-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OLBfqCdAacHYftQ7Hsjf/gIoo5M2IcwOJzGJbWbmphGQSfq1Zpx1WbnYTCFecu1S aQ6wkAtnFU9GjV3Ey6hdXA== 0000313499-98-000001.txt : 19980814 0000313499-98-000001.hdr.sgml : 19980814 ACCESSION NUMBER: 0000313499-98-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980813 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANGELES PARTNERS XIV CENTRAL INDEX KEY: 0000759859 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 953959771 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14284 FILM NUMBER: 98684903 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: P.O. BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1998 [ ] TRANSITION REPORT PURSUANT TO 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-14248 ANGELES PARTNERS XIV (Exact name of small business issuer as specified in its charter) California 95-3959771 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 Issuer's telephone number Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) ANGELES PARTNERS XIV CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 1998 Assets Cash and cash equivalents $ 835 Receivables and deposits 357 Restricted escrows 293 Other assets 332 Investment properties: Land $ 2,579 Buildings and related personal property 28,967 31,546 Less accumulated depreciation (19,664) 11,882 $ 13,699 Liabilities and Partners' Deficit Liabilities Accounts payable $ 33 Tenant security deposit liabilities 91 Accrued property taxes 369 Accrued interest 4,797 Due to affiliates 1,271 Other liabilities 72 Notes payable, including $7,242 in default 34,081 Partners' Deficit General partners $ (653) Limited partners (43,887 units issued and outstanding) (26,362) (27,015) $ 13,699 See Accompanying Notes to Consolidated Financial Statements b) ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1998 1997 1998 1997 Revenues: Rental income $ 1,295 $ 1,399 $ 2,621 $ 2,741 Other income 40 34 75 72 Write-up of investment property 44 -- 44 -- Total revenues 1,379 1,433 2,740 2,813 Expenses: Operating 513 595 1,003 1,153 General and administrative 66 98 119 178 Depreciation 313 302 621 603 Interest 991 1,170 2,101 2,318 Property taxes 99 119 213 234 Bad debt (recovery) expense, net (7) 9 (7) (18) Loss on sale of investment property 177 -- 177 -- Total expenses 2,152 2,293 4,227 4,468 Net loss before extraordinary item (773) (860) (1,487) (1,655) Extraordinary gain on extinguishment of debt 5,735 -- 7,979 -- Net income (loss) $ 4,962 $ (860) $ 6,492 $(1,655) Net income (loss) allocated to general partners (1%) $ 50 $ (9) $ 65 $ (17) Net income (loss) allocated to limited partners (99%) 4,912 (851) 6,427 (1,638) Net income (loss) $ 4,962 $ (860) $ 6,492 $(1,655) Per limited partnership unit: Net loss before extraordinary item $(17.43) $(19.39) $(33.54) $(37.32) Extraordinary gain on extinguishment of debt 129.35 -- 179.98 -- Net income (loss) $111.92 $(19.39) $146.44 $(37.32) See Accompanying Notes to Consolidated Financial Statements
c) ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data) Limited Partnership General Limited Units Partners Partners Total Original capital contributions 44,390 $ 1 $ 44,390 $ 44,391 Partners' deficit at December 31, 1997 43,887 $ (718) $(32,789) $(33,507) Net income for the six months ended June 30, 1998 -- 65 6,427 6,492 Partners' deficit at June 30, 1998 43,887 $ (653) $(26,362) $(27,015) See Accompanying Notes to Consolidated Financial Statements d) ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1998 1997 Cash flows from operating activities: Net income (loss) $ 6,492 $(1,655) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Write-up of investment property (44) -- Loss on sale of investment property 177 -- Extraordinary gain on extinguishment of debt (7,979) -- Depreciation 621 603 Amortization of discounts, loan costs, and leasing commissions 49 28 Bad debt recovery, net (7) (18) Change in accounts: Receivables and deposits (148) 67 Other assets 69 (28) Accounts payable -- 4 Tenant security deposit liabilities (5) 2 Accrued property taxes 51 72 Accrued interest 1,259 1,534 Due to affiliates 71 143 Other liabilities (4) 5 Net cash provided by operating activities 602 757 Cash flows from investing activities: Property improvements and replacements (263) (127) Net receipts from (deposits to) restricted escrows 98 (48) Proceeds from sale of investment property, net 1,847 -- Net cash provided by (used in) investing activities 1,682 (175) Cash flows from financing activities: Principal payments on notes payable (308) (341) Additions to notes payable 32 96 Repayment of notes payable (1,822) -- Net cash used in financing activities (2,098) (245) Net increase in cash and cash equivalents 186 337 Cash and cash equivalents at beginning of period 649 318 Cash and cash equivalents at end of period $ 835 $ 655 Supplemental disclosure of cash flow information: Cash paid for interest $ 765 $ 720 Supplemental disclosure of non-cash investing and financing activities: Interest on notes transferred to notes payable $ 350 $ 434 See Accompanying Notes to Consolidated Financial Statements
ANGELES PARTNERS XIV CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) (in thousands) Supplemental disclosure of non-cash activities Foreclosures In January and April of 1998, Building 53 and Building 59, respectively, of the Dayton Industrial Complex were foreclosed upon by the lender. In June 1998, Building 41 of the Dayton Industrial Complex was sold to an independent third party. In connection with these non-cash transactions, the following accounts were adjusted: Building 53 Building 59 Building 41 Receivables and deposits $ (35) $ -- $ (54) Other assets (9) -- (8) Investment properties (660) (706) (1,962) Property tax payable 64 26 -- Tenant security deposit liabilities 12 -- -- Accrued interest 175 688 23 Mortgage notes payable 2,697 3,599 2,105 See Accompanying Notes to Consolidated Financial Statements ANGELES PARTNERS XIV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - GOING CONCERN The accompanying financial statements have been prepared assuming Angeles Partners XIV (the "Partnership") will continue as a going concern. The Partnership continues to incur recurring operating losses and suffers from inadequate liquidity. Non-recourse and recourse indebtedness of approximately $2,666,000 and $4,576,000 is in default at June 30, 1998, due to nonpayment of interest and principal when due. The Partnership incurred net income of approximately $6,492,000 for the six months ended June 30, 1998. This was due to the recognition of an extraordinary gain on the extinguishment of debt of approximately $7,979,000, relating to the foreclosures of Buildings 53 and 59 and the sale of Building 41 in the Dayton Industrial Complex. The Partnership realized a loss before the extraordinary gain of approximately $1,487,000. Angeles Realty Corporation II, (the "Managing General Partner" or "ARC II") expects the Partnership to continue to incur such losses from operations. The Partnership generated cash from operations of approximately $602,000 during the six months ended June 30, 1998; however, this primarily was the result of accruing interest of approximately $1,259,000 on its indebtedness and $71,000 for services provided by affiliates. In January 1998 and April 1998, Buildings 53 and 59, respectively, of the Dayton Industrial Complex were foreclosed on and in June 1998, Building 41 of the Dayton Industrial Complex was sold. Historically, the Dayton Industrial Complex has not been able to retain tenants and has never generated operating cash. Effective October 1, 1996, the Partnership determined that, based on economic conditions at the time as well as projected future operational cash flows, the decline in value of the property was other than temporary and recovery of the carrying value was not likely. Accordingly, the Dayton Industrial Complex's carrying value was reduced to an amount equal to its estimated fair value. The Partnership ceased making debt service payments on Buildings 53 and 59 in 1996 and the buildings were placed in receivership in 1997. In the Managing General Partner's opinion, it was not in the Partnership's best interest to contest the foreclosure actions. As a result of the foreclosures, the Partnership recorded an extraordinary gain on extinguishment of debt of approximately $2,244,000 and $3,607,000 for Buildings 53 and 59, respectively. Also, in connection with the foreclosure of Building 59, the Partnership recorded a $44,000 write-up of the building from its carrying value to its estimated fair value during the second quarter of 1998. Prior to the foreclosure of Building 53, the outstanding debt on the property was a first mortgage in the amount of approximately $1,043,000 and a second mortgage in the amount of approximately $1,669,000. Related accrued interest amounted to approximately $175,000. Prior to the foreclosure of Building 59, the outstanding debt on the property was a first mortgage in the amount of approximately $2,895,000 and a second mortgage in the amount of approximately $704,000. Related accrued interest amounted to approximately $688,000. As a result of the sale of Building 41, the Partnership recorded an extraordinary gain on extinguishment of debt of approximately $2,128,000. Prior to the sale of Building 41, the outstanding debt on the property was a first mortgage in the amount of approximately $1,104,000 and a second mortgage in the amount of approximately $2,823,000. Related accrued interest amounted to approximately $23,000. The Dayton Industrial Complex has one remaining building at June 30, 1998. The first mortgage on Building 55 which totals approximately $2,666,000 is all nonrecourse to the Partnership, matured in December 1997 and is in default due to nonpayment of interest and principal when due. The Managing General Partner has entered into a sales agreement for Building 55 of the Dayton Industrial Complex and anticipates selling this building to an unrelated party in 1998. The Dayton Industrial Complex has not generated any operating cash for the Partnership since it was purchased nor has the Partnership expended any cash to support the property. The Managing General Partner will not use any Partnership funds on the remaining building in 1998. The Partnership has unsecured working capital loans to Angeles Acceptance Pool, L.P. ("AAP") in the amount of approximately $4,576,000 plus related accrued interest that was due in November 1997. This indebtedness is recourse to the Partnership. The Partnership does not have the means with which to satisfy this obligation. The Managing General Partner does not plan to enter into negotiations with AAP on this indebtedness at this time. The Managing General Partner believes that the possibility that AAP will initiate collection proceedings on this indebtedness is remote, as the estimated value of the Partnership's investment properties and other assets are significantly less than the existing first mortgages and other secured Partnership indebtedness. If AAP initiates proceedings, then the Managing General Partner will enter into negotiations to restructure this indebtedness. The Partnership has two notes to Angeles Mortgage Investment Trust ("AMIT"), which are recourse to the partnership only, in the amount of approximately $2,326,000 plus related accrued interest that originally matured in March 1998. The Managing General Partner negotiated with AMIT to extend this indebtedness and in the second quarter of 1998 executed an extension through November 2027. No other sources of additional financing have been identified by the Partnership, nor does the Managing General Partner have any other plans to remedy the liquidity problems the Partnership is currently experiencing. The Managing General Partner anticipates that Fox Crest Apartments and Waterford Square Apartments will generate sufficient cash flows for the next twelve months to meet all property operating expenses, debt service requirements and to fund capital expenditures. As a result of the above, there is substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classifications of liabilities that may result from these uncertainties. NOTE B - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Managing General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1997. Effective October 1, 1996, the Dayton Industrial Complex buildings were classified as an investment property "held for disposal". Accordingly, the remaining building has been recorded at the lower of its carrying amount or fair value, less costs to sell, and no additional depreciation expense will be recorded during the period the asset is held for disposal. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE C - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Managing General Partner is a wholly-owned subsidiary of Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following payments were paid or accrued to the Managing General Partner and affiliates during each of the six months ended June 30, 1998 and 1997: 1998 1997 (in thousands) Property management fees (included in operating expenses) $132 $123 Reimbursement for services of affiliates, including $1,271 accrued at June 30, 1998 (included in general and administrative expenses) 76 143 Included in operating expense and investment properties for the period ended June 30, 1998, is approximately $5,000 of construction oversight reimbursements. For the period from January 1, 1997, to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the Managing General Partner with an insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner which receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations was not significant. In November 1992, AAP, a Delaware limited partnership which now controls the working capital loan previously provided by Angeles Capital Investment, Inc. ("ACII"), was organized. Angeles Corporation ("Angeles") is the 99% limited partner of AAP and Angeles Acceptance Directives, Inc.("AAD"), which is wholly- owned by IPT, was, until April 14, 1995, the 1% general partner of AAP. On April 14, 1995, as part of a settlement of claims between affiliates of the General Partner and Angeles, AAD resigned as general partner of AAP and simultaneously received a .5% limited partner interest in AAP. An affiliate of Angeles now serves as the general partner of AAP. These working capital loans funded the Partnership's operating deficits in prior years. Total indebtedness was approximately $4,576,000, plus accrued interest, at June 30, 1998, with monthly interest accruing at prime plus two percent. Upon maturity on November 25, 1997, the Partnership did not have the means with which to satisfy this maturing debt obligation. Total interest expense for this loan was approximately $240,000 for both the six months ended June 30, 1998 and 1997. Accrued interest payable was approximately $2,513,000 at June 30, 1998. AMIT currently holds notes receivable from the Partnership in the amount of approximately $7,090,000. Total interest expense on this financing was approximately $555,000 and $498,000 for the six months ended June 30, 1998 and 1997, respectively. Accrued interest was approximately $2,141,000 at June 30, 1998. In November 1992, MAE GP acquired 1,675,113 Class B Common Shares of AMIT. The terms of the Class B Shares provide that they are convertible, in whole or in part, into Class A Common Shares on the basis of one Class A Share for every 49 Class B Shares (however, in connection with the settlement agreement described in the following paragraph, MAE GP has agreed not to convert the Class B Shares so long as AMIT's option is outstanding). These Class B Shares entitle the holder to receive 1% of the distributions of net cash distributed by AMIT (however, in connection with the settlement agreement described in the following paragraph, MAE GP agreed to waive its right to receive dividends and distributions so long as AMIT's option is outstanding). The holder of the Class B Shares is also entitled to vote on the same basis as the holders of Class A Shares, providing the holder with approximately 39% of the total voting power of AMIT (unless and until converted to Class A Shares, in which case the percentage of the vote controlled represented by such shares would approximate 1.3% of the total voting power of AMIT). As part of a settlement of certain disputes with AMIT, MAE GP granted to AMIT an option to acquire the Class B Shares owned by it. This option can be exercised at the end of 10 years or when all loans made by AMIT to partnerships which were affiliated with MAE GP as of November 9, 1994 (which is the date of execution of a definitive Settlement Agreement) have been paid in full. In connection with such settlement, AMIT delivered to MAE GP cash in the sum of $250,000 at closing (which occurred April 14, 1995) as payment for the option. If and when the option is exercised, AMIT will be required to remit to MAE GP an additional $94,000. Simultaneously with the execution of the option and as part of the settlement, MAE GP also executed an irrevocable proxy in favor of AMIT, which provides that the holder of the Class B Shares is permitted to vote those shares on all matters except those involving transactions between AMIT and MAE GP affiliated borrowers or the election of any MAE GP affiliate as an officer or trustee of AMIT. With respect to such matters, the trustees of AMIT are required to vote (pursuant to the irrevocable proxy) the Class B Shares (as a single block) in the same manner as a majority of the Class A Shares are voted (to be determined without consideration of the votes of "Excess Class A Shares" (as defined in Section 6.13 of AMIT's Declaration of Trust)). Between its acquisition of the Class B Shares (in November 1992) and March 31, 1995, MAE GP declined to vote these shares. Since that date, MAE GP voted its shares at the 1995 and 1996 annual meetings in connection with the election of trustees and other matters. In February 1998, MAE GP was merged into IPT, and in connection with that merger, MAE GP dividended all of the Class B Shares to its sole stockholder, Metropolitan Asset Enhancement, L.P. ("MAE"). As a result, MAE, as the holder of the Class B Shares, is now subject to the terms of the settlement agreement, option and irrevocable proxy described in the two preceding paragraphs. Neither MAE GP nor MAE has exerted or has any current intention to exert any management control over or participate in the management of AMIT. However, subject to the terms of the proxy described below, MAE may choose to vote the Class B Shares or otherwise exercise its rights as a shareholder of AMIT as it deems appropriate in the future. Liquidity Assistance L.L.C., which is an affiliate of the General Partner, MAE and Insignia (which provides property management and partnership administration services to the Partnership), owned 96,800 Class A Shares of AMIT at June 30, 1998. These Class A Shares represent approximately 2.2% of the total voting power of AMIT. On April 3, 1997, Insignia and AMIT entered into a non-binding agreement in principle contemplating, among other things, a business combination of AMIT and IPT, which was then owned 98% by Insignia and its affiliates. On July 18, 1997, IPT, Insignia and MAE GP entered into a definitive merger agreement pursuant to which (subject to shareholder approval and certain other conditions, including the receipt by AMIT of a fairness opinion from its investment bankers) AMIT would be merged with and into IPT, with each Class A Share and Class B Share being converted into 1.625 and 0.0332 Common Shares of IPT, respectively. The foregoing exchange ratios are subject to adjustment to account for dividends paid by AMIT from January 1, 1997 and dividends paid by IPT from February 1, 1997. It is anticipated that Insignia and its affiliates (including MAE) would own approximately 57% of post-merger IPT if this transaction is consummated. The Partnership has agreed to pay Miller Valentine Realty ("MV") property management fees, leasing commissions, and financing fees and sales commissions upon the refinancing or sale of the properties. The Partnership will receive the first $3,000,000 of excess cash from operations, refinancing or sales of the properties less unrefunded arrearages. Thereafter, the agreement provides that MV shall receive, as incentive for providing property management, leasing and asset management services to the Partnership, two-thirds of the next $12,000,000 of excess cash proceeds generated by the properties. Cash in excess of $15,000,000 shall be shared equally by MV and the Partnership. The agreement contemplates that the properties will be sold at an opportune time but no later than 10 years after commencement of the agreements (March 2, 1992). In addition, the agreement contains an option for MV to buy the properties five years after the commencement date of the agreement. MV did not exercise this option. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in September or October of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the Managing General Partner of the Partnership. NOTE D - SALE OF INVESTMENT PROPERTY The Partnership sold Building 41 of the Dayton Industrial Complex on June 12, 1998, to an unaffiliated party for net sales proceeds of approximately $1,847,000. The Partnership realized a loss of approximately $177,000 on the sale and a related $2,128,000 extraordinary gain on the early extinguishment of debt during the second quarter of 1998. The extraordinary gain was the result of forgiveness of debt. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of two apartment complexes and one commercial property. The following table sets forth the average occupancy of the properties for the six months ended June 30, 1998 and June 30, 1997. Property 1998 1997 Waterford Square Apartments Huntsville, Alabama 94% 91% Fox Crest Apartments Waukegan, Illinois 96% 96% Dayton Industrial Complex Dayton, Ohio (1) 74% 69% 1)Dayton Industrial has been adversely affected by the build-up of commercial space in the area. The increase in occupancy is due to the foreclosures of Buildings 53 and 59 in 1998 that were not occupied. The remaining building is fully leased at June 30, 1998. The Partnership realized net income of approximately $4,962,000 and $6,492,000 for the three and six months ended June 30, 1998, versus net losses of approximately $860,000 and $1,655,000 for the three and six months ended June 30, 1997. Net income for the three and six months ended June 30, 1998, resulted from the extraordinary gain on extinguishment of debt of approximately $5,735,000 and $7,979,000, respectively. The Partnership realized a loss before the extraordinary gain of approximately $1,487,000. The Partnership experienced a decrease in revenues and expenses for the six months ended June 30, 1998, due to the loss of Buildings 53, 59, and 41 of the Dayton Industrial Complex in January, April, and June 1998, respectively (see discussion below). Rental income decreased primarily due to the loss of Buildings 53, 59, and 41 of the Dayton Industrial Complex but was offset by an increase in rental income at both Foxcrest Apartments and Waterford Square Apartments. Average rental rates increased at both investment properties, while Waterford Square Apartments also experienced an increase in average occupancy. The decrease in expenses is mainly due to decreases in operating expenses, general and administrative expenses, and interest expense. These decreases were primarily due to the foreclosures of Buildings 53 and 59 and the sale of Building 41 of the Dayton Industrial Complex. The decrease in operating expenses was offset by an increase in maintenance expense at Waterford Square Apartments due to an exterior painting project during the six months ended June 30, 1998. Offsetting the decrease in interest expense due to the foreclosure of Buildings 53 and 59 and the sale of Building 41 was an increase in interest expense on the defaulted debt due to interest accruing on increased debt balances as unpaid interest is added to principal. As part of the ongoing business plan of the Partnership, the Managing General Partner continues to monitor the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. As part of this plan, the Managing General Partner attempts to protect the Partnership from inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. At June 30, 1998, the Partnership had cash and cash equivalents of approximately $835,000 compared to approximately $655,000 at June 30, 1997. Cash and cash equivalents increased approximately $186,000 and $337,000 for the periods ended June 30, 1998 and 1997, respectively. Net cash provided by operating activities decreased primarily due to an increase in receivables and deposits and smaller increases in accrued interest and amounts due to affiliates. These changes were partially offset by a decrease in other assets. The decrease in receivables and deposits during the first six months of 1997 is primarily due to a decrease in tenant accounts receivable. The increase in receivables and deposits during the first six months of 1998 is primarily due to an increase in escrow accounts due to the timing of payments. The increase in accrued interest is primarily due to the accrual of default interest, along with interest accruing on increased debt balances at Dayton Industrial Complex as accrued interest is added to the principal on all of the 2nd mortgages secured by this property. However, due to the foreclosures of Buildings 53 and 55 and the sale of Building 41 of the Dayton Industrial Complex, the second mortgage balance was lower during the six months ended June 30, 1998, resulting in a smaller increase in accrued interest. Also, as a result of the sale and foreclosures of the buildings, expense reimbursements decreased for the six months ended June 30, 1998, resulting in a smaller accrual to due to affiliates. Other assets decreased for the six months ended June 30, 1998, due to a decrease in prepaid insurance. Net cash provided by investing activities increased primarily as a result of the recognition of proceeds from the sale of Building 41 of the Dayton Industrial Complex, along with an increase in receipts from restricted escrows. This was partially offset by an increase in property improvements and replacements at Waterford Square Apartments and Fox Crest Apartments. Net cash used in financing activities increased due to the repayment of loans which occurred as a result of the sale of Building 41 of the Dayton Industrial Complex. Also contributing to the increase in cash used in financing activities was a decrease in additions to notes payable as a result of fewer advances received from the lender to cover operating expenses for Building 59 of the Dayton Industrial Complex. These changes were partially offset by a decrease in principal payments on notes payable. For the six months ended June 30, 1997, a $200,000 principal payment was made on the third mortgage indebtedness at the Dayton Industrial Complex versus a $150,000 principal payment for the six months ended June 30, 1998. The accompanying financial statements have been prepared assuming the Partnership will continue as a going concern. The Partnership continues to incur recurring operating losses and suffers from inadequate liquidity. Non- recourse and recourse indebtedness of approximately $2,666,000 and $4,576,000 is in default at June 30, 1998, due to nonpayment of interest and principal when due. The Partnership incurred net income of approximately $6,492,000 for the six months ended June 30, 1998. This was due to the recognition of an extraordinary gain on the extinguishment of debt of approximately $7,979,000, relating to the foreclosures of Buildings 53 and 59 and the sale of Building 41 in the Dayton Industrial Complex. The Partnership realized a loss before the extraordinary gain of approximately $1,487,000. Angeles Realty Corporation II, (the "Managing General Partner" or "ARC II") expects the Partnership to continue to incur such losses. The Partnership generated cash from operations of approximately $602,000 during the six months ended June 30, 1998; however, this primarily was the result of accruing interest of approximately $1,259,000 on its indebtedness and $71,000 for services provided by affiliates. In January and April 1998, Buildings 53 and 59, respectively, of the Dayton Industrial Complex were foreclosed on and in June 1998, Building 41 of the Dayton Industrial Complex was sold. Historically, the Dayton Industrial Complex has not been able to retain tenants and has never generated operating cash. Effective October 1, 1996, the Partnership determined that, based on economic conditions at the time as well as projected future operational cash flows, the decline in value of the property was other than temporary and recovery of the carrying value was not likely. Accordingly, the Dayton Industrial Complex's carrying value was reduced to an amount equal to its estimated fair value. The Partnership ceased making debt service payments on Buildings 53 and 59 in 1996 and the buildings were placed in receivership in 1997. In the Managing General Partner's opinion, it was not in the Partnership's best interest to contest the foreclosure actions. As a result of the foreclosures, the Partnership recorded an extraordinary gain on extinguishment of debt of approximately $2,244,000 and $3,607,000 for Buildings 53 and 59, respectively. Also, in connection with the foreclosure of Building 59, the Partnership recorded a $44,000 write-up of the building from its carrying value to its estimated fair value during the second quarter of 1998. Prior to the foreclosure of Building 53, the outstanding debt on the property was a first mortgage in the amount of approximately $1,043,000 and a second mortgage in the amount of approximately $1,669,000. Related accrued interest amounted to approximately $175,000. Prior to the foreclosure of Building 59, the outstanding debt on the property was a first mortgage in the amount of approximately $2,895,000 and a second mortgage in the amount of approximately $704,000. Related accrued interest amounted to approximately $688,000. As a result of the sale of Building 41, the Partnership recorded an extraordinary gain on extinguishment of debt of approximately $2,128,000. Prior to the sale of Building 41, the outstanding debt on the property was a first mortgage in the amount of approximately $1,104,000 and a second mortgage in the amount of approximately $2,823,000. Related accrued interest amounted to approximately $23,000. The Dayton Industrial Complex has one remaining building at June 30, 1998. The first mortgage on Building 55 which totals approximately $2,666,000 is all nonrecourse to the Partnership, matured in December 1997 and is in default due to nonpayment of interest and principal when due. The Managing General Partner has entered into a sales agreement for Building 55 of the Dayton Industrial Complex and anticipates selling this building to an unrelated party in 1998. The Dayton Industrial Complex has not generated any operating cash for the Partnership since it was purchased nor has the Partnership expended any cash to support the property. The Managing General Partner will not use any Partnership funds on the remaining building in 1998. The Partnership has unsecured working capital loans to Angeles Acceptance Pool, L.P. ("AAP") in the amount of approximately $4,576,000 plus related accrued interest that was due in November 1997. This indebtedness is recourse to the Partnership. The Partnership does not have the means with which to satisfy this obligation. The Managing General Partner does not plan to enter into negotiations with AAP on this indebtedness at this time. The Managing General Partner believes that the possibility that AAP will initiate collection proceedings on this indebtedness is remote, as the estimated value of the Partnership's investment properties and other assets are significantly less than the existing first mortgages and other secured Partnership indebtedness. If AAP initiates proceedings, then the Managing General Partner will enter into negotiations to restructure this indebtedness. The Partnership has two notes to Angeles Mortgage Investment Trust ("AMIT"), which are recourse to the partnership only, in the amount of approximately $2,326,000 plus related accrued interest that originally matured in March 1998. The Managing General Partner negotiated with AMIT to extend this indebtedness and in the second quarter of 1998 executed an extension through November 2027. No other sources of additional financing have been identified by the Partnership, nor does the Managing General Partner have any other plans to remedy the liquidity problems the Partnership is currently experiencing. The Managing General Partner anticipates that Fox Crest Apartments and Waterford Square Apartments will generate sufficient cash flows for the next twelve months to meet all property operating expenses, debt service requirements and to fund capital expenditures. As a result of the above, there is substantial doubt about the Partnership's ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or amounts and classifications of liabilities that may result from these uncertainties. Year 2000 The Partnership is dependent upon the Managing General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The Managing General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDING In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled ROSALIE NUANES, ET AL. V. INSIGNIA FINANCIAL GROUP, INC., ET AL. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia Financial Group, Inc., ("Insignia") and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates to acquire limited partnership units, the management of partnerships by Insignia affiliates as well as a recently announced agreement between Insignia and Apartment Investment and Management Company. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, plaintiffs have recently filed an amended complaint. On July 30, 1998, certain entities claiming to own limited partnership interests in certain limited partnerships whose general partners are affiliates of Insignia filed a complaint in the Superior Court of the State of California, County of Los Angeles. The action involves 44 real estate limited partnerships (including the Partnership) in which the plaintiffs allegedly own interests and which Insignia affiliates allegedly manage or control (the "Subject Partnerships"). The complaint names as defendants Insignia, several Insignia affiliates alleged to be managing partners of the defendant limited partnerships, the Partnership and the Managing General Partner. Plaintiffs allege that they have requested from, but have been denied by each of the Subject Partnerships, lists of their respective limited partners for the purpose of making tender offers to purchase up to 4.9% of the limited partner units of each of the Subject Partnerships. The complaint also alleges that certain of the defendants made tender offers to purchase limited partner units in many of the Subject Partnerships, with the alleged result that plaintiffs have been deprived of the benefits they would have realized from ownership of the additional units. The plaintiffs assert eleven causes of action, including breach of contract, unfair business practices, and violations of the partnership statutes of the states in which the Subject Partnerships are organized. Plaintiffs seek compensatory, punitive and treble damages. The Partnership was only recently served with the complaint and has not yet responded to it. The Partnership believes the claims to be without merit and intends to defend the action vigorously. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The Managing General Partner believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule. Exhibit 10.38, Assignment of Warranties - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. Exhibit 10.39, Assignment of Permits - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. Exhibit 10.40, Purchase Agreement - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. Exhibit 10.41, Closing Statement - Building 41 of the Dayton Industrial Complex - between the Partnership and Mid-States Development Company, dated June 12, 1998. Exhibit 10.42, Journal Entry Confirming Sale, Ordering Deed and Distributing Sale Proceeds - between The Traveler's Insurance Company and the Partnership, dated June 12, 1998. b) Reports on Form 8-K: No reports on form 8-K were filed during the six months ended June 30, 1998. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ANGELES PARTNERS XIV By: Angeles Realty Corporation II Managing General Partner By: /s/Carroll D. Vinson Carroll D. Vinson President/Director By: /s/Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: August 13, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Angeles Partners XIV 1998 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000759859 ANGELES PARTNERS XIV 1,000 6-MOS DEC-31-1998 JUN-30-1998 835 0 357 0 0 0 31,546 (19,664) 13,699 0 34,081 0 0 0 (27,015) 13,699 0 2,740 0 0 4,227 0 2,101 0 0 (1,487) 0 7,979 0 6,492 146.44 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-10.38 3 ASSIGNMENT OF WARRANTIES (PROJECT 41) (PER SECTION 7.1.4) Angeles Partners XIV, a California limited partnership (the "Assignor") for Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby transfers, assigns and conveys unto MID-STATES DEVELOPMENT COMPANY, an Ohio general partnership, (the "Assignee") all of its right, title and interest in and to any warranty or guaranty given by any person, partnership, corporation or other entity in connection with, or related to, work or labor performed, materials supplied, or property of any type delivered to or in connection with that certain commercial property being sold by Assignor to Assignee pursuant to that certain Purchase Agreement dated January ____, 1998, as assigned, and which is located in Montgomery County, Ohio as more particularly described on Exhibit A attached hereto and incorporated by reference herein to the full extent that any such warranty or guaranty is assignable or transferable by Assignor. IN WITNESS WHEREOF, the Assignor has executed the within Assignment this 10th day of June, 1998 ANGELES PARTNERS XIV, a California limited partnership By: Angeles Realty Corporation II, general partner of Angeles Partners XIV By: /s/William H. Jarrard, Jr. Its: President EX-10.39 4 ASSIGNMENT OF PERMITS, ETC. (PROJECT 41) (PER SECTION 7.1.8) ANGELES PARTNERS XIV, a California limited partnership ("Assignor), for Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, hereby transfers, assigns and conveys unto MID-STATES DEVELOPMENT COMPANY, an Ohio general partnership ("Assignee") all of its right, title and interest in and to any and all permits, licenses and certificates and other authority granted to Assignor related to, or granted, held or possessed in connection with or arising out of the ownership, occupation and operation of that certain commercial property being sold to Assignor to Assignee pursuant to that certain Purchase Agreement dated January ____1998, as assigned, and which is located in Greene County, Ohio as more fully described on Exhibit A attached hereto and incorporated by reference herein, to the full extent that any such permit, license, certificate or authority is assignable or transferable by Assignor. IN WITNESS WHEREOF, the Assignor has executed the within Assignment this 10th day of June, 1998. ANGELES PARTNERS XIV, a California limited partnership By: Angeles Realty Corporation II, general partner of Angeles Partners XIV By: /s/William H. Jarrard, Jr. Its: President ASSIGNMENT AND ASSUMPTION OF LEASES AND SECURITY DEPOSITS (PROJECT 41) (PER SECTION 7.1.5) For Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned, ANGELES PARTNERS XIV, a California limited partnership (the "Assignor"), hereby transfers, conveys and assigns unto MID-STATES DEVELOPMENT COMPANY, an Ohio general partnership (the "Assignee"), all of the right, title and interest of the Assignor in and to all tenant leases currently in force and effect between the Assignor and tenants of that certain commercial property (more fully described on Exhibit A attached hereto) being sold by Assignor to Assignee as of the date hereof and commonly referred to as located at 3981-3983 Image Drive, Vandalia, Ohio, (the "Leases") and security deposits paid to Assignor by Tenants under the Leases. Assignee hereby assumes the obligations of Assignor under the Leases, including the obligations with respect to the security deposits being transferred herein. IN WITNESS WHEREOF, the Assignor and Assignee have executed the within Assignment and Assumption of Leases and Security Deposits effective as of this 10th day of June, 1998. MID-STATES DEVELOPMENT Angeles Partners XIV COMPANY a California limited partnership By: /s/William Schneider By: Angeles Realty Corporation, II Its: General Partner General Partner of Angeles Partners XIV Date: June 12, 1998 By: /s/William H. Jarrard, Jr. Its: President Date: June 10, 1998 EX-10.40 5 PURCHASE AGREEMENT RE: ANGELES PROPERTIES XIV PROJECT 41 THIS PURCHASE AGREEMENT (this "Agreement") is made as of January ______, 1998, (the "date of this Agreement") between ANGELES PROPERTIES XIV, a California limited partnership ("Seller") and MID-STATES DEVELOPMENT COMPANY, an Ohio general partnership ("Purchaser"). Section 1. Description of Property: Agreement of Purchase and Sale. 1.1 Purchase and Sale; Property. Seller agrees to sell and convey to Purchaser, and Purchaser agrees to purchase and pay for, upon the terms and conditions contained in this Agreement, the following: 1.1.1 The following real estate located in the City of Vandalia, County of Montgomery, State of Ohio and commonly referred to as follows: (a) Project 41 located at 3981 - 3983 Image Drive, Vandalia, Ohio. The land respectively encompassed by said project is more fully described on Exhibits A-1 and A-2 attached hereto and incorporated by reference herein. All of the land described in Exhibits A-1 and A-2 is collectively hereafter referred to as the Land. The Land shall include all of Seller's rights therein and in any alleys, strips or gores, if any, adjoining the Land or any part thereof. 1.1.2 Said project is improved with an office/industrial building containing approximately 128,800 gross square footage area, and includes all other buildings, structures, appurtenances, landscaping and other improvements on the Land (collectively, the "Improvements") (all of the Land and Improvements and the Personal Property, hereinafter defined, are referred to as the "Premises." 1.1.3 Any building supplies, fuels, intangible rights wherever located including, but not limited to, all plans and specifications, surveys, studies and drawings related to the Premises, all transferable permits and licenses and all warranties and guarantees of contractors, suppliers, and manufacturers, all fixtures, machinery and equipment, heating, ventilating and air conditioning equipment and systems, plumbing and electrical equipment and systems, furnishings, furniture, alarm systems, sprinkler systems and all other tangible and intangible personal property that is owned by Seller and attached to, appurtenant to or located in or used in connection with the operation, management or maintenance of the Premises (all of the foregoing being collectively referred to as the "Personal Property"); 1.1.4 All right, title and interest of Seller in and to any air rights, riparian rights, easements, right-of-way, rights of ingress or egress, licenses or other interests in or to any land, highway, street, road or avenue, open or proposed, in, on, across, abutting or adjoining, the Land. 1.1.5 Any and all other rights, privileges and appurtenances owned by Seller and in any way related to, or used in connection with, the operation, management, or maintenance of the Premises and/or the Personal Property; and 1.1.6 All right, title and interest of Seller in and to any condemnation award or proceeds of insurance made or to be made in respect of the Premises or any of the other interests described above. 1.1.7 All right, title and interest of Seller in and to all rents, income, revenues, issues and profits, leases and rental agreements affecting or pertaining to the Premises or any part thereof. 1.2 The term "Property" as used in this Agreement shall mean all property, whether real or personal, tangible or intangible, set out and described above. 1.3 Closing. The parties agree to consummate this purchase and sale and the transactions contemplated hereby ("Closing") on or before February 27, 1998 at 1:00 p.m., Eastern Standard Time, in the offices of the Title Company (hereinafter defined) in Dayton, Ohio, or at such other earlier date and time as may be agreed upon by the parties ("Closing Date" or "Date of Closing"). Purchaser and Seller agree to work toward an earlier Closing if conditions precedent to Closing can be reasonably accomplished by such earlier date. Section 2. Purchase Price. 