, 1999.
C. Each of the Mortgage Loans is a non-recourse
loan that bears interest (the "Basic Interest") at 9.5%
per annum. The Basic Interest is payable monthly in an
amount equal to 100% of the Property Cash Flow (as
defined in the documents evidencing and securing the
Mortgage Loans), and to the extent that the Property
Cash Flow is insufficient to pay the Basic Interest,
the difference between the Basic Interest calculated at
9.5% per annum and the Property Cash Flow accrues and
bears interest at 9.5% compounded annually.
D. In addition to the Basic Interest, contingent
interest is payable from any Property Cash Flow or the
proceeds of a sale or refinancing of the Properties as
follows: (1) 75% thereof until the Basic Interest plus
contingent interest results in a yield of 10.75% per
annum on each respective Mortgage Loan; (2) 50% of the
remaining balance until the Basic Interest plus
contingent interest results in a yield of 12.75% per
annum on each respective Mortgage Loan; and (3) 25% of
the remaining balance thereof.
E. Under the terms of the documents (the "Loan
Documents") evidencing and securing the Mortgage Loans,
the entire principal balance, together with accrued and
unpaid interest, is due and payable on the respective
maturity date of each of the Mortgage Loans.
F. ABF and FELP are the general partners of each
of the Partnerships.
<PAGE>
G. CIGNA Investments, Inc. ("CIGNA") has issued
commitments to affiliates of the General Partners
respecting two first mortgage loans (the "CIGNA Loans")
secured by the Properties, which such loans will be
cross-collateralized. A description of the CIGNA Loans
is provided on Exhibit "A" attached hereto.
H. General Electric Capital Corporation ("GECC")
has issued a commitment to an affiliate of the General
Partners respecting the terms and conditions of an
equity investment (the "GECC Equity") with respect to
the Properties. A description of the GECC Equity is
provided on Exhibit "A" attached hereto.
I. The CIGNA Loans and the GECC Equity, together
with funds provided by FELP or its affiliates, will
enable the Payoff Amount (hereinafter defined) to be
paid in full satisfaction of the obligations of the
Partnerships in respect of the Mortgage Loans.
J. In order to fix the interest rate payable in
respect of the CIGNA Loans and to commence its formal
application and due diligence process, CIGNA has
required the payment of $410,000; and the completion of
the process required the payment of an additional
$410,000. Furthermore, GECC required that FELP agree to
commit to pay its expenses in connection with its
formal due diligence and approval process. FELP was
willing to commit such amounts only if FMLP agreed to
accept the Payoff Amount in full satisfaction of the
Mortgage Loans.
K. Through its general partner, Prudential-Bache
Properties, Inc. ("PBP"), FMLP has advised FELP that
FMLP will accept the Payoff Amount in full satisfaction
of the Mortgage Loans, if (1) FMLP obtains a written
opinion (the "Fairness Opinion") in form and substance
satisfactory to PBP from a financial advisory firm to
the effect that the transactions (the "Transactions")
contemplated in this Agreement are fair to FMLP and its
partners from a financial point of view, and (2) the
Transactions are approved by a majority in interest of
the limited partners of FMLP.
L. PBP has further advised FELP that FMLP has
retained the firm of Scott-Macon Securities, Inc.
("Scott-Macon") to serve as its exclusive financial
advisor with respect to the Transactions and to render
the Fairness Opinion.
M. Scott-Macon has advised PBP that Scott-Macon is
willing to render the Fairness Opinion only if the
Mortgage Loans are first offered to a selected list of
potential buyers in an open bidding process (the
"Marketing Process") to be conducted by Scott-Macon.
N. Scott-Macon has completed the Marketing
Process, together with such other analysis, review and
investigation as it deems necessary, and has advised
PBP that it is now willing to issue the Fairness
Opinion with respect to the Transactions.
O. The form and substance of the Fairness Opinion
are satisfactory to PBP.
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P. The parties hereto entered into that certain
Payoff Agreement executed by the General Partners on
December 1, 1997, and executed by FMLP and PBP on
November 26, 1997 (the "Prior Agreement").
Q. Certain of the conditions contained in the
Prior Agreement have been satisfied, certain of the
terms respecting the repayment of the Mortgage Loans
have been revised, and the parties hereto desire to
enter into this Agreement to amend and restate the
Prior Agreement in its entirety and to evidence their
agreements respecting the repayment of the Mortgage
Loans.
NOW, THEREFORE, in consideration of the mutual
covenants, agreements, representations and warranties
set forth in this Agreement, and for other good and
valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, the
parties hereto hereby amend and restate the Prior
Agreement in its entirety and agree as follows:
1. Payoff and Satisfaction.
(a) Subject to terms and conditions
hereinafter set forth, FELP agrees to pay (or cause to
be paid on behalf of the Partnerships) to FMLP an
amount (the "Payoff Amount") in cash or immediately
available funds equal to the sum of:
(i) $48,000,000; and
(ii) an amount, if any, by which the
aggregate amount of interest paid to FMLP by the
Partnerships in respect of the Mortgage Loans for the
period from October 1, 1997, through the Closing Date
(hereinafter defined) is less than interest on the face
amount of the Mortgage Loans during such period
calculated at an annual rate of 7.7%.
(b) Subject to the terms and conditions
hereinafter set forth, FMLP agrees to accept the Payoff
Amount in full satisfaction of all obligations owed by
the Partnerships to FMLP in respect of the Mortgage
Loans.
(c) To the extent not earlier paid pursuant to
any provision of this Agreement, the Payoff Amount
shall be payable at the Closing (hereinafter defined)
in cash or immediately available funds, and upon
receipt of the Payoff Amount, FMLP shall (i) release
the liens and encumbrances securing each Mortgage Loan;
(ii) cancel each promissory note evidencing the
respective Mortgage Loan and return the same to the
respective Partnership marked "Paid in Full"; and (ii)
provide to each Partnership and affiliates thereof
general releases with respect to the Mortgage Loans.
2. Additional Representations, Warranties and
Covenants of FELP and ABF. Each of FELP and ABF
represents, warrants and covenants as follows:
(a) Each of FELP and ABF shall use its
reasonable best efforts to consummate the Transactions.
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(b) The partners in each of the Partnerships
have substantial negative capital accounts which would
trigger the allocation of a substantial amount of
phantom income or gain (income or gain in excess of
cash distributions) if either of the Properties was
sold or transferred in a taxable transaction.
(c) Each of FELP and ABF agrees that, for a
period of one (1) year from the Closing Date, neither
FELP nor ABF will sell or otherwise transfer any
interest in either of the Properties, other than (i)
the transfers described on Exhibit "A" attached hereto,
and (ii) transfers of the interests owned by FELP
and/or ABF in the entities described on Exhibit "A"
attached hereto to affiliates or immediate family
members.
(d) For the period commencing December 1, 1997
and continuing through the last day of the month
immediately preceding the month in which the Closing
occurs, ABF and FELP shall cause the Partnerships to
pay to FMLP not less than $295,583.75 each month as
interest in respect of the Mortgage Loans, which such
interest shall be payable in arrears on the date
specified in the documents evidencing and securing the
Mortgage Loans.
3. Fairness Opinion and Limited Partner Approval.
(a) Subject to the satisfaction of any other
condition set forth in Section 5 hereof, PBP has
advised FELP that PBP is willing to cause FMLP to
consummate the Transactions only if the Transactions
are approved by a majority in interest of the limited
partners of FMLP. Accordingly, in addition to the
satisfaction of any other condition set forth in
Section 5 hereof, FMLP's obligation to consummate the
Transactions shall be contingent upon obtaining the
approval of a majority in interest of the limited
partners of FMLP.
(b) Promptly following its execution of this
Agreement, (i) PBP shall take all steps necessary to
solicit the approval of FMLP's limited partners to the
Transactions; and (ii) in connection with such
solicitation, PBP shall recommend that such limited
partners approve the Transactions.
(i) Subject to any right or obligation
contained in Section 11 hereof, in connection with the
solicitation of the approval of FMLP's limited
partners, PBP shall: (A) cause to be prepared a
statement (the "Consent Statement") to be furnished to
the limited partners of FMLP, (B) cause FMLP to file
the Consent Statement, together with such other
documents and instruments as may be required by
applicable law, with the Securities and Exchange
Commission (the "SEC"), (C) use its reasonable best
efforts to cause such filing to be made on or before
February 20, 1998, and (D) use its reasonable best
efforts to obtain the SEC's timely approval of the
Consent Statement.
(ii) PBP shall include FELP and its counsel
on the distribution list to receive drafts of the
Consent Statement.
(c) If a majority in interest of FMLP's
limited partners approves or disapproves the
Transactions, FMLP shall provide notice thereof to FELP
not later than the
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business day following such approval or disapproval.
4. Conditions to FELP's Obligation to Close. The
obligation of FELP to consummate the Transactions is
conditioned upon and subject to each of the following:
(a) The Transactions are consummated on or
before May 29, 1998; and
(b) FMLP having performed and complied with
all agreements, covenants and conditions to be
performed or complied with on or before the Closing
Date.
5. Conditions to FMLP's Obligation to Close.
Subject to the right to terminate pursuant to Section
11 hereof, the obligation of FMLP to consummate the
Transactions is conditioned upon and subject to each of
the following:
(a) The Transactions shall have been approved
by a majority in interest of FMLP's limited partners;
and
(b) FELP having performed and complied (or
shall have caused the Partnerships to have performed
and complied) with all agreements, covenants and
conditions to be performed or complied with on or
before the Closing Date.
6. Closing. The Transactions shall be consummated
(the "Closing") on a date (the "Closing Date") and at a
time and place acceptable to FELP and FMLP, which such
date shall be on or before ten (10) business days
following notice from FMLP to FELP that a majority in
interest of the limited partners of FMLP have approved
the Transactions but in no event later than May 29,
1998.
(a) At Closing, FELP shall deliver, or cause
to be delivered, to FMLP the following:
(i) To the extent not previously paid, the
Payoff Amount, which shall be paid by federal wire
transfer of immediately available funds; and
(ii) A general release releasing each of
FMLP, PBP and their respective partners, agents,
affiliates, successors and assigns from any and all
liability in respect of the Mortgage Loans.
(b) At the Closing, FMLP shall deliver to FELP
the following:
(i) Such documents and instruments as are
necessary to release each and every lien and
encumbrance securing the Mortgage Loans;
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(ii) Either (A) the original of the
promissory notes evidencing each Mortgage Loan, which
such notes shall be marked "Paid in Full"; or (B) such
other documentation evidencing the payment and
satisfaction of the Mortgage Loans as may be agreeable
to the parties;
(iii) A general release releasing each
of the Partnerships and their respective partners,
agents, affiliates, successors and assigns from any and
all liability in respect of the Mortgage Loans; and
(iv) Such other, further and different
documents which are reasonably necessary or appropriate
to consummate the Transactions.
