<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from to
------------------ -----------------
Commission File No. 33-47228
ANGELES MORTGAGE INVESTMENT TRUST
(Exact name of registrant as specified in its charter)
California 95-6890805
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
340 North Westlake Blvd., Suite 230
Westlake Village, California 91362
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 449-1335
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange on which
Title of each class: registered:
Class A shares, $1.00 par American Stock Exchange
value Angeles Mortgage
Investment Trust Units
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
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. X
---
The aggregate market value of the Class A Shares held by non-affiliates,
based upon a closing price of $7 1/2 on February 1, 1996, was approximately $
18,135,000.
As of February 1, 1996 there were 2,826,700 shares of Angeles Mortgage
Investment Trust Class A, $1.00 par value outstanding.
Documents incorporated by reference: (1) Proxy Statement to be sent to
shareholders on or about February 21, 1996.
Total Pages 40
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TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I............................................................................................ 3
ITEM 1 BUSINESS................................................................................... 3
Employees...................................................................................... 4
Competition.................................................................................... 4
ITEM 2. PROPERTIES................................................................................ 4
ITEM 3. LEGAL PROCEEDINGS......................................................................... 5
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................................... 6
PART II........................................................................................... 7
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS............. 7
ITEM 6. SELECTED FINANCIAL DATA.................................................................. 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS..... 9
General........................................................................................ 9
Fiscal year 1995 compared to 1994.............................................................. 9
Fiscal year 1994 compared to 1993.............................................................. 10
Liquidity And Capital Resources................................................................ 11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................................... 13
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES... 28
PART III.......................................................................................... 29
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS.......................................................... 29
ITEM 11. EXECUTIVE COMPENSATION................................................................... 31
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........................... 31
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................... 31
PART IV........................................................................................... 32
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES, AND REPORTS ON FORM 8-K.................... 32
</TABLE>
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PART I
ITEM 1 BUSINESS
Angeles Mortgage Investment Trust (the "Trust") is a California
business trust which qualifies as a real estate investment trust for federal
income tax purposes. The Trust was originally organized as a publicly held
limited partnership that began offering limited partnership units (the "Units")
on August 18, 1986 and commenced operations on July 9, 1987. In January 1989,
the holders of a majority of the Units elected to transfer all of the
partnership's assets to the Trust. Presently the Trust's capital structure
consists of 2,826,700 outstanding shares of Class A Common Stock ("Class A
Shares") and 1,675,113 outstanding shares of Class B Common Stock ("Class B
Shares"). The Class A Shares are publicly held and are traded on the American
Stock Exchange. Each of the Class A Shares and the Class B Shares is entitled to
one vote with respect to any matters put before the Trust's shareholders.
Angeles Funding Corporation ("AFC"), a wholly owned subsidiary of
Angeles Corporation ("Angeles") served as advisor to the Trust until February
1993. Through AFC the Trust had invested in various types of intermediate-term
loans (the "Trust Loans" or "Loans"). The majority of the Loans were made
principally to partnerships that were once controlled by Angeles and are now
controlled by Insignia Financial Group, Inc., a Delaware corporation, which
through an affiliate holds the Trust's Class B Shares, (Insignia Financial
Group, Inc. and its affiliates are referred to as "Insignia" in this document).
These partnerships include private and public real estate limited partnerships
which were formed to acquire, own and operate income-producing real properties.
As of December 31, 1995, there were 30 Trust Loans outstanding, with an
aggregate portfolio balance of approximately $30 million, net of a $13 million
loan loss reserve, and $3.4 million of real property, net of a $.2 million
valuation reserve. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
By virtue of its ownership of the Class B Shares, Insignia owns a 1%
interest in the profits, losses, credits and distributions of the Trust and 37%
of the Trust's total voting shares. As discussed in Note 7, "Notes to Financial
Statements", the Trust and Insignia entered into an agreement pursuant to which
Insignia granted to the Trust the option to purchase all the Class B Shares
currently owned by Insignia. The option is exercisable by the Trust in 10 years
for approximately $94,000. During the 10 year period that the option is
outstanding, all of the Class B Shares are required to vote, pursuant to an
irrevocable proxy, with the majority of Class A Shares in connection with any
proposal involving the Trust and Insignia or the election of any Trustee
nominated by Insignia. Such majority will be determined without consideration of
the votes of "Excess Class A Shares," as defined in the Trust's Declaration of
Trust. With respect to all other matters, the affiliate of Insignia can vote the
Class B Shares without restriction.
The Trust, beginning in February 1993, faced significant liquidity
problems caused by (i) the failure of a significant number of the Insignia
partnerships and entities affiliated with Angeles to fully service outstanding
debt obligations under their respective Trust obligations and (ii) Angeles'
inability to fully service its debt obligations under its promissory note
receivable or perform its other obligations to the Trust under its third party
loan guarantees and shareholder distribution guarantees. As of February 1993,
approximately 75% of the Trust's Loan portfolio had defaulted in payments to the
Trust. In February 1993, Angeles informed the Trust that it was unable to
perform its obligations under its guarantees because of liquidity problems
caused by its inability to complete sales or refinancings of real estate assets,
its inability to fully realize asset values in a continuing sluggish and
depressed real estate market and the failure of the Insignia partnerships to
service fully, if at all, their debt obligations to Angeles. On May 3, 1993,
Angeles filed for protection under Chapter 11 of the federal bankruptcy code.
Angeles' failure to perform under its guarantees, together with the defaults on
Trust Loans made to the Insignia partnerships and affiliates of Angeles,
resulted in the Trust's temporary suspension of cash distributions to the Class
A Shareholders starting February 1993. The Trust made various claims against
Angeles and eventually reached agreement with Angeles and the Committee of
Creditors Holding Unsecured Claims of Angeles to settle all claims between the
Trust and Angeles. The settlement agreement was approved by the Bankruptcy Court
in March 1995. Under the agreement, the Trust received over $15 million in cash,
notes, and Trust Class A Shares.
The Trust has restructured the majority of its Loan portfolio since
February 1993, when the Trust terminated its advisory agreement with AFC, and
has been able to entirely pay off its then outstanding bank loan of $20 million.
However, Loans having a carrying value of approximately $12 million (or 25% of
the Trust's investments) are not currently paying debt service to the Trust. The
Trust's options are significantly limited as a
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result of and its position as the holder of second and third trust deeds and
promissory notes subordinate to other senior creditors. The Trust's lending is
concentrated in secured and unsecured real estate loans in regions which have
experienced adverse economic conditions. The realizable value of real estate
collateralizing notes receivable or acquired in loan foreclosure proceedings can
only be determined based upon a sales negotiation between independent third
parties in an arm's length transaction. In addition, considering that, in most
cases, it is the proceeds of sale and/or refinancing which will enable the Trust
to receive funds, the actual proceeds may be significantly impacted by the
condition of the real estate industry at the time the principal amounts become
due or properties sold. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
From time to time the Trust has held, and will continue to hold
discussions with other REITs to consider expanding the Trust's portfolio through
a transaction involving the issuance of Trust shares or entering into joint
ventures or partnerships which would ultimately result in the issuance in Trust
shares.
The general policies and supervision of the Trust are overseen by a
board of four trustees (the "Trustees").
The Trust will terminate December 31, 2003, unless extended by vote of
the shareholders. Upon liquidation of the Trust, disposition proceeds will be
distributed to the shareholders.
EMPLOYEES
The Trust has three employees. Upon the 1993 termination of AFC's
advisory and administrative services the Trust engaged personnel to advise and
administer its operations. The Class A Shareholders have no right to participate
in the management or conduct of the Trust's business and affairs.
COMPETITION
The business in which the Trust is engaged is highly competitive, and
the Trust is not a significant factor in its industry. The Trust competes with
significant numbers of organizations (including banks, savings and loan
associations, insurance companies, other lending institutions and other similar
limited partnerships and trusts) with respect to its financing activities.
ITEM 2. PROPERTIES
In August 1993, the Trust acquired through a mortgage loan foreclosure,
a vacant parcel of land located in Houston, Texas and in January 1994, the Trust
acquired through a mortgage loan foreclosure, a 220 unit apartment complex
located in Decatur, Georgia. The apartment complex was sold in 1994 for $3.4
million. The vacant parcel of land, free and clear of any liens, was sold in
1995 for $1.5 million.
In addition, in 1995 the Trust obtained title to three properties
through deeds-in-lieu of foreclosure. Two of these properties, are industrial
warehouses, and are located in Cleveland, Ohio. One is known as 4851 Van Epps,
on which the Trust held a first trust deed mortgage in the amount of $1,500,000
and the second is known as 4705 Van Epps, on which the Trust obtained a judgment
lien through recourse provisions in a defaulted loan. In October 1995, the Trust
sold the 4851 Van Epps property for $1,370,000. The third property, University
Center Phase I & II, was obtained through a deed-in-lieu of foreclosure, through
recourse provisions in a defaulted loan. The property consists of warehouse
office space located in Fridley, Minnesota.
In December 1995, the Trust foreclosed on its first trust deed mortgage
in the original amount of $1,800,000, held on a retail shopping center, known as
University Center Phase IV.
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The following is a list of properties owned by the Trust and held for
sale as of December 31, 1995.
<TABLE>
<CAPTION>
Gross
Date of Type of Carrying
Property Ownership Ownership Use Value
- - ------------------- --------- ------------- -------------------- ----------
<S> <C> <C> <C> <C>
4705 Van Epps 8/24/95 Fee ownership Industrial Warehouse $ 500,000
35,000 Sq. Ft.
University Center 11/16/95 Fee ownership Warehouse Office 1,100,000
Phase I & II 51,200 Sq. Ft.
University Center 12/2/95 Fee ownership Retail Shopping 1,800,000
Phase IV 56,000 Sq. Ft.
----------
$3,400,000
==========
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
THE TRUST IS CURRENTLY INVOLVED AS A PLAINTIFF IN THE FOLLOWING LAWSUITS:
1. Angeles Mortgage Investment Trust vs. Morton D. Kirsch, an individual,
Wherco, Inc., a California corporation, Jeffrey Schultz, and
individual, Schultz Investments, an entity, Jonathan Schultz, an
individual, John Barry Clemens, an individual, and Jules P. Kirsch, an
individual, and DOES 1 through 50, inclusive Superior Court of the
State of California for the Los Angeles, Case No. BC 125243
On April 5, 1995, the Trust filed this action for violations of
California Corporations Code Sections 25402 and 25502.5 and California
Business and Professions Code Sections 17200 et. seq. The action seeks
damages and injunctive relief based on defendants' use of "inside
information" in connection with their purchase of Class A shares of
stock in the Trust. The Trust seeks treble damages pursuant to the
Corporations Code, plus attorneys fees, prejudgement interest and an
injunction. The Trust filed its second amended complaint on July 11,
1995. All defendants have filed answers to the second amended
compliant. Discovery is ongoing.
2. Angeles Mortgage Investment Trust vs. Morton D. Kirsch, an individual,
Wherco, Inc., a California corporation, Leland Evans, an individual,
Jonathan Schultz, an individual, John B. Clemens, an individual, Jules
P. Kirsch, an individual, Lee C. McClurkin, an individual, and Arthur
G. Weiss, an individual United States District Court, Central District
of California, Case No. 95-2670 WDK (CTx)
On April 21, 1995, the Trust filed this action in Federal Court for
violations of Sections 13(d) and 14(a) of the Securities and Exchange
Act of 1934 and the rules and regulations promulgated thereunder. This
action seeks injunctive relief based on defendants' failure to disclose
complete and accurate information in violation of the Federal
Securities Laws. On May 2, 1995, Morton D. Kirsch and Wherco, Inc.
filed a Counterclaim and Third Party Compliant for injunctive relief
against the Trust, and Third Party Defendants Insignia Financial Group,
Inc., a Delaware corporation, MAE GP Corporation, a Delaware
corporation, Ronald J. Consiglio, an individual, J. D'Arcy Chisholm, an
individual, Bryan L. Herrmann, an individual, and Jack E. McDonald, an
individual. On May 17, 1995, Morton D. Kirsch and Wherco, Inc.,
dismissed the Counterclaim and Third Party Compliant. Discovery is
ongoing.
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PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDER
MATTERS
The Trust has 1,738 Class A Shareholders of record as of February 1,
1996. The Class A Shares are currently traded on the American Stock Exchange
under the symbol "ANM". All of the Class B Shares are held by MAE GP
Corporation, an affiliate of Insignia.
The Trust, as noted in Note 7 in the "Notes to the Financial
Statements", has acquired an option to purchase all of the Class B Shares held
by MAE GP Corporation, an affiliate of Insignia. There is no established public
trading market for these shares.
The following table sets forth the high and low sales prices of the
Trust's Class A Shares for the two most recent calendar years:
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
1995, Quarter ended:
December 31, 1995 $7 9/16 $4 11/16
September 30, 1995 $7 1/4 $5 3/8
June 30, 1995 $7 5/8 $6 1/4
March 31, 1995 $7 1/2 $6 1/4
1994, Quarter ended:
December 31, 1994 $6 7/8 $5 1/4
September 30, 1994 $6 $4 3/4
June 30, 1994 $5 5/8 $3 1/2
March 31, 1994 $3 7/8 $2 9/16
</TABLE>
On February 1, 1996, the last sale price of the Class A Shares as
reported by the American Stock Exchange was $7 1/2. The Trust made no
distributions in 1994 and 1995. The Board of Trustees of the Trust declared a
$.10 per share dividend payable on February 13, 1996, to shareholders of record
on January 22, 1996. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
The Board of Trustees of the Trust has authorized the Trust to
repurchase, in open market transactions, up to 10% of its Class A Shares. The
Trust has repurchased 43,800 shares under this program. There were no purchases
in 1995, 1994 and 1993.
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ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue (1) $ 19,502,000 $ 2,769,000 $ 4,307,000 $ 9,505,000 $ 8,470,000
Costs and expenses (2) 2,213,000 2,396,000 3,017,000 37,808,000 3,044,000
Extraordinary item (3) 1,844,000 -- -- -- --
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 19,133,000 $ 373,000 $ 1,290,000 $(28,303,000) $ 5,426,000
------------ ------------ ------------ ------------ ------------
PER CLASS A SHARE (4):
Income (loss) before
extraordinary item $ 5.77 $ 0.11 $ 0.38 $ (8.64) $ 1.93
Extraordinary item $ 0.61 $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 6.38 $ 0.11 $ 0.38 $ (8.64) $ 1.93
------------ ------------ ------------ ------------ ------------
Cash distributions to shareholders $ -- $ -- $ 573,000 $ 6,562,000 $ 5,640,000
Cash distributions per Class A
Share (5) $ -- $ -- $ 0.17 $ 2.00 $ 2.00
Total assets $ 37,332,000 $ 35,535,000 $ 41,463,000 $ 48,781,000 $ 76,719,000
Notes and advances payable (6) $ -- $ 11,085,000 $ 17,965,000 $ 26,285,000 $ 19,050,000
8.5% Convertible debenture, net $ -- $ -- $ -- $ -- $ 9,074,000
Shareholders' equity $ 37,139,000 $ 22,510,000 $ 22,137,000 $ 21,420,000 $ 47,280,000
Class A Shares
Outstanding at end of year 2,826,700 3,394,026 3,394,026 3,394,026 2,786,200
Weighted average outstanding 2,968,532 3,394,026 3,394,026 3,394,026 2,786,200
</TABLE>
(1) In 1993, revenues decreased significantly as a result of approximately
75% of the Trust's portfolio defaulting in payments to the Trust after
February 1993. In 1995, revenues increased significantly as a result of
$15,954,000 of recovery of bad debts relating primarily to the Angeles
settlement (see Note 10 in the "Notes to the Financial Statements"). In
addition, the 1995 revenues include $435,000 of gain on sale of real
property.
(2) Includes provision for loss and write-down of in-substance foreclosed
properties of $35,000,000 in 1992.
(3) Extraordinary item in 1995 represents the settlement of claims the
Trust had with various partnerships associated with Insignia; the Trust
was able to negotiate the settlement of advances payable at a discount
(see Note 7 in the "Notes to the Financial Statements").
(4) The net income per Class A Share was based the weighted average Class A
Shares outstanding during the years ended December 31, 1995, 1994,
1993, and 1992, respectively, after deduction of the Class B Shares' 1%
interest.
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(5) Monthly cash distributions had been paid to the Class A Shareholders
from cash generated by the Trust from operations, subject to Angeles'
distribution guarantee of a minimum annual distribution of $2.00 per
Class A Share through May 1994. As of February 1993, such distributions
had been temporarily suspended due to the Trust's liquidity problems
and Angeles' inability to perform its guaranty obligations or service
the promissory note due the Trust. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."
(6) Notes and advances decreased significantly in 1995 as a result of the
settlement of the Insignia related advances from partnerships of
$7,595,000 and the full repayment of the Bank loan.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with "Selected
Financial Data" and the "Financial Statements and Supplementary Data".
FISCAL YEAR 1995 COMPARED TO 1994
For the year ended December 31, 1995 total revenue increased
significantly as compared to total revenue for the same period in 1994. This
increase is primarily due to the Angeles bankruptcy settlement which was
effective March 31, 1995. The Trust recognized a recovery of bad debt of
$12,844,000 as a result of the settlement, for which the Trust received proceeds
of cash in excess of $8 million on April 14, 1995. Simultaneous with the Angeles
settlement, the Trust settled its claims with the various partnerships
associated with Insignia, which resulted in an extraordinary gain of $1,844,000
resulting from the Trust being able to negotiate the settlement of these claims
at a discount. During the year ended December 31, 1995, the Trust recorded an
additional $3,110,000 in recovery of other bad debts, which were associated with
partial principal repayments on loans which had allowances for estimated losses
recorded in addition to recording two properties the Trust received through
deeds-in-lieu of foreclosure at market value. Included in the $3,110,000 of debt
recovery, the Trust reversed $1,800,000 of allowance for estimated loss relating
to the Fox Run loans, based upon improved property performance, the commencement
of modified debt service in the fourth quarter of 1995 and an anticipated
refinancing of the mortgages on the property.
In addition, revenues increased in 1995 from 1994 as a result of a
$435,000 gain recognized from the $1,370,000 sale of the 4851 Van Epps property.
The Trust obtained title to this property through a deed-in-lieu of foreclosure
in September 1995, from its first trust deed mortgage on this property.
Interest income for the twelve months ended December 31, 1995 increased
approximately 12% or $318,000 when compared to the same period ended in 1994.
The increase is primarily related to two Trust Loans: (1) recognition of
interest due to restructuring of past due interest into principal, the note is
currently performing; and (2) recognition of interest as a result of debt
satisfaction through a deed-in-lieu of foreclosure.
Property rental income and ownership expenses increased for the year
ended 1995 when compared to 1994 as the Trust owned up to five properties during
1995 compared to two properties owned in 1994.
In December 1995, the Trust sold the parcel of land it owned in
Houston, Texas for $1,500,000 and recognized a $3,000 loss from such sale.
Interest expense on the Bank line of credit decreased as the Trust's
average month-end borrowings were $2,075,000 and $6,093,000 in 1995 and 1994,
respectively. Such decrease is offset by an increase in the weighted average
interest rate of 10.1% and 9.0% for the years ended December 31, 1995 and 1994,
respectively.
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Other interest expense decreased for the twelve months ended December
31, 1995 when compared to the same period in 1994. Such interest expense is
associated with cash advances which had a balance of $7,585,000 as of December
31, 1994 and were paid effective March 31, 1995 (see Note 7 of Notes to
Financial Statements).
The increase in general and administrative expenses for the twelve
months ended December 31, 1995 when compared to the same period in 1994, is
primarily due to increased proxy solicitation costs of approximately $150,000
incurred as a result of the proxy fight with the Kirsch slate. The increased
legal fees are associated with state claims brought by the Trust against a group
of investors, claiming the investors acquired Trust Class A shares based on
insider information and a federal claim against Morton Kirsch and Wherco, Inc.
and others, for deficiencies in information required to be filed and, false and
misleading information filed by the defendants in public documents regarding the
Trust. The Trust seeks recovery of legal expenses in connection with certain of
these claims.
FISCAL YEAR 1994 COMPARED TO 1993
The Trust had revenue of $2,769,000 in 1994, a decrease of $1,538,000
or 35% from the prior year, with costs and expenses decreasing $611,000 from the
prior year. Net income was $373,000 and $1,290,000 for 1994 and 1993,
respectively. The primary factors contributing to the decrease in Trust's net
income are discussed in the following paragraphs.
Interest income decreased from $4,307,000 in 1993 to $2,769,000 in
1994. Of this decrease, approximately $900,000 is due to loans which were paid
in full or which the Trust received significant payments in late 1993 and early
1994. An additional $600,000 is due to loans which were placed on non-accrual in
1994 or the interest pay rate had been modified downward.
Rental income in 1994 is the result of income earned on properties the
Trust has foreclosed upon. Such rental income was primarily generated from the
apartment complex owned by the Trust for a three month period of time prior to
its sale in April 1994. The remaining property owned by the Trust is a parcel of
land which generates only a minor amount of income.
The Trust Loans outstanding at December 31, 1994 have various
maturities ranging from those that have already matured to nine years, and have
stated fixed interest rates ranging from 8.5% to 13%. A significant portion of
the Trust Loans are secured by real property owned by the borrowers of such
Trust Loans, by an assignment of the limited partnership interest in the limited
partnership that owns the property (but not the specific underlying property) or
by a general obligation of the limited partnerships that own the property.
The overall decrease in costs and expenses from 1993 to 1994 is due to
various factors, the most significant being interest expense to the bank.
Interest expense to Bank decreased as the Trusts average month-end
borrowings on the bank line of credit were $6,093,000 and $15,938,000 in 1994
and 1993, respectively. Such decrease is offset by changes in the stated
interest rate and increases in the prime rate during 1994, thus resulting in
weighted average interest rates of 9.06% and 7.63% for the years ended 1994 and
1993, respectively.
Interest expense to affiliated partnerships increased to $548,000 for
the year ended 1994, or a 17% increase over such expense in 1993. Such advances
from affiliated partnerships had an average month-end balance of $7,585,000 and
$7,618,000 in 1994 and 1993, respectively. These cash advances allegedly accrued
interest from the Trust at the prime rate of interest with accrued interest
payable of $941,000 as of December 31, 1994. The increase in such interest
expense is due to the fact that the prime interest rate increased from 6% to
8.5% during 1994, thus resulting in weighted average interest rates of 7.13% and
6% for 1994 and 1993, respectively. Beginning February 1993, the Trust has not
paid interest on such accruals.
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The decrease in general and administrative expenses for 1994 when
compared to 1993 is due primarily to decreased professional fees, excluding
legal fees. Legal expenses increased to $505,000 in 1994 as compared to $270,000
in 1993, due to the Trust's counsels involvement and preparation of settlement
documents relating to the settlements in principal with Angeles and Insignia. In
addition, the Trust during 1994 has commenced the foreclosure process on three
Trust Loans which the Trust holds the first trust deed position. This
foreclosure process has required the significant use of outside counsel. In
addition, in May 1993, the Trust established and opened its own offices and in
1993, hired three employees to help administer and monitor the Trust operations.
Such expenses are partially offset due to the termination of the Advisors
services in February 1993 and the corresponding elimination of the advisory fees
and non-accountable expense allowance paid to AFC.
LIQUIDITY AND CAPITAL RESOURCES
In February 1993, the Trust's policy of distributing monthly the net
cash from operations to its Class A Shareholders was temporarily suspended as a
result of the failure of the Insignia Partnerships and Angeles to fully service
their respective Trust Loan obligations and Angeles' inability to fulfill its
guarantee of a minimum annual distribution of $2.00 per Class A Share through
May 1994. The Trust announced on December 20, 1995 that it had reduced its bank
and other debt to zero and had scheduled its first dividend payment in three
years to Class A Shareholders of record on January 22, 1996 to be payable on
February 13, 1996, in the amount of $0.10 per share.
As of July 25, 1995, the Trust has a new line of credit established
with the Bank, in the amount of $5 million. This new line of credit requires
monthly interest only payments based upon prime plus 1% and matures July 31,
1996. The new line of credit which has substituted for the prior loan with the
Bank allows the Trust to draw on such line to facilitate the foreclosure process
on Trust loans. In August 1995, the Trust drew down on such line of credit in
the amount of $343,000 in order to pay-off the first trust deed on a property
obtained through a deed-in-lieu of foreclosure (see Note 6). On December 5,
1995, the Trust paid off the outstanding balance on the line of credit.
The Trust's liquidity is dependent upon its borrowers having sufficient
cash to pay interest and principal payments as they become due. In February
1993, a significant number of the Insignia Partnerships failed to service their
debt obligations under the Trust Loans. The Trust has since completed the
process of restructuring certain of the Trust Loans. The restructured loan terms
typically include a reduction in the interest rate, an extension of the loan
term, payment of at least net cash flow from the operation of the relevant
property on a current basis and a modest increase in the principal balance of
the loan as consideration for the modification.
The Trust has restructured the majority of its loan portfolio since
February 1993 and has been able to entirely pay off its then outstanding bank
loan debt of $20 million. However, loans having a carrying value of
approximately $12 million (or 25% of the Trust's investments) are not currently
paying debt service to the Trust. The Trust's options are significantly limited
as a result of its position as the holder of second and third trust deeds
subordinate to other creditors. The Trust's lending is concentrated in secured
and unsecured real estate loans in regions which have experienced adverse
economic conditions. The realizable value of real estate collateralizing notes
receivable or owned from Loan foreclosures, can only be determined based upon a
sales negotiation between independent third parties in an arm's length
transaction. In addition, considering that, in most cases, it is the proceeds of
sale and/or refinancing which will enable the Trust to receive such funds, the
actual proceeds may be significantly impacted by the condition of the real
estate industry at the time the principal amounts become due or properties sold.
The Trust received full and partial paydowns of approximately $10.5
million from 15 Trust Loans, $3.6 million from six Trust Loans, and $9 million
from six Trust Loans during 1993, 1994, and 1995, respectively. Such repayments
have resulted from either the sale or refinancing of the properties or partial
principal prepayments.
In January 1994, the Trust foreclosed on a 220 unit apartment complex,
located in Georgia, on which the Trust held a $3,600,000 first trust deed
mortgage. The Trust subsequently sold this property in April 1994 for
$3,400,000, resulting in cash proceeds of approximately $3,300,000. The proceeds
were used to pay down the Trust's loan with the Bank. During 1994, the Trust
commenced the foreclosure process on 4851 Van Epps, University Center - Phase IV
and Colony Cove Loans on which the Trust holds first trust deed mortgages. In
11
<PAGE> 12
addition, during 1995 the Trust foreclosed on University Center Phase IV and
took title to three properties through deeds-in-lieu of foreclosure. These
properties include 4851 Van Epps for which the Trust had commenced foreclosure
action in 1994. In October 1995, the Trust sold this property for $1,370,000,
receiving net cash proceeds of $580,000 and a first trust deed on the property
for $700,000. In addition, the Trust obtained title, through deeds-in-lieu of
foreclosure as a result of recourse provisions in a defaulted loan, on 4705 Van
Epps, an industrial warehouse located in Cleveland, Ohio and on University
Center I and II, office industrial property located in Fridley, Minnesota. The
4705 Van Epps property is under contract for sale which is scheduled to close in
the first quarter of 1996. In addition, the Trust sold a parcel of land located
in Houston, Texas for $1,500,000, resulting in net cash proceeds of
approximately $1,400,000.
