UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 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)
One Insignia Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 239-1000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Limited
Partnership Units
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
No market for the Limited Partnership Units exists and therefore a market
value for such Units cannot be readily determined.
DOCUMENTS INCORPORATED HEREIN BY REFERENCE:
Prospectus of Registrant dated September 20, 1983, as amended on June
13, 1984, and thereafter supplemented incorporated in Parts I and IV.
CENTURY PROPERTIES FUND XIX
(a limited partnership)
PART I
Item 1. Business.
Century Properties Fund XIX (the "Registrant") was organized in August
1982 as a California limited partnership under the Uniform Limited Partnership
Act of the California Corporations Code. Fox Partners II, a California general
partnership, is the general partner of the Registrant. The general partners of
Fox Partners II are Fox Capital Management Corporation (the "Managing General
Partner"), a California corporation, Fox Realty Investors ("FRI"), a California
general partnership, and Fox Partners 83, a California general partnership.
The Registrant's Registration Statement, filed pursuant to the
Securities Act of 1933 (No. 2-79007), was declared effective by the Securities
and Exchange Commission on September 20, 1983. The Registrant marketed its
securities pursuant to its Prospectus dated September 20, 1983, which was
amended on June 13, 1984, and thereafter supplemented (hereinafter the
"Prospectus"). The Prospectus was filed with the Securities and Exchange
Commission pursuant to Rule 424(b) of the Securities Act of 1933.
The principal business of the Registrant is and has been to acquire,
hold for investment and ultimately sell income-producing multi-family
residential properties. The Registrant is a "closed" limited partnership real
estate syndicate formed to acquire multi-family residential properties.
Beginning in September 1983 through October 1984, the Registrant
offered $90,000,000 in Limited Partnership Units and sold units having an
initial cost of $89,292,000. The net proceeds of this offering were used to
acquire thirteen income-producing real properties. The Registrant's original
property portfolio was geographically diversified with properties acquired in
seven states. The Registrant's acquisition activities were completed in June
1985 and since then the principal activity of the Registrant has been managing
its portfolio. One property was sold in each of the years, 1988, 1992 and 1993
and in February 1994. In addition one property was foreclosed on in 1993. See
"Item 2, Properties" for a description of the Registrant's properties.
The Registrant is involved in only one industry segment, as described
above. The business of the Registrant is not seasonal. the Registrant does not
engage in any foreign operations or derive revenues from foreign sources.
Both the income and the expenses of operating the properties owned by
the Registrant are subject to factors outside the Registrant's control, such as
oversupply of similar rental facilities resulting from overbuilding, increases
in unemployment or population shifts, changes in zoning laws or changes in
patterns of needs of the users. Expenses, such as local real estate taxes and
miscellaneous management expenses, are subject to change and cannot always be
reflected in rental increases due to market conditions or existing leases. The
profitability and marketability of developed real property may be adversely
affected by changes in general and local economic conditions and in prevailing
interest rates, and favorable changes in such factors will not necessarily
enhance the profitability or marketability of such property. Even under the most
favorable market conditions, there is no guarantee that any property owned by
the Registrant can be sold by it or, if sold, that such sale can be made upon
favorable terms.
It is possible that legislation on the state or local level may be
enacted in the states where the Registrant's properties are located which may
include some form of rent control. There have been, and it is possible there may
be other Federal, state and local legislation and regulations enacted relating
to the protection of the environment. The Managing General Partner is unable to
predict the extent, if any, to which such new legislation or regulations might
occur and the degree to which such existing or new legislation or regulations
might adversely affect the properties still owned by the Registrant.
The Registrant monitors its properties for evidence of pollutants,
toxins and other dangerous substances, including the presence of asbestos. In
certain cases environmental testing has been performed, which resulted in no
material adverse conditions or liabilities. In no case has the Registrant
received notice that it is a potentially responsible party with respect to an
environmental clean up site.
The Registrant maintains property and liability insurance on the
properties and believes such coverage to be adequate.
At this time, it appears that the investment objective of capital
growth will not be attained and that a significant portion of invested capital
will not be returned to investors. The extent to which invested capital is
returned to investors is dependent upon the success of the Registrant's strategy
as set forth in "Item 7" as well as upon significant improvement in the
performance of the Registrant's remaining 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 that some of the remaining properties will be
held longer than originally expected. The ability to hold and operate these
properties is dependent on the Registrant's ability to obtain additional
financing, refinancing, or debt restructuring as required.
Property Matters
Misty Woods - As of June 1, 1994, the lender holding the mortgage at
Misty Woods Apartments was permitted to draw on the two letters of credit, each
in the amount of $300,000, which were held in connection with the note payable
encumbering this property. In accordance with the loan agreement, the Registrant
applied the $594,000 net proceeds of the draw to the note, reducing the mortgage
balance to $5,183,000. Commencing July 1, 1994, the monthly debt service payment
was reduced to approximately $46,000. See, "Item 8, Consolidated Financial
Statements and Supplementary Data - Note 5."
On December 29, 1995, the first mortgage encumbering Misty Woods
Apartments was refinanced. The principal amount of the refinanced mortgage was
$5,450,000. The loan bears interest at 7.88% per annum, has a 30 year
amortization and matures in January 2006. See "Item 8, Consolidated Financial
Statements and Supplementary Data, Note 5" for additional information with
respect to this loan.
In connection with this refinancing, the lender required the Registrant
to transfer Misty Woods into a single asset entity. As a result, title to Misty
Woods is held in a limited partnership in which the Registrant holds a 99%
limited partnership interest. The general partner of the partnership is a
corporation in which the Registrant is the sole stockholder.
Wood Lake, Wood Ridge and Plantation Crossing - On December 15, 1995,
the Partnership refinanced the mortgage loan encumbering each of Wood Lake
Apartments located in Atlanta, Georgia, Wood Ridge Apartments located in
Atlanta, Georgia and Plantation Crossing located in Marietta, Georgia. In
connection with this refinancing, each of these properties was conveyed from the
sub-partnership which held these properties to the Registrant. The aggregate
amount of the loan was $22,000,000, which was allocated $7,750,000 to Wood Lake,
$9,000,000 to Wood Ridge and $5,250,000 to Plantation Crossing. The loan bears
interest at a rate of 7.5% per annum, matures January 1, 2003 and has monthly
payments of principal and interest of 163,000. In addition, the Registrant is
required to make monthly tax escrow payments to the lender. Net proceeds from
this refinancing to the Registrant were approximately $750,000. [Were net
proceeds distributed?] See "Item 8, Consolidated Financial Statements and
Supplementary Data, Note 5" for additional information with respect to this
loan.
Greenspoint Apartments - On June 29, 1995, the Registrant replaced its
maturing mortgage encumbering Greenspoint Apartments with a new first mortgage
in the amount of $9,000,000. The loan bears interest at 8.33% per annum, is
being amortized over 30 years and matures on May 15, 2005 with a balloon payment
of approximately $7,974,00. As specified in the loan agreement, the Registrant
was obligated to undertake additional improvements at the property in the amount
of approximately $30,000 prior to December 31, 1995. See "Item 8, Consolidated
Financial Statements and Supplementary Data, Note 5" for additional information
with respect to this loan.
Sandspoint Apartments - On June 29, 1995, the Registrant replaced its
maturing mortgage encumbering Sandspoint Apartments with a new first mortgage in
the amount of $10,000,000. The loan bears interest at 8.33% per annum, is being
amortized over 30 years and matures on May 15, 2005 with a balloon payment of
approximately $8,859,00. As specified in the loan agreement, the Registrant was
obligated to undertake additional improvements at the property in the amount of
approximately $74,000 prior to March 31, 1996. See "Item 8, Consolidated
Financial Statements and Supplementary Data, Note 5" for additional information
with respect to this loan.
Plantation Forest Apartments - On February 8, 1994, the Registrant sold
this property for $2,450,000 to an unaffiliated third party. After payment of
the existing loan of $1,965,000 and expenses of the sale, the proceeds to the
Registrant were approximately $482,000. The tax loss on the sale was $149,000.
Net proceeds realized from the sale were in part used to fully repay $370,000 of
the demand notes, plus accrued interest, held by NPI Realty. The balance was
added to working capital. See, "Item 8, Consolidated Financial Statements and
Supplementary Data - Note 8."
McMillan Place Apartments - On September 1, 1994, the Registrant
obtained a modification of the existing mortgage encumbering McMillan Place
Apartments in the amount of $12,939,000 (including accrued interest of
$2,139,000). The loan was split into a first mortgage note of $10,800,000 and a
second mortgage note of $2,139,000. The first mortgage requires monthly payments
of approximately $89,000, bears interest at 8.25% per annum and is being
amortized over a twenty-two year period. Under the terms of the second mortgage,
interest accrues at 8.25% (with monthly compounding) per annum. Monthly payments
of interest or principal are not required on the second mortgage. However,
quarterly payments of all excess cash flow, as defined in the cash management
agreement, are required to be made to the lender to reduce the second mortgage.
In addition, pursuant to the terms of the loan documents the Registrant is
prohibited from making any distributions from operations to its partners. Both
loans mature on August 31, 1999 with a balloon payment of approximately
$9,767,000 on the first mortgage plus the outstanding balance on the second
mortgage note. As specified in the modification, the Registrant was required to
deposit $80,000 in a reserve account for future capital improvements and is
required to make monthly payments of $10,000 to the reserve account for the term
of the loan. See, "Item 8, Consolidated Financial Statements and Supplementary
Data - Note 5."
Employees
Services are performed for the Registrant at its remaining properties
by on-site personnel all of whom are employees of NPI-AP Management, L.P.
("NPI-AP"), an affiliate of the Managing General Partner, which directly manages
the Registrant's remaining properties. All payroll and associated expenses of
such on-site personnel are fully reimbursed by the Registrant to NPI-AP.
Pursuant to a management agreement, NPI-AP provides certain property management
services to the Registrant in addition to providing on-site management.
Change in Control
From March 1988 through December 1993, the Registrant's affairs were
managed by Metric Management, Inc. ("MMI") or a predecessor. On December 16,
1993, the services agreement with MMI was modified and, as a result thereof, the
Managing General Partner began directly providing real estate advisory and asset
management services to the Registrant. As advisor, such affiliate provides all
partnership accounting and administrative services, investment management, and
supervisory services over property management and leasing.
On December 6, 1993, the shareholders of the Managing General Partner
entered into a Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI
Equity II") pursuant to which NPI Equity II was granted the right to vote 100%
of the outstanding stock of the Managing General Partner. In addition, NPI
Equity II became the managing partner of FRI. As a result, NPI Equity II
indirectly became responsible for the operation and management of the business
and affairs of the Registrant and the other investment partnerships originally
sponsored by the Managing General Partner and/or FRI. The individuals who had
served previously as partners of FRI and as officers and directors of the
Managing General Partner contributed their general partnership interests in FRI
to a newly formed limited partnership, Portfolio Realty Associates, L.P.
("PRA"), in exchange for limited partnership interests in PRA. The shareholders
of the Managing General Partner and the prior partners of FRI, in their capacity
as limited partners of PRA, continue to hold indirectly certain economic
interests in the Registrant and such other investment limited partnerships, but
have ceased to be responsible for the operation and management of the Registrant
and such other partnerships.
On August 10, 1994, an affiliate of Apollo Real Estate Advisors, L.P.
("Apollo") obtained general and limited partnership interests in NPI-AP.
On October 12, 1994, Apollo acquired one-third of the stock of National
Property Investors, Inc. ("NPI"), the parent corporation of NPI Equity II.
Pursuant to the terms of the stock acquisition, Apollo was entitled to designate
three of the seven directors of the Managing General Partner and NPI Equity II.
In addition, the approval of certain major actions on behalf of the Registrant
required the affirmative vote of at least five directors of the Managing General
Partner.
On August 17, 1995, the stockholders of NPI entered into an agreement
to sell to IFGP Corporation, a Delaware corporation, an affiliate of Insignia
Financial Group, Inc., a Delaware corporation ("Insignia"), all of the issued
and outstanding common stock of NPI, for an aggregate purchase price of
$1,000,000. NPI is the sole shareholder of NPI Equity II, the general partner of
FRI, and the entity which controls the Managing General Partner. The closing of
the transactions contemplated by the above mentioned agreement (the "Closing")
occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI, NPI Equity II and
the Managing General Partner resigned and an affiliate of Insignia caused new
officers and directors of each of those entities to be elected.
See "Item 10, Directors and Executive Officers of the Registrant."
The Tender Offer
On October 12, 1994, affiliates of Apollo acquired (i) one-third of the
stock of the respective general partners of DeForest Ventures I L.P. ("DeForest
I") and DeForest Ventures II L.P. and (ii) an additional equity interest in
NPI-AP (bringing its total equity interest in such entity to one-third). NPI-AP
is a limited partner of DeForest I which was formed for the purpose of making
tender offers for limited partnership units in the Registrant as well as eleven
affiliated limited partnerships.
On January 19, 1996, DeForest I and certain of its affiliates sold all
of its interest in the Registrant to Insignia NPI L.L.C. ("Insignia LLC"), an
affiliate of Insignia. Pursuant to a Schedule 13-D filed by Insignia LLC with
the Securities and Exchange Commission, Insignia LLC acquired 24,811.66 limited
partnership units or approximately 28% of the total limited partnership units of
the Registrant. (See "Item 12, Security Ownership of Certain Beneficial Owners
and Management.")
Competition
The Registrant is affected by and subject to the general competitive
conditions of the residential real estate industry. Many of the Registrant's
properties which are or were located in oil industry dependent and other
weakened markets have been adversely affected by economic conditions in these
markets. In addition, each of the Registrant's properties competes in an area
which normally contains numerous other multi-family residential properties which
may be considered competitive.
Item 2. Properties.
A description of the multi-family residential properties in which the
Registrant has or has had an ownership interest is as follows. All of the
Registrant's properties are owned in fee.
Date of
Name and Location Purchase Size
- ----------------- -------- ----
Wood Lake Apartments 12/83 220 units
100 Pinhurst Drive
Atlanta, Georgia
Greenspoint Apartments 02/84 336 units
NE Corner, 42nd Street
Phoenix, Arizona
Sandspoint Apartments 02/84 432 units
SW Corner, Butler Drive
and 19th Avenue
Phoenix, Arizona
Wood Ridge Apartments 04/84 280 units
100 Wood Ridge Drive
Atlanta, Georgia
Plantation Crossing Apartments 06/84 180 units
2703 Delk Road
Atlanta, Georgia
Sunrunner Apartments 07/84 200 units
11400 4th Street North
St. Petersburg, Florida
McMillan Place Apartments 06/85 402 units
12610 Jupiter Place
Dallas, Texas
Misty Woods Apartments 06/85 228 units
4642 Central Avenue
Charlotte, North Carolina
See, "Item 8, Consolidated Financial Statements and Supplementary Data"
for information regarding any encumbrances to which the properties of the
Registrant are subject.
The following chart sets forth the occupancy rate at December 31,
1995, 1994, 1993, 1992 and 1991 for the Registrant's remaining properties:
OCCUPANCY SUMMARY
Average
Occupancy Rate(%)
for the Year Ended
December 31,
--------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Wood Lake Apartments 97 96 91 92 89
Greenspoint Apartments 96 98 97 94 93
Sandspoint Apartments 96 95 90 91 91
Wood Ridge Apartments 95 97 94 92 90
Plantation Crossing Apartments 96 96 97 97 96
Sunrunner Apartments 95 97 91 92 92
McMillan Place Apartments 97 96 93 93 93
Misty Woods Apartments 97 95 93 95 93
Item 3. Legal Proceedings.
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.
("Whiteside")
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all
others similarly situated, v. DeForest Ventures I L.P., DeForest Capital I
Corporation, MRI Business Properties Fund, Ltd. II, MRI Business Properties
Fund, Ltd. III, NPI Equity Investments II, Inc., Montgomery Realty Company-84,
MRI Associates, Ltd. II, Montgomery Realty Company-85 and MRI Associates, Ltd.