7. Costs and Expenses. The costs, fees and
expenses incurred in connection with the Transactions
shall be payable as follows:
(a) FMLP shall pay:
(i) the fees and expenses of Scott-Macon
incurred in connection with the rendering of the
Fairness Opinion;
(ii) any and all costs associated with the
winding-up of its affairs; and
(iii) any and all costs, fees and
expenses (the "FMLP Transaction Costs") incurred by or
on behalf of FMLP in connection with the Transactions,
including, without limitation, the fees and expenses
incurred in connection with (A) the preparation and
review of this Agreement and the Prior Agreement
(including the determination to proceed with the
Transactions), and (B) the solicitation of the consent
of FMLP's limited partners and the consummation of the
Transactions, which such fees and expenses shall
include, without limitation, all legal and accounting
fees and expenses, all solicitation costs, all printing
and filing fees and expenses.
(b) FELP shall pay any and all costs, fees and
expenses incurred by or on behalf of FELP, ABF, the
Partnerships or any party, other than FMLP or PBP, in
connection with the Transactions, including, without
limitation, the fees and expenses incurred in
connection with (i) the preparation and review of this
Agreement and the Prior Agreement (including the
determination to proceed with the Transactions); and
(ii) the fees and expenses incurred in connection with
the CIGNA Loans or the GECC Equity.
(c) If the Transactions are not consummated
because FMLP exercises any of its rights of termination
provided in this Agreement, except for the right of
termination provided in Section 10.(b) hereof, in
addition to the costs described in Section 7.(a)
hereof, FMLP shall promptly pay to FELP the amount, if
any, by which the aggregate payments made pursuant to
Section 2.(d) hereof exceed the Property Cash Flow for
the applicable period.
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8. Damage or Destruction of the Properties. In
the event that all or any portion of either of the
Properties is damaged or destroyed by fire or other
casualty prior to the Closing Date, FELP shall have the
option to:
(a) terminate this Agreement, in which event,
this Agreement shall be null, void and of no further
force or effect, except for the provisions of Section 7
hereof; or
(b) terminate this Agreement with respect to
the Property to which such damage or destruction has
occurred and consummate the Transactions with respect
to the remaining Property, in which case, the Payoff
Amount shall be reduced by an amount equal to the face
amount of the Mortgage Loan encumbering the Property
which was damaged or destroyed; or
(c) consummate the Transactions and require
FMLP to deliver to FELP at Closing a duly executed
assignment, in form and substance reasonably
satisfactory to FELP, assigning all of MLP's right,
title and interest in and to all insurance proceeds
payable as a result of such fire or casualty.
FELP shall have fifteen (15) business days from the
date of any such damage or destruction within which to
exercise its rights under this Section.
9. Condemnation. In the event that either of the
Partnerships receives written notice that any
condemnation or eminent domain proceedings are
threatened or initiated which might result in a taking
of all or any part of the Properties, FELP may:
(a) terminate this Agreement, in which event,
this Agreement shall be null, void and of no further
force or effect, except for the provisions of Section 7
hereof; or
(b) terminate this Agreement with respect to
the Property which is the subject of the condemnation
or eminent domain proceeding and consummate the
Transactions with respect to the remaining Property, in
which case, the Payoff Amount shall be reduced by an
amount equal to the face amount of the Mortgage Loan
encumbering the Property that is the subject of such
condemnation or eminent domain proceeding; or
(c) consummate the Transactions and require
FMLP to deliver to FELP at Closing a duly executed
assignment, in form and substance reasonably
satisfactory to FELP, assigning all of FMLP's right,
title and interest in and to all proceeds payable as a
result of such condemnation or eminent domain
proceeding.
10. Breach of Agreement.
(a) If FMLP should breach any of its covenants
or agreements contained in this Agreement or in any
other agreement, instrument, certificate or document
delivered pursuant to this Agreement or if FMLP should
fail to consummate the Transactions for any reason
other than FELP's default or the exercise of FMLP's
right to terminate this Agreement in accordance
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with the terms hereof, FELP may: (i) terminate this
Agreement, in which event, this Agreement shall be
null, void and of no further force or effect, including
the provisions of Section 7 hereof; or (ii) enforce
specific performance of this Agreement.
(b) If FELP or ABF should breach any of their
covenants or agreements contained in this Agreement,
except the agreement contained in Section 2.(c) hereof,
or in any other agreement, instrument, certificate or
document delivered pursuant to this Agreement or if
FELP should fail to consummate the Transactions for any
reason other than FMLP's default or FELP's termination
of this Agreement in accordance with the terms hereof,
FMLP may (i) terminate this Agreement and recover its
actual out-of pocket expenses incurred in connection
with the Transactions as full and final liquidated
damages; or (ii) enforce specific performance of this
Agreement. FMLP and FELP hereby acknowledge that in
the event of FELP's failure to consummate the
Transactions, the actual damages suffered by FMLP would
be difficult and/or inconvenient to determine or
ascertain.
(c) In the event that FELP breaches the
agreement contained in Section 2.(c) hereof, FMLP shall
be entitled to receive from FELP as liquidated damages
the greater of (i) $1.0 million, or (ii) the excess, if
any, of the amount received by FELP as a result of any
such sale or transfer over that portion of the Payoff
Amount set forth in Section 1.(a)(i) hereof.
11. Other Termination Rights. Notwithstanding
anything contained herein to the contrary, in the event
that after the date on which FMLP receives the Fairness
Opinion but prior to the Closing Date, FMLP or PBP has
received one or more written offers to purchase the
Mortgage Loans from FMLP which PBP has determined to be
more favorable to FMLP and its partners than the terms
and conditions contained in this Agreement, PBP may
consider such offers, and to the extent that it
believes it would be in the best interest of FMLP and
its partners to do so, may accept such offer and
terminate this agreement by providing written notice
thereof to FELP, in which event all of the rights,
duties and obligations of the parties hereto shall
immediately terminate and this Agreement shall be null,
void and of no further force or effect; provided,
however, FMLP shall have no such right of termination
unless, not less than five (5) business days prior to
the exercise of such right of termination, FMLP shall
have provided to FELP written notice setting forth with
particularity the terms of such offer and FELP shall
have failed to agree to meet or exceed the terms of
such offer; provided further, however,
contemporaneously with the exercise of its right of
termination provided in this Section 11, FMLP shall pay
to FELP a break up fee of $750 thousand.
(a) Notwithstanding the foregoing, from and
after the date on which FMLP receives the Fairness
Opinion, neither FMLP nor PBP will (y) initiate or
solicit any offer to purchase the Mortgage Loans or any
similar transaction; or (z) negotiate with or provide
any information respecting the Mortgage Loans to any
person or entity; provided, however, PBP may
(i) furnish such information as may be
required to be contained in the Consent Statement or as
may otherwise be required to be furnished in connection
with the solicitation of the consent of FMLP's limited
partners, or
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(ii)furnish such information or enter into
such negotiations that PBP in good faith determines to
be required in the exercise of its fiduciary duty.
(b) PBP agrees to provide to FELP prompt
written notice of any and all information provided or
negotiations entered into in reliance upon subsection
11.(a)(ii) hereof.
12. Notice. All notices, demands, requests and
other communications required or permitted to be given
by any provision of this Agreement shall be in writing
and sent by first class, regular, registered, certified
mail, commercial delivery service, overnight courier,
telegraph, telex, telecopier or facsimile transmition,
air or other courier or hand delivery to the party to
be notified, addressed as follows:
If to FELP or ABF:
Fogelman Enterprises, L.P.
5400 Poplar Avenue
Memphis, Tennessee 38119
Attention: Richard L. Fogelman, President
Telephone: (901) 762-6720
Telecopier: (901) 762-6708
With Required Copy to:
Krivcher Magids PLC
International Place II
6410 Poplar Avenue
Suite 300
Memphis, Tennessee 38119
Attention: L. Don Campbell, Jr., Esq.
Telephone: (901) 682-6431
Telecopier: (901) 682-6453
If to FMLP:
Fogelman Mortgage L.P. I
c/o Prudential-Bache Properties, Inc.
199 Water Street
28th Floor
New York, New York 10292
Attention: Chester A. Piskorowski
Telephone: (212) 214-1339
Telecopier: (212) 214-1422
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With a Required Copy to:
Greenberg Traurig
200 Park Avenue
New York, New York 10166
Attention: Judith D. Fryer, Esq.
Telephone: (212) 801-9330
Telecopier: (212) 801-6400
Any such notice, demand, request or communication
shall be deemed to have been given and received for all
purposes under this Agreement: (i) three (3) business
days after the same is deposited in any official
depository or receptacle of the United States Postal
Service first class, certified mail, return receipt
requested, postage-prepaid; (ii) on the date of
transmission when delivered by telecopier or facsimile
transmission, telex, telegraph or other communication
device (provided receipt is confirmed and such notice
is promptly confirmed by notice given by some other
means described herein); (iii) on the next business day
after the same is deposited with a nationally
recognized overnight delivery service that guarantees
overnight delivery; and (iv) on the date of actual
delivery to such party by any other means; provided,
however, if the day such notice, demand, request or
communication shall be deemed to have been given as
aforesaid is not a business day, such notice, demand,
request or communication shall be deemed to have been
given and received on the next business day.
Any party to this Agreement may change such party's
address for the purpose of notice, demands, requests
and communications required or permitted hereunder by
providing written notice of such change of address to
all of the parties hereto by written notice as provided
herein.
13. Entire Agreement. This Agreement contains the
entire agreement between the parties regarding the
subject matter hereof. Any prior agreements,
discussions or representations not expressly contained
herein shall be deemed to be replaced by the provisions
hereof and no party has relied upon any such prior
agreements, discussions or representations as an
inducement to the execution hereof. Without limiting
the generality of the foregoing, this Agreement amends,
restates and replaces the Prior Agreement, which shall
become null, void and of no further force and effect
upon the execution of this Agreement by all of the
parties hereto.
14. Amendments. This Agreement may be modified or
amended only by a written instrument executed by all
the parties hereto.
15. Waiver. Each and every waiver of any covenant,
representation, warranty or other provision of this
Agreement must be in writing and signed by the party
whose interest are adversely affected by such waiver.
No waiver granted in any one instance shall be
construed as a continuing waiver applicable in any
other instance.
