SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 0-11935
Century Properties Fund XIX
(Exact name of Registrant as specified in its charter)
California 94-2887133
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive N.W., Ste. 370, Atlanta, Georgia 30328
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (404) 916-9090
N/A
Former name, former address and fiscal year, if changed since last report.
Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No_____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a court.
Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date __________________.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets
June 30, December 31,
1995 1994
(Unaudited) (Audited)
Assets
Cash and cash equivalents $ 1,573,000 $ 218,000
Restricted cash 507,000 787,000
Deferred costs and other assets 1,892,000 1,643,000
Real Estate:
Real estate 94,258,000 94,106,000
Accumulated depreciation (33,018,000) (31,650,000)
Allowance for impairment of value (500,000) (500,000)
------------ ------------
Real estate, net 60,740,000 61,956,000
Total assets $ 64,712,000 $ 64,604,000
============ ============
Liabilities and Partners' Equity
Accrued expenses and other liabilities $ 1,645,000 $ 1,195,000
Notes payable 60,225,000 59,063,000
------------ ------------
Total liabilities 61,870,000 60,258,000
------------ ------------
Commitments and Contingencies
Partners' Equity (Deficit):
General partner (8,735,000) (8,558,000)
Limited partners (89,292 units outstanding at
June 30, 1995 and December 31, 1994) 11,577,000 12,904,000
------------ ------------
Total partners' equity 2,842,000 4,346,000
------------ ------------
Total liabilities and partners' equity $ 64,712,000 $ 64,604,000
============ ============
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
Consolidated Statements of Operations (Unaudited)
For the Six Months Ended
June 30, 1995 June 30, 1994
Revenues:
Rental $ 7,210,000 $ 6,783,000
Interest income 38,000 27,000
----------- -----------
Total revenues 7,248,000 6,810,000
----------- -----------
Expenses:
Interest 3,887,000 2,947,000
Operating 3,391,000 3,276,000
Depreciation 1,368,000 1,379,000
General and administrative 106,000 212,000
Loss on sale of property -- 149,000
----------- -----------
Total expenses 8,752,000 7,963,000
----------- -----------
Net loss $(1,504,000) $(1,153,000)
=========== ===========
Net loss per limited partnership unit $ (15) $ (11)
=========== ===========
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
Consolidated Statements of Operations (Unaudited)
For the Three Months Ended
June 30, 1995 June 30, 1994
Revenues:
Rental $ 3,642,000 $ 3,366,000
Interest income 21,000 14,000
----------- -----------
Total revenues 3,663,000 3,380,000
----------- -----------
Expenses:
Interest 2,310,000 1,566,000
Operating 1,730,000 1,713,000
Depreciation 684,000 694,000
General and administrative 57,000 75,000
----------- -----------
Total expenses 4,781,000 4,048,000
----------- -----------
Net loss $(1,118,000) $ (668,000)
=========== ===========
Net loss per limited partnership unit $ (11) $ (7)
=========== ===========
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
Consolidated Statements of Cash Flows (Unaudited)
For the Six Months Ended
June 30, 1995 June 30, 1994
Operating Activities:
Net loss $ (1,504,000) $ (1,153,000)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 1,574,000 1,566,000
Loss on sale of property -- 149,000
Deferred costs paid (203,000) --
Changes in operating assets and liabilities:
Other assets (171,000) (679,000)
Accrued expenses and other liabilities 369,000 634,000
------------ ------------
Net cash provided by operating activities 65,000 517,000
------------ ------------
Investing Activities:
Additions to real estate (152,000) (171,000)
Decrease in restricted cash 280,000 656,000
Net proceeds from sale of rental property -- 485,000
Cost of sale of rental property -- (3,000)
------------ ------------
Net cash provided by investing activities 128,000 967,000
------------ ------------
Financing Activities:
Repayment of notes payable to affiliate
of the general partner -- (370,000)
Notes payable proceeds 18,810,000 --
Repayment of notes payable (17,501,000) (594,000)
Notes payable principal payments (147,000) (233,000)
------------ ------------
Net cash provided by (used in) financing
activities 1,162,000 (1,197,000)
------------ ------------
Increase in Cash and Cash Equivalents 1,355,000 287,000
Cash and Cash Equivalents at Beginning
of Period 218,000 119,000
------------ ------------
Cash and Cash Equivalents at End of Period $ 1,573,000 $ 406,000
============ ============
Supplemental Disclosure of Cash Flow
Information:
Interest paid in cash during the period $ 3,589,000 $ 2,689,000
============ ============
Supplemental Disclosure of Non-Cash Investing
and Financing Activities:
Deferred financing costs accrued $ 81,000 --
============ ============
See notes to consolidated financial statements.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The accompanying consolidated financial statements, footnotes and
discussions should be read in conjunction with the consolidated financial
statements, related footnotes and discussions contained in the Partnership's
Annual Report for the year ended December 31, 1994. Certain accounts have
been reclassified to conform to the current period.
The financial information contained herein is unaudited. In the opinion of
management, however, all adjustments necessary for a fair presentation of
such financial information have been included. All adjustments are of a
normal recurring nature, except as disclosed in Note 3.
The results of operations for the six and three months ended June 30, 1995
and 1994 are not necessarily indicative of the results to be expected for
the full year.
2. Transactions with Related Parties
(a) An affiliate of NPI, Inc. received reimbursements of administrative
expenses amounting to $72,000 and $57,000 during the six months ended
June 30, 1995 and 1994, respectively. These reimbursements are
included in general and administrative expenses.
(b) An affiliate of NPI, Inc. is entitled to receive a management fee equal
to 5% of the annual gross receipts from certain properties it manages.
For the six months ended June 30, 1995 and 1994, affiliates of NPI,
Inc. received $368,000 and $223,000, respectively. These fees are
included in operating expenses.
3. Loss on Sale of Property
Plantation Forest Apartments located in Atlanta, Georgia, was sold on
February 8, 1994 for $2,450,000. After assumption of the existing loan of
$1,965,000 and expenses of the sale, the proceeds to the Partnership were
$482,000. The loss on sale was $149,000.
Net proceeds realized from the sale were partially used to fully repay
$370,000 of demand notes, including accrued interest, held by an affiliate
of the general partner.
4. Notes Payable
a) On June 29, 1995, the Partnership replaced its maturing mortgage
encumbering Greenspoint Apartments with a new first mortgage in the
amount of $9,000,000. As of June 30, 1995, $8,810,000 had been
advanced, the remaining $190,000 will be disbursed pending satisfaction
of certain conditions set by the lender. Based upon the proceeds
disbursed, the loan requires monthly payments of approximately $67,000
at 8.33% interest and is being amortized over 30 years. The loan
matures on May 15, 2005 with a balloon payment of approximately
$7,805,000. As specified in the loan agreement the borrower is
obligated to undertake additional improvements at the property in the
amount of approximately $30,000. These improvements must be completed
by December 31, 1995, or result in a default under the mortgage loan.
A premium is to be calculated under the terms of the mortgage if the
loan is prepaid. The partnership incurred closing costs of $135,000 in
connection with this refinancing, of which $97,000 was paid during the
six months ended June 30, 1995. In connection with the satisfaction of
its maturing debt, the Partnership paid a $337,000 exit fee at date of
closing, which is included in interest expense.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. Notes Payable (Continued)
b) On June 29, 1995, the Partnership replaced its maturing mortgage
encumbering Sandspoint Apartment with a new first mortgage in the
amount of $10,000,000. The loan requires monthly payments of
approximately $76,000 at 8.33% interest and is being amortized over 30
years. The loan matures on May 15, 2005 with a balloon payment of
approximately $8,859,000. As specified in the loan agreement, the
Partnership is obligated to undertake additional improvements at the
property in the amount of approximately $74,000. These improvements
must be completed by March 31, 1996, or result in a default under the
mortgage loan. A premium is to be calculated under the terms of the
mortgage if the loan is prepaid. The Partnership incurred closing
costs of $149,000 in connection with this refinancing, of which
$106,000 was paid during the six months ended June 30, 1995. In
connection with the satisfaction of its maturing debt, the Partnership
paid a $393,000 exit fee at date of closing, which is included in
interest expense.
5. Legal Proceedings
On May 19, 1995 final approval was given by the Court to a settlement
agreement relating to the tender offer litigation. As required by the terms
of the settlement agreement, DeForest Ventures I L.P. ("DeForest") commenced
a second tender offer (the "Second Tender Offer") on June 2, 1995 for units
of limited partnership in the Partnership. Pursuant to the Second Tender
Offer, DeForest acquired an additional 4,234 limited partnership units of
the Partnership.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
This item should be read in conjunction with the Consolidated Financial
Statements and other Items contained elsewhere in this Report.
Liquidity and Capital Resources
Registrant holds investments in and operates eight apartment complexes.
Registrant receives rental income from its properties and is responsible for
operating expenses, administrative expenses, capital improvements and debt
service payments. As of August 1, 1995, five of the thirteen properties
originally purchased by Registrant were sold or otherwise disposed. All of
Registrant's eight properties, except for McMillan Place, Greenspoint and
Sandspoint Apartments, generated positive cash flow from operations during the
six months ended June 30, 1995. Registrant's Greenspoint and Sandspoint
Apartments generated negative cash flow from operations due to the exit fees
paid in association with the satisfaction of its maturing debt.
Registrant uses working capital reserves provided from any undistributed cash
flow from operations, sales and refinancing proceeds as its primary sources of
liquidity. There have been no distributions since 1987. Registrant is
prohibited from making any distributions from operations until the mortgages
encumbering McMillan Place Apartments are satisfied. Future distributions from
sales or refinancings are permitted and will be evaluated at such time.
The level of liquidity based upon cash and cash equivalents experienced a
$1,355,000 increase at June 30, 1995, as compared to December 31, 1994.
Registrant experienced an increase in cash of $1,162,000 from financing
activities, $65,000 from operating activities and $128,000 from investing
activities. Registrant's cash provided by financing activities consists of
$18,810,000 of proceeds received from the refinancing of the mortgages
encumbering Registrant's Greenspoint and Sandspoint properties, offset by
$17,501,000 of cash used for the repayment of the prior first mortgages and
$147,000 of cash used for notes payable principal payments. Registrant's net
cash from investing activities consists of $280,000 of cash from the release of
restricted cash, offset by $152,000 of improvements to real estate. All other
increases (decreases) in certain assets and liabilities are the result of the
timing of receipt and payment of various operating activities.
Working capital reserves are invested in a money market account or repurchase
agreements secured by United States Treasury obligations. The Managing General
Partner believes that, if market conditions remain relatively stable, cash flow
from operations, when combined with working capital reserves, will be sufficient
to fund required capital improvements and regular debt service payments until
May 1996, when the balloon payment encumbering Registrant's Misty Woods
Apartments comes due in the approximate amount of $5,083,000. The ability to
hold and operate this property is dependent on Registrant's ability to obtain
refinancing or debt modification as required. If Misty Woods Apartments is lost
through foreclosure, Registrant would incur a loss of approximately $260,000.
In addition, Registrant has substantial balloon payments due in 1997, 1998 and
1999 in the amounts of $3,169,000, $19,920,000 and $12,971,000, respectively.
Although management is confident that these mortgages can be replaced, if the
mortgages are not extended or refinanced, or the properties are not sold, the
properties could be lost through foreclosure.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Liquidity and Capital Resources (Continued)
As required by the terms of the settlement of the actions brought against, among
others, DeForest Ventures I L.P. ("DeForest") relating to the tender offer made
by DeForest in October 1994 (the "First Tender Offer") for units of limited
partnership interest in Registrant and certain affiliated partnerships, DeForest
commenced a second tender offer (the "Second Tender Offer") on June 2, 1995 for
units of limited partnership interest in Registrant. Pursuant to the Second
Tender Offer, DeForest acquired an additional 4,234 units of Registrant which,
when added to the units acquired during the First Tender Offer, represents
approximately 27.6% of the total number of outstanding units of Registrant. The
Managing General Partner believes that the tender will not have a significant
impact on future operations or liquidity of Registrant (see Part II, Item 1,
Litigation). Also in connection with the settlement, an affiliate of the
Managing General Partner has made available to Registrant a credit line of up to
$150,000 per property owned by Registrant. Based on present plans, management
does not anticipate the need to borrow in the near future.
At this time, it appears that the investment objective of capital growth will
not be attained and that investors will not receive a return of all of their
invested capital. The extent to which invested capital is returned to investors
is dependent upon the performance of Registrant's properties and the markets in
which such properties are located and on the sales price of the remaining
properties. In this regard, it is anticipated at this time that the remaining
properties will be held longer than originally expected. The ability to hold
and operate these properties is dependent on Registrant's ability to obtain
refinancing or debt modification as required.
Real Estate Market
The national real estate market has suffered from the effects of the real estate
recession including, but not limited to, a downward trend in market values of
existing residential properties. In addition, the bailout of the savings and
loan associations and sales of foreclosed properties by auction reduced market
values and caused a further restriction on the ability to obtain credit. As a
result, Registrant's ability to refinance or sell its properties may be
restricted. These factors caused a decline in market property values and serve
to reduce market rental rates and/or sales prices. Compounding these
difficulties have been relatively low interest rates, which encourage existing
and potential tenants to purchase homes. In addition, there has been a
significant decline nationally in new household formation. Despite the above,
the rental market appears to be experiencing a gradual strengthening and
management anticipates that increases in revenue will generally exceed increases
in expenses during 1995. Furthermore, management believes that the emergence of
new institutional purchasers, including real estate investment trusts and
insurance companies, should create a more favorable market value for
Registrant's properties in the future.
Results of Operations
Six Months Ended June 30, 1995 vs. June 30, 1994
Operating results declined by $351,000 for the six months ended June 30, 1995,
as compared to 1994, due to increases in expenses of $789,000 and in revenues of
$438,000. Operating results declined due to the additional interest incurred on
the satisfaction of the prior mortgages encumbering Registrant's Greenspoint and
Sandspoint Apartment properties, which was partially offset by improved
operations and the loss on the disposition of Plantation Forest Apartments in
February 1994.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Six Months Ended June 30, 1995 vs. June 30, 1994 (Continued)
With respect to the remaining properties, operating results declined by $515,000
due to increases in expenses of $1,010,000 and in revenues of $495,000.
With respect to the remaining properties, rental income increased by $484,000
primarily due to an increase in rental rates and occupancy at Registrant's
Misty Woods Apartments, McMillan Place Apartments and Sunrunner Apartments,
which was slightly offset by a decline in occupancy at Registrant's Wood Ridge
Apartments. Interest income increased by $11,000 due to an increase in
average working capital reserves available for investment, coupled with an
increase in interest rates.
With respect to the remaining properties (not including $730,000 of exit fees
described in Item 1, Note 4), expenses increased due to increases in operating
expenses of $145,000, interest expense of $240,000, and depreciation expense of
$1,000. Operating expenses increased primarily due to an insurance adjustment
and an increase in repairs and maintenance expenses at all of Registrant's
properties. The increase in interest expense is attributable to increased
variable interest rates on mortgages encumbering the Wood Lake, Wood Ridge,
Plantation Crossing, Greenspoint and Sandspoint Apartments. Depreciation
expense remained relatively constant. In addition, general and administrative
expenses decreased by $106,000 due to a decrease in asset management costs.
Three Months Ended June 30, 1995 vs. June 30, 1994
Operating results declined by $450,000 for the three months ended June 30, 1995,
as compared to 1994, due to increases in expenses of $733,000 and in revenues of
$283,000. Operating results declined primarily due to the additional interest
incurred on the satisfaction of the mortgages encumbering Registrant's
Greenspoint and Sandspoint Apartment properties.
Revenues increased by $283,000 due to increases in rental revenues of $276,000
and in interest income of $7,000. Rental revenues increased due to increased
rental rates and occupancy at Registrant's Misty Woods Apartments, McMillan
Place Apartments and Sandspoint Apartments, which was slightly offset by a
decrease in occupancy at Registrant's Sunrunner and Wood Ridge Apartment
complexes. Interest income increased due to an increase in average working
capital reserves available for investment, coupled with an increase in interest
rates.
Expenses (not including $730,000 of exit fees described in Item 1, Note 4),
increased due to increases in interest expense of $14,000 and operating expenses
of $17,000, which were partially offset by decreases in general and
administrative expenses of $18,000 and depreciation expense of $10,000.