2.1 Purchase Price. The total purchase price for the Property shall be One Million Nine Hundred Thousand Dollars ($1,900,000.00) payable on the Closing Date by certified check, cashier's check, wire transfer or cash. The purchase price shall be allocated between the Land and Improvements as set forth in Exhibit B hereto (which, if not attached hereto at the time of execution, shall thereafter be agreed to by the parties and then attached to this agreement and shall become a part hereof). 2.2 Disbursement of Purchase Price. The Purchase Price after adjustment for any prorations of taxes, assessments, rents, utilities or transfers of security deposits as provided herein and other customary closing adjustments and credits, shall be paid and disbursed at the Closing in the following manner: 2.2.1 First, to payment in full of all loans secured by first mortgage liens on the Property or any part thereof. If Purchaser assumes any such loan, then the amount of the assumed loan shall be treated as a credit to the payment of the purchase price. 2.2.2 Next to payment of all costs of sale to be paid by Seller, including, but not limited to, real estate commissions, pursuant to the terms hereof. 2.2.3 Next, to the payment in full of the mortgage held by Miller-Valentine Realty, Inc. recorded at Microfiche 92-0650-D02 of the Montgomery County, Ohio mortgage records. 2.2.4 Next to the payment in full of the loan secured by the mortgage held by Mid-States Development Company, recorded at Microfiche 85-1840-E06 and amended by document recorded at Microfiche 92-0651-B08 of the Montgomery County, Ohio mortgage records. 2.2.5 Next, any remaining portion of the purchase price shall be distributed in satisfaction of any other liens and encumbrances on the Property. 2.2.6 Any remaining balance of the purchase price shall be distributed as provided in the Property Operating and Management Agreement between Seller and Miller-Valentine Realty, Inc. 2.3 Minimum Payment to Seller. Notwithstanding anything to the contrary provided herein, in no event shall Seller receive from the disbursement of the purchase price less than Five Thousand Dollars ($5,000). Section 3. Documents and Inspections. 3.1 Seller's Deliveries. Upon execution of this Agreement to the extent not previously delivered, Seller shall deliver to Purchaser correct copies of each of the following document and materials: 3.1.1 All of the agreements, oral or written, formal or informal, actually known by Seller to pertain to the ownership, management, maintenance and operation of the Property. The current manager of the Property, Miller- Valentine Realty, Inc., is authorized by Seller to turn over all such documents which it may possess to Purchaser and is further directed by Seller to cooperate in the closing of the transaction contemplated hereby. 3.1.2 All plans, specifications and blueprints pertaining to the Improvements that are in Seller's possession. 3.1.3 All certificates of occupancy, licenses, permits, authorizations and approvals, issued by all governmental authorities having jurisdiction over the Property, together with copies of all certificates issued by any local board of fire underwriters (or other body exercising similar functions), if available. 3.1.4 All leases and rental agreements relating or pertaining to the Property or any part thereof in possession of Seller. 3.1.5 Copies of any environmental audits or other reports concerning soil, ground water, underground tanks, subsurface conditions, environmental conditions or other matters concerning the Premises or any part thereof of which Seller is aware and in possession or control of such information or data. 3.2 Entry for Inspection. Immediately upon the execution of this Agreement and thereafter continuously through the date of Closing, Seller shall make the Property available for inspection by Purchaser, and Purchaser's agents, employees and contractors. During that time, Purchaser may, at Purchaser's sole risk and expense, undertake a complete physical inspection of the Property as Purchaser deems appropriate. Purchaser agrees to indemnify and save Seller harmless against all liabilities, claims, damages, penalties, costs and expenses incurred by or asserted against Seller in connection with or arising out of the entry upon the Premises by Purchaser or Purchaser's employees, agents, or contractors. This obligation shall survive the consummation or termination of this Agreement. 3.3 Inspection Period. Purchaser shall have until the date of Closing (the "Inspection Period"), in which to determine whether the condition and suitability of the Property and all of the items delivered to Purchaser pursuant to Section 3.1 are satisfactory to Purchaser. If the Property or any of such items is not satisfactory to Purchaser, Purchaser may elect not to purchase the Property by sending written notice of termination to Seller, postmarked not later than the date of Closing. In such event, this Agreement shall terminate and neither party shall have any further rights or obligations under this Agreement other than those rights and/or obligations that are expressly stated to survive expiration or termination of this Agreement. Section 4. Title and Survey. 4.1 Title; Deed. Prior to Closing, Purchaser, at Purchaser's cost, shall obtain a commitment for an Owner's Policy of Title Insurance (the "Commitment") issued by Chicago Title Insurance Company (the "Title Company") and dated as of a current date, pursuant to which the Title Company shall commit to issue to Purchaser an ALTA Owner's Policy of Title Insurance in the amount of the Purchase Price, with all printed General Exceptions of Schedule B of the title policy form deleted, insuring in Purchaser marketable fee simple title to the Premises, subject only to the "Permitted Exceptions" as defined below. From the proceeds of sale, Seller shall pay for or reimburse Purchaser for the cost of such policy at Closing. At the Closing, and as a condition to Purchaser's obligations under this Agreement, the Title Company shall deliver or irrevocably commit to delivery to Purchaser the policy of title insurance in accordance with the Commitment. At Closing, Seller will convey the Premises to Purchaser by transferable and recordable limited warranty deed, conveying marketable title to Purchaser, or its nominee, free and clear of all defects, liens, claims encumbrances, easements, restrictions, covenants, conditions, encroachments, assessments (general or special) or any other exceptions, including but not limited to the printed General Exceptions of Schedule B of the title policy form, except for the following (the "Permitted Exceptions"): (a) all legal highways. (b) Zoning, building and other laws, ordinances, codes and regulations that do not materially adversely affect the current use of the Property. (c) Easements, rights-of-way, covenants and restrictions of record, to the extent that such easements, right-of-way, covenants and restrictions do not interfere with, obstruct, or otherwise impair, in Purchaser's sole judgment, Purchaser's current or intended future use and enjoyment of the Property or Purchaser's plans for the future development of the Property; (d) Installments of real estate taxes and assessments which are a lien upon the Premises, but not yet due and payable; and (e) Any mortgage assumed by Purchaser. Any mortgage or other monetary lien on the Property not assumed by Purchaser is to be discharged and paid by Seller at the time of Closing. If funds are disbursed as set forth in Section 2.2, it shall be Purchaser's obligation hereunder to obtain releases of the security interests held on the Property or any part thereof by Mid-States Development Company or Miller-Valentine Realty, Inc. 4.2 Survey. Prior to Closing, Purchaser, at Purchaser's cost, shall obtain such survey ("Survey") as is reasonably necessary to cause the title insurer to delete the survey exception from the title insurance policy and to satisfy the requirements of Purchaser's lender, if any, certified to Purchaser, the Title Company and Purchaser's lender, if any, showing all improvements, easements, roads, highways, and other restrictions affecting the Property. 4.3 U.C.C. Searches. Prior to Closing, Purchaser, at Purchaser's cost, shall obtain current searches of all Uniform Commercial Code financing statements filed with the Secretary of State of Ohio and the County Recorder's Office in Montgomery County, Ohio against Seller and against all prior owners of the Property during the past six (6) years. Such searches shall reveal that there are no claims or liens against any of those parties encumbering the Property. If claims or liens are revealed that do or could encumber the Property, then the cure and termination election provisions set forth below shall apply. 4.4 Defects and Cure. 4.4.1 The Commitment, the Survey and the Uniform Commercial Code searches described in Section 4.1 through 4.3 are referred to as the "Title Evidence." Prior to the Closing Date, Purchaser shall notify Seller of Purchaser's disapproval of any matter contained in the Title evidence after Purchaser's receipt of all of the Title Evidence and copies of the documents referred to in the Title Evidence as exceptions or exclusions from coverage. Except for real estate taxes that are to be prorated at Closing and mortgages and other monetary liens which, in any event and notwithstanding anything hereinafter to the contrary, shall be discharged and paid at Closing, Purchaser's failure to so notify Seller of disapproval of any matter shall be deemed approval of that matter. If the Title Evidence discloses, with respect to the Survey, conditions that will adversely affect Purchaser's current or future use or enjoyment of the Premises or Purchaser's plans for the future development of the Premises, with respect to the Title Commitment, matters other than the Permitted Exceptions, or with respect to the Uniform Commercial Code searches, liens or claims (collectively, "Defects"), those Defects shall, as a condition to Purchaser's obligations under this Agreement, be cured or removed from the Title Evidence prior to or at Closing. If Seller fails to cure and remove all Defects within fifteen (15) days after written notice, this Agreement (1) may be terminated, at Purchaser's election, by written notice given to Seller within ten (10) days after expiration of the period allowed for cure. If necessary to allow the full time to cure or remove such defect, the date of Closing shall be extended accordingly; or (2) Purchaser may, at its sole election, proceed to close this transaction notwithstanding such defects. If this agreement is terminated as above provided in this Section 4, neither party shall have any further rights or obligations under this Agreement other than those rights and/or obligations that are expressly stated to survive consummation or termination of this Agreement. Section 5. Purchaser's Conditions to Closing. The obligation of Purchaser to close the transaction contemplated by this Agreement is subject to the following conditions, inserted for Purchaser's benefit and which may be waived by Purchaser at its sole option by notice to Seller. 