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16. Section Headings. The section headings
contained in this Agreement are for reference purposes
only and shall not affect the interpretation of this
Agreement.
17. Governing Law. This Agreement shall be
governed in all respects, including validity,
interpretation and effect by and shall be enforceable
in accordance with the internal laws of the State of
New York, without regard to conflicts of laws
principles.
18. Jurisdiction. Each party to this Agreement
hereby consents to the exclusive jurisdiction of all
courts of the State of New York and the United States
District Court for the Southern District of New York,
as well as to the jurisdiction of all courts from which
any appeal may be taken from such courts, for the
purpose of any suit, action or other proceeding arising
out of or with respect to this Agreement, and any other
agreements, instruments, certificates or other
documents executed in connection herewith, or any of
the transactions contemplated hereby or thereby.
19. Successors and Assigns. This Agreement shall
be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and
assigns.
20. Assignment. This Agreement and any of FELP's
rights hereunder may be assigned by FELP prior to the
Closing Date upon written notice to FMLP and without
the prior consent of FMLP; provided, however, the right
of FELP to make any such assignment shall be
conditioned upon such assignee executing a document
satisfactory to FMLP, pursuant to which such assignee
agrees to be bound by the terms and conditions hereof
and FELP agrees to guarantee the obligations assigned.
FMLP may not assign any of its rights or obligations
hereunder prior to the Closing Date without the express
written consent of FELP.
21. Time of Essence. Time is of the essence with
respect to this Agreement.
22. Lawful Authority. If any party executing this
Agreement is a corporation, the person executing on
behalf of the corporation hereby personally represents
and warrants to all of the parties that he has been
fully authorized to execute and deliver this Agreement
on behalf of the corporation, pursuant to a duly
adopted resolution of its board of directors or by
virtue of its bylaws.
23. Attorneys Fees. If any legal action or other
proceeding is brought for the enforcement of this
Agreement or because of any alleged dispute, breach,
default or misrepresentation in connection with any
provisions of this Agreement and such action is
successful, the prevailing party shall be entitled to
recover reasonably attorneys fees, court costs and all
reasonable expenses, even if not taxable or assessable
as court costs (including, without limitation, all such
fees, costs and expenses incident to appeal) incurred
in that action or proceeding in addition to any other
relief to which such party may be entitled.
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24. Counterpart Execution. This Agreement may be
executed in multiple counterparts, each of which shall
be deemed an original, but all of which shall be
considered together as one and the same instrument.
Further, in making proof of this Agreement, it shall
not be necessary to produce or account for more than
one such counterpart. Execution by a party of a
signature page hereto shall constitute due execution
and shall create a valid, binding obligation of the
party so signing and it shall not be necessary or
required that the signatures of all parties appear on a
single signature page hereto.
25. Waiver of Jury Trial. FMLP and FELP, for
themselves and their respective successors and assigns,
knowingly, voluntarily and intelligently waive all
right to trial by jury in any action or proceeding to
enforce or defend any rights or remedies under this
Agreement.
26. Business Day. The term "business day" shall
mean and refer to any day other than a Saturday, a
Sunday or a day on which national banks located in
Memphis, Tennessee are obligated or authorized to close
their regular banking business.
27. Further Assurances. Each of the parties hereto
agrees to execute such other, further and different
documents and perform such other acts as may reasonably
be necessary or desirable to carry out the intents and
purposes of this Agreement.
[SIGNATURES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their duly authorized
representatives on the dates set forth below.
FELP: FMLP:
FOGELMAN ENTERPRISES, L.P. FOGELMAN MORTGAGE L.P. I
By: Fogelman Limited Partnership By: Prudential-Bache Properties,
Its General Partner Inc.
By: Fogelman Properties, Inc. By: _______
Name: _____
Title: ____
By: _______
Richard L. Fogelman Date signed:__________________
President
Date Signed:
ABF:
____
AVRON B. FOGELMAN
Date Signed: ___
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JOINDER BY PBP
As of the date of execution on behalf of FMLP, PBP
joins in and executes this Agreement to evidence its
obligations as the general partner of FMLP under
Section 3 hereof.
PBP:
PRUDENTIAL-BACHE PROPERTIES, INC.
By: ____
Name:___
Title:__
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EXHIBIT A
DESCRIPTION OF CIGNA LOANS, GECC EQUITY
AND RELATED TRANSACTIONS
The following description of the GECC Equity, the
CIGNA Loans and the related transactions is intended
only for quick reference, is neither complete nor
exact, and is subject in all respects to the documents
and instruments which will evidence the GECC Equity,
the CIGNA Loans and the related transactions.
Furthermore, the amount of either the CIGNA Loans or
the GECC Equity may vary, pursuant to final agreements
among CIGNA, GECC and the General Partners, and the
capital interests of GECC and the Fogelman Party
(hereinafter defined) will be adjusted to reflect any
such variance; provided, however, any change in the
amount of the CIGNA Loans or the GECC Equity will not
alter the Payoff Amount.
GECC Equity
GECC and FELP and/or its affiliates (FELP and/or
such affiliates is hereinafter referred to as the
"Fogelman Party") will form a limited liability company
("Funding LLC") to facilitate the acquisition,
refinancing and operation the Properties. Each of the
Properties will be owned by a separate limited
liability company, and Funding LLC will be the sole
member in each separate sub-tier entity that will own
and hold title to the Properties.
GECC will contribute $5,000,000 in cash to the
capital of Funding LLC, and the Fogelman Party will
make cash contributions to Funding LLC equal to
$3,000,000. In exchange for its capital contributions,
GECC will hold an 62.5% preferred capital interest in
Funding LLC, and the Fogelman Party will hold a 37.5%
subordinated capital interest therein. The capital
contributions of GECC shall earn preferred returns as
follows: (i) a preferred return (the "Class A Preferred
Return") equal to 12% per annum, which will be
cumulative and will be compounded annually; (ii) a
preferred return (the "Class B Preferred Return") equal
to 8% per annum, which shall be cumulative, but not
compounded; and (iii) a preferred return of 25% per
annum (with annual compounding) on any additional funds
(the "Default Contributions") contributed to the
capital of Funding LLC by GECC that should have been
made by the Fogelman Party.
Cash flow generated by the operation of the
Properties after payment of operating expenses, debt
service, approved capital expenditures and operating
reserves shall be distributed as follows: first, to
pay the 25% preferred returns on any Default
Contributions and then to repay all Default
Contributions; second, 100% to GECC until the Class A
Preferred Return (including any unpaid portion from
prior years) is fully paid; third, 100% to GECC until
the Class B Preferred Return (including any unpaid
portion from prior years) is fully paid; and the
balance, if any, to the Fogelman Party.
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The net proceeds of any sale or refinancing of the
Properties shall be distributed as follows: first, to
pay the 25% preferred returns on any Default
Contributions and then to repay all Default
Contributions; second, 100% to GECC until the Class A
Preferred Return (including any unpaid portion from
prior years) is fully paid; third, 100% to GECC until
the Class B Preferred Return (including any unpaid
portion from prior years) is fully paid; fourth, to
return to GECC its initial capital contribution; and
the balance, if any, to the Fogelman Party.
In order to comply with GECC's requirement that
each Property be owned by a separate limited liability
company and that the cash flow from both Properties be
combined for purposes of determining the cash flow
available to pay preferred returns, while avoiding a
taxable transfer of the Properties, the following
transactions will occur:
1. Royal View will contribute the Point Royal
Property to Point Royal, LLC in exchange for 100% of
the membership interests therein; and Chesterfield will
contribute the Westmont Property to Chesterfield, LLC
in exchange for 100% of the membership interests
therein.
2. Royal View will contribute the membership
interests in Point Royal, LLC to Royal Fogelman, LLC in
exchange for a membership interest therein;
Chesterfield will contribute the membership interests
in Chesterfield, LLC to Royal Fogelman, LLC in exchange
for a membership interest therein; and the Fogelman
Party will contribute cash equal to $3,000,000 to Royal
Fogelman, LLC in exchange for a membership interest
therein. The membership interest of each of the
members in Royal Fogelman have not been determined as
of the date of this Agreement.
3. Royal Fogelman, LLC will contribute $3,000,000
in cash, the Point Royal, LLC membership interest and
the Chesterfield, LLC membership interest to Funding
LLC in exchange for a membership interest therein; and
GECC (or a wholly owned subsidiary thereof) will
contribute $5,000,000 cash to Funding LLC in exchange
for a membership interest therein.
CIGNA Loans
CIGNA will make the CIGNA Loans in the aggregate
amount of $41,000,000; one in the amount of $19,800,000
secured by a first mortgage and related security
interests that will encumber the Point Royal Property;
and one in the amount of $21,200,000 that will be
secured by a first mortgage and related security
interests that will encumber the Westmont Property. In
addition to the first mortgage and related security
interests, each CIGNA Loan will be cross-defaulted and
cross-collateralized. Other than the Property that
will serve as the primary security and matters of local
law, the terms of each of the CIGNA Loans will be
identical, which such terms are summarized as follows:
1. Each of the CIGNA Loans will bear interest at a
fixed rate equal to 7.28% per annum.
2. Monthly installments of interest only at 7.28%
per annum are payable for thirty-six (36) months.
A-2
<PAGE>
3. During the period that interest only is
payable, monthly deposits in an amount that
approximates the principal payments that would be
required ($23,400 for the Pointe Royal Property and
$25,000 for the Westmont Property) had the CIGNA Loans
been amortizing are payable into an escrow account, and
the amounts on deposit therein are available to be used
for capital improvements at the applicable Property.
4. After the end of the interest-only period,
installments of principal and interest, each in an
amount sufficient to amortize the principal balance of
the CIGNA Loans over a term of twenty-five (25) years,
are payable monthly.
5. The CIGNA Loans mature on the first day of the
first calendar month following the seventh anniversary
of the closing date; provided, however, upon the
satisfaction of certain conditions, either of the CIGNA
Loans may be extended for an additional thirty-six (36)
months.
6. The CIGNA Loans are closed to pre-payment for a
period of three (3) years. Thereafter, the CIGNA
Loans may be prepaid in whole, but not in part, on any
monthly payment date; provided, that the applicable
borrower gives CIGNA at least forty-five (45) days
prior written notice and pays a prepayment premium
equal to 3% of the loan balance on any of the 25th
through the 60th monthly payment dates; 2% of the loan
balance on any of the 61st through the 70th monthly
payment dates and 1% of the loan balance on any of the
71st through the 80th monthly payment dates. The CIGNA
Loans are open to prepayment at par from and after the
81st monthly payment date.
7. With certain exceptions, the CIGNA Loans shall
be nonrecourse to the applicable borrower.