As discussed in Note 10 in the "Notes to the Financial Statements", the
settlement between the Trust and Angeles represented over $15 million in various
assets including $6 million in cash. The collateralized note due December 31,
1998, carries interest at prime plus one percent with a maximum interest rate of
8.5%. The note is collateralized with a pledge of Angeles limited partnership
interest in a limited partnership whose assets are comprised of notes and
receivables from various real estate investment partnerships. The collectibility
of the note is subject to the performance of the obligors of the various notes
and receivables. Although the Trust at this time believes there is sufficient
collateral to provide for realization of the note, there can be no assurances
that full recovery will result. The Trust used the cash proceeds from the
settlement of over $6 million, to pay down on debt obligations to the Bank and
various limited partnerships.
The Trust's management on a quarterly basis reviews the carrying value
of the Trust's Loans and properties held for sale. Generally accepted accounting
principles require that the carrying values of a note receivable or property
held for sale cannot exceed the lower of its cost or its estimated net
realizable value. The estimate of net realizable value is based on management's
review and evaluation of the collateral properties as well as recourse
provisions included in certain notes receivable. The allowance for loan loss as
of December 31, 1995 was approximately $13 million. However, the provision for
loss is an estimate which is inherently uncertain and depends on the outcome of
future events. The Trust's estimates are based on an analysis of the Loan
portfolio, composition of the Loan portfolio, the value of collateral and
current economic conditions.
From time to time the Trust has held, and will continue to hold
discussions with other REITs to consider expanding the Trust's portfolio through
a transaction involving the issuance of Trust shares or entering into joint
ventures or partnerships which would ultimately result in the issuance in Trust
shares.
In May 1993, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 114 - "Accounting By
Creditors for Impairment of a Loan", which amends SFAS No. 5 - "Accounting for
Contingencies" and SFAS No. 15 - "Accounting by Debtors and Creditors for
Troubled Debt Restructurings." The statement requires that notes receivable be
considered impaired when "based on current information and events, it is
probable that a creditor will be unable to collect all amounts due, both
principal and interest, according to the contractual terms of the loan
agreement. Impairment is to be measured either on the present value of expected
future cash flows discounted at the note's effective interest rate or if the
note is collateral dependent, on the fair value of the collateral. In October
1994, the FASB issued SFAS No. 118 - "Accounting by Creditors for Impairment of
a Loan-Income Recognition and Disclosure" which amends SFAS No. 114. SFAS No.
118 eliminates the income recognition provisions of SFAS No. 114, substituting
disclosure of the creditor's policy of income recognition on impaired notes.
SFAS No. 114 and SFAS No. 118 are both effective for the fiscal years beginning
after December 15, 1994. The Trust implemented such pronouncements in 1995 which
did not affect the Trust's interest income recognition policy or require the
reclassification of loans within the Trust's balance sheet.
12
<PAGE> 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ANGELES MORTGAGE INVESTMENT TRUST
Index to Audited Financial Statements and Supplemental Schedules
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Report of Independent Certified Public Accountants - BDO Seidman, LLP 14
Audited Financial Statements and Supplemental Schedules - The financial
statements and supplemental schedules of the Trust required to be
included in Item 8 are listed below:
Balance Sheets at December 31, 1995 and 1994 15
Statements of Operations for the years ended
December 31, 1995, 1994 and 1993 16
Statements of Changes in Shareholders' Equity
for the years ended December 31, 1995,
1994 and 1993 17
Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993 18
Notes to Financial Statements 19
Supplemental Schedule III - Real Estate and
Accumulated Depreciation 35
Supplemental Schedule IV - Mortgage Loans on
Real Estate 36
</TABLE>
All other supplemental schedules are omitted because they are not required or
because the required information is shown in the financial statements.
13
<PAGE> 14
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Trustees of
Angeles Mortgage Investment Trust
We have audited the accompanying balance sheets of Angeles Mortgage Investment
Trust (the "Trust") as of December 31, 1995 and 1994, and the related statements
of operations, changes in shareholders' equity and cash flows for each of the
three years in the period ended December 31, 1995. We have also audited the
schedules listed at Item 8. These financial statements and schedules are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on the financial statements and schedules 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 and schedules are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
schedules. An audit also includes assessing the accounting principles used and
significant estimates made by the Trust's management, as well as evaluating the
overall presentation of the financial statements and schedules. We believe that
our audits provides 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 Trust at December 31, 1995
and 1994, and the results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
Also, in our opinion the schedules present fairly, in all material respects, the
information set forth therein.
BDO Seidman, LLP
Los Angeles, California
February 2, 1996
14
<PAGE> 15
ANGELES MORTGAGE INVESTMENT TRUST
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31
--------------------------------
NOTES 1995 1994
----- ---- ----
<S> <C> <C> <C>
ASSETS
Notes receivable 2,3,5,6
Mortgage notes receivable, (including
$25,397,000 and $34,399,000 due from affiliates
in 1995 and 1994) $ 26,987,000 $ 35,340,000
Promissory notes receivable, (including
$8,551,000 and $17,908,000 due from affiliates
in 1995 and 1994) 18,310,000 23,908,000
------------- ------------
45,297,000 59,248,000
Foreclosed real estate held for sale 4 3,400,000 1,400,000
------------- ------------
48,697,000 60,648,000
Less: Allowance for estimated losses (13,598,000) (26,995,000)
------------- ------------
35,099,000 33,653,000
Cash 1,229,000 1,104,000
Accrued interest receivable (net of reserves of
$176,000 in 1995 and 1994) 460,000 352,000
Prepaid expenses and other 544,000 426,000
------------- ------------
Total assets $ 37,332,000 $ 35,535,000
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Note payable to bank 6 $ - $ 3,500,000
Recorded cash advances from affiliated partnerships 7 - 7,585,000
Accounts payable and accrued expenses 193,000 1,940,000
------------- ------------
Total liabilities 193,000 13,025,000
------------- ------------
Shareholders' equity: 9
Class A Shares (2,826,700 in 1995, and 3,394,026 in 1994,
issued and outstanding, $1.00 par value,
unlimited shares authorized) 2,827,000 3,394,000
Class B Shares (1,675,113 issued and outstanding,
$.01 value, unlimited shares authorized) 14,000 14,000
Additional paid-in capital 51,719,000 55,656,000
Accumulated distributions in excess of cumulative net
income (17,421,000) (36,554,000)
------------- ------------
Total shareholders' equity 37,139,000 22,510,000
------------- ------------
Total liabilities and shareholders' equity $ 37,332,000 $ 35,535,000
============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 16
ANGELES MORTGAGE INVESTMENT TRUST
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE:
Interest income (including $1,710,000, $2,080,000, and $3,534,000
from affiliates in 1995, 1994, 1993, respectively) $ 3,017,000 $ 2,696,000 $ 4,305,000
Rental income 96,000 71,000 --
Gain from sale of real property 435,000 2,000 --
Recovery of bad debt from Angeles Corporation settlement 12,844,000 -- --
Recovery of other bad debts 3,110,000 -- --
Service fee income -- -- 2,000
----------- ----------- -----------
Total revenue 19,502,000 2,769,000 4,307,000
----------- ----------- -----------
COSTS AND EXPENSES:
Property operating expenses 262,000 76,000 152,000
Loss from sale of real property 3,000 -- --
Interest expense to bank 227,000 578,000 1,239,000
Interest expense affiliated partnerships -- 548,000 468,000
Legal expenses 851,000 505,000 270,000
General and administrative (including amount paid to affiliate
of $35,000 in 1993) 835,000 612,000 730,000
Amortization of loan fees 35,000 77,000 158,000
----------- ----------- -----------
Total costs and expenses 2,213,000 2,396,000 3,017,000
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 17,289,000 373,000 1,290,000
EXTRAORDINARY ITEM - Debt forgiveness 1,844,000
----------- ----------- -----------
NET INCOME $19,133,000 $ 373,000 $ 1,290,000
=========== =========== ===========
PER CLASS A SHARE:
Net income before extraordinary $ 5.77 $ 0.11 $ 0.38
Extraordinary item 0.61 -- --
----------- ----------- -----------
Net income $ 6.38 $ 0.11 $ 0.38
=========== =========== ===========
Cash distributions $ -- $ -- $ 0.17
=========== =========== ===========
Weighted average Class A Shares 2,968,532 3,394,026 3,394,026
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 17
ANGELES MORTGAGE INVESTMENT TRUST
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
ACCUMULATED
DISTRIBUTIONS IN
ADDITIONAL EXCESS OF
CLASS A CLASS B PAID-IN CUMULATIVE NET
SHARES SHARES CAPTIAL INCOME TOTAL
------------ ------------ ------------ ---------------- ------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993 $ 3,394,000 $ 14,000 $ 55,656,000 $(37,644,000) $ 21,420,000
Net income -- -- -- 1,290,000 1,290,000
Cash distributions -- -- -- (573,000) (573,000)
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1993 3,394,000 14,000 55,656,000 (36,927,000) 22,137,000
Net income -- -- -- 373,000 373,000
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1994 3,394,000 14,000 55,656,000 (36,554,000) 22,510,000
Class A Shares received from
Angeles Corporation settlement (567,000) -- (3,687,000) -- (4,254,000)
Purchase of Class B Share Option (250,000) -- (250,000)
Net income -- -- 19,133,000 19,133,000
------------ ------------ ------------ ------------ ------------
Balance at December 31, 1995 $ 2,827,000 $ 14,000 $ 51,719,000 ($17,421,000) $ 37,139,000
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 18
ANGELES MORTGAGE INVESTMENT TRUST
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
----------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 19,133,000 $ 373,000 $ 1,290,000
ADJUSTMENTS TO RECONCILE NET INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES:
Net gain from sale of real property (432,000) -- --
Amortization 35,000 77,000 158,000
Recovery of bad debt (15,954,000) -- --
Interest income in exchange of notes receiveable or real property (501,000) (183,000) --
Extraordinary gain (1,844,000) -- --
Decrease (increase) in interest receivable (108,000) 149,000 108,000
Increase in prepaid expenses and other (326,000) (399,000) (315,000)
(Decrease) increase in accounts payable and accrued expenses (61,000) 579,000 321,000
(Decrease) in unearned loan fee income (38,000) (274,000) (422,000)
------------ ------------ ------------
Cash flows from (used in) operating activities (96,000) 322,000 1,140,000
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cost of foreclosed real estate (355,000) -- --
Funding of notes receivable -- -- (1,944,000)
Principal collections of notes receivable 9,056,000 3,599,000 10,498,000
Proceeds from sale of real estate 1,952,000 3,298,000 --
------------ ------------ ------------
Cash flows from investing activities 10,653,000 6,897,000 8,554,000
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in note payable to bank (3,500,000) (6,880,000) (9,620,000)
Repayment of cash advances from affiliate partnerships (6,682,000) -- --
Purchase of Class B option (250,000) -- --
Cash advances recorded from affiliated partnerships -- -- 1,300,000
Distributions to shareholders -- -- (1,146,000)
Advances under distribution guarantee by Angeles Corp. -- -- 537,000
------------ ------------ ------------
Cash flows from (used in) financing activities (10,432,000) (6,880,000) (8,929,000)
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents 125,000 339,000 765,000
Cash and cash equivalents:
At beginning of period 1,104,000 765,000 --
------------ ------------ ------------
At end of period $ 1,229,000 $ 1,104,000 $ 765,000
============ ============ ============
Supplemental operating cash flow disclosure:
Cash received for interest $ 2,213,000 $ 2,394,000 $ 3,558,000
Cash paid for interest 312,000 590,000 1,423,000
Schedule of noncash financing and investing activities:
Carrying value of real estate in satisfaction of notes receivable
with carrying values of $3,580,000 in 1995, $3,501,000 in 1994
and $3,200,000 in 1993 $ 3,969,000 $ 3,170,000 $ 1,400,000
Mortgage notes receivable from sale of real estate 700,000 -- --
Recovery of Class A stock in connection with Angeles Settlement 4,254,000 -- --
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 19
ANGELES MORTGAGE INVESTMENT TRUST
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION, BUSINESS ACTIVITIES AND SIGNIFICANT EVENTS
Angeles Mortgage Investment Trust (the "Trust") is a California
business trust which qualifies as a real estate investment trust for federal
income tax purposes. The Trust was originally organized as a publicly held
limited partnership that began offering limited partnership units on August 18,
1986 and commenced operations on July 9, 1987. In January 1989, the holders of a
majority of the units elected to transfer all of the partnership's assets to the
Trust. The Trust's capital structure consists of 2,826,700 outstanding shares of
Class A Common Stock ("Class A Shares") and 1,675,113 outstanding shares of
Class B Common Stock ("Class B Shares"). The Class A Shares are publicly held
and are traded on the American Stock Exchange. Each of the Class A Shares and
the Class B Shares is entitled to one vote with respect to any matters put
before the Trust's shareholders.
Prior to November 1992, all Class B Shares were held by Angeles Funding
Corporation ("AFC"), a California corporation wholly owned by Angeles
Corporation, a California corporation ("Angeles"). AFC served as the advisor to
the Trust until February 1993 when AFC's advisory services were terminated by
the Trust. On November 24, 1992, Angeles sold to an independent third party
controlled by Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), Angeles' real estate partnership business consisting of property
management contracts and other service contracts relating to its real estate
partnership business, together with the general partnership interests of a
number of limited partnerships (hereinafter, the "Insignia Partnerships") to
which the Trust had made various types of intermediate-term loans (the "Trust
Loans"). In connection with this transaction, Angeles also transferred to MAE GP
Corporation, an affiliate of Insignia, all of its Class B Shares. Angeles did
not obtain approval from the Trust with respect to these transactions. By virtue
of its ownership of the Class B Shares, Insignia owns a 1% interest in the
profits, losses and credits of the Trust and holds 37% of the Trust's total
voting shares.
The Trust, beginning in February 1993, faced significant liquidity
problems caused by (i) the failure of a significant number of the Insignia
Partnerships and entities affiliated with Angeles to fully service outstanding
debt obligations under their respective Trust obligations and (ii) Angeles'
inability to fully service its debt obligations under its promissory note
receivable or perform its other obligations to the Trust under its third party
loan guarantees and shareholder distribution guarantees. As of February 1993,
approximately 75% of the Trust's loan portfolio had defaulted in payments to the
Trust. In February 1993, Angeles informed the Trust that it was unable to
perform its obligations under these guarantees because of liquidity problems
caused by its inability to complete sales or refinancings of real estate assets,
its inability to fully realize asset values in a continuing sluggish and
depressed real estate market and the failure of the Insignia Partnerships to
service fully, if at all, their debt obligations to Angeles. On May 3, 1993,
Angeles filed for protection under Chapter 11 of the federal bankruptcy code.
Angeles' failure to perform under its guarantees, together with the defaults on
Trust Loans made to the Insignia Partnerships and affiliates of Angeles, have
resulted in the Trust's temporary suspension of cash distributions to the Class
A Shareholders effective February 1993. The Trust had made various claims
against Angeles and as discussed under Note 10, and eventually reached an
agreement with Angeles and the Committee of Creditors Holding Unsecured Claims
of Angeles to settle all claims between the Trust and Angeles. The settlement
agreement was approved, effective March 31, 1995, by the Bankruptcy Court having
jurisdiction over the Angeles bankruptcy Under the agreement, the Trust received
approximately $15 million in various assets, including $6 million in cash.
The Trust has restructured the majority of its loan portfolio since
February 1993 and has been able to entirely pay off its then outstanding bank
loan debt and other debt of $27 million. However, loans having a carrying value
of approximately $12 million (or 25% of the Trust's investments) are not
currently paying debt service to the Trust. The Trust's lending is concentrated
in real estate-secured and unsecured loans in regions which have experienced
adverse economic conditions. The realizable value of real estate collateralizing
notes receivable or owned from loan foreclosures, can only be determined based
upon a sales negotiation between independent third parties in an arm's length
transaction. In addition, considering that in most cases, it is the proceeds of
sale and/or
19
<PAGE> 20
refinancing which will enable the Trust to receive such funds, the actual
proceeds may be significantly impacted by the condition of the real estate
industry at the time the principal amounts become due or properties sold.
From time to time the Trust has held, and will continue to hold
discussions with other REITs to consider expanding the Trust's portfolio through
a transaction involving the issuance of Trust shares or entering into joint
ventures or partnerships which would ultimately result in the issuance in Trust
shares.
The general policies and supervision of the Trust are overseen by a
board of four trustees (the "Trustees"). On February 26, 1993, in recognition of
the conflicts of interest between the Trust and Angeles, a committee was formed
consisting solely of Trustees who were not affiliated with Angeles (the
"Independent Committee"). The Independent Committee was given the authority to
evaluate, negotiate and implement a restructuring of the Trust's assets and
liabilities, and to make all decisions relating to the Trust's dealings with
Angeles. An independent firm of valuation consultants and independent counsel
were engaged to assist the Independent Committee. In April 1993, the two
Trustees affiliated with Angeles resigned from the Board of Trustees and the
Independent Committee ceased to exist.
The Trust will terminate December 31, 2003, unless extended by vote of
the shareholders. The Trust will liquidate its investments in the ordinary
course of its business, and may liquidate certain investments during the course
of the restructuring. Upon liquidation of the Trust, disposition proceeds will
be distributed to the shareholders.
The Trust has made loans principally to partnerships that were
originally affiliated with Angeles but the majority of which are now controlled
by Insignia. These partnerships include private and public real estate limited
partnerships which were formed to acquire, own and operate income-producing real
properties.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING - The financial statements of the Trust are
prepared on the accrual basis and therefore, revenue is recorded as earned and
costs and expenses are recorded as incurred. In connection with the preparation
of the financial statements, the Trust has made certain estimates and
assumptions that affect the reported amounts of assets and liabilities. Actual
results could differ from these estimates. Certain prior years amounts have been
reclassified to conform to current year classifications.
CASH AND CASH EQUIVALENTS - For financial reporting purposes, the Trust
considers cash and cash equivalents to include cash on deposit and amounts due
from banks maturing within 90 days of purchase.
NOTES RECEIVABLE AND INTEREST INCOME - Notes receivable are recorded at
the lower of cost or estimated net realizable value net of unearned loan fees
which are amortized over the lives of the respective loans. Interest income is
recorded as earned in accordance with the terms of the loans. Interest income is
not recorded on individual loans if a specific loan loss allowance has been
associated with such loan or if payments are in default in excess of two months.
FORECLOSED REAL ESTATE HELD FOR SALE - Foreclosed real estate is
initially recorded at new cost, defined as the lower of original cost or fair
value minus estimated costs of sale. After foreclosure, the excess of new cost,
if any, over fair value minus estimated costs of sale is recognized in an
valuation allowance. Subsequent changes in fair value either increases or
decreases such valuation allowance. See "Allowance for Estimated Losses" below.
ALLOWANCE FOR ESTIMATED LOSSES - Valuation allowances are established
by the Trust for estimated losses on notes receivable and properties held for
sale to the extent that the investment in notes or properties exceeds the
Trust's estimate of net realizable values of the property or collateral securing
each note, or fair value if foreclosure is probable. The provision for losses is
based on estimates using the direct capitalization of net operating income for
the underlying properties. Capitalization rates have been determined by using
micro and macro economic factors. Actual losses may vary from current estimates.
Such estimates are reviewed periodically and any additional provision determined
to be necessary is charged against earnings in the period in which it becomes
reasonably estimated.
20
<PAGE> 21
REVENUE RECOGNITION ON SALE OF REAL ESTATE - Sales of real estate are
recognized when and to the extent permitted by Statement of Financial Accounting
Standards No. 66, "Accounting for Sales of Real Estate."
INCOME TAXES - The Trust has elected to be taxed as a Real Estate
Investment Trust ("REIT") under the Internal Revenue Code for each taxable year
of operations. As a qualified REIT, the Trust is subject to income taxation at
corporate rates on its REIT taxable income. However, the Trust is allowed a
deduction for the amount of dividends paid to its shareholders, thereby
subjecting the distributed net income of the Trust to taxation at the
shareholder level only. As of December 31, 1995 the Trust had tax loss
carryforwards of approximately $6.0 million expiring through 2009.
NET INCOME PER CLASS A SHARE - The net income per Class A Share was
based on 2,968,532, 3,394,026, and 3,394,026 weighted average Class A Shares
outstanding during the years ended December 31, 1995, 1994 and 1993,
respectively, after deduction of the Class B Shares' 1% interest.
SERVICE FEE INCOME - Service fee income, consisting of loan commitment
fees, is calculated based upon any undrawn funds during the commitment period
and is recognized over the commitment period.
AMORTIZATION - The Trust amortizes loan fees to interest income over
the lives of the related Trust Loans. Loan fees and refinancing expenses paid by
the Trust are amortized over the life of the relevant loans.
CONCENTRATION OF CREDIT RISK - Financial instruments which potentially
expose the Trust to concentrations of credit risk are primarily temporary cash
investments and mortgage and promissory notes receivable. The Trust places its
temporary cash investments with major financial institutions and, by policy,
limits the amount of credit exposure to any one financial institution. The
majority of all notes receivable are with partnerships who have previously
defaulted on their obligations (see Note 3).
NOTE 3 - NOTES AND INTEREST RECEIVABLE
Notes receivable are collateralized by real property owned by the
borrowers of such Trust Loans, or by an assignment of the limited partnership
interest in the limited partnership that owns the property (but not the specific
underlying property) or by a general obligation of the limited partnership that
owns the property. All of the Trust's mortgage notes receivable collateralize
the Trust's line of credit with a third party lender (see Note 6).
Activity in the allowance for estimated loan losses was as follows:
<TABLE>
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period $ 26,595,000 $ 30,825,000 $ 35,000,000
Provisions for losses -- -- --
Deductions (12,997,000) (4,230,000) (4,175,000)
------------ ------------ ------------
Balance at end of period $ 13,598,000 $ 26,595,000 $ 30,825,000
============ ============ ============
</TABLE>
The deductions to the estimated loan losses relate primarily to the
foreclosure of properties by either Trust or the first lien holder, where the
Trust is in a second position. During 1995 the Trust modified the Fox Run loans
and capitalized approximately $1,914,000 of past due interest and default
interest into the principal of the loans. The Trust reversed $1,800,000 of
allowance for estimated loss relating to the Fox Run loans, based upon improved
property performance, the commencement of modified debt service in the fourth
quarter of 1995 and an anticipated refinancing of the mortgages on the property.
Included in the Trust's allowances for estimated losses on notes
receivable is $3 million relating to one loan, a promissory note on a Waukegan,
Illinois apartment complex. The property has continued to improve in operations
since February 1993. The property still needs substantial maintenance and
capital improvements and has not provided the Trust with any debt service since
February 1993, and no debt service is anticipated in the near future. The Trust
has not reduced the allowance. There can be no assurances that the value in this
property will exceed the first mortgage debt.
21
<PAGE> 22
Notes receivable are summarized as follows:
<TABLE>
<CAPTION>
December 31
-----------------------------
1995 1994
------------ ------------
<S> <C> <C>
MORTGAGE NOTES RECEIVABLE:
First trust deeds, primarily requiring monthly interest only
payments ranging from 9% to 13%, maturing through
December 2003 $ 8,200,000 $ 10,537,000
Second trust deeds, requiring monthly interest only payments
ranging from 11% to 12.5%, maturing through December 2003 15,317,000 17,498,000
Third trust deeds, requiring monthly interest only payments
ranging from 10% to 12.5%, maturing through June 1996 3,534,000 7,398,000
------------ ------------
27,051,000 35,433,000
Less: Unearned loan fees (64,000) (93,000)
------------ ------------
Net mortgage notes receivable 26,987,000 35,340,000
------------ ------------
PROMISSORY NOTES RECEIVABLE:
Promissory notes receivable, requiring monthly interest
payments ranging from 8.5% to 13%, maturing through
December 2003 (See Note 5) 18,318,000 23,925,000
Less: Unearned loan fees (8,000) (17,000)
------------ ------------
Net promissory note receivable 18,310,000 23,908,000
------------ ------------
NOTES RECEIVABLE $ 45,297,000 $ 59,248,000
============ ============
</TABLE>
At December 31, 1995 mortgage notes receivable of $7,848,000 and
promissory notes receivable of $7,588,000, all of which are due from affiliates,
are in default.
With respect to the promissory notes receivable as of December 31,
1995, $9,750,000 are secured by partnership interests and $8,560,000 are general
obligations of partnerships. The underlying properties are not collateral for
such loans.
During year ended December 31, 1994, two Trust Loans, referred to as
Bridgetower Apartments and North Prior, were foreclosed upon by debt holders
senior to the debts of the Trust. Both loans had been fully reserved for loss.
During year ended December 31, 1995, two Trust Loans, referred to as Marina
Plaza and Burnhamthorpe, respectively, were foreclosed upon by debt holders
senior to the debts of the Trust. Both loans had been fully reserved for loss.
However, due to recourse provisions on the Marina Plaza loan, the Trust was able
to obtain title to a property having an estimated value of $500,000.
Scheduled maturities of notes receivable due subsequent to December 31,
1995 are, $14,775,000 in 1996, $8,410,000 in 1997, $4,075,000 in 1998, $0 in
1999 and $8,846,000 thereafter. It is likely that the scheduled maturity dates,
for a significant percentage of the notes, will be extended.
NOTE 4 - REAL ESTATE HELD FOR SALE
In August 1993, the Trust foreclosed on a parcel of land located in
Houston, Texas, referred to by the Trust as "Martinique", for which it held a
first trust deed mortgage. The Trust did not recognize a loss on foreclosure in
1993 in excess of the reserve of $600,000 previously provided. The property was
sold in December 1995, for $1.5 million and the Trust received net cash proceeds
of approximately $1,371,000. The Trust realized a $3,000 loss on the sale as
detailed in the following table.
22
<PAGE> 23
In 1994, the Trust began a foreclosure action on a $1,500,000 first
trust deed mortgage held on a property referred to as 4851 Van Epps, an
industrial warehouse located in Cleveland, Ohio. The Trust had previously
provided a loss reserve of $600,000 on this loan. In September 1995 the Trust
obtained title to the property through a deed-in-lieu of foreclosure. In October
1995 the Trust sold the property for $1,370,000, taking back a $700,000 first
trust deed mortgage on the property and received net cash proceeds of
approximately $580,000. The income recognized from the sale is detailed in the
following table.
<TABLE>
<CAPTION>
4851 Van Epps Martinique
------------- -----------
<S> <C> <C>
Sale price of real estate $ 1,370,000 $ 1,500,000
Less:
New cost of real estate held for sale (912,000) (1,400,000)
Closing costs (23,000) (103,000)
----------- -----------
Gain (loss) from sale of real estate $ 435,000 $ (3,000)
=========== ===========
</TABLE>
In January 1994, the Trust acquired, through a foreclosure on its loan
of $3,600,000, a 220 unit apartment complex located in Decatur, Georgia. The
foreclosure resulted in no loss in 1994 as the reserve of $430,000 had been
previously provided. See Note 3. In April 1994, the Trust sold the property and
received net cash proceeds of approximately $3.3 million. The income recognized
from the sale is detailed in the following table:
<TABLE>
<S> <C>
Sale price of real estate $ 3,400,000
Less:
New cost of real estate held for sale (3,298,000)
Closing costs (100,000)
-----------
Gain from sale of real property $ 2,000
===========
</TABLE>
As of December 31, 1995, the Trust owns three real estate properties
held for sale, referred to as University Center Phase IV a 56,000 square foot
retail center and University Center Phase I & II, a 51,200 square foot warehouse
office space, both of these properties are located in Fridley, Minnesota and
4705 Van Epps, a 35,000 square foot industrial warehouse located in Cleveland,
Ohio.