Operating expenses increased due to increased repairs and maintenance at all of
Registrant's properties. General and administrative expenses decreased due to a
decrease in asset management costs. Depreciation expense and interest expense
(not including the exit fees) remained relatively constant.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Properties
A description of the properties in which Registrant had an ownership interest
during the period covered by this Report, along with occupancy data, follows:
CENTURY PROPERTIES FUND XIX
OCCUPANCY SUMMARY
Average
Occupancy Rate (%)
---------------------------
Six Months Three Months
Number Date Ended Ended
of of June 30, June 30,
Name and Location Units Purchase 1995 1994 1995 1994
- ----------------- ------ -------- ---- ---- ---- ----
Wood Lake Apartments 220 12/83 96 96 96 96
Atlanta, Georgia
Greenspoint Apartments 336 02/84 96 97 95 96
Phoenix, Arizona
Sandspoint Apartments 432 02/84 95 94 95 91
Phoenix, Arizona
Wood Ridge Apartments 280 04/84 94 96 94 97
Atlanta, Georgia
Plantation Crossing Apartments 180 06/84 96 97 96 95
Atlanta, Georgia
Plantation Forest Apartments (1) 64 06/84 - - - -
Atlanta, Georgia
Sunrunner Apartments 200 07/84 96 95 96 98
St. Petersburg, Florida
McMillan Place Apartments 402 06/85 97 95 97 95
Dallas, Texas
Misty Woods Apartments 228 06/85 97 92 97 94
Charlotte, North Carolina
(1) Property was sold in February 1994.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
PART II - OTHER INFORMATION
Item 1. Litigation
Lawrence M. Whiteside, on behalf of himself and all others similarly
situated, v. Fox Capital Management Corporation et al., Superior Court of
the State of California, San Mateo County, Case No. 390018.
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all others
similarly situated, v. DeForest Ventures I L.P., et. al., United States
District Court, Northern District of Georgia, Atlanta Division, Case No.
1-94-CV-2983-JEC.
Roger L. Vernon, individually and on behalf of all similarly situated
persons v. DeForest Ventures I L.P. et. al., Circuit Court of Cook County,
County Departments, Chancery Division, State of Illinois, Case No.
94CH0100592.
James Andrews, et al., on behalf of themselves and all others similarly
situated v. Fox Capital Management Corporation, et al., United States
District Court, Northern District of Georgia, Atlanta Division, Case No.
1-94-CV-3351-JEC.
On May 19, 1995, the Court gave final approval to the settlement agreement
entered into, in March 1995, by the plaintiffs and the defendants in the
above actions. Pursuant to the Court's order, all claims made by the
plaintiffs were dismissed with prejudice subject to the defendants
compliance with the settlement agreement. As required by the settlement
agreement, DeForest Ventures I L.P. ("DeForest") and DeForest Ventures II
L.P. commenced a tender offer for units of limited partnership interest in
Registrant as well as 18 other affiliated partnerships on June 2, 1995 and
implemented the other provisions of the settlement agreement. See Part I,
Item 2, "Management's Discussion and Analysis of Financial Condition."
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10.1 Form of Promissory Note made by Century Properties Fund XIX in
favor of The Prudential Insurance Company of America
("Prudential") dated June 27, 1995, with respect to Greenspoint
Apartments ($9,000,000 principal loan amount) and Sandspoint
Apartments ($10,000,000 principal amount).
10.2 Form of Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Leases, Rents and Agreements from Century Properties
Fund XIX to Transamerica Title Insurance Company, as trustee for
Prudential, with respect to Greenspoint Apartments and Sandspoint
Apartments.
(b) Reports of Form 8-K.
No report on Form 8-K was required to be filed during the period.
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CENTURY PROPERTIES FUND XIX - FORM 10-Q - JUNE 30, 1995
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY PROPERTIES FUND XIX
By: FOX PARTNERS II,
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION,
A General Partner
/S/ ARTHUR N. QUELER
Secretary/Treasurer and Director
(Principal Financial Officer)
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Exhibit 10.1
PROMISSORY NOTE
$____________ Phoenix, Arizona
Loan No.: ____________ June 27, 1995
FOR VALUE RECEIVED, the undersigned, CENTURY PROPERTIES FUND XIX, a
California Limited Partnership ("Maker"), having an address at c/o National
Property Investors, Inc., 100 Jericho Quadrangle, Suite 214, Jericho, New York
11753, the general partner of which is Fox Partners II, a California general
partnership, the general partner of which is Fox Capital Management
Corporation, a California corporation, PROMISES TO PAY TO THE ORDER OF THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA ("Prudential"), a New Jersey
corporation authorized to do business in the State of Arizona (Prudential and
its successors and assigns who become holders of this Promissory Note (the
"Note") are hereinafter collectively referred to as "Holder"), to Prudential
at Morgan Guaranty Trust Company, 23 Wall Street, New York, New York 10019,
Account No. 050-54-493, referencing Loan No. 6 100 913, or at such other place
as Holder, may from time to time designate, the principal sum
of____________________ Dollars ($____________), together with interest thereon
from the date funds are first disbursed hereunder until paid at a rate per
annum equal to the Interest Rate (as hereinafter defined). For the first
payment due under the loan, interest shall be calculated on the basis of a
365-day year and the actual number of days in each month. Thereafter,
interest shall be calculated on the basis of a 360-day year and 30-day month;
except with respect to partial months in which case interest shall be
calculated on the basis of the actual number of days in the year and the
actual number of days elapsed in the period during which it accrues, in
accordance with the terms and conditions set forth below.
1. Definitions. For the purpose of this Note, the following terms shall
have the meanings set forth below; certain other terms are defined where they
appear in this Note:
(a) "Deed of Trust" means that certain Deed of Trust, Security
Agreement and Fixture Filing with Assignment of Leases, Rents and Agreements,
of even date herewith, executed by Maker as "Trustor" to the benefit of
Prudential as "Beneficiary" and recorded in the Official Records of Maricopa
County, Arizona.
(b) "Discount Rate" means the interest rate, which when compounded
monthly, is equivalent to the Treasury Rate, when compounded semi-annually.
(c) "Interest Rate" means a rate of interest per annum of eight and
33/100 percent (8.33%).
(d) "Loan Documents" means this Note, the Deed of Trust, and all
other documents, with the exception of that certain Hazardous Substances
Remediation and Indemnification Agreement of even date herewith (the
"Remediation and Indemnification Agreement") executed by Maker in favor of
Holder, now or hereafter governing, securing or executed in connection with
the indebtedness evidenced by this Note or any portion of such indebtedness.
(e) "Loan" means the loan evidenced by this Note.
(f) "Maturity Date" means that date which is the fifteenth (15th)
day of June 2005.
(g) "Prepayment Amount" means the amount of the Principal Balance
prepaid on a Prepayment Date.
(h) "Prepayment Date" means any date, prior to the Maturity Date,
upon which all or any portion of the Principal Balance is prepaid.
(i) "Prepayment Premium" shall have the meaning set forth in
Paragraph 6(a) hereof.
(j) "Present Value of the Loan" means the present value, discounting
from a Prepayment Date at the Discount Rate, of all payments of principal and
interest which would have been payable on the Prepayment Amount from the
Prepayment Date through and including the Maturity Date.
(k) "Principal Balance" means the outstanding principal balance of
this Note from time to time outstanding.
(l) "Secondary Interest Rate" means a rate of interest equal to the
greater of (i) eighteen percent (18%) per annum, or (ii) a per annum rate
equal to five percent (5%) over the prime rate (for corporate loans at large
United States money center commercial banks) published in the Wall Street
Journal on the first business day of each month in which such default occurs
or continues.
(m) "Treasury Rate" means the interest rate, conclusively determined
by Holder on the Prepayment Date equal to the semi-annual yield on the
Treasury Constant Maturity Series with maturity equal to the remaining
weighted average life of the Loan for the week prior to the Prepayment Date,
as reported in Federal Reserve Statistical Release H.15 - Selected Interest
Rates ("Release H.15"). The rate will be determined by linear interpolation
between the yields reported in Release H.15, if necessary. In the event
Release H.15 is no longer published, Holder shall select a comparable
publication to determine the Treasury Rate.
2. Payments. Subject to the provisions of the first paragraph of this
Note with respect to the calculation of the first payment hereunder,
commencing on the fifteenth day of July 1995 and continuing on the fifteenth
day of each calendar month thereafter through and including the fifteenth day
of the calendar month prior to the "Holdback Disbursement Date" (as that term
is defined in that certain Holdback Agreement dated as of even date herewith
by and between Prudential and Maker (the "Holdback Agreement")), monthly
installments of principal and interest in the amount of $66,682.72 (the
"Original Installments") shall be due and payable. Commencing on the
fifteenth day of the calendar month following the Holdback Disbursement Date
and continuing on the fifteenth day of each calendar month thereafter through
and including the fifteenth day of May, 2005, monthly installments of
principal and interest in an amount necessary to fully amortize the unpaid
Principal Balance over a period of time equal to 360 months less the number of
calendar month having elapsed from and including the month of the first
payment of principal and interest due under this Note to and including the
month of the last payment prior to the Holdback Disbursement Date, shall be
due and payable, with the entire unpaid Principal Balance plus accrued
interest and other amounts payable under the Loan Documents being due and
payable on the Maturity Date. Notwithstanding the foregoing, in the event the
Holdback Disbursement Date never occurs, the Original Installments shall
continue to be due and payable on the fifteenth day of each calendar mouth
through and including the fifteenth day of May, 2005, with the entire unpaid
Principal Balance plus accrued interest and other amounts payable under the
Loan Documents being due and payable on the Maturity Date. Maker acknowledges
that payment of a substantial portion of the Loan shall be due on the Maturity
Date.
3. Treatment of Payments. All payments due under this Note or the Loan
Documents shall be paid by Maker in lawful money of the United States of
America on the date such payment is due. All such payments shall be made
without deduction for any present or future taxes, levies, imposts,
deductions, charges or withholdings (including U.S., state or local income
taxes), which amounts shall be paid by Maker. Payments from Maker to Holder
under this Note shall be applied first to the payment of any expense
reimbursements under the Loan Documents, any Per Diem Late Charges or Late
Charges (each as hereinafter defined) and any Prepayment Premium due thereon,
in such order as Holder shall determine, then to accrued and unpaid interest,
with the remainder to be applied to the Principal Balance.
4. Per Diem Late Charges, Late Charges and Secondary Interest.
(a) If Maker fails timely to pay any sum due and payable under this
Note on or before the date due, a late charge equal to Two Hundred Dollars
($200) per day (the "Per Diem Late Charge") shall be assessed for each day
that such payment is not paid from and including the first day following the
date such payment was due to and including the date upon which such payment is
made; provided, however, that notwithstanding the foregoing, if such payment,
together with all accrued Per Diem Late Charges, is not made on or before the
fifteenth (15th) day following the date due, a late charge equal to four cents
($.04) for each dollar ($1.00) of each such late payment (the "Late Charge")
shall be immediately due and payable. The Late Charge shall be in lieu of the
Per Diem Late Charges that shall have accrued during the immediately preceding
fifteen (15) day period. Maker acknowledges and agrees that its failure to
make timely payments will result in Holder incurring additional expense in
servicing the Loan, and that it is extremely difficult and impractical to
ascertain the extent of such damages and that the Per Diem Late Charges and
the Late Charge represent fair and reasonable estimates, considering all of
the circumstances existing on the date of the execution of this Note, of the
costs that Holder will incur by reason of such late payment. Holder agrees to
comply with any Arizona statute with respect to the giving of notice prior to
imposing a Per Diem Late Charge or Late Charge, as such statute or any
successor statute may now or hereafter be in effect. Acceptance of any Per
Diem Late Charge or Late Charge shall not constitute a waiver of the default
with respect to the late payment, and shall not prevent Holder from exercising
any of the other rights or remedies available hereunder or at law or in
equity.
(b) Maker further acknowledges and agrees that during the time that
any payment of principal, interest or other amount due under this Note shall
be delinquent, Holder will incur additional costs and expenses attributable to
its loss of use of money due to and to the adverse impact on Holder's ability
to meet its other obligations and avail itself of other opportunities. Maker
agrees that it is extremely difficult and impractical to ascertain the extent
of such expenses, and Maker therefore agrees that interest at the Secondary
Interest Rate shall accrue on any delinquent payments of principal, interest
or other amounts due under this Note or any Loan Document from the date such
payments were due and for so long as non-payment continues, regardless of
whether or not there has been an acceleration of the maturity of the
indebtedness evidenced by this Note.
5. Event of Default and Secondary Interest.
(a) The occurrence of an "Event of Default" under any Loan Document
shall constitute an Event of Default under this Note. Upon the occurrence of
an Event of Default (including without limitation the failure of the Maker to
observe the provisions of paragraph 4.2 of the Deed of Trust, Holder, at its
option may cause the Principal Balance together with all unpaid accrued
interest, any Prepayment Premium (as hereinafter defined) and any other sums
evidenced or secured by this Note or any Loan Document, to be immediately due
and payable, without further presentment, demand, protest or notice of any
kind, by so notifying Maker in writing ("Acceleration Notice").
(b) Maker agrees that from and after the delivery of an Acceleration
Notice pursuant to Paragraph 5(a) hereof, interest at the Secondary Interest
Rate shall accrue on the Principal Balance and all unpaid accrued interest and
other sums evidenced or secured by this Note or any Loan Documents.
6. Prepayment.
(a) If for any reason the Principal Balance or any portion thereof
is prepaid (whether by operation of law, acceleration or otherwise) on a date
prior to the Maturity Date, Maker shall pay to Holder as liquidated damages,
immediately upon demand, together with the related principal prepayment and
any unpaid accrued interest, a prepayment charge (the "Prepayment Premium")
equal to the greater of:
(1) the product of (x) one percent (1%) of the Prepayment
Amount multiplied by (y) a fraction, the numerator of which
is the number of full months remaining until the Maturity
Date as of the Prepayment Date and the denominator of which
is the number of full months comprising the term of the
Loan; or
(2) the Present Value of the Loan less the sum of (x) the
Prepayment Amount, and (y) unpaid accrued interest, if any.
(b) Maker shall have the right voluntarily to prepay all or any
portion of the Principal Balance, together with accrued interest thereon,
provided that Maker gives Holder not less than thirty (30) days prior written
notice of its intention to prepay, and delivers to Holder, on or before the
Prepayment Date, the Prepayment Premium as calculated above, together with the
Prepayment Amount and all accrued interest and other sums due under the Loan
Documents. Notwithstanding the foregoing, Maker may prepay the entire
outstanding Principal Balance on or after May 15, 2005 without incurring or
paying the Prepayment Premium.
(c) Maker agrees that such Prepayment Premium represents the
reasonable estimate of Holder and Maker of a fair average compensation for the
loss that may be sustained by Holder due to the payment of any of the
Principal Balance prior to the Maturity Date; and by initialing this provision
in the space provided below, Maker hereby declares that Holder's agreement to
enter into this transaction on the terms set forth in this Note and in the
other Loan Documents constitutes adequate and valuable consideration, given
individual weight by Maker for this agreement. Such Prepayment Premium shall
be paid without prejudice to the right of Holder to collect any other amount
provided to be paid hereunder. Holder shall not be obligated to actually
reinvest the Prepayment Amount in any Treasury obligations as a condition to
receiving the Prepayment Premium.
INITIALS OF MAKER: __________
7. Security. This Note is secured, among other security, by the Deed of
Trust and the other Loan Documents, which contain provisions for the
acceleration of the maturity of this Note upon the occurrence of certain
described events.
8. Holder's Rights; No Waiver by Holder. The rights, powers and
remedies of Holder under this Note shall be in addition to all rights, powers
and remedies given to Holder under the Loan Documents and any other agreement
or document securing or evidencing the indebtedness evidenced hereby or by
virtue of any statute or rule of law, including, but not limited to, the
Arizona Uniform Commercial Code. All such rights, powers and remedies shall
be cumulative and may be exercised successively or concurrently in Holder's
sole discretion without impairing Holder's security interest, rights or
available remedies. Any forbearance, failure or delay by Holder in exercising
any right, power or remedy shall not preclude further exercise thereof, and
every right, power or remedy of Holder shall continue in full force and effect
until such right, power or remedy is specifically waived in a writing executed
by Holder. Maker waives any right to require the Beneficiary (as defined in
the Deed of Trust) to proceed against any person or to pursue any remedy in
Holder's power.
9. Maker's Waivers.
(a) Maker and any endorsers of this Note, and each of them, hereby
waive diligence, demand, presentment for payment, notice of non-payment,
protest and notice of protest, and specifically consent to and waive notice of
any renewals or extensions of this Note, whether made to or in favor of Maker
or any person or persons. Maker and any endorsers of this Note expressly
waive all right to the benefit of any statute of limitations and any
moratorium, reinstatement, marshalling, forbearance, extension, redemption, or
appraisement now or hereafter provided by the Constitution or the laws of the
United States or of any state thereof, as a defense to any demand against
Maker or any such endorsers, to the fullest extent permitted by law.
(b) Maker hereby waives any right to trial by jury with respect to
any action or proceeding brought by Maker, Holder or any other person relating
to (i) the indebtedness evidenced by this Note, or (ii) the Loan Documents.
Maker hereby agrees that this Note constitutes a written consent to waiver of
trial by jury and Maker does hereby constitute and appoint Holder its true and
lawful attorney-in-fact, which appointment is coupled with an interest, and
Maker does hereby authorize and empower Holder, in the name, place and stead
of Maker, to file this Note with the clerk or judge of any court of competent
jurisdiction as statutory written consent to waiver of trial by jury.