A-3
<PAGE>
Audited Financial Statements
Pointe Royal Project
Years ended December 31, 1997, 1996, and 1995
with Report of Independent Auditors
(LOGO)
<PAGE>
Pointe Royal Project
Audited Financial Statements
Years ended December 31, 1997, 1996, and 1995
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statements of Assets, Liabilities and Project Deficit 2
Statements of Revenues and Expenses and Changes in Project Deficit 3
Statements of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Auditors
To the Partners of
FPI Royal View, Ltd., L.P.
We have audited the accompanying statements of assets, liabilities and
project deficit of the Pointe Royal Project (the Project) as of December
31, 1997 and 1996, and the related statements of revenues and expenses
and changes in project deficit and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements
are the responsibility of the Project's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of the
Project at December 31, 1997 and 1996, and the results of its
operations and its cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally
accepted accounting principles.
Memphis, Tennessee
January 30, 1998
1
<PAGE>
Pointe Royal Project
Statements of Assets, Liabilities and
Project Deficit
<TABLE>
<CAPTION>
December 31
1997 1996
<S> <C> <C>
Assets
Property, at cost $23,970,628 $23,288,629
Less accumulated depreciation (7,869,324) (7,065,474)
16,101,304 16,223,155
Restricted funds and escrows 145,221 157,191
Cash 72,186 3,400
Total assets $16,318,711 $16,383,746
Liabilities and Project Deficit
Mortgage notes payable $23,808,000 $23,808,000
Due to FPI Royal View, Ltd., L.P.
and related entities 1,180,778 1,183,763
Accrued interest payable 6,278,092 4,235,079
Accrued real estate taxes 172,135 177,100
Security deposits 57,520 64,890
Other accrued expenses 66,527 64,043
Total liabilities 31,563,052 29,532,875
Project deficit (15,244,341) (13,149,129)
Total liabilities and project deficit $16,318,711 $16,383,746
</TABLE>
See accompanying notes.
2
<PAGE>
Pointe Royal Project
Statements of Revenues and Expenses and
Changes in Project Deficit
<TABLE>
<CAPTION>
Year ended December 31
1997 1996 1995
<S> <C> <C> <C>
Revenues
Rental income $ 3,734,047 $ 3,771,718 $ 3,615,886
Interest and other income 128,129 165,052 137,665
3,862,176 3,936,770 3,753,551
Expenses
Operating expenses 2,398,690 2,064,220 1,686,854
Interest 2,754,848 2,600,663 2,524,077
Depreciation 803,850 745,929 749,890
Loss on disposal of property - 43,941 354,386
5,957,388 5,454,753 5,315,207
Expenses in excess of revenues (2,095,212) (1,517,983) (1,561,656)
Project deficit at beginning of year (13,149,129) (11,631,146) (10,069,490)
Project deficit at end of year $(15,244,341) $(13,149,129) $(11,631,146)
</TABLE>
See accompanying note.
3
<PAGE>
Pointe Royal Project
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1997 1996 1995
<S> <C> <C> <C>
Operating activities
Expenses in excess of revenues $ (2,095,212) $ (1,517,983) $ (1,561,656)
Adjustments to reconcile
expenses in excess of
revenues to net cash
provided by operating
activities:
Depreciation 803,850 745,929 749,890
Loss on disposal of property - 43,941 354,386
Decrease in restricted
funds and escrows 11,970 7,210 10,188
(Decrease) increase in
Due to FPI Royal View,
Ltd., L.P. and related
entities (2,985) (48,669) 13,077
Increase in accrued
interest payable 2,043,013 1,063,483 766,521
(Decrease) increase in
accrued real estate
taxes (4,965) (1,761) 35,308
Decrease in security deposits (7,370) (8,190) (20,781)
Increase (decrease) in
other accrued expenses 2,484 28,708 (92,223)
Net cash provided by
operating activities 750,785 312,668 254,710
Investing activities
Property additions (681,999) (395,525) (340,910)
Net increase (decrease) in cash 68,786 (82,857) (86,200)
Cash at beginning of year 3,400 86,257 12,457
Cash at end of year $ 72,186 $ 3,400 $ 86,257
</TABLE>
See accompanying notes.
4
<PAGE>
Pointe Royal Project
Notes to Financial Statements
December 31, 1997
1. Project Description
The Pointe Royal Project (the Project) is a 437
unit residential rental property on 34.74 acres in
Overland Park, Kansas. The Project, which is not a
separate legal entity, is owned by FPI Royal View,
Ltd., L.P. (the Partnership), a Kansas limited
partnership. Avron B. Fogelman and Fogelman
Enterprises, L.P. (FELP), which is directly and
indirectly owned by Avron B. Fogelman, are general
partners of the Partnership. FELP is also the sole
limited partner. Through December 24, 1992, Avron
B. Fogelman was also a general partner of Fogelman
Mortgage L.P. I (FMLP), which holds the first
mortgage note on the Project's property (see Note
4). However, as of December 24, 1992, pursuant to
settlement of certain claims brought by investors
in FMLP, Mr. Fogelman and an affiliated entity
withdrew as general partners from FMLP (see Note
4).
Units are leased under short-term operating leases
with monthly rentals due in advance. The Project,
existing and future leases, and rents have been
assigned as collateral for the related mortgage
notes (see Note 4).
2. Summary of Significant Accounting Policies
Basis of Reporting
The accompanying financial statements are prepared
on the accrual basis of accounting and represent
the cumulative operations of the Project beginning
with the inception of the FMLP loan agreement on
April 23, 1987 (see Note 4).
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the amounts reported in
the financial statements and accompanying notes.
Actual results could differ from those estimates.
Statements of Cash Flows
The Project made payments of $711,835, $1,537,180,
and $1,757,556, for interest during the years ended
December 31, 1997, 1996, and 1995, respectively.
5
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Restricted Funds and Escrows
Included in restricted funds and escrows are
security deposits and real estate tax escrow
deposits.
Income Taxes
No income taxes are paid by the Project or the
Partnership since the results of operations are
allocated to the partners of the Partnership. Any
income tax liability or benefit resulting therefrom
is the responsibility of the partners rather than
the Partnership or the Project.
3. Property
Property is stated at cost. Depreciation is
provided for financial statement reporting purposes
using the straight-line method over estimated
useful lives as follows:
<TABLE>
<CAPTION>
Useful Cost at December 31
Life 1997 1996
<S> <C> <C> <C>
Land N/A $ 3,496,000 $ 3,496,000
Buildings 30 years 16,537,712 16,537,712
Land improvements 15 years 1,864,748 1,618,401
Furniture and fixtures 5-7 years 2,072,168 1,636,516
$ 23,970,628 $ 23,288,629
</TABLE>
Construction period interest incurred during
Project development amounted to $1,347,428 and has
been capitalized as a component of property costs.
The Project follows Financial Accounting Standards
Board Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, which requires impairment
losses to be recorded on long-lived assets used in
operations when indicators of impairment are
present and the undiscounted cash flows estimated
to be generated by those assets are less than the
assets' carrying amount. Statement 121 also
addresses the accounting for long-lived assets that
are expected to be disposed of. The Project adopted
Statement 121 during 1996, with no effect on its
financial statements.
As a result of normal capital improvements at the
Project, certain property was replaced. The net
book value of this property was written off and is
reflected as a loss on disposal of property in the
accompanying financial statements.
6
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
4. Mortgage Notes Payable
The Project is financed with nonrecourse mortgage
notes payable consisting of the following at
December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
Accrued Accrued
Interest Interest
Principal Payable Principal Payable
<S> <C> <C> <C> <C>
First mortgage note
payable to FMLP $22,745,000 $5,587,575 $22,745,000 $3,717,722
Second mortgage note
payable to Avron B.
Fogelman 1,063,000 690,517 1,063,000 517,357
$23,808,000 $6,278,092 $23,808,000 $4,235,079
</TABLE>
The first mortgage note was amended effective
January 1, 1990 pursuant to a consensual
reorganization of the business affairs of Avron B.
Fogelman and related entities. The note, as
amended, bears interest at the basic interest rate
of 9.50% per annum and is payable monthly with the
principal balance due April 23, 1999. If Property
Cash Flow, as defined, is insufficient to pay the
basic interest, then the interest paid shall be
equal to the Property Cash Flow. Such insufficiency
between basic interest at 9.50% and Property Cash
Flow is accrued and bears interest at 9.50%,
compounded monthly. If Property Cash Flow exceeds
the basic interest, then the excess shall be
applied against any unpaid accrued interest until
all such accrued interest has been paid.
Thereafter, any excess Property Cash Flow shall be
paid to FMLP to be held in escrow as additional
collateral for future interest obligations. If
Property Cash Flow exceeds the basic interest for
six consecutive months after payment of all accrued
basic interest, then cash held as additional
collateral shall be paid as contingent interest as
provided under the original terms of the first
mortgage note.
Contingent interest is payable from any Property
Cash Flow, sale or refinancing proceeds received
after January 1, 1989 as follows: (a) 75% thereof
until the total interest (basic interest plus
contingent interest) paid results in a 10.75% yield
on the note; (b) 50% of the remaining balance until
the total interest paid results in a 12.75% yield
on the note; and (c) 25% of the remaining balance
thereof.
Under the first mortgage note agreement, effective
January 1, 1994, the principal may be repaid in
whole, but not in part, upon the payment of a
prepayment penalty equal to 5% of the outstanding
principal balance. Thereafter, prepayment penalties
decline 1% annually.
7
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
4. Mortgage Notes Payable (continued)
During 1992, Mr. Fogelman, FMLP and other
defendants settled litigation with certain
investors in FMLP, the holder of the Project's
first mortgage note. Pursuant thereto, funds placed
by Mr. Fogelman in trust to satisfy his guarantee
related to the mortgage note were released to FMLP
and applied as payment of accrued basic interest.
Mr. Fogelman was then released from his guarantee
on the note and Mr. Fogelman and an affiliated
entity withdrew as general partners from FMLP.
Accordingly, the first mortgage note payable to
FMLP is solely a nonrecourse note collateralized by
the Project.
In accordance with the transfer of funds to FMLP
discussed in the preceding paragraph, the Project
recorded a second mortgage note payable to Mr.
Fogelman in the amount of $1,063,000, which was the
amount of funds transferred to FMLP. The note bears
interest at the prime rate plus 2%, adjustable
monthly (10.5% and 10.25% at December 31, 1997 and
1996, respectively), and the principal and accrued
interest mature April 23, 1999. The note and
interest thereon are subordinate to the first
mortgage note and related interest payable to FMLP
discussed above. The note may be prepaid, subject
to the subordination provisions above, at any time
without penalty.