The Trust foreclosed on University Center Phase IV in December 1995, on
which it held a $1,800,00 first trust deed mortgage. This note contained
recourse provisions, accordingly, the Trust received as a function of the
foreclosure action, a judgment lien in the amount of $464,000 on a property
called University Center Phase I & II. As the Trust had two additional loans
with the same borrower, the borrower agreed to deed-in-lieu of foreclosure the
University Center Phase I & II property in consideration of reducing the
principal loan balance by $880,000 on a second trust deed mortgage held by the
Trust in the original amount of $2,600,000, known as Springdale Lake Estates.
The Trust recorded the University Center Phase I and II property at $1,100,000,
its estimated fair market value.
The Trust obtained title to the 4705 Van Epps property through a
deed-in-lieu of foreclosure in August 1995. The Trust had obtained a judgment
lien of approximately $2.7 million on this property as a result of recourse
provisions in the $2 million note referred to as Marina Plaza. In consideration
of the deed-in-lieu of foreclosure, the Trust agreed to reduce the judgment lien
by $500,000 and a payment of $5,000. The 4705 Van Epps property had a $343,000
delinquent first mortgage from an independent financial institution which the
Trust was required to pay upon transfer of title to the Trust. The Trust
recorded this property at $500,000 and recognized approximately $151,000 as
recovery of bad debt. The property is currently under contract to sell with an
anticipated closing by the first quarter of 1996. There can be no assurance that
this sale will be consummated.
23
<PAGE> 24
NOTE 5 - ANGELES PROMISSORY NOTE RECEIVABLE
The Trust had provided Angeles with a $10,000,000 promissory note
receivable secured by real estate, expiring May 31, 1993. At December 31, 1994,
outstanding borrowings on the note were $9,255,000. As a result of the Angeles
settlement as discussed in Note 10 the Trust received over $15 million in cash,
notes and stock to settle this note along with other matters. The new note in
the amount of $6,100,000 received from Angeles in the settlement has been paid
down to $3,750,000 as of December 31, 1995.
NOTE 6 - NOTE PAYABLE TO BANK
As of July 25, 1995, the Trust established a new line of credit with
the Bank, in the amount of $5 million. This new line of credit requires monthly
interest only payments based upon prime plus 1% and matures July 31, 1996. The
new line of credit which refinanced the prior loan with the Bank allows the
Trust to draw on such line to facilitate the foreclosure process on Trust Loans.
In August 1995 the Trust drew down on such line of credit in the amount of
$343,000 in order to pay-off the first trust deed on a property obtained through
a deed-in-lieu of foreclosure (see Note 4). As of December 5, 1995, the Trust
paid off the remaining outstanding balance on the line of credit.
The Trust's average month-end borrowings on the working capital line of
credit were $2,075,000 and $6,094,000 in 1995 and 1994, respectively at a
weighted average interest rate of 10.1% and 9.0%, respectively. The highest
month-end loan balance was $3,500,000 and $9,257,000 in 1995 and 1994,
respectively. Such borrowings were used to increase the Trust's investment in
notes receivable. In conjunction with the financing, the Trust paid loan fees of
$43,000, $82,000, and $91,000 in 1995, 1994 and 1993, respectively.
NOTE 7 - RECORDED CASH ADVANCES FROM AFFILIATED PARTNERSHIPS AND PROPOSED
SETTLEMENT WITH INSIGNIA
In July 1993, the Trust had filed a lawsuit challenging the Trust's
indebtedness and any liability for principal and interest relating to funds
allegedly loaned to the Trust by eight partnerships. The balance outstanding on
these alleged loans, as of December 31, 1994, was $7,585,000 along with accrued
interest of approximately $941,000. Cross complaints were filed against the
Trust by certain of the lending partnerships in this same lawsuit seeking, among
other things, repayment in full of the alleged loans. Effective March 31, 1995,
the following settlement was consummated between the Trust and seven
partnerships, Insignia and affiliates of Insignia. Funds were paid to such
entities on April 14, 1995 as follows:
- the Trust paid approximately, $5,752,000 in cash;
- the Trust purchased, for $250,000, an option from MAE GP
Corporation, an affiliate of Insignia, to purchase all the Class
B Shares of the Trust currently owned by the affiliate. Such
holdings represent 100% of the Trust's outstanding Class B
Shares. The option is exercisable by the Trust in 10 years for
approximately $94,000. During the 10 year period the option is
outstanding all of the Class B Shares will be voted, pursuant to
an irrevocable proxy, with the majority of Class A Shares in
connection with any proposal involving the Trust and Insignia or
any affiliate thereof or election of any Trustee nominated by or
affiliated with Insignia. Such majority will be determined
without consideration of the votes of "Excess Class A Shares," as
defined in the Trust's Declaration of Trust. With respect to all
other matters the affiliate of Insignia can vote the Class B
Shares without restriction.
In addition, one partnership, not affiliated with Insignia, having an
alleged loan to the Trust of $1,150,000 along with accrued interest of
approximately $145,000 as of March 31, 1995, reached an agreement with the Trust
for a settlement of all claims between the Trust and the partnership. Pursuant
to this agreement the Trust paid a total of $930,000 of cash on May 9, 1995,
upon execution of the settlement agreement.
24
<PAGE> 25
As a result of this settlement the Trust recognized an extraordinary
gain of $1,844,000 summarized as follows:
<TABLE>
<S> <C>
Recorded cash advances from affiliated partnerships $ 7,585,000
Accrued interest on recorded cash advances through 12/31/94 941,000
-----------
Total recorded liabilities relating to recorded cash advances 8,526,000
Less:
Settlement of principal and interest on Insignia related partnerships (5,686,000)
Additional interest due on settlement of Insignia related partnerships (66,000)
Settlement of principal on non-Insignia related partnership (930,000)
-----------
Extraordinary gain $ 1,844,000
===========
</TABLE>
NOTE 8 - SHAREHOLDERS' EQUITY
The Shares of the Trust are of two classes: Class A Shares (par value
$1.00 per share) and Class B Shares (par value $.01 per share). There is no
limit on the number of either Class A or Class B Shares which the Trust is
authorized to issue. Class A and Class B Shares are each entitled to one vote
per share with respect to the election of Trustees and other matters.
In 1995, the Trust purchased, for $250,000, an option from MAE GP
Corporation, an affiliate of Insignia to purchase all the Class B Shares of the
Trust currently owned by the affiliate. Such holdings represent 100% of the
Trust's outstanding Class B Shares. The option is exercisable by the Trust in 10
years for approximately $94,000. During the 10 year period the option is
outstanding, all of the Class B Shares will be voted, pursuant to an irrevocable
proxy, with majority of Class A Shares in connection with any proposal involving
the Trust and Insignia or any affiliate thereof or election of any Trustee
nominated by or affiliated with Insignia. The majority will be determined
without consideration of the votes of "Excess Class A Shares," as defined in the
Trust's Declaration of Trust. With respect to all other matters, the affiliate
of Insignia can vote the Class B Shares without restriction.
The Board of Trustees of the Trust has authorized the Trust to
repurchase, in open market transactions, up to 10% of its Class A Shares. The
Trust has repurchased 43,800 shares under this program. There were no purchases
in 1995, 1994 and 1993.
In February 1993, the Trust's policy of distributing monthly the net
cash from operations to its Class A shareholders was temporarily suspended as a
result of the failure of the Insignia Partnerships and partnerships affiliated
with Angeles to fully service their Trust Loan obligations and Angeles'
inability to perform its guarantee of a minimum annual distribution of $2.00 per
Class A Share through May 1994 or meet its obligations under its promissory note
receivable with the Trust because of its own liquidity problems. The Trust
announced in December 1995 its intention to declare a dividend of $0.10 to its
Class A Shareholders of record as of January 22, 1996, payable February 13,
1996.
NOTE 9 - FEES AND OTHER PAYMENTS TO AFC AND ITS AFFILIATES
Until February 1, 1993, the Trust paid AFC monthly advisory fees for
trust administration . The Trust also reimbursed an affiliate of AFC for
administrative expenses incurred on its behalf. In February 1993, AFC's advisory
services to the Trust were terminated. The amount paid to AFC or its affiliate
for 1993 was $35,000.
NOTE 10 - SETTLEMENT WITH ANGELES CORPORATION
Angeles had been unable to service its debt obligations under its
promissory note receivable with the Trust or perform its obligations under its
guarantees of the Trust's Loans. In May 1993 Angeles filed for protection under
Chapter 11 of the federal bankruptcy code. Angeles's failure to perform under
its debt obligations and guarantees
25
<PAGE> 26
with the Trust together with other matters, resulted in the March 1994 filing by
the Trustees, on behalf of the Trust, of substantial claims against Angeles in a
proof of claim in the Angeles bankruptcy.
The Trust reached agreement with Angeles and the Committee of Creditors
Holding Unsecured Claims of Angeles to settlement of all claims between the
Trust and Angeles. The settlement agreement was approved by the Bankruptcy Court
under a plan of reorganization and the Trust received on April 14, 1995, after
the effective date of Court approval (March 31, 1995), the following:
- cash of $6.0 million;
- collateralized note payable of $6,100,000 due December 31, 1998,
interest paid quarterly at prime plus 1% not to exceed 8.5%;
- 567,326 Class A Shares of the Trust, owned by Angeles,
representing 16% of the then total outstanding Class A Shares of
the Trust;
- payment of $1 million on a third party claim;
- assignment of a third party subordinated note with a face value
of $1.2 million; and a
- release of all claims on behalf of Angeles against the Trust.
The $6.1 million note is collateralized with a pledge of Angeles's
limited partnership interest in a limited partnership whose assets are comprised
of notes and receivables from various real estate investment partnerships. The
Trust, during 1995, received $2,350,000 in principal paydowns on this loan
leaving a remaining principal balance as of December 31, 1995 of $3,750,000.
The third party $1.2 million subordinated note received in the
settlement had an indeterminable value and therefore was recorded at zero.
The settlement transaction with Angeles has resulted in the Trust
recording $12,844,000 recovery of bad debt, summarized as follows:
<TABLE>
<S> <C>
Consideration received in settlement:
Cash $ 6,000,000
Collateralized note 6,100,000
Third party subordinated note 1,200,000
Reimbursement for third party claim 1,000,000
567,326 Class A Trust Shares (valued as of
effective date of settlement, $7.50/Class A share) 4,254,000
Other 745,000
------------
Total 19,299,000
Less:
Repayment of Angeles note receivable, net of reserve (4,255,000)
Reserve for third party subordinated note (1,200,000)
Payment of third party claim (1,000,000)
------------
Recovery of bad debt from Angeles Settlement $ 12,844,000
============
</TABLE>
26
<PAGE> 27
NOTE 11 - QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table sets forth the selected quarterly financial data
for the Trust (in thousands except for per share amounts).
<TABLE>
<CAPTION>
QUARTER ENDING
--------------------------------------------
1995 12/31/95 9/30/95 6/30/95 3/31/95
- - ---- --------------------------------------------
<S> <C> <C> <C> <C>
Revenue $4,048 $1,231 $ 602 $13,621
Income (loss) before extraordiary item $3,387 $ 864 $ 228 $12,810
Extraordinary item $ -- $ -- $ -- $ 1,844
Net income (loss) $3,387 $ 864 $ 228 $14,654
PER CLASS A SHARE
Income (loss) before extraordiary item $ 1.19 $ 0.30 $ 0.08 $ 3.74
Extraordinary item $ -- $ -- $ -- $ 0.53
Net income (loss) $ 1.19 $ 0.30 $ 0.08 $ 4.27
Weighted average Class A Shares outstanding 2,827 2,827 2,827 3,394
</TABLE>
<TABLE>
<CAPTION>
Quarter Ending
----------------------------------------------
1994 12/31/94 9/30/94 6/30/94 3/31/94
----------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 815 $ 711 $ 531 $ 712
Net income (loss) $ 194 $ 171 ($ 100) $ 108
Net income (loss) per Class A share $ 0.06 $ 0.05 ($ 0.03) $ 0.03
Weighted average Class A Shares outstanding 3,394 3,394 3,394 3,394
</TABLE>
27
<PAGE> 28
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
None.
28
<PAGE> 29
PART III
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS
The current executive officers and Trustees of the Trust are listed
below, together with their ages and all Trust positions held by them:
<TABLE>
<S> <C> <C>
Ronald J. Consiglio (1) 52 Trustee, Chairman, Chief Executive Officer and
President
J. D'Arcy Chisholm (1) (2) (3) 64 Trustee
Bryan L. Herrmann (1) (3) 60 Trustee
Leland B. Evans (2) 42 Trustee
Anna Merguerian 40 Vice President, Secretary, and Chief Financial Officer
</TABLE>
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
Mr. Consiglio has been a Trustee since April 1988 and has served as the
Chairman, Chief Executive Officer and President of the Trust since May 1993. In
addition, Mr. Consiglio was the Chairman of the Trust's Audit Committee in 1993
and became the Chairman of the Independent Committee upon its formation in
February 1993. Upon formation of the Trust's Executive Committee in May 1995,
Mr. Consiglio serves as its Chairman. From January 1993 through June 1993, Mr.
Consiglio served as Executive Vice President and Chief Administrative Officer of
Reynolds Kendrick Stratton, Inc., a Los Angeles based securities brokerage firm.
From 1990 through 1992, Mr. Consiglio was the Senior Vice President and Chief
Financial Officer of Cantor Fitzgerald & Co., Inc. where he was responsible for
operations, administration and finance. From 1988 through 1990 he was the Senior
Vice President of the investment banking firm of Wedbush Morgan Securities, Inc.
("WMS"), and from 1984 through 1988 he was Executive Vice President of a
predecessor firm, Morgan, Olmstead, Kennedy & Gardner Incorporation. He was
responsible for WMS's investment banking activities, as well as many of the
administrative and operation functions of the firm. He is a certified public
accountant and was a partner in Deloitte Haskins & Sells from 1977 to June 1984.
In 1992, Mr. Consiglio served as the District Chairman of the National
Association of Securities Dealers' District Business Conduct Committee. Mr.
Consiglio is also an executive officer, trustee and Chairman of Angeles
Participating Mortgage Trust and is a business consultant.
Mr. Chisholm has been a Trustee of the Trust since September 1989 and
became a member of the Audit, Compensation and Executive Committees and serves
as the Chairman of the Audit Committee. He has been a consultant to real estate,
business and educational entities in San Francisco, California, currently and in
Minneapolis, Minnesota since 1989. From 1980 until September 1989, Mr. Chisholm
was associated with the Institute for Pastoral and Social Ministry at the
University of Notre Dame, initially as a volunteer, then as an assistant
director from 1982 until 1986 and finally as an associate director from 1986
until 1989. From 1971 until 1980, Mr. Chisholm served in several capacities for
Angeles and its subsidiaries, including president of its property management
company and president of its property sales company. Prior to 1971, Mr. Chisholm
was employed at the following real estate related firms; Real Estate Research
Corporation, Del E. Webb Corporation and Milton Meyer Company. He holds a B.A.
degree from the University of Notre Dame and is a graduate of the Executive
Program, graduate School of Business, UCLA. Mr. Chisholm also serves as a
trustee of Angeles Participating Mortgage Trust.
Mr. Herrmann has been trustee since December 1994 and is a member of
the Compensation and Executive Committees and serves as the Chairman of the
Compensation Committee. Mr. Herrmann is an investment banker by background and
currently is Chairman and Chief Executive Officer of Base Camp 9 Corp. and has
been in that position since 1990. In addition to his duties at Base Camp 9
Corp., from 1992 to 1994, Mr. Herrmann served as Chief Executive officer of
Spaulding Composites Company and is currently a member of its board of
directors.
29
<PAGE> 30
Since 1984 Mr. Herrmann has been the general partner of MOKG 1984 Investment
Partners Ltd. Mr. Herrmann is a member of the board of directors of Wynn's
International, Inc., a New York Stock Exchange company.
Mr. Evans, has been a Trustee since May 1995, and became a member of
the audit committee in June 1995. Mr. Evans is an attorney and has practiced law
since 1980. Mr. Evans has represented secured lenders in real estate matters and
has served as counsel to federally insured lending institutions.
Ms. Merguerian became the Vice President and Secretary of the Trust in
December 1993 and the Chief Financial Officer in December 1994. Prior to joining
the Trust in May 1993, she was employed by Angeles from June 1981 through April
1993. Her last position with Angeles and its subsidiaries was as a Senior Vice
President of the Asset Management Group. From September 1977 to May 1981, she
served as a Senior Accountant at Ernst & Young (which was formerly known as
Ernst & Whinney). Ms. Merguerian is a certified public accountant.
INFORMATION REGARDING THE BOARD OF TRUSTEES AND ITS COMMITTEES
INDEPENDENT COMMITTEE. On February 26, 1993, in recognition of the
conflicts of interest between the Trust and Angeles, a committee was formed
consisting solely of Trustees who are not affiliated with Angeles. The
Independent Committee was given the authority to evaluate, negotiate and
implement the Restructuring of the Trust's assets and liabilities, and to make
all decisions relating to the Trust's dealings with Angeles or any of its
affiliates. An independent firm of valuation consultants and independent counsel
have been engaged to assist the Independent Committee. Messrs. Consiglio,
Bryant, Chisholm and McDonald served on the Independent Committee with Mr.
Consiglio serving as Chairman. In April 1993 the Independent Committee ceased to
exist upon the resignation of the two Angeles affiliated Trustees.
AUDIT COMMITTEE. The Board of Trustees has delegated a portion of its
authority to an Audit Committee comprised of only independent trustees. This
Committee makes recommendations to the Board of Trustees concerning the
selection of the Trust's independent auditors, oversees the financial reporting
process, develops and approves plans for the annual duties of the Trust, reviews
fees charged by the independent auditors, reviews the scope and results of the
auditors' reports and reviews and monitors the implementation of suggestions
made by the independent auditors. Additionally, the Committee reviews and
monitors non-audit services provided by the independent auditors. The Committee
is kept apprised by management of the Trust's internal control procedures.
Messrs. Chisholm and Evans served on the Audit Committee with Mr. Chisholm
serving as Chairman.
COMPENSATION COMMITTEES. During 1995 the Audit and Compensation
Committee was split into two separate committees. The Compensation Committee
oversees, reviews and approves the compensation of the Trustees and officers of
the Trust. Messrs. Chisholm and Herrmann serve on the Compensation Committee
with Mr. Herrmann serving as Chairman.
EXECUTIVE COMMITTEE. In May 1995 the Board of Trustees delegated a
portion of its authority to the Executive Committee comprised of Mr. Consiglio,
Mr. Chisholm and Mr. Herrmann, with Mr. Consiglio serving as Chairman. The
purpose of establishing the Executive Committee was the expectation that the
Board of Trustees would expand in size due to the contemplated expansion of the
Trust's asset portfolio through an UPREIT structure. Therefore, in order to
facilitate efficient management of the Trust without having to arrange for
meetings for a larger group of Trustees, the Executive Committee was formed as
provided in the Trust's Declaration of Trust. The Executive Committee has all of
the powers and authority of the board of trustees with some restrictions.
BOARD OF TRUSTEES AND COMMITTEE MEETINGS. During the fiscal year ended
December 31, 1995, the Trust's Board of Trustees held five regular meetings with
all Trustees attending in person and three special meetings with all Trustees
attending except for Mr. Herrmann, who did not attend one such special meeting.
The Audit Committee met once during fiscal year 1995 and each committee member
attended either in person or by telephone. The Compensation Committee met once
in 1995 and each committee member attended either in person or by telephone. The
Executive Committee met three times during 1995 and each committee member
attended either in person or by telephone.
30
<PAGE> 31
ITEM 11. EXECUTIVE COMPENSATION
This item is hereby incorporated by reference to the Trust's 1996 Proxy
Statement to be filed with the Securities and Exchange Commission.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This item is hereby incorporated by reference to the Trust's 1996 Proxy
Statement to be filed with the Securities and Exchange Commission.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This item is hereby incorporated by reference to the Trust's 1996 Proxy
Statement to be filed with the Securities and Exchange Commission.
31
<PAGE> 32
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES, AND REPORTS ON FORM 8-K
(a) Listed below are all financial statements and supplemental schedules
filed as part of this 10-K and herein included.
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Balance Sheets at December 31, 1995 and 1994 15
Statements of Operations for the years ended December 31, 1995, 1994 and 1993 16
Statements of Changes in Shareholders' Equity for the years ended
December 31, 1995, 1994 and 1993 17
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993 18
Notes to Financial Statements 19
Supplemental Schedule III - Real Estate and Accumulated Depreciation 35
Supplemental Schedule IV - Mortgage Loans on Real Estate 36
</TABLE>
(b) No reports on Form 8-K were filed during the last quarter of the period
ended December 31, 1995
(c) Exhibits required by Item 601 of Regulation S-K: Refer to Exhibit Index
of this report.
(d) Other Financial Statements required by Regulation S-X are not
applicable or because the required information is shown in the
financial statement.
All other supplemental schedules are omitted because they are not required or
because the required information is shown in the financial statements.
32
<PAGE> 33
ANGELES MORTGAGE INVESTMENT TRUST
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
- - -------------- ----------------------
<S> <C>
3.1 Declaration of the Trust dated September 1, 1988.(1)
10.1 The Financial Statements of Angeles Corporation
("Angeles").(2)
10.2 Loan and Security Agreement dated May 31, 1990 between
Angeles and the Trust.(3)
10.3 Amended and Restated Loan and Security Agreement dated June
25, 1990 between the Bank and the Trust.(3)
10.4 Amendment No. 1 to the Amended and Restated Loan and
Security Agreement dated May 30, 1991 between the Bank and
the Trust.(4)
10.5 $10,000,000 Convertible Debenture Agreement dated April 17,
1991 between Angeles and the Trust.(4)
10.7 Fee and Indemnity Agreement dated April 21, 1992 among
Angeles, Angeles Housing Concepts, Inc. ("AHC") and the
Trust.(5)
10.8 Guarantee Agreement dated April 21, 1992 relating to
guaranty made by the Trust in favor of PaineWebber
Independent Living Mortgage Fund, Inc. and PaineWebber
Independent Living Mortgage Inc. II.(5)
10.9 Amendment No. 2 to the Amended and Restated Loan and
Security Agreement dated April 29, 1992 between the Bank and
the Trust. (5)
10.10 First Amendment to Fee and Indemnity Agreement dated July
20, 1992 between Angeles, AHC and the Trust.(5)
10.11 Guaranty Agreement dated November 24, 1992 relating to
guaranty made by Insignia Financing Group, Inc. ("Insignia")
in favor of the Trust. (5)
10.12 Amendment No. 1 to the Security Agreement dated November 24,
1992 between Angeles and the Trust.(5)
10.13 Letter Agreement dated April 13, 1993 regarding the Amended
and Restated Loan and Security Agreement between the Bank
and the Trust.(5)
10.14 Amendment No. 3 to the Amended and Restated Loan and
Security Agreement dated May 17, 1993 between the Bank and
the Trust.(6)
10.15 Amendment No. 4 to the Amended and Restated Loan and
Security Agreement dated November 17, 1993 between the Bank
and the Trust.(6)
10.16 Amendment No. 5 to the Amended and Restated Loan and
Security Agreement dated May 16, 1994 between the Bank and
the Trust.(6)
10.17 Supplement to Amendment No. 5 to Amended and Restated Loan
and Security Agreement RE: Extension dated November 28, 1994
between the Bank and the Trust. (7)
10.18 Agreement and Mutual Release dated January 30, 1995 between
the Trust, Angeles Corporation and the Committee of
Creditors Holding Unsecured Claims. (7)
10.19 Settlement Agreement dated November 9, 1994 between the
Trust and the Insignia Parties. (7)
10.20 Amendment to Agreement and Mutual Release dated April 10,
1995 between the Trust, Angeles Corporation and the
Committee of Creditors Holding Unsecured Claims.
10.21 Amendment to Settlement Agreement dated December 20, 1994
between the Trust and the Insignia Parties.
10.22 Second Amendment to Settlement Agreement dated March 29,
1995 between the Trust and the Insignia Parties.
10.23 Third Amendment to Settlement Agreement dated April 12, 1995
between the Trust and the Insignia Parties.
10.24 Settlement Agreement dated May 5, 1995 between the Trust and
Satellite Communication Partners, Ltd.
10.25 Seconded Amended and Restated Loan and Security Agreement
dated July 25, 1995 between the Trust and Imperial Bank.
10.26 Employment Agreement dated December 1, 1995 between the
Trust and Anna Merguerian.
19.1 Form of Indemnification Agreement dated as of January 3,
1989 between the Trust and the Trustees.
</TABLE>
(1) Filed as an exhibit to the Trust's Registration Statement dated
December 14, 1988, and incorporated herein by reference.
(2) Filed as an exhibit to Angeles' Form 10-K dated June 30, 1991 and
Angeles' Form 10-Q dated December 31, 1991, and incorporated herein by
reference.
(3) Filed as an exhibit to the Trust's Form 10-K dated December 31, 1990,
March 27, 1991, and incorporated herein by reference.
(4) Filed as an exhibit to the Trust's Form 10-K dated December 31, 1991,
and incorporated herein by reference.
(5) Filed as an exhibit to the Trust's Form 10-K dated December 31, 1992,
and incorporated herein by reference.
(6) Filed as an exhibit to the Trust's Form 10-K dated December 31, 1993,
and incorporated herein by reference.
(7) Filed as an exhibit to the Trust's Form 10-K dated December 31, 1994,
and incorporated herein by reference.
33
<PAGE> 34
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Trust has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ANGELES MORTGAGE INVESTMENT TRUST
Registrant
Date February 7, 1996 /s/ Ronald J. Consiglio
-------------------------------------
Ronald J. Consiglio
Chairman of the Board of Trustees
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
Trust and in the capacities and on the dates indicated.