(c) Maker hereby expressly waives any right it may have to prepay
this Note, in whole or in part, without prepayment charge, upon acceleration
of the Maturity Date of this Note, and agrees that if for any reason, a
prepayment of any or all of this Note is made, whether voluntarily or upon or
following any acceleration of the Maturity Date of this Note by the Holder,
then Maker shall pay, concurrently therewith, a Prepayment Premium calculated
pursuant to Paragraph 6 hereof. By initialling this provision in the space
provided below, Maker hereby declares that Holder's agreement to make the Loan
at the Interest Rate and for the term set forth in this Note constitutes
adequate consideration, given individual weight by Maker, for this waiver and
agreement.
INITIALS OF MAKER: ________
10. Transfers by Holder. This Note or any interest in this Note and the
Loan Documents may be hypothecated, transferred or assigned by Holder without
the prior consent of Maker.
11. Amendment. This Note may be amended or modified only by an
instrument in writing which by its express terms refers to this Note and which
is duly executed by the party sought to be bound thereby.
12. Successors and Assigns. This Note shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and permitted assigns.
13. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Arizona.
14. Authority. Each individual executing this Note on behalf of a
partnership, corporation or other entity states that he or she is duly
authorized to execute and deliver this Note on behalf of said entity, in
accordance with duly and regularly adopted existing authority and, if
necessary, resolution of the governing body of such organization, and that
this Note is binding upon said entity in accordance with its terms.
15. Time. Time is of the essence with respect to the performance of each
and every term and provision of this Note.
16. Usury. In the event, and only in the event, that the usury laws of
the State of Arizona are applied with respect to the Loan or indebtedness
evidenced by this Note, all fees, charges, goods, things in action or any
other sums or things of value including any contractual obligations, other
than interest resulting from the Interest Rate or the Secondary Interest Rate
(collectively, the "Additional Sums") paid or payable by Maker to Holder,
whether pursuant to this Note or otherwise with respect to the Loan or
indebtedness evidenced hereby, or with respect to the Deed of Trust or any of
the other Loan Documents which, under the laws of the State of Arizona may be
deemed to be interest with respect to such Loan or indebtedness, shall, for
the purpose of any laws of the State of Arizona which may limit the maximum
rate of interest to be charged with respect to such Loan or indebtedness, be
payable by Maker as, and shall be deemed to be, additional interest, and for
such purposes only, the agreed upon and "contracted rate of interest"
described above shall be deemed to be increased to the rate of interest
resulting from the Additional Sums. If any interest or other charges are ever
deemed to exceed the maximum amount permitted by law, then: (a) the amount of
interest or charges payable hereunder by Maker shall be reduced to the maximum
amount permitted by law; and (b) any excess amount previously collected from
Maker which exceeded the maximum amount permitted by law will be credited
against the outstanding Principal Balance. If the Principal Balance has
already been paid, the excess amount paid will be refunded to Maker.
17. Notices. All notices, consents and other communications required
or permitted by this Note shall be in writing and shall be given in the manner
set forth in the Deed of Trust.
18. Attorneys' Fees. The Maker, endorsers, guarantors, sureties,
accommodation parties hereof, and all other persons liable or to become liable
on this Note, jointly and severally agree to pay all costs of collection,
including reasonable attorneys' fees and all costs of suit and in preparation
for such suit (and whether at trial or appellate level), in the event the
unpaid principal sum of this Note, or any payment of interest or principal and
interest thereon or any premium, is not paid when due, or in case it becomes
necessary to protect the security for the indebtedness evidenced hereby, or
for the foreclosure by the Holder of the Deed of Trust and any other Loan
Documents, or in the event the Holder is made party to any litigation because
of the existence of the indebtedness evidenced by this Note, or if at any time
the Holder of this Note should incur any attorneys' fees in any proceeding
under the Federal Bankruptcy Act (or other similar laws for the protection of
debtors generally) in order to collect any indebtedness hereunder or to
preserve, protect or realize upon any security for such indebtedness, or
because of the existence of the Deed of Trust or other Loan Documents, whether
suit be brought or not, and whether through courts of original jurisdiction,
as well as in courts of appellate jurisdiction, or through a bankruptcy court
or other legal proceeding.
19. Limitation on Personal Liabilities.
(a) Except as expressly set forth in paragraph 19(b) below, the
recourse of Holder with respect to the obligations evidenced by this Note
shall be solely to the Property (as defined in the Deed of Trust).
(b) Notwithstanding anything to the contrary contained in this
Note or in any Loan Document, nothing shall be deemed in any way to impair,
limit or prejudice the rights of Holder:
(i) in foreclosure proceedings or in any ancillary
proceedings brought to facilitate Holder's
foreclosure on the Property or any portion
thereof;
(ii) to recover from Maker damages or costs (including
without limitation reasonable attorneys' fees)
incurred by Holder as a result of waste by Maker;
(iii) to recover from Maker any condemnation or
insurance proceeds attributable to the Property
which were not paid to Holder or used to restore
the Property in accordance with the terms of the
Deed of Trust;
(iv) to recover from Maker any rents, profits,
security deposits, advances, rebates, prepaid
rents or other similar sums attributable to the
Property collected by or for Maker following an
Event of Default and not properly applied to the
reasonable fixed and operating expenses of the
Property, including payments of the Loan;
(v) to pursue the personal liability of Maker under
the provisions of paragraph 9.26 of the Deed of
Trust, including any indemnification provisions
under said paragraph;
(vi) to exercise any other specific rights or remedies
afforded Holder under any provisions of the Loan
Documents or at law or in equity (or to recover
under any guarantee given in connection with the
Loan);
(vii) to recover from Maker the amount of any taxes,
assessments, and/or utility charges affecting the
Property which are due and unpaid prior to the
date title to the Property passes from Maker to
Holder or Holder's designee and/or prior to the
date a receiver is appointed with respect to the
Property for the benefit of Holder;
(viii) to pursue any personal liability of Maker under
the Remediation and Indemnification Agreement;
and
(ix) to recover from Maker damages or costs incurred
by Holder as a result of Maker's failure to
obtain and maintain in effect all the insurance
required in the Loan Documents.
(c) The agreement contained in this Paragraph 19 to limit the
personal liability of Maker shall become null and void and of no further force
or effect in the event:
(i) that the Property or any part thereof or any
interest therein shall be further encumbered by a
voluntary lien securing any obligation upon which
Maker shall be personally liable for repayment;
(ii) of any breach or violation of paragraph 4.2 of
the Deed of Trust;
(iii) of any fraud or misrepresentation by Maker in
connection with the Property, the Loan Documents
or the Loan Application; or
(iv) that an "Event of Default" under the Remediation
and Indemnification Agreement shall have
occurred; unless prior to the expiration of any
cure period, if any, relating to such event of
default (A) such event of default shall have been
duly and completely cured, and (B) any claims by
any party arising out of or relating to such
event of default, which are pending, or to
Maker's and/or Holder's knowledge threatened or
reasonably anticipated against Maker or Holder or
the Property, shall have been duly paid, settled
or waived.
IN WITNESS WHEREOF, Maker has caused this Promissory Note to be executed
and delivered effective as of the date first written above.
"Maker":
CENTURY PROPERTIES FUND XIX, a California
Limited Partnership
By: Fox Partners II, a California general
partnership, its general partner
By: Fox Capital Management Corporation,
a California corporation,
its general partner
By: ________________________
________________________
[Printed Name and Title]
Exhibit 10.2
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Sheppard, Mullin, Richter
& Hampton
333 South Hope St., 48th Fl.
Los Angeles, CA 90071-1448
Attention: Jay T. Kinn, Esq.
________________________________________________________________________________
Loan No._____________
DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE
FILING WITH ASSIGNMENT OF LEASES, RENTS AND AGREEMENTS
THIS DEED OF TRUST, SECURITY AGREEMENT AND FIXTURE FILING WITH ASSIGNMENT
OF LEASES, RENTS AND AGREEMENTS (this "Deed of Trust") is made as of June 27,
1995 by CENTURY PROPERTIES FUND XIX, a California Limited Partnership, having
offices c/o National Property Investors, Inc., 100 Jericho Quadrangle, Suite
214, Jericho, New York 11753 ("Trustor"), Transamerica Title Insurance
Company, having offices at 234 North Central Avenue, Suite 670, Phoenix,
Arizona 85004 ("Trustee"), and The Prudential Insurance Company of America, a
New Jersey corporation, having offices at 2029 Century Park East, Suite 3700,
Los Angeles, California 90067 ("Beneficiary").
WITNESSETH:
Trustor HEREBY IRREVOCABLY GRANTS, TRANSFERS AND ASSIGNS TO Trustee, IN
TRUST, WITH POWER OF SALE all of Trustor's right, title and interest now owned
or hereafter acquired in and to the following property, together with the
Personalty (as hereinafter defined), all of which is hereinafter collectively
defined as the "Property": (i) that certain real property (the "Land")
located in the County of Maricopa, State of Arizona, and more particularly
described in Exhibit A attached hereto; (ii) all Improvements (as hereinafter
defined) and all appurtenances, easements, rights and privileges thereof,
including all minerals, oil, gas and other hydrocarbon substances thereon or
therein, air rights, water rights and development rights, and any land lying
in the streets, roads or avenues adjoining the Land or any part thereof; (iii)
all Fixtures (as hereinafter defined), whether now or hereafter installed,
being hereby declared to be for all purposes of this Deed of Trust a part of
the Land; and (iv) the Rents (as hereinafter defined) of or from the Property.
FOR THE PURPOSE OF SECURING, in such order of priority as Beneficiary may
determine: (i) payment of the Indebtedness (as hereinafter defined); and (ii)
payment (with interest as provided) and performance by Trustor of the
Obligations (as hereinafter defined). Notwithstanding the foregoing, or any
other term contained herein or in the Loan Documents, none of Trustor's
obligations under or pursuant to the Unsecured Remediation and Indemnification
Agreement (as hereinafter defined) shall be secured by the lien of this Deed
of Trust.
A1
Definitions
Certain Defined Terms: As used in this Deed of Trust the following terms
shall have the following meanings; other terms are defined where they appear
in this Deed of Trust:
Application: The Application, dated May 2, 1995, executed by Trustor
(referred to as "Borrower" therein), which Application includes the exhibits
attached thereto.
Debt Service Coverage: The ratio, as determined by Beneficiary, of (a) Net
Operating Income for the Property for the preceding twelve-month period, to
(b) the sum of (i) the annual debt service payments (including principal and
interest) on the Loan for the preceding twelve-month period, and (ii) the
annual debt service payments (including principal and interest) on all other
indebtedness secured or which will be secured by a lien on all or part of the
Property for the preceding twelve-month period. For purposes of calculating
annual debt service, amortization of the aggregate principal indebtedness over
a thirty (30) year period (or such lesser period if the Note or other loan
documents in the case of loans other than the Loan provide otherwise) is
assumed to apply during the entire term of the Loan.
Event of Default: As defined in Paragraph 6.1 hereof.
Fixtures: All fixtures located upon or within the Improvements or now or
hereafter installed in, or used in connection with any of the Improvements,
including boilers, furnaces, pipes, plumbing, elevators, cleaning and
sprinkler systems, fire extinguishing apparatus and equipment, water tanks,
heating, ventilating, air conditioning and air cooling equipment, whether or
not permanently affixed to the Land or the Improvements.
Holdback Agreement: The Holdback Agreement (Improvements) of even date
herewith by and between Borrower and Lender.
Impositions: All real estate and personal property and other taxes and
assessments, water and sewer rates and charges levied or assessed upon or with
respect to the Property, and all other governmental charges and any interest
or costs or penalties with respect thereto, ground rent and charges for any
easement or agreement maintained for the benefit of the Property, general and
special, ordinary and extraordinary, foreseen or unforeseen, of any kind and
nature whatsoever that at any time prior to or after the execution of the Loan
Documents may be assessed, levied, imposed, or become a lien upon the Property
or the rent or income received therefrom, or any use or occupancy thereof; and
any and all other charges, expenses, payments, claims, mechanics' or material
suppliers' liens or assessments of any nature, if any, which are or may become
a lien upon the Property or the rent or income received therefrom.
Impound Account: The account that Trustor may be required to maintain
pursuant to Paragraph 3.4 hereof for the deposit of amounts required to pay
Impositions and insurance premiums.
Improvements: All buildings and other improvements and appurtenances
located on the Land, including surface improvements, such as parking areas and
landscaping structures and all improvements, additions and replacements
thereof, and other buildings and improvements, at any time hereafter
constructed or placed upon the Land.
Indebtedness: The principal of and all other amounts, payments and premiums
due under the Note and any extensions or renewals thereof (including
extensions or renewals at a different rate of interest, whether or not
evidenced by a new or additional promissory note or notes), and all other
indebtedness of Trustor to Beneficiary and additional advances under,
evidenced by and/or secured by the Loan Documents, plus interest on all such
amounts.
Inventory: The personal property Inventory certified by Trustor by Owner's
Affidavit of even date herewith.
Laws and Restrictions: All federal, state, regional, county, local and other
laws, regulations, orders, codes, ordinances, rules, statutes and policies,
restrictive covenants and other title encumbrances, permits and approvals,
Leases and other rental agreements, relating to the development, occupancy,
ownership, management, use, and/or operation of the Property or otherwise
affecting all or any part of the Property or Trustor.
Leases: Any and all leasehold interests, including subleases and tenancies
following attornment, now or hereafter affecting or covering any part of the
Property.
Loan: The loan from Beneficiary to Trustor evidenced by the Note.
Loan Documents: The Note, the Application, this Deed of Trust, the Assignment
of Agreements, the Assignment of Lessor's Interest in Leases and Rents, the
Secured Remediation and Indemnification Agreement, that certain letter
agreement re remedial repairs of even date herewith by and between Beneficiary
and Trustor, the Holdback Agreement and all other documents, with the
exception of the Unsecured Remediation and Indemnification Agreement,
evidencing, securing or relating to the Loan, the payment of the Indebtedness
or the performance of the Obligations.
Loan Parties: Trustor, Fox Partners II, a California general partnership, Fox
Capital Management Corporation, a California corporation, and/or Fox Realty
Investors, a California general partnership.
Loan to Value Ratio: The ratio, as determined by Beneficiary, of (i) the
aggregate principal balance, together with all accrued but unpaid interest, of
all encumbrances against the Property, to (ii) the fair market value of the
Property, as determined by Beneficiary.
Material Adverse Change: Any material and adverse change in (i) the financial
condition of any of the Loan Parties, or (ii) the condition or operation of
the Property.
Net Operating Income: For any period, gross income from operations of the
Property derived from arm's length, market rate rents from Leases with
unaffiliated third parties, service fees or charges, and additional rent
resulting from operating expense, common area maintenance and tax escalation
pass through provisions (excluding capital gains income derived from the sale
of assets and other items of income which Beneficiary reasonably determines
are unlikely to occur in any subsequent period), less operating expenses (such
as cleaning, utilities, administrative, landscaping, security and management
expenses, repairs and maintenance and reserves for replacements) and less
fixed expenses (such as insurance, real estate and other taxes), which
expenses shall be related to the Property, shall be for services from arm's
length third party transactions or equivalent to the same, and shall exclude
all expenses for capital improvements and replacements, debt service and
depreciation or amortization of capital expenditures and other similar noncash
items. Operating expenses shall include management fees of not less than four
percent (4.0%) of minimum base rent and a reserve for replacements of not less
than $250 per residential apartment unit per year. Gross income shall not be
anticipated for any greater period than that approved by generally accepted
accounting principles, nor shall operating expenses be prepaid.
Note: The Promissory Note of even date herewith executed by Trustor in the
original principal amount of _____________ _______________ Dollars
($________________), payable to Beneficiary or its order, and all
modifications, renewals or extensions thereof.
Obligations: Any and all of the covenants, promises and other obligations
(including, without limitation, the Indebtedness) made or owing by Trustor to
or due to Beneficiary under and/or as set forth in the Loan Documents and all
of the material covenants, promises and other obligations made or owing by
Trustor to each and every other Person relating to the Property.
Permitted Exceptions: All of those matters described on Exhibit B attached
hereto.
Person: Any natural person, corporation, firm, association, government,
governmental agency or any other entity, whether acting in an individual,
fiduciary or other capacity.
Personalty: Trustor's right, title and interest in all personal property
(other than Fixtures) now or hereafter located in, upon or about or collected
or used in connection with the Property, together with all present and future
attachments, accessions, replacements, substitutions and additions thereto or
therefor, and the cash and noncash proceeds thereof, including all property
listed in the Inventory, the Impound Account, all goods, documents,
instruments and chattel paper, all drawings, plans and specifications, all
causes of action and recoveries now or hereafter existing for any loss or
diminution in value of the Property, all licenses, governmental authorizations
or permits pertaining to the Property or the development, ownership,
management or operation thereof, the Rents, all trademarks, service marks,
designs, logos, names or similar identifications pertaining to the Property,
and all accounts, contract rights and general intangibles (including, without
limitation, any insurance proceeds and condemnation awards or compensation)
arising out of or incident to the ownership, development or operation of the
Property owned by or in which Trustor has an interest including, without
limitation, all personal property described in the UCC-1 Financing Statement
executed by Trustor of even date herewith, which is incorporated herein by
this reference, and all furniture, furnishings, equipment, machinery,
construction materials and supplies, leasehold interests in personal property
and the Leases.