5. Related Party Transactions
Fogelman Management Co. (FMC), which is owned by
Mr. Fogelman, manages the Project and charges
management fees equal to 5% of gross operating
revenues, as defined in the management agreement.
Management fees paid by the Project were
approximately $193,000, $196,000, and $188,000 for
1997, 1996, and 1995, respectively.
FMC obtains insurance coverage for all properties
it manages and allocates the related costs
proportionately among the properties.
6. Fair Values of Financial Instruments
The following methods and assumptions were used by
the Project's management in estimating fair value
disclosures for financial instruments:
The carrying amounts reported in the balance sheet
for restricted funds and escrows, Due to FPI Royal
View, Ltd., L. P. and related entities, and other
accrued expenses approximate fair value.
The fair value of the first mortgage note and
accrued interest, when combined with the
outstanding amount of the first mortgage note and
accrued interest of FPI Chesterfield, L.P.
($29,439,179), an affiliate, approximates the
payoff amount described in Note 7.
8
<PAGE>
Pointe Royal Project
Notes to Financial Statements (continued)
6. Fair Values of Financial Instruments (continued)
Management of the Project has determined that it is
not practicable to estimate the fair value of the
second mortgage note payable to Mr. Fogelman and
related accrued interest since these obligations
are subordinate to the first mortgage note.
7. Subsequent Event
On January 30, 1998, FELP, Avron B. Fogelman and
FMLP entered into an agreement ("Payoff Agreement")
which provides that FELP will pay (or cause to be
paid on behalf of the Partnership) to FMLP, in full
satisfaction of the first mortgage loan and related
accrued interest of the Partnership, as well as,
the first mortgage loan and related accrued
interest of FPI Chesterfield, L.P. (collectively
referred to as "Mortgage Loans"), the following:
(i) $48,000,000 and (ii) an amount, if any, by
which the aggregate amount of interest paid to FMLP
with respect to the Mortgage Loans for the period
October 1, 1997 through the closing is less than
interest on the principal amount of the Mortgage
Loans ($46,065,000) at an annual interest rate of
7.7%.
The obligation of FMLP to close under the Payoff
Agreement is subject to the approval by a majority
in interest of the unitholders of FMLP.
Additionally, FELP's obligation to close is subject
to the closing occurring on or before May 29, 1998,
unless FELP in its sole discretion agrees to the
closing on a later date.
FELP and Avron B. Fogelman have reached an
agreement in principle with (i) Connecticut General
Life Insurance Company ("CIGNA") respecting the
terms and conditions of new first mortgage
financing and (ii) General Electric Capital
Corporation ("GECC") respecting the terms of a new
equity investment. The funds from CIGNA and GECC,
together with funds provided by FELP and/or its
affiliates, would repay the Mortgage Loans.
9
<PAGE>
Audited Financial Statements
Westmont Project
Years ended December 31, 1997, 1996, and 1995
with Report of Independent Auditors
(LOGO)
<PAGE>
Westmont Project
Audited Financial Statements
Years ended December 31, 1997, 1996, and 1995
Contents
Report of Independent Auditors 1
Audited Financial Statements
Statements of Assets, Liabilities and Project Deficit 2
Statements of Revenues and Expenses and Changes in
Project Deficit 3
Statements of Cash Flows 4
Notes to Financial Statements 5
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Auditors
To the Partners of
FPI Chesterfield, L.P.
We have audited the accompanying statements of assets,
liabilities and project deficit of the Westmont Project
(the Project) as of December 31, 1997 and 1996, and the
related statements of revenues and expenses and changes
in project deficit and cash flows for each of the three
years in the period ended December 31, 1997. These
financial statements are the responsibility of the
Project's management. Our responsibility is to express
an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are
free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles
used and significant estimates made by management, as
well as evaluating the overall financial statement
presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the
financial position of the Project at December 31, 1997
and 1996, and the results of its operations and its
cash flows for each of the three years in the period
ended December 31, 1997, in conformity with generally
accepted accounting principles.
Memphis, Tennessee
January 30, 1998
<PAGE>
Westmont Project
Statements of Assets, Liabilities and
Project Deficit
<TABLE>
<CAPTION>
December 31
1997 1996
<S> <C> <C>
Assets
Property, at cost $23,480,010 $23,093,158
Less accumulated depreciation (8,397,855) (7,597,138)
15,082,155 15,496,020
Restricted funds and escrows 163,243 126,294
Cash 176,411 151,421
Total assets $15,421,809 $15,773,735
Liabilities and Project Deficit
Mortgage notes payable $24,409,000 $24,409,000
Due to FPI Chesterfield, L.P.
and related entities 611,413 613,701
Accrued interest payable 6,826,586 5,289,419
Security deposits 165,333 121,410
Other accrued expenses 138,698 59,008
Total liabilities 32,151,030 30,492,538
Project deficit (16,729,221) (14,718,803)
Total liabilities and project
deficit $15,421,809 $15,773,735
</TABLE>
See accompanying notes.
2
<PAGE>
Westmont Project
Statements of Revenues and Expenses and
Changes in Project Deficit
<TABLE>
<CAPTION>
Year ended December 31
1997 1996 1995
<S> <C> <C> <C>
Revenues
Rental income $ 3,761,133 $ 3,669,349 $ 3,547,581
Interest and other income 137,721 137,427 161,780
3,898,854 3,806,776 3,709,361
Expenses
Operating expenses 2,173,193 1,651,281 1,812,435
Interest 2,881,056 2,774,158 2,693,697
Depreciation 837,524 782,138 795,726
Loss on disposal of property 17,499 - -
5,909,272 5,207,577 5,301,858
Expenses in excess of
revenues (2,010,418) (1,400,801) (1,592,497)
Project deficit at
beginning of year (14,718,803) (13,318,002) (11,725,505)
Project deficit at end of
year $(16,729,221) $(14,718,803) $(13,318,002)
</TABLE>
See accompanying notes.
3
<PAGE>
Westmont Project
Statements of Cash Flows
<TABLE>
<CAPTION>
Year ended December 31
1997 1996 1995
<S> <C> <C> <C>
Operating activities
Expenses in excess of revenues $ (2,010,418) $ (1,400,801) $(1,592,497)
Adjustments to reconcile
expenses in excess of
revenues to net cash
provided by operating
activities:
Depreciation 837,524 782,138 795,726
Loss on disposal of property 17,499 - -
(Increase) decrease in
restricted funds and
escrows (36,949) 127,426 2,853
(Decrease) increase in
Due to FPI Chesterfield,
L.P. and related entities (2,288) (42,850) 5,532
Increase in accrued
interest payable 1,537,167 749,884 891,362
Increase (decrease) in
security deposits 43,923 4,500 (8,695)
Increase (decrease) in
other accrued expenses 79,690 10,041 (17,537)
Net cash provided by
operating activities 466,148 230,338 76,744
Investing activities
Property additions (441,158) (160,749) (122,556)
Net increase (decrease) in cash 24,990 69,589 (45,812)
Cash at beginning of year 151,421 81,832 127,644
Cash at end of year $ 176,411 $ 151,421 $ 81,832
</TABLE>
See accompanying notes.
4
<PAGE>
Westmont Project
Notes to Financial Statements
December 31, 1997
1. Project Description
The Westmont Project (the Project) is a 489 unit
residential rental property on 57.65 acres in
Chesterfield, Missouri. The Project, which is not a
separate legal entity, is owned by FPI
Chesterfield, L.P. (the Partnership), a Missouri
limited partnership. Avron B. Fogelman and Fogelman
Enterprises, L.P. (FELP), which is directly and
indirectly owned by Avron B. Fogelman, are general
partners of the Partnership. Avron B. Fogelman is
also the sole limited partner. Through December 24,
1992, Avron B. Fogelman was also a general partner
of Fogelman Mortgage L.P. I (FMLP), which holds the
first mortgage note on the Project's property (see
Note 4). However, as of December 24, 1992, pursuant
to settlement of certain claims brought by
investors in FMLP, Mr. Fogelman and an affiliated
entity withdrew as general partners from FMLP (see
Note 4).
Units are leased under short-term operating leases
with monthly rentals due in advance. The Project,
existing and future leases, and rents have been
assigned as collateral for the related mortgage
notes (see Note 4).
2. Summary of Significant Accounting Policies
Basis of Reporting
The accompanying financial statements are prepared
on the accrual basis of accounting and represent
the cumulative operations of the Project beginning
with the inception of the FMLP loan agreement on
July 8, 1987 (see Note 4).
Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates
and assumptions that affect the amounts reported in
the financial statements and accompanying notes.
Actual results could differ from those estimates.
Statements of Cash Flows
The Project made payments of $1,343,889,
$2,024,274, and $1,802,335, for interest during the
years ended December 31, 1997, 1996, and 1995,
respectively.
5
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
2. Summary of Significant Accounting Policies (continued)
Restricted Funds and Escrows
Included in restricted funds and escrows are
security deposits and real estate tax escrow
deposits.
Income Taxes
No income taxes are paid by the Project or the
Partnership since the results of operations are
allocated to the partners of the Partnership. Any
income tax liability or benefit resulting therefrom
is the responsibility of the partners rather than
the Partnership or the Project.
3. Property
Property is stated at cost. Depreciation is
provided for financial statement reporting purposes
using the straight-line method over estimated
useful service lives as follows:
<TABLE>
<CAPTION>
Useful Cost at December 31
Life 1997 1996
<S> <C> <C> <C>
Land N/A $ 2,386,320 $ 2,386,320
Buildings 30 years 17,029,627 17,027,526
Land improvements 15 years 2,001,847 1,931,757
Furniture and fixtures 5-7 years 2,062,216 1,747,555
$23,480,010 $23,093,158
</TABLE>
Construction period interest incurred during
Project development amounted to $1,358,694 and has
been capitalized as a component of property costs.
The Project follows Financial Accounting Standards
Board Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, which requires impairment
losses to be recorded on long-lived assets used in
operations when indicators of impairment are
present and the undiscounted cash flows estimated
to be generated by those assets are less than the
assets' carrying amount. Statement 121 also
addresses the accounting for long-lived assets that
are expected to be disposed of. The Project adopted
Statement 121 during 1996, with no effect on its
financial statements.
As a result of normal capital improvements at the
Project, certain property was replaced. The net
book value of this property was written off and is
reflected as a loss on disposal of property in the
accompanying financial statements.