Date February 7, 1996 /s/ Ronald J. Consiglio
-------------------------------------
Ronald J. Consiglio
Trustee, President and Chief
Executive Officer (Principal
Executive Officer)
Date February 7, 1996 /s/ J. D'Arcy Chisholm
-------------------------------------
J. D'Arcy Chisholm
Trustee
Date February 7, 1996 /s/ Bryan L. Herrmann
-------------------------------------
Bryan L. Herrmann
Trustee
Date February , 1996
-------------------------------------
Leland B. Evans
Trustee
Date February 7, 1996 /s/ Anna Merguerian
-------------------------------------
Anna Merguerian
Vice President, Chief Financial
Officer and Secretary (Principal
Financial and Accounting Officer)
34
<PAGE> 35
ANGELES MORTGAGE INVESTMENT TRUST
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Cost capitalized Gross amount at which
Description Encum- Initial Cost to subsequent to carried at close of Accumulated Date of
brances Trust acquisition period(1)(2) Depreciation con-
----------------------------------- struction
Building Improve- Carrying
and land ments costs
improvements
- - ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
4705 Van Epps $-0- $ 500,000 -- -- $ 500,000 0 1979
Industrial Warehouse
Cleveland, Ohio
University Center Phase IV 1,800,000 -- -- 1,800,000 0 1975
Retail Shopping
Friedly, Minnesota
University Center Phase I & II 1,100,000 -- -- 1,100,000 0 1975
Warehouse Office
Friedly, Minnesota
--------------------------------------------------------------------------
Total 0 3,400,000 0 0 3,400,000 0
==========================================================================
<CAPTION>
Life on
which
Description Date depreciation
acquired in latest
income
statements
is computed
- - --------------------------------------------------------------
<S> <C> <C>
4705 Van Epps Aug.-'95 N/A
Industrial Warehouse
Cleveland, Ohio
University Center Phase IV Dec.-'95 N/A
Retail Shopping
Friedly, Minnesota
University Center Phase I & II Nov.-'95 N/A
Warehouse Office
Friedly, Minnesota
Total
</TABLE>
FOOTNOTES TO SCHEDULE XI - REAL ESTATE AND ACCUMULATED DEPRECIATION
(1) Reconcilation of real property investment:
<TABLE>
<S> <C>
Balance at January 1, 1993 $ --
Additions during period:
Acquisition through foreclosure $ 1,400,000
Deductions during period $ --
-----------
Balance at December 31, 1993 $ 1,400,000
-----------
Additions during period:
Acquisition through foreclosure $ 3,170,000
Deductions during period $(3,170,000)
-----------
Balance at December 31, 1994 $ 1,400,000
-----------
Additions during period:
Acquisition through foreclosure $ 4,312,000
Deductions during period $(2,312,000)
-----------
Balance at December 31, 1995 $ 3,400,000
===========
</TABLE>
(2) The carrying value for federal income tax purposes is $3,400,000.
35
<PAGE> 36
ANGELES MORTGAGE INVESTMENT TRUST
SCHEDULE IV- MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
FINAL PERIODIC FACE CARRYING PRINCIPAL AMOUNT OF LOANS
INTEREST MATURITY PAYMENT PRIOR AMOUNT OF AMOUNT OF MORT SUBJECT TO DELINQUENT
DESCRIPTION RATE DATE TERMS LIENS MORTGAGES GAGES(2)(3) PRINCIPAL OR INTEREST
----------- -------- -------- -------- ----- --------- -------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FIRST TRUST DEEDS
- - -----------------
Colony Cove 13.00% Jun-95 (1) $ - 2,000 1,572 1,572
Land,
Ellenton, Florida
Mesa Dunes, Wakonda, Town & Country
Retail Stores, 9.00% Dec-03 (4) - 5,000 3,450 -
Cedar Rapids / Des
Moines, Iowa
Princeton Meadows Joint Venture
Golf Course,
Princeton Meadows, New Jersey 12.50% Sep-01 (1) - 1,280 1,567 -
4851 Van Epps
Warehouse Complex,
Cleveland, Ohio 9.00% Dec-03 (1) - 700 700 -
La Salle
Warehouse, 11.50% Dec-03 (1) - 935 911 -
Las Vegas, Nevada
-----------------------------------------------------------
TOTAL FIRST TRUST DEEDS 0 9,915 8,200 1,572
SECOND TRUST DEEDS
- - ------------------
Hospitality Inn 12.50% Jul-96 (1) 795 800 900 -
Hotel,
Pensacola, Florida
Hospitality Inn 12.00% Jul-96 (1) 904 525 588 -
Hotel,
Pensacola, Florida
Hospitality Inn 12.00% Jul-96 (1) 2,248 575 644 -
Hotel,
Jacksonville, Florida
</TABLE>
36
<PAGE> 37
ANGELES MORTGAGE INVESTMENT TRUST
SCHEDULE IV- MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
FINAL PERIODIC FACE CARRYING PRINCIPAL AMOUNT OF LOANS
INTEREST MATURITY PAYMENT PRIOR AMOUNT OF AMOUNT OF MORT SUBJECT TO DELINQUENT
DESCRIPTION RATE DATE TERMS LIENS MORTGAGES GAGES(2)(3) PRINCIPAL OR INTEREST
----------- -------- -------- -------- ------ --------- -------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
SECOND TRUST DEEDS - CONTINUED
Panorama Terrace 11.00% Dec-03 (1) 3,946 950 256 -
Apartments,
Birmingham, Alabama
Southgate (5) 11.50% Mar-95 (1) 2,723 2,000 2,000 2,000
Apartments,
Bedford Heights, Ohio
4595-97 Van Epps 12.00% Feb-97 (1) 1,601 600 500 -
Warehouse Complex,
Cleveland, Ohio
North Prior 12.25% Jun-96 (1) 7,918 2,000 1,206 1,206
Warehouse Complex,
St. Paul, Minnesota
Springdale Lake Estates (5) 12.25% Jun-95 (1) 2,883 2,600 1,720 1,720
Mobile Home Park,
Belton, Missouri
Bercado Shores 12.50% Jun-95 (1) 4,307 1,350 1,350 1,350
Apartments,
South Bend, Indiana
Brittany Point 12.50% Dec-00 (1) 9,536 1,250 1,250 -
Apartments,
Huntsville, Alabama
Nolana Apartments, Inc. 12.00% Aug-96 (1) 1,873 455 375 -
Los Angeles, California
Fox Run 11.50% Sep-96 (1) 22,849 1,734 1,734 -
Apartments,
Plainsboro, New Jersey
Fox Run 12.50% Sep-96 (1) - 2,794 2,794 -
Apartments,
Plainsboro, New Jersey
---------------------------------------------------
TOTAL SECOND TRUST DEEDS 61,583 17,633 15,317 6,276
</TABLE>
37
<PAGE> 38
ANGELES MORTGAGE INVESTMENT TRUST
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 1995
(in thousands)
<TABLE>
<CAPTION>
FINAL PERIODIC FACE CARRYING PRINCIPAL AMOUNT OF LOANS
INTEREST MATURITY PAYMENT PRIOR AMOUNT OF AMOUNT OF MORT SUBJECT TO DELINQUENT
DESCRIPTION RATE DATE TERMS LIENS MORTGAGES GAGES(2)(3) PRINCIPAL OR INTEREST
----------- -------- -------- -------- ------ --------- -------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
THIRD TRUST DEEDS
- - -----------------
Oxford/Spanish Gardens 10.00% Jun-96 (1) 2,741 1,298 1,298 -
Apartments,
Montgomery, Alabama
Fox Run (A) 12.50% Sep-96 (1) 3,250 2,236 2,236 -
Apartments,
Plainsboro, New Jersey
-------------------------------------------------------------
TOTAL THIRD TRUST DEEDS 5,991 3,534 3,534 0
PROMISSORY NOTES RECEIVABLE
- - ---------------------------
Lake Arrowhead Joint Venture 13.00% Dec-97 (1) 21,000 6,000 6,000 -
Hotel,
Lake Arrowhead, California
Harbour Landing 12.00% Feb-95 (1) 4,165 470 178 178
Apartments,
Columbia, South Carolina
Carriage Hills 12.00% Apr-95 (1) 3,440 1,200 1,200 1,200
Apartments,
East Lansing, Michigan
Vista Hills 12.50% Jun-95 (1) 3,775 1,300 1,300 1,300
Apartments,
El Paso, Texas
Angeles Partners 16 12.50% Jun-97 (1) - 860 860 860
California Limited Partnership
Rolling Greens Partners, Ltd. 12.50% Jun-97 (1) - 2,470 1,050 1,050
California Limited Partnership
Angeles Partners X 12.75% Dec-03 (1) - 1,350 655 -
California Limited Partnership
</TABLE>
38
<PAGE> 39
ANGELES MORTGAGE INVESTMENT TRUST
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 1995
(in thousands)
<TABLE>
<CAPTION>
FINAL PERIODIC FACE CARRYING PRINCIPAL AMOUNT OF LOANS
INTEREST MATURITY PAYMENT PRIOR AMOUNT OF AMOUNT OF MORT SUBJECT TO DELINQUENT
DESCRIPTION RATE DATE TERMS LIENS MORTGAGES GAGES(2)(3) PRINCIPAL OR INTEREST
----------- -------- -------- -------- -------- --------- -------------- -------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PROMISSORY NOTES RECEIVABLE -
CONTINUED
Fox Crest 12.50% Jan-96 (1) 6,682 3,000 3,000 3,000
Apartments,
Waukegan, Illinois
Angeles Partners XIV 12.00% Feb-98 (1) - 325 325 -
California Limited Partnership
Angeles Corporation 8.50% Dec-98 (1) - 6,100 3,750 -
---------------------------------------------------------------
Los Angeles, California
TOTAL PROMISSORY NOTES RECEIVABLE 39,062 23,075 18,318 7,588
-------- ------- -------- -------
TOTAL $106,636 $54,157 45,369 $15,436
==================== =======
UNEARNED LOAN FEES (72)
--------
45,297
ALLOWANCE FOR ESTIMATED LOSSES (13,598)
--------
$ 31,699
========
</TABLE>
39
<PAGE> 40
ANGELES MORTGAGE INVESTMENT TRUST
FOOTNOTES TO SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
December 31, 1995
(1) Note requires monthly interest only payments through maturity, when the
principal balance is due.
(2) Reconciliation of notes receivable:
<TABLE>
<S> <C>
Balance at January 1, 1993 83,060,000
Additions:
New mortgage loans 1,944,000
Deductions:
Principal collections (10,498,000)
Foreclosures (4,732,000)
------------
Balance at December 31, 1993 $ 69,774,000
Additions:
New mortgage loans 283,000
Deductions:
Principal collections (3,599,000)
Foreclosures (7,100,000)
------------
Balance at December 31, 1994 $ 59,358,000
Additions:
New mortgage loans 9,001,000
Deductions:
Principal collections (12,310,000)
Foreclosures (10,680,000)
------------
Balance at December 31, 1995 $ 45,369,000
============
</TABLE>
(3) The carrying amount for Federal income tax purposes is approximately
$45,369,000.
(4) Note requires monthly interest and principal payments through maturity,
when the principal balance is due.
(5) Although loans are noted as delinquent as to principal or interest,
these loans are paying debt service to the Trust from cash available
from property operations.
40
<PAGE> 1
EXHIBIT 10.20
AMENDMENT TO AGREEMENT AND MUTUAL RELEASE
This Amendment to Agreement and Mutual Release is entered into by and
among Angeles Mortgage Investment Trust, a California business trust ("AMIT"),
Angeles Corporation, a California corporation ("Angeles"), and the Committee of
Creditors Holding Unsecured Claims (the "Committee") by execution on the dates
indicated below.
RECITALS
A. In January of 1995, AMIT, Angeles, and the Committee entered into an
Agreement and Mutual Release (the "Agreement and Mutual Release").
B. Pursuant to the Agreement and Mutual Release, and as a condition
thereof, the parties agreed that the "Settlement Date" as defined therein must
occur no later than March 31, 1995, or, the settlement contained in the
Agreement and Mutual Release must be approved on motion to the United States
Bankruptcy Court having jurisdiction over Angeles' Chapter 11 bankruptcy
proceeding (the "Bankruptcy Case") by an order which becomes final and
unappealed on or before March 31, 1995. Neither of these events occurred by
March 31, 1995.
C. Pursuant to Paragraph 1.5 of the Agreement and Mutual Release, AMIT,
Angeles, and the Committee agreed that, among other things, Angeles would
execute and deliver to AMIT an Indemnity Agreement and a Security Agreement
(Deposit Account) in order to indemnify and secure Angeles' obligations to AMIT
with regard to any losses arising on account of AMIT's
<PAGE> 2
alleged guaranty (the "PaineWebber Guaranty") of the obligations of Angeles
Housing Concepts, Inc. ("AHC") to PaineWebber Independent Living Mortgage Fund,
Inc., a Delaware corporation or PaineWebber Independent Living Mortgage, Inc.,
II, a Delaware corporation (collectively "PaineWebber"), including, but not
limited to, with regard to litigation commenced by PaineWebber against AMIT in
the Superior Court of the State of California for the County of Los Angeles as
Case No. BC 107487 (the "PaineWebber Litigation").
D. Subsequent to the execution of the Agreement and Mutual Release,
PaineWebber, Angeles and the Committee entered into that certain Agreement for
Classification and Treatment of Claims ("the Angeles/PaineWebber Settlement
Agreement"). The effectiveness of the Angeles/PaineWebber Settlement Agreement,
was conditioned upon, among other things, the execution by PaineWebber and AMIT
of the Settlement Agreement, a true and correct copy of which is attached hereto
as Exhibit "1" (the "AMIT/PaineWebber Settlement Agreement").
E. Pursuant to the AMIT/PaineWebber Settlement Agreement, among other
things, AMIT agreed to pay PaineWebber the aggregate sum of $1.0 Million in
satisfaction of all claims which PaineWebber might have against AMIT under the
PaineWebber Guaranty, conditioned upon Angeles paying to AMIT the sum of $1.0
Million (which $1.0 Million payment would then be used by AMIT to fund the
AMIT/PaineWebber Settlement) plus reimbursement of AMIT's costs and attorneys'
fees relative to the PaineWebber Guaranty.
-2-
<PAGE> 3
F. The parties now enter into this Amendment to Agreement and Mutual
Release for the purpose of extending the Settlement Date, modifying the terms of
the Agreement and Mutual Release with regard to Angeles' indemnification of AMIT
on account of the PaineWebber Guaranty, and such additional modifications as are
hereinafter set forth.
NOW, THEREFORE, BASED UPON THE FOREGOING RECITALS, THE PARTIES AGREE
AS FOLLOWS:
1. Paragraph No. 2.1 of the Agreement and Mutual Release is hereby
amended so as to change the date of "March 31, 1995" to "April 14, 1995".
2. Paragraph No. 1.5 and Exhibits "F" and "G" to the Agreement and
Mutual Release are hereby stricken in their entity, and the following Paragraph
1.5 is inserted in place of the form of Paragraph No. 1.5 contained in the
Agreement and Mutual Release:
"1.5 PaineWebber Indemnification.
1.5.1 Not later than the Settlement Date, in addition to all
other sums due by Angeles to AMIT hereunder, Angeles shall pay to or
for the benefit of AMIT the following sums on account of the
obligations Angeles and Angeles Housing Concepts, Inc. ("AHC") under
the terms of the April 21, 1992 Fee and Indemnification Agreement (as
amended effective July 20, 1992) executed by Angeles and AHC in favor
of AMIT and pertaining to AMIT's alleged Guaranty (the "PaineWebber
Guaranty") of the obligations of AHC to PaineWebber Independent Living
-3-
<PAGE> 4
Mortgage Fund, Inc., a Delaware corporation or PaineWebber Independent
Living Mortgage, Inc., II, a Delaware corporation (collectively
"PaineWebber")":
1.5.1.1 The sum of $1.0 Million which shall be paid
directly by Angeles to PaineWebber in satisfaction of AMIT's
obligations to PaineWebber under the AMIT/PaineWebber
Settlement Agreement.
1.5.1.2 A sum equal to all reasonable costs and
attorneys' fees incurred by AMIT as of the Settlement Date
with regard to the case now pending before the Superior Court
of the State of California for the County of Los Angeles as
Case Number BC 107487 (the "PaineWebber Litigation") and any
reasonable costs and attorneys' fees incurred by AMIT as of
the Settlement Date with regard to any other action taken by
PaineWebber against AMIT arising under or in connection with
the PaineWebber Guaranty, including, but not limited to,
reasonable costs and attorneys' fees incurred by AMIT relative
to the negotiation and preparation of the AMIT/PaineWebber
Settlement Agreement. Should a dispute arise as to the
reasonableness of the attorneys' fees or costs, it will be
resolved by motion made to the Bankruptcy Court before whom
the Bankruptcy Case is now pending under standards applicable
to counsel representing creditors whose employment is not
subject to Bankruptcy Court approval (i.e., under generally
accepted standards for State Court practitioners).
-4-
<PAGE> 5
1.5.2 Angeles hereby agrees to indemnify, defend and hold AMIT
harmless from and against any and all claims, liabilities, damages,
costs and expenses (including, without limitation, reasonable
attorneys' fees and legal expenses) arising from or relating to any
action or proceeding brought or taken against AMIT by PaineWebber on
account of the PaineWebber Guaranty (the "PaineWebber Action").
Notwithstanding the foregoing, nothing herein is intended as an
admission by AMIT, Angeles, or the Committee that, after payment by
Angeles to PaineWebber of the sums referenced in Paragraph No. 1.5.1.1
hereof, PaineWebber will have any right to bring any PaineWebber Action
against AMIT, it being the position of Angeles, the Committee and AMIT
that PaineWebber would not be entitled to bring any PaineWebber Action
after such payment."
3. Exhibit "A" to the Agreement and Mutual Release is hereby amended in
the form attached hereto as Exhibit "A".
4. Exhibit "B" to the Agreement and Mutual Release is hereby amended in
the form attached hereto as Exhibit "B".
5. Exhibit "C" to the Agreement and Mutual Release is hereby amended in
the form attached hereto as Exhibit "C".
6. Exhibit "D" to the Agreement and Mutual Release is hereby amended in
the form attached hereto as Exhibit "D".
-5-
<PAGE> 6
7. Exhibit "E" to the Agreement and Mutual Release is hereby amended in
the form attached hereto as Exhibit "E".
8. Exhibits "F" and "G" are intentionally omitted from this Amendment
to Agreement and Mutual Release.
9. Exhibit "H" to the Agreement and Mutual Release is hereby amended in
the form attached hereto as Exhibit "H".
10. Exhibit "I" to the Agreement and Mutual Release is hereby amended
in the form attached hereto as Exhibit "I".
11. Paragraph 1.7.3.1 of the Agreement and Mutual Release shall be
deleted and replaced with the following:
"1.7.3.1 Angeles Related Parties: Conditioned upon timely
performance by Angeles in accordance with Paragraph 1 of this Agreement
and Mutual Release: (a) Angeles' and its direct and indirect
subsidiaries' officers and directors who were officers or directors of
Angeles or its direct and indirect subsidiaries as of May 3, 1993 (the
"Officers and Directors"), and (b) Angeles' affiliates (as defined in
11 U.S.C. Section 101(2) other than MAE GP Corporation ("MAE GP") or
any person or entity which is or was an "affiliate" of Angeles solely
on account of MAE GP's ownership of the AMIT Class B Shares) or an
insider (as defined in 11 U.S.C. Section 101(31) other than the
Officers and Directors; or
-6-
<PAGE> 7
MAE GP or any person or entity, which is or was an "insider" of Angeles
solely on account of MAE GP's ownership of the AMIT Class B Shares) of
Angeles, or an agent, attorney, trustee, officer, or director of any of
said affiliates or insiders (said agents, attorneys, affiliates, and
insiders shall hereinafter collectively be referred to as the
"Non-Officers and Non-Directors"), shall have the option of entering
into a Mutual Release with AMIT. The Mutual Release between AMIT and
the Officers and Directors will be in the form attached hereto as
Exhibit "J-1". The Mutual Release between AMIT and the Non-Officers
and Non-Directors will be in the form attached hereto as Exhibit "J-2".
Any Officer or Director or Non-Officer or Non-Director electing to
execute a Mutual Release with AMIT, must do so by executing the
applicable Mutual Release and transmitting the original thereof to AMIT
at the address specified below no later than 120 days following the
Settlement Date. Upon timely execution and delivery of the applicable
Mutual Release by an Officer or Director or a Non-Officer or
Non-Director, such party shall be released from all claims and causes
of action specified in the applicable Mutual Release, whether or not
AMIT executes such Mutual Release."
12. Exhibit "J" to the Agreement and Mutual Release is deleted and
replaced by Exhibits "J-1" and J-2" hereto.
-7-
<PAGE> 8
13. Except as otherwise expressly set forth herein, the Agreement and
Mutual Release shall remain in full force and effect and the terms thereof are
incorporated herein by this reference.
DATED: April , 1995 ANGELES MORTGAGE INVESTMENT TRUST,
-- a California business trust
By:
--------------------------------
Its:
----------------------------
DATED: April , 1995 ANGELES CORPORATION,
-- a California corporation
By:
--------------------------------
Its:
----------------------------
DATED: April , 1995 THE COMMITTEE OF CREDITORS HOLDING
-- UNSECURED CLAIMS
By:
--------------------------------
Its:
----------------------------
-8-
<PAGE> 1
EXHIBIT 10.21
AMENDMENT TO SETTLEMENT AGREEMENT
This Amendment to Settlement Agreement is entered into by and among
Angeles Mortgage Investment Trust, a California business trust ("AMIT"), on the
one hand, and Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), MAE GP Corporation, a Delaware Corporation ("MAE GP"), Ocean
Waterways Partners, Ltd., a California limited partnership ("Ocean Waterways"),
Angeles Park Communities, Ltd., a California limited partnership ("APC"), Terra
Siesta Communities, Ltd., a California limited partnership ("Terra Siesta
Communities") and Terra Siesta Partners, Ltd., a California limited partnership
("Terra Siesta Partners"), Angeles Properties, Inc., a California corporation
("API"), Angeles Investment Properties, Inc., a California corporation ("AIPI"),
Angeles Realty Corporation, a California corporation ("ARC"), Angeles Realty
Corporation II, a California corporation ("ARC II"), Northbrook Apartments,
Ltd., a California limited partnership ("Northbrook"), Lake Avenue Offices,
Ltd., a California limited partnership ("Lake Avenue"), La Colina Ranch
Apartments, Ltd., a California partnership ("La Colina"), Angeles Fort Worth
Option Joint Venture, a California general partnership ("Ft. Worth JV"), and
Angeles Income Properties IV, a California partnership ("AIP IV") (collectively,
the "Insignia Parties"), on the other hand, by execution on the dates indicated
below.
<PAGE> 2
RECITALS
A. On November 9, 1994, AMIT and the Insignia Parties entered into a
Settlement Agreement (the "Settlement Agreement").
B. Pursuant to the Settlement Agreement, and as a condition thereof,
the parties agreed that the "Effective Date" of the settlement described in the
Settlement Agreement must occur by March 1, 1995 (the "Settlement Deadline").
C. The parties now enter into this Amendment to Settlement Agreement
for the purpose of extending the Settlement Deadline.
NOW, THEREFORE, based upon the foregoing Recitals, the parties agree as
follows:
1. Paragraph 3 of the Settlement Agreement is amended as follows:
"3. STAY OF LITIGATION:
A. Upon execution of this Settlement Agreement by all parties,
AMIT and the Insignia Parties shall immediately file a joint
application in the Action notifying the Court that a settlement has
been reached among such parties, contingent upon (i) the occurrence of
the Effective Date;
2
<PAGE> 3
and (ii) AMIT obtaining the Imperial Consent by December 1, 1994; and
requesting the Court to stay the Action as among the parties to this
Settlement Agreement who are also parties to the Action pending the
completion of the Angeles Plan confirmation process. If the Angeles
Plan is confirmed embodying the settlement contained in the
Angeles/AMIT Agreement and the Effective Date occurs by March 31, 1995,
and the Imperial Consent is obtained prior to December 1, 1994, then
following the Effective Date, the Action will be dismissed as among the
parties to this Settlement Agreement and the parties agree to cause
their respective counsel of record in the Action to execute and file a
request for dismissal (the "Dismissal Request"). Such dismissal shall
be without an award of costs and shall provide that each parties shall
bear his or its own costs of suit and attorneys' fees.
B. In the event that the State Court does not approve the
request for a stay of the Action, then the parties hereto will
immediately file the Dismissal Request dismissing (the "Contingent
Dismissal") their claims against each other in the Action without
prejudice to refiling of said claims if the Effective Date does not
occur by March 31, 1995, or the Imperial Consent is not obtained prior
to December 1, 1994. Such Contingent Dismissal shall be without an
award of costs and shall provide that each party
3
<PAGE> 4
shall bear his or its own costs of suit and attorneys' fees. In the
event of a Contingent Dismissal, the parties agree that all statutes of
limitation and other delay defenses with respect to any claims which
they have or may have against each other related to the Action are and
shall be tolled and suspended during the period from July 23, 1993,
when the Action was filed, to and including April 15, 1995.
C. If the Effective Date does not occur by March 31, 1995, or
the Imperial Consent is not obtained prior to December 1, 1994, and
unless the parties hereto agree in writing to the contrary, the
settlement outlined herein, except this paragraph, will be null and
void and the stay of the Action will be lifted.
D. The parties to this Settlement Agreement agree to suspend
all statutes of limitations pertaining to claims which they have or may
have against each other during the period commencing on September 2,
1994, and terminating on April 15, 1995."
4
<PAGE> 5
2. Except as otherwise expressly set forth herein, the Settlement
Agreement shall remain in full force and effect.
Dated: December __, 1994 ANGELES MORTGAGE INVESTMENT TRUST,
a California business trust
By:_______________________________
Ronald J. Consiglio
Its: President
Dated: December __, 1994 INSIGNIA FINANCIAL GROUP, INC.,
a Delaware corporation
By:_______________________________
Its: Executive Managing Director
Dated: December __, 1994 ANGELES INVESTMENT PROPERTIES
INC., a California corporation
By:_______________________________
Its:______________________________
Dated: December __, 1994 ANGELES PROPERTIES, INC.,
a California Corporation
By:_______________________________
Its:______________________________
5
<PAGE> 6
Dated: December __, 1994 MAE GP CORPORATION,
a Delaware corporation
By:_______________________________
Its:______________________________
Dated: December __, 1994 NORTHBROOK APARTMENTS, LTD., a
California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
Dated: December __, 1994 LAKE AVENUE OFFICES, LTD., a
California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
Dated: December __, 1994 OCEAN WATERWAYS PARTNERS, LTD., a
California limited partnership
By: Angeles Properties, Inc.
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA AMENDMENT TO SETTLEMENT AGREEMENT
6
<PAGE> 7
Dated: December __, 1994 TERRA SIESTA COMMUNITIES, LTD., a
California limited partnership
By: Angeles Investment Properties,
Inc.
By:_______________________________
Its:______________________________
Dated: December __, 1994 TERRA SIESTA PARTNERS, LTD., a
California limited partnership
By: Angeles Properties, Inc.