III, United States District Court, Northern District of Georgia, Atlanta
Division ("Ruben").
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, Case No. 94CH0100592. ("Vernon")
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. ("Andrews")
In the fourth quarter of fiscal 1994, limited partners in certain
limited partnerships affiliated with the Registrant, commenced actions in and
against, among others, the Managing General Partner. The actions alleged, among
other things, that the tender offers made by DeForest Ventures I L.P. ("DeForest
I") and DeForest Ventures II L.P. ("DeForest II") in October 1994, constituted
(a) breach of the fiduciary duty owed by the Managing General Partner to the
limited partners of the Registrant, and (b) a breach of, and an inducement to
breach, the provisions of the Partnership Agreement of the Registrant. The
actions, which had been brought as class actions on behalf of limited partners
sought monetary damages in an unspecified amount and, in the Whiteside action,
to enjoin the tender offers. The temporary restraining order sought in the
Whiteside action was denied by the court on November 3, 1994, and on November
18, 1994, the court denied Whiteside a preliminary injunction.
On March 16, 1995, the United States Court for the Northern District
of Georgia, Atlanta, Division, entered an order which granted preliminary
approval to a settlement agreement (the "Settlement Agreement") in the Ruben and
Andrews actions, conditionally certified two classes for purpose of settlement,
and authorized the parties to give notice to the classes of the terms of the
proposed settlement. Plaintiffs counsel in the Vernon and Whiteside action
joined in the Settlement Agreement as well. The Settlement Agreement received
final approval on May 19, 1995, and the actions were dismissed subject to
satisfaction of the terms of the Settlement Agreement. The two certified classes
constituted all limited partners of the Registrant and the eighteen other
affiliated partnerships who either tendered their units in connection with the
October tender offers or continued to hold their units in the Registrant and the
other affiliated partnerships. Pursuant to the terms of the Settlement
Agreement, which were described in the notice sent to the class members in March
1995, (and more fully described in the Amended Stipulation of Settlement
submitted in the court on March 14, 1995) all claims which either were made or
could have been asserted in any of the class actions would be dismissed with
prejudice and/or released. In consideration for the dismissal and/or release of
such claims, among other things, DeForest I paid to each unit holder who
tendered their units in the Registrant an amount equal to 15% of the original
tender offer price less attorney's fees and expenses. In addition, DeForest I
commenced a second tender offer on June 2, 1995, for an aggregate number of
units of the Registrant (including the units purchased in the initial tender)
constituting up to 49% of the total number of units of the Registrant at a price
equal to the initial tender price plus 15% less attorney's fees and expenses.
Furthermore, under the terms of the Settlement Agreement, the Managing General
Partner agreed, among other things, to provide the Registrant a credit line of
$150,000 per property which would bear interest at the lesser of the prime rate
plus 1% and the rate permitted under the partnership agreement of the
Registrant. The second tender offer closed on June 30, 1995.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this Report.
PART II
Item 5. Market for the Registrant's Equity and Related Security
Holder Matters.
The Limited Partnership Unit holders are entitled to certain
distributions as provided in The Partnership Agreement. No market for Limited
Partnership Units exists, nor is expected to develop. As of March 1, 1996,
distributions from operations to date to unitholders have been approximately $25
for each $1,000 of original investment.
No distributions from operations were made during the years ended
December 31, 1995 and 1994. See "Item 7, Management's Discussion and Analysis of
Financial Condition and Results of Operations" for a discussion of the
Registrant's financial ability to make distributions.
As of March 1, 1996, the approximate number of holders of Limited
Partnership Units was 6,710.
Item 6. Selected Financial Data.
The following represents selected financial data for the Registrant for
the years ended December 31, 1995, 1994, 1993, 1992 and 1991. The data should be
read in conjunction with the consolidated financial statements included
elsewhere herein. This data is not covered by the independent auditors' report.
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------
1995 1994 1993 1992 1991
(Amounts in thousands except per unit data)
<S> <C> <C> <C> <C> <C>
Total revenues $14,731 $13,768 $14,690 $17,795 $ 18,799
======= ======= ======= ======= ========
Loss before extraordinary item $(2,047) $(3,105) $(2,686) $(8,310) $ (5,257)
Extraordinary item - gain (loss)
on extinguishment of debt $(1,636) - - $ 7,022 -
-------- ------- ------- ------- --------
Net loss $(3,683) $(3,105) $(2,686) $(1,288) $ (5,257)
======= ======= ======= ======= ========
Net loss per limited
partnership unit (1)
Loss before extraordinary item $(20.23) $(30.67) $(26.53) $(82.08) $ (51.93)
Extraordinary Item $(16.16) - - $ 69.36 $ -
-------- ------- ------- ------- -------
Net loss $(36.39) $(30.67) $(26.53) $(12.72) $ (51.93)
======== ======== ======== ======= ========
Total assets $64,379 $64,604 $70,799 $99,401 $111,211
======= ======= ======= ======= ========
Long-term obligations:
Notes payable $62,342 $59,063 $59,869 $82,007 $ 94,509
======= ======= ======= ======= ========
</TABLE>
- ----------------
(1) $1,000 original contribution per unit, based on units outstanding during the
year, after giving effect to the allocation of net loss to the general partner.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
The Registrant holds investments in and operates eight apartment
complexes. The properties are located in Georgia, Arizona, Florida, Texas, and
North Carolina. The Registrant receives rental income from its properties and is
responsible for operating expenses, administrative expenses, capital
improvements and debt service payments. As of March 1, 1996, five of the
thirteen properties originally purchased by the Registrant were sold or
otherwise disposed. All of the Registrant's remaining properties, except for
McMillan Place and Sunrunner Apartments, generated positive cash flow from
operations during the year ended December 31, 1995. The Registrant's Sunrunner
Apartments generated negative cash flow from operations due to significant
capital improvements incurred during the year ended December 31, 1995.
The Registrant uses working capital reserves provided from any
undistributed cash flow from operations, sales and refinancing proceeds as its
primary sources of liquidity. For the long term, cash from operations will be
the Registrant's primary source of liquidity. There have been no distributions
since 1987. The 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 $2,650,000 increase at December 31, 1995, as compared to 1994. The Registrant
had an increase in cash of $1,159,000 from financing activities and $465,000
from investing activities and $1,026,000 from operating activities. The
Registrant's cash provided by financing activities consists of $46,450,000 of
proceeds received from the refinancing, at lower interest rates, of the
mortgages encumbering the Registrant's Misty Woods, Plantation Crossing, Wood
Lake, Wood Ridge, Greenspoint and Sandspoint Apartments properties, which was
significantly offset by $42,807,000 of cash used for the repayment of the prior
first mortgages and $364,000 of cash used for notes payable principal payments.
The Registrant's net cash provided by investing activities consists of $787,000
of cash from the release of restricted cash, which was slightly offset by
$322,000 of improvements to real estate. Cash from operating activities declined
primarily due to significant refinancing fees, prepayment premiums and exit fees
totaling $1,391,000. The Managing General Partner is currently evaluating the
Registrant's capital improvement requirements. 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. The Registrant has substantial balloon payments on Sunrunner
and McMillan Place Apartments due in January 1997 and August 1999 in the amounts
of $3,169,000 and $12,971,000, respectively. Although management anticipates
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. If the Registrant's Sunrunner Apartments were lost through
foreclosure, the Registrant would recognize a loss of approximately $600,000. If
the Registrant's McMillan Place Apartments were lost through foreclosure, the
Registrant would not recognize a loss for financial reporting purposes.
On December 29, 1995, the Registrant refinanced the mortgage that
encumbered its Misty Woods Apartments property with a new first mortgage in the
amount of $5,450,000. The loan requires monthly payments of approximately
$40,000 at 7.88% interest and matures on January 1, 2006, with a balloon payment
of approximately $4,863,000. The loan may not be prepaid without penalty.
On December 15, 1995, the Registrant refinanced the mortgages that
encumbered their Wood Ridge, Wood Lake and Plantation Crossing Apartments
properties. The new $22,000,000 loan (allocated $9,000,000, $7,750,000 and
$5,250,000, respectively) requires total monthly payments of approximately
$163,000 at 7.5% interest and is being amortized over 25 years. The loan matures
on January 1, 2003 with a balloon payment of approximately $19,283,000. The loan
may not be prepaid without penalty.
On June 29, 1995, the Registrant replaced its maturing mortgage
encumbering Greenspoint Apartments with a new first mortgage in the amount of
$9,000,000. The loan requires monthly payments of approximately $68,000 at 8.33%
interest and is being amortized over 30 years. The loan matures on May 15, 2005
with a balloon payment of approximately $7,974,000. The loan may not be prepaid
without penalty.
On June 29, 1995, the Registrant 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. The loan may not be
prepaid without penalty.
In connection with the above refinanced mortgages, the Registrant
recognized an extraordinary loss on extinguishment of debt of $1,636,000,
consisting of the write-off of unamortized deferred loan costs, prepayment
premiums and exit fees.
In connection with the refinancing of the Registrant's Misty Woods
Apartments, the Registrant was required to transfer all the assets and
liabilities of Misty Woods to a newly formed, wholly-owned subsidiary. In
connection with the remaining refinancings that occurred in 1995, the Registrant
was required to convey the properties from the respective wholly-owned
subsidiaries back to the Partnership.
As required by the terms of the settlement of the actions brought
against, among others, DeForest Ventures I L.P. ("DeForest I") relating to the
tender offer made by DeForest I in October 1994 (the "First Tender Offer") for
units of limited partnership interest in the Registrant and certain affiliated
partnerships, DeForest I commenced a second tender offer (the "Second Tender
Offer") on June 2, 1995 for units of limited partnership interest in the
Registrant. Pursuant to the Second Tender Offer, DeForest I acquired an
additional 4,234 units of the Registrant which, when added to the units acquired
during the First Tender Offer, represents approximately 28% of the total number
of outstanding units of the Registrant. The Managing General Partner believes
that the tender will not have a significant impact on future operations or
liquidity of the Registrant. Also in connection with the settlement, an
affiliate of the Managing General Partner has made available to the Registrant a
credit line of up to $150,000 per property owned by the Registrant. The
Registrant has no outstanding amounts due under this line of credit. Based on
present plans, management does not anticipate the need to borrow in the near
future. Other than cash and cash equivalents, the line of credit is the
Registrant's only unused source of liquidity.
On January 19, 1996, the stockholders of NPI, the sole shareholder of
NPI Equity II, sold to IFGP Corporation all of the issued and outstanding stock
of NPI. In addition, an affiliate of Insignia purchased the limited partnership
units held by DeForest I and certain of its affiliates. IFGP Corporation caused
new officers and directors of NPI Equity II and the Managing General Partner to
be elected. The Managing General Partner does not believe these transactions
will have a significant effect on the Registrant's liquidity or results of
operations. See "Item 1 Business-Change in Control".
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 the 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 the Registrant's ability to
obtain refinancing or debt modification as required.
Real Estate Market
The business in which the Registrant is engaged is highly competitive,
and the Registrant is not a significant factor in its industry. Each investment
property is located in or near a major urban area and, accordingly, competes for
rentals not only with similar properties in its immediate area but with hundreds
of similar properties throughout the urban area. Such competition is primarily
on the basis of location, rents, services and amenities. In addition, the
Registrant competes with significant numbers of individuals and organizations
(including similar partnerships, real estate investment trusts and financial
institutions) with respect to the sale of improved real properties, primarily on
the basis of the prices and terms of such transactions.
Results of Operations
1995 Compared to 1994
Operating results, before the extraordinary loss on extinguishment of
debt, improved by $1,058,000 for the year ended December 31, 1995, as compared
to 1994, due to an increase in revenues of $963,000 and a decrease in expenses
of $95,000. Operating results improved due to improved operations, the gain on
sale of property of Plantation Forest Apartments and a provision for impairment
of value on Sunrunner Apartments which were recorded in 1994.
With respect to the remaining properties, rental revenues increased by
$977,000 primarily due to an increase in rental rates at all of the Registrant's
properties. Occupancy remained relatively constant at all of the Registrant's
properties. In addition, interest income increased by $42,000 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, expenses increased due to
increases in operating expenses of $596,000 and interest expense of $73,000,
which was partially offset by decreases in depreciation expense of $11,000 and
the provision for impairment of value of $500,000 which was recorded during
1994. Operating expenses increased primarily due to an increase in repairs and
maintenance expenses at all of the Registrant's properties except for Sandspoint
Apartments. The increase in interest expense is attributable to an increase in
the variable interest rates on mortgages that had encumbered the the
Registrant's Wood Lake, Wood Ridge, Plantation Crossing, Greenspoint and
Sandspoint Apartments. Depreciation expense remained relatively constant. In
addition, general and administrative expenses decreased by $32,000 due to a
decrease in asset management costs, effective July 1, 1994.
1994 Compared to 1993
Operating results declined by $419,000 for the year ended December 31,
1994, as compared to 1993, due to the provision for impairment of value of
$500,000 on the Sunrunner Apartments and the loss on the sale of Plantation
Apartments of $149,000. Parkside Village Apartments and Plantation Forest
Apartments were sold in May 1993 and February 1994, respectively, and the Cove
Apartments was foreclosed in July 1993. With respect to the remaining
properties, operating results improved by $194,000 due to increases in revenues
of $826,000 and in expenses of $632,000.
Revenues declined by $922,000 for the year ended December 31, 1994, as
compared to 1993, due to the disposition of the Registrant's Parkside Village
Apartments (May 1993), The Cove Apartments (July 1993) and Plantation Forest
Apartments (February 1994). With respect to the remaining properties, rental
revenues increased by $829,000 primarily due to increased rates and occupancy at
all of the the Registrant's properties, except for Plantation Crossing, where
rates and occupancy remained relatively constant. Reduced concessions at
McMillan and Misty Woods Apartments also contributed to the increase in rental
revenues. In addition, interest income decreased by $3,000.
Costs and expenses declined by $503,000 for the year ended December 31,
1994, as compared to 1993, due to the disposition of the Registrant's Parkside
Village, The Cove and Plantation Forest Apartments. With respect to the
remaining properties, expenses increased due to increases in operating expenses
of $892,000, depreciation expense of $15,000 and provision for impairment of
$500,000, which were only partially offset by a decrease in interest expense of
$396,000.
Operating expenses increased primarily due to increased spending on
deferred maintenance at the Registrant's Sandspoint, Greenspoint, Sunrunner and
Wood Lake Apartments. Depreciation expense increased due to the effect of fixed
asset additions. Interest expense declined partially due to a $594,000 reduction
of the principal balance on the mortgage encumbering the Registrant's Misty
Woods property. This was only partially offset by an increase in interest
expense on the Registrant's Greenspoint and Sandspoint properties due to an
increase in interest rates on the variable rate mortgages. In addition, general
and administrative expenses declined by $454,000 due to a decrease in asset
management costs.
Item 8. Consolidated Financial Statements and Supplementary Data.
CENTURY PROPERTIES FUND XIX
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
Independent Auditors' Reports.............................................F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994.........................F - 4
Statements of Operations for the Years Ended December 31,
1995, 1994 and 1993...............................................F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993..................................F - 6
Statements of Cash Flows for the Years Ended December 31,
1995, 1994 and 1993...............................................F - 7
Notes to Consolidated Financial Statements...........................F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation
at December 31, 1995..........................F - 18
Consolidated financial statements and financial statement schedules not included
have been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in the consolidated
financial statements.
To the Partners
Century Properties Fund XIX
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Fund XIX (a limited partnership) (the "Partnership") and its
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the additional information supplied pursuant to
Item 14(a)(2). These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Fund XIX and its subsidiaries as of December 31, 1995 and 1994, and
the results of its operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly, in
all material respects, the information set forth therein.
IMOWITZ KOENIG & CO., LLP
Certified Public Accountants
New York, N.Y.