5.1 The representations and warranties of Seller contained in Section 6 of this Agreement shall be true on the date of Closing in all material respects as though those representations and warranties were made on that date. 5.2 Seller shall not have breached any material affirmative covenant contained in this Agreement to be performed by Seller on or prior to the date of Closing. 5.3 Purchaser shall have either affirmatively approved or shall have been deemed (pursuant to the provisions of Section 3 and 4) to have approved all of the matters set forth in Sections 3 and 4 in respect to which Purchaser has, under provisions of this Agreement, a right of inspection and/or approval; or, in the event Purchaser has delivered written objections to Seller in respect to any of those matters, Seller has remedied Purchaser's objections prior to Closing in the manner and within the time period provided in this Agreement, or Purchaser has waived same in writing. 5.4 Seller shall have timely delivered to Purchaser in satisfactory form the documents and all other items referred to in Section 7 below. 5.5 The Title Company shall at Closing have delivered or irrevocably committed itself in writing to deliver the Title Policy described in Section 4.1. 5.6 Seller shall have obtained the agreement of holders of mortgages on the Property to release their respective liens against the Property at Closing in any case where such mortgage is not being paid in full, except that it shall be Purchaser's obligation to obtain releases from Miller-Valentine Realty, Inc. and Mid-States Development Company if liens held by either of them are not paid in full, so long as the proceeds of sale are disbursed as provided in Section 2.2 hereof. 5.7 Purchaser, at its expense, shall determine that all legal highways do not interfere with, obstruct, or otherwise impair, in Purchaser's sole judgment, Purchaser's current or intended future use and enjoyment of the Property or Purchaser's plans for future development of the Property. 5.8 Purchaser shall have received an environmental assessment satisfactory to Purchaser, as Purchaser in its sole discretion shall determine, evidencing that no condition of or concerning the Property causes or creates a situation or matter which violates or is not in compliance with any law, rule or regulation or ordinance which relates to protection of the environment or which, in Purchaser's sole judgment, would cause Purchaser to incur significant costs to correct any such matter, or to investigate such matter further to determine the potential impact thereof. 5.9 Purchaser shall have obtained a commitment for financing in the amount of not less than $1,000,000 on terms no less favorable than those generally prevailing for commercial loans of similar size and on similar types to commercial property as the Property to a borrower of similar creditworthiness as Purchaser. The financing may include any combination of loans, loan assumptions, and lenders as Purchaser may determine appropriate. Purchaser agrees to promptly apply for and diligently proceed to obtain such financing. The closing of this transaction is contingent upon Purchaser's lender funding said loan commitment. 5.10 If any of the conditions provided in this Section 5 are not satisfied or waived, or the time periods for satisfaction extended by Purchaser, then Purchaser shall have the right, in addition to any other right which it may have, to terminate this Agreement by notice delivered to Seller no later than the date of Closing or such earlier time as may be provided above. In the event of such termination, neither party shall have any further rights or obligations under this Agreement other than those rights and/or obligations which are expressly stated to survive consummation or termination of this Agreement. Section 6. Representations, Warranties and Covenants. 6.1 Seller's Representations, Warranties and Covenants. Seller represents, warrants and covenants to Purchaser as of the date hereof as to the following matters, and shall be deemed to remake all of the following representations, warranties and covenants as of the date of Closing without further action on its part: 6.1.1 The execution and delivery of this Agreement by Seller, the execution and delivery of every other document and instrument delivered pursuant to this Agreement by or on behalf of Seller, and the consummation of the transactions contemplated by this Agreement have been duly authorized and validly executed and delivered by Seller, and will not (a) constitute or result in the breach of or default under any written agreement to which Seller is a party or which affects the Property; (b) constitute or result in a violation of any order, decree or injunction with respect to which Seller and/or the Property is bound; (c) cause or entitle any party to have a right to accelerate or declare a default under any written agreement to which Seller is a party or which affects the Property; and/or (d) violate any provision of any municipal, state or federal law, statutory or otherwise, to which Seller or the Property may be subject. 6.1.2 No attachments, execution proceedings, liens, assignments, bankruptcy, or insolvency proceedings are pending or, to the actual knowledge of Seller, threatened against Seller or the Property or contemplated by Seller, except such liens as may be specifically disclosed in the Commitment issued by the Title Company, which shall be released at Closing or assumed by Purchaser. 6.1.3 Seller is not a party to any collective bargaining agreement as to any employees who are engaged by Seller with regard to the operation and maintenance of the Property. Purchaser is assuming no responsibilities or obligations whatsoever relative to any employees engaged by Seller with regard to the operation and management of the Property, and Seller indemnifies Purchaser from and against any and all obligations and other matters relative to such employees, whether arising or accruing on, before or after the date of Closing. 6.1.4 Between the date of this Agreement and the date of Closing, no part of the Property will be sold, encumbered or transferred in favor of or to any other party whatsoever. 6.1.5 There are no purchase contracts, options or any other agreements of any kind, oral or written, by which any person or entity other than Seller will have acquired or will have any basis to assert any right, title or interest in, or right to possession, use, enjoyment or proceeds of, any part or all of the Property other than tenants of the Property, the leases and rental agreements which have been previously disclosed to Purchaser, and which do not contain any option to purchase the Property or any part thereof. 6.1.6 Seller is a limited partnership duly organized and validly existing under California law and qualified to own property and transact business in Ohio, and the person(s) signing this Agreement on behalf of Seller have the power and authority to enter into and perform this Agreement in accordance with its terms; and at Closing Seller's execution and delivery of this Agreement and the consummation of this transaction by its general partners will have been duly authorized by all appropriate actions and proceedings. Evidence by Seller of the foregoing representation reasonably satisfactory to Purchaser's counsel shall be delivered at Closing, which evidence may include, but not be limited to, an opinion of Seller's counsel with respect to such matters. 6.1.7 Seller owns good record and marketable, fee simple title to the Premises in recordable form, free and clear of any and all mortgages (except mortgages to be assumed, paid or released at closing), liens, encumbrances, claims, charges, equities, covenants, conditions, restrictions, easements, rights-of-way, or other matters, whether or not of record, except for Permitted Exceptions. 6.1.8 Seller is not a foreign person as such term is used in Section 1445 of the Internal Revenue Code. 6.1.9 Hazardous Materials. Seller represents and warrants to Purchaser that it has not received written notice from any federal, state or local governmental agency regarding Hazardous materials (as defined below) on, in, under or affecting the Property. Seller further represents and warrants to Purchaser that, to the best of Seller's knowledge, there has been no spill, release, discharge or disposal of Hazardous Materials on, in, under or affecting the Property. Seller further represents and warrants that, to the best of its knowledge, the soil and groundwater are not contaminated with Hazardous Materials. As used in this Agreement, the term "Hazardous Materials" means any hazardous or toxic substance, materials or waste which is or become regulated by any local governmental authority, any agency of the State of Ohio, or any agency of the United States Government. The term "Hazardous Materials" includes without limitation any material or substance which is (I) designated, defined or listed as a "hazardous substance" pursuant to the Federal Water Pollution Control Act (33 U.S.C. - 1251, et seq.), the Federal Resource Conservation and Recovery Act (42 U.S.C. - 9601, et seq.), or the Hazardous Materials Transportation Act (49 U.S.C. - 1801, et seq.); (ii) petroleum and any petroleum by-products; (iii) asbestos; or (iv) polychlorinated biphenyls. 6.1.10 To the best knowledge of Seller, the Premises are not in violation of any zoning, subdivision, building or fire code, or any other applicable ordinance, statute, regulation or requirement of any governmental authority having jurisdiction thereof, and Seller has received no notice or order from any governmental authority as to such a violation. 6.3 No Other Representations. Except as is expressly provided in this Agreement, Purchaser acknowledges that neither Seller nor any agent, attorney, employee or representative of Seller has made any representations as to the physical nature or condition of the Property. 6.4 Survival. All of the representations, warranties and covenants made by Seller in Section 6.2 and elsewhere in this Agreement shall survive Closing for a period of one (1) year, except for the environmental representations, warranties and covenants which shall survive indefinitely. Unless Purchaser delivers notice to Seller of a breach of representation, warranty or covenant contained in Section 6.1 or elsewhere in this Agreement (other than a matter which relates to an environmental representation or warranty) within one (1) year of the date of Closing, the representation, warranty or covenant shall be of no further force or effect. Notwithstanding the foregoing, the covenants of limited warranty contained in Seller's deed shall survive indefinitely. Section 7. Closing and Transfer of Title. 7.1 Seller's Documents; Other Deliveries. At Closing, Seller shall execute and/or deliver to Purchaser the following: 7.1.2 A limited warranty deed to the Premises in accordance with Section 4.1, conveying marketable title in recordable form to the Premises to Purchaser (or its nominee) free, clear and unencumbered, subject, however, to the Permitted Exceptions, and any mortgage assumed by Purchaser. 