6
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
4. Mortgage Notes Payable
The Project is financed with nonrecourse mortgage
notes payable consisting of the following at
December 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
Accrued Accrued
Interest Interest
Principal Payable Principal Payable
<S> <C> <C> <C> <C>
First mortgage
note payable
to FMLP $23,320,000 $6,119,179 $23,320,000 $4,759,407
Second mortgage
note payable
to Avron B.
Fogelman 1,089,000 707,407 1,089,000 530,012
$24,409,000 $6,826,586 $24,409,000 $5,289,419
</TABLE>
The first mortgage note was amended effective
January 1, 1990 pursuant to a consensual
reorganization of the business affairs of Avron B.
Fogelman and related entities. The note, as
amended, bears interest at the basic interest rate
of 9.50% per annum and is payable monthly with the
principal balance due July 1, 1999. If Property
Cash Flow, as defined, is insufficient to pay the
basic interest, then the interest paid shall be
equal to the Property Cash Flow. Such insufficiency
between basic interest at 9.50% and Property Cash
Flow is accrued and bears interest at 9.50%,
compounded monthly. If Property Cash Flow exceeds
the basic interest, the excess shall be applied
against any unpaid accrued interest until all such
accrued interest has been paid. Thereafter, any
excess Property Cash Flow shall be paid to FMLP to
be held in escrow as additional collateral for
future interest obligations. If Property Cash Flow
exceeds the basic interest for six consecutive
months after payment of all accrued basic interest,
then cash held as additional collateral shall be
paid as contingent interest as provided under the
original terms of the first mortgage note.
Contingent interest is payable from any Property
Cash Flow, sale or refinancing proceeds received
after January 1, 1989 as follows: (a) 75% thereof
until the total interest (basic interest plus
contingent interest) paid results in a 10.75% yield
on the note; (b) 50% of the remaining balance until
the total interest paid results in a 12.75% yield
on the note; and (c) 25% of the remaining balance
thereof.
Under the first mortgage note agreement, effective
January 1, 1994, the principal may be repaid in
whole, but not in part, upon the payment of a
prepayment penalty equal to 5% of the outstanding
principal balance. Thereafter, prepayment penalties
decline 1% annually.
7
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
4. Mortgage Notes Payable (continued)
During 1992, Mr. Fogelman, FMLP and other
defendants settled litigation with certain
investors in FMLP, the holder of the Project's
first mortgage note. Pursuant thereto, funds placed
by Mr. Fogelman in trust to satisfy his guarantee
related to the mortgage note were released to FMLP
and applied as payment of accrued basic interest.
Mr. Fogelman was then released from his guarantee
on the note and Mr. Fogelman and an affiliated
entity withdrew as general partners from FMLP.
Accordingly, the first mortgage note payable to
FMLP is solely a nonrecourse note collateralized by
the Project.
In accordance with the transfer of funds to FMLP
discussed in the preceding paragraph, the Project
recorded a second mortgage note payable to Mr.
Fogelman in the amount of $1,089,000, which was the
amount of funds transferred to FMLP. The note bears
interest at the prime rate plus 2%, adjustable
monthly (10.5% and 10.25% at December 31, 1997 and
1996, respectively), and the principal and accrued
interest mature July 1, 1999. The note and interest
thereon are subordinate to the first mortgage note
and related interest payable to FMLP discussed
above. The note may be prepaid, subject to the
subordination provisions above, at any time without
penalty.
5. Related Party Transactions
Fogelman Management Co. (FMC), which is owned by
Mr. Fogelman, manages the Project and charges
management fees equal to 5% of gross operating
revenues, as defined in the management agreement.
Management fees paid by the Project were
approximately $195,000, $190,000, and $185,000, for
1997, 1996, and 1995, respectively.
FMC obtains insurance coverage for all properties
it manages and allocates the related costs
proportionately among the properties.
6. Fair Values of Financial Instruments
The following methods and assumptions were used by
the Project's management in estimating fair value
disclosures for financial instruments:
The carrying amounts reported in the balance sheet
for restricted funds and escrows, Due to FPI
Chesterfield, L. P. and related entities, and other
accrued expenses approximate fair value.
The fair value of the first mortgage note and
accrued interest, when combined with the
outstanding amount of the first mortgage note and
accrued interest of FPI Royal View, Ltd., L.P.
($28,332,575), an affiliate, approximates the
payoff amount described in Note 7.
8
<PAGE>
Westmont Project
Notes to Financial Statements (continued)
6. Fair Values of Financial Instruments (continued)
Management of the Project has determined that it is
not practicable to estimate the fair value of the
second mortgage note payable to Mr. Fogelman and
related accrued interest since these obligations
are subordinate to the first mortgage note.
7. Subsequent Event
On January 30, 1998, FELP, Avron B. Fogelman and
FMLP entered into an agreement ("Payoff Agreement")
which provides that FELP will pay (or cause to be
paid on behalf of the Partnership) to FMLP, in full
satisfaction of the first mortgage loan and related
accrued interest of the Partnership, as well as,
the first mortgage loan and related accrued
interest of FPI Royal View, Ltd., L.P.
(collectively referred to as "Mortgage Loans"), the
following: (i) $48,000,000 and (ii) an amount, if
any, by which the aggregate amount of interest paid
to FMLP with respect to the Mortgage Loans for the
period October 1, 1997 through the closing is less
than interest on the principal amount of the
Mortgage Loans ($46,065,000) at an annual interest
rate of 7.7%.
The obligation of FMLP to close under the Payoff
Agreement is subject to the approval by a majority
in interest of the unitholders of FMLP.
Additionally, FELP's obligation to close is subject
to the closing occurring on or before May 29, 1998,
unless FELP in its sole discretion agrees to the
closing on a later date.
FELP and Avron B. Fogelman have reached an
agreement in principle with (i) Connecticut General
Life Insurance Company ("CIGNA") respecting the
terms and conditions of new first mortgage
financing and (ii) General Electric Capital
Corporation ("GECC") respecting the terms of a new
equity investment. The funds from CIGNA and GECC,
together with funds provided by FELP and/or its
affiliates, would repay the Mortgage Loans.
9
<PAGE>
1997
- --------------------------------------------------------------------------------
Fogelman Mortgage L.P. I Annual
Report
<PAGE>
<PAGE>
FOGELMAN MORTGAGE L.P. I
LETTER TO THE UNIT HOLDERS
FOR THE YEAR ENDED DECEMBER 31, 1997
1
<PAGE>
<PAGE>
Price Waterhouse LLP (LOGO)
1177 Avenue of the Americas
New York, NY 10036
Telephone 212 596-7000
Facsimile 212 596-8910
Report of Independent Accountants
February 13, 1998
To the Unitholders and
General Partner of
Fogelman Mortgage L.P. I
In our opinion, the accompanying statements of financial condition and the
related statements of operations, changes in partners' capital and cash flows
present fairly, in all material respects, the financial position of Fogelman
Mortgage L.P. I at December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the general partner; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by the general
partner, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
2
<PAGE>
Deloitte & Touche LLP (LOGO)
Two World Financial Center
New York, New York 10281-1414
Telephone (212) 436-2000
Facsimile (212) 436-5000
Independent Auditors' Report
To the Partners of
Fogelman Mortgage L.P. I
We have audited the accompanying statements of operations, changes in partners'
capital and cash flows of Fogelman Mortgage L.P. I (a Tennessee Limited
Partnership) for the year ended December 31, 1995. These financial statements
are the responsibility of the General Partner. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
the General Partner, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of Fogelman Mortgage L.P. I
for the year ended December 31, 1995 in conformity with generally accepted
accounting principles.
/s/ Deloitte & Touche LLP
February 12, 1996
2A
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
<S> <C> <C>
- --------------------------------------------------------------------------------------------------
ASSETS
Investments in mortgage loans $25,701,746 $26,123,955
Cash and cash equivalents 420,884 1,708,313
Deferred general partner's fees (net of accumulated amortization
of $2,153,435 in 1997 and $1,949,939 in 1996) 285,565 489,061
----------- -----------
Total assets $26,408,195 $28,321,329
----------- -----------
----------- -----------
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Deposits held for tax obligations of underlying properties $ 86,068 $ 88,550
Due to affiliates 73,238 71,794
Accrued expenses 177,179 45,362
----------- -----------
Total liabilities 336,485 205,706
----------- -----------
Partners' capital
Unitholders (54,200 units issued and outstanding) 26,305,236 28,328,711
General partner (233,526) (213,088)
----------- -----------
Total partners' capital 26,071,710 28,115,623
----------- -----------
Total liabilities and partners' capital $26,408,195 $28,321,329
----------- -----------
----------- -----------
- --------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
3
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------------------
1997 1996 1995
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
REVENUES
Equity income from the underlying properties $1,633,515 $2,557,797 $2,166,858
Interest income 49,251 85,190 103,340
---------- ---------- ----------
1,682,766 2,642,987 2,270,198
---------- ---------- ----------
EXPENSES
General and administrative 322,261 124,620 137,046
Amortization of deferred general partner's fees 203,496 203,496 203,496
---------- ---------- ----------
525,757 328,116 340,542
---------- ---------- ----------
Net income $1,157,009 $2,314,871 $1,929,656
---------- ---------- ----------
---------- ---------- ----------
ALLOCATION OF NET INCOME
Unitholders $ 917,417 $2,063,701 $1,682,338
---------- ---------- ----------
---------- ---------- ----------
General partner:
Special distribution $ 230,325 $ 230,325 $ 230,325
Other 9,267 20,845 16,993
---------- ---------- ----------
$ 239,592 $ 251,170 $ 247,318
---------- ---------- ----------
---------- ---------- ----------
Net income per depositary unit $ 16.93 $ 38.08 $ 31.04
---------- ---------- ----------
---------- ---------- ----------
- ----------------------------------------------------------------------------------------------------
</TABLE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL
UNITHOLDERS PARTNER TOTAL
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Partners' capital (deficit)--December 31, 1994 $31,053,609 $(185,566) $30,868,043
Net income 1,682,338 247,318 1,929,656
Distributions (3,116,500) (261,805) (3,378,305)
----------- --------- -----------
Partners' capital (deficit)--December 31, 1995 29,619,447 (200,053) 29,419,394
Net income 2,063,701 251,170 2,314,871
Distributions (3,354,437) (264,205) (3,618,642)
----------- --------- -----------
Partners' capital (deficit)--December 31, 1996 28,328,711 (213,088) 28,115,623
Net income 917,417 239,592 1,157,009
Distributions (2,940,892) (260,030) (3,200,922)
----------- --------- -----------
Partners' capital (deficit)--December 31, 1997 $26,305,236 $(233,526) $26,071,710
----------- --------- -----------
----------- --------- -----------
- ----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
4
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received from mortgage loans $ 2,055,724 $ 3,561,452 $ 3,559,892
Interest received from cash equivalents 49,251 85,190 103,340
Cash received for tax obligations of underlying
properties 640,207 480,838 615,068
Cash paid for tax obligations of underlying properties (642,689) (620,853) (586,186)
General and administrative expenses paid (189,000) (143,315) (124,503)
----------- ----------- -----------
Net cash provided by operating activities 1,913,493 3,363,312 3,567,611
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (3,200,922) (3,618,642) (3,378,305)
----------- ----------- -----------
Net increase (decrease) in cash and cash equivalents (1,287,429) (255,330) 189,306
Cash and cash equivalents at beginning of year 1,708,313 1,963,643 1,774,337
----------- ----------- -----------
Cash and cash equivalents at end of year $ 420,884 $ 1,708,313 $ 1,963,643
----------- ----------- -----------
----------- ----------- -----------
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Net income $ 1,157,009 $ 2,314,871 $ 1,929,656
----------- ----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of deferred general partner's fees 203,496 203,496 203,496
Equity income from the underlying properties (1,633,515) (2,557,797) (2,166,858)
Interest received from mortgage loans 2,055,724 3,561,452 3,559,892
Changes in:
Deposits held for tax obligations of underlying
properties (2,482) (140,015) 28,882
Due to affiliates 1,444 (24,161) 12,022
Accrued expenses 131,817 5,466 521
----------- ----------- -----------
Total adjustments 756,484 1,048,441 1,637,955
----------- ----------- -----------
Net cash provided by operating activities $ 1,913,493 $ 3,363,312 $ 3,567,611
----------- ----------- -----------
----------- ----------- -----------
- -----------------------------------------------------------------------------------------------------
The accompanying notes are an integral part of these statements.