February 20, 1996
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XIX:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Century Properties Fund XIX (a limited
partnership) (the "Partnership") and its wholly-owned subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations and cash flows of the Partnership
and its wholly-owned subsidiaries for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
The accompanying 1993 consolidated financial statements have been prepared
assuming that the Partnership will continue as a going concern. As discussed
in the first paragraph of Note 10 to the financial statements, the Partnership
has balloon payments totaling $10,800,000 due in December 1994, which raises
substantial doubt about the Partnership's ability to continue as a going
concern. Management's plans in regard to this matter are also described in
Note 10. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
---------------------------
1995 1994
------------ ------------
ASSETS
Cash and cash equivalents $ 2,868,000 $ 218,000
Restricted cash -- 787,000
Other assets and deferred costs 1,977,000 1,643,000
Real Estate:
Real estate 94,428,000 94,106,000
Accumulated depreciation (34,394,000 (31,650,000)
Allowance for impairment of value (500,000) (500,000)
------------ ------------
Real estate, net 59,534,000 61,956,000
------------ ------------
Total assets $ 64,379,000 $ 64,604,000
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accrued expenses and other liabilities (including $ 1,374,000 $ 1,195,000
$27,000 to a related party in 1995)
Notes payable 62,342,000 59,063,000
------------ ------------
Total liabilities 63,716,000 60,258,000
------------ ------------
Partners' Equity (Deficit):
General partner (8,992,000) (8,558,000)
Limited partners (89,292 units outstanding at
December 31, 1995 and 1994) 9,655,000 12,904,000
------------ ------------
Total partners' equity 663,000 4,346,000
------------ ------------
Total liabilities and partners' equity $ 64,379,000 $ 64,604,000
============ ============
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-------------------------------------------
1995 1994 1993
----------- ----------- -----------
Revenues:
Rental $14,630,000 $13,709,000 $14,052,000
Interest income 101,000 59,000 62,000
Gain on sale of property - - 576,000
----------- ----------- -----------
Total revenues 14,731,000 13,768,000 14,690,000
----------- ----------- -----------
Expenses (including $1,401,000,
$690,000 and $57,000 paid to
the general partner and
affiliates in 1995,1994
and 1993):
Interest 6,001,000 5,959,000 6,807,000
Operating 7,826,000 7,260,000 6,992,000
Depreciation 2,744,000 2,766,000 2,840,000
General and administrative 207,000 239,000 693,000
Loss on sale of property - 149,000 44,000
Provision for impairment
of value - 500,000 -
----------- ----------- -----------
Total expenses 16,778,000 16,873,000 17,376,000
----------- ----------- -----------
Loss before extraordinary
item (2,047,000) (3,105,000) (2,686,000)
Extraordinary item:
Loss on extinguishment
of debt (1,636,000) - -
----------- ----------- -----------
Net loss $(3,683,000) $(3,105,000) $(2,686,000)
=========== =========== ===========
Net loss per limited
partnership unit:
Loss before extraordinary
item $ (20.23) $ (30.67) $ (26.53)
Extraordinary item (16.16) - -
----------- ----------- -----------
Net loss $ (36.39) $ (30.67) $ (26.53)
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
Partners' Partners' Partners'
(Deficit) Equity Equity
----------- ----------- -----------
Balance - January 1, 1993 $(7,875,000) $18,012,000 $10,137,000
Net loss (317,000) (2,369,000) (2,686,000)
----------- ----------- -----------
Balance - December 31, 1993 (8,192,000) 15,643,000 7,451,000
Net loss (366,000) (2,739,000) (3,105,000)
----------- ----------- -----------
Balance - December 31, 1994 (8,558,000) 12,904,000 4,346,000
Loss before extraordinary item (241,000) (1,806,000) (2,047,000)
Extraordinary item (193,000) (1,443,000) (1,636,000)
----------- ----------- -----------
Balance - December 31, 1995 $(8,992,000) $ 9,655,000 $ 663,000
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------------------
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,683,000) $ (3,105,000) $ (2,686,000)
Adjustments to reconcile net loss to net cash (used in) provided
by operating activities:
Depreciation and amortization 3,048,000 3,172,000 3,199,000
Extraordinary item - extinguishment of debt 1,636,000 - -
Accrued interest added to note payable principal - 29,000 -
Costs expensed on attempted property refinancing - - 64,000
Provision for impairment of value - 500,000 -
Gain on sale of property - - (576,000)
Loss on sale of property - 149,000 44,000
Deferred costs refunded - - 523,000
Changes in operating assets and liabilities:
Other assets and deferred costs (72,000) (374,000) (166,000)
Accrued expenses and other liabilities 97,000 196,000 (1,905,000)
------------ ------------ ------------
Net cash (used in) provided by operating activities 1,026,000 567,000 (1,503,000)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash decrease (increase) 787,000 729,000 (691,000)
Additions to real estate (322,000) (240,000) (658,000)
Net proceeds from sale of rental property - 485,000 11,259,000
Cost of sale of rental property - (3,000) (772,000)
------------ ------------ ------------
Net cash provided by investing activities 465,000 971,000 9,138,000
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable to affiliate of the
general partner - - 291,000
Repayment of notes payable to affilliate of general partner - (370,000) (1,309,000)
Notes payable proceeds 46,450,000 - 20,375,000
Repayment of notes payable (42,807,000) - (25,249,000)
Financing costs paid (729,000) (90,000) (497,000)
Notes payable principal payments (364,000) (979,000) (1,274,000)
Costs paid to extinguish debt (1,391,000) - -
------------ ------------ ------------
Net cash provided by (used in) financing activities 1,159,000 (1,439,000) (7,663,000)
------------ ------------ ------------
Increase (Decrease) in Cash and Cash Equivalents 2,650,000 99,000 (28,000)
Cash and Cash Equivalents at Beginning of Year 218,000 119,000 147,000
------------ ------------ ------------
Cash and Cash Equivalents at End of Year $ 2,868,000 $ 218,000 $ 119,000
============ ============ ============
Supplemental Disclosure of Cash Flow Information:
Interest paid in cash during the year $ 5,662,000 $ 5,449,000 $ 7,826,000
============ ============ ============
Supplemental Disclosure of Non-cash Investing and Financing
Activities:
Accrued interest added to note payable principal $ - $ 2,139,000 $ -
============ ============ ============
Refinancing of notes payable (see Note 5)
Disposition of rental property in 1994 and 1993 - (see Note 8).
See notes to consolidated financial statements.
</TABLE>
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Fund XIX (the "Partnership") is a limited partnership
organized under the laws of the State of California to acquire, hold for
investment, and ultimately sell income-producing real estate. The
Partnership currently owns three residential apartment complexes in
Atlanta, Georgia, two residential apartment complexes in Phoenix, Arizona
and one residential apartment complex in St. Petersburg, Florida, Dallas,
Texas and Charlotte, North Carolina. The general partner of the
Partnership is Fox Partners II, a California general partnership. The
general partners of Fox Partners II are Fox Capital Management
Corporation ("FCMC"), a California corporation, Fox Realty Investors
("FRI"), a California general partnership, and Fox Partners 83, a
California general partnership. The capital contributions of $89,292,000
($1,000 per unit) were made by the limited partners, including 100
Limited Partnership Units purchased by FCMC.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the
"Managing General Partner") pursuant to which NPI Equity was granted the
right to vote 100 percent of the outstanding stock of FCMC and NPI Equity
became the managing general partner of FRI. As a result, NPI Equity
became responsible for the operation and management of the business and
affairs of the Partnership and the other investment partnerships
originally sponsored by FCMC and/or FRI. NPI Equity is a wholly-owned
subsidiary of National Property Investors, Inc. ("NPI, Inc."). The
shareholders of FCMC and the partners in FRI retain indirect economic
interests in the Partnership and such other investment limited
partnerships, but have ceased to be responsible for the operation and
management of the Partnership and such other partnerships.
In October 1994, DeForest Ventures I L.P. ("DeForest I") made a tender
offer for limited partnership interests in the partnership, as well as
eleven affiliated limited partnerships. DeForest Ventures II, L.P.
("DeForest II") made tender offers for limited partnership interests in
seven affiliated limited partnerships. Shareholders who controlled
DeForest Capital I Corporation, the sole general partner of DeForest I,
also controlled NPI, Inc. As of December 31, 1995, DeForest I had
acquired approximately 28% of total limited partnership units of the
Partnership (see Note 11).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia
Financial Group, Inc. ("Insignia"). In addition, an affiliate of
Insignia acquired the limited partnership interests of the Partnership
held by DeForest I and certain of its affiliates (see Note 11).
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Consolidation
The consolidated financial statements include the statements of the
Partnership and its wholly-owned subsidiaries, one of which was formed in
May 1993 into which Sunrunner Apartments was transferred and another
which was formed in December 1995 into which Misty Woods Apartments was
transferred. During 1995, two wholly-owned subsidiaries of the
Partnership were terminated and the properties were conveyed back to the
Partnership (see Note 5). All significant intercompany transactions and
balances have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from
those estimates.
Distributions
Cash distributions have been suspended since 1987. As specified in the
modification of the existing mortgage encumbering McMillan Place
Apartments, the Partnership is prohibited from making any distributions
except from sales or refinancing of its properties, until the mortgage
encumbering McMillan Place Apartments is satisfied.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting
Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial
Instruments," as amended by SFAS No. 119, "Disclosures about Derivative
Financial Instruments and Fair Value of Financial Instruments," which
requires disclosure of fair value information about financial
instruments, whether or not recognized in the balance sheet, for which it
is practicable to estimate fair value. Fair value is defined in the SFAS
as the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of
its financial instruments (except for long term debt) approximates fair
value due to the short term maturity of these instruments. The fair value
of the Partnership's long term debt, after discounting the scheduled loan
payments to maturity, approximates its carrying balance (see Note 5).
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity date of three months or less at the time of purchase to be cash
equivalents.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation. Balances in excess
of $100,000 are usually invested in repurchase agreements, which are
collateralized by United States Treasury obligations. Cash balances
exceeded these insured levels during the year. At December 31, 1995, the
Partnership had approximately $1,900,000 invested in overnight repurchase
agreements, secured by United States Treasury obligations, which are
included in cash and cash equivalents.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. In 1995, the Partnership adopted SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of ", which requires impairment losses to be
recognized for long-lived assets used in operations when indicators of
impairment are present and the undiscounted cash flows are not sufficient
to recover the asset's carrying amount. The adoption of the SFAS had no
effect on the Partnership's financial statements.
Depreciation
Depreciation is computed by the straight-line method over estimated
useful lives ranging from 27.5 to 30 years for buildings and improvements
and five to seven years for furnishings.
Deferred Financing Costs
Financing costs are deferred and amortized over the lives of the related
loans as interest expense or expensed if financing is not obtained. At
December 31, 1995 and 1994, accumulated amortization of deferred
financing costs totaled $114,000 and $974,000, respectively. Net deferred
costs of $872,000 and $610,000 for the years ended December 31, 1995 and
1994, respectively, are included in other assets and deferred costs.
Net Loss Per Limited Partnership Unit
The net loss per limited partnership unit is computed by dividing the net
loss allocated to the limited partners by 89,292 units outstanding.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax
returns of its partners. Accordingly, no provision for income taxes is
made in the financial statements of the Partnership.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassification
Certain amounts from 1994 and 1993 have been reclassified to conform to
the 1995 presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be
charged by the general partners and affiliates for services provided to
the Partnership. From March 1988 to December 1992 such amounts were
assigned pursuant to a services agreement by the general partner and
affiliates to Metric Realty Services, L.P. ("MRS"), which performed
partnership management and other services for the Partnership.
On January 1, 1993, Metric Management, Inc., ("MMI"), successor to
MRS, a company which is not affiliated with the general partners,
commenced providing certain property and portfolio management
services to the Partnership under a new services agreement. As
provided in the new services agreement, effective January 1, 1993, no
reimbursements were made to the general partners and affiliates after
December 31, 1992. Subsequent to December 31, 1992, reimbursements were
made to MMI. On December 16, 1993, the services agreement with MMI was
modified and, as a result thereof, the Managing General Partner began
directly providing cash management and other Partnership services on
various dates commencing December 23, 1993. On March 1, 1994, an
affiliate of NPI Equity commenced providing certain property management
services (see Notes 1 and 11). Related party fees and expenses for the
years ended December 31, 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Financing fees $ 27,000 $ - $ -
Property management fees 738,000 557,000 -
Real estate tax reduction fees 66,000 - -
Reimbursement of operational expenses:
Partnership accounting and investor services 148,000 100,000 -
Professional services - 30,000 -
--------- --------- ---------
Total $ 979,000 $ 687,000 $ -
========= ========= =========
Interest expense $ - $ 3,000 $ 57,000
========= ========= =========
</TABLE>
Property management fees and real estate tax reduction fees are included
in operating expenses. Reimbursed expenses are primarily included in
general and administrative expenses. Financing fees have been capitalized
and are being amortized over the life of the loan. Approximately $449,000
of insurance premiums, which were paid to an affiliate of NPI Inc. under
a master insurance policy arranged by such affiliate, are included in
operating expenses for the year ended December 31, 1995.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
In accordance with the partnership agreement, the general partner
received a partnership management incentive allocation equal to ten
percent of net and taxable income (loss) before gains on property
dispositions. The general partner was also allocated its two percent
continuing interest in the Partnership's net and taxable income (loss)
after the preceding allocation. The general partner is also allocated
gain on property dispositions to the extent it is entitled to receive
distributions and then 12 percent of remaining gain.
3. RESTRICTED CASH
Restricted cash at December 31, 1994, consists of required reserves
maintained in accordance with financing arrangements on the Wood Lake,
Wood Ridge, Plantation Crossing, Greenspoint and Sandspoint Apartments in
order to meet future capital requirements. During 1995, these properties
were refinanced and, as a result of these refinancings, restricted cash
reserves were released.
4. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
1995 1994
----------- -----------
Land $11,681,000 $11,681,000
Buildings and improvements 75,225,000 75,029,000
Furnishings 7,522,000 7,396,000
----------- -----------
Total 94,428,000 94,106,000
Accumulated depreciation (34,394,000) (31,650,000)
Allowance for impairment of value (500,000) (500,000)
----------- -----------
Real estate, net $59,534,000 $61,956,000
=========== ===========
5. NOTES PAYABLE
The Partnership's properties are pledged as collateral for the related
notes payable. The Partnership's Wood Lake, Wood Ridge and Plantation
Crossing Apartments are cross-collateralized. The notes currently bear
interest at rates ranging from 7.5% to 10.06%, and are payable monthly
except for the second note on McMillan Apartments whose interest is
compounded monthly and is payable at maturity, August 31, 1999.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
On December 29, 1995, the Partnership refinanced the mortgage that
encumbered its Misty Woods Apartments property with a new first mortgage
in the amount of $5,450,000. The loan requires monthly payments of
approximately $40,000 at 7.88% interest and matures on January 1, 2006,
with a balloon payment of approximately $4,863,000. The loan may not be
prepaid without penalty. The Partnership incurred closing costs and fees
of $177,000 in connection with the refinancing, of which $95,000 was paid
in 1995. In connection with the refinancing, the Partnership was required
to transfer all the assets and liabilities of Misty Woods Apartments to a
newly formed, wholly-owned subsidiary, Misty Woods CPF 19, L.P.
On December 15, 1995, the partnership refinanced the mortgages that
encumbered their Wood Ridge, Wood Lake and Plantation Crossing Apartments
properties. The new $22,000,000 loan (allocated $9,000,000, $7,750,000
and $5,250,000, respectively) requires total monthly payments of
approximately $163,000 at 7.5% interest and is being amortized over 25
years. The loan matures on January 1, 2003 with a balloon payment of
approximately $19,283,000. A premium is to be calculated under the terms
of the mortgage if the loan is prepaid. In connection with the
refinancings, each of these properties was conveyed from a wholly-owned
subsidiary, Century Woods 19, L.P., back to the Partnership. The
Partnership incurred closing costs and fees of $346,000 in connection
with this refinancing.