By:_______________________________
Its:______________________________
Dated: December __, 1994 ANGELES REALTY CORPORATION,
a California corporation
By:_______________________________
Its:______________________________
Dated: December __, 1994 LA COLINA RANCH APARTMENTS, LTD.,
a California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA AMENDMENT TO SETTLEMENT AGREEMENT
7
<PAGE> 8
Dated: December __, 1994 ANGELES PARK COMMUNITIES, LTD.,
a California limited partnership
By: Angeles Realty Corporation
By:_______________________________
Its:______________________________
Dated: December __, 1994 ANGELES FORT WORTH OPTION JOINT
VENTURE, a California partnership
By: Angeles Income Properties,
Ltd., IV
By: Angeles Realty Corporation II
By:_______________________________
Its:______________________________
Dated: December __, 1994 ANGELES INCOME PROPERTIES IV,
a California limited partnership
By: Angeles Realty Corporation II
By:_______________________________
Its:______________________________
Dated: December __, 1994 ANGELES REALTY CORPORATION II,
a California corporation
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA AMENDMENT TO SETTLEMENT AGREEMENT
8
<PAGE> 1
EXHIBIT 10.22
SECOND AMENDMENT TO SETTLEMENT AGREEMENT
This Second Amendment to Settlement Agreement is entered into by and
among Angeles Mortgage Investment Trust, a California business trust ("AMIT"),
on the one hand, and Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), MAE GP Corporation, a Delaware Corporation ("MAE GP"), Ocean
Waterways Partners, Ltd., a California limited partnership ("Ocean Waterways"),
Angeles Park Communities, Ltd., a California limited partnership ("APC"), Terra
Siesta Communities, Ltd., a California limited partnership ("Terra Siesta
Communities") and Terra Siesta Partners, Ltd., a California limited partnership
("Terra Siesta Partners"), Angeles Properties, Inc., a California corporation
("API"), Angeles Investment Properties, Inc., a California corporation ("AIPI"),
Angeles Realty Corporation, a California corporation ("ARC"), Angeles Realty
Corporation II, a California corporation ("ARC II"), Northbrook Apartments,
Ltd., a California limited partnership ("Northbrook"), Lake Avenue Offices,
Ltd., a California limited partnership ("Lake Avenue"), La Colina Ranch
Apartments, Ltd., a California partnership ("La Colina"), Angeles Fort Worth
Option Joint Venture, a California general partnership ("Ft. Worth JV"), and
Angeles Income Properties IV, a California partnership ("AIP IV") (collectively,
the "Insignia Parties"), on the other hand, by execution on the dates indicated
below.
<PAGE> 2
RECITALS
A. On November 9, 1994, AMIT and the Insignia Parties entered into a
Settlement Agreement (the "Settlement Agreement").
B. Pursuant to the Settlement Agreement, and as a condition thereof,
the parties agreed that the "Effective Date" of the settlement described in the
Settlement Agreement must occur by March 1, 1995 (the "Settlement Deadline").
C. In December of 1994, the parties entered into an Amendment to
Settlement Agreement for the purpose of extending the Settlement Deadline to
March 31, 1995.
D. The parties now enter into this Second Amendment to Settlement
Agreement for the purpose of further extending the Settlement Deadline and
amending the terms of Exhibit "7" and "8" to the Settlement Agreement as
hereinafter provided.
NOW, THEREFORE, based upon the foregoing Recitals, the parties agree as
follows:
1. Paragraph 3 of the Settlement Agreement, as amended by the Amendment
to Settlement Agreement, is again amended and restated as follows:
-2-
<PAGE> 3
"3. STAY OF LITIGATION:
A. Upon execution of this Settlement Agreement by all parties,
AMIT and the Insignia Parties shall immediately file a joint
application in the Action notifying the Court that a settlement has
been reached among such parties, contingent upon (i) the occurrence of
the Effective Date; and (ii) AMIT obtaining the Imperial Consent by
December 1, 1994; and requesting the Court to stay the Action as among
the parties to this Settlement Agreement who are also parties to the
Action pending the completion of the Angeles Plan confirmation process.
If the Angeles Plan is confirmed embodying the settlement contained in
the Angeles/AMIT Agreement and the Effective Date occurs by April 24,
1995, and the Imperial Consent is obtained prior to December 1, 1994,
then following the Effective Date, the Action will be dismissed as
among the parties to this Settlement Agreement and the parties agree to
cause their respective counsel of record in the Action to execute and
file a request for dismissal (the "Dismissal Request"). Such dismissal
shall be without an award of costs and shall provide that each parties
shall bear his or its own costs of suit and attorneys' fees.
-3-
<PAGE> 4
B. In the event that the State Court does not approve the
request for a stay of the Action, then the parties hereto will
immediately file the Dismissal Request dismissing (the "Contingent
Dismissal") their claims against each other in the Action without
prejudice to refiling of said claims if the Effective Date does not
occur by April 24, 1995, or the Imperial Consent is not obtained prior
to December 1, 1994. Such Contingent Dismissal shall be without an
award of costs and shall provide that each party shall bear his or its
own costs of suit and attorneys' fees. In the event of a Contingent
Dismissal, the parties agree that all statutes of limitation and other
delay defenses with respect to any claims which they have or may have
against each other related to the Action are and shall be tolled and
suspended during the period from July 23, 1993, when the Action was
filed, to and including April 30, 1995.
C. If the Effective Date does not occur by April 24, 1995, or
the Imperial Consent is not obtained prior to December 1, 1994, and
unless the parties hereto agree in writing to the contrary, the
settlement outlined herein, except this paragraph, will be null and
void and the stay of the Action will be lifted.
-4-
<PAGE> 5
D. The parties to this Settlement Agreement agree to suspend
all statutes of limitations pertaining to claims which they have or may
have against each other during the period commencing on September 2,
1994, and terminating on April 30, 1995."
2. Exhibit "7" to the Settlement Agreement is amended and restated in
the form attachment hereto and marked "Exhibit 7".
3. Exhibit "8" to the Settlement Agreement is amended and restated in
the form attachment hereto and marked "Exhibit 8".
4. Except as otherwise expressly set forth herein, the Settlement
Agreement shall remain in full force and effect.
Dated: March __, 1995 ANGELES MORTGAGE INVESTMENT TRUST,
a California business trust
By:_______________________________
Ronald J. Consiglio
Its: President
Dated: March __, 1995 INSIGNIA FINANCIAL GROUP, INC.,
a Delaware corporation
By:_______________________________
Its: Executive Managing Director
-5-
<PAGE> 6
Dated: March __, 1995 ANGELES INVESTMENT PROPERTIES
INC., a California corporation
By:_______________________________
Its:______________________________
Dated: March __, 1995 ANGELES PROPERTIES, INC.,
a California Corporation
By:_______________________________
Its:______________________________
Dated: March __, 1995 MAE GP CORPORATION,
a Delaware corporation
By:_______________________________
Its:______________________________
Dated: March __, 1995 NORTHBROOK APARTMENTS, LTD., a
California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA AMENDMENT TO SETTLEMENT AGREEMENT
-6-
<PAGE> 7
Dated: March __, 1995 LAKE AVENUE OFFICES, LTD., a
California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
Dated: March __, 1995 OCEAN WATERWAYS PARTNERS, LTD., a
California limited partnership
By: Angeles Properties, Inc.
By:_______________________________
Its:______________________________
Dated: March __, 1995 TERRA SIESTA COMMUNITIES, LTD., a
California limited partnership
By: Angeles Investment Properties,
Inc.
By:_______________________________
Its:______________________________
Dated: March __, 1995 TERRA SIESTA PARTNERS, LTD., a
California limited partnership
By: Angeles Properties, Inc.
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA AMENDMENT TO SETTLEMENT AGREEMENT
-7-
<PAGE> 8
Date: March __, 1995 ANGELES REALTY CORPORATION,
a California corporation
By:_______________________________
Its:______________________________
Dated: March __, 1995 LA COLINA RANCH APARTMENTS, LTD.,
a California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
Dated: March __, 1995 ANGELES PARK COMMUNITIES, LTD.,
a California limited partnership
By: Angeles Realty Corporation
By:_______________________________
Its:______________________________
Dated: March __, 1995 ANGELES FORT WORTH OPTION JOINT
VENTURE, a California partnership
By: Angeles Income Properties,
Ltd., IV
By: Angeles Realty Corporation II
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA AMENDMENT TO SETTLEMENT AGREEMENT
-8-
<PAGE> 9
Dated: March __, 1995 ANGELES INCOME PROPERTIES IV,
a California limited partnership
By: Angeles Realty Corporation II
By:_______________________________
Its:______________________________
Dated: March __, 1995 ANGELES REALTY CORPORATION II,
a California corporation
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA AMENDMENT TO SETTLEMENT AGREEMENT
-9-
<PAGE> 1
EXHIBIT 10.23
THIRD AMENDMENT TO SETTLEMENT AGREEMENT
This Third Amendment to Settlement Agreement is entered into by and
among Angeles Mortgage Investment Trust, a California business trust ("AMIT"),
on the one hand, and Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), MAE GP Corporation, a Delaware Corporation ("MAE GP"), Ocean
Waterways Partners, Ltd., a California limited partnership ("Ocean Waterways"),
Angeles Park Communities, Ltd., a California limited partnership ("APC"), Terra
Siesta Communities, Ltd., a California limited partnership ("Terra Siesta
Communities") and Terra Siesta Partners, Ltd., a California limited partnership
("Terra Siesta Partners"), Angeles Properties, Inc., a California corporation
("API"), Angeles Investment Properties, Inc., a California corporation ("AIPI"),
Angeles Realty Corporation, a California corporation ("ARC"), Angeles Realty
Corporation II, a California corporation ("ARC II"), Northbrook Apartments,
Ltd., a California limited partnership ("Northbrook"), Lake Avenue Offices,
Ltd., a California limited partnership ("Lake Avenue"), La Colina Ranch
Apartments, Ltd., a California partnership ("La Colina"), Angeles Fort Worth
Option Joint Venture, a California general partnership ("Ft. Worth JV"), and
Angeles Income Properties IV, a California partnership ("AIP IV") (collectively,
the "Insignia Parties"), on the other hand, by execution on the dates indicated
below.
<PAGE> 2
RECITALS
A. On November 9, 1994, AMIT and the Insignia Parties entered into a
Settlement Agreement (the "Settlement Agreement").
B. In December of 1994, AMIT and the Insignia Parties entered into an
Amendment to Settlement Agreement.
C. In March of 1995, AMIT and the Insignia Parties entered into a
Second Amendment to Settlement Agreement.
D. The parties have agreed that the "Settlement Amount" referenced in
Paragraph 1 of the Settlement Agreement will be paid, by AMIT, in full, by the
Effective Date of the Settlement Agreement as amended in the Amendment to
Settlement Agreement and the Second Amendment to Settlement Agreement.
Therefore, the parties enter into this Third Amendment to Settlement Agreement
for the purpose of amending the Settlement Agreement in that regard, and making
such other amendments as are hereinafter set forth.
NOW, THEREFORE, BASED UPON THE FOREGOING RECITALS, THE PARTIES AGREE AS
FOLLOWS:
-2-
<PAGE> 3
1. Schedule A to the Settlement Agreement (the "Settlement Schedule")
is revised in the manner indicated on Schedule A hereto.
2. Paragraph 1 of the Settlement Agreement is revised to read as
follows:
"1. SETTLEMENT AMOUNT:
AMIT shall pay to each Demand Depositor identified on
the Settlement Schedule the sum(s) described on the Settlement
Schedule as the "Settlement Amount" allocable to each Demand
Depositor's respective claim(s) as identified on the
Settlement Schedule, plus interest ("Interest Accrual") at the
rate of 8.6% per annum from and after November 9, 1994 until
paid in full on the portion of the Settlement Amount indicated
on the Settlement Schedule as the "Interest Accrual Basis"
allocable to each Demand Depositor's respective claim(s)."
3. Paragraph No. 2 of the Settlement Agreement shall be deleted in its
entirety, and shall be replaced by the following:
-3-
<PAGE> 4
"2. METHOD OF PAYMENT:
The Settlement Amount plus the Interest Accrual shall
be paid by AMIT to MAE GP, as agent for the Demand Depositors
not later than ten (10) days after AMIT receives the cash
portion of the settlement embodied in the AMIT/Angeles
Agreement (the"Effective Date")."
4. The phrase "Cash Payment" referenced on the third line of Paragraph
No. 5 of the Settlement Agreement is deleted and replaced with the phrase
"payments referenced in Paragraph No. 1 hereof".
5. Exhibit Nos. 1, 2, 3, and 4, are deleted from the Settlement
Agreement.
6. Exhibit No. 6 to the Settlement Agreement is amended as set forth on
Exhibit "6" hereto.
7. Except as otherwise expressly set forth herein, the Settlement
Agreement, the Amendment to Settlement Agreement and the Second Amendment to
Settlement Agreement shall remain in full force and effect.
-4-
<PAGE> 5
8. This Third Amendment to Settlement Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument. Any party may
deliver to the other party a facsimile copy of an executed counterpart of this
Third Amendment to Settlement Agreement and upon the other party's receipt of
such facsimile counterpart, an executed counterpart of this Third Amendment to
Settlement Agreement shall be deemed to have been delivered; provided, however,
that the original of any facsimile counterpart shall be furnished to the
recipient of the of the facsimile counterpart in due course.
Dated: April __, 1995 ANGELES MORTGAGE INVESTMENT TRUST,
a California business trust
By:_______________________________
Ronald J. Consiglio
Its: President
Dated: April __, 1995 INSIGNIA FINANCIAL GROUP, INC.,
a Delaware corporation
By:_______________________________
Its: Executive Managing Director
Dated: April __, 1995 ANGELES INVESTMENT PROPERTIES
INC., a California corporation
By:_______________________________
Its:______________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
-5-
<PAGE> 6
Dated: April __, 1995 ANGELES PROPERTIES, INC.,
a California Corporation
By:_______________________________
Its:______________________________
Dated: April __, 1995 MAE GP CORPORATION,
a Delaware corporation
By:_______________________________
Its:______________________________
Dated: April __, 1995 NORTHBROOK APARTMENTS, LTD., a
California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
Dated: April __, 1995 LAKE AVENUE OFFICES, LTD., a
California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
REFERENCE: AMIT/INSIGNIA THIRD AMENDMENT TO SETTLEMENT AGREEMENT
-6-
<PAGE> 7
Dated: April __, 1995 OCEAN WATERWAYS PARTNERS, LTD., a
California limited partnership
By: Angeles Properties, Inc.
By:_______________________________
Its:______________________________
Dated: April __, 1995 TERRA SIESTA COMMUNITIES, LTD., a
California limited partnership
By: Angeles Investment Properties,
Inc.
By:_______________________________
Its:______________________________
Dated: April __, 1995 TERRA SIESTA PARTNERS, LTD., a
California limited partnership
By: Angeles Properties, Inc.
By:_______________________________
Its:______________________________
Dated: April __, 1995 ANGELES REALTY CORPORATION,
a California corporation
By:_______________________________
Its:______________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
REFERENCE: AMIT/INSIGNIA THIRD AMENDMENT TO SETTLEMENT AGREEMENT
-7-
<PAGE> 8
Dated: April __, 1995 LA COLINA RANCH APARTMENTS, LTD.,
a California limited partnership
By: MAE Ventures, Inc.
By:_______________________________
Its:______________________________
Dated: April __, 1995 ANGELES PARK COMMUNITIES, LTD.,
a California limited partnership
By: Angeles Realty Corporation
By:_______________________________
Its:______________________________
Dated: April __, 1995 ANGELES FORT WORTH OPTION JOINT
VENTURE, a California partnership
By: Angeles Income Properties,
Ltd., IV
By: Angeles Realty Corporation II
By:_______________________________
Its:______________________________
Dated: April __, 1995 ANGELES INCOME PROPERTIES IV,
a California limited partnership
By: Angeles Realty Corporation II
By:_______________________________
Its:______________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
REFERENCE: AMIT/INSIGNIA THIRD AMENDMENT TO SETTLEMENT AGREEMENT
-8-
<PAGE> 9
Dated: April __, 1995 ANGELES REALTY CORPORATION II,
a California corporation
By:_______________________________
Its:______________________________
REFERENCE: AMIT/INSIGNIA THIRD AMENDMENT TO SETTLEMENT AGREEMENT
-9-
<PAGE> 1
EXHIBIT 10.24
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT is entered into, by and between Angeles
Mortgage Investment Trust, a California business trust ("AMIT"), and Satellite
Communications Partners, Ltd., a California limited partnership ("Satellite") by
execution on the dates indicated below.
RECITALS
A. AMIT and Satellite, along with others, are parties to a lawsuit
captioned Angeles Mortgage Investment Trust, et al. v. Insignia Financial Group,
Inc., et al., Case No. BC 085673 now pending in the Superior Court of the State
of California for the County of Los Angeles (the "Action").
B. Satellite contends that it deposited funds with AMIT or loaned funds
to AMIT (hereinafter the "Demand Deposit") which allegedly remains outstanding
in the principal amount of $1,150,000.00. AMIT commenced the Action requesting,
among other things, a declaration of the Court that AMIT is not indebted to
Satellite for the alleged Demand Deposit. Satellite cross-complained to recover
the alleged Demand Deposit from AMIT.
<PAGE> 2
C. The parties hereto desire to settle all claims alleged in the Action
between AMIT, on the one hand, and Satellite, on the other hand, in accordance
with the terms and conditions set forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
1. SETTLEMENT AMOUNT. AMIT shall, within five (5) business days after
Satellite's execution of the Settlement Agreement, pay to Satellite the sum of
$930,000.00 (the "Settlement Amount").
2. DISMISSAL. Upon execution of this Settlement Agreement by both
parties and payment of the Settlement Amount by AMIT to Satellite, the Complaint
in the Action will forthwith be dismissed, with prejudice, as among the parties
to this Settlement Agreement; and Satellite's Cross-Complaint in the Action will
forthwith be dismissed, with prejudice, as to all parties thereto; and the
parties hereto agree to cause their respective counsel of record in the Action
to execute and file such a Request for Dismissal. Such dismissal shall be
without an award of costs and shall provide that each party shall bear his or
its own costs of suit and attorneys' fees.
2
<PAGE> 3
3. RELEASES.
A. AMIT Release:
(i) Except as provided in paragraph 3(A)(ii) hereof,
AMIT hereby releases Satellite and, solely in their capacity as such
and solely with regard to their activities as such, its respective
existing and former officers, employees, directors, partners and
attorneys (collectively, the "Satellite Released Parties") from any and
all known claims, demands, debts, obligations, liabilities, costs,
expenses, rights of action, causes of action and judgments of any kind
or character whatsoever which AMIT has against the Satellite Released
Parties or any of them, arising prior to the date of execution of this
Settlement Agreement and relating to the Demand Deposit (the "AMIT
Released Claims");
(ii) The AMIT Released Claims shall not include: (a)
claims arising hereunder; or (b) a release or waiver of any rights or
defenses which AMIT may have against any person or entity to whom the
Demand Deposit or any portion thereof was disbursed, transferred or
loaned.
(iii) AMIT acknowledges that it may hereafter
discover facts different from or in addition to those which it now
knows or believes to be true with respect to the AMIT Released Claims
and agrees that this Settlement Agreement shall be and remain effective
in all respects
3
<PAGE> 4
notwithstanding such different or additional facts or the discovery
thereof.
B. Satellite Release:
(i) Except as provided in paragraph 3(B)(ii) hereof,
Satellite hereby releases AMIT and, solely in their capacity as such
and solely with regard to their activities as such, its existing and
former officers, directors, employees, trustees and attorneys ("AMIT
Released Parties") from any and all known claims, demands, debts,
obligations, liabilities, costs, expenses, rights of action, causes of
action and judgments of any kind or character whatsoever which
Satellite has against the AMIT Released Parties, or any of them,
arising prior to the date of execution of this Settlement Agreement and
relating to the Demand Deposit (the "Satellite Released Claims");
(ii) The Satellite Released Claims shall not include:
(a) claims arising hereunder, including, but not limited to, AMIT's
obligation to pay Satellite the Settlement Amount; or (b) a release or
waiver of any rights or defenses which Satellite may have against any
person or entity to whom the Demand Deposit or any portion thereof is
disbursed, transferred or loaned;
4
<PAGE> 5
(iii) Satellite acknowledges that it may hereafter
discover facts different from or in addition to those which it now
knows or believes to be true with respect to the Satellite Claims and
agrees that this Settlement Agreement shall be and remain effective in
all respects notwithstanding such different or additional facts or the
discovery thereof.
4. NO PRIOR ASSIGNMENT BY SATELLITE. Satellite represents, warrants and
covenants that it has not previously assigned or transferred any of the rights,
claims, demands or causes of action which are being released herein. In the
event that any right, claim, demand or cause of action should be asserted
against the AMIT Released Parties, or any of them, which, if successful, would
result in the breach of the foregoing representation, warranty or covenant,
Satellite shall forthwith (i) indemnify and hold harmless the AMIT Released
Parties against the assertion of any such claim, demand, right or cause of
action, (ii) provide a defense through any lawyer or lawyers designated by the
AMIT Released Parties, and (iii) pay the reasonable attorneys' fees and costs
incurred in defense of any such proceeding, including all such fees and costs on
appeal.
5. NO PRIOR ASSIGNMENT BY AMIT. AMIT represents, warrants and
covenants that it has not previously assigned or transferred to anyone any of
the rights, claims, demands or causes of action which are being released herein.
In the event that any right,
5
<PAGE> 6
claim, demand or cause of action should be asserted against the Satellite
Released Parties, or any of them, which, if successful, would result in the
breach of the foregoing representation, warranty or covenant, AMIT shall
forthwith (i) indemnify and hold harmless the Satellite Released Parties against
the assertion of any such claim, demand, right or cause of action, (ii) provide
a defense through any lawyer or lawyers designated by the Satellite Released
Parties, and (iii) pay the reasonable attorneys' fees and costs incurred in
defense of any such proceeding, including all such fees and costs on appeal.
6. ENTIRE AGREEMENT AND AMENDMENTS. This Settlement Agreement
constitutes the entire agreement among the parties hereto and it is expressly
understood and agreed that there are no agreements or understandings between the
parties other than those expressly set forth herein and any prior or
contemporaneous conversations, negotiations, representations, covenants and
warranties, express or implied, oral or written, are superseded by this
Settlement Agreement. This Settlement Agreement may not be altered, amended,
modified or otherwise changed in any respect whatsoever except by a writing duly
executed by an authorized representative of each of the parties, and the parties
agree that they shall make no claim at any time that this Settlement Agreement
has been altered, amended, modified or otherwise changed in any respect
whatsoever by any oral communication of any kind.
6
<PAGE> 7
7. NO ADMISSION OF LIABILITY. This Settlement Agreement and each
agreement herein and made hereunder is being made by way of settlement of claims
which are expressly disputed. Nothing in this Settlement Agreement is an
admission of any liability or responsibility by any party hereto and all parties
agree that they shall not characterize this settlement as an admission of
liability by any other party hereto. Neither this Settlement Agreement nor any
communications or negotiations in connection herewith may be offered into
evidence by anyone in the Action or in any other action, suit or proceeding
between AMIT and Satellite (except any such action, suit, arbitration or
proceeding to enforce the terms hereof).
8. ADVICE OF COUNSEL. Each and all of the parties confirm that they are
entering into this Settlement Agreement based upon the legal advice of their
attorneys, who are their attorneys of choice, that they have been afforded the
opportunity to discuss completely this Settlement Agreement and each of its
terms with their attorneys, and that each of these terms are fully understood
and voluntarily accepted.
9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of, and shall be binding upon, the successors and assigns of the parties hereto.
7
<PAGE> 8
10. GOVERNING LAW. This Settlement Agreement shall be deemed to have
been executed and delivered within the State of California and the rights and
obligations of the parties hereunder shall be governed, construed and enforced
in accordance with the laws of the State of California.
11. COUNTERPARTS. This Settlement Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument. Any party may deliver
to the other party a facsimile copy of an executed counterpart of this
Settlement Agreement and upon the other party's receipt of such facsimile
counterpart, an executed counterpart of this Settlement Agreement shall be
deemed to have been delivered; provided, however, that the original of any
facsimile counterpart shall be furnished to the recipient of the facsimile
counterpart in due course. This Settlement Agreement shall not be binding upon
any party hereto until a counterpart hereof has been signed by all parties
hereto, AMIT has delivered an original counterpart hereof (signed by an
authorized representative of AMIT on its behalf) to Satellite, and Satellite has
delivered an original counterpart hereof (signed by an authorized representative
of Satellite on its behalf) to AMIT.
12. AUTHORITY. Each of the parties hereto represents and warrants that
the execution, delivery and performance of this Settlement Agreement has been
duly authorized.
8
<PAGE> 9
13. PRESS RELEASES. Satellite shall not issue any press releases
concerning the existence or terms of this Settlement Agreement without the prior
approval of AMIT, and Satellite shall notify AMIT of any intended public filings
concerning the existence or terms of this Settlement Agreement at least ten (10)
days prior to such public filing and shall apprise AMIT of the applicable
language which will be included in the public filing.
14. ATTORNEYS FEES. Should any party hereto take legal action to
enforce its rights and remedies hereunder the non-prevailing party shall pay to
the prevailing party all costs and attorneys' fees incurred in connection
therewith. Said costs and attorneys' fees shall include all post-judgment costs
and attorneys' fees, including costs and attorneys' fees for any appeal and for
efforts to collect upon any judgment, the right to recover which shall not merge
into any judgment.
Dated: May ___, 1995 ANGELES MORTGAGE INVESTMENT TRUST,
a California business trust
By:_______________________________
Ronald J. Consiglio
Its: President
Dated: May ___, 1995 SATELLITE COMMUNICATIONS PARTNERS,
LTD., a California limited
partnership
By:_______________________________
Its: General Partner
9
<PAGE> 1
EXHIBIT 10.25
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT
(Angeles Mortgage Investment Trust)
This Amended and Restated Loan and Security Agreement is entered into
as of July 25, 1995, by and between Imperial Bank, a California Banking
Corporation ("Bank"), and Angeles Mortgage Investment Trust, a California
business trust ("Borrower"), with respect to the following:
A. Bank and Angeles Mortgage Partners, Ltd. ("AMPL") entered into that
certain Loan and Security Agreement dated as of June 30, 1988 (the "Initial Loan
Agreement").
B. Pursuant to that certain Exchange of Assets Agreement dated as of
January 1, 1989 between AMPL and Borrower, all assets of AMPL were transferred
to Borrower; and Borrower assumed and agreed to pay, perform, fulfill and
discharge all of the debts, liabilities, obligations, and agreement of AMPL,
including the obligations of AMPL pursuant to the Initial Loan Agreement.
C. Pursuant to that certain Amendment, Waiver and Consent dated as of
June 12, 1989, Bank consented to the transactions referred to in Recital B, and
the Initial Agreement was amended to substitute Borrower for AMPL for all
purposes of the Initial Loan Agreement.
D. Pursuant to that certain Amended and Restated Loan and Security
Agreement dated as of June 25, 1990 (the "First Amended and Restated Loan
Agreement"), the parties amended and restated the Initial Loan Agreement in
certain respects.
E. The parties have entered into various amendments to the First
Amended and Restated Loan Agreement.
F. The parties hereto now desire to further amend and restate the First
Amended and Restated Loan Agreement, as heretofore amended (the First Amended
and Restated Loan Agreement as so amended being hereinafter referred to as the
"Existing Agreement"), to among other things: (i) modify the Commitment of Bank;
(ii) extend the Termination Date and (iii) modify certain of the provisions
pertaining to the Collateral.
NOW, THEREFORE, the parties hereto agree to amend and restate the
Existing Agreement, as follows:
<PAGE> 2
1. Definitions and Accounting Terms
1.1 Defined Terms. In addition to the terms defined elsewhere in
this Agreement, the following terms have the meanings indicated for purposes of
this Agreement:
"Advance" means a particular extension of credit or funding of
all or any part of the Credit available hereunder as may be made from time to
time during the term of the Agreement.