Property: As defined in the above granting paragraph of this Deed of Trust.
Receiver: Any trustee, receiver, custodian, fiscal agent, liquidator or
similar officer.
Rents: All rents, royalties, revenues, issues, profits, proceeds and other
income from the Property.
Secondary Interest Rate: As defined in the Note.
Secured Remediation and Indemnification Agreement: The Secured Hazardous
Substances Remediation and Indemnification Agreement of even date herewith
executed by Trustor in favor of Beneficiary.
Unsecured Remediation and Indemnification Agreement. The Unsecured Hazardous
Substances Remediation and Indemnification Agreement of even date herewith
executed by Trustor in favor of Beneficiary.
A2
Representations and Warranties
Trustor hereby represents and warrants to Beneficiary and Trustee that as
of the date of this Deed of Trust and as of the date of any subsequent
disbursement pursuant to the Loan Documents:
A2.1 Title, Authorization and Organization. Trustor (i) is the lawful
owner of the Property and holds good and marketable title to the Property free
and clear of all defects, liens, encumbrances, easements, exceptions and
assessments, except the Permitted Exceptions; (ii) has good, right and lawful
authority to grant the Property as provided in and by this Deed of Trust;
(iii) has the requisite power and authority to own, develop and operate the
Property; (iv) is duly organized, validly existing and in good standing under
the laws of the State of its organization and is duly registered to do
business in the State in which the Land is located; and (v) is in compliance
with all Laws and Restrictions applicable to it.
A2.2 Validity of Loan Documents. The execution, delivery and performance
by Trustor of the Loan Documents and the borrowings evidenced by the Note are
within the power of Trustor, have been authorized by all requisite corporate
or partnership authority and will not violate any Laws and Restrictions or any
agreement or other instrument. Each of the Loan Documents when executed and
delivered to Beneficiary, will constitute a legal, valid and binding
obligation of Trustor enforceable in accordance with its terms.
A2.3 Financial Statements. All financial statements and data that have
been given to Beneficiary with respect to the Property or any Loan Party are
true, accurate, complete and correct and except as expressly noted to the
contrary therein, have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods covered
thereby. Notwithstanding the foregoing, the financial statements and data
that have been given to Beneficiary with respect to any Loan Party other than
Trustor have been prepared in accordance with sound accounting principles
consistently applied throughout the periods covered thereby. There has been
no Material Adverse Change since the date of the most recent financial
statements given to Beneficiary.
A2.4 Other Information. All reports, papers, data and information given
to Beneficiary with respect to Loan Parties and the Property are accurate,
correct and complete.
A2.5 Litigation. There is not now pending against or affecting any Loan
Party or the Property, nor to the best of Trustor's knowledge is there
threatened any action, suit or proceeding at law or in equity or by or before
any administrative agency that, if adversely determined, would materially
impair or affect (i) the financial condition or operations of such Loan Party,
or (ii) the condition, use or operation of the Property.
A2.6 Additional Representations and Warranties. (i) The Property is not
used principally or primarily for agricultural or grazing purposes; (ii) each
Loan Party has filed all federal, state, county and municipal income tax
returns required to have been filed by it and has paid all taxes that have
become due pursuant to such returns or pursuant to any assessments received by
it (and no Loan Party knows of any basis for any additional assessment against
it in respect of such taxes); (iii) all costs for labor and materials for the
construction of the Improvements have been paid in full; (iv) Trustor is not
aware of any assessment for public improvements which is pending and which
could become a lien upon the Property; (v) no event has occurred which with
the giving of notice or the passage of time, or both, would constitute an
Event of Default under any of the Loan Documents; (vi) Trustor is not a party
to any agreement or instrument materially and adversely affecting its present
or proposed business conducted on the Property or the Property itself,
financial or otherwise; (vii) Trustor is not in default in the performance,
observance or fulfillment of any of the material obligations, covenants or
conditions set forth in any such agreement or instrument to which it is a
party to the extent that the same would have a material and adverse effect on
the Property or Trustor's ability to timely perform its Obligations under the
Loan Documents; (viii) all Fixtures are permanently affixed to the
Improvements and are not subject to any financing statement or security
agreements covering the Fixtures, or any of them, and the costs of all
Fixtures due as of the date hereof have been paid; (ix) neither the Property,
nor any part thereof, has sustained, incurred or suffered any material damage
or destruction; and (x) subject to the Permitted Exceptions, the Personalty is
owned by Trustor, free and clear of any liens, encumbrances, mortgages,
security interests, claims and rights of others.
A2.7 Compliance with Laws. Except as otherwise revealed to Beneficiary
in the Owner's Affidavit of even date herewith from Trustor to Beneficiary,
the Property and the proposed and actual use thereof comply with all Laws and
Restrictions and the Laws and Restrictions contain no unsatisfied conditions
necessary for the actual use of the Property as it is currently used. Except
as otherwise revealed to Beneficiary in the Owner's Affidavit of even date
herewith from Trustor to Beneficiary, Trustor has received no notices of
violations of any Laws and Restrictions.
A2.8 Bankruptcy. No petition in bankruptcy, petition or answer seeking
assignment for the benefit of creditors or appointment of a Receiver with
respect to Trustor has occurred or is contemplated, and no reorganization,
arrangement, liquidation or dissolution or similar relief under the Federal
Bankruptcy laws or any state laws have been instituted by or against Trustor,
and none is contemplated.
A3
Affirmative Covenants
Trustor hereby covenants and agrees as follows:
A3.1 Obligations of Trustor. Trustor will (i) timely perform, or cause
to be timely performed, all the Obligations; (ii) maintain and preserve the
lien of this Deed of Trust; and (iii) forever warrant and defend its grant
made herein against any and all claims and demands whatsoever.
A3.2 Insurance.
A. Trustor, at its sole cost and expense, will keep and maintain
for the mutual benefit of Trustor and Beneficiary, the following policies of
insurance:
(1) Insurance against loss or damage to the Property by fire
and other risks covered by insurance commonly known as the broad form of
extended coverage, including losses sustained by reason of riot and civil
commotion, vandalism, malicious mischief, burglary, theft and mysterious
disappearance, flood (if the Property is located in a HUD designated special
flood hazard area), and against such other risks or hazards as Beneficiary
from time to time reasonably may designate, in an amount equal to one
hundred percent (100%) of the then "full replacement cost" of the
Improvements, the Fixtures and the Personalty, without deduction for physical
depreciation.
(2) Rental income insurance against loss of income in an amount
not less than twelve (12) months rental and taxes and other operating expense
reimbursements or payments at then-current income levels.
(3) Commercial General Liability insurance including broad form
property damage, contractual liability and personal injury or death coverage,
with a combined single limit of at least $5,000,000.
(4) "Builders Risk" insurance, during any material
construction, repair, replacement, renovation or alteration of the
Improvements, in such amounts as are reasonably approved by Beneficiary.
(5) If applicable, boiler and machinery insurance covering
boilers and other pressure vessels, the air conditioning system, high pressure
piping and other machinery and equipment required for the operation of the
Property.
(6) Such other insurance, and in such amounts, as may from time
to time be reasonably required by Beneficiary.
B. Trustor shall provide Beneficiary with satisfactory evidence
of compliance with applicable requirements for Worker's Compensation insurance
and of employee automobile coverage.
C. All policies of insurance required by this Deed of Trust (i)
shall be satisfactory in form and substance to Beneficiary and written with
companies satisfactory to Beneficiary, (ii) shall name Beneficiary as an
additional insured as its interests may appear, (iii) shall contain a Standard
Lender's Loss Payable endorsement and other non-contributory standard
mortgagee protection clauses acceptable to Beneficiary, and at Beneficiary's
option, a waiver of subrogation rights by the insurer, (iv) shall contain an
agreement by the insurer that such policy shall not be amended or cancelled
without at least thirty (30) days' prior written notice to Beneficiary, (v)
shall be in the amount of the full replacement cost of the Improvements,
without deduction for physical depreciation and (vi) shall contain such other
provisions as Beneficiary deems reasonably necessary or desirable to protect
its interests. Any policies containing a coinsurance clause shall include a
replacement cost endorsement adequate to ensure that the coinsurance clause is
rendered inoperative.
D. In the event a blanket policy is submitted to satisfy Trustor's
responsibilities under this Paragraph 3.2, in addition to such other
requirements set forth herein, Trustor shall deliver to Beneficiary a
certificate from such insurer indicating that Beneficiary is an insured under
such policy and designating the amount of such insurance applicable to the
Property.
E. Trustor shall furnish evidence, satisfactory to Beneficiary,
that (i) all insurance requirements (including, without limitation, provisions
for waivers of subrogation) set forth in the Leases or any other agreements
affecting the Property shall have been satisfied by each party thereto, and
(ii) Trustor's insurance coverage is sufficient (assuming the total
destruction of the Property) to permit Trustor to rebuild the Improvements
(including basic tenant improvements) and to replace the Fixtures and
Personalty in such manner as to enable the Property to be operable and
rentable as it is currently rented and operated.
F. Self-insurance (other than the applicable deductibles approved
by Beneficiary) shall not be employed to satisfy the requirements of this
Paragraph 3.2.
G. All of Trustor's right, title and interest in and to all
policies of property insurance and any unearned premiums paid thereon are
hereby assigned (to the fullest extent assignable) to Beneficiary who shall
have the right, but not the obligation, to assign the same to any purchaser of
the Property at any foreclosure sale.
H. Not less than thirty (30) days prior to the expiration dates of
any policy previously furnished pursuant to this Paragraph 3.2, Trustor shall
provide Beneficiary with duplicate originals or certified copies of the
renewal policies together with evidence satisfactory to Beneficiary of
Trustor's payment of the applicable premiums.
A3.3 Maintenance, Waste and Repair. Trustor will (i) maintain the
Property in good order and condition, (ii) promptly make all necessary
structural and non-structural repairs and replacements to the Property, (iii)
not diminish or materially alter the Improvements, nor erect any new
buildings, structures or building additions on the Property, without the prior
written consent of Beneficiary, and (iv) not permit any waste of the Property
or make any change in the use thereof, nor do or permit to be done thereon
anything, that may in any way impair the security of this Deed of Trust.
A3.4 Impositions; Impounds. Trustor will pay when due all Impositions.
Upon an Event of Default, Trustor will pay monthly to Beneficiary an amount
equal to one-twelfth (1/12th) of the annual cost of Impositions together with
an amount equal to the estimated next hazard and other required insurance
premiums. These funds will be held by Beneficiary (and may be commingled with
other funds of Beneficiary) without interest and will be released to Trustor
for payment of Impositions and insurance premiums, or directly applied to such
costs by Beneficiary, as Beneficiary may elect.
A3.5 Compliance with Law. Trustor will promptly and faithfully comply
with all present and future Laws and Restrictions.
A3.6 Books and Records. Trustor, without expense to Beneficiary, will
maintain full and complete books of account and other records reflecting the
results of the operations of the Property in accordance with generally
accepted accounting principles consistently applied, and will furnish or cause
to be furnished to Beneficiary such financial information concerning the
condition of the Loan Parties and the Property as Beneficiary shall reasonably
request. Notwithstanding the foregoing, books and records regarding the
condition of any of the Loan Parties other than Trustor may be prepared in
accordance with sound accounting principles consistently applied throughout
the periods covered thereby. The following information will be furnished
without request:
A. As soon as available, and in any event within thirty (30) days
after the close of each fiscal quarter of each fiscal year of Trustor, a
statement of revenues and expenses relating to the rentals and operations of
the Property for the applicable fiscal quarter just ended, certified by
Trustor;
B. As soon as available, and in any event within ninety (90) days
after the end of each fiscal year of Trustor, an annual operating statement
for the Property certified by an officer of the general partner of a general
partner of Trustor and a rent roll in the form delivered to Beneficiary in
connection with the closing of the Loan certified by Trustor reflecting all
the existing Leases.
C. As soon as available, and in any event within one hundred twenty
(120) days after the end of Trustor's fiscal year, a balance sheet of Trustor,
certified in a manner acceptable to Beneficiary.
Upon Beneficiary's reasonable request, Beneficiary shall have the right,
at all reasonable times and upon reasonable notice, to audit the books of
account and records of Trustor and/or otherwise relating to the Property, all
of which shall be made available at Trustor's office during reasonable
business hours to Beneficiary and Beneficiary's representatives for such
purpose, from time to time. If such audit discloses a variance of ten percent
(10%) or more in income or expenses, the cost of such audit shall be paid by
Trustor.
A3.7 Further Assurances. Trustor, at any time upon the reasonable
request of Beneficiary, will at Trustor's expense execute, acknowledge and
deliver all such additional papers and instruments (including, without
limitation, a declaration of no setoff) and all such further acts and things
as may be reasonably necessary to carry out the purposes of the Loan
Documents and to subject to the liens thereof any property intended by the
terms thereof to be covered thereby and any renewals, additions, substitutions
or replacements thereto.
A3.8 Indemnity and Attorneys' Fees. Trustor will indemnify, defend,
protect and hold Beneficiary harmless from and against, and shall be
responsible for, any and all liability, loss, claims, damage, cost or expense
(including, without limitation, reasonable attorneys' fees) that Beneficiary
may or might incur hereunder, or in connection with the making or
administering of the Loan, the enforcement of any of Beneficiary's rights or
remedies hereunder or under the other Loan Documents, any action taken by
Beneficiary hereunder or thereunder, whether or not suit is filed, or by
reason or in defense of any and all claims and demands whatsoever that may be
asserted against Beneficiary arising out of the Property, or any part thereof
or interest therein, or as to which it becomes necessary to defend or uphold
the lien of this Deed of Trust or other Loan Documents. Should Beneficiary
incur any such liability, loss, claim, damage, cost or expense, the amount
thereof with interest thereon at the Secondary Interest Rate shall be payable
by Trustor immediately without demand, shall be secured by this Deed of Trust,
and shall be part of the Indebtedness. Notwithstanding anything to the
contrary contained in this Section 3.8, this indemnity shall not apply to
liability, loss, claims, damage, cost or expense arising out of Beneficiary's
gross negligence or willful misconduct except to the extent, and in such
proportion as, such liability, loss, claims, damage, cost or expense is also
caused by Trustor.
A3.9 Litigation. Trustor will promptly give notice in writing to
Beneficiary of any litigation which may reasonably be expected to result in a
Material Adverse Change.
A3.10 Inspection of Property. Trustor hereby grants to Beneficiary, its
agents, employees, consultants and contractors, the right to enter upon the
Property for the purpose of making any and all inspections, reports, tests
(including, without limitation, soils borings, ground water testing, wells
and/or soils analysis), inquiries and reviews as Beneficiary (in its sole and
absolute discretion) may deem necessary to assess the then current condition
of the Property. Beneficiary shall provide Trustor with one (1) business
day's notice of such entry; provided, however, that Trustor's consent shall
not be required for such entry or for the performance of such tests. All
costs, fees and expenses (including those of Beneficiary's legal counsel and
consultants) incurred by Beneficiary with respect to such inspections,
reports, tests, inquiries and reviews shall be paid by Trustor to Beneficiary
upon demand, shall begin to accrue interest at the Secondary Interest Rate
from the date five (5) business days after demand for payment until paid, and
shall be secured by this Deed of Trust.
A3.11 Contest. Notwithstanding the provisions of Paragraphs 3.4 and 3.5
hereof, Trustor may, at its expense, contest the validity or application of
any Impositions or Laws and Restrictions by appropriate legal proceedings
promptly initiated and conducted in good faith and with due diligence,
provided that (i) Beneficiary is reasonably satisfied that neither the
Property nor any part thereof or interest therein will be in danger of being
sold, forfeited, or lost as a result of such contest, and (ii) Trustor shall
have posted a bond or furnished such other security as may be reasonably
required from time to time by Beneficiary.
A3.12 Tax Receipts. Trustor will deliver to Beneficiary, within seven
(7) days after the demand made therefor, bills showing the payment to the
extent then due of all taxes, assessments (including, without limitation,
those payable in periodic installments), and any Imposition that may have
become a lien upon the Property or any part thereof.
A3.13 Additional Information. Trustor will furnish to Beneficiary,
within seven (7) days after written request therefor, or as soon thereafter as
reasonably possible in the event seven days is not reasonably possible, any
and all information that Beneficiary may reasonably request concerning the
Property or the performance by Trustor of the Obligations.
A3.14 Prepayment. Trustor may prepay the Loan only on the terms and
conditions set forth in the Note and Trustor shall pay Beneficiary prepayment
charges in respect of any prepayment, whether voluntary or involuntary, as
required by and on the terms and conditions set forth in the Note.