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. The loan requires monthly payments of approximately
$68,000 at 8.33% interest and is being amortized over 30 years. The loan
matures on May 15, 2005 with a balloon payment of approximately
$7,974,000. A premium is to be calculated under the terms of the mortgage
if the loan is prepaid. In connection with the refinancing, the property
was conveyed from a wholly-owned subsidiary, SGP Properties, L.P., back
to the partnership. The partnership incurred closing costs of $138,000 in
connection with the refinancing.
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. A premium is to be calculated under the terms of the mortgage
if the loan is prepaid. In connection with the refinancing, the property
was conveyed from a wholly-owned subsidiary, SGP Properties, L.P., back
to the partnership. The Partnership incurred closing costs of $150,000 in
connection with the refinancing.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
In connection with the above refinancings, the Partnership recognized an
extraordinary loss on extinguishment of debt of $1,636,000, consisting of
the write-off of unamortized deferred financing costs, prepayment
premiums and exit fees.
On September 1, 1994, the Partnership obtained a modification of the
existing mortgage encumbering McMillan Place Apartments in the amount of
$12,939,000 (including accrued interest of $2,139,000). The loan was
split into a first mortgage note of $10,800,000 and a second mortgage
note of $2,139,000. The first mortgage requires monthly payments of
approximately $89,000 at 8.25% interest and is being amortized over a
twenty-two year period. Under the terms of the second mortgage, interest
accrues at 8.25% (with monthly compounding). Quarterly payments, of all
excess cash flow, as defined in the cash management agreement, are
required to be made to the lender. No excess cash flow payments were made
in 1995 or 1994. In addition, the Partnership is prohibited from making
any distributions from operations to its partners. The notes mature on
August 31, 1999, with a balloon payment of approximately $9,767,000 on
the first mortgage plus the outstanding balance and accrued interest on
the second mortgage note. As specified in the modification, the
Partnership is required to make monthly payments of $10,000 to a reserve
account for the term of the loan, which will be used to fund capital
improvements.
The mortgage encumbering the Partnership's Sunrunner Apartments property
matures on January 1, 1997, with a balloon payment of approximately
$3,169,000. Based upon the operations of the property, the Managing
General Partner anticipates that the maturing mortgage can be replaced.
Principal payments at December 31, 1995 are required as follows:
1996 $ 763,000
1997 3,933,000
1998 826,000
1999 12,691,000
2000 689,000
Thereafter 43,440,000
-------------
Total $ 62,342,000
=============
Amortization of deferred financing costs totaled $304,000, $416,000 and
$349,000 for 1995, 1994 and 1993, respectively.
6. NOTES PAYABLE TO AFFILIATE OF THE GENERAL PARTNER
The Partnership repaid $370,000 in principal and $3,000 in interest to an
affiliate of the general partner in 1994.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
7. ALLOWANCE FOR IMPAIRMENT OF VALUE
In 1994, the Partnership determined that, based upon current economic
conditions and projected future operational cash flow, the decline in
value of Sunrunner Apartments located in St. Petersburg, Florida was
other than temporary and that recovery of its carrying value was not
likely. Accordingly, a provision for impairment of value of $500,000 was
recognized by the Partnership to reduce the property's carrying value to
its estimated fair value.
8. DISPOSITION OF RENTAL PROPERTIES
In February 1994, the Partnership sold Plantation Forest Apartments,
located in Atlanta, Georgia for $2,450,000. After assumption of the
existing loan of $1,965,000 and costs of sale of $3,000, the proceeds to
the Partnership were $482,000. The carrying value of the property at the
time of the sale was $2,590,000 and $6,000 in unamortized financing
costs. The net loss on the sale was $149,000.
In May 1993, the Partnership sold Parkside Village Apartments, located in
Aurora, Colorado for $11,259,000. After payment of the existing loan of
$7,667,000 and costs of the sale of $728,000 (including $281,000 real
estate commission paid to an outside broker and $400,000 prepayment
premium on the existing loan), the net proceeds to the Partnership were
$2,864,000. The carrying value of the property at the time of sale, net
of the $1,895,000 provision for impairment of value recognized in 1992,
was $9,955,000. The net gain on the sale was $576,000.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
9. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The differences between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the consolidated
financial statements are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------------- --------------- ---------------
<S> <C> <C> <C>
Net loss - financial statements $ (3,683,000) $ (3,105,000) $ (2,686,000)
Differences resulted from:
Amortization of notes payable discount - - 8,000
Depreciation (948,000) (980,000) (1,887,000)
Amortization of deferred financing costs and
organization expenses - - (114,000)
Construction period interest and taxes 3,000 (331,000) (471,000)
Provision for impairment of value - 500,000 -
Operating - receivership - - 158,000
Interest expense - short-term borrowings - (66,000) (29,000)
Prepayment penalty - - (400,000)
Gain on property dispositions - net - 910,000 6,301,000
Other (27,000) 21,000 (12,000)
--------------- --------------- ---------------
Net (loss) income - income tax method $ (4,655,000) $ (3,051,000) $ 868,000
=============== =============== ===============
Taxable (loss) income per limited partnership unit
after giving effect to the allocation to the
general partner $ (46) $ (30) $ 8
=============== =============== ===============
Partners' equity - financial statements $ 663,000 $ 4,346,000 $ 7,451,000
Differences resulted from:
Sales commissions and organization expenses 12,413,000 12,413,000 12,413,000
Payments credited to rental properties 215,000 215,000 215,000
Amortization of notes payable discount - - 448,000
Depreciation (23,081,000) (22,133,000) (22,059,000)
Interest expense - - (1,347,000)
Construction period interest and taxes (4,648,000) (4,651,000) (4,320,000)
Provision for impairment of value 500,000 500,000 -
Interest expense - short-term borrowings - - 66,000
Other (927,000) (900,000) (26,000)
=============== =============== ===============
Partners' deficit - income tax method $ (14,865,000) $ (10,210,000) $ (7,159,000)
=============== =============== ===============
</TABLE>
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
10. BASIS OF PRESENTATION AND OPERATING STRATEGY FOR THE YEAR ENDED
DECEMBER 31, 1993
The accompanying consolidated financial statements for the year ended
December 31, 1993, have been prepared on a going concern basis which
contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. The Partnership, after taking into account
accrued but unpaid interest on certain notes payable for which the
Partnership had suspended debt service payments, has experienced cash
flow deficiencies during recent years. At December 31, 1993, the
Partnership had borrowed a total of $370,000 from affiliates of the
general partner for working capital needs. The Partnership holds
investments in and operates properties in real estate markets that are or
were experiencing unfavorable economic conditions. Many of the
Partnership's properties are or were located in oil industry related and
other weakened markets and have experienced operating difficulties. In
addition, markets in some areas remained depressed due in part to
overbuilding which continued to depress residential rental rates. The
level of sales of existing properties have been affected by the limited
availability of financing in real estate markets. The Partnership had a
balloon payment of $10,800,000 on McMillan Place Apartments due in
December 1994. The Partnership's ability to hold and operate its
remaining properties was dependent on obtaining refinancing or debt
restructuring as required. If the Partnership was unable to obtain debt
modification or refinancing, it was likely that dispositions of
properties operating at a deficit or with significant balloon payments
would have occurred through sale, foreclosure or transfer to the lenders.
The Partnership sold Plantation Forest in February 1994 and with the
proceeds from the sale paid off the remaining loans from an affiliate of
the general partner. The Partnership believed this strategy, combined
with cash generated from the Partnership's properties with positive
operations would allow the Partnership to meet its capital and operating
requirements. The outcome of these uncertainties could not be determined.
The consolidated financial statements do not include any adjustments that
might have resulted from the ultimate outcome of these uncertainties.
The Partnership obtained a modification of the McMillan Place debt during
1994 and refinanced numerous properties during 1995, which resulted in
significant net proceeds to the Partnership. Cash flow from operations
improved in 1994 and 1995, as compared to 1993 (see Note 5).
11. SUBSEQUENT EVENT
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued
and outstanding stock of NPI, Inc. to an affiliate of Insignia. In
addition, an affiliate of Insignia acquired the limited partnership
interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 1). As a result of the transaction, the Managing
General Partner of the Partnership is controlled by Insignia. Insignia
affiliates now provide property and asset management services to the
Partnership, maintain its books and records and oversee its operations.
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E
Cost Capitalized
Initial Cost Subsequent Gross Amount at Which
to Partnership to Acquisition Carried at Close of Period(1)
-------------- ---------------- -----------------------------
Buildings Buildings
and and
Encum- Improve- Improve- Carrying Improve-
Description brances Land ments ments Costs Land ments Total (2)
- ----------- ------- ---- -------- -------- -------- ---- --------- ---------
(Amounts in thousands)
PARTNERSHIP:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Wood Lake Apartments
Atlanta, Georgia $ 7,750 $ 1,206 $10,980 $ 499 $ - $ 1,206 $11,479 $12,685
Sandspoint Apartments
Phoenix, Arizona 9,968 2,124 13,158 633 (44) 2,146 13,725 15,871
Greenspoint
Apartments
Phoenix, Arizona 8,972 2,165 11,199 324 (153) 2,140 11,395 13,535
Wood Ridge
Apartments
Atlanta, Georgia 9,000 1,632 12,321 592 - 1,632 12,913 14,545
Plantation Crossing
Apartments
Atlanta, Georgia 5,250 1,062 7,576 368 - 1,062 7,944 9,006
McMillan Place
Apartments
Dallas, Texas 12,710 2,399 10,826 509 (11) 2,427 11,296 13,723
Subsidiaries:
Sunrunner Apartments
St. Petersburg,
Florida 3,242 634 6,485 497 - 634 6,982 7,616
Misty Woods
Apartments
Charlotte,
North Carolina 5,450 429 6,846 179 (7) 434 7,013 7,447
------- ------- ------- ----- ------- ------- ------- -------
Total $62,342 $11,651 $79,391 $3,601 $ (215) $11,681 $82,747 $94,428
======= ======= ======= ====== ======= ======= ======= =======
COLUMN COLUMN COLUMN COLUMN COLUMN
A F G H I
Accumu- Life
lated on which
Deprecia- Deprecia-
tion Year tion is
and of Date computed
Impairment Con- of in latest
of value struc- Acqui- statement of
Description (3) tion sition operations
- ----------- ---------- ----- ------ ----------
PARTNERSHIP:
<S> <C> <C> <C> <C>
Wood Lake Apartments
Atlanta, Georgia $ 4,913 1983 12/83 5 - 30 yrs
Sandspoint Apartments
Phoenix, Arizona 5,603 1986 2/84 6 - 30 yrs
Greenspoint
Apartments
Phoenix, Arizona 4,634 1986 2/84 6 - 30 yrs
Wood Ridge
Apartments
Atlanta, Georgia 5,431 1982 4/84 6 - 30 yrs
Plantation Crossing
Apartments
Atlanta, Georgia 3,334 1980 6/84 6 - 30 yrs
McMillan Place
Apartments
Dallas, Texas 4,704 1985 6/85 6 - 30 yrs
Subsidiaries:
Sunrunner Apartments
St. Petersburg,
Florida 3,441 1981 7/84 6 - 30 yrs
Misty Woods
Apartments
Charlotte,
North Carolina 2,834 1986 6/85 6 - 30 yrs
-------
Total $34,894
=======
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES FUND XIX
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<S> <C>
NOTES:
(1) The aggregate cost for Federal income tax purposes is $89,059,000.
(2) Balance, January 1, 1993 $ 137,828,000
Improvements capitalized subsequent to acquisition 658,000
Cost of rental property disposed of (41,050,000)
-------------
Balance, December 31, 1994 97,436,000
Improvements capitalized subsequent to acquisition 240,000
Cost of rental property disposed of (3,570,000)
-------------
Balance, December 31, 1994 94,106,000
Improvements capitalized subsequent to acquisition 322,000
-------------
Balance, December 31, 1995 $ 94,428,000
=============
(3) Balance, January 1, 1993 $ 41,635,000
Additions charged to expense 2,840,000
Accumulated depreciation on rental property disposed (11,012,000)
Allowance for impairment of value on rental properties disposed of (3,589,000)
-------------
Balance, December 31, 1993 29,874,000
Additions charged to expense 2,766,000
Allowance for impairment of value 500,000
Accumulated depreciation on rental property disposed (990,000)
-------------
Balance, December 31, 1994 32,150,000
Additions charged to expense 2,744,000
-------------
Balance, December 31, 1995 $ 34,894,000
=============
</TABLE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
Effective April 22, 1994, the Registrant dismissed its prior
Independent Auditors, Deloitte & Touche, LLP ("Deloitte") and retained as its
new Independent Auditors, Imowitz Koenig & Company, LLP. Deloitte's Independent
Auditors' Report on the Registrant's financial statements for the calendar year
ended December 31, 1993 did not contain an adverse opinion or a disclaimer of
opinion, and was not qualified or modified as to audit scope or accounting
principles. However, Deloitte's Independent Auditors' Report for the calendar
year December 31, 1993 was modified due to the uncertainty regarding the
Registrant's ability to continue as a going concern since the Registrant had
substantial balloon payments due on Notes in 1994; the financial statements did
not include any adjustments that might result from the outcome of this
uncertainty. The decision to change Independent Auditors was approved by the
Managing General Partner's Directors. During calendar year ended 1993 and
through April 22, 1994 there were no disagreements between the Registrant and
Deloitte on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure which disagreements if not
resolved to the satisfaction of Deloitte, would have caused it to make reference
to the subject matter of the disagreements in connection with its reports.
Effective April 22, 1994, the Registrant engaged Imowitz Koenig &
Company, LLP as its Independent Auditors. The Registrant did not consult Imowitz
Koenig & Company, LLP regarding any of the matters or events set forth in Item
304(a)(2)(i) and (ii) of Regulation S-K prior to April 22, 1994.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Neither the Registrant, nor Fox Partners II ("Fox"), the general
partner of the Registrant, has any officers or directors. Fox Capital Management
Corporation (the "Managing General Partner'), the managing general partner of
Fox, manages and controls substantially all of the Registrant's affairs and has
general responsibility and ultimate authority in all matters affecting its
business. NPI Equity Investments II, Inc., which controls the Managing General
Partner, is a wholly-owned affiliate of National Property Investors, Inc., which
in turn is owned by an affiliated Insignia (See "Item 1, Business - Change in
Control"). Insignia is a full service real estate service organization
performing property management, commercial and retail leasing, partnership
administration, mortgage banking, and real estate investment banking services
for various entities. Insignia commenced operations in December 1990 and is the
largest manager of multifamily residential properties in the United States and
is a significant manager of commercial property. It currently provides property
and/or asset management services for over 2,000 properties. Insignia's
properties consist of approximately 300,000 units of multifamily residential
housing and approximately 64 million square feet of commercial space.
As of March 1, 1996, the names and positions held by the officers and
directors of the Managing General Partner are as follows:
Has served as a
Director and/or
Officer of the
Managing
Name Positions Held General Partner since
- ---- -------------- ---------------------
William H. Jarrard, Jr. President and Director January 1996
Ronald Uretta Vice President and January 1996
Treasurer
John K. Lines, Esquire Vice President, January 1996
Secretary and Director
Thomas R. Shuler Director January 1996
Kelley M. Buechler Assistant Secretary January 1996
William H. Jarrard, Jr., age 49, has been President and a Director of
the Managing General Partner since January 1996. Mr. Jarrard has been a Managing
Director - Partnership Administration of Insignia since January 1991.
Ronald Uretta, age 40, has been Insignia's Chief Financial Officer and
Treasurer since January 1992. Since September 1990, Mr. Uretta has also served
as the Chief Financial Officer and Controller of Metropolitan Asset Group.
John K. Lines, Esquire, age 36, has been a Director and Vice President
and Secretary of the Managing General Partner since January 1996, Insignia's
General Counsel since June 1994, and General Counsel and Secretary since July
1994. From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel
and Vice President of Ocwen Financial Corporation, West Palm Beach, Florida.