"Affiliate" means, when applied to any Person, any other
Person directly or indirectly controlling, controlled by or under common control
with, that Person, and any director, officer or shareholder (and any family
member of any of the foregoing) of such other Person. For the purposes of this
definition, "control" (including with corresponding meanings, the terms
"controlling", "controlled by" and "under common control with"), as applied to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of that Person, whether
through the ownership of voting securities, by contract or otherwise; provided,
that the term "Affiliate" as used herein shall not include MAE GP Corporation,
or any other person or entity which might otherwise be determined to be an
"Affiliate" of Borrower solely because it is an "Affiliate" of MAE GP.
"Agreement" means this Second Amended and Restated Loan and
Security Agreement, as the same may be amended, supplemented or modified from
time to time.
"Appraised Value" means as to any Property the fair market
value thereof as determined by an appraiser satisfactory to Bank.
"Assigned Loan" means each outstanding mortgage and other loan
heretofore made or during the Availability Period to be made by Borrower to any
Person.
"Assignment" means the assignment in recordable form to Bank
of the applicable Deed of Trust.
"Assigned Note" means each promissory note or other evidence
of indebtedness delivered to the Bank with respect to the applicable Assigned
Loan. An Assigned Note may be either a Cash Flow Note or Trust Note.
"Availability Period" means the period commencing on the date
hereof and ending on the Termination Date, or, if such day is not a Lending Day,
on the last Lending Day before such day.
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"Bank" shall have the meaning as defined in the introductory
paragraph of this Agreement.
"Borrower" shall have the meaning as defined in the
introductory paragraph of this agreement.
"Borrowing Base Collateral" means Collateral with respect to
which Collateral Value has been ascribed as reflected in the applicable
Borrowing Base Certificate referred to in Section 2.5(a) hereof.
"Cash Flow Note" means an Assigned Note in which the amount of
monthly payment consists of the operating cash flow from the applicable Property
less (i) the debt service with respect to mortgages which are prior to such Cash
Flow Note, (ii) agreed upon capital expenditures and, (iii) annual partnership
expenses not to exceed $37,500.
"Collateral" means any property granted to Bank as security
for the obligations of Borrower pursuant to the Loan Documents.
"Collateral Value" means, as to the Borrowing Base Collateral,
the sum of (i) .50 times the aggregate Net Value of all Eligible Trust Notes,
(ii) .25 times the aggregate Net Value of all Eligible Cash Flow Notes; and
(iii) the lower of (x) 10% of the aggregate Net Value of Assigned Notes which
are not Eligible Trust Notes or Eligible Cash Flow Notes or (y) $500,000;
provided, however, that Bank, in its sole discretion, upon notice to Borrower,
may reduce the Collateral Value of any of the foregoing at any time.
"Commitment" means an amount equal to the lower of the
aggregate Collateral Value of the Borrowing Base Collateral or Five Million
Dollars ($5,000,000).
"Credit" means the credit described in Article 2 hereof.
"Debt" means the total of all items of indebtedness,
obligation or liability (including, without limitation, any indebtedness,
obligation or liability secured by a mortgage, pledge, lien, security interest
or other encumbrance on properties whether or not assumed) as determined in
accordance with GAAP.
"Declaration" means that certain Declaration of Trust of
Borrower dated as of September 1, 1988.
"Deed of Trust" means each deed of trust and assignment of
rents, mortgage or similar instrument in favor of
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Borrower, as lender, which secures the obligation of a Mortgagor to Borrower
under the applicable Assigned Loan.
"Dollar(s)" or "$" means U.S. dollars in immediately available
funds.
"Eligible Cash Flow Notes" means, as of any date, all Cash
Flow Notes with respect to which all payments of principal and interest by the
obligor on any obligation secured by the subject Property or Properties are no
more than sixty (60) days past due (during the initial term or any extended
term) according to the original or modified terms of payment (as approved by
Bank), except that Bank shall have the right in its sole and absolute discretion
to exclude at any time any Cash Flow Note from the definition of Eligible Cash
Flow Notes.
"Eligible Trust Notes" means, as of any date, all Trust Notes
with respect to which all payments of principal and interest by the obligor on
any obligation secured by the subject Property or Properties are no more than
sixty (60) days past due (during the initial term or any extended term)
according to the original or modified terms of payment (as approved by Bank),
except that Bank shall have the right in its sole and absolute discretion to
exclude at any time any Trust Note from the definition of Eligible Trust Notes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" means any event listed in Article 9 hereof.
"GAAP" means generally accepted accounting principles as set
forth in the Opinions of the Accounting Principles Board of the America
Institute of Certified Public Accountants, in statements of the Financial
Accounting Standards Board or in such other statement by such other entity as
may be approved by a significant segment of the accounting profession, which are
applicable in the circumstances as of the date in question, and the requisite
that such principles be applied on a consistent basis shall mean that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
"Hazardous Materials" shall have the meaning as defined in
Section 5.16(c) hereof.
"Indemnitees" shall have the meaning as defined in Section
10.10 hereof.
"Laws" shall have the meaning as defined in Section 5.16(d)
hereof.
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"Lending Day" means a day other than a Saturday on which banks
are open for business in Los Angeles, California.
"Lending Office" means the Los Angeles Regional Office of
Bank, 201 North Figueroa Street, Los Angeles, California 90012 or such other of
its branches or offices as Bank may from time to time designate.
"Loan Documents" means this Agreement, the Assignments, the
Assigned Notes, the Deeds of Trust, the Title Policies, and any other instrument
or agreement required hereunder or thereunder.
"Mortgagor" means any Person who is an owner of Property and
an obligor under an Assigned Loan.
"Net Value" means, as to any Assigned Note, the lower of (a)
the remaining principal balance of such Assigned Note, (b) the value of such
Assigned Note on the records of Borrower or (c) 80% of the Appraised Value of
the Property securing such Assigned Note, less, in each case, the amount of all
existing security interests, encumbrances and liens on the applicable Property
other than the security interest in favor of Borrower.
"Obligations" means all loans, advances, debts, liabilities,
obligations, covenants and duties owing by Borrower to Bank of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under this Agreement or any other Loan Document or
under any other agreement, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, opening or
amendment of a letter of credit or payment of any draft drawn thereunder,
indemnification or in any other manner, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interests, charges,
expenses, fees, attorneys' fees and disbursements and any other sum chargeable
to Borrower under this Agreement or any other agreement.
"Person" means a corporation, association, partnership, trust,
organization, business, individual or government or governmental agency or
political subdivision thereof.
"Plan" means any employee pension plan maintained or
contributed to by Borrower or any Subsidiary, or by any trade or business under
common control (within the meaning of ERISA) with Borrower or any Subsidiary.
"Property" means all real and personal property pledged as
security under any Assigned Loan.
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"Prime Rate" means the floating commercial loan reference
rate, announced by Bank from time to time as its "prime rate," which interest
rate may not necessarily be the lowest interest rate at which Bank is willing to
extend credit facilities.
"Real Estate Investment Trust" means "Real Estate Investment
Trust" as defined in Section 856 of the Internal Revenue Code of 1986 (the
"Code"), or such other entity as may, under the corresponding section or
sections of any United States Income Tax Law at the time in effect, be entitled
to substantially the same treatment or benefits in respect of liability for
federal income taxes as that to which a "Real Estate Investment Trust", as so
defined, is entitled pursuant to Sections 856 through 860 of the Code.
"Reportable Event" as used herein shall have the same meaning
given such term in Section 4043 of ERISA and any regulations promulgated
thereunder.
"Revolving Note" means the note executed by Borrower in favor
of Bank in accordance with the provisions of Section 2.3 hereof, and all
extensions, replacements and substitutions thereof.
"Subordinated Debt" means any Debt which by its terms is
subordinate in payment and lien priority to Borrower's Debt to Bank upon terms
acceptable to Bank in its sole discretion.
"Subsidiary" means any corporation, partnership, trust, or
other entity of which at least a majority of the outstanding stock (or
equivalent ownership or controlling interest) having ordinary voting power, in
the absence of contingencies, to elect a majority of the directors of such
corporation (if a corporation) or to select a trustee or equivalent controlling
interest shall, at the time, be directly or indirectly owned by Borrower.
"Tangible Net Worth" means, as at any date of determination,
the total of Borrower's capital stock, additional paid-in capital and retained
earnings determined in accordance with GAAP less the aggregate of (i) intangible
assets (including, without limitation, goodwill, trademarks, service marks,
patents, copyrights, patent applications, research and development expenses, and
organizational expenses), (ii) treasury securities, (iii) all capital stock that
is obligated to be redeemed (whether by maturity, mandatory redemption, sinking
fund obligations or otherwise), (iv) the unamortized portion of the capitalized
costs of issuing securities, (v) all sums held in (or designated for) a sinking
or analogous fund established for the purpose of redeeming, retiring or
prepaying securities which are not already
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deducted pursuant to clause (iii) above, (vi) securities issued by Persons other
than Affiliates of the Borrower which are not readily marketable, (vii) all
established reserves that are not deducted on the balance sheet from the assets
to which they relate, (viii) amounts due from Affiliates, officers, directors,
stockholders, and (ix) other similar assets.
"Termination Date" means July 31, 1996.
"Title Policy" means an ALTA Loan Policy or Policies of Title
Insurance (October 17, 1970 Form) with respect to the applicable Property or
Properties with such additional endorsements as Bank shall reasonably require,
from a title insurer acceptable to Bank ("Title Policy") with a liability limit
of not less than the amount of the applicable Advance. The Title Policy or
Policies shall show fee simple title to the Property or Properties vested in the
applicable Mortgagor and insuring the applicable Deed of Trust to be a first
lien (or junior lien, as the case may be) on such Property subject only to taxes
for the current year, and such other matters of record as Bank shall approve in
writing after reviewing and receiving the preliminary title report to the
Property.
"Total Outstandings" means as of any date of determination
thereof, the aggregate unpaid amount of all Advances made hereunder by Bank,
including the aggregate unpaid amount of Advances made or outstanding pursuant
to the Existing Agreement.
"Trust Amendment" means the Amendment dated May 17, 1989 and
April 27, 1990 to the Declaration.
"Trust Documents" means the Declaration and the Trust
Amendment.
"Trust Note" means an Assigned Note which is not a Cash Flow
Note.
1.2 Use of Defined Terms. Any defined term used in the plural
shall refer to all members of the relevant class, and any defined term used in
the singular shall refer to any one or more of the members of the relevant
class.
1.3 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with GAAP applied on a consistent basis, as in effect on the date
hereof, except as otherwise specifically prescribed herein.
1.4 Exhibits and Schedules. All exhibits and schedules to this
Agreement, either as originally existing or as
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<PAGE> 8
the same may from time to time be supplemented, modified or amended, are
incorporated herein by this reference.
2. The Credit.
2.1 Revolving Loans. Subject to the terms and conditions of this
Agreement, Bank agrees to make Advances to Borrower (the "Credit"), from time to
time during the Availability Period in such amounts as Borrower may request in
accordance with Section 2.4 hereof. Each Advance made by Bank shall be in a
minimum amount of Twenty-Five Thousand Dollars ($25,000). This is a revolving
credit, and subject to the terms and conditions hereof, Borrower may, during the
Availability Period, reborrow amounts repaid or prepaid. The Credit shall be
used by Borrower for general working capital purposes but shall not be used to
make or acquire any mortgage or other loans, provided, however, that nothing
herein shall be deemed to prohibit Borrower from using the Credit to reduce or
satisfy any security interest on any Property which is senior to the security
interest of Borrower, or to reduce or satisfy any security interest or other
liens on Property which is acquired by Borrower from its borrowers whether
through foreclosure or otherwise.
2.2 Amount of Commitment. The Credit shall be available to
Borrower in an amount not to exceed the amount of the Commitment, provided that
the aggregate amount of the Total Outstandings shall at no time exceed Five
Million Dollars ($5,000,000).
2.3 Revolving Note. All Advances under the Credit made by Bank
shall be evidenced by and repaid with interest, in accordance with a Revolving
Note, payable to the order of Bank in form and substance acceptable to Bank and
substantially the same as Exhibit A hereto. The principal amount of the
Revolving Note shall be equal to the total amount of the Credit and shall be
payable in the unpaid amount of Advances under the Credit made by Bank. The date
and amount of Advances made and all payments of principal and interest thereof
received by Bank shall be entered by Bank on the records of Bank, and such
entry, absent manifest error shall be prima facie evidence of such Advances and
payments, provided that any failure by Bank to make any such entry shall not in
any way relieve Borrower of any obligations hereunder or under the Revolving
Note.
2.4 Borrowing Procedure. Each Advance shall be made upon the
irrevocable written request (or irrevocable telephonic request promptly
confirmed in writing) of Borrower which shall be received by Bank not later than
10:00 A.M. Los Angeles time on the date of the requested Advance. Each notice
shall specify:
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<PAGE> 9
(a) The date of the Advance, which shall be a Lending Day;
and
(b) The amount of the Advance.
2.5 Advances.
(a) Documents Furnished to Bank. Concurrently with each
request for an Advance, Borrower shall deliver to Bank a certificate (the
"Borrowing Base Certificate") of an authorized officer of Borrower in
substantially the form of Exhibit 2.5(a) as to the Collateral Value of the
Borrowing Base Collateral and the then unused amount of the Commitment, together
with such other documents as Bank shall reasonably request with respect to the
proposed Advance.
(b) Term of Advance. Each Advance must be repaid, in full,
on or prior to the Termination Date.
2.6 Interest. Interest on all Advances shall be calculated on
the basis of a 360-day year and actual days elapsed, which results in more
interest than if a 365-day year were used. Interest shall accrue on each Advance
at a rate per annum equal to the Prime Rate plus one (1.00) percentage point.
Such interest shall be due and payable on the first day of each month,
commencing on the first day of the first month after the date of such Advance,
and upon payment in full of the principal of such Advance.
2.7 Principal Payments. Unless otherwise prepaid, Borrower shall
repay the outstanding principal amount of each Advance, in full on the date
determined in accordance with the provisions of Section 2.5(b) hereof.
2.8 Payments Due on Non-Lending Day. Whenever any payment of
principal, interest or fees is due on a day which is not a Lending Day, the
applicable payment shall be made on the next succeeding Lending Day with
interest calculated through the date when actually paid.
2.9 Prepayments on the Credit. Upon telephonic request, promptly
confirmed in writing, received by Bank by 10:00 a.m. on the date thereof,
Borrower may at any time prepay any Advance, in full or in part in the minimum
amount of Twenty Five Thousand Dollars ($25,000).
2.10 Extension Fee. Borrower shall pay Bank an extension fee of
$25,000 payable in four installments of $6,250 commencing on the execution of
this Agreement and each three months thereafter with the final payment due on
April 16, 1996.
3. Disbursements and Payments.
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3.1 Payments. Each Advance and each payment of principal,
interest and other sums due under this Agreement shall be made in immediately
available funds at the Lending Office not later than 10:00 a.m. Los Angeles time
on the date due.
3.2 Overdue Payments of Principal and Interest. Any sum of
principal or interest payable hereunder, if not paid within ten Lending Days of
when due, shall bear interest (payable on demand) from its due date until
payment in full (computed daily on the basis of a three hundred sixty (360) day
year and actual days elapsed, which results in more interest than if a three
hundred sixty-five (365) day year were used) at a rate per annum equal to five
(5.00) percentage points over the interest rate then in effect.
3.3 Other Overdue Payments. Any sum payable hereunder, other
than principal or interest, if not paid within ten Lending Days of when due
shall, to the extent permitted by applicable law, bear additional interest
(payable on demand) from its due date until payment in full (computed daily on
the basis of a three hundred sixty (360) day year and actual days elapsed, which
results in more interest than if a three hundred sixty-five (365) day year were
used) at a rate per annum equal to five (5.00) percentage points over the
interest rate then in effect.
4. Security
4.1 Intentionally Deleted.
4.2 Security Interest. Borrower hereby confirms a continuing
security interest previously granted to Bank under the Existing Agreement in and
lien upon, and assigns to Bank as security for the Obligations, all of
Borrower's right, title and interest in and to all of Borrower's property,
whether real, personal, tangible or intangible, whether now owned or hereafter
acquired, and wherever located, including, without limitation, the Assigned
Loans (whether now existing or hereafter arising or in which Borrower now has or
may hereafter acquire any rights); and all proceeds of all of the foregoing.
Such security interest, lien and assignment secures the payment of all
Obligations now or hereafter existing, whether for principal, interest, fees,
expenses or otherwise. The Collateral covered by the security interest shall
include the following:
(a) All promissory notes, deeds of trust, mortgages, and
other documents evidencing or securing the Assigned Loans;
(b) All cash, payments and prepayments of principal,
interest, penalties and other income due or to become due in respect of the
Assigned Loans including any participation or equity interest in the Property;
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(c) All the right, title and interest of every nature
whatsoever of Borrower in and to the following:
(i) All hazard and liability insurance policies, title
insurance policies (or any binders or commitments to issue any of such policies)
and all condemnation proceeds with respect to or relating to any of the
Properties or the Assigned Loans; and
(ii) All servicing and all servicing agreements relating
to the servicing of any Assigned Loans; and
(d) All files, surveys, certificates, correspondence, loan
documents, instruments, appraisals, computer programs, tapes, disks, cards,
accounting records, and other records, information and data of Borrower relating
to the Assigned Loans or the Property.
4.3 Right to Release Collateral. Provided no event which is, or
with notice or lapse of time or both will be, an Event of Default hereunder
(including, without limitation, the collateral maintenance requirements set
forth in Section 7.12 hereof after giving effect to the request) has occurred
and is continuing, in connection with the payment to Borrower of all amounts due
under the applicable Assigned Loan(s), upon request of Borrower, Bank shall
execute or redeliver to Borrower such documents as may be necessary to release
any Collateral from the lien of this Agreement.
4.4 Right to Service Collateral. Provided no Event of Default
has occurred and is continuing, Borrower shall have the right and authority to
service the Assigned Loans and to enforce the rights and remedies of holder
thereunder. Upon the request of Borrower, Bank shall execute such documents or
take such other action as may be reasonably necessary to so service or enforce
the Assigned Loans.
5. Representations and Warranties.
Borrower represents and warrants as follows:
5.1 Borrower's Organization. Borrower is a Real Estate
Investment Trust duly organized and existing under the laws of California as a
business trust, and is properly licensed and in good standing in every
jurisdiction where the failure to so comply would be likely to have a material
adverse affect on Borrower's operations as a whole.
5.2 Intentionally Deleted.
5.3 Authority. The execution, delivery and performance of this
Agreement and any other instrument or agreement
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required hereunder are within Borrower's powers, have been duly authorized, and
are not in conflict with the terms of any charter, Trust Document, bylaw or
other organization papers of Borrower or any instrument or agreement material to
Borrower's operations to which Borrower is a party or by which Borrower is bound
or affected. Similarly, the execution, delivery and performance of any other
Loan Document are within the power of the Person (other than Bank) executing
such Document, have been duly authorized, and are not in conflict with the terms
of any charter, bylaw or other organizational document of such Person or any
instrument or agreement material to the operations of such Person to which such
Person is a party or by which it may be bound or affected.
5.4 Approvals and Consent. No approval, consent or other action
by, or notice to or filing with, any governmental authority is necessary in
connection with the execution, delivery or performance by Borrower, or
enforcement by Bank, of this Agreement or any other Loan Document.
5.5 Legality. There is no law, rule or regulation, nor is there
any judgment, decree or order of any court or governmental authority binding on
Borrower or any other material document, instrument or agreement to which
Borrower is a party, which would be contravened by the execution, delivery,
performance or enforcement of this Agreement or any other Loan Document where
such contravention would have a material adverse effect on the financial
conditions or operations of Borrower.
5.6 Enforceability. This Agreement and any other Loan Documents
to which Borrower is a party are the legal, valid and binding agreements of
Borrower, enforceable against Borrower in accordance with their respective
terms, and any instrument or agreement required hereunder, when executed and
delivered, will be similarly legal, valid, binding and enforceable.
5.7 Clear Title. Borrower has good and marketable title to the
Borrowing Base Collateral free and clear of all security interests, liens,
encumbrances or rights of others, except for the lien created hereunder and for
taxes which have resulted in a lien but are not yet delinquent.
The execution, delivery or performance of this Agreement will
not result in the creation of any such security interest, lien, encumbrance or
right except for the security interest created hereunder.
5.8 Litigation. There are no suits, proceedings, claims or
disputes pending or, to the best of Borrower's knowledge, threatened against or
affecting Borrower or its property, the adverse determination of which would be
likely to have a material adverse affect on Borrower's financial condition
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or operations or impair Borrower's ability to perform its obligations hereunder
or under any instrument or agreement required hereunder.
5.9 Event of Default. No event has occurred and is continuing or
would result from the incurring of obligations by Borrower under this Agreement
which is, or with the lapse of time or notice or both would be, an Event of
Default.
5.10 Trust Documents. Attached hereto as Exhibit B is a true,
complete and correct copy of the Declaration and Trust Amendment. The
Declaration, as amended by the Trust Amendments, is in full force and effect,
has not been amended and no party thereto is in breach of any of the terms
thereof.
5.11 Financial Statements. All financial statements (including
the balance sheet dated as of December 31, 1994 and March 31, 1995, income
statement for the year ended December 31, 1994 and the quarter ended March 31,
1995 and statement of changes in financial position for the year ended December
31, 1994 and the quarter ended March 31, 1995), and all other information and
data furnished by Borrower to Bank are complete and correct in all material
respects, and such financial statements have been prepared in accordance with
GAAP and fairly present the financial condition and results of operations of
Borrower as of such date or for such period. Since March 31, 1995, there has
been no change in Borrower's financial condition or results of operations
sufficient to impair Borrower's ability to repay the Credit in accordance with
the terms hereof. Borrower has no contingent obligations, liabilities for taxes
or other outstanding financial obligations which are material in the aggregate,
except as disclosed in such statements, information and data.
5.12 ERISA. To the best of Borrower's knowledge, no fact or
circumstance, including, but not limited to any Reportable Event, exists in
connection with any Plan of Borrower which constitutes reasonable grounds for
the termination of any such Plan or for the appointment by the appropriate
United States District Court of a trustee to administer any such Plan. For
purposes of this representation and warranty, Borrower if not the Plan
administrator, shall be deemed to have knowledge of all facts attributable to
the Plan administrator designated pursuant to ERISA.
5.13 Taxes. Borrower has filed all foreign, federal, state and
local tax returns and other reports they are required by law to file, and which
are material to the conduct of their business. Borrower has no knowledge of any
deficiency or additional assessment in a materially important amount in
connection with any taxes, assessments or charges not provided for on its books.
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5.14 Compliance with Laws. Borrower has complied with all
federal, state and local laws, rules and regulations affecting the business of
Borrower, including, without limitation, all applicable securities laws, except
where failure to so comply would not be likely to have a material adverse effect
on Borrower's financial condition or operations.
5.15 Contracts. Borrower is not in default under any contracts,
agreements or commitments to which Borrower is a signatory or by which Borrower
is bound, which default would have a materially adverse affect on their ability
to perform Borrower's obligations under this Agreement.
5.16 Regarding Real Property. With respect to any Property which
has been pledged as security under any Assigned Loan which is part of the
Borrowing Base Collateral:
(a) The applicable Mortgagor has or shall have, upon
recordation of the applicable Deed of Trust, good and marketable title to the
Property, subject only to such exceptions as have been set forth in the
applicable Title Policy.
(b) Except as otherwise disclosed to Bank, Borrower has not
received any notice from any governmental or quasi-governmental body or agency
or from any person or entity with respect to any actual or threatened taking of
the Property or any portion thereof for any public or quasi-public purpose by
the exercise of a right of condemnation or eminent domain and Borrower has no
knowledge of any such actual or threatened taking of the Property.
(c) Except as otherwise disclosed to Bank, to the best of
Borrower's knowledge, the Property and any improvements thereon are not
currently and have never been subject to Hazardous Materials (as hereinafter
defined), hazardous or toxic substances or wastes, or their effects. The term
"Hazardous Materials" shall mean any flammables, explosive or radioactive
materials, hazardous wastes, toxic substances or related materials including,
without limitation, substances defined as "hazardous substances", "hazardous
materials", "hazardous wastes" or "toxic substances" in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 as amended, 42
U.S.C. Sec. 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C.
Sec. 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. Sec.
6901, et seq.; Section 25117 of the California Health and Safety Code; Section
25316 of the California Health and Safety Code; and those chemicals known to
cause cancer or reproductive toxicity published pursuant to the Safe Drinking
Water and Toxic Enforcement Act of 1986, Section 25249.5, et seq. of the
California Health & Safety Code; and in the regulations adopted
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and publications promulgated pursuant to any of the aforesaid laws.
(d) Except as disclosed to Bank, to the best of Borrower's
knowledge, the owner of the Property is in compliance with all federal, state
and local laws, ordinances, statutes, rules, orders, decrees, directives and
regulations (collectively, "Laws") affecting all or any portion of the Property,
noncompliance with which would materially impair the value of the security for
the Credit or the prospect of repayment of the Credit, and, to the best of
Borrower's knowledge, no condition exists which, with the giving of notice or
the lapse of time, or both, would form the basis for such a violation of any
Laws. Borrower will at all times use its best efforts to cause the applicable
Mortgagor to comply with all existing and future Laws affecting all or any
portion of the Property.
5.17 Regulations G, T, U and X; Investment Company Act. Borrower
is not engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of "purchasing" or "carry" any
"margin stock" or "margin security" within the meanings of Regulations G, T, U
or X, respectively, of the Board of Governors of the Federal Reserve System. If
requested by Bank, Borrower will furnish Bank with a statement or statements in
conformity with the requirements of Federal Reserve Forms G-3 and/or U-1
referred to in Regulations G or U of said Board of Governors. No part of the
proceeds of any Credit hereunder will be used to purchase or carry any such
"margin security" or "margin stock" or to extend credit to others for the
purpose of purchasing or carrying any such "margin security" or "margin stock"
in violation of Regulations G, T, U or X of said Board of Governors. Borrower is
not required to be registered under the Investment Company Act of 1940.
5.18 Assigned Loans. With respect to each Assigned Loan which is
part of the Borrowing Base Collateral:
(a) Borrower is and will at all times be the legal and
equitable owner and holder of the Assigned Loan, free and clear of all
mortgages, liens, pledges, charges, security interests or other encumbrances
whatsoever other than those of Bank. The Assigned Loans have been duly
authorized and validly issued to Borrower. All of the Assigned Loans have been
(and will be) validly pledged and assigned to Bank and delivered to Bank subject
to no other mortgages, liens, pledges, charges, security interests or other
encumbrances whatsoever.
(b) Borrower has, and will continue to have, the full right
and authority to pledge the Assigned Loans.
(c) All Assigned Loans and all documents related thereto:
(i) as of any date of determination, have been
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(and will be) duly executed and delivered by the parties thereto, (ii) have been
(and will be) made in compliance with all requirements of law, (iii) are (and
will be) valid and enforceable in accordance with their terms, without defense
or offset, (iv) have not been (and will not be) modified or amended nor any
requirements thereof waived in any manner which would reduce or impair the value
of such Assigned Loan as collateral hereunder in any material respect without
the prior written consent of Bank and (v) constitute (and will constitute) bona
fide transactions entered into in the ordinary course of Borrower's business.