A3.15 FIRPTA Affidavit. In the event of any transfer by Trustor of its
rights hereunder or of any interest in the Property otherwise permitted under
this Deed of Trust, such transferee shall, as an additional condition to such
transfer, under penalty of perjury, execute and deliver to Beneficiary an
affidavit concerning the non-foreign status of such transferee substantially
in the form required to be delivered by Trustor in connection with the funding
of the Loan. Nothing in this Paragraph 3.15 shall be deemed a modification or
waiver of any other provision of any of the Loan Documents limiting,
prohibiting or otherwise relating to any transfer of any interest in the
Property or Trustor.
A3.16 Tax Service Contract. Throughout the term of the Loan, at
Trustor's sole expense, Beneficiary shall be furnished tax service contracts
issued by a tax reporting agency satisfactory to Beneficiary.
A3.17 Reimbursement. Any amount paid by Beneficiary for any tax, stamp
tax, assessment, water rate, sewer rate, insurance premium, repair, rent
charge, debt, claim, inspection or lien having priority over this Deed of
Trust or to in any way protect the security for the Loan, shall (i) bear
interest at the Secondary Interest Rate from the date of payment by
Beneficiary, (ii) constitute additional indebtedness secured by this Deed of
Trust, prior to any right, title or interest in or claim upon the Property
attaching or accruing subsequent to the lien of this Deed of Trust, (iii) be
secured by this Deed of Trust, and (iv) be payable by Trustor to Beneficiary
upon demand.
A3.18 Plans and Specifications. Trustor agrees to keep at its offices at
the Property, and to make available to Beneficiary during normal business
hours, "As-Built Plans and Specifications", or, if unavailable, the final set
of set of plans and specifications from which the Improvements were con-
structed ("As-Builts"), certified by a licensed architect or licensed
contractor as true, correct and complete As-Builts for the Improvements.
A4
Negative Covenants
Trustor hereby covenants and agrees as follows:
A4.1 Restrictive Uses. Trustor will not initiate, join in, or consent to
any change in the current use of the Property or in any zoning ordinance,
private restrictive covenant, assessment proceedings or other public or
private restrictions limiting or restricting the uses that may be made of the
Property or any part thereof without the prior written consent of Beneficiary.
A4.2 Due on Sale or Encumbrance.
A. In the event that Trustor, without the prior written consent of
Beneficiary (which consent may be withheld for any reason or for no reason or
given upon such terms and conditions as Beneficiary deems necessary or
appropriate, all within Beneficiary's absolute discretion), shall sell,
convey, assign, transfer, alienate or otherwise dispose of or be divested of
its title to, or, shall mortgage, convey security title to, or otherwise
encumber or cause to be encumbered, the Property or any part thereof or any
interest therein in any manner or way, whether voluntary or involuntary, or in
the event of (a) any merger, consolidation or dissolution involving, or the
sale or transfer of all or substantially all of the assets of, Trustor or any
general partner of Trustor, (b) the transfer (at one time or over any period
of time) of ten percent (10%) or more of the voting stock of (i) a corporate
Trustor, (ii) any corporate general partner of Trustor or (iii) any
corporation which is the direct or indirect owner of ten percent (10%) or more
of the voting stock of Trustor or any general partner of Trustor, (c) the
transfer of any general partnership interest in Trustor or in any partnership
which is a direct or indirect general partner of Trustor, or (d) the
conversion of any such general partnership interest to a limited partnership
interest, then the entire balance of the Indebtedness, plus the Prepayment
Premium (as defined in the Note), shall become immediately due and payable at
the option of Beneficiary. Trustor hereby covenants not to participate in,
cause or permit any of the foregoing actions or events described in this
Section 4.2 without Beneficiary's prior written consent. Consent to one such
transfer by Beneficiary shall not be deemed a waiver of the right to require
such consent to further or future transfers. Any such transferee shall, as a
condition of the effectiveness of any consent or waiver by Beneficiary
hereunder, as a covenant of Trustor and such transferee, and in form and
substance required by Beneficiary, assume all obligations under the Loan
Documents and the assumption shall not, however, release Trustor, or any maker
or guarantor of the Note, from any liability thereunder. This provision shall
not apply to transfers of title or interest under any will or testament or
applicable law of descent or to the transfer of any interest in National
Property Investors, Inc., a Delaware corporation.
B. Notwithstanding the foregoing, if no Event of Default or event
which with the passage of time or the giving of notice or both would
constitute an Event of Default has occurred and is continuing, Beneficiary
agrees upon written request of Trustor, and following the fourth anniversary
of the date of the recordation of this Deed of Trust, not to unreasonably
withhold consent to a one-time transfer of the entire Property if: (i) the
proposed transferee of the Property is a Person which, in the judgment of
Beneficiary, has the financial capability and creditworthiness, reputation and
experience (by itself or through its manager) in the ownership, operation and
leasing of similar properties, equal to or greater than Trustor; (ii) at the
time of transfer the Loan to Value Ratio does not exceed sixty-five percent
(65%); (iii) the proposed transferee provides a minimum cash down payment
equal to at least thirty-five percent (35%) of the net purchase price of the
Property when purchasing the Property, (iv) Beneficiary has received thirty
(30) days' prior written notice from Trustor of the proposed transfer; (v) as
consideration for the approval of such transfer, Trustor has paid Beneficiary
a sum equal to one percent (1.0%) of the then outstanding principal balance of
the Loan; (vi) at Beneficiary's option, Beneficiary has received an
endorsement to Beneficiary's title policy at Trustor's expense, which
endorsement states that this Deed of Trust remains a first and prior lien
against the Property; (vii) Debt Service Coverage is equal to or greater than
1.50 to 1.00 and Beneficiary receives satisfactory evidence that such Debt
Service Coverage will be maintained for the next succeeding twelve (12)
months; (viii) the transferee expressly assumes the Obligations to be
performed under the Loan Documents and the Unsecured Remediation and
Indemnification Agreement pursuant to an assumption document satisfactory to
Beneficiary; (ix) Beneficiary is furnished with a certified copy of the
recorded transfer instruments; and (x) Trustor pays all reasonable costs and
expenses incurred by Beneficiary in connection with such transfer, including,
without limitation, all legal, accounting, title insurance and appraisal fees,
whether or not such transfer is actually consummated.
A4.3 Replacement of Fixtures and Personalty. Trustor will not permit any
of the Fixtures or Personalty to be removed at any time from the Property
without the prior written consent of Beneficiary unless actually replaced by
articles of equal suitability and value owned by Trustor free and clear of any
lien or security interest.
A4.4 No Cooperative or Condominium. Trustor shall not operate the
Property or permit the Property to be operated, as a cooperative or
condominium building or buildings in which the tenants or occupants
participate in the ownership, control, or management of the Property or any
part thereof, as tenant stockholders or otherwise.
A4.5 Partnership Agreement. Trustor, if a partnership, will not
terminate, alter, modify or amend or permit the termination, alteration,
modification or amendment of its Partnership Agreement without Beneficiary's
prior written consent if: (i) An Event of Default has occurred and is
continuing, or (ii) if such action could have a material adverse effect on
Trustor, the Property or the value of Beneficiary's real property security, or
(iii) if such action could result in a violation of any other provision of the
Loan Documents, including without limitation Section 4.2 of this Deed of
Trust.
A5
Casualties and Condemnation
A5.1 Insurance and Condemnation Proceeds.
A. Trustor will notify Beneficiary in writing promptly after loss
or damage caused by fire or other casualty to all or any part of the Property,
and prior to the making of any repairs thereto. Trustor will furnish to
Beneficiary within sixty (60) days after such loss or damage (a) preliminary
plans and specifications for the repair and reconstruction of the Property
(the "Preliminary Plans and Specifications"); and (b) evidence satisfactory to
Beneficiary (i) of the cost of repair or reconstruction in accordance with the
Preliminary Plans and Specifications, (ii) that sufficient funds are avail-
able and/or committed for the benefit of Beneficiary, including insurance
proceeds, funds provided by the Trustor, payment and performance bond, or
otherwise, to complete such repair or reconstruction, and (iii) that such
repair or reconstruction may be completed in accordance with all applicable
Laws and Restrictions within the time frame described in Paragraph 5.1.C.(v)
hereof and that all necessary permits and approvals have been or will be
obtained. Trustor hereby unconditionally and irrevocably waives all rights of
a property owner under any statute providing for the allocation of
condemnation proceeds between a property owner and a lien holder.
B. In the event an Event of Default has occurred and is continuing
under any of the Loan Documents, or in the event of any damage to the Property
in excess of $25,000, all insurance proceeds on account of any damage to the
Property shall be payable to, and deposited with, Beneficiary. Beneficiary,
at its sole option, may (i) apply such insurance proceeds in payment of the
Indebtedness or in satisfaction of any other Obligation in such order as
Beneficiary may determine, (ii) use such insurance proceeds to repair or
reconstruct the Improvements, (iii) release such insurance proceeds to Trustor
for repair or reconstruction of the Improvements in accordance with the
procedures described in Paragraph 5.1.E hereof, or (iv) divide such proceeds
in any manner among any such application, use or release. No such
application, use or release shall, however, extend or postpone the due date of
any installments under the Note or change the amount of such installments or
cure or waive any Event of Default or notice of Event of Default under the
Loan Documents or invalidate any act done pursuant to such notice.
C. Notwithstanding the provisions of Paragraph 5.1.B hereof, if
all or any part of the Property is damaged or destroyed or less than all of
the Property is taken by any public or quasi-public authority through
condemnation, eminent domain, deed in lieu thereof, or otherwise, Beneficiary
shall make the net amount of all insurance proceeds and condemnation awards
received by Beneficiary after deduction of Beneficiary's reasonable costs and
expenses, if any, in collection of the same and costs associated with
Beneficiary's review of the Preliminary Plans and Specifications and other
costs associated with disbursement of such proceeds (the "Net Proceeds")
available for the repair and reconstruction of the Property (or so much
thereof as was not condemned) pursuant to the procedures described in
Paragraph 5.1.E hereof, provided that (i) no Event of Default or event which,
with the giving of notice or the passage of time, or both, would constitute an
Event of Default, shall have occurred and shall be continuing, (ii) Trustor
has complied with the provisions of Paragraph 5.1.A hereof and Beneficiary
has approved the Preliminary Plans and Specifications, (iii) Trustor shall
proceed with the reconstruction of the Property as nearly as possible to the
condition it was in immediately prior to the occurrence of such casualty or
taking (the "Occurrence") and in accordance with the Plans and Specifications
as promptly as is practicable after the Occurrence, but in no event later than
three (3) months after the Occurrence, (iv) Beneficiary shall be satisfied
that either Leases with an aggregate rentable square footage of ten percent
(10%) or more of the total rentable square feet contained in the Property
prior to the Occurrence shall not be terminated or terminable as a result of
the Occurrence, or Trustor has obtained sufficient rental income insurance to
cover the loss of rental income from all terminated and terminable Leases
during the time required to complete reconstruction of the Property and relet
all units previously occupied pursuant to such Leases, (v) Beneficiary shall
be satisfied that such reconstruction can be completed no later than twelve
(12) months after the Occurrence and at least two (2) years before the
maturity of the Loan, (vi) Beneficiary shall be satisfied that the
reconstruction can be completed at a cost which does not exceed the Net
Proceeds, or, in the event the cost of such restoration exceeds the Net
Proceeds, Trustor shall have satisfied the requirements set forth in Para-
graph 5.1.F(i) hereof or Paragraph 5.1.F(ii) hereof, (vii) Beneficiary shall
be satisfied that Trustor (whether with rental loss insurance proceeds or
otherwise) will continue to be able to timely pay all payments as they become
due on the Indebtedness during such period of repair and reconstruction,
(viii) Trustor shall cause such reconstruction to be completed with due
diligence as promptly as possible after commencement, but in no event later
than twelve (12) months after the Occurrence and at least two (2) years before
the maturity of the Loan, (ix) Beneficiary determines that repair or recon-
struction is economically feasible and that the Loan to Value Ratio of the
repaired or reconstructed Property will be 75% or less, the Debt Service
Coverage will be 1.20 to 1.00 or greater and Beneficiary receives satisfactory
evidence that such Debt Service Coverage will be maintained for the next
succeeding twelve (12) months, and (x) Trustor shall have entered into a
general construction contract acceptable in all material respects to
Beneficiary for completion of the repair or reconstruction, which contract
must include provision for a retainage of not less than ten percent (10%)
until full completion of the repair or reconstruction.
D. Beneficiary shall be entitled to settle and adjust all insurance
claims, and Beneficiary may deduct and retain from the proceeds of any
insurance the amount of all expenses incurred by Beneficiary in connection
with any settlement or adjustment.
E. The Net Proceeds and any additional funds deposited by Trustor
with Beneficiary shall constitute additional security for the Loan. Trustor
shall execute, deliver, file and/or record, at its own expense, such documents
and instruments as Beneficiary deems necessary or advisable to grant to
Beneficiary a perfected, first priority security interest in the Net Proceeds
and such additional funds. Provided that Trustor is otherwise entitled to
receive the Net Proceeds pursuant to the terms and provisions of this Deed of
Trust, Beneficiary shall pay the Net Proceeds to Trustor from time to time
during the course of the restoration, subject to the following terms and
conditions:
(1) The work, if necessary under the circumstance, or in the
event any structural repair is required, shall be administered and overseen by
an architect or engineer approved by Beneficiary (the "Architect"). Complete
copies of the plans and specifications for the work (the "Plans and
Specifications"), approved by all governmental authorities whose approval is
required, and bearing the signed approval thereof by the Architect and
accompanied by the Architect's signed estimate, bearing the Architect's seal,
of the entire cost of completing the work, shall be delivered to Beneficiary;
(2) Each request for payment shall be made upon seven (7) day's
prior written notice to Beneficiary and shall, if necessary under the
circumstance, or in the event any structural repair is required, be
accompanied by a certificate to be made by the Architect stating that (i) all
of the work completed has been done in compliance with the Plans and
Specifications, as approved by Beneficiary, (ii) the sum requested is justly
required to reimburse Trustor for payments by Trustor to, or is justly due to,
the contractor, subcontractors, materialmen, laborers, engineers, architects
or other persons rendering services and materials for the work (giving a brief
description of such services and materials) and, when added to all sums
previously paid out by Beneficiary, does not exceed the value of the work done
to the date of such certificate, and (iii) the amount of such proceeds
remaining with Beneficiary are sufficient on completion of the work to pay for
the same in full (giving in such reasonable detail as Beneficiary may require
an estimate of the cost of such completion);
(3) Each request shall be accompanied by waivers of lien
satisfactory to Beneficiary covering that part of the work for which payment
or reimbursement is being requested and, if required by Beneficiary, by a
search prepared by a title company satisfactory to Beneficiary, that there has
not been filed with respect to the Property any mechanics', materialmen's or
other liens;
(4) The request for any payment after the work has been
completed shall be accompanied by a copy of any certificate or certificates
required by any Laws and Restrictions for legal occupancy of the Improvements;
(5) Trustor shall deliver to Beneficiary certified or
photostatic copies of all permits and approvals required by any Laws and
Restrictions in connection with the commencement and conduct of the work;
(6) In the event the damage to the Property is $100,000 or
more, Trustor shall deliver to Beneficiary a surety bond for and/or guaranty
of the payment for and completion of the work, which bond or guaranty shall be
in form and substance satisfactory to Beneficiary and in an amount no less
than the Architect's estimate of the entire cost of completing the work; and
(7) Prior to disbursement on account of the final request, the
work has been substantially completed and a Notice of Completion has been
recorded in the Official Records of Maricopa County, Arizona.
F. Notwithstanding anything to the contrary contained herein or in
any of the insurance policies, all proceeds paid to Trustor under such
policies shall immediately be delivered to Beneficiary. If the Net Proceeds
exceed the costs of completion of the restoration of the Property, such
excess proceeds shall belong and be retained by and/or paid over to
Beneficiary to be applied against the Indebtedness. If at any time the Net
Proceeds shall not, in Beneficiary's opinion, be sufficient to pay in full the
balance of the costs which will be incurred in connection with the repair and
reconstruction of the Property and all payments as they come due on the
Indebtedness and all other obligations which are or may be secured by a lien
on the Property during the reconstruction period, Trustor shall, prior to
receiving any further disbursement, either (i) complete, using its own funds
and not borrowed funds, such portion of the reconstruction as shall be
sufficient to render the Net Proceeds sufficient to complete the
reconstruction, or (ii) deposit the deficiency with Beneficiary before any
further disbursement of the Net Proceeds shall be made, which deficiency
deposit shall be held by Beneficiary in an interest bearing special account
and shall be disbursed on the same conditions applicable to the Net Proceeds.
Beneficiary shall remit to Trustor the balance, if any, of any such deficiency
deposit remaining after completion of the reconstruction.
A5.2 Additional Provisions Relating to Condemnation. Trustor,
immediately upon obtaining knowledge of the commencement of any proceedings
for the condemnation of the entire Property or any material part thereof, will
notify Trustee and the Beneficiary of the pendency of such proceedings.