7.1.3 A Bill of Sale with full warranties of title, conveying the Personal Property to Purchaser. 7.1.4 An assignment of all warranties and guarantees with respect to the Property. 7.1.5 An assignment of all leases and rental agreements concerning the Property or any portion thereof. 7.1.6 Releases of all mortgages liens which are liens against the Premises. The parties recognize that the purchase price will not be sufficient to satisfy all mortgage liens on the Premises, but anticipate that certain of the lienholders will release their respective lien or liens for less than full consideration. If funds are distributed as provided in Section 2.2 hereof, then Purchaser shall be responsible for obtaining releases from Miller-Valentine Realty, Inc. and Mid-States Development Company. If satisfactory arrangements are not reached with any other lienholder who is not to be paid in full at Closing, then either party hereto may terminate this agreement by giving written notice to the other prior to Closing Date, and in such event. neither party shall have any further rights or obligations under this agreement other than those rights and/or obligations which are expressly stated to survive consummation or termination of this agreement. 7.1.7 All other documents and instruments referred to in this Agreement which are to be delivered to Purchaser. 7.1.8 An assignment of all permits, licenses and certificates and authority granted to Seller for the ownership, occupation and operation of the Property. 7.1.9 All of the Personal Property. 7.1.10 Documents satisfactory to Purchaser and the Title Company, indemnifying Purchaser and the Title Company from all liability and expense, including attorneys' fees, in connection with unfiled mechanics' liens in the event of any work being completed or performed, or material being furnished, at, on, or about the Property within ninety (90) days of the date of Closing. 7.1.11 The originals of all blueprints, construction plans, specifications and plats for all of the Improvements or Seller's rights to any of the foregoing that are held by third parties, if available. 7.1.12 An owner's affidavit as to mechanics' liens, parties in possession of the Premises, unrecorded agreements, and such other matters required by the Title Company as a condition to its deletion of the printed General Exceptions relating to such matters from the title policy. 7.1.13 All consents that may be required from any third person or entity in connection with the sale of the Property. 7.1.14 Such evidence of Seller's due authorization of this agreement and the transactions as contemplated hereby in form and substance as shall comply with the requirements set forth in Section 6.1.6. 7.1.15 Such other documents or instruments as may be reasonably required by Purchaser or Purchaser's lender, if any, to cause such lender to fund and disburse the loan obtained by Purchaser to finance the purchase contemplated hereby or as may be reasonably necessary to effectuate Closing, including, but not limited to, a closing statement and affidavit of non-foreign status. All of the documents and instruments to be delivered by Seller shall be in form and substance reasonably satisfactory to counsel for Purchaser. 7.2 Purchaser's Documents. At Closing, Purchaser shall execute and/or deliver to Seller the following documents: 7.2.1 An assignment of leases and rental agreements, as described in 7.1.4 hereof, which shall include Purchasers assumption of the obligations of the Lessor thereunder. 7.2.2. Such other documents and instruments as Seller or the Title Company shall reasonably request in order to consummate this transaction, or as may be reasonably necessary to effectuate Closing, including, but not limited to, a closing statement. Section 8. Possession. Seller shall deliver possession of the Property to Purchaser at Closing. Section 9. Prorations and Expenses. 9.1 Proration of Real Estate Taxes and Assessments. At or prior to Closing, Seller shall pay all real estate taxes and assessments on the Property, including all penalties, which become due and payable prior to the date of Closing. The Seller shall have paid the June, 1997 installment of real estate taxes and assessments for the property. The December, 1997 installment of real estate taxes (due and payable in approximately February, 1998) shall be prorated as of the date of Closing, based upon the most recent tax bills issued by the Treasurer of Montgomery County, Ohio in accordance with the "short form" method of proration (as is the custom for property located in Montgomery County, Ohio). Purchaser shall pay the December, 1997 installment of real estate taxes and all installments thereafter. In computing the real estate tax proration, any payment by Tenants of the Property pursuant to rental agreement and leases shall be taken into account. 9.2 Utility Expenses and Other Expenses. Final reading on all gas, water and electric meters which are the responsibility of the Seller shall be made as of the date of Closing, if possible, and shall be transferred to Purchaser. Seller shall be responsible for payment of all utility charges arising before the Closing Date, Purchaser shall be responsible for payments of all such utility charges from and after the date of Closing. Purchaser shall be responsible for making all arrangements for the continuation of utility services. Seller shall pay all operating expenses which relate to the Property or any part thereof which relate to any period prior to the Closing and which are Seller's responsibility to pay, and Purchaser shall be responsible for all such expenses relating to any period on or after the Closing. The Property is currently being operated by Miller-Valentine Realty, Inc. ("Manager") for the Seller pursuant to an operating agreement effective March 2, 1992 ("Operating Agreement"). The parties will direct the Manager to utilize any funds of Seller which were received by Manager in connection with its management of the Property to satisfy any and all operating expenses which are Seller's responsibility hereunder. After payment of all such items and any other items under the Operating Agreement which are to be paid by Seller any remaining funds shall be applied in partial satisfaction of any obligation owing by Seller to Purchaser or Miller-Valentine Realty, Inc. Manager shall disburse all funds of Seller which it is holding and provide an accounting of all receipts and payments within 60 days after Closing. If any item which is Seller's responsibility to pay cannot be exactly paid and determined, Manager shall make a reasonable estimation thereof, which shall be conclusive as between the parties hereto if exact determination cannot be made within such 60-day period. 9.3 Security Deposits. Seller shall turn over to Purchaser all security deposits which Seller holds in connection with the Property at Closing, and Purchaser shall thereafter be responsible therefor and shall indemnify and hold Seller harmless in connection therewith. 9.4 Rents. The parties will prorate as of the Closing all rents, and other income items arising from the Property, or any part thereof. Section 10. Condemnation or Casualty. 10.1 Condemnation. If between the date of this Agreement and the date of Closing all or any portion of the Property is taken or is made subject to condemnation, eminent domain or other governmental or quasi-governmental acquisition proceedings, then the following provisions shall apply. In the event Seller receives a written notice from any governmental or quasi- governmental authority with powers of eminent domain to the effect that a condemnation as to any portion or all of the Property is pending or contemplated, Seller shall notify Purchaser promptly after receipt of the notice. If the proposed or pending condemnation is one that could reasonably be expected to render any portion of the Premises untenantable, then Purchaser may, upon receipt of notice of the event, cancel this Agreement at any time prior to Closing, in which event neither party shall have any further rights or obligations under this Agreement other than those rights and/or obligations which are expressly stated to survive expiration or termination of this Agreement. In the event that Purchaser elects not to terminate, then this Agreement shall remain in full force and effect, and Seller shall be entitled to all monies received or collected prior to the Closing by reason of the condemnation. In that event, this transaction shall close in accordance with the terms and conditions of this Agreement except that there will be an abatement of the Purchase Price equal to the amount of the gross proceeds received by Seller, less reasonable out-of-pocket costs and reasonable attorneys' fees expended by Seller. If, however, Seller has not received any proceeds by reason of such condemnation prior to the Closing and Purchaser does not elect to terminate Purchaser's obligations under this Agreement, then the Closing shall take place without abatement of the Purchase price, and Seller shall assign and transfer to Purchaser at Closing by written instrument all of Seller's right, title and interest in any condemnation awards, less, however, the amount required to reimburse Seller for any of the out-of-pocket costs and reasonable attorneys' fees expended by Seller prior to the date of Closing. 10.2 Casualty. In the event of substantial loss or damage to the Property prior to the Closing by fire or other casualty, Purchaser may, at any time after receipt of notice or knowledge of that event, cancel this Agreement, in which event neither party shall have any further rights or obligations under this Agreement other than those rights and/or obligations which are expressly stated to survive expiration or termination of this Agreement. In the event that Purchaser shall not elect to terminate, or if the loss or damage is not "substantial," then this Agreement shall remain in full force and effect and Purchaser shall proceed to close and take the Property as damaged, in which event Purchaser shall be entitled to receive the insurance proceeds payable on account of such loss or damage plus a credit against the purchase price equal to the amount of any deductible, co-insurance or self-insurance carried by Seller, so that Purchaser shall receive, in effect, the full replacement cost of the loss or damage, as the cost is determined in the settlement with the insurer, or if there be no insurer, then based upon the actual costs or reasonable estimates of actual costs, as the parties shall reasonably agree, to completely and fully repair and replace such loss or damage. Seller and Purchaser shall each be entitled to participate in the settlement. As used in this Section 10.2, the term "substantial loss or damage" means any loss or damage resulting to the Property which the parties reasonably estimate will cost $100,000 or more to repair or restore. Section 11. Default. If the closing is not concluded due to failure of Purchaser to perform its obligations under this Agreement, Seller may terminate this Agreement by written notice to Purchaser, after which neither party shall have any further rights or obligations under this Agreement other than such rights or obligations that are expressly stated to survive consummation or termination of this Agreement. If the closing is not concluded due to failure of Seller to perform its obligations under this Agreement, Purchaser, at its option, may (a) elect to enforce the terms of this Agreement by action for specific performance or (b) terminate this Agreement by written notice to Seller, after which neither party shall have any further rights or obligations under this Agreement other than such rights or obligations that are expressly stated to survive consummation or termination of this Agreement. Section 12. Broker. Each party represents and warrants to the other that it has dealt with no agent or broker who has in any way participated in the sale of the Property other than Miller-Valentine Realty, Inc. Seller agrees to pay out of the purchase price the brokerage commission due Miller-Valentine Realty, Inc. in the amount of 2% of the purchase price. Any other fees or commissions that may be claimed shall be the sole responsibility of the party breaching the preceding warranty. Each party agrees to indemnify and hold harmless the other against any and all claims, judgments, costs of suit, attorneys' fees and other reasonable expenses that the other may incur by reason of any action or claim made against the other by any agent, advisor or intermediary appointed by or instructed by Seller or Purchaser as the case may be, arising out of this Agreement or sale of the Property to Purchaser. The foregoing indemnity shall survive Closing and delivery of the deed. Section 13. Binding Effect/Assignment. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns. Section 14. Notices. All notices permitted or required under this Agreement shall be in writing, and shall be deemed properly delivered when deposited in the United States regular mail, postage prepaid, addressed to the parties at their respective addresses set forth below or as they may otherwise specify by written notice delivered in accordance with this Section: As to Purchaser: Mid-States Development Company 4000 Miller-Valentine Court Dayton, Ohio 45439 Attention: Vern Oakley As to Seller: Angeles Partners XIV c/o Insignia Financial Group, Inc. One Insignia Financial Plaza P. O. Box 1089 Greenville, South Carolina 29602 Attention: Ken Cobler Section 15. Expenses. Seller shall pay from the proceeds of sale the transfer and conveyance fee charged in connection with the conveyance of the Premises, provided that in no event shall Seller's payment of such expenses cause it to receive less than the amount specified in Section 2.3. Purchaser shall pay recording charges for the deed and any mortgages Purchaser may place upon the Premises. Each party shall pay for its own legal and accounting fees and incidental expenses. Section 16. Miscellaneous. 16.1 Gender. Words of any gender used in this Agreement shall be held and construed to include any other gender, any words in the singular number shall be held to include the plural, and vice versa, unless the context requires otherwise. 16.2 Captions. The captions in this Agreement are inserted only for the purpose of convenient reference and in no way define, limit or prescribe the scope or intent of this Agreement or any part of this Agreement. 16.3 Construction. No provisions of this Agreement shall be construed by any Court or other judicial authority against any party by reason of that party's being deemed to have drafted or structured the provisions. 16.4 Entire Agreement. This Agreement constitutes the entire contract between the parties and supersedes all prior understandings, if any, there being no other oral or written promises, conditions, representations, understanding or terms of any kind as conditions or inducements to the execution of this Agreement and none have been relied upon by either party. Any subsequent conditions, representations, warranties or agreements shall not be valid and binding upon the parties unless in writing and signed by both parties. 16.5 Time of Essence. Time is of the essence in this transaction. 16.6 Governing Law. This Agreement shall be construed and the rights and obligations of Seller and Purchaser shall be determined, in accordance with the laws of the State of Ohio. 16.7 Date of Agreement, Counterparts. The date of this Agreement shall be the date first above written, regardless of the dates on which Purchaser and Seller execute this Agreement. This Agreement may be executed in counterparts each of which shall constitute an original but all of which taken together shall constitute one and the same instrument. WITNESS the execution hereof by Purchaser and Seller on the dates set forth below their respective signatures. PURCHASER: MID-STATES DEVELOPMENT COMPANY By:/s/William Schneider Its General Partner Date: June 12, 1998 SELLER: ANGELES PROPERTIES XIV, a California Limited Partnership By: ANGELES REALTY CORPORATION II, INC., a California corporation and general partner of Angeles Properties XIV By: /s/Robert D. Long, Jr. Its: Vice President Date: June 10, 1998 EXHIBIT A PROJECT LEGAL DESCRIPTIONS EXHIBIT B PURCHASE PRICE ALLOCATION PROJECT LAND BUILDING TOTAL 41 325,000 1,575,000 $1,900,000.00 EX-10.41 6 CLOSING STATEMENT SELLER: PURCHASER: Angeles Partners XIV Mid-States Development Company c/o Insignia Financial Group, inc. 4000 Miller-Valentine Court One Insignia Financial Plaza Dayton, Ohio 45439 P. O. Box 1089 Greenville, South Carolina 29662 PROPERTY LOCATION: 3981-3983 Image Drive, Vandalia, Ohio DATE OF CLOSING: June 12, 1998 SELLER'S STATEMENT 1. Purchase Price $1,900,000.00 Less Deductions 2. Pay-off Life Insurance Company of Virginia Loan II a. Principal ($1,049,309.23) b. Interest to June 5, 1998 ($1,530.24) c. Prepayment fee ($10,493.09) d. Per diem interest $306.05/day x 7 days ($2,142.35) Total to Life Insurance Company of Virginia ($1,063,474.91) 3. Partial Pay off of Miller Valentine Realty, Inc. Mortgage (Rec. Ref. 92-0650-D02) ($773,136.58) 4. Miller-Valentine Realty, Inc. Commission of 2% of Purchase Price ($38,000.00) 5. Conveyance fee ($3,800.00) 6. Real Estate Tax Proration of June, 1998 installment ($101.77 per day x 163 days) ($16,588.51) 7. Total Deductions (lines 2-7) ($1,895,000.00) Net cash due to Seller (line 1 minus 8) $5,000.00 PURCHASER'S STATEMENT 1. Purchase Price $1,900,000.00 Plus Charges 2. National City Bank (loan charges) $5,600.00 3. Total (lines 1 and 2) $1,905,600.00 Less credits 4. Real estate tax proration of June, 1996 installment ($101.77/day x 163 days ) ($16,588.51) 5. National City Bank Mortgage ($1,120,000.00) 6. Partial pay-off of MV Realty Mortgage ($773,136.58) (paid outside of closing by inter-company transfer) 7. Total Credits ($1,909,725.09) Cash to Purchaser (line 3 minus line 7) $4,125.09 DISBURSEMENTS 1. Life Insurance Co. of Virginia $1,063,474.91 2. National City Bank loan fees $5,600.00 3. Auditor for conveyance fees $3,800.00 4. Cash to Seller $5,000.00 5. Miller-Valentine Realty Commission $38,000.00 6. Cash to Purchaser $4,125.09 Total Cash Disbursements $1,120,000.00 Cash funds provided by: National City Bank Loan $1,120,000.00 The parties acknowledge receiving a copy of this closing statement and agree to the correctness thereof. In addition to the above, Purchaser shall pay Chicago Title Insurance Co. the title insurance policy charges, miscellaneous recording fees, and any loan charges not reflected in the above. SELLER: PURCHASER: ANGELES PARTNERS XIV MID-STATES DEVELOPMENT COMPANY By: Angeles Realty Corp. II, its General Partner By: /s/William H. Jarrard, Jr. By: /s/William Schneider Its: President Its: General Partner EX-10.42 7 COURT OF COMMON PLEAS MONTGOMERY COUNTY, OHIO THE TRAVELERS INSURANCE COMPANY : Case No. 96-5314 Plaintiff, : (Judge Langer) -VS- : JOURNAL ENTRY CONFIRMING SALE, ORDERING DEED AND ANGELES PARTNERS XIV, et al : DISTRIBUTING SALE PROCEEDS Defendants : This cause came on to be heard on the return of the Sheriff of this County, for the sale of the real estate on Friday, April 3, 1998, for $1,150,000.00, to the substituted party plaintiff, Ocwen Partnership, L.P., A Virginia Limited Partnership and the assignment by it of its bid to OAIC Park Center, LLC (hereinafter "grantee"); and the Court finding that the sale was made in conformity to the law and orders of this Court, hereby orders the sale in these proceedings approved and confirmed. IT IS FURTHER ORDERED that the Sheriff convey to the said OAIC Park Center, LLC, whose address is c/o Ocwen Federal Bank, FSB, 1675 Palm Beach Lakes Blvd., Suite 402, West Palm Beach, FL 33401 a deed for the lands and tenements described in Exhibit "A" attached hereto. IT IS FURTHER ORDERED that the grantee is subrogated to all the rights of the mortgagee and lien holders in the real estate to the extent necessary for the protection of its title, and a writ of possession is hereby awarded to put it in possession of the real estate. IT IS FURTHER ORDERED that the Clerk cause a release (or certified copy of this entry) to be filed for record to discharge of record the following liens as they relate to the real estate herein: A. Mortgage to Travelers Life and Annuity Company in Mortgage Microfiche 83-76B07; B. Assignment to The Travelers Insurance Company in Mortgage Microfiche 92-2501A09; C. Modification in Mortgage Microfiche 93-0137D10; D. Mortgage to Mid-States Development Company in Microfiche 85-1843D10; E. Modification in Mortgage Microfiche 92-651B08; F. Mortgage held by Miller-Valentine Realty, Inc. in Microfiche 92-650D02 G. Assignment of rents in Microfiche 83-76C11; H. Financing statement filed on January 26, 1983 as Document No. 83-697 to Travelers Life and Annuity Company; I. Financing statement in favor of Mid-States Development Company filed on December 20, 1985 as Document No. 85-12675; J. Financing statement in favor of The Travelers Life and Annuity Company filed on October 21, 1991 as Document No. 91-10099; and K. Financing Statement in favor of Miller-Valentine Realty, Inc. filed on March 4, 1992 as Document No. 92-1919; IT IS FURTHER ORDERED that the Sheriff pay from the sale price the following claims in the order of their stated priority: First, To the Clerk of this Court, the costs of this action, taxed at a total of $2,385,54, which sum includes $26.00 for the preparation of the Sheriff's Deed. Second, To the Treasurer of this County, the taxes and assessments legally assessed against the real estate and due and payable under Parcel No. B02-012-13-0005 as of the date of Sheriff's Sale, in the amount of none, inclusive of penalties. Third, To the plaintiff, Ocwen Partnership, L.P., the balance of said proceeds of sale, in partial satisfaction of its judgment herein, being the sum of $1,147,614.46. Prior Deed Reference: Deed Book 850702A05 Judgment amount, interest and date: $2,684,008.78 plus interest from October 1, 1996 /s/ Dennis Langer Dennis Langer Judge /s/ J. Michael Debbeler J. Michael Debbeler, Trail Counsel Ohio Supreme Court Reg. #0012991 LERNER, SAMPSON & ROTHFUSS Attorneys for Plaintiff EXHIBIT A Situate in the City of Vandalia, County of Montgomery, State of Ohio and being known as Lot numbered Two (2) 70/75 Corporate, Section Two as recorded in Plat Book 168, Pages 26 and 26A for the Plat records of Montgomery County, Ohio. -----END PRIVACY-ENHANCED MESSAGE-----