From October 1991 until May 1993, Mr. Lines was a Senior Attorney with Banc One
Corporation, Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was an
attorney with Squire Sanders & Dempsey, Columbus, Ohio.
Thomas R. Shuler, age 50, has been Managing Director - Residential
Property Management of Insignia since March 1991 and Executive Managing Director
of Insignia and President of Insignia Management Services since July 1994. From
January 1983 until March 1991, Mr. Shuler was President of the Management
Division of Hall Financial Group, Inc., a property management organization
located in Dallas, Texas.
Kelley M. Buechler, age 38, has been Assistant Secretary of the
Managing General Partner since January 1996 and Assistant Secretary of Insignia
since 1991.
No family relationships exist among any of the officers or directors of
the Managing General Partner.
Each director and officer of the Managing General Partner will hold
office until the next annual meeting of stockholders of the Managing General
Partner and until his successor is elected and qualified.
Item 11. Executive Compensation.
The Registrant is not required to and did not pay any compensation to
the officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See "Item 13, Certain Relationships and Related Transactions.")
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The Registrant is a limited partnership and has no officers or
directors. The Managing General Partner has discretionary control over most of
the decisions made by or for the Registrant in accordance with the terms of the
Partnership Agreement. The Managing General Partner directly owns 100 limited
partnership units in the Registrant.
The following table sets forth certain information regarding limited
partnership units of the Registrant owned by each person who is known by the
Registrant to own beneficially or exercise voting or dispositive control over
more than 5% of the Registrant's limited partnership units, by each of the
Managing General Partner's directors and by all directors and executive officers
of the Managing General Partner as a group as of March 1, 1996.
Name and address of Amount and nature of
Beneficial Owner Beneficial Ownership % of Class
Insignia NPI, LLC(1) 24,811.66(2) 27.8
All directors and
executive officers as
a group (5 persons) - -
- -----------
(1) The business address for Insignia NPI, L.L.C. is One Insignia Financial
Plaza, Greenville, South Carolina 29602.
(2) Based upon information supplied to the Registrant by Insignia NPI,
L.L.C.
There are no arrangements known to the Registrant, the operation of
which may, at a subsequent date, result in a change in control of the
Registrant.
Item 13. Certain Relationships and Related Transactions.
In accordance with the Registrant's partnership agreement, the
Partnership may be charged by the general partners and affiliates for services
provided to the Partnership. On January 1, 1993, Metric Management, Inc.,
("MMI"), successor to MRS, a company which is not affiliated with the general
partners, commenced providing certain property and portfolio management services
to the Partnership under a new services agreement. As provided in the new
services agreement, effective January 1, 1993, no reimbursements were made to
the general partners and affiliates after December 31, 1992. Subsequent to
December 31, 1992, reimbursements were made to MMI. On December 16, 1993, the
services agreement with MMI was modified and, as a result thereof, NPI Equity II
began directly providing cash management and other Partnership services on
various dates commencing December 23, 1993. On March 1, 1994, an affiliate of
NPI Equity II commenced providing certain property management services (see
Notes 1 and 11). Related party expenses for the years ended December 31, 1995,
1994 and 1993 were as follows:
1995 1994 1993
-------- -------- --------
Property management fees $738,000 $557,000 $ -
Real estate tax reduction fees 66,000 - -
Reimbursement of operational expenses:
Partnership accounting and
investor services 148,000 100,000 -
Professional services - 30,000 -
-------- -------- --------
Total $952,000 $687,000 $ -
======== ======== ========
Interest expense $ - $ 3,000 $ 57,000
======== ======== ========
Property management fees and real estate tax reduction fees are included
in operating expenses. Reimbursed expenses are primarily included in general and
administrative expenses. Approximately $449,000 of insurance premiums, which
were paid to an affiliate of NPI Inc. under a master insurance policy arranged
by such affiliate, are included in operating expenses for the year ended
December 31, 1995. In addition, a $27,000 fee was accrued to an affiliate of
Insignia during 1995 in connection with the refinancing of the Partnership's
Misty Woods Apartments property.
In accordance with the Registrant's partnership agreement, the general
partner received a partnership management incentive allocation equal to ten
percent of net and taxable income (loss) before gains on property dispositions.
The general partner was also allocated its two percent continuing interest in
the Partnership's net and taxable income (loss) after the preceding allocation.
The general partner is also allocated gain on property dispositions to the
extent it is entitled to receive distributions and then 12 percent of remaining
gain.
As a result of its ownership of 24,811.66 limited partnership units,
Insignia NPI L.L.C. ("Insignia LLC") could be in a position to significantly
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
Insignia LLC would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of its
affiliation with the Managing General Partner. However, Insignia LLC has agreed
for the benefit of non-tendering unitholders, that it will vote its Units: (i)
against any proposal to increase the fees and other compensation payable by the
Registrant to the Managing General Partner and any of its affiliates; and (ii)
with respect to any proposal made by the Managing General Partner or any of its
affiliates, in proportion to votes cast by other unitholders. Except for the
foregoing, no other limitations are imposed on Insignia LLC's right to vote each
Unit acquired.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)(1)(2) Consolidated Financial Statements and Financial
Statement Schedules:
See "Item 8" of this Form 10-K for Consolidated
Financial Statements of the Registrant, Notes
thereto, and Financial Statement Schedules. (A Table
of Contents to Consolidated Financial Statements and
Financial Statement Schedules is included in "Item 8"
and incorporated herein by reference.)
(a) (3) Exhibits:
2.1 NPI, Inc. Stock Purchase Agreement, dated as of
August 17, 1995, incorporated by reference to the
Registrant's Current Report on Form 8-K dated August
17, 1995.
2.2 Partnership Units Purchase Agreement dated as of
August 17, 1995 incorporated by reference to Exhibit
2.1 to Form 8-K filed by Insignia Financial Group,
Inc. ("Insignia) with the Securities and Exchange
Commission on September 1, 1995.
2.3 Management Purchase Agreement dated as of August 17,
1995 incorporated by reference to Exhibit 2.2 to Form
8-K filed by Insignia with the Securities and
Exchange Commission on September 1, 1995.
2.4 Limited Liability Company Agreement of Riverside
Drive L.L.C., dated as of August 17, 1995
incorporated by reference to Exhibit 2.4 to Form 8-K
filed by Insignia with the Securities and Exchange
Commission on September 1, 1995.
2.5 Master Indemnity Agreement dated as of August 17,
1995 incorporated by reference to Exhibit 2.5 to Form
8-K filed by Insignia with the Securities and
Exchange Commission on September 1, 1995.
3.4 Agreement of Limited Partnership, incorporated by reference to
Exhibit A to the Prospectus of the Registrant dated September
20, 1983, as amended or June 13, 1989, and as thereafter
supplemented contained in the Registrant's Registration
Statement on Form S-11 (Reg. No. 2-79007)
10(a) Amended and Restated Note A, made as of September
1, 1994, by the Registrant in favor of The Travelers
Insurance Company ("Travelers") in the principal
amount of $10,800,000, incorporated by reference to
the Registrant's Form 10-Q for the quarter ended
September 30, 1994.
(b) Amended and Restated Note B, made as of September
1, 1994, by the Registrant in favor of Travelers in
the principal amount of $2,138,673.53, incorporated
by reference to the Registrant's Form 10-Q for the
quarter ended September 30, 1994.
(c) Amended and Restated Deed of Trust, dated as of
September 1, 1994, between the Registrant and
Travelers, incorporated by reference to the
Registrant's Form 10-Q for the quarter ended
September 30, 1994.
(d) Amended and Restated Note B, made as of September
1, 1994, between the Registrant and Travelers,
incorporated by reference to the Registrant's Form
10-Q for the quarter ended September 30, 1994.
(e) Promissory Note made December 15, 1995, by the
Registrant in favor of Connecticut General Life
Insurance Company ("CIGNA") in the principal amount
of $22,000,000 relating to the refinancing of Wood
Lake, Wood Ridge and Plantation Crossing.
(f) Form of Deed to Secure Debt and Security Agreement
from the Registrant to CIGNA relating to the
refinancing of Wood Lake, Wood Ridge and Plantation
Crossing.
(g) First Mortgage Note from the Registrant to Secore
Financial Corporation ("Secore") relating to the
refinancing of Misty Woods Apartments.
(h) First Mortgage and Security Agreement dated as of
December 29, 1995, from the Registrant to Secure
relating to the refinancing of Misty Woods
Apartments.
16. Letter from the Registrant's former Independent
Auditor dated April 27, 1994, incorporated by
reference to exhibit 10 to the Registrant's Current
Report on Form 8-K dated April 22, 1994.
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized this 26th of March,
1996.
CENTURY PROPERTIES FUND XIX
By: FOX PARTNERS II
Its General Partner
By: FOX CAPITAL MANAGEMENT
CORPORATION, a General Partner
By:/s/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature/Name Title Date
/s/ William H. Jarrard, Jr. President and March 26, 1996
- --------------------------- Director
William H. Jarrard, Jr.
/s/ Ronald Uretta Principal Financial March 26, 1996
- --------------------------- Officer and Principal
Ronald Uretta Accounting Officer
/s/ John K. Lines Director March 26, 1996
- ---------------------------
John K. Lines
Exhibit Index
Exhibit Page
2.1 NPI, Inc. Stock Purchase Agreement (1)
2.2 Partnership Units Purchase Agreement (2)
2.3 Management Purchase Agreement (3)
2.4 Limited Liability Company Agreement of (4)
Riverside Drive L.L.C.
2.5 Master Indemnity Agreement (5)
3.4. Agreement of Limited Partnership (6)
10.1 Amended and Restated Note A, made as of September 1, (7)
September 1, 1994, by the Registrant in favor of The Travelers
Insurance Company ("Travelers") in the principal amount of
$10,800,000
10.2 Amended and Restated Note A, made as of September 1, (7)
September 1, 1994, by the Registrant in favor of Travelers
in the principal amount of $2,138,673.53
10.3 Amended and Restated Deed of Trust, dated as of September (7)
1, 1994, between the Registrant and Travelers
10.4 Amended and Restated Note B, made as of September 1, 1994 (7)
between the Registrant and Travelers
10.5 Promissory Note made December 15, 1995, by the Registrant in
favor of Connecticut General Life Insurance Company ("CIGNA")
in the principal amount of $22,000,000
10.6 Deed to Secure Debt and Security Agreement from
the Registrant to CIGNA
10.7 First Mortgage Note from the Registrant to Secore
Financial Corporation ("Secore")
10.8 First Mortgage and Security Agreement dated
as of December 29, 1995, from the Registrant to
Secore
16 Letter from the Registrant's former Independent Auditor
dated April 27, 1994 (8)
- -------------------
(1) Incorporated by reference to the Registrant's Current Report on Form
8-K dated August 7, 1995
(2) Incorporated by reference to Exhibt 2.1 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(3) Incorporated by reference to Exhibit 2.2 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(4) Incorporated by reference to Exhibit 2.4 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(5) Incorporated by reference to Exhibit 2.5 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(6) Incorporated by reference to Exhibit A to the Prospectus of the
Registrant dated September 20, 1983, as amended or June 13, 1989 and as
thereafter supplemented contained in the Registrant's Registration Statement
on Form S-11 (Reg. No. 2-79007)
(7) Incorporated by reference to the Registrant's Form 10-Q for the
quarter ended September 30, 1994.
(8) Incorporated by reference to exhibit 10 to the Registrant's Current
Report on Form 8-K dated April 22, 1994.
Atlanta, Georgia
PROMISSORY NOTE
$22,000,000 December 15, 1995
FOR VALUE RECEIVED, CENTURY PROPERTIES FUND XIX, a California limited
partnership (the "Maker"), promises to pay to the order of CONNECTICUT GENERAL
LIFE INSURANCE COMPANY, a Connecticut corporation, having its principal office
at 900 Cottage Grove Road, Bloomfield, Connecticut (the "Payee"), at Payee's
principal address or such other place as the Holder hereof may designate in
writing (the legal holder from time to time of this Note, including Payee as the
initial holder, being hereinafter referred to as "Holder"), the principal sum of
Twenty Two Million and NO/100 Dollars ($22,000,000) (the "Principal
Indebtedness"), together with interest thereon at an annual rate of seven and
one-half percent (7.5%) (the "Interest Rate"), in accordance with the provisions
hereinafter set forth.
1. Terms of Payment. If the date on which the Principal Indebtedness is
advanced to Maker (the "Advancement Date") is not the first day of a calendar
month, then Maker shall pay to Holder on the Advancement Date, interest only on
the Principal Indebtedness, at the Interest Rate, calculated on the basis of a
365-day year and the number of days from and including the Advancement Date to
and including the last day of the calendar month in which the Advancement Date
occurs. On the first day of the second calendar month following the Advancement
Date (or on the first day of the first calendar month following the Advancement
Date, if the Advancement Date is the first day of a calendar month), and on the
first day of each calendar month thereafter (hereinafter called the "monthly
payment dates") through and including December 1, 2002, Maker shall pay to
Holder the sum of $162,578.07 (hereinafter referred to as "monthly payments"),
to be applied first to interest on the Principal Indebtedness from time to time
outstanding at the Interest Rate and the balance to be applied in reduction of
the Principal Indebtedness. The interest component of the monthly payments shall
be calculated and applied on the basis of a 360-day year consisting of twelve
30-day months. On January 1, 2003 (the "Maturity Date") Maker shall pay to
Holder the entire Principal Indebtedness then remaining unpaid, together with
accrued and unpaid interest thereon at the Interest Rate and any other charges
due under this Note, the Security Deeds (hereinafter defined), and any other
documents evidencing or securing or pertaining to the advancement or
disbursement of the Principal Indebtedness (collectively, the "Loan Documents").
The period from and including the date hereof to the Maturity Date will be
referred to hereinafter as the "Term".
2. Prepayment. Except as specifically provided herein or in the
Security Deeds, no prepayment of the Principal Indebtedness shall be allowed
during the first four (4) loan years (the "Closed Period"). Maker, whether or
not a debtor in a proceeding under Title 11, United States Code, may prepay the
Principal Indebtedness in full, but not in part (except as provided in the
Security Deeds), on any monthly payment date after the Closed Period, provided
Maker gives Holder sixty (60) days prior written notice and pays a prepayment
fee equal to: (i) three percent (3.0%) of the then-existing balance of this
Note, if prepayment is made during the fifth (5th) loan year; (ii) two percent
(2.0%) of the then-existing balance of this Note, if prepayment is made during
the sixth (6th) loan year; or (iii) one percent (1.0%) of the then-existing
balance of this Note, if prepayment is made during the first nine (9) months of
the seventh (7th) loan year. No prepayment fee shall be due if prepayment is
made during the last three (3) months of the seventh (7th) loan year.
The loan years shall be consecutive 12-month periods measured from the
initial monthly payment date. The foregoing prepayment fee will be due when the
loan is prepaid after the Closed Period and prior to the last three (3) months
preceding the Maturity Date, whether such prepayment is voluntary or results
from default, acceleration or any other cause.
In the event of a prepayment during the Closed Period resulting from a
default, acceleration or any other reason (other than a sale of collateral as
permitted in the Security Deeds), Maker shall pay to Holder a default prepayment
fee calculated as follows:
(a) three percent (3.0%) of the then existing principal balance of
this Note, plus
(b) Yield Maintenance as defined below.
Yield Maintenance: Yield Maintenance is defined as the Present Value
on the date of prepayment of the Monthly Interest Shortfall for the remaining
Term of the loan.
The Monthly Interest Shortfall is the product of (i) the positive
difference, if any, of the Semi-Annual Equivalent Rate less the Treasury Yield,
divided by 12, times (ii) the outstanding principal balance of the loan on each
monthly payment date for each full and partial month remaining in the Term.
The Present Value is then determined by discounting each Monthly 12
Interest Shortfall at the Treasury Yield divided by twelve.