Trustee and Beneficiary may participate in any such proceedings and Trustor
from time to time will deliver to Beneficiary all instruments requested by
Beneficiary to permit such participation. In the event of such condemnation
proceedings, the award or compensation payable is hereby assigned to and shall
be paid to Beneficiary. Beneficiary shall be under no obligation to question
the amount of any such award or compensation and may accept the same in the
amount in which the same shall be paid. In any such condemnation proceedings
Beneficiary may be represented by counsel selected by Beneficiary, the cost
of such counsel to be borne by Trustor. The proceeds of any award or
compensation so received shall, at the option of Beneficiary, either be
applied to the prepayment of the Indebtedness or be paid over to the Trustor
for restoration of the Improvements in accordance with the provisions of
Paragraph 5.1.E hereof.
A6
Events of Default and Remedies of Beneficiary
A6.1 Events of Default.
A. If one or more of the following events shall have occurred and
be continuing:
(1) Trustor shall fail to pay when due any part of the
Indebtedness;
(2) Trustor shall fail to timely observe, perform or discharge
any Obligation contained in any of the Loan Documents, any agreement relating
to the Property or any other loan documents with respect to the Property on
its part to be performed or observed, other than as described in Paragraphs
6.1.A(1), (3), (4), (5), (6), (7) and (8), and any such failure shall remain
unremedied for thirty (30) days or such lesser period as may be otherwise
specified in the applicable Loan Document (the "Grace Period") after notice to
Trustor of the occurrence of such failure; provided, however, that the Grace
Period may be extended to ninety (90) days if: (a) Beneficiary determines in
good faith that (i) such default cannot be cured within the Grace Period but
can be cured within ninety (90) days, (ii) no lien or security interest
created by the Loan Documents shall be impaired prior to the completion of
such cure, and (iii) Beneficiary's immediate exercise of any remedies provided
hereunder or by law is not necessary for the protection or preservation of the
Property or Beneficiary's security interest therein, and (b) Trustor shall
immediately commence and diligently pursue the cure of such default;
(3) Trustor, as lessor or sublessor, as the case may be, shall
assign the Rents (other than to Beneficiary) without first obtaining the
written consent of Beneficiary;
(4) Default by Trustor after the expiration of all applicable
grace or cure periods under any agreement other than the Loan Documents to
which Trustor is a party, which agreement relates to the borrowing of money by
Trustor from any Person, and such default might have an adverse effect upon
the value or the operation of the Property, or the security for the Loan;
(5) Any representation or warranty made by Trustor in, under or
pursuant to the Loan Documents was false or misleading in any material respect
as of the date on which such representation or warranty was made or deemed
remade;
(6) (i) Any claim or lien shall be filed against the Property
or any part thereof, whether or not such lien shall be prior to this Deed of
Trust, which shall be maintained for a period of ninety (90) days without
discharge, satisfaction or adequate bonding in accordance with the terms of
this Deed of Trust; (ii) the existence of any interest in the Property other
than the Permitted Exceptions, those of Trustor, Trustee, Beneficiary and any
tenants in the Property; or (iii) the sale, hypothecation, conveyance or other
disposition of the Property without the prior written consent of Beneficiary
except as the result of the condemnation of a non-material part of the
Property as set forth in Paragraph 5.1 above;
(7) Any of the Loan Documents, at any time after their
respective execution and delivery and for any reason, other than an act or
omission of Beneficiary, shall cease to be in full force and effect or be
declared null and void, or shall cease to constitute valid and subsisting
liens and/or valid and perfected security interests in and to the Property, or
Trustor shall contest or deny in writing that it has any further liability or
obligation under any of the Loan Documents; or
(8) The failure of Trustor to observe, or any breach in, the
provisions of Section 4.2, above.
THEN and in any such event Beneficiary may, by written notice delivered to
Trustor, which notice specifically states the occurrence of an Event of
Default, declare Trustor to be in default. Upon the occurrence of such event
and the giving of such notice, the same shall constitute an event of default
(an "Event of Default").
B. It shall constitute an Event of Default hereunder without the
requirement of any notice if one or more of the following events shall have
occurred and be continuing:
(1) (i) The entry of an order for relief under Title 11 of the
United States Code as to Trustor, any general partner of Trustor, any parent
company of such partner, or any owner of the Property or any interest therein
(other than limited partners of Trustor) or the adjudication of Trustor, any
general partner of Trustor, or any owner of the Property as insolvent or
bankrupt pursuant to the provisions of any state insolvency or bankruptcy act;
(ii) the commencement by Trustor, any general partner of Trustor, any parent
company of such partner, or any owner of the Property or any interest therein
(other than limited partners of Trustor) of any case, proceeding or other
action seeking any reorganization, arrangement, composition, adjustment,
liquidation, dissolution or similar relief for itself under any present or
future statute, law or regulation relating to bankruptcy, insolvency,
reorganization or other relief for debtors; (iii) consent to, acquiescence in
or attempt to secure the appointment of any Receiver of all or any substantial
part of its properties or of the Property by Trustor, any general partner of
Trustor, any parent company of such partner, or any owner of the Property or
any interest therein (other than limited partners of Trustor); (iv) Trustor,
any general partner of Trustor, any parent company of such partner, or any
owner of the Property or any interest therein (other than limited partners of
Trustor) shall generally not pay its debts as they become due or shall admit
in writing its inability to pay its debts or shall make a general assignment
for the benefit of creditors; or (v) Trustor, any general partner of
Trustor, any parent company of such partner, or any owner of the Property or
any interest therein (other than limited partners of Trustor) shall take any
action to authorize any of the acts set forth above; or
(2) Any case, proceeding or other action against Trustor, any
general partner of Trustor, any parent company of such partner, or any owner
of Property or any interest therein (other than limited partners of Trustor)
shall be commenced seeking to have an order for relief entered against such
party as a debtor or seeking any reorganization, arrangement, composition,
adjustment, liquidation, dissolution or similar relief for itself under any
present or future statute, law or regulation relating to bankruptcy,
insolvency, reorganization or other relief for debtors, or seeking the
appointment of any Receiver for Trustor, any general partner thereof, any
parent company of such partner, or any owner of the Property or any interest
therein (other than limited partners of Trustor) or for all or any substantial
part of its property or the Property, and such case, proceeding or other
action remains undismissed for an aggregate of sixty (60) days (whether or not
consecutive) or Trustor or such owner or general partner or parent company
during the period of its ownership fails to proceed diligently during such
sixty (60) day period to have such proceeding or other action dismissed.
C. Upon the occurrence of any Event of Default, Beneficiary may at
any time declare all of the Indebtedness to be due and payable and the same
shall thereupon become immediately due and payable, together with any
prepayment fee due in accordance with the terms of the Note, without any
further presentment, demand, protest or notice of any kind. Beneficiary may
in its sole discretion, also do any of the following:
(1) in person, by agent, or by a Receiver, and without regard
to the adequacy of security, the solvency of Trustor or the condition of the
Property, enter upon and take possession of the Property, or any part thereof,
in its own name or in the name of Trustee and do any acts which Beneficiary
deems necessary to preserve the value, marketability or rentability of the
Property; sue for or otherwise collect the Rents, including those past due and
unpaid, and apply the same, less cost and expenses of operation and
collection, including, without limitation, reasonable attorneys' fees, against
the Indebtedness, all in such order as Beneficiary may determine. The
entering upon and taking possession of said property, the collection of the
Rents and the application thereof as aforesaid shall not cure or waive any
default or notice of default hereunder or invalidate any act done pursuant to
such notice;
(2) commence an action to foreclose this Deed of Trust in the
manner provided under this Deed of Trust or by law;
(3) with respect to any Personalty, proceed as to both the real
and personal property in accordance with Beneficiary's rights and remedies in
respect of the Land, or proceed to sell said Personalty separately and without
regard to the Land and the Improvements in accordance with Beneficiary's
rights and remedies as to personal property (any proceeds of any such sale
shall not cure any Event of Default or reinstate any Indebtedness for purposes
of A.R.S. Section 33-813); or;
(4) deliver to Trustee a written declaration of default and
demand for sale, and a written notice of default and election to cause the
Property to be sold, which notice Trustee or Beneficiary shall cause to be
duly filed for record.
A6.2 Power of Sale.
A. Should Beneficiary elect to foreclose by exercise of the power
of sale herein contained, Beneficiary shall also deposit with Trustee this
Deed of Trust and such receipts and evidence of expenditures made and secured
hereby as Trustee may require, and notice of default having been given as then
required by law, and after lapse of such time as may then be required by law,
after recordation of such notice of default, Trustee, without demand on
Trustor, shall, after notice of sale having been given as required by law,
sell the Property at the time and place of sale fixed by it in said notice of
sale, either as a whole or in separate parcels as Beneficiary shall determine,
and in such order as Beneficiary may determine, at public auction to the
highest bidder. Beneficiary may, in its sole discretion, designate the order
in which the Property shall be offered for sale or sold through a single sale
or through two or more successive sales, or in any other manner Beneficiary
deems to be in its best interest. If Beneficiary elects more than one sale or
other disposition of the Property, Beneficiary may at its option cause the
same to be conducted simultaneously or successively, on the same day or at
such different days or times and in such order as Beneficiary may deem to be
in its best interest, and no such sale shall terminate or otherwise affect the
lien of this Deed of Trust on any part of the Property not then sold until all
Indebtedness secured hereby has been fully paid. If Beneficiary elects to
dispose of the Property though more than one sale, Trustor shall pay the costs
and expenses of each such sale of its interest in the Property and of any
proceedings where the same may be made. Trustee may postpone sale of all or
any part of the Property by public announcement at such time and place of
sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement, and without
further notice make such sale at the time fixed by the last postponement; or
Trustee may, in its discretion, give a new notice of sale. Beneficiary may
rescind any such notice of default at any time before Trustee's sale by
executing a notice of rescission and recording the same. The recordation of
such notice shall constitute a cancellation of any prior declaration of
default and demand for sale and of any acceleration of maturity of
Indebtedness affected by any prior declaration or notice of default. The
exercise by Beneficiary of the right of rescission shall not constitute a
waiver of any default then existing or subsequently occurring, or impair the
right of Beneficiary to execute other declarations of default and demand for
sale, or notices of default and of election to cause the Property to be sold,
nor otherwise affect the Note or this Deed of Trust, or any of the rights,
obligations or remedies of Beneficiary or Trustee hereunder or thereunder.
After sale Trustee shall deliver to such purchaser its deed conveying the
property so sold, but without any covenant or warranty, express or implied.
Any such deed shall be conclusive evidence in favor of purchasers and
encumbrances for value and without notice, and that all requirements of law
were met relating to the exercise of the power of sale and the Trustee's sale
of the Property conveyed by such deed. Knowledge of the Trustee shall not be
imputed to the Beneficiary. Any Person, including, without limitation,
Trustor, Trustee or Beneficiary, may purchase at such sale. If allowed by
law, Beneficiary, if it is the purchaser, may turn in the Note at the amount
owing therein toward payment of the purchase price (or for endorsement of the
purchase price as a payment on the Note if the amount owing thereon exceeds
the purchase price). Trustor hereby expressly waives any right of redemption
after sale that Trustor may have at the time of sale or that may apply to the
sale.
B. Trustee, upon such sale, shall make (without any covenant or
warranty, express or implied), execute and after due payment made, deliver to
the purchaser, its heirs or assigns, a deed or other record of interest, as
the case may be, in and to the property so sold that shall convey to the
purchaser all the title and interest of Trustor in the Property (or part
thereof sold), and shall apply the proceeds of such sale in payment to the
extent permitted under applicable law, first, of the cost and expenses of
exercising the power of sale and such sale together with the reasonable
expenses of the trust, including, without limitation, trustee's fees and
attorneys' fees reasonably incurred, that shall become due upon any default
made by Trustor, and also such sums, if any, as Trustee or Beneficiary shall
have paid for procuring a search of the title to the Property, or any part
thereof, subsequent to the execution of this Deed of Trust; and in payment,
second, of the Indebtedness then remaining unpaid, and the amount of all other
monies with interest thereon agreed or provided to be paid by Trustor; and the
balance or surplus of such proceeds of sale Trustee shall pay to the junior
lien holder or encumbrancers in order of their priority, and then to Trustor,
its successors or assigns as their interest may appear.
A6.3 Proof of Default. In the event of a sale of the Property, or any
part thereof, and the execution of a deed therefor, the recital therein of
default, and of recording notice of default and election of sale, and of the
elapsing of the required time (if any) between the foregoing recording and the
following notice, and of the giving of notice of sale, and of a demand by
Beneficiary, or its successors or assigns, that such sale should be made,
shall be conclusive proof of such default, recording, election, elapsing of
time, and of the due giving of such notice, and that the sale was regularly
and validly made on due and proper demand by Beneficiary, its successors or
assigns. Any such deed or deeds with such recitals therein shall be effective
and conclusive against Trustor, its successors and assigns, and all other
Persons. The receipt for the purchase money recited or contained in any deed
executed to the purchaser as aforesaid shall be sufficient to discharge such
purchaser from all obligations to see to the proper application of the
purchase money.
A6.4 Protection of Security. If an Event of Default shall have occurred
and be continuing, then Beneficiary or Trustee, but without obligation so to
do and without notice to or demand upon Trustor and without releasing Trustor
from any obligations or defaults hereunder, may, and Trustor hereby
constitutes and appoints Beneficiary as Trustor's true and lawful attorney,
coupled with an interest, with full power of substitution, in the name, place
and stead of Trustor, to: (i) perform any act in such manner and to such
extent as either may deem necessary to protect the security hereof,
Beneficiary and Trustee being authorized to enter upon the Property for such
purpose; (ii) appear in and defend any action or proceeding purporting to
affect, in any manner whatsoever, the obligations or the Indebtedness, the
security hereof or the rights or powers of Beneficiary or Trustee; (iii) pay,
purchase or compromise any encumbrance, charge or lien that in the judgment of
Beneficiary or Trustee is prior or superior hereto; and (iv) in exercising any
such powers, pay necessary expenses, employ counsel and pay reasonable
attorneys' fees. Trustor agrees that all sums expended by Trustee or
Beneficiary pursuant to this paragraph, together with interest at the
Secondary Interest Rate from the date of expenditure by Beneficiary, shall be
added to the principal amount of the Indebtedness secured by the Loan
Documents and this Deed of Trust and shall be payable by Trustor to
Beneficiary upon demand.
A6.5 Receiver. If an Event of Default shall have occurred and be
continuing, Beneficiary, as a matter of strict right and without notice to
Trustor or anyone claiming under Trustor, and without regard to the then value
of the Property, shall have the right to apply ex parte to any court having
jurisdiction to appoint a Receiver to enter upon and take possession of the
Property, and Trustor hereby waives notice of any application therefor,
provided a hearing to confirm such appointment with notice to Trustor is set
within the time required by law. Any such Receiver shall have all the powers
and duties of Receivers in like or similar cases and all the powers and duties
of Beneficiary in case of entry as provided in this Deed of Trust, and shall
continue as such and exercise all such powers until the date of confirmation
of sale, unless such receivership is sooner terminated.
A6.6 Remedies Cumulative. All remedies of Beneficiary provided for
herein are cumulative and shall be in addition to any and all other rights and
remedies provided in the other Loan Documents or by law, including, without
limitation, any right of offset. The exercise of any right or remedy by
Beneficiary hereunder shall not in any way constitute a cure or waiver of
default hereunder or under the Loan Documents, or invalidate any act done
pursuant to any notice of default, or prejudice Beneficiary in the exercise of
any of its rights hereunder or under the Loan Documents.
A6.7 Curing of Defaults. If Trustor shall at any time fail to perform or
comply with any of the terms, covenants and conditions required on Trustor's
part to be performed and complied with under this Deed of Trust, any of the
other Loan Documents or any other agreement that, under the terms of this Deed
of Trust, Trustor is required to perform, then Beneficiary, and without
waiving or releasing Trustor from any of the Obligations, may, in its sole
discretion:
(i) make any payments thereunder payable by
Trustor and take out, pay for and maintain any of the insurance policies
provided for therein; and/or
(ii) after the expiration of any applicable grace
period and subject to Trustor's rights to contest certain obligations
specifically granted hereby, perform any such other acts thereunder on the
part of Trustor to be performed and enter upon the Property for such purpose.
All sums so paid out of Beneficiary's own funds and all reasonable costs and
expenses incurred and paid by Beneficiary in connection with the performance
of any such act, together with interest on unpaid balances thereof at the
Secondary Interest Rate from the respective dates of Beneficiary's making of
each such payment, shall be added to the principal of the Indebtedness, shall
be secured by the Loan Documents and by the lien of this Deed of Trust, prior
to any right, title or interest in or claim upon the Property attaching or
accruing subsequent to the lien of this Deed of Trust, and shall be payable by
Trustor to Beneficiary on demand.