</TABLE>
5
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
NOTES TO FINANCIAL STATEMENTS
A. General
Fogelman Mortgage L.P. I (the 'Partnership'), a Tennessee limited
partnership, was formed on September 4, 1986 and will terminate on December 31,
2016 unless terminated sooner under the provisions of the Amended and Restated
Certificate and Agreement of Limited Partnership, as amended ('Partnership
Agreement'). The Partnership was formed to invest in and hold loans evidenced by
notes secured by first liens on two apartment complexes developed by affiliates
of Avron B. Fogelman ('ABF'). The Partnership invested in two mortgage loans
(the 'Mortgage Loans') which provided construction and permanent financing for
the development of two multi-family residential apartment complexes.
The general partner of the Partnership is Prudential-Bache Properties, Inc.
('PBP' or the 'General Partner'), a wholly owned subsidiary of Prudential
Securities Group Inc. Prudential-Bache Investor Services II, Inc. is the
Assignor Limited Partner of the Partnership. ABF and Fogelman Mortgage Partners
I, Inc. ('FMPI') withdrew from the Partnership and transferred their interests
as general partners to PBP as of December 14, 1992.
On January 30, 1998, the Partnership entered into an amended and restated
payoff agreement (the 'Payoff Agreement') with Fogelman Enterprises, L.P., a
Delaware limited partnership ('FELP') and ABF. Through PBP, the Partnership has
advised FELP that the Partnership will accept the Payoff Amount, as hereinafter
defined, in full satisfaction of the Mortgage Loans if the Transactions, as
hereinafter defined, are approved by a majority in interest of the Unitholders
of the Partnership. PBP has received a written opinion from its advisor to the
effect that the offer to pay off the Mortgage Loans pursuant to the terms of the
Payoff Agreement (the 'Transactions') are fair to the Partnership and the
Unitholders from a financial point of view. If the Transactions are approved by
the Unitholders, the Partnership intends to consummate the Transactions,
distribute the Payoff Amount (net of expenses) and the remaining net assets of
the Partnership and liquidate the Partnership.
Pursuant to the Payoff Agreement, FELP has agreed to pay to the Partnership
the payoff amount ('Payoff Amount') of $48,000,000 and an amount, if any, by
which the aggregate amount of interest paid to the Partnership in respect of the
Mortgage Loans for the period from October 1, 1997, through the closing of the
Transactions is less than the interest on the face amount of the Mortgage Loans
during such period calculated at an annual rate of 7.7%.
The Transactions must be consummated not later than May 29, 1998.
B. Summary of Significant Accounting Policies
Basis of accounting
The books and records of the Partnership are maintained on the accrual basis
of accounting in accordance with generally accepted accounting principles.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the General Partner to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Deferred general partner's fees
Deferred general partner's fees are amortized on a straight-line basis over
the lives of the mortgage loans, which are twelve years.
Investments in mortgage loans
Investments in mortgage loans are accounted for on the equity method. Such
investments are adjusted for net income or loss from the underlying properties
(before the accrual of interest expense and depreciation of certain capitalized
costs not financed by the Partnership) and are decreased by interest received
from the mortgage loans.
6
<PAGE>
<PAGE>
Cash and cash equivalents
Cash and cash equivalents include money market funds whose cost approximates
market value.
Income taxes
The Partnership is not required to provide for, or pay, any Federal or state
income taxes. Income tax attributes that arise from its operations are passed
directly to the individual partners. The Partnership may be subject to other
state and local taxes in jurisdictions in which it operates.
Profit and loss allocation and distributions
Net profits or losses are allocated 99% to the Unitholders and 1% to the
General Partner after giving effect to the allocation of the special
distribution. As more fully described in the Partnership Agreement, PBP receives
a special distribution equal to 0.5% per annum of the mortgage loan principal
outstanding, limited to 10% of all distributions of adjusted cash from
operations, payable quarterly. In addition, distributions of cash are made based
on adjusted cash flow from operations as defined in the Partnership Agreement
after giving effect to the special distribution to the General Partner.
C. Investments in Mortgage Loans
A summary of the investments in mortgage loans is as follows:
<TABLE>
<CAPTION>
Pointe Royal Westmont
Loan Loan Total
<S> <C> <C> <C>
------------------ -------------- -----------
Balance at December 31, 1994 $ 14,386,564 $ 14,134,080 $28,520,644
Equity income from the underlying properties 1,013,501 1,153,357 2,166,858
Interest received from mortgage loans (1,757,556) (1,802,336) (3,559,892)
------------------ -------------- -----------
Balance at December 31, 1995 13,642,509 13,485,101 27,127,610
Equity income from the underlying properties 1,132,286 1,425,511 2,557,797
Interest received from mortgage loans (1,537,179) (2,024,273) (3,561,452)
------------------ -------------- -----------
Balance at December 31, 1996 13,237,616 12,886,339 26,123,955
Equity income from the underlying properties 710,719 922,796 1,633,515
Interest received from mortgage loans (711,835) (1,343,889) (2,055,724)
------------------ -------------- -----------
Balance at December 31, 1997 $ 13,236,500 $ 12,465,246 $25,701,746
------------------ -------------- -----------
------------------ -------------- -----------
</TABLE>
The Partnership has invested in Mortgage Loans with two partnerships in which
ABF and FELP are the general partners: FPI Royal View Ltd., L.P. on April 23,
1987 for $22,745,000 (the 'Pointe Royal Loan') and FPI Chesterfield, L.P. on
July 8, 1987 for $23,320,000 (the 'Westmont Loan'). At December 31, 1997, the
accrued interest liability at the property level was approximately $5,588,000
and $6,119,000 for Pointe Royal and Westmont, respectively. This accrued
interest plus the original loan principal balances aggregate approximately
$57,772,000. The ultimate collectibility of the accrued interest as well as the
full principal balances of the mortgages will depend upon the value of the
underlying properties, which are estimated, based on the most recent third party
appraisals, to be less than the amounts due. However, the estimated property
values exceed the carrying amount of the Partnership's investment in mortgage
loans which is recorded using the equity method of accounting. The values of
Pointe Royal and Westmont estimated in the appraisal reports were $24,200,000
and $25,600,000, respectively, as of April 15, 1997. (See Note A for discussion
of the proposed payoff of the Mortgage Loans.)
A plan for the consensual reorganization of the business and affairs of ABF
and related entities closed on July 31, 1990 (the 'Plan'). The Plan provided
for, among other things, the modification of loans and credit relationships
between lenders and ABF and related affiliates, including those of the
Partnership. The two notes executed by FPI Royal View, Ltd., L.P. and FPI
Chesterfield, L.P. and the loan agreements executed in connection with such
notes and the two mortgages with respect to Westmont Apartments and Pointe Royal
Apartments securing those notes were modified, effective as of January 1, 1990.
The principal effect of such modifications was to make the indebtedness
evidenced by the notes repayable on a cash flow basis, with the difference
between the amount actually paid and the original pay rate of 9.5% per annum
being accrued
7
<PAGE>
<PAGE>
in a separate account on the books of FPI Royal View, Ltd., L.P. and FPI
Chesterfield, L.P., as discussed above, and bearing interest at 9.5% per annum.
For the three years ended December 31, 1997, interest received from the net
property cash flow has been less than the original pay rate of 9.5% per annum.
D. Income Taxes
The following is a reconciliation of net income for financial reporting
purposes to net income for tax reporting purposes.
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net income per financial statements $1,157,009 $2,314,871 $1,929,656
Equity income from the underlying properties (1,633,515 ) (2,557,797 ) (2,166,858 )
Interest received from mortgage loans 2,055,724 3,561,452 3,559,892
----------- ----------- -----------
Tax basis net income $1,579,218 $3,318,526 $3,322,690
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The differences between the tax basis and book basis of partners' capital are
primarily attributable to the cumulative effect of the book to tax income
adjustments and the timing of distributions.
E. Related Parties
The General Partner and its affiliates perform services for the Partnership
which include, but are not limited to: accounting and financial management;
registrar, transfer and assignment functions; asset management; investor
communications; printing and other administrative services. The amount of
reimbursement from the Partnership for these services is limited by the
provisions of the Partnership Agreement. The costs and expenses were
approximately $79,000, $52,000 and $79,000 for the years ended December 31,
1997, 1996 and 1995, respectively.
An affiliate of FMPI continues to manage the properties for which it earned
approximately $388,000, $386,000 and $373,000 for the years ended December 31,
1997, 1996 and 1995, respectively.
The Partnership maintains an account with the Prudential Institutional
Liquidity Portfolio Fund, an affiliate of PBP, for investment of its available
cash in short-term instruments pursuant to the guidelines established by the
Partnership Agreement.
Prudential Securities Incorporated, an affiliate of PBP, owns 835 units at
December 31, 1997.
F. Summarized Property Financial Information
Presented below is summarized property financial information for the
properties underlying the Partnership's two mortgage loan investments.