The "Semi-Annual Equivalent Rate" for this loan is 7.62%
The "Treasury Yield" will be determined by reference to the Federal
Reserve Statistical Release H.15 (519) of Selected Interest Rates (or any
similar successor publication of the Federal Reserve) for the first week ending
not less than two full weeks prior to the prepayment date. If the remaining Term
is less than one year, the Treasury Yield will equal the yield for 1-Year
Treasury Constant Maturities. If the remaining Term is equal to one of the
maturities of the Treasury Constant Maturities (e.g., 1-year, 2-year, etc.),
then the Treasury Yield will equal the yield for the Treasury Constant Maturity
with a maturity equalling the remaining Term. If the remaining Term is longer
than one year, but does not equal one of the maturities of the Treasury Constant
Maturities, then the Treasury Yield will equal the yield for the Treasury
Constant Maturity closest to, but not exceeding, the remaining Term.
Any other provision of this Note to the contrary notwithstanding, (i)
prepayments will be permitted at par (i.e., no prepayment fee) for prepayments
occasioned by the application of casualty insurance and/or condemnation proceeds
to the Principal Indebtedness as provided in the Security Deeds and (ii)
prepayments in connection with the sale of one or more of the three apartment
projects securing this Note, during the Closed Period, made in conformity with
the requirements of the Security Deeds, shall require a prepayment fee equal
only to the greater of (x) one percent (1.0%) of the principal amount prepaid or
(y) Yield Maintenance.
The aforementioned prepayment fee does not constitute a penalty, but
rather represents the reasonable estimate, agreed to between Maker and Payee, of
a fair compensation for the loss that may be sustained by Holder due to
prepayment of the Principal Indebtedness prior to the Maturity Date. Any
prepayment fee required pursuant to the preceding paragraphs shall be paid
without prejudice to the right of Holder to collect any of the amounts owing
under this Note or the Security Deeds or otherwise, to enforce any of its rights
or remedies arising out of an Event of Default hereunder.
3. Security. This Note is secured by, among other things, three Deeds
to Secure Debt and Security Agreements (the "Security Deeds"), each given by
Maker to Payee, of even date herewith, constituting a first lien or first
security title on real estate and a first priority security interest in personal
property and any leasehold on such personal property and assignment of rents and
leases (hereinafter referred to as the "Security"), comprising three apartment
projects known as "Wood Lake Apartments", "Wood Ridge Apartments" and
"Plantation Crossing Apartments," respectively, located in the County of Cobb,
State of Georgia.
4. Location and Medium of Payments. The sums payable under this Note or
under the Security Deeds shall be paid to Holder at its principal address
hereinabove set forth, or at such other place as Holder may from time to time
hereafter designate to Maker in writing, in legal tender of the United States of
America.
5. Acceleration of Maturity. At the option of Holder, which may be
exercised at any time after one or more of the following events (each being an
"Event of Default") shall have occurred, the whole of the Principal
Indebtedness, together with all interest, applicable prepayment fees, and other
charges due under any of the Loan Documents, shall immediately become due and
payable ("Acceleration of Maturity"): (a) if any payment of any installment of
the Principal Indebtedness, and/or interest or of any other sum due hereunder is
not received by Holder within five business days following the date when such
payment was due; or (b) if a default or an Event of Default shall occur under
the Security Deeds or any other of the Loan Documents, which is not cured within
any applicable grace period afforded therein, if any.
6. Late Charges; Interest Following Event of Default. If any payment
due under this Note, the Security Deeds, or any other Loan Document, is not paid
when due, without regard to any cure or grace period, Maker shall pay and Holder
shall be entitled to collect a late payment charge for each month or fraction
thereof during which such payment is not made when due and for each month
thereafter that such sum remains unpaid, equal to the lesser of four percent
(4%) of such late payment or the maximum amount permitted by law, for the
purpose of defraying the expense incurred by Holder in handling and processing
such delinquent payment, and such amount shall be secured by the Loan Documents
securing this Note.
In addition to any late payment charge which may be due under this
Note, Maker shall pay interest on all sums due hereunder at a rate (the "Default
Rate") equal to the lesser of (i) the Interest Rate plus four percent (4%) per
annum, or (ii) the maximum rate permitted by law, from and after the first to
occur of the following events: if Holder elects to cause the Acceleration of
Maturity; if a petition under Title 11, United States Code, shall be filed by or
against Maker or if Maker shall seek or consent to the appointment of a receiver
or trustee for itself or for any of the Security, file a petition seeking relief
under the bankruptcy or other similar laws of the United States, any state or
any jurisdiction, make a general assignment for the benefit of creditors, or be
unable to pay its debts as they become due; if a court shall enter an order,
judgment or decree appointing, with or without the consent of Maker, a receiver
or trustee for it or for any of the Security or approving a petition filed
against Maker which seeks relief under the bankruptcy or other similar laws of
the United States, any state or any jurisdiction, and any such order, judgment
or decree shall remain in force, undischarged or unstayed, sixty days after it
is entered; or if all sums due hereunder are not paid on the Maturity Date.
7. Collection and Enforcement Costs. Maker, upon demand, shall pay
Holder for all costs and expenses, including without limitation attorneys' fees,
paid or incurred by Holder in connection with the collection of any sum due
hereunder, or in connection with enforcement of any of Holder's rights or
Maker's obligations under this Note, the Security Deeds, or any of the other
Loan Documents.
8. Continuing Liability. The obligation of Maker to pay the Principal
Indebtedness, interest and all other sums due hereunder shall continue in full
force and effect and in no ways be impaired, until the actual payment thereof to
Holder, and in case of a sale or transfer of all or any part of the Security, or
in case of any further agreement given to secure the payment of this Note, or in
case of any agreement or stipulation extending the time or modifying the terms
of payment above recited, Maker shall nevertheless continue to be liable on this
Note, as extended or modified by any such agreement or stipulation, unless
released and discharged in writing by Holder.
9. Joint and Several Liability. If more than one person, corporation,
partnership or other entity shall execute this Note, then each person and entity
shall be fully liable for all obligations of Maker hereunder, and such
obligations shall be joint and several.
10. No Oral Changes; Waivers. This Note may not be changed orally, but
only by an agreement in writing signed by the party against whom enforcement of
a change is sought. The provisions of this Note shall extend and be applicable
to all renewals, amendments, extensions, consolidations, and modifications of
the other Loan Documents, and any and all references herein to the Loan
Documents shall be deemed to include any such renewals, amendments, extensions,
consolidations, or modifications thereof.
Maker and any future indorsers, sureties, and guarantors hereof,
jointly and severally, waive presentment for payment, demand, notice of
nonpayment, notice of dishonor, protest of any dishonor, notice of protest, and
protest of this Note, and all other notices in connection with the delivery,
acceptance, performance, default (except notice of default required by the Loan
Documents, if any), or enforcement of the payment of this Note, and they agree
that the liability of each of them shall be unconditional without regard to the
liability of any other party and shall not be in any manner affected by an
indulgence, extension of time, renewal, waiver, or modification granted or
consented to by the Holder; and Maker and all future indorsers, sureties and
guarantors hereof consent to any and all extensions of time, renewals, waivers,
or modifications that may be granted by the Holder hereof with respect to the
payment or other provisions of this Note, and to the release of the collateral,
or any part thereof, with or without substitution, and agree that additional
makers, indorsers, guarantors, or sureties may become parties hereto without
notice to them or affecting their liability hereunder.
Holder shall not by any act of omission or commission be deemed to
waive any of its rights or remedies hereunder unless such waiver be in writing
and signed by Holder, and then only to the extent specifically set forth
therein; a waiver on one event shall not be construed as continuing or as a bar
to or waiver of such right or remedy on a subsequent event. The acceptance by
Holder of payment hereunder that is less than payment in full of all amounts due
at the time of such payment shall not without the express written consent of
Holder: (i) constitute a waiver of the right to exercise any of Holder's
remedies at that time or at any subsequent time, (ii) constitute an accord and
satisfaction, or (iii) nullify any prior exercise of any remedy.
No failure to cause an Acceleration of Maturity hereof by reason of an
Event of Default hereunder, acceptance of a past due installment, or indulgences
granted from time to time shall be construed (i) as a novation of this Note or
as a reinstatement of the indebtedness evidenced hereby or as a waiver of such
right of acceleration or of the right of Holder thereafter to insist upon strict
compliance with the terms of this Note, or (ii) to prevent the exercise of such
right of acceleration or any other right granted hereunder or by the laws of the
State of Georgia; and, to the maximum extent permitted by law, Maker hereby
expressly waives the benefit of any statute or rule of law or equity now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the foregoing.
To the maximum extent permitted by law, Maker hereby waives and
renounces for itself, its heirs, successors and assigns, all rights to the
benefits of any statute of limitations and any moratorium, reinstatement,
marshalling, forbearance, valuation, stay, extension, redemption and
appraisement now provided, or which may hereafter be provided, by the
Constitution and laws of the United States of America and of any state thereof,
both as to itself and in and to all of its property, real and personal, against
the enforcement and collection of the obligations evidenced by this Note.
11. Bind and Inure. This Note shall bind and inure to the benefit of
the parties hereto and their respective legal representatives, heirs, successors
and assigns.
12. Applicable Law. The provisions of this Note shall be construed and
enforceable in accordance with the laws of the State of Georgia.
If any provision of this Note or the application hereof to any person
or circumstance shall, for any reason and to any extent, be invalid or
unenforceable, neither the remainder of this Note nor the application of such
provision to any other person or circumstance shall be affected thereby, but
rather the same shall be enforced to the greatest extent permitted by law,
except that if such provision relates to the payment of a monetary sum, then the
Holder may, at its option, declare the entire indebtedness evidenced hereby due
and payable upon sixty (60) days prior written notice to Maker and, provided no
Event of Default is then continuing, without prepayment fee or premium.
13. Usury. It is hereby expressly agreed that if from any circumstances
whatsoever fulfillment of any provision of this Note, at the time performance of
such provision shall be due, shall involve transcending the limit of validity
presently prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such validity, so
that in no event shall any exaction be possible under this Note that is in
excess of the limit of such validity. In no event shall Maker be bound to pay
for the use, forbearance or detention of the money loaned pursuant hereto,
interest of more than the current legal limit; the right to demand any such
excess being hereby expressly waived by Holder.
14. Notice. Any notice, request, demand, statement or consent made
hereunder shall be in writing signed by the party giving such notice, request,
demand, statement or consent, and shall be deemed to have been properly given
when either delivered personally, delivered to a reputable overnight delivery
service providing a receipt or deposited in the United States Mail, postage
prepaid and registered or certified return receipt requested, at the address set
forth below, or at such other address within the continental United States of
America as may have theretofore been designated in writing. The effective date
of any notice given as aforesaid shall be the date of personal service, one (1)
business day after delivery to such overnight delivery service, or three (3)
business days after being deposited in the United States Mail, whichever is
applicable. For purposes hereof, the addresses are as follows:
If to Holder:
CIGNA Corporation
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2319
Attn: Investment Services, S-319
With a copy to:
CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, CT 06152-2215
Attn: Real Estate Division, S-215A
If to Maker:
Century Properties Fund XIX
5665 Northside Drive,N.W.
Suite 370
Atlanta, Georgia 30328
With a courtesy copy to:
Post & Heymann, LLP
Suite 214
100 Jericho Quadrangle
Jericho, New York 11753
Attn: David J. Heymann
Notwithstanding the foregoing agreement to provide a courtesy copy to
Maker's attorneys, such copy shall be a courtesy copy only, and failure to
provide such courtesy copy shall have absolutely no effect or entitle Maker to
any remedy whatsoever. Any notice duly given to Maker shall be effective whether
or not the courtesy copy was given to Maker's attorneys.
15. Nonrecourse. Except as hereinafter in this Section 15 and in Section 39
of the Security Deeds specifically provided, Maker shall not be personally
liable for the payment of any sums due hereunder or the performance of any
obligations of Maker hereunder or under the other Loan Documents. No judgment
for the repayment of the Principal Indebtedness or interest thereon will be
enforced against the Maker personally or any property of the Maker other than
the Security and other security furnished under the Loan Documents in any action
to foreclose the Security Deeds or to otherwise realize upon any security
furnished under the Loan Documents or to collect any amount payable hereunder.
Notwithstanding the foregoing:
(a) Nothing herein contained shall be construed as prohibiting Holder
from exercising any and all remedies which the Loan Documents permit,
including the right to bring actions or proceedings against Maker and to
enter a judgment against Maker, so long as the exercise of any remedy does
not extend to execution against or recovery out of any property of Maker
other than the security furnished under the Loan Documents;
(b) Maker shall be fully and personally liable for (i) misapplying
any condemnation awards or insurance awards attributable to the Security,
to the full extent of such awards so misapplied, (ii) misapplying any
security deposits attributable to the Security, to the full extent of such
deposits so misapplied, (iii) collecting any rents in advance in violation
of any covenant contained in the Loan Documents, to the full extent of
such rents so collected in advance, (iv) committing fraud,
misrepresentation or waste in connection with the operation of the
Security or the making of the loan evidenced hereby, to the full extent of
any loss, damage, expense or costs (including reasonable attorneys' fees)
incurred by Holder resulting from such fraud, misrepresentation or waste,
(v) failing to pay any debt service on any indebtedness related to the
Security, operating and maintenance expenses, insurance premiums, deposits
into a reserve for replacements or other sums required by the Loan
Documents, but only to the extent of any gross revenues from the Security
during the period beginning twelve (12) months prior to a notice of
acceleration to Maker through the date of foreclosure or deed in lieu of
foreclosure that were available to pay such expenses but were not so used,
(vi) failing to pay real estate taxes and assessments which are a lien
against the Security during the period of Maker's ownership (excluding any
period during which a receiver for the Security has been appointed by a
court of competent jurisdiction), to the full extent of such unpaid taxes
(excluding, however, any such real estate taxes and assessments for which
funds shall have been escrowed by Maker, with or for the benefit of Holder
for the payment thereof as provided in the Security Deeds), and (vii)
failing to maintain the levels of insurance required under the Security
Deeds or any other of the Loan Documents, to the full extent of any
insurance proceeds that would have been available had such levels of
insurance been maintained;
(c) There shall be no limitation, in any event of Maker's personal
liability under, and the exercise of any of Holder's rights under any
indemnity from Maker to Holder including but not limited to, the three
Environmental Indemnification Agreements of even date herewith each from
Maker, et al., to Payee with regard to the Security except as may be
expressly set forth therein.
16. Time of the Essence. Time is of the essence in this Note and the other
Loan Documents.
17. Attorneys' Fees. Any reference to "attorney fees" in this document
includes but is not limited to both the fees, charges and costs incurred by
Holder through its retention of outside legal counsel and the allocable fees,
costs and charges for services rendered by Holder's in-house counsel. Any
reference to "attorney fees" shall also include but not be limited to those
attorneys or legal fees, costs and charges incurred by Holder in the collection
of any Principal Indebtedness, the enforcement of any obligations hereunder, the
protection of the Security, the foreclosure of the Security Deeds, the sale of
the Security, the defense of actions arising hereunder and the collection,
protection or setoff of any claim the Holder may have in a proceeding under
Title 11, United States Code. Attorneys' fees provided for hereunder shall
accrue whether or not Holder has provided notice of an Event of Default or of an
intention to exercise its remedies for such Event of Default.
18. Waiver of Trial by Jury. If and to the extent now or hereafter
enforceable under applicable law, Maker hereby waives its right to a trial by
jury as to any matter arising out of or concerning the subject matter of this
Note.
IN WITNESS WHEREOF, Maker has duly executed this Note as a sealed
instrument as of the day and year first above written.
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:
Name:
Title:
Attest:
Name:
Title:
[CORPORATE SEAL]
Recording Requested By and
When Recorded Mail To:
- ----------------------------------
- ----------------------------------
- ----------------------------------
DEED TO SECURE DEBT AND SECURITY AGREEMENT
(Wood Lake)
From
CENTURY PROPERTIES FUND XIX
as Grantor
To
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
as Grantee
December 15, 1995
THIS DEED TO SECURE DEBT SECURES A PROMISSORY NOTE IN THE AMOUNT OF $22,000,000
(THE "NOTE"). THE NOTE IS ALSO SECURED BY TWO OTHER DEEDS TO SECURE DEBT ALSO
BEING FILED SIMULTANEOUSLY HEREWITH IN THE RECORDS OF COBB COUNTY, GEORGIA.