A7
Security Agreement and Fixture Filing
A7.1 Grant of Security Interest. Trustor hereby grants to Beneficiary a
security interest in and to all Trustor's right, title and interest now owned
or hereafter acquired in and to the Personalty and the Fixtures (collectively,
the "Collateral").
A7.2 Remedies. This Deed of Trust constitutes a security agreement with
respect to the Collateral in which Beneficiary is hereby granted a security
interest. In addition to the rights and remedies provided under this Deed of
Trust, Beneficiary shall have all of the rights and remedies of a secured
party under the Arizona Uniform Commercial Code as well as all other rights
and remedies available at law or in equity. Trustor hereby agrees to execute
and deliver on demand and irrevocably constitutes and appoints Beneficiary the
attorney-in-fact of Trustor, coupled with an interest, with full power of
substitution, to, at Trustor's expense, execute, deliver and, if appropriate,
to file with the appropriate filing officer or office such security
agreements, financing statements, continuation statements or other
instruments as Beneficiary may request or require in order to impose, perfect
or continue the perfection of the lien or security interest created hereby.
Upon the occurrence of any Event of Default, Beneficiary shall have (i) the
right to cause any of the Collateral which is personal property to be sold at
any one or more public or private sales as permitted by applicable law and to
apply the proceeds thereof to the Indebtedness or any other monetary
obligation of Trustor to Beneficiary, and (ii) the right to apply to the
Indebtedness or any other monetary obligation of Trustor to Beneficiary, any
Collateral which is cash, negotiable documents or chattel paper. Any such
disposition may be conducted by an employee or agent of Beneficiary or
Trustee. Any Person, including, without limitation, both Trustor and
Beneficiary, shall be eligible to purchase any part or all of such Personalty
at any such disposition.
A7.3 Expenses. Expenses of retaking, holding, preparing for sale,
selling or the like pertaining to the Collateral shall be borne by Trustor and
shall include Beneficiary's and Trustee's reasonable attorneys' fees and legal
expenses. Trustor, upon demand of Beneficiary shall assemble the Collateral
and make it available to Beneficiary at the Property, a place which is hereby
deemed to be reasonably convenient to Beneficiary and Trustor. Beneficiary
shall give Trustor at least ten (10) days' prior written notice of the time
and place of any public sale or other disposition of the Collateral or of the
time after which any private sale or any other intended disposition is to be
made. Any such notice sent to Trustor in the manner provided for the mailing
of notices herein is hereby deemed to be reasonable notice to Trustor.
A7.4 Fixture Filing. This Deed of Trust constitutes a financing
statement filed as a fixture filing in the Official Records of the County
Recorder of the county in which the Land is located with respect to any and
all Fixtures included within the term "Property" as used herein and with
respect to any goods, Personalty or other personal property that may now be or
hereafter become Fixtures.
A7.5 Waivers. Trustor waives (a) any right to require Beneficiary to (i)
proceed against any Person, (ii) proceed against or exhaust any Collateral or
(iii) pursue any other remedy in its power; and (b) any defense arising by
reason of any disability or other defense of Trustor or any other Person, or
by reason of the cessation from any cause whatsoever of the liability of
Trustor or any other Person. Until the Indebtedness shall have been paid in
full and Obligations performed in full, Trustor shall not have any right to
subrogation, and Trustor waives any right to enforce any remedy which
Beneficiary now has or may hereafter have against Trustor or against any other
Person and waives any benefit of and any right to participate in any
Collateral or security whatsoever now or hereafter held by Beneficiary.
A8
Assignment of Rents
A8.1 Assignment of Rents. Trustor absolutely and unconditionally assigns
and transfers the Rents to Beneficiary, whether now due, past due or to become
due, and gives to and confers upon Beneficiary the right, power and authority
to collect such Rents, and apply the same to the Indebtedness. Trustor
irrevocably appoints Beneficiary its agent to, at any time, demand, receive
and enforce payment, to give receipts, releases and satisfactions, and to sue,
either in the name of Trustor or in the name of Beneficiary, for all such
Rents. Neither the foregoing assignment of Rents to Beneficiary nor the
exercise by Beneficiary of any of its rights or remedies under this Deed of
Trust shall be deemed to make Beneficiary a "mortgagee-in-possession" or
otherwise responsible or liable in any manner with respect to the Property or
the use, occupancy, enjoyment or operation of all or any part thereof, unless
and until Beneficiary, in person or by its own agent, assumes actual
possession thereof, nor shall appointment of a Receiver for the Property by
any court at the request of Beneficiary or by agreement with Trustor or the
entering into possession of the Property or any part thereof by such Receiver
be deemed to make Beneficiary a "mortgagee-in-possession" or otherwise
responsible or liable in any manner with respect to the Property or the use,
occupancy, enjoyment or operation of all or any part thereof.
A8.2 Collection of Rents. Notwithstanding anything to the contrary
contained herein or in the Note, so long as no Event of Default shall occur,
Trustor shall have a license, revocable upon the occurrence of an Event of
Default or, if an Event of Default shall have occurred, so long as such Event
of Default shall not have been waived by Beneficiary, to collect all Rents,
and to first apply same to the Indebtedness as and when due and thereafter to
retain, use and enjoy the same and to otherwise exercise all rights with
respect thereto, subject to the terms hereof. Upon the occurrence of an Event
of Default, Beneficiary shall have the right, on written notice to Trustor, to
terminate and revoke the license hereintofore granted to Trustor and shall
have the complete right and authority then or thereafter to exercise and
enforce any and all of its rights and remedies provided herein or by law or at
equity.
A9
Miscellaneous
A9.1 Successor Trustee. Beneficiary may remove Trustee or any successor
trustee at any time or times and appoint a successor trustee by recording a
written substitution in the county where the Property is located, or in any
other manner permitted by law.
A9.2 Change of Law. In the event of the passage, after the date of this
Deed of Trust, of any law deducting from the value of the Property, for the
purposes of taxation, any lien thereon, or changing in any way the laws now in
force for the taxation of mortgages, deeds of trust, or debts secured by
mortgage or deed of trust (other than laws imposing taxes on income), or the
manner of the collection of any such taxes so as to materially affect the
anticipated yield of Beneficiary as holder of the Note and/or Beneficiary
under this Deed of Trust, the Indebtedness plus any applicable prepayment
charges shall become due and payable at the option of Beneficiary exercised by
thirty (30) days' notice to Trustor unless Trustor, within such thirty (30)
day period shall, if permitted by law, assume the payment of any tax or other
charge so imposed upon Beneficiary for the period remaining until full payment
by Trustor of the Indebtedness.
A9.3 No Waiver. No waiver by Beneficiary of any default or breach by
Trustor hereunder shall be implied from any omission by Beneficiary to take
action on account of such default if such default persists or is repeated, and
no express waiver shall affect any default other than the default expressly
referenced in the waiver and such waiver shall be operative only for the time
and to the extent therein stated. Waivers of any covenant, term or condition
contained herein shall not be construed as a waiver of any subsequent breach
of the same covenant, term or condition. The consent or approval by
Beneficiary to or of any act by Trustor requiring further consent or approval
shall not be deemed to waive or render unnecessary the consent or approval to
or of any subsequent similar act.
A9.4 Abandonment. Subject to such chattel mortgages, security agreements
or other liens on title as may exist thereon with the consent of Beneficiary,
or any provided for herein, any and all Personalty that upon foreclosure of
the Property is owned by Trustor and is used in connection with the operation
of the Property shall be deemed at the option of Beneficiary to have become on
such date a part of the Property and abandoned to Beneficiary in its then
condition.
A9.5 Notices. All notices, demands, requests, consents, statements,
satisfactions, waivers, designations, refusals, confirmation or denials that
may be required or otherwise provided for or contemplated under the terms of
this Deed of Trust shall be in writing, and shall be deemed to have been
properly given (i) upon delivery, if delivered in person, or by facsimile
transmission with receipt acknowledged (such facsimile transmission to be
followed by delivery pursuant to one of the methods described in the following
clauses ii and iii), (ii) one business day after having been deposited for
overnight delivery with Federal Express or another comparable overnight
courier service, or (iii) three business days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, addressed
as follows:
If to Trustor:
Century Properties Fund XIX
c/o National Property Investors, Inc.
100 Jericho Quadrangle, Suite 214
Jericho, New York 11753
If to Trustee:
Transamerica Title Insurance Company
234 North Central Avenue, Suite 670
Phoenix, Arizona 85004
If to Beneficiary:
The Prudential Insurance Company of America
2029 Century Park East
Suite 3700
Los Angeles, California 90067
Attention: Regional Counsel
or addressed to each respective party at such other address as such party may
from time to time designate by written notice to the other parties given in
the manner aforesaid.
A9.6 Severability. If any term, provision, covenant or condition hereof
or any application thereof should be held by a court of competent jurisdiction
to be invalid, void or unenforceable, in whole or in part, all terms,
provisions, covenants and conditions hereof and all applications thereof not
held invalid, void or unenforceable shall continue in full force and effect
and shall in no way be affected, impaired or invalidated thereby.
A9.7 Joinder of Foreclosure. Should Beneficiary hold any other or
additional security for the payment of the Indebtedness or performance of
the Obligations, its sale or foreclosure, upon any default in such payment
or performance, in the sole discretion of Beneficiary, may be prior to,
subsequent to, or joined or otherwise contemporaneous with any sale or
foreclosure hereunder. In addition to the rights herein specifically
conferred, Beneficiary, at any time and from time to time, may exercise any
right or remedy now or hereafter given by law to beneficiaries under deeds of
trust generally, or to the holders of any obligations of the kind hereby
secured.
A9.8 Governing Law. The parties expressly agree that this Deed of Trust
(including, without limitation, all questions regarding permissible rates of
interest) shall be governed by and construed in accordance with the laws of
the state in which the Land is located, without regard to the choice of law
rules of that state.
A9.9 Subordination. At the option of Beneficiary, this Deed of Trust
shall become subject and subordinate in whole or in part (but not with respect
to priority of entitlement to any insurance proceeds, damages, awards, or
compensation resulting from damage to the Property or condemnation or exercise
of power of eminent domain), to any and all contracts of sale and/or any and
all Leases upon the execution by Beneficiary and recording thereof in the
Official Records of the County in which the Land is located of a unilateral
declaration to that effect. Beneficiary may require the issuance of such
title insurance endorsements to the Title Policy in connection with any such
subordination as Beneficiary, in its reasonable judgment, shall determine
are appropriate, and Trustor shall be obligated to pay any cost or expense
incurred in connection with the issuance thereof.
A9.10 Further Advances. Upon the request of Trustor or its permitted
successors in ownership of the Property, Beneficiary may hereafter, at its
option, at any time before full payment of the Indebtedness, make further
advances to Trustor or said successors, and the same, with interest and late
charges, shall be secured by this Deed of Trust; provided, however, that the
amount of principal secured by this Deed of Trust and remaining unpaid, shall
not at the time of and including any such advance exceed the original
principal sum secured hereby; and provided further that if Beneficiary, at its
option, shall make a further advance or advances as aforesaid, Trustor or said
successors in ownership agree to execute and deliver to Beneficiary (i) a note
to evidence the same, payable on or before the maturity of the Indebtedness
secured hereby and bearing such other terms as Beneficiary shall require, and
(ii) satisfactory evidence that after such advance this Deed of Trust will
secure such advance and continue to constitute a valid first mortgage lien on
the Property subject only to the Permitted Exceptions.
A9.11 Waiver of Statute of Limitations and Rights to Trial by Jury. The
pleading of any statute of limitations as a defense to any and all obligations
secured by this Deed of Trust and the right to a jury trial in any action
under or relating to the Loan Documents is hereby waived, to the fullest
extent allowed by law.
A9.12 Entire Agreement. The Loan Documents and the Unsecured Remediation
and Indemnification Agreement set forth the entire understanding between
Trustor and Beneficiary relative to the Loan and the same shall not be amended
except by a written instrument duly executed by each of Trustor and
Beneficiary. Any and all previous representations, warranties, agreements and
understandings between or among the parties regarding the subject matter of
the Loan or the Loan Documents, whether written or oral, are superseded by
this Deed of Trust and the other Loan Documents. The foregoing
notwithstanding, the terms and the conditions of the Application shall survive
the funding of the Loan but in the event of any conflict between the
provisions of the Application and any of the other Loan Documents or the
Unsecured Remediation and Indemnification Agreement, except as otherwise
specifically provided herein, the terms of such other Loan Documents and the
Unsecured Remediation and Indemnification Agreement shall control.
A9.13 References to Foreclosure. References in this Deed of Trust to
"foreclosure" and related phrases shall be deemed references to the
appropriate procedure in connection with Trustee's private power of sale as
well as any judicial foreclosure proceeding or a conveyance in lieu of
foreclosure.
A9.14 Rights of Beneficiary and Trustee. At any time or from time to
time, without liability therefor and without notice, and without releasing or
otherwise affecting the liability of any person for payment of any
Indebtedness (i) Beneficiary at its sole discretion and only in writing may
extend the time for, or release any Person now or hereafter liable for,
payment of any or all such Indebtedness, or accept or release additional
security therefor, or subordinate the lien or charge hereof, or (ii) Trustee
upon written request of Beneficiary and presentation of the Note, any
additional notes secured by this Deed of Trust and this Deed of Trust for
endorsement may reconvey any part of the Property, consent to the making of
any map or plat thereof, join in granting any easement thereon, or join in any
such agreement of extension or subordination. Upon written request of
Beneficiary and surrender of the Note, any additional notes secured by this
Deed of Trust and this Deed of Trust to the Trustee for cancellation, and
upon payment to Trustee of its fees and expenses, Trustee shall reconvey
without warranty the remaining Property. The recitals in any reconveyance
shall be conclusive proof of the truthfulness thereof and the grantee in any
reconveyance may be described as "the person or persons legally entitled
thereto."
A9.15 Copies. Trustor will promptly give to Beneficiary copies of all
(i) notices of violation relating to the Property that Trustor receives from
any governmental agency or authority, and (ii) notices of default that Trustor
shall give or receive under any agreement that Trustor covenants to perform
hereunder, including, without limitation, notices of default relating to the
Property that Trustor receives under any agreement relating to the borrowing
of money by Trustor or from any Person.
A9.16 No Merger. So long as any of the Indebtedness shall remain unpaid
or Trustor shall have any further obligation under the Loan Documents, unless
Beneficiary shall otherwise consent in writing, the fee estate of Trustor in
the Property or any part thereof shall not merge, by operation of law or
otherwise, with any leasehold or other estate in the Property or any part
thereof, but shall always be kept separate and distinct therefrom,
notwithstanding the union of said fee estate and such leasehold or other
estate in Trustor or any other Person.
A9.17 Right of Entry. In addition to the rights granted to Beneficiary
under Paragraph 3.10 hereof, Beneficiary may enter at any reasonable time upon
any part of the Property for the purpose of performing any of the acts
Beneficiary is authorized to perform under the terms of this Deed of Trust or
of any of the other Loan Documents. Trustor agrees to cooperate with
Beneficiary to facilitate such entry. Beneficiary shall provide Trustor with
one (1) day's notice of such entry; provided, however, that Trustor's consent
shall not be required for such entry or for the performance of such acts.
A9.18 Performance by Trustor. Trustor will faithfully perform each and
every Obligation to be performed by Trustor under any lien or encumbrance,
including, without limitation, mortgages, deeds of trust, leases, declarations
or covenants, conditions and/or restrictions and other agreements which affect
the Property. If Trustor fails to do so, Beneficiary, without demand or
notice, may do any or all things necessary to perform the Obligations of
Trustor under the pertinent instrument.
A9.19 Personalty Security Instruments. Trustor covenants and agrees that
if Beneficiary at any time holds additional security for any obligations
secured hereby, it may enforce the terms thereof or otherwise realize upon the
same, at its option, either before or concurrently herewith or after a sale is
made hereunder, and may apply the proceeds upon the Indebtedness secured
hereby without affecting the status of or waiving any right to exhaust all or
any other security, including the security hereunder, and without waiving any
breach or default or any right or power whether exercised hereunder, and
without waiving any breach or default or any right or power whether exercised
hereunder or contained herein or in any such other security.
A9.20 Suits to Protect Property. Trustor covenants and agrees to appear
in and defend any action or proceeding purporting to affect the security of
the Deed of Trust, or of any additional or other security for the Obligations,
the interest of Beneficiary or the rights, powers and duties of Trustee
hereunder; and to pay all costs and expenses, including, without limitation,
costs of evidence of title and reasonable attorneys' fees, in any action or
proceeding in which Beneficiary and/or Trustee may appear or be made a party,
including, without limitation, foreclosure or other proceedings commenced by
those claiming a right to any part of the Property in any action to partition
or condemn all or part of the Property, whether or not pursued to final
judgment, and in any exercise of the power of sale contained herein, whether
or not the sale is actually consummated. Trustee agrees that in any such
action or proceeding in which Beneficiary is made a party, Beneficiary may at
its option defend such action, and all costs of such defense, including all
court costs and reasonable attorneys' fees, shall be borne and paid by
Trustor.