<TABLE>
<CAPTION>
December
December 31, 1997 December 31, 1996 31, 1995
WESTMONT POINTE ROYAL TOTAL WESTMONT POINTE ROYAL TOTAL WESTMONT
<S> <C> <C> <C> <C> <C> <C> <C>
----------- ------------ ------------ ----------- ------------ ------------ -----------
Assets:
Property, net of
accumulated
depreciation $15,082,155 $ 16,101,304 $31,183,459 $15,496,020 $ 16,223,155 $31,719,175 $16,117,409
Other assets 339,654 217,407 557,061 277,715 160,591 438,306 335,552
----------- ------------ ------------ ----------- ------------ ------------ -----------
$15,421,809 $ 16,318,711 $31,740,520 $15,773,735 $ 16,383,746 $32,157,481 $16,452,961
----------- ------------ ------------ ----------- ------------ ------------ -----------
----------- ------------ ------------ ----------- ------------ ------------ -----------
Liabilities:
First mortgage note
payable to the
Partnership $23,320,000 $ 22,745,000 $46,065,000 $23,320,000 $ 22,745,000 $46,065,000 $23,320,000
Second mortgage note
payable to ABF 1,089,000 1,063,000 2,152,000 1,089,000 1,063,000 2,152,000 1,089,000
Other liabilities 7,742,030 7,755,052 15,497,082 6,083,538 5,724,875 11,808,413 5,361,963
----------- ------------ ------------ ----------- ------------ ------------ -----------
$32,151,030 $ 31,563,052 $63,714,082 $30,492,538 $ 29,532,875 $60,025,413 $29,770,963
----------- ------------ ------------ ----------- ------------ ------------ -----------
----------- ------------ ------------ ----------- ------------ ------------ -----------
<CAPTION>
POINTE ROYAL TOTAL
<S> <C> <C>
------------ ------------
Assets:
Property, net of
accumulated
depreciation $ 16,617,500 $32,734,909
Other assets 250,658 586,210
------------ ------------
$ 16,868,158 $33,321,119
------------ ------------
------------ ------------
Liabilities:
First mortgage note
payable to the
Partnership $ 22,745,000 $46,065,000
Second mortgage note
payable to ABF 1,063,000 2,152,000
Other liabilities 4,691,304 10,053,267
------------ ------------
$ 28,499,304 $58,270,267
------------ ------------
------------ ------------
</TABLE>
8
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Year Ended
Year Ended Year Ended December
December 31, 1997 December 31, 1996 31, 1995
----------------------------------------- ----------------------------------------- -----------
WESTMONT POINTE ROYAL TOTAL WESTMONT POINTE ROYAL TOTAL WESTMONT
----------- ------------ ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 3,761,133 $ 3,734,047 $ 7,495,180 $ 3,669,349 $ 3,771,718 $ 7,441,067 $ 3,547,581
Interest and other
income 137,721 128,129 265,850 137,427 165,052 302,479 161,780
----------- ------------ ------------ ----------- ------------ ------------ -----------
3,898,854 3,862,176 7,761,030 3,806,776 3,936,770 7,743,546 3,709,361
----------- ------------ ------------ ----------- ------------ ------------ -----------
Expenses:
Operating 2,173,193 2,398,690 4,571,883 1,651,281 2,064,220 3,715,501 1,812,435
Interest 2,881,056 2,754,848 5,635,904 2,774,158 2,600,663 5,374,821 2,693,697
Depreciation 837,524 803,850 1,641,374 782,138 745,929 1,528,067 795,726
Write-off of fixed
assets 17,499 -- 17,499 -- 43,941 43,941 --
----------- ------------ ------------ ----------- ------------ ------------ -----------
5,909,272 5,957,388 11,866,660 5,207,577 5,454,753 10,662,330 5,301,858
----------- ------------ ------------ ----------- ------------ ------------ -----------
Net loss $(2,010,418) $ (2,095,212) $(4,105,630 ) $(1,400,801) $ (1,517,983) $(2,918,784 ) $(1,592,497)
----------- ------------ ------------ ----------- ------------ ------------ -----------
----------- ------------ ------------ ----------- ------------ ------------ -----------
<CAPTION>
POINTE ROYAL TOTAL
------------ ------------
<S> <C> <C>
Revenues:
Rental income $ 3,615,886 $ 7,163,467
Interest and other
income 137,665 299,445
------------ ------------
3,753,551 7,462,912
------------ ------------
Expenses:
Operating 1,686,854 3,499,289
Interest 2,524,077 5,217,774
Depreciation 749,890 1,545,616
Write-off of fixed
assets 354,386 354,386
------------ ------------
5,315,207 10,617,065
------------ ------------
Net loss $ (1,561,656) $(3,154,153 )
------------ ------------
------------ ------------
</TABLE>
G. Subsequent Event
On January 30, 1998, the Partnership entered into the Payoff Agreement with
FELP and ABF (see Note A).
In February 1998, distributions of approximately $623,000 were paid to the
Unitholders and distributions of approximately $6,000 were paid to the General
Partner for the quarter ended December 31, 1997.
9
<PAGE>
<PAGE>
FOGELMAN MORTGAGE L.P. I
(a limited partnership)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
The Partnership provides permanent financing for two multi-family residential
apartment complexes. As of December 31, 1997, the Partnership had $421,000 of
funds available which may be used to pay distributions, unanticipated or
extraordinary expenses, real estate taxes and other costs relating to the
operation and administration of the Partnership's business. Significant amounts
of cash were expended at the properties in 1997 for improvements and repairs and
maintenance. These expenditures partially offset cash flow paid by the
properties to the Partnership in the form of interest.
The distribution for the three months ended December 31, 1997 was funded from
current and prior undistributed cash flow from operations. Because of the
increased competition in the two market areas in which the properties underlying
the Partnership's mortgage loan investments are located, there has been an
increase in the properties' capital expenditures in order to maintain their
competitiveness. As a result of these increased capital expenditures, the
General Partner has lowered the distribution to 4.6% on an annualized basis or
$11.50 per unit per quarter beginning with the distribution made for the second
quarter of 1997. The Partnership currently does not expect that quarterly cash
distributions will continue to be paid in the future subject to the approval by
the Unitholders of the proposed disposition of the Mortgage Loans. (See Note A
to the financial statements.)
Results of Operations
Net income decreased by $1,158,000 and increased by $385,000 for the years
ended December 31, 1997 and 1996, respectively, as compared to the prior years.
For financial reporting purposes, the Partnership's Mortgage Loans are
considered, in substance, to be investments in real estate and are accounted for
using the equity method. Equity income from the underlying properties (which
increases the carrying value of the original investment) decreased $924,000 and
increased $391,000 for the years ended December 31, 1997 and 1996, respectively,
as compared to the prior years. The 1997 decrease was primarily due to increased
repairs and maintenance at Pointe Royal and Westmont of $269,000 and $431,000,
respectively. In addition, depreciation expense increased at Pointe Royal and
Westmont by $58,000 and $55,000, respectively, as a result of increased capital
improvements at both properties. The 1996 increase was primarily due to higher
rental rates at both properties.
Interest received from mortgage loans for the years ended December 31, 1997
and 1996 of $2,056,000 and $3,561,000, respectively, is accounted for as
distributions and, accordingly, reduces the carrying value of the original
investment. Interest received (paid from property cash flow) decreased
$1,505,000 for the year ended December 31, 1997 as compared to the same period
in 1996 primarily due to the reasons discussed above in addition to an increase
in capital improvements at the properties. Capital improvements increased
$286,000 and $280,000 at Pointe Royal and Westmont, respectively, in 1997 as
compared to 1996.
At December 31, 1997, the accrued interest liability at the property level
was $5,588,000 and $6,119,000 for Pointe Royal and Westmont, respectively. This
accrued interest plus the original loan principal balances aggregate
$57,772,000. As of December 31, 1997, 1996 and 1995, the cumulative differences
between the original pay rate of 9.5% per annum and the cash paid were
$11,707,000, $8,477,000 and $6,975,000, respectively, including accrued interest
on the unpaid balance. The ultimate collectibility of the accrued interest as
well as the full principal balances of the mortgage loans will depend upon the
value of the underlying properties which are estimated, based on the most recent
third party appraisals, to be less than the amounts due. However, the estimated
property values exceed the Partnership's carrying amount of the investment in
mortgage loans which is recorded using the equity method of accounting. (See
Note A to the financial statements for discussion of the proposed payoff of the
Mortgage Loans.)
10
<PAGE>
<PAGE>
Average occupancy rates for the underlying properties were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Westmont 96.7% 96.2% 96.2%
Pointe Royal 96.7 98.0 98.3
</TABLE>
Despite the occupancy rates, competition in local markets results in rental
rates that are below what is required to pay debt service at the original pay
rate of 9.5%.
Interest income from cash equivalents decreased by $36,000 and $18,000
respectively, for 1997 and 1996 as compared to the respective prior years
primarily due to lower cash balances in 1997 compared to 1996 and lower interest
rates in 1996 compared to 1995.
General and administrative expenses increased by $198,000 in 1997 and
decreased by $12,000 in 1996. The increase in 1997 was primarily due to
professional fees incurred in connection with the Partnership preparing a
consent solicitation statement to the Unitholders in connection with the
proposed payoff of the Partnership's Mortgage Loans.
11
<PAGE>
<PAGE>
OTHER INFORMATION
The Partnership's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission is available to Unitholders without charge upon written
request to:
Fogelman Mortgage L.P. I
P.O. Box 2016
Peck Slip Station
New York, New York 10272-2016
12
<PAGE>
<PAGE>
BULK RATE
Peck Slip Station
U.S. POSTAGE
P.O. Box 2016
PAID
New York, NY 10272
Automatic Mail
FMLP/170970
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial
information extracted from the financial
statements for Fogelman Mortgage LP 1
and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<CIK> 0000800608
<NAME> Fogelman Mortgage LP 1
<MULTIPLIER> 1
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-1-1997
<PERIOD-END> Dec-31-1997
<PERIOD-TYPE> 12-Mos
<CASH> 420,884
<SECURITIES> 0
<RECEIVABLES> 25,701,746
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 285,565
<DEPRECIATION> 0
<TOTAL-ASSETS> 26,408,195
<CURRENT-LIABILITIES> 336,485
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 26,071,710
<TOTAL-LIABILITY-AND-EQUITY> 26,408,195
<SALES> 0
<TOTAL-REVENUES> 1,682,766
<CGS> 0
<TOTAL-COSTS> 525,757
<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> 1,157,009
<EPS-PRIMARY> 16.93
<EPS-DILUTED> 0
</TABLE>