GEORGIA INTANGIBLES TAX ON THE NOTE IN THE AMOUNT OF $25,000 IS BEING PAID IN
CONJUNCTION WITH THE FILING OF THE FIRST OF THE THREE DEEDS TO SECURE DEBT.
DEED TO SECURE DEBT AND SECURITY AGREEMENT
TABLE OF CONTENTS
Page
1. Payment of Indebtedness.......................................... 6
2. Covenants of Title................................................7
3. Usury.............................................................7
4. Impositions.......................................................8
5. Tax Deposits......................................................9
6. Change in Taxes..................................................11
7. Insurance........................................................12
8. Insurance/Condemnation Proceeds..................................13
9. Restoration Following Fire and Other Casualty or Condemnation....14
10. Disposition of Condemnation or Insurance Proceeds................20
11. Fire and Other Casualty; Self-Help...............................22
12. Rent Insurance Proceeds..........................................23
13. [INTENTIONALLY LEFT BLANK].......................................24
14. Repair; Alterations; Waste; Environmental........................24
15. Environmental Indemnification....................................29
16. Independence of Security.........................................29
17. No Other Liens...................................................30
18. Management.......................................................30
19. [INTENTIONALLY LEFT BLANK].......................................31
20. Sidewalks, Municipal Charges.....................................31
21. Assignment of Rents and Leases...................................31
22. Future Leases....................................................33
23. Grantor's Obligations as Lessor..................................34
24. Leases; Foreclosure..............................................35
25. [INTENTIONALLY LEFT BLANK].......................................35
26. Events of Default................................................35
27. Remedies Upon Default............................................37
28. Acceleration Interest............................................43
29. Late Charge......................................................44
30. Security Interest................................................44
31. Right of Entry...................................................46
32. Estoppel Certificate.............................................46
33. Annual Statements................................................46
34. Rights Cumulative................................................48
35. Subrogation......................................................48
36. No Waiver........................................................48
37. Deed Extension...................................................48
38. Indemnification..................................................49
39. Nonrecourse......................................................49
40. Attorneys' Fees..................................................51
41. Administrative Fees..............................................51
42. Protection of Security; Costs and Expenses.......................52
43. Notices..........................................................53
44. Release..........................................................54
45. Applicable Law...................................................54
46. Invalidity.......................................................54
47. Captions.........................................................55
48. Modifications....................................................55
49. Bind and Inure...................................................55
50. Replacement of Note..............................................55
51. Time of the Essence..............................................56
52. Waiver of Grantor's Rights.......................................56
53. Discontinuance of Proceedings....................................57
54. Limitations on Transfers.........................................57
55. Sale of Security.................................................62
Exhibit A - Description of Land
Exhibit B - Description of Debtor and Secured Party
DEED TO SECURE DEBT AND SECURITY AGREEMENT
THIS DEED TO SECURE DEBT AND SECURITY AGREEMENT (hereinafter
referred to as this "Deed") is made as of the 15th day of December, 1995, by
CENTURY PROPERTIES FUND XIX, a California limited partnership whose general
partner is Fox Partners II, a California general partnership, having its
principal place of business at 5665 Northside Drive, N.W., Suite 370, Atlanta,
Georgia 30328 (hereinafter referred to as "Grantor"), to CONNECTICUT GENERAL
LIFE INSURANCE COMPANY, a Connecticut corporation having its principal place of
business at 900 Cottage Grove Road, Bloomfield, Connecticut 06002 (hereinafter
referred to as "Grantee").
WITNESSETH:
THAT, to secure (i) payment to Grantee of the principal indebtedness
of Twenty Two Million and No/100 Dollars ($22,000,000) together with interest
thereon, as evidenced by that certain promissory note (hereinafter referred to
as the "Note") of even date herewith, and any renewals, extensions or
modifications thereof, given by Grantor to Grantee and made payable to the order
of Grantee, with the final payment being due and payable on January 1, 2003, in
and by which Note the Grantor promises to pay the said principal indebtedness
and interest at the rate and in installments as provided in the Note, (ii) the
performance of the covenants herein contained and the payment of any monies
expended by Grantee in connection therewith, (iii) the payment of all
obligations and the performance of all covenants of Grantor under any other loan
documents, agreements or instruments between Grantor and Grantee given in
connection with or related to this Deed or the Note and (iv) any and all
additional advances made by Grantee to protect or preserve the Security
(hereinafter defined) or the security interest created hereby on the Security,
or for taxes, assessments, or insurance premiums as hereinafter provided or for
performance of any of Grantor's obligations hereunder or for any other purpose
provided herein (whether or not the original Grantor remains the owner of the
Security at the time of such advances) (all of the aforesaid indebtedness and
obligations of Grantor being herein called the "Indebtedness", and all of the
documents, agreements and instruments between Grantor and Grantee now or
hereafter evidencing or securing the repayment of, or otherwise pertaining to,
the Indebtedness being herein collectively called the "Loan Documents"), Grantor
does hereby mortgage, grant, bargain, sell, assign, pledge, transfer, and convey
unto Grantee and to Grantee's successors and assigns forever, all of the
following described land, improvements real and personal property and all of its
estate, right, title and interest therein (hereinafter collectively called the
"Security"):
The land described in Exhibit A attached hereto and made a part
hereof, situate, lying and being in the County of Cobb, and State of Georgia
(the "Land");
TOGETHER with all buildings and other improvements now or hereafter
located on said Land or any part thereof including but not limited to, all
extensions, betterments, renewals, renovations, substitutes and replacements of,
and all additions and appurtenances to the Security (the "Improvements");
TOGETHER with all of the right, title and interest of Grantor in and
to the land lying in the bed of any street, road, highway or avenue in front of
or adjoining the Land to the center lines thereof;
TOGETHER with the right to use, in perpetuity, in connection with
the operation of the Security the name "Wood Lake Apartments" and any other name
similar thereto;
TOGETHER with all easements now or hereafter located on or
appurtenant to the Land and/or Improvements or under or above the same or any
part thereof, rights-of-way, licenses, permits, approvals and privileges,
belonging or in any way appertaining to the Land and/or Improvements including
without limitation (i) any drainage ponds or other like drainage areas not
located on the Land which may be required for water run-off, (ii) any easements
necessary to obtain access from the Land to such drainage areas, or to any other
location to which Grantor has a right to drain water or sewage (iii) any land
required to be maintained as undeveloped land by the zoning rules and
regulations applicable to the Land, and (iv) any easements and agreements which
are or may be established to allow satisfactory ingress to, egress from and
operating of the Land and/or the Improvements;
TOGETHER with any and all awards heretofore made and hereafter to be
made by any governmental, municipal, or state authorities to the present and all
subsequent owners of the Security for the taking of all or any portion of the
Security by power of eminent domain, including, without limitation, awards for
damage to the remainder of the Security and any awards for any change or changes
of grade of streets affecting the Security, which said awards are hereby
assigned to Grantee, and Grantee, at its option, is hereby authorized, directed
and empowered to collect and receive the proceeds of any such awards from the
authorities making the same and to give proper receipts and acquittances
therefor, and to apply the same toward the payment of the Indebtedness,
notwithstanding the fact that such amount may not then be due and payable; and
Grantor hereby covenants and agrees to and with Grantee, upon request by
Grantee, to make, execute and deliver, at Grantor's expense, any and all
assignments and other instruments sufficient for the purpose of assigning the
aforesaid awards to Grantee, free, clear and discharged of any and all
encumbrances of any kind or nature whatsoever (all of the foregoing Land,
Improvements, rights, easements, rights-of-way, licenses, privileges, and
awards, collectively, the "Real Property");
TOGETHER with all proceeds, insurance or otherwise, paid for the
damage done to any of the Security and all proceeds of the conversion,
voluntarily or involuntarily, of any of the Security into cash or liquidated
claims;
TOGETHER with all fixtures, machinery, equipment, goods, and every
other article of personal property, tangible and intangible, now or hereafter
attached to or used in connection with the Real Property, or placed on any part
thereof and whether or not attached thereto, appertaining or adapted to the use,
management, operation or improvement of the Real Property, insofar as the same
and any reversionary right thereto may now or hereafter be owned or acquired by
Grantor, including, but without limitation: all partitions; screens; awnings;
shades; blinds; floor coverings; hall and lobby equipment; heating, lighting,
plumbing, ventilating, refrigerating, incinerating, elevator, escalator, air
conditioning and communication plants or systems with appurtenant fixtures;
vacuum cleaning systems; call systems; sprinkler systems and other fire
prevention and extinguishing apparatus and materials; all equipment, manual,
mechanical and motorized, for the construction, maintenance, repair and cleaning
of, and removal of snow from, parking areas, walks, underground ways, truck
ways, driveways, common areas, roadways, highways and streets; all equipment,
manual, mechanical and motorized, for the transportation of customers or
employees to and from the store facilities on the Real Property; all telephone,
computers, and other electronic equipment and appurtenances thereto, including
software; and all other machinery, pipes, poles, appliances, equipment, wiring,
fittings, panels and fixtures; and any proceeds therefrom, any replacements
thereof or additions or accessions thereto; and all building materials, supplies
and other property delivered to the Real Property for incorporation into the
Improvements thereon, all of which are declared to be a part of the realty and
covered by the lien and security title hereof, but said lien and security title
shall not cover any fixture, machinery, equipment or article of personal
property which is owned by a tenant and not required for the operation or
maintenance of the Real Property, provided said fixture, machinery, equipment or
article of personal property is not permanently affixed to the realty and may be
removed without material damage thereto and is not a replacement of any item
which shall have been subject to the lien and security title hereof, but said
lien and security title shall include any other fixture, machinery, equipment or
article of personal property so incorporated into the Improvements so as to
constitute realty under applicable law, whether or not owned by the Grantor;
TOGETHER with all of Grantor's books of account and records relating
to the Security, including all computers and software relating thereto;
TOGETHER with all contracts for sale and leases in the nature of
sales of the Real Property, or any portion thereof, now and hereafter entered
into and all right, title and interest of Grantor thereunder, including, without
limitation, cash or securities deposited thereunder to secure performance by the
lessees or contract purchasers; all proceeds and revenue arising from or out of
the Real Property or any part thereof; all licenses, permits, franchises,
governmental approvals and all sanitary sewer, drainage, water and utility
service agreements benefiting the Real Property or any part thereof, together
with all accounts, general intangibles, documents, instruments and chattel paper
arising from or in connection with the Real Property, including all books and
records in connection therewith; and all rights of Grantor under any leases,
covenants, agreements, easements, restrictions or declarations recorded with
respect to, or as an appurtenance to, the Real Property or any part thereof;
(all of the tangible and intangible personal property described in this and the
previous two paragraphs, collectively, the "Personal Property");
TOGETHER with all of the right, title and interest of Grantor in and
to all and singular the tenements, hereditaments and appurtenances thereunto
belonging to or in any way pertaining to the Security; all the estate, right,
title and claim whatsoever of Grantor, either in law or in equity, in and to the
Security; and any and all other, further or additional title, estate, interest
or right which may at any time be acquired by Grantor in or to the Security, and
if Grantor shall at any time acquire any further estate or interest in or to the
Security, the lien and security title of this Deed shall attach, extend to,
cover and be a lien and security title upon such further estate or interest
automatically without further instrument or instruments, and Grantor, upon
request of Grantee, shall execute such instrument or instruments as shall
reasonably be requested by Grantee to confirm such security title, security
interest and lien, and Grantor hereby irrevocably appoints Grantee as Grantor's
attorney-in-fact (which appointment is coupled with an interest) to execute all
such instruments if Grantor shall fail to do so within ten (10) days after
demand;
TO HAVE AND TO HOLD the Security, and each and every part thereof,
unto Grantee and its successors and assigns forever, in fee simple as to the
Real Property, for the purposes and uses herein set forth.
This Deed is intended (i) to constitute a security agreement as
required under the Uniform Commercial Code of the State of Georgia and (ii) to
operate and to be construed as a deed passing the title to the Security to
Grantee and is made under those provisions of the existing laws of the State of
Georgia relating to Deeds to Secure Debt, and not as a mortgage (including,
without limitation, Chapter 44-14 of the Official Code of Georgia Annotated
1982).
Should the Indebtedness be paid according to the tenor and effect
thereof when the same shall become due and payable, and should Grantor perform
all covenants herein contained in a timely manner, then this Deed shall be
cancelled and surrendered pursuant to the Laws of the State of Georgia.
AND, Grantor hereby further covenants, agrees and warrants as
follows:
1. Payment of Indebtedness. Grantor will pay the principal indebtedness
and interest thereon in accordance with the provisions of the Note and all
prepayment charges, late charges and fees required thereunder, and all
extensions, renewals, modifications, amendments and replacements thereof, and
will keep and perform all the covenants, promises and agreements and pay all
sums provided in (i) each of the Note or any other promissory note or notes at
any time hereafter issued to evidence the Indebtedness (ii) this Deed and (iii)
any and all other Loan Documents, all in the manner herein or therein set forth.
Each of the persons and/or entities constituting Grantor hereunder shall be
fully liable for such payment and performance, and such liability shall be joint
and several.
2. Covenants of Title. Grantor has good and indefeasible title to the
entire Real Property in fee simple, has absolute unencumbered title to the
Personal Property, and has good right and full power to sell, mortgage and
convey the same; the Security is free and clear of easements, restrictions,
liens, leases and encumbrances, except those easements, restrictions, liens,
leases and encumbrances listed on Schedule B of the policy or policies of title
insurance delivered to Grantee as of the recordation of this Deed (the
"Permitted Encumbrances"), to which this Deed is expressly subject, or which may
hereafter be created in accordance with the terms hereof; and Grantor will
warrant and defend title to the Security against all claims and demands
whatsoever except the Permitted Encumbrances. Grantee shall have the right, at
its option and at such time or times as it, in its sole discretion, shall deem
necessary, to take whatever action it may deem necessary to defend or uphold the
lien and security title of this Deed or otherwise enforce any of the rights of
Grantee hereunder or any obligation secured hereby, including without
limitation, the right to institute appropriate legal proceedings for such
purposes.
3. Usury. It is hereby expressly agreed that if from any circumstances
whatsoever fulfillment of any provision of the Note, this Deed, or any other
Loan Documents, at the time performance of such provision shall be due, shall
violate any applicable usury statute or any other law, with regard to
obligations of like character and amount, then ipso facto the obligation to be
fulfilled shall be reduced to the limit of such validity, so that in no event
shall any exaction be possible under the Loan Documents that is in excess of the
limit of such validity. In no event shall Grantor be bound to pay for the use,
forbearance or detention of the money loaned pursuant to the Loan Documents,
interest of more than the current legal limit, the right to demand any such
excess being hereby expressly waived by Grantee.
4. Impositions. Grantor will pay (if and to the extent Grantor shall
not have placed adequate funds in escrow pursuant to Section 5 below to cover
such payment), before the last day on which the same may be paid without penalty
or interest, all real estate taxes, sewer rents, water charges and all other
municipal and governmental assessments, rates, charges, impositions and liens
(hereinafter referred to as "Impositions") which now or hereafter are imposed by
law upon the Security, whether relating directly to the Security or to property
adjoining or abutting the Security. If any Imposition is not paid within the
time hereinabove specified, Grantee shall have the right to pay the same,
together with any penalty and interest thereon, and the amount or amounts so
paid or advanced shall forthwith be payable by Grantor to Grantee and shall be
secured by the lien and security title of this Deed; but Grantor may in good
faith contest, at Grantor's own cost and expense, by proper legal proceedings,
the validity or amount of any Imposition, on the condition that Grantor first
shall deposit with Grantee, as security for the payment of such contested item,
an amount equal to the contested item plus all penalties and interest which
would be payable if Grantor is ultimately required to pay such contested item,
and on the further condition that no amount so contested may remain unpaid for
such length of time as shall permit the Security, or the lien thereon created by
the item being contested, to be sold for the nonpayment thereof, or as shall
permit an action, either of foreclosure or otherwise, to be commenced by the
holder of any such lien. Grantor will not claim any credit on, or make any
deduction from the Indebtedness by reason of the payment of any Imposition.