A9.21 Junior Liens. Trustor represents and warrants that as of the date
hereof there are no encumbrances to secure debt junior to this Deed of Trust
and covenants that there are to be none as of the date when this Deed of Trust
becomes of record.
A9.22 Charges for Statements. Trustor agrees to pay Beneficiary's
charge, up to the maximum amount permitted by law, for any statement regarding
the obligations secured by this Deed of Trust requested by Trustor or on its
behalf.
A9.23 Usury. In the event, and only in the event, that the usury laws of
the State of Arizona are applied with respect to the Loan or the Indebtedness,
all fees, charges, goods, things in action or any other sums or things of
value including any contractual obligations, other than interest resulting
from the Interest Rate (as defined in the Note) or the Secondary Interest Rate
(collectively, the "Additional Sums") paid or payable by Trustor to
Beneficiary, whether pursuant to the Note or otherwise with respect to the
Loan or the Indebtedness, or with respect to this Deed of Trust or any of the
other Loan Documents which, under the laws of the State of Arizona may be
deemed to be interest with respect to such Loan or the Indebtedness, shall,
for the purpose of any laws of the State of Arizona which may limit the
maximum rate of interest to be charged with respect to such Loan or the
Indebtedness, be payable by Trustor as, and shall be deemed to be, additional
interest, and for such purposes only, the agreed upon and "contracted rate of
interest" described above shall be deemed to be increased to the rate of
interest resulting from the Additional Sums. If any interest or other charges
are ever deemed to exceed the maximum amount permitted by law, then: (a) the
amount of interest or charges payable under the Note and/or hereunder by
Trustor shall be reduced to the maximum amount permitted by law; and (b) any
excess amount previously collected from Trustor which exceeded the maximum
amount permitted by law will be credited against the outstanding principal
balance of the Loan. If such principal balance has already been paid, the
excess amount paid will be refunded to Trustor.
A9.24 Publicity. Trustor hereby agrees that Beneficiary, at its expense,
may publicize the financing of the Property.
A9.25 Information Reporting Under IRC Section 6045(e). Any information
returns or certifications that must be filed with the Internal Revenue Service
and/or provided to other parties, pursuant to Internal Revenue Code Section
6045(e) shall be prepared, filed by and sent to the appropriate parties by
Trustor. To the extent permitted by law, Beneficiary shall have no
responsibility to perform such services; provided however, upon demand Trustor
shall reimburse Beneficiary for any costs incurred by Beneficiary in doing so
and shall also pay such fee as Beneficiary may reasonably and lawfully
request. Beneficiary shall, where requested by Trustor, promptly supply
Trustor with all information pertaining to Beneficiary reasonably required by
Trustor to prepare and file any such return or certification. Trustor shall
indemnify Beneficiary and defend, protect and hold Beneficiary harmless from
and against, and shall be responsible for, all loss, cost, damage and expense
(including, without limitation, attorneys' fees and costs incurred in the
investigation, defense and settlement of claims) that Beneficiary may incur,
directly or indirectly, as a result of or in connection with the assertion
against Beneficiary of any claim relating to the failure of Trustor to comply
with its obligations under this Paragraph.
A9.26 ERISA.
A. Beneficiary represents and warrants to Trustor that, as of the
date of the recording of this Deed of Trust, the source of funds from which
Beneficiary extends the Loan is its general account, which is subject to the
claims of its general creditors under state law. For so long as The
Prudential Insurance Company of America is the Beneficiary hereunder, it shall
not allocate all or any portion of the Loan to any separate account other than
its general account.
B. Trustor represents and warrants to Beneficiary that, as of the
date of this Deed of Trust and throughout the term of the Loan (i) Trustor is
not an "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), which is subject
to Title I of ERISA, and (ii) the assets of Trustor do not constitute "plan
assets" of one or more such plans within the meaning of 29 C.F.R. Section
2510.3-101.
C. Trustor represents and warrants to Beneficiary that, as of the
date of this Deed of Trust (i) Trustor is not a "governmental plan" within the
meaning of Section 3(32) of ERISA and (ii) transactions by or with Trustor are
not subject to state statutes regulating investment of and fiduciary
obligations with respect to governmental plans.
D. Trustor covenants and agrees to deliver to Beneficiary such
certifications or other evidence from time to time throughout the term of the
Loan, as requested by Beneficiary in its sole discretion, that (i) Trustor
is not an "employee benefit plan" or a "governmental plan"; and (ii) Trustor
is not subject to state statutes regulating investments and fiduciary
obligations with respect to governmental plans; and (iii) one or more of the
following circumstances is true:
(1) Equity interests in Trustor are publicly offered
securities, within the meaning of 29 C.F.R. Section 2510.3-101(b)(2);
(2) Less than twenty-five percent (25%) of all equity interests
in Trustor are held by "benefit plan investors" within the meaning of 29
C.F.R. Section 2510.3-101(f)(2);
(3) Trustor qualifies as an "operating company" or a "real
estate operating company" within the meaning of 29 C.F.R. Section
2510.3-101(c) or (e); or
(4) No equity interest in Trustor is held directly or
indirectly by an employee benefit plan subject to ERISA.
E. Any of the following shall constitute an Event of Default
entitling Beneficiary to exercise any and all remedies to which it may be
entitled under the Loan Documents: (i) the failure of any representation or
warranty made by Trustor under this Paragraph 9.26 to be true and correct in
all respects, (ii) the failure of Trustor to provide Beneficiary with the
written certifications and evidence referred to above, or (iii) the
consummation by Trustor of a transaction which would cause the Deed of Trust
or any exercise of Beneficiary's rights under the Loan Documents to constitute
a non-exempt prohibited transaction under ERISA or a violation of a state
statute regulating governmental plans, subjecting Beneficiary to liability for
violation of ERISA or such state statute.
F. Trustor shall indemnify, protect and defend and hold Beneficiary
harmless from and against, and shall be responsible for, all loss, cost,
damage and expense (including, without limitation, attorneys' fees and costs
incurred in the investigation, defense and settlement of claims and losses
incurred in correcting any prohibited transaction or in the sale of a
prohibited loan, and in obtaining any individual prohibited transaction
exemption under ERISA that may be required, in Beneficiary's sole discretion)
that Beneficiary may incur, directly or indirectly, as a result of a default
under Paragraph 9.26.E hereof. This indemnity shall survive any termination,
satisfaction or foreclosure of the Deed of Trust.
G. Anything in Paragraph 4.2 hereof or elsewhere in this Deed of
Trust to the contrary notwithstanding, no sale, assignment or transfer of any
direct or indirect interest in Trustor shall be permitted which would negate
Trustor's representations in this Paragraph 9.26 or cause this Deed of Trust
(or any exercise of Beneficiary's rights under the Loan Documents) to
constitute a violation of any provision of ERISA or of any applicable state
statute regulating a governmental plan, as determined in the sole discretion
of Beneficiary.
H. Anything in Paragraph 4.2 hereof or elsewhere in this Deed of
Trust to the contrary notwithstanding, no direct or indirect transfer of the
Property or any interest therein including a junior lien or leasehold
interest, shall be permitted which would cause this Deed of Trust (or any
exercise of Beneficiary's rights under the Loan Documents) to constitute a
violation of ERISA or any applicable state statute regulating a governmental
plan, as determined in the sole discretion of Beneficiary.
I. Anything in this Deed of Trust to the contrary notwithstanding,
not less than fifteen (15) days before consummation of a transfer of title to
the Property or of an interest in Trustor, or of any direct or indirect right,
title or interest in either of them, or of the placing of any lien or
encumbrance on the Property, Trustor shall obtain from the proposed transferee
or lienholder a representation to Beneficiary in form and substance
satisfactory to Beneficiary that Paragraph 9.26.D hereof will be true after
the transfer; and further provided that any proposed lienholder agrees that
any direct or indirect transfer of its lien or any interest herein will be
governed by this Paragraph 9.26.
A9.27 Defense and Indemnity Rights. Whenever, under any Loan Document,
Trustor is obligated to indemnify and/or defend Beneficiary, or Trustor is
obligated to defend or prosecute any action or proceeding, then Beneficiary
shall have the right of counsel of Beneficiary's choice reasonably exercised,
and all costs and expenses incurred by Beneficiary in connection with such
participation (including, without limitation, reasonable attorneys' fees)
shall be reimbursed by Trustor to Beneficiary immediately upon demand. In
addition, Beneficiary shall have the right to approve any counsel retained by
Trustor in connection with the prosecution or defense of any such action or
proceeding by Trustor. Trustor shall give notice to Beneficiary of the
initiation of all proceedings prosecuted or required to be defended by
Trustor, or which are subject to Trustor's indemnity obligations, under this
Deed of Trust, promptly after the receipt by Trustor of notice of the exist-
ence of any such proceeding, but in no event later than five (5) days
thereafter. All costs or expenses required to be reimbursed by Trustor to
Beneficiary hereunder shall, if not paid when due as herein specified, bear
interest at the Secondary Interest Rate. As used herein, "proceeding" shall
include litigation (whether by way of complaint, answer, cross-complaint,
counter claim or third party claim), arbitration and administrative hearings
or proceedings.
A9.28 Destruction of Note. Trustor shall, if the Note is mutilated or
destroyed by any cause whatsoever, or otherwise lost or stolen and regardless
of whether due to the act or neglect of Beneficiary or Trustee, execute and
deliver to Beneficiary in substitution therefor a duplicate promissory note
containing the same terms and conditions as the Note, within ten (10) days
after Beneficiary notifies Trustor of any such mutilation, destruction, loss
or theft of the Note. Any new promissory note executed and delivered
hereunder shall be in full substitution for the Note, shall not constitute any
new or additional indebtedness of Trustor to Beneficiary, shall constitute
solely a substitute evidence of the indebtedness evidenced by the original
Note, and shall not affect in any manner the priority of this Deed of Trust,
or any other document or instrument executed in connection with or
evidencing or securing the Indebtedness under the Note. Failure or delay by
Beneficiary to notify Trustor hereunder shall not affect in any manner
Trustor's liability for the Indebtedness under the Note or Trustor's
obligation to execute a new promissory note hereunder; and Trustor's failure
to execute a new promissory note on Beneficiary's request hereunder shall
likewise not affect Trustor's liability for the indebtedness under the Note.
A9.29 Trustor, Beneficiary and Trustee Defined. As used in this Deed of
Trust, "Trustor" includes the original signators of this Deed of Trust as
Trustor, and its successors and assigns; the term "Beneficiary" means the
Beneficiary named herein or any future owner or holder, including pledgee and
participants, of any note, notes or instrument secured hereby, or any
participation therein; and "Trustee" includes the original Trustee under this
Deed of Trust and its successors and assigns.
A9.30 Rules of Construction. When the identity of the parties or other
circumstances make appropriate, the masculine gender shall include the
feminine and/or neuter, and the singular number shall include the plural.
Specific enumeration of rights, powers and remedies of Trustee and Beneficiary
and of acts which they may do and of acts Trustor must do or not do shall not
exclude or limit the general. The headings of each Article and Paragraph are
for information and convenience and do not limit or construe the contents of
any provision hereof. The provisions of this Deed of Trust, all other Loan
Documents and the Unsecured Remediation and Indemnification Agreement shall be
construed as a whole according to their common meaning, not strictly for or
against any party and consistent with the provisions herein contained, in
order to achieve the objectives and purposes of such documents. Each party
and its counsel has reviewed and revised the Loan Documents and the Unsecured
Remediation and Indemnification Agreement and agree that the normal rule of
construction to the effect that any ambiguities to be resolved against the
drafting party shall not be employed in the interpretation of such document.
The use in this Deed of Trust, all other Loan Documents and the Unsecured
Remediation and Indemnification Agreement of the words "including," "such as,"
or words of similar import, when following any general term, statement or
matter shall not be construed to limit such statement, term or matter to the
specific items or matters, whether or not language of non-limitation such as
"without limitation" or "but not limited to," or words of similar import, are
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that could reasonably fall within the broadest possible scope
of such statement, term or matter.
A9.31 Information to Third Persons. If, at any time, Beneficiary desires
to sell or transfer, or grant a participation interest in, all or any
portion of, or any interest in, the Note, this Deed of Trust or any other Loan
Document to any Person, Trustor and each Loan Party shall furnish in a timely
manner any and all financial information concerning the Property and Leases,
and concerning Trustor's or such Loan Party's financial condition, requested
by Beneficiary or such person in connection with any such sale or transfer.
A9.32 Commingling of Funds. Any and all sums collected or retained by
Beneficiary hereunder (including insurance and condemnation proceeds and any
amounts paid by Trustor to Beneficiary under Paragraph 3.4 hereof), shall not
be deemed to be held in trust, and Beneficiary may commingle any and all such
funds or proceeds with its general assets and shall not be liable for the
payment of any interest or other return thereon, except to the extent
expressly provided herein or otherwise required by law.
A9.33 Standards of Discretion. Nothing contained in this Deed of Trust,
the Note, or any other Loan Documents, shall limit the right of Beneficiary to
exercise its business judgment, or act, in a subjective manner with respect to
any matter as to which it has specifically been granted such right or the
right to act in its sole discretion or sole judgment hereunder or thereunder,
whether "objectively" reasonable under the circumstances. Any such exercise
shall not be deemed inconsistent with any covenant of good faith and fair
dealing otherwise implied by law to be a part of this Deed of Trust; and the
parties intend by the foregoing to set forth and affirm their entire
understanding with respect to the terms, covenants and conditions and
standards pursuant to which their rights, duties and obligations are to be
judged, their performance measured, and the parameters within which
Beneficiary's discretion may be exercised hereunder and under the other Loan
Documents.
A9.34 Certain Standards on Efforts of Trustor. Whenever in this Deed of
Trust, or any other Loan Document, the phrase "cause to be" is used in
conjunction with any of Trustor's Obligations, such phrase shall be deemed to
include the use by Trustor of best efforts and all due diligence to cause the
applicable act, event or circumstance to occur or be performed or taken, and
such efforts and due diligence shall encompass the initiation of litigation or
other proceedings in order to enforce or bring about the happening of the
applicable act or matter.
A9.35 Certain Obligations Unsecured. Notwithstanding anything to the
contrary set forth herein or any of the Loan Documents, this Deed of Trust
shall not secure the following obligations (the "Unsecured Obligations"): Any
obligations evidenced by or arising under the Unsecured Remediation and
Indemnification Agreement. Any breach or default with respect to the
Unsecured Obligations shall constitute an Event of Default hereunder,
notwithstanding the fact that such Unsecured Obligations are not secured by
this Deed of Trust. Nothing in this section shall, in itself, impair or limit
Beneficiary's right to obtain a judgment in accordance with applicable law
after foreclosure for any deficiency in recovery of all obligations that are
secured by this Deed of Trust following foreclosure.
A9.36 Limitation on Personal Liabilities. The obligations of Trustor
under the Note are limited as set forth in Section 19 of the Note.
IN WITNESS WHEREOF, Trustor has caused this Deed of Trust to be executed
as of the day and year first above written.
"Trustor":
CENTURY PROPERTIES FUND XIX,
a California Limited Partnership
By: Fox Partners II, a California
general partnership,
its general partner
By: Fox Capital Management
Corporation, a California
corporation, its general
partner
By: _______________________
_______________________
[Printed Name and Title]
State of _______________ )
)
County of ______________ )
On __________, 1995, before me, __________________, Notary Public, personally
appeared ___________________________________,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s)
on the instrument the person(s), or the entity upon behalf of which the
person(s) acted, executed the instrument.
WITNESS my hand and official seal.
_______________________________
EXHIBIT A
(Property Description)
EXHIBIT B
(Permitted Exceptions)
1 Liens, mortgages, deeds of trust, pledges, security interests
and other charges and encumbrances in favor of Beneficiary;
2 General and special ad valorem real property taxes which are
not yet due or payable;
3 Exceptions numbered 1 through 4, inclusive, 6 through 10,
inclusive, and 12 in Schedule B, Part II of that certain Commitment for Title
Insurance No. 75010963, dated as of April 14, 1995, issued by Transamerica
Title Insurance Company; and
4 Other matters expressly approved by Beneficiary in writing
which are subject and subordinate to the lien of this Deed of Trust.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Century
Properties Fund XIX and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 2,080,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 94,258,000
<DEPRECIATION> (33,518,000) <F2>
<TOTAL-ASSETS> 64,712,000
<CURRENT-LIABILITIES> 0
<BONDS> 60,225,000
<COMMON> 0
0
0
<OTHER-SE> 2,842,000
<TOTAL-LIABILITY-AND-EQUITY> 64,712,000
<SALES> 0
<TOTAL-REVENUES> 7,210,000
<CGS> 0
<TOTAL-COSTS> 4,759,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,887,000
<INCOME-PRETAX> (1,504,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,504,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,504,000)
<EPS-PRIMARY> (15)
<EPS-DILUTED> (15)
<FN>
<F1> Cash includes restricted cash of $507,000.
<F2> Depreciation includes a $500,000 allowance for impairment of value.
</FN>
</TABLE>