(d) Except as disclosed to Bank in writing, no event of
default nor any event which with the giving of notice or lapse of time or both
would become an event of default has occurred and is continuing under any
Assigned Loan.
(e) All fire and casualty policies covering the Property
encumbered by each Assigned Loan are in full force and effect and afford (and
will afford) insurance against fire and such other risks as are usually insured
against in the broad form of extended coverage insurance or course of
construction insurance, as applicable.
5.19 Continuing Representations and Warranties. The
representations and warranties contained in Article 5 and in any instrument or
agreement executed and delivered in connection herewith shall be deemed to be
made by Borrower on and as of the date of each request for an Advance under the
Credit.
6. Conditions Precedent.
6.1 Condition Precedent to Execution of the Agreement. Bank
shall have received the favorable opinion of Borrower's counsel, dated as of the
date hereof, addressed to Bank with respect to the matters set forth in Sections
5.1, 5.3, 5.4, 5.5 and 5.6 of this Agreement.
6.2 Conditions Precedent to Advances. The obligation of Bank to
make any Advances is subject to the conditions that, on the date of each
Advance:
(a) There shall have been delivered to Bank, in form and
substance satisfactory to Bank:
(i) a certificate signed by a duly authorized officer of
Borrower and dated the date of the Advance stating the representations and
warranties contained in Article 5 and any instrument or agreement executed and
delivered in connection herewith are then true and accurate in all material
respects as though made on and as of such date (except the representations and
warranties may reflect changes in the financial condition and operations of
Borrower occurring subsequent to the
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date of this Agreement which are not materially adverse changes with respect to
the financial conditions or operations of Borrower and which are not the result
of a breach of any covenant herein), and there is no Event of Default and no
event or occurrence which, with the giving of notice or the passage of time or
both, would become an Event of Default;
(ii) the written request for borrowing referred to in
Section 2.4 hereof, with respect to each Advance;
(iii) the Borrowing Base Certificate; and
(iv) such other documents as Bank may reasonably request
in order to effect fully the purposes and covenants of this Agreement.
(b) No Event of Default, and no event which with the giving
of notice or the lapse of time or both would constitute such an Event of
Default, shall have occurred and be continuing.
7. Affirmative Covenants.
Borrower covenants and agrees that so long as the Credit shall
remain available, and until the full and final payment of all indebtedness
incurred hereunder, Borrower shall fully comply with the following terms and
conditions:
7.1 Notice. Promptly give written notice to Bank of:
(a) All litigation affecting Borrower:
(1) Where the amount claimed is Two Hundred Fifty
Thousand Dollars ($250,000) or more;
(2) Where equitable relief is sought; or
(3) For any amount where a cause of action for fraud is
alleged;
(b) Any involuntary lien affecting the property or assets of
Borrower in excess of Two Hundred Fifty Thousand Dollars ($250,000);
(c) Any substantial dispute which may exist between Borrower
and any governmental regulatory body or law enforcement authority;
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(d) Any monetary default or any notice of default given by
Borrower under any Assigned Note or Deed of Trust;
(e) Any event which is, or with notice or lapse of time or
both would be, an Event of Default; and
(f) Any other matter which has resulted or might result in a
material adverse change in Borrower's financial condition or operations.
7.2 Financial Statements and Reports. Provide Bank with:
(a) Within one hundred ten (110) days after the end of each
fiscal year, Borrower's 10-K Report and annual audited financial statements
(including balance sheet, income statement and statement of changes in financial
position) with the unqualified opinion of a certified public accountant
acceptable to Bank;
(b) As soon as available but no later than sixty (60) days
after the close of each quarter, Borrower's 10-Q Report, Borrower's balance
sheet as of the close of such period, and Borrower's income statement, statement
of changes in financial position for such period and for that portion of
Borrower's fiscal year ending with such period, certified as being complete and
correct and fairly presenting Borrower's financial condition and results of
operations by the chief financial officer of Borrower;
(c) Within ten (10) days from the end of each month, a
report in a format and containing such information as requested by Bank with
respect to Assigned Loans which are delinquent by 30 days or more in the payment
of any Debt to any Person; and
(d) Promptly, such financial information concerning
Borrower's business activities and financial condition as Bank may reasonably
request from time to time.
7.3 Books and Records. Maintain adequate books, accounts and
records and prepare all financial statements required in accordance with GAAP,
and permit employees or agents of Bank at any reasonable time to inspect
Borrower's properties and examine or audit Borrower's books, accounts and
records and make copies and memoranda thereof.
7.4 Maintain Existence.
(a) Maintain and preserve its existence and all rights,
privileges and franchises now enjoyed, and
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(b) Keep all its properties in good working order and
condition normal wear and tear excepted.
7.5 Insurance. Maintain and keep in force in adequate amounts
such insurance as is usual in its business and submit schedules of insurance in
such form and substance as reasonably requested by Bank.
7.6 Security. Upon notice by Bank, perform such acts as may be
necessary or advisable to perfect any security interest or lien provided for
herein or otherwise to carry out the intent of this Agreement.
7.7 Compliance with Laws. At all times comply with all laws,
rules, regulations, orders and directions of any governmental authority having
jurisdiction over it or its business, except as such may be contested in good
faith and except where failure to comply could not have a material adverse
effect on Borrower's consolidated financial condition.
7.8 Payment of Obligations. Pay all its obligations, including
tax claims, when due, except such as may be contested in good faith.
7.9 Tangible Net Worth. Maintain at all times Tangible Net Worth
of at least $20,000,000.
7.10 Environmental Indemnification. At its expense, protect,
defend, indemnify, save and hold Bank harmless from and against any and all
claims, demands, losses, expenses, damages, liabilities, fines, penalties,
charges, administrative and judicial proceedings and orders, judgments, remedial
action requirements, enforcement actions of any kind, and all costs and expenses
incurred in connection therewith (including but not limited to attorneys' fees
and expenses), arising directly or indirectly, in whole or in part, out of (i)
the presence on or under the Property of any Hazardous Materials, or any
releases or discharges of any Hazardous Material on, under or from the Property,
or (ii) any activity carried on or undertaken on or off the Property, whether
prior to or during the term of this Credit, and whether by Borrower, the present
owner or any predecessor in title or any employees, agents, contractors or
subcontractors of Borrower, the present owner or any predecessor in title, or
any third persons at any time occupying or present on the Property (excluding,
however, any activity undertaken by or on behalf of Bank after foreclosure or
other sale of the Property), in connection with the handling, treatment,
removal, storage, decontamination, clean-up, transport or disposal of any
Hazardous Materials at any time located or present on or under the Property. The
foregoing indemnities shall further apply to any residual contamination on or
under the Property, or affecting any natural resources, and to any contamination
of any property or
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natural resources arising in connection with the generation, use, handling,
storage, transport or disposal of any such Hazardous Materials, and irrespective
of whether any of such activities were or will be undertaken in accordance with
applicable laws, regulations, codes and ordinances.
7.11 Use of Proceeds. Use the proceeds of the Credit only for
the purposes set forth in Section 2.1 hereof.
7.12 Maintenance of Collateral. If the aggregate Collateral
Value of the Borrowing Base Collateral shall at any time be less than the amount
of the Advances then outstanding, prepay the Credit in such an amount so that
immediately after giving effect to such prepayment, the aggregate Collateral
Value of the Borrowing Base Collateral shall be not less than the aggregate
amount of all Advances then outstanding.
7.13 Mandatory Repayment. Borrower agrees that for the
Availability Period, it shall repay in its entirety the aggregate outstanding
amount of the Obligations for not less than 30 consecutive days, and shall have
no right to borrow during such period.
8. Negative Covenants.
Borrower covenants and agrees that so long as the Credit shall
remain available, and until the full and final payment of all Obligations,
Borrower shall not, without Bank's prior written consent (which shall not be
unreasonably withheld):
8.1 Intentionally Deleted.
8.2 Intentionally Deleted.
8.3 Intentionally Deleted.
8.4 Acquisition of Assets. Acquire or purchase the capital
stock, assets or business of any other Person, or acquire or purchase other
securities, other than money market instruments acquired in the ordinary course
of its cash management activities.
8.5 Liquidate, Merge, Sell Assets. Liquidate or dissolve or
enter into any consolidation, merger, partnership, joint venture or other
combination, or sell, lease or dispose of its business or assets as a whole or
such as in the opinion of Bank constitute a substantial portion of its business
or assets.
8.6 Disposition of Assets. Dispose of any of its assets except
for full, fair and reasonable consideration, or enter into any sale and
leaseback agreement covering any of its assets.
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8.7 Change in Business Activities. Engage in any business
activities or operations substantially different from or unrelated to present
business activities and operations that might, in the opinion of Bank, have a
material adverse effect on the financial condition of Borrower.
8.8 Payments to Affiliates. Make any cash capital contributions
to any Person, or repurchase any shares of beneficial interest of the Trust from
holders of such shares.
8.9 Trust Documents. Amend any provision of the Trust Documents
without notice to and approval of Bank.
9. Events of Default.
Regardless of the terms of any note issued hereunder, the
existence or occurrence of any of the following events shall constitute an Event
of Default:
9.1 Nonpayment. Borrower shall fail to pay (i) when due the
principal amount of any Advances made hereunder or (ii) within five days of the
due date any other sums outstanding under this Agreement or any instrument or
agreement required under this Agreement.
9.2 Breach of Representation or Warranty. Any representation or
warranty herein or in any agreement, instrument or certificate executed pursuant
hereto or in connection with any transaction contemplated hereby shall prove to
have been false or misleading in any material respect when made.
9.3 Intentionally Deleted.
9.4 Judgment. A judgment or judgments shall be entered against
Borrower and become final upon appeal or because of the failure to appeal within
the required time in the aggregate amount of Two Hundred Fifty Thousand Dollars
($250,000) or more on a claim or claims not covered by insurance or for which
adequate reserves have not been established and shall remain undischarged,
unvacated, unbonded or unstayed for a period of thirty (30) days or in any event
later than five days prior to the date of any proposed sale thereunder.
9.5 Involuntary Liens. Any involuntary lien or liens in the
aggregate sum of Two Hundred Fifty Thousand Dollars ($250,000) or more, of any
kind or character, shall attach to any assets or property of Borrower, and
remain in effect for a period of sixty (60) days after the date of such lien, or
in any event later than five days prior to the date of any sale thereunder,
except for taxes due but not in default and liens, the validity of which are
being contested in good faith by appropriate
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proceedings commenced upon stay of execution of the enforcement thereof.
9.6 Voluntary Proceedings. Borrower shall fail to pay its debts
generally as they come due, or shall file any petition or action for relief
under any bankruptcy reorganization, insolvency or moratorium law, or any other
law or laws for the relief of, or relating to, debtors.
9.7 Involuntary Proceedings. An involuntary petition shall be
filed under any bankruptcy statute against Borrower, or a custodian, receiver,
trustee, assignee for the benefit of creditors (or other similar official) shall
be appointed to take possession, custody, or control of the properties of
Borrower and shall not be dismissed or discharged within ninety (90) days of
institution or appointment.
9.8 Governmental Action. Any governmental regulatory authority
shall take or institute action against Borrower or any part of the Borrowing
Base Collateral which, in the opinion of Bank, will have a material adverse
effect on Borrower's condition, operations or ability to repay the Credit,
unless such action is set aside or withdrawn or ceases to be in effect within
six (6) months.
9.9 Intentionally deleted.
9.10 Reportable Event. Any Reportable Event or any other fact or
circumstance which constitutes reasonable grounds for the termination of any
Plan of Borrower or for the appointment by an appropriate United States District
Court of a trustee to administer any such Plan, shall be terminated within the
meaning of Title IV of ERISA, or a trustee shall be appointed by the appropriate
United States District Court to administer any plan of Borrower upon the
occurrence of any of the foregoing, or the aggregate amount of Borrower's vested
unfunded liability under all such Plans exceeds ten percent (10%) of Borrower's
net worth.
9.11 Breach of Certain Covenants. Failure of Borrower to perform
or comply with any term or condition contained in Section 7.4(a) or Article 8 of
this Agreement.
9.12 Other Defaults Under Agreement. Failure of Borrower to
perform or comply with any other covenant contained in this Agreement and such
default shall not have been remedied or waived within thirty (30) days after
receipt of notice from Bank of such default.
9.13 Intentionally Deleted.
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9.14 Remedies Upon Event of Default. Without limiting any other
rights or remedies of Bank provided for elsewhere in this Agreement or by
applicable law, or in equity, or otherwise:
(a) Upon the occurrence of any Event of Default:
(1) the obligation of Bank to make or continue the
Credit and all other obligations of Bank and all rights of Borrower shall
terminate without notice to or demand upon Borrower, which are expressly waived
by Borrower, except that Bank may waive such Event of Default or, without
waiving, determine, upon terms and conditions satisfactory to Bank, to make
further Advances, which waiver or determination shall be binding upon Borrower.
(2) Bank may declare all or any part of the unpaid
principal, all interest accrued and unpaid thereon and all other amounts payable
under or in respect of this Agreement to be forthwith due and payable, whereupon
the same shall become and be forthwith due and payable, without protest,
presentment, notice of dishonor, demand or further notice of any kind, all of
which are expressly waived by Borrower.
(3) Bank, without notice to or demand upon Borrower,
which are expressly waived by Borrower, may proceed to protect, exercise and
enforce its rights and remedies under this Agreement against Borrower and such
other rights and remedies as are provided by law or equity, including, without
limitation, all of the rights and remedies of a secured party under the Uniform
Commercial Code.
(4) Bank may require Borrower to deliver all Assigned
Loans not already in Bank's possession to Bank (Borrower hereby agreeing to do
so on demand of Bank), sell any Assigned Loan, or any part thereof, at public or
private sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery, and at such price or prices as Bank may
reasonably deem satisfactory, and Bank may be the purchaser of any or all of the
Assigned Loans so sold and thereafter hold the same absolutely free from any
right or claim or whatsoever kind. Bank is authorized, at any such sale, if it
reasonably deems it advisable so to do, to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are purchasing for
their own account, for investment, and not with a view to the distribution or
sale of any Assigned Loan. Upon any such sale, Bank shall have the right to
deliver, assign and transfer to the purchaser thereof the Assigned Loan so sold.
Each purchaser at any such sale shall hold the property sold absolutely, free
from any claim or right of whatsoever kind, including any equity or right of
redemption
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of Borrower, and Borrower hereby specifically waives all rights of redemption
which it has or may have under any rule of law or statute now existing or
hereafter adopted. At any such sale, the Assigned Loans may be sold in one lot
as an entirety or in separate parcels, as Bank may determine. Bank shall not be
obligated to make any sale pursuant to any such notice. Bank may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Assigned Loans on
credit or for future delivery, the Assigned Loans so sold may be retained by
Bank until the selling price is paid by the purchaser thereof, but Bank shall
not incur any liability in case of the failure of such purchaser to take up and
pay for the Assigned Loans so sold and, in case of any such failure, such
Assigned Loans may again be sold upon like notice. Bank may, however, instead of
exercising the power of sale herein conferred upon it, proceed by a suit or
suits at law or in equity to collect all amounts due upon the Assigned Loans,
and/or to foreclose the pledge and sell the Assigned Loans or any portion
thereof, under a judgment or degree of a court or courts of competent
jurisdiction. Bank shall incur no liability as a result of the sale of the
Assigned Loans, or any part thereof, at any private sale. Borrower hereby waives
any claims it may have against Bank arising by reason of the fact that the price
at which the Assigned Loans may have been sold at such private sale was less
than the price which might have been obtained at a public sale or was less than
the aggregate amount of the indebtedness then outstanding, even if Bank accepts
the first offer received and does not offer the Assigned Loans to more than one
offeree.
(5) Bank may notify obligors under any of the Assigned
Loans to make all payments directly to Bank, and Bank may take all action deemed
necessary or desirable by Bank to collect such amounts.
(6) Bank may exercise any right under any Deed of Trust
or mortgage.
(b) The order and manner in which Bank's rights and remedies
are to be exercised shall be determined by Bank in its sole discretion, and all
payments received by Bank, shall be applied first to the costs and expenses
(including attorneys' fees and disbursements) of Bank, second, to the payment of
accrued and unpaid interest on the Credit to and including the date of such
application, third, to the payment of the unpaid principal of the Credit, and
fourth, to the payment of all other amounts (including fees) then owing to Bank
hereunder. No application of payments will cure any Event of Default, nor
prevent acceleration, or continued acceleration, of amounts
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payable hereunder, or prevent the exercise, or continued exercise, of rights or
remedies of Bank hereunder or at law or in equity, provided, however, that
nothing herein shall authorize Bank to continue to exercise its remedies against
the Collateral once the Obligations have been paid in full.
10. Miscellaneous.
10.1 Cumulative Remedies; No Waiver. The rights, powers,
privileges and remedies of Bank provided herein are cumulative and not exclusive
of any right, power, privilege or remedy provided by law or equity. No failure
or delay on the part of Bank in exercising any right, power, privilege or remedy
may be, or may be deemed to be, a waiver thereof; nor may any single or partial
exercise of any right, power, privilege or remedy preclude any other or further
exercise of the same or any other right, power, privilege or remedy. The terms
and conditions of Article 9 hereof are inserted for the sole benefit of Bank and
Bank may waive them in whole or in part, with or without terms or conditions, in
respect of any portion of the Credit, without prejudicing Bank's rights to
assert them in whole or in part in respect of any other portion of the Credit.
10.2 Amendments; Consents. No amendment, modification,
supplement, extension, termination or waiver of any provision of this Agreement,
no approval or consent thereunder, and no consent to any departure by Borrower,
may in any event be effective unless in writing signed by Bank and then only in
the specific instance and for the specific purpose given.
10.3 Costs, Expenses and Taxes. Borrower shall pay on demand the
reasonable costs and expenses of Bank in connection with the negotiation,
preparation, execution and delivery of this Agreement and the other Loan
Documents (not to exceed $20,000), and of Bank in connection with the amendment,
waiver, refinancing, restructuring, reorganization (including a bankruptcy
reorganization) and enforcement or attempted enforcement of the Loan Documents,
and any matter related thereto, including, without limitation, filing fees,
recording fees, title insurance fees, appraisal fees, search fees and other
out-of-pocket expenses and the reasonable fees and out-of-pocket expenses of any
legal counsel, independent public accountants and other outside experts retained
by Bank, and including, without limitation, any costs, expenses or fees incurred
or suffered by Bank in connection with or during the course of any bankruptcy or
insolvency proceedings of Borrower or any Subsidiary. Borrower shall pay any and
all documentary and other taxes (other than income or gross receipts taxes
generally applicable to banks) and all costs, expenses, fees and charges payable
or determined to be payable in connection with the filing or recording of this
Agreement, any other Loan Document or any other instrument or writing to be
delivered hereunder or thereunder, or in connection with
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any transaction pursuant hereto or thereto, and shall reimburse, hold harmless
and indemnify Bank from and against any and all loss, liability or legal or
other expense with respect to or resulting from any delay in paying or failure
to pay any tax, cost, expense, fee or charge or that any of them may suffer or
incur by reason of the failure of any Person to perform any of its obligations.
Any amount payable to Bank under this Section 10.3 shall bear interest from the
second Lending Day following the date of demand for payment at the rate provided
for in Section 2.6 hereof.
10.4 Nature of Bank's Obligations. Nothing contained in this
Agreement or any other Loan Document and no action taken by Bank pursuant hereto
or thereto may, or may be deemed to, make Bank a partnership, an association, a
joint venture or other entity, either with Borrower or any affiliate of
Borrower.
10.5 Reliance Upon Representations and Warranties. All
representations and warranties contained herein or in any other Loan Document,
or in any certificate or other writing delivered by or on behalf of any one or
more of the parties to any Loan Document have been or will be relied upon by
Bank, not withstanding any investigation made by Bank or on their behalf.
10.6 Notices. Except as otherwise expressly provided in the
Loan Documents: (a) All notices, requests, demands, directions and other
communications provided for hereunder or under any other Loan Document must be
in writing and must be mailed, telegraphed, telecopied, delivered or sent by
telex or cable to the appropriate party at the address set forth on the
signature pages of this Agreement or other applicable Loan Document or, as to
any party to any Loan Document, at any other address as may be designated by it
in a written notice sent to all other parties to such Loan Document in
accordance with this Section 10.6 and (b) Any notice, request, demand, direction
or other communication given by telegram, telecopier, telex or cable must be
confirmed within 48 hours by letter mailed or delivered to the appropriate party
at its respective address. Except as otherwise expressly provided in any Loan
Document, if any notice, request, demand, direction or other communication
required or permitted by any Loan Document is given by mail, it will be
effective on the earlier of receipt or the third calendar day after deposit in
the United States mail with first class or airmail postage prepaid; if given by
telegraph or cable, when delivered to the telegraph company with charges
prepaid; if given by telex or telecopier, when sent; or if given by personal
delivery, when delivered.
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10.7 Execution of Loan Documents. Unless Bank otherwise
specifies with respect to any Loan Document, this Agreement and any other Loan
Document may be executed in any number of counterparts and any party hereto or
thereto may execute any counterpart, each of which when executed and delivered
will be deemed to be an original and all of which counterparts of this Agreement
or any other Loan Document, as the case may be, when taken together will be
deemed to be but one and the same instrument. The execution of this Agreement or
any other Loan Document by any party hereto or thereto will not become effective
until counterparts hereof or thereof, as the case may be, have been executed by
all the parties hereto or thereto.
10.8 Binding Effect; Assignment. This Agreement and the other
Loan Documents shall be binding upon and shall inure to the benefit of the
parties hereto and thereto and Borrower may not assign its rights hereunder or
thereunder or any interest herein or therein without the prior written consent
of Bank.
10.9 Lien on Deposits and Property in Possession of any Bank. In
addition to all liens and rights of setoff given to Bank by law against any
property of Borrower, as security for the prompt payment and performance of all
obligations, Borrower hereby grants to Bank a lien on and a security interest in
all of its right, title and interest in and to any and all deposit accounts now
or hereafter maintained with Bank and in and to any and all of its property and
the proceeds thereof now or hereafter in the possession of Bank and hereby
grants to Bank a right of setoff against all such deposit accounts, property and
the proceeds thereof. The foregoing shall apply whether held in a general or
special account, on deposit or for safekeeping or otherwise. Each such lien,
security interest and right of setoff may, upon an Event of Default, be enforced
or exercised without demand or notice to Borrower, shall continue in full force
and effect unless specifically waived or released by Bank in writing and shall
not be deemed waived by any conduct of Bank, by any failure of Bank to exercise
any such right of setoff or to enforce any such lien or security interest or by
any neglect or delay in so doing. If an Event of Default has occurred and is
continuing, Bank may exercise its rights under the Uniform Commercial Code and
other applicable Laws and apply any fund in any deposit account maintained by
Borrower with Bank and/or any Property of Borrower and the proceeds thereof in
its possession against any obligation owned by Borrower to Bank hereunder and/or
under any other Loan Document.
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10.10 Indemnity by Borrower. Borrower agrees to indemnify, save
and hold harmless Bank and its directors, officers, agents, attorneys and
employees and their respective successors and assigns (collectively the
"Indemnitees") from and against: (a) Any and all claims, demands, actions or
causes of action that are asserted against any Indemnitee by any Person (other
than Bank) if the claim, demand, action or cause of action directly or
indirectly relates to a claim, demand, action or cause of action that such
Person has or asserts against Borrower, any Affiliate of Borrower or any
officer, director or shareholder of Borrower and arises out of or relates to the
relationship between Borrower and Bank under any of the Loan Documents or the
transactions contemplated thereby; and (b) Any and all liabilities, losses,
costs or expenses (including attorneys' fees and disbursements and other
professional services) that any Indemnitee suffers or incurs as a result of the
assertion of any foregoing claim, demand, action or cause of action; provided
that no Indemnitee shall be entitled to indemnification for any loss caused by
its own gross negligence or willful misconduct. Each Indemnitee is authorized to
employ counsel of its own choosing in enforcing its rights hereunder and in
defending against any claim, demand, action or cause of action covered by this
Section 10.10; provided that each Indemnitee shall endeavor, in connection with
any matter covered by this Section 10.10 which also involves other Indemnitees,
to use reasonable efforts to avoid unnecessary duplication of effort by counsel
for all Indemnitees. Borrower shall be responsible for the fees and costs of one
such counsel, or such greater number of counsel as may be required due to
conflicts of interest. Any obligation or liability of Borrower to any Indemnitee
under this Section 10.10 shall survive the expiration or termination of this
Agreement and the repayment of the Credit and the payment and performance of all
other obligations owed to Bank.
10.11 Nonliability of Bank. Borrower acknowledges and agrees
that:
(a) Any inspections of any collateral made by or through
Bank are for purposes of administration of the Loan only and Borrower is not
entitled to rely upon the same;
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to Bank pursuant to the Loan Documents,
including any certificate, financial statement, insurance policy or other
document, Bank
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shall not be deemed to have warranted or represented the sufficiency, legality,
effectiveness or legal effect of the same, or of any term, provision or
condition thereof, and such acceptance or approval thereof shall not constitute
a warranty or representation to anyone with respect thereto by Bank;
(c) The relationship between Borrower and Bank is, and shall
at all times remain, solely that of a borrower and Bank; Bank shall not under
any circumstance be construed to be a partner or joint venturer of Borrower or
its Affiliates; Bank shall not under any circumstance be deemed to be in a
relationship of confidence or trust or a fiduciary relationship with Borrower or
its Affiliates, or to owe any fiduciary duty to Borrower or its Affiliates; Bank
does not undertake or assume any responsibility or duty to Borrower or its
Affiliates to select, review, inspect, supervise, pass judgment upon or inform
Borrower or its Affiliates of any matter in connection with their property, any
Collateral held by Bank or the operations of Borrower or its Affiliates;
Borrower and its Affiliates shall rely entirely upon their own judgment with
respect to such matters; and any review, inspection, supervision, exercise of
judgment or supply of information undertaken or assumed by Bank in connection
with such matters is solely for the protection of Bank and neither Borrower nor
any other Person is entitled to rely thereon; and
(d) Bank shall not be responsible or liable to any Person
for any loss, damage, liability or claim of any kind relating to injury or death
to Persons or damage to Property caused by the actions, inaction or negligence
of Borrower and/or its Affiliates, and Borrower hereby indemnifies and holds
Bank harmless from any such loss, damage, liability or claim.
10.12 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties of
Borrower and Bank in connection with the Credit, and is made for the sole
protection of Borrower, and Bank, and Bank's successors and assigns. Except as
provided in Section 10.10, no other Person shall have any rights of any nature
hereunder or by reason hereof.
10.13 Confidentiality. Bank agrees to hold any confidential
information that it may receive from Borrower pursuant to this Agreement in
confidence, except for disclosure: (a) To legal counsel, accountants and other
professional advisors to Borrower or Bank; (b) To regulatory officials having
jurisdiction over Bank; (c) As required by Law or legal process or in connection
with any legal proceeding to which Bank is a party;
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(d) To another financial institution in connection with a disposition or
proposed disposition of all or part of Bank's interests hereunder; provided that
such financial institution agrees to be bound by the terms of this Section
10.13; and (e) To prospective purchasers of Collateral in connection with any
disposition thereof; provided that nothing in this Section shall be construed to
create or give rise to any fiduciary duty on the part of Bank to Borrower or to
create or give rise to any relationship of confidence or trust between Bank and
Borrower.
10.14 Further Assurances. Borrower and its Subsidiaries shall,
at their expense and without expense to Bank, execute and deliver such further
acts and documents as Bank from time to time reasonably requires for the
assuring and confirming unto Bank of the rights hereby created or intended now
or hereafter so to be, or for carrying out the intention of facilitating the
performance of the terms of any Loan Document, or for assuring the validity,
perfection, priority or enforceability of any lien under any Loan Document.
10.15 Integration. This Agreement, the Exhibits and Schedules
hereto together with the other Loan Documents, comprise the complete and
integrated agreement of the parties on the subject matter hereof and thereof and
supersede all prior or contemporaneous agreements, written or oral, on the
subject matter hereof or thereof. In the event of any conflict between the
provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control and govern; provided that the
inclusion of supplemental rights or remedies in favor of Bank in any other Loan
Document shall not be deemed a conflict with this Agreement. Each Loan Document
was drafted with the joint participation of the respective parties thereto and
shall be construed neither against nor in favor of any party, but rather in
accordance with the fair meaning thereof.
10.16 Governing Law. Except to the extent otherwise provided
herein or therein, each Loan Document shall be governed by, and construed and
enforced in accordance with, the local Laws of California; provided that the
local Laws of California shall not apply with respect to any foreclosure of real
Property Collateral located outside California, and in no event shall California
Code of Civil Procedure Sections 726 and/or 58Oa and/or 58Ob and/or 58Od apply
to any such foreclosure outside of California or to the right of Bank to obtain
a deficiency judgment for all Obligations remaining due following such
foreclosure.
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10.17 Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid as to any
party or in any jurisdiction shall, as to that party or jurisdiction, be
inoperative, unenforceable or invalid without affecting the remaining provisions
or the operation, enforceability or validity of that provision as to any other
part/ or in any other jurisdiction, and to this end the provisions of all Loan
Documents are declared to be severable.
10.18 Headings. Article and Section headings in this Agreement
and the other Loan Documents are included for convenience of reference only and
are not part of this Agreement or the other Loan Documents for any other
purpose.
10.19 Time of the Essence. Time is of the essence of the Loan
Documents.
10.20 Reference. (a) Other than (i) non-judicial foreclosure and
all matters in connection therewith regarding security interests in real or
personal property; or (ii) the appointment of a receiver or the exercise of
other provisional remedies (any and all of which may be initiated pursuant to
applicable law) each controversy, dispute or claim between the parties arising
out of or relating to this Agreement, which controversy, dispute or claim is not
settled in writing within thirty (30) days after the "Claim Date" (defined as
the date on which a party subject to the Agreement gives written notice to all
other parties that a controversy, dispute or claim exists), will be settled by a
reference proceeding in Los Angeles, California in accordance with the
provisions of Section 638 et seq. of the California Code of Civil Procedure, or
their successor section ("CCP"), which shall constitute the exclusive remedy for
the settlement of any controversy, dispute or claim concerning this Agreement,
including whether such controversy, dispute or claim is subject to the reference
proceeding and the parties waive their rights to initiate any legal proceedings
against each other in any court or jurisdiction other than the Superior Court of
Los Angeles (the "Court"). The referee shall be a retired Judge of the Court
selected by mutual agreement of the parties, and if they cannot so agree within
forty-five (45) days after the Claim Date, the referee shall be promptly
selected by the Presiding Judge of the Los Angeles Superior Court (or his
representative). The referee shall be appointed to sit as a temporary judge,
with all of the powers for a temporary judge, as authorized by law, and upon
selection should take and subscribe to the oath of office as provided for in
Rule 244 of the California Rules of Court (or any subsequently enacted Rule).
Each party shall have one preemptory challenge pursuant to CCP 170.6. The
Referee shall (a) be requested to set the matter
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for hearing within sixty (60) days after the Claim Date and (b) try any and all
issues of law or fact and report a statement of decision upon them, if possible,
within ninety (90) days of the Claim Date. Any decision rendered by the referee
will be final, binding and conclusive and judgment shall be entered pursuant to
CCP 644 in any court in the State of California having jurisdiction. Any party
may apply for a reference at any time after thirty (30) days following notice to
any other party of the nature of the controversy, dispute or claim, by filing a
petition for a hearing and/or trial. All discovery permitted by this Agreement
shall be completed no later than fifteen (15) days before the first hearing date
established by the referee. The referee may extend such period in the event of a
party's refusal to provide requested discovery for any reason whatsoever,
including, without limitation, legal objections raised to such discovery or
unavailability of a witness due to absence or illness. No party shall be
entitled to "priority" in conducting discovery. Depositions may be taken by
either party upon seven (7) days written notice, and, request for production or
inspection of documents shall be responded to within ten (10) days after
service. All disputes relating to discovery which cannot be resolved by the
parties shall be submitted to the referee whose decision shall be final and
binding upon the parties. Pending appointment of the referee as provided herein,
the Superior Court is empowered to issue temporary and/or provisional remedies
as appropriate.
(b) Except as expressly set forth in this Agreement, the
referee shall determine the manner in which the reference proceeding is
conducted including the time and place of all hearings, the order of
presentation of evidence, and all other questions that arise with respect to the
course of the reference proceeding. All proceedings and hearings conducted
before the referee, except for trial, shall be conducted without a court
reporter, except that when any party so requests, a court reporter will be used
at any hearing conducted before the referee. The party making such a request
shall have the obligation to arrange for and pay for the court reporter. The
costs of the court reporter at the trial shall be borne equally by the parties.
(c) The referee shall be required to determine all issues in
accordance with existing case law and the statutory laws of the State of
California. The rules of evidence applicable to proceedings at law in the State
of California will be applicable to the reference proceeding. The referee shall
be empowered to enter equitable as well as legal relief, to provide all
temporary and/or provisional remedies and to enter equitable
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<PAGE> 33
orders that will be binding upon the parties. The referee shall issue a single
judgment at the close of the reference proceeding which shall dispose of all of
the claims of the parties that are the subject of the reference. The parties
hereto expressly reserve the right to contest or appeal from the final judgment
or any appealable order or appealable judgment entered by the referee. The
parties hereto expressly reserve the right to findings of fact, conclusions of
law, a written statement of decision, and the right to move for a new trial or a
different judgment, which new trial, if granted, is also to be a reference
proceeding under this provision.
(d) In the event that the enabling legislation which
provides for appointment of a referee is repealed (and no successor statute is
enacted), any dispute between the parties that would otherwise be determined by
the reference procedure herein described will be resolved and determined by
arbitration. The arbitration will be conducted by a retired judge of the Los
Angeles Superior Court, in accordance with the California Arbitration Act,
Sections 1280 through 1294.2 of the CCP as amended from time to time. The
limitations with respect to discovery as set forth hereinabove shall apply to
any such arbitration proceeding.
10.21 Participations. Insofar as Borrower is concerned, Bank
shall have the right at any time to sell, assign, transfer, negotiate or grant
participations in all or any part of the Credit or the Revolving Note to one or
more financial institutions. The terms and provisions of this Credit Agreement
and the other Loan Documents shall inure to the benefit of any such assignee or
transferee , and in the event of such transfer or assignment, the rights and
privileges herein conferred upon Bank shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. In connection therewith, Bank may disclose all documents and information
which Bank now or hereafter may have relating to the Credit, this Agreement,
Borrower, any other Persons referred to herein or any of the business of any of
the foregoing entities.
10.22 Limitation of Liability. Notwithstanding any provision
herein or in any Loan Document to the contrary, in accordance with Section 7.2
of the Declaration, neither the "Shareholders" nor the "Trustees" nor officers
of Borrower shall be liable hereunder, or under any other Loan Document, and
Bank and its successors and assigns shall look solely to Borrower for the
payment of any claim hereunder or thereunder or for the performance hereof or
thereof. Each of the foregoing quoted terms has the meaning ascribed to it in
the Declaration.
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<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written.
ANGELES MORTGAGE INVESTMENT Address:
TRUST, a California business
trust 340 North Westlake Boulevard
Suite 230
By: Westlake Village, CA 91362
By/s/RONALD CONSIGLIO Attn: Ronald Consiglio
------------------------ President and
Trustee Chief Operating
Officer
Telecopy No. (805) 449-1336
With a copy to:
Greenberg, Glusker, Fields,
Claman & Machtinger
1900 Avenue of the Stars
Suite 2000
Los Angeles, CA 90067
Attn: Jean Morris, Esq.
Telecopy No. (310) 553-0687
IMPERIAL BANK, a California Address:
Banking Corporation
Los Angeles Regional
Office
201 North Figueroa
Los Angeles, CA 90012
By/s/FRANK FRATTO Attn: Frank Fratto
----------------------------- Regional Vice President
Telecopy No. (213) 484-3721
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By With a copy to:
-----------------------------
Loeb and Loeb
1000 Wilshire Boulevard
Suite 1800
Los Angeles, CA 90017
Attn: David L. Ficksman, Esq.
Telecopy No. (213) 688-3460
and
Imperial Bank Legal
Department
9920 S. La Cienega Blvd.,
Inglewood, CA 90301
Attn: Richard M. Baker, Esq.
Senior Vice President
and General Counsel
Telecopy No. (310) 417-5695
35
<PAGE> 36
NOTE
$5,000,000 July , 1995
Los Angeles, California
FOR VALUE RECEIVED, ANGELES MORTGAGE INVESTMENT TRUST, a California
business trust ("Borrower"), promises to pay to the order of IMPERIAL BANK
("Payee") on July 31, 1996, the lesser of Five Million Dollars ($5,000,000) or
the amount of all Advances made to the Borrower under the Second Amended and
Restated Loan and Security Agreement dated as of the date hereof (as at any
time amended or supplemented, the "Credit Agreement") between the Borrower and
Payee.
Borrower also promises to pay interest on the unpaid principal amount
hereof from the date hereof until paid at the rate of 1% per year in excess of
Payee's Prime Rate or at the rates and at the times which shall be determined
in accordance with the provisions of the Credit Agreement.
This Note is the "Revolving Note" referred to in the Credit Agreement
and is issued pursuant to and entitled to the benefits of the Credit Agreement
to which reference is hereby made for a more complete statement of the terms
and conditions under which the Advances evidenced hereby are made and are to be
repaid. Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
Exhibit A
<PAGE> 37
Each Advance hereunder shall be made in accordance with the Credit
Agreement. The Payee shall, and is hereby authorized to, enter on its records,
the date and amount of each Advance, and other information referred to therein;
provided that the failure to make an entry of any Advance or payment on this
Note shall not limit or otherwise affect the obligation of Borrower hereunder
with respect to the payment of principal or interest on this Note.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
office of the Payee located at 201 North Figueroa, Los Angeles, California
90012, or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement. Until notified in writing
of the transfer of this Note, Borrower shall be entitled to deem Payee or such
person who has been so identified by a transferor in writing to Borrower as the
holder of this Note, as the owner and holder of this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Lending Day, such payment shall be made on the next succeeding
Lending Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
2
<PAGE> 38
The Credit Agreement and this Note shall be governed by, and shall be
construed and enforced in accordance with the laws of the State of California.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note may become, or may be declared to be, due and
payable in the manner, upon the conditions and with the effect provided in the
Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of Borrower,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
Borrower promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note.
Borrower and endorsers of this Note hereby consent to renewals and extensions
of time at or after the maturity hereof, without notice, and hereby waive
diligence, presentment, protest, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as
a defense to any demand hereunder.
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IN WITNESS WHEREOF, Borrower has caused this Note to be executed and
delivered by the undersigned duly authorized officer as of the day and year and
at the place first above written.
Angeles Mortgage Investment Trust,
a California business trust
By ___________________________________
Ronald Consiglio, Trustee
4
<PAGE> 1
EXHIBIT 10.26
EMPLOYMENT AGREEMENT
This Employment Agreement (this "Agreement") is made and entered into as of
December 1, 1995, by and between Angeles Mortgage Investment Trust, a California
business trust (the "Trust"), and Anna Merguerian, an individual ("Executive").
This Agreement is made and entered into with reference to the following facts:
Executive is presently employed by the Trust as Vice President, Secretary and
Chief Financial Officer.
The Board of Trustees of the Trust (the "Board") recognizes that the Executive's
contribution to the successful restructuring of the Trust's loan portfolio and
her day-to-day management of the Trust's business affairs during the past three
(3) years has been substantial in all material respects. The Trustees consider
the Executive's services to be very important to the successful operation of the
Trust. The Board desires to stabilize management in general and specifically
provide for the continued employment of the Executive and to formalize and make
certain changes in Executive's employment arrangement with the Trust. The Board
has determined that the terms of Executive's employment as herein provided will
reinforce and encourage the continued attention and dedication to the Trust by
the Executive, which is in the best interests of the Trust and its shareholders.
The Executive is willing to commit herself to continue to serve the Trust, on
the terms and conditions herein provided.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained in this Agreement, the Trust and
Executive agree as follows:
I. EMPLOYMENT.
The Trust hereby employs Executive, and Executive hereby accepts such employment
as Vice President, Secretary and Chief Financial Officer of the Trust. In such
capacity, Executive shall perform all services or actions necessary or
reasonably advisable for the management and conduct of the business of the Trust
which are appropriate to the position of an executive officer, subject to the
terms of the Trust's Declaration of Trust and any authorization, direction or
restriction by the President and Chief Executive Officer.
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<PAGE> 2
II. TERM.
Subject to the provisions for termination set forth herein, the term of this
Agreement (the "Original Term") shall commence as of the date hereof and shall
continue until May 31, 1997. This Agreement shall be renewed automatically each
eighteen month period thereafter for succeeding terms of eighteen (18) months
(each, a "Renewal Term"), unless either party gives written notice to the other
party at least one hundred (180) days prior to expiration of the Original Term
or Renewal Term (as applicable) of its or her intention not to renew. As used
herein, "Term" shall mean the Original Term or any Renewal Term, whichever is
then in effect.
III. DUTIES.
During the Term, Executive shall perform such duties and have such authority and
responsibilities consistent with her present position as Vice President,
Secretary and Chief Financial Officer as shall, from time to time, be reasonably
delegated or assigned to her by the President and Chief Executive Officer of the
Trust. Executive shall report directly to the President and Chief Executive
Officer of the Trust. Executive shall render to the Trust her services specified
herein principally at the present location, or other locations not exceeding 30
miles from the present location of the Trust's executive offices.
IV. EXCLUSIVITY.
Executive agrees to faithfully and conscientiously serve the Trust, to devote
her full working time, attention and energy to the business of the Trust, its
parent, subsidiaries and affiliated entities, if any (collectively, the
"Affiliates"), and to perform her duties hereunder competently, diligently and
to the best of her abilities. During the Term, Executive's services shall be
rendered exclusively for the Trust or any Affiliate. Notwithstanding the
foregoing, Executive shall be permitted to continue to serve as an officer for
Angeles Participating Mortgage Trust ("APART"), including devoting approximately
fifteen (15) hours per month to carry out such responsibilities for so long as
APART's offices are located in its present facilities. APART will reimburse the
Trust for its employment expenses based on the time spent by the Executive on
APART's business matters.
V. COMPENSATION AND FRINGE BENEFITS.
The Trust shall compensate Executive for her services under this Agreement as
follows:
A. Base Salary. The Trust shall pay Executive, a salary
("Base Salary") at the rate of One Hundred Thousand Dollars ($100,000)
per annum, in regular installments, consistent with the Trust's
standard payroll practice, said Base Salary is subject to review on an
annual basis.
B. Bonus. The Board (or the Compensation Committee of the
Board), in its sole discretion, may, from year to year, pay to
Executive an annual bonus ("Bonus") in an amount to be determined by
the Board (or the Compensation Committee) in its sole discretion.
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<PAGE> 3
C. Vacation. Executive shall be entitled to four (4) weeks
per year of paid vacation ("Vacation") during the Term in addition to
legal holidays. Such Vacation shall be taken during a period mutually
and reasonably satisfactory to both the Trust and Executive.
D. Benefits. The Trust shall provide Executive with benefits
("Benefits") as the Board may from time to time determine. Benefits
may include, without limitation, group insurance plans for medical,
dental, life, accident and disability insurance.
VI. TERMINATION BY TRUST.
A. Termination. The Trust may terminate this Agreement in
its sole discretion by giving written notice to the Executive in
accordance with Section XIV hereof. The post marked date of such
written notice shall be the Termination Date. However, this Agreement
shall automatically terminate in the event of Executive's death or
when any period of disability prevents the Executive from performing
her duties in excess of three (3) consecutive months; provided,
however that if illness or other disability prevents the Executive
from carrying out her duties under this Agreement, she shall not be
entitled to take advantage of this paragraph whenever, in any period
of eighteen (18) consecutive months, the Executive has been unable to
work for an aggregate of four (4) months.
B. Compensation of Executive Upon Termination by the Trust.
If this Agreement is terminated by the Trust pursuant to Section VI.A.
above, the Trust shall continue to pay the Executive as Severance Pay,
(i) her then present Base Salary and Benefits for one (1) year beyond
the Termination Date in accordance with the Trust's normal payroll
practices, (ii) accrued Vacation for that portion of the fiscal year
in which the termination took place during which time the Executive's
services were performed and (iii) the Executive shall also receive
within 120 days of the Termination Date the pro rata portion of any
estimated Bonus to be earned but not yet paid under Section V.B.
above. If the Executive obtains and begins other employment prior to
the end of the Severance Pay period said Severance Pay shall be
discontinued. However, the Executive shall receive no Severance Pay if
she is terminated for Cause. As used herein, "Cause" includes without
limitation:
1. A material breach by the Executive of any of
the terms, conditions or provisions of this Agreement which has
not been cured within ten (10) days after notice of such
noncompliance has been given by the Trust to the Executive;
2. Executive is convicted of, or pleads guilty or
nolo contendere to any felony;
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<PAGE> 4
3. Executive is held liable in any civil action
involving allegations of fraud, embezzlement, fraudulent
conversion or misappropriation of property;
4. The commission by Executive of any fraudulent
act in connection with the performance of Executive's duties
under this Agreement;
5. The commission by Executive of any act of gross
negligence while acting within the scope of her employment which
adversely affects the Trust;
C. Effect of Termination by the Trust. Notwithstanding
anything to the contrary contained in this Agreement, neither the
expiration nor the termination of this Agreement for any reason shall
affect the ownership by the Trust of the results and proceeds of the
services rendered by Executive hereunder, or alter any of the rights
or privileges of the Trust or any warranty, representation or
undertaking on the part of Executive hereunder.
Any termination under this Section VI shall not be deemed to be an election of
remedy or a waiver by the Trust of any of the Trust's rights or remedies
otherwise available to the Trust at law, in equity or otherwise.
VII. TERMINATION BY EXECUTIVE.
A. Termination. The Executive may terminate this Agreement
at any time in her sole discretion by giving written notice to the
Trust in accordance with Section XVI hereof. The post marked date of
such written notice shall be the Termination Date. Such termination
shall be either voluntary or for Good Reason (as hereinafter defined).
For purposes of this Agreement, termination for "Good Reason" shall be
limited to any one of the following events:
1. A material breach by the Trust of any of the
terms, conditions or provisions of this Agreement which have not
been cured within ten (10) days after notice of such
noncompliance has been given by Executive to the Trust, or
2. Change of Control of the Trust (as hereinafter
defined). For purposes of this Agreement, "Change of Control" of
the Trust shall mean a change in the composition of the Board of
Trustees such that the Trustees who , as of the date hereof,
constitute the Board (such Board shall be hereinafter referred to
as the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual who becomes a member of the Board subsequent to the
date hereof and whose election, or nomination for election by the
Trust's shareholders, was
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<PAGE> 5
approved by a vote of at least a majority of those Trustees who
are members of the Board and who were also Trustees of the
Incumbent Board (or deemed to be such pursuant to the proviso)
shall be considered as though such Trustee were a member of the
Incumbent Board; but, provided, further that any such Trustee
whose initial assumption of office occurs as a result of either
an actual or threatened election contest (as such terms are used
in Rule 14a 11 or Regulation 14A promulgated under the Securities
Exchange Act of 1934) or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the
Board shall not be so considered as a Trustee of the Incumbent
Board, or
3. Accelerated Liquidation of the Trust (as herein
after defined). For purposes of this Agreement, "Accelerated
Liquidation" of the Trust shall have occurred if prior to the
dates set out in Article VIII, Section 8.1(a) of the Declaration
of Trust the shareholders of the Trust, at a special meeting of
shareholders, cast the necessary votes to cause a liquidation,
dissolution, sale or disposition of all or substantially all of
the assets of the Trust or similar liquidating transaction.
B. Compensation of Executive Upon Termination by the
Executive. If the Executive voluntarily terminates this Agreement then
there shall be no Severance Pay. However if the Executive terminates
this Agreement for Good Reason, then:
1. The Trust shall pay Executive her accrued Base
Salary, and prorated Bonus (if any, for the year in which the
termination occurs), accrued Benefits and Vacation through the
Termination Date; and
2. The Trust shall pay Severance Pay, as defined
in Section VI.B. above to the Executive, except that the
Severance Pay period shall be two (2) years. Such payment to be
made in accordance with the Trust's normal payroll practices. If
the Executive obtains and begins other employment prior to the
end of the Severance Pay period said Severance Pay shall be
discontinued.
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<PAGE> 6
VIII. CONFIDENTIALITY.
Executive shall not disclose to any unrelated third party any of the Trust's
proprietary information regarding the Trust obtained by Executive during her
employment. Upon the termination of Executive's employment with the Trust, and
regardless of the manner in which such termination shall occur, Executive agrees
not to take, without the prior written consent of the Trust, any memoranda,
reports, or other written material or electronically filed, stored or recorded
information of any kind. The agreements and covenants of this Section VIII shall
survive and inure to the benefit of the Trust notwithstanding the expiration,
termination or rescission of this Agreement.
IX. REPRESENTATIONS OF EXECUTIVE.
Executive represents and warrants to the Trust that there are no agreements or
arrangements, whether written or oral, which would be breached by Executive upon
execution of this Agreement or which would impair or prevent Executive from
rendering her services to the Trust during the Term.
X. NO SOLICITATION BY EXECUTIVE.
Executive shall not, during any period in which Severance Pay is being paid,
induce or attempt to induce any of the Trust's employees or representatives to
discontinue working for or representing the Trust in order to work for or
represent any of the Trust's competitors. The provisions of this Section X shall
survive the expiration, termination or rescission of this Agreement.
Solicitation during this period would be grounds for ceasing any future
severance payments.
XI. ATTORNEYS' FEES.
If the Executive commences an action against the Trust to enforce any of the
terms in this Agreement, or to obtain damages for any alleged breach of any of
the terms hereof, or for a declaration of rights hereunder, the Trust shall pay
the Executive's reasonable attorneys' fees and costs incurred in connection with
the prosecution of such action, whether or not such action proceeds to
arbitration, trial or appeal.
XII. ASSIGNMENT.
This Agreement is personal to Executive, and Executive's rights and obligations
under this Agreement may not be assigned or transferred by Executive. The Trust
shall have the right to assign its rights and its obligations under this
Agreement to any related or affiliated corporation or other entity that the
Trust may determine.
6
<PAGE> 7
XIII. EFFECT OF HEADINGS.
The subject headings of the sections of this Agreement are included for purposes
of convenience of reference only, and shall not affect the construction or
interpretation of any of its provisions. Should there be any conflict between
any such headings and the paragraphs at the head of which it appears, the
paragraph and not such heading shall govern and control in the construction of
this Agreement.
XIV. ENTIRE AGREEMENT; MODIFICATIONS; WAIVER.
This instrument contains the entire Agreement between the parties. It may not be
changed orally, but only by agreement in writing signed by the party against
whom enforcement of any recovery, change, modification or discharge is sought.
XV. COUNTERPARTS.
This Agreement may be executed in one or more separate counterparts, each of
which, when so executed, shall be deemed an original, but all of which together
shall constitute one and the same instrument.
XVI. NOTICE.
Any notices, or other communications relating to this Agreement shall be in
writing and mailed, prepaid to the party concerned at the address indicated, as
follows:
To Executive at:
4140 Greenbush Avenue
Sherman Oaks, CA 91423
To Trust at:
Angeles Mortgage Investment Trust
340 N. Westlake Boulevard
Suite 230
Westlake Village, CA 91362
Attention: President and Chief Executive Officer
Any party may change its address for purposes of this Section XVI by giving the
other party written notice of the new address in the manner set forth above.
7
<PAGE> 8
XVII. PARTIAL INVALIDITY.
If any provision or portion of this Agreement shall be held invalid, inoperative
or unenforceable, then, so far as is reasonable and possible, the remainder of
this Agreement shall be considered valid, operative and enforceable, and effect
shall be given to the intent manifested by the provision or portion held
invalid, inoperative or unenforceable.
XVIII. GOVERNING LAW.
This Agreement shall, in all respects, be construed in accordance with and
governed by the laws of the State of California, without reference to principles
of conflicts of law thereof.
XIX. FURTHER ASSURANCES.
Each of the parties to this Agreement shall execute and deliver any and all
additional papers, documents, and other assurances, and shall do any and all
acts and things reasonably necessary in connection with the performance of their
obligations hereunder and to carry out the intent of the parties to this
Agreement.
XX. NO OBLIGATION TO THE THIRD PARTIES.
Except for the parties to this Agreement, no person is intended to be a
beneficiary of any provisions of this Agreement and, accordingly, there shall be
no third party beneficiaries of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
ANGELES MORTGAGE INVESTMENT TRUST, a California business trust
By:/s/RONALD J. CONSIGLIO
---------------------------------------------------
RONALD J. CONSIGLIO, Chief Executive Officer and Trustee
EXECUTIVE
By:/s/ANNA MERGUERIAN
---------------------------------------------------
ANNA MERGUERIAN, Vice President, Secretary and Chief Financial Officer
8
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE YEAR
ENDED DECEMBER 31, 1995 BALANCE SHEET AND INCOME STATEMENT AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH DECEMBER 31, 1995 FORM 10-K.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1
<CASH> 1,229,000
<SECURITIES> 0
<RECEIVABLES> 1,004,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,233,000
<PP&E> 35,099,000<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 37,332,000
<CURRENT-LIABILITIES> 193,000
<BONDS> 0
0
0
<COMMON> 2,827,000
<OTHER-SE> 34,312,000
<TOTAL-LIABILITY-AND-EQUITY> 37,332,000
<SALES> 19,502,000<F2>
<TOTAL-REVENUES> 19,502,000
<CGS> 0
<TOTAL-COSTS> 265,000
<OTHER-EXPENSES> 1,721,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 227,000
<INCOME-PRETAX> 17,289,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 17,289,000
<DISCONTINUED> 0
<EXTRAORDINARY> 1,844,000
<CHANGES> 0
<NET-INCOME> 19,133,000
<EPS-PRIMARY> 6.38
<EPS-DILUTED> 6.38
<FN>
<F1>INCLUDES MORTGAGE AND PROMISSORY NOTES OF $31,699,000.
<F2>INCLUDES RECOVERY OF BAD DEBT OF $15,954,000 AND GAIN ON SALE OF REAL PROPERTY
OF $435,000.
</FN>
</TABLE>