Grantor hereby assigns to Grantee all rights of Grantor now or
hereafter arising in and to the refund of any Imposition and any interest
thereon. If following receipt of any such refund by Grantee, there exists no
Event of Default (as hereinafter defined) hereunder, then Grantee shall pay over
the same to Grantor promptly after demand; if there exists an Event of Default
hereunder, Grantee may apply said refund in reduction of the Indebtedness in
whatever order Grantee may elect.
5. Tax Deposits. Grantor shall deposit with Grantee, or with an escrow
agent selected by Grantor, on the first day of the calendar month immediately
following the date of this Deed and on the first day of each calendar month
thereafter (each of which dates is hereinafter called the "monthly tax deposit
date") until the payment in full of the Indebtedness a sum equal to one-twelfth
of the Impositions to be levied, charged, assessed or imposed upon or for the
Security within one year after said monthly tax deposit date. If on any monthly
tax deposit date the amount of Impositions to be levied, charged, assessed or
imposed within the ensuing one year period shall not be fixed, such amount for
the purpose of computing the deposit to be made by Grantor hereunder, shall be
estimated by Grantee, with appropriate adjustment when the amount of such
Impositions is fixed.
The sums deposited by Grantor under this Section shall be held
in an interest bearing account with interest being retained by Grantee and free
of trust except to the extent, if any, that applicable law shall otherwise
require and applied in payment of such Impositions when due. Grantor shall give
thirty (30) days prior written notice to Grantee in each instance when an
Imposition is due, specifying the Imposition to be paid and the amount thereof,
the place of payment and the last day on which the same may be paid in order to
be within the time limit specified in Section 4 hereof entitled "Impositions".
Notwithstanding the foregoing provision and so long as Grantor holds
title to and controls the Security, Impositions are paid in full when due and
there has been no Event of Default, or any state of facts which, with the
passage of time or giving of notice, or both, would constitute an Event of
Default under the Loan Documents, the interest earned by such escrows, less
reasonable escrow costs, will be paid to Grantor on each real estate tax payment
date.
If for any reason the sums on deposit with Grantee or escrow agent
under this Section shall not be sufficient to pay an Imposition within the time
specified in Section 4 hereof, then Grantor shall, within ten (10) days after
demand by Grantee, deposit sufficient sums so that Grantee may pay such
Imposition in full, together with any penalty and interest thereon. Grantee may
change its estimate of Impositions for any period, on the basis of a change in
an assessment or tax rate or on the basis of a prior miscalculation or for any
other reason, in which event Grantor shall deposit with Grantee or escrow agent
within ten (10) days after demand the amount of any excess of the deposits which
would theretofore have been payable under the revised estimate over the sums
actually deposited.
If any Imposition shall be levied, charged, assessed or
imposed upon or for the Security, or any portion thereof, and if such Imposition
shall also be a levy, charge, assessment or imposition upon or for any other
premises not covered by the lien and security title of this Deed, then the
computation of the amounts to be deposited under this Section shall be based
upon the entire amount of such Imposition and Grantor shall not have the right
to apportion any deposit with respect to such Imposition.
Upon an assignment of this Deed, Grantee shall have the right
to arrange to transfer all amounts deposited and still in its possession to the
assignee and Grantee shall thereupon be completely released from all liability
with respect to such deposit and Grantor or owner of the Security shall look
solely to the assignee or transferee in reference thereto.
Upon the payment in full by Grantor of the entire
Indebtedness, any sums then held by Grantee under this Section shall be refunded
to Grantor.
All amounts deposited shall be held by Grantee as additional
security for the sums secured by this Deed, and Grantor hereby grants to Grantee
a security interest in such sums, and upon the occurrence of an Event of Default
hereunder Grantee may, in its sole and absolute discretion, apply said amounts
to the payment of the Indebtedness in whatever order Grantee may elect.
Immediately upon receipt of such by Grantor, Grantor shall
deliver to Grantee copies of all notices, demands, claims, bills, and receipts
in relation to the Impositions.
Notwithstanding the foregoing provisions, Grantee will waive the
requirement for deposits as to that portion of Impositions payable directly to
the governmental or other authority by tenants under the terms of leases
approved by Grantee, provided satisfactory proof of payment is promptly
furnished to Grantee.
6. Change in Taxes. In the event any tax shall be due or become due and
payable to the United States of America, the State of Georgia or any political
subdivision thereof with respect to the execution and delivery or recordation of
this Deed or any other Loan Document or the interest of Grantee in the Security,
Grantor shall pay such tax at the time and in the manner required by applicable
law and Grantor shall hold Grantee harmless and shall indemnify Grantee against
any liability of any nature whatsoever as a result of the imposition of any such
tax. In the event of the enactment, after the date of this instrument, of any
law changing in any way the present law as to the taxation of notes or debts
secured by mortgages, for Federal, State, or local purposes, or the manner of
collection of any Impositions, so as to affect this Deed or the Note secured
hereby, then Grantor shall upon demand make such payments to Grantee and take
such other steps, as may be necessary in Grantee's reasonable judgment, to place
Grantee in the same financial position as it was prior to any such enactment,
failing which, or if the Grantor is not permitted by law to make such payments,
the Indebtedness shall, at the option of Grantee, immediately become due and
payable.
7. Insurance. Grantor shall at all times until the Indebtedness shall
be paid in full, keep the Security insured against loss or damage for its full
replacement cost (which cost shall be reset once a year at Grantee's option)
under policies of All Risk Replacement Cost Insurance with Agreed Amount
Endorsement (including risks of war and nuclear explosion, if available), and
shall further provide flood insurance (if the Security is situated in an area
which is considered a flood risk area by the federal government or any agency
thereof), boiler and machinery insurance, earthquake insurance, rent loss
insurance in an amount sufficient to cover the total of all rents accruing from
the Security for a one year period, comprehensive general liability insurance in
a minimum amount of $1,000,000, and excess or umbrella liability of at least
$25,000,000, during any period of restoration, a policy or policies of builder's
"all risk" insurance in an amount not less than the full insurable value of the
Security against such risks as Grantee may request, and such other appropriate
insurance as Grantee may require from time to time, in such amounts and with
such companies as shall be approved by Grantee with a Best's rating of A:XII or
better, and will assign and deliver the original policy or policies of such
insurance to Grantee. Each such policy shall name Grantee as an additional
insured and shall provide that all proceeds shall be payable to Grantee, that
the same may not be cancelled or modified except upon thirty (30) days prior
written notice to Grantee, that no act or thing done by Grantor shall invalidate
the policy as against Grantee, shall be endorsed with standard noncontributory
mortgagee clauses in favor of and in form acceptable to Grantee, and shall
otherwise be in such form as shall be reasonably acceptable to Grantee, so that
at all times until the payment in full of the Indebtedness, Grantee shall have
and hold the said policy and policies as further collateral for the payment of
all Indebtedness. If Grantor shall fail to obtain any such policy or policies
required by Grantee, or shall fail to assign and deliver the same to Grantee,
then Grantee may obtain such insurance and pay the premium or premiums therefor,
in which event Grantor shall, on demand of Grantee, repay such premium or
premiums to Grantee and such repayment shall be secured by the lien and security
title of this Deed. If Grantor fails to maintain the level of insurance required
under this Deed, then Grantor shall indemnify Grantee to the extent that a
casualty occurs and insurance proceeds would have been available had such
insurance been maintained.
Grantor shall promptly provide to Grantee copies of any and
all notices (including notice of non-renewal), claims, and demands which Grantor
receives from insurers of the Security.
Effective from and after any Event of Default, Grantor hereby
assigns to Grantee all rights of Grantor in and to any unearned premiums on any
insurance policy required to be furnished by Grantor.
8. Insurance/Condemnation Proceeds. Grantor hereby assigns to Grantee
all proceeds of any insurance or condemnation awards which Grantor may be
entitled to receive for loss or damage to, or taking of, the Security. In the
event of loss or damage to, or a taking of, the Security, the proceeds of said
insurance or condemnation award shall be payable to Grantee alone and Grantor
hereby authorizes and directs any affected insurance company or governmental
agency to make payment of the insurance proceeds or condemnation award directly
to Grantee; provided, however, if the insurance proceeds or condemnation award
in any one instance shall be less than $75,000, Grantor shall be entitled to
collect such proceeds or awards and to retain any excess not required for repair
or restoration. In the event that any such insurance proceeds or condemnation
awards are paid directly to Grantor, Grantor shall make such proceeds or awards
available to Grantee within five (5) days of Grantor's receipt thereof. No such
loss or damage shall itself reduce the Indebtedness. Grantee is authorized to
adjust and compromise such loss without the consent of Grantor, to collect and
receive such proceeds or awards in the name of Grantee and Grantor and to
endorse Grantor's name upon any check in payment thereof. Subject to the
provisions of Sections 9, 10, and 11 hereof, such proceeds or awards shall be
applied first toward reimbursement of all costs and expenses of Grantee in
collecting said proceeds or awards, then toward payment of the Indebtedness or
any portion thereof, whether or not then due and payable, in whatever order
Grantee may elect, or Grantee may, at its option, apply said insurance proceeds
or condemnation awards in whole or in part toward restoration of the Security
for which such insurance proceeds or condemnation awards shall have been paid.
In the event of foreclosure of this Deed or other transfer of
title to the Security and extinguishment, in whole or in part, of the
Indebtedness, all right, title, and interest of Grantor in and to any insurance
policy, or premiums or payments in satisfaction of claims or any other rights
thereunder then in force, shall pass to the purchaser or grantee notwithstanding
the amount of any bid at such foreclosure sale. Nothing contained herein shall
prevent the accrual of interest as provided in the Note on any portion of the
principal balance due under the Note until such time as the insurance proceeds
or condemnation awards are actually received and applied to reduce the principal
balance outstanding.
9. Restoration Following Fire and Other Casualty or Condemnation. In
the event of damage to the Security by reason of fire or other hazard or
casualty, Grantor shall give prompt written notice thereof to Grantee and shall
proceed with reasonable diligence to perform repair, replacement and/or
rebuilding work (hereinafter referred to as the "Work") to restore the Security
to its condition prior to such damage in full compliance with all legal
requirements. In the event of a taking by power of eminent domain or conveyance
in lieu thereof ("condemnation"), if restoration is feasible as reasonably
determined by Grantee, then Grantor shall proceed with reasonable diligence to
perform such restoration (also referred to as the "Work"). Before commencing the
Work, Grantor shall comply with the following requirements:
(a) If the casualty or condemnation is of a nature that
requires plans and specifications, Grantor shall furnish to Grantee complete
plans and specifications for the Work, for Grantee's approval, which approval
shall not be unreasonably withheld. Said plans and specifications shall bear the
signed approval thereof by an architect satisfactory to Grantee and shall be
accompanied by the architect's signed estimate, bearing the architect's seal, of
the entire cost of completing the Work.
(b) Grantor shall furnish to Grantee true and correct copies
of all permits and approvals required by law in connection with the commencement
and conduct of the Work.
(c) If required by Grantee in its reasonable discretion,
Grantor shall furnish to Grantee, prior to the commencement of the Work, a
surety bond for or guaranty of completion of and payment for the Work, which
bond or guaranty shall be in form satisfactory to Grantee and shall be signed by
a surety or sureties, or guarantor or guarantors, as the case may be, who are
acceptable to Grantee, and in an amount not less than the architect's estimate
of the entire cost of completing the Work, less the amount of insurance proceeds
or condemnation award, if any, then held by Grantee and which Grantee shall have
elected or shall be required to apply toward restoration of the Security as
provided in Section 10 hereof.
Grantor shall not commence any of the Work until Grantor shall
have complied with the above requirements, and thereafter Grantor shall perform
the Work diligently and in good faith in accordance with the plans and
specifications referred to in subsection (a) above.
If, as provided in Section 10 hereof, Grantee shall have
elected or is required to apply any insurance proceeds or condemnation awards
toward repair or restoration of the Security, then so long as the Work is being
diligently performed by Grantor in accordance with the provisions of this Deed,
Grantee shall disburse such insurance proceeds or condemnation awards to Grantor
from time to time during the course of the Work in accordance with the following
provisions:
A. The Work shall be in the charge of an experienced construction
manager satisfactory to Grantee with the consultation of any architect or
engineer required pursuant to Section 9(a) above or otherwise required by
Grantee in its reasonable discretion.
B. Each request for payment shall not be made more often than at thirty
(30) day intervals, on ten (10) business days prior notice to Grantee, and shall
be accompanied by a certificate of the architect or engineer, if any (or, if
none, by a certificate of Grantor), dated not more than ten (10) days prior to
the application for withdrawal of funds, stating:
(i) that all of the Work for which payment is being requested is in
place and has been completed in compliance with the approved plans and
specifications and all applicable legal requirements;
(ii) that the sum then requested to be withdrawn has been paid by
Grantor and/or is justly due to contractors, subcontractors,
materialmen, engineers, architects or other persons (whose names and
addresses shall be stated) who have rendered or furnished certain
services or materials for the Work and giving a brief description of
such services and materials and the principal subdivisions or categories
thereof and the respective amounts so paid or due to each of said
persons in respect thereof and stating the progress of the Work up to
the date of said certificate;
(iii) that the sum then requested to be withdrawn, plus all sums
previously withdrawn, does not exceed the cost of the Work insofar as
actually accomplished up to the date of such certificate;
(iv) that the remainder of the moneys held by Grantee will be
sufficient to pay in full for the completion of the Work;
(v) that no part of the cost of the services and materials described
in the foregoing paragraph (ii) of this Clause B has been or is being
made the basis of the withdrawal of any funds in any previous or then
pending application; and
(vi) that, except for the amounts, if any, specified in the foregoing
paragraph (ii) of this Clause B to be due for services or materials,
there is no outstanding indebtedness known, after due inquiry, which is
then due and payable for work, labor, services or materials in
connection with the Work which, if unpaid, might become the basis of a
vendor's, mechanic's, laborer's or materialman's statutory or other
similar lien upon the Security or any part thereof.
C. Grantor shall deliver to Grantee satisfactory evidence that the
Security and every part thereof, and all materials and all property described in
the certificate furnished pursuant to the foregoing Clause B, are free and clear
of all mortgages, liens, charges or encumbrances, except (a) encumbrances, if
any, securing indebtedness due to persons (whose names and addresses and the
several amounts due them shall be stated) specified in said certificate
furnished pursuant to the foregoing Clause B, which encumbrances will be
discharged upon disbursement of the funds then being requested, and (b) this
Deed. Grantee shall accept as satisfactory evidence under this Clause C a
certificate of a title insurance company acceptable to Grantee or an endorsement
to Grantee's existing loan title policy insuring the lien and security title of
this Deed, dated as of the date of the making of the disbursement, confirming
the foregoing.
D. If the casualty or condemnation results in the construction of any
improvements outside the foundations of improvements existing prior to the
casualty or condemnation, Grantor shall deliver to Grantee a survey of the
Security dated as of a date within ten (10) days prior to the making of the
advance (or revised to a date within ten days prior to the advance) showing no
encroachments other than those, if any, acceptable to Grantee.
E. There shall be no Event of Default by Grantor under the Note or
under any of the other Loan Documents, or any state of facts existing which,
with the passage of time or the giving of notice, or both, would constitute an
Event of Default.
Grantee at its option may waive any of the foregoing
requirements.
Upon compliance by Grantor with the foregoing Clauses A, B, C,
D, and E (except for such requirements, if any, as Grantee at its option may
have waived), Grantor shall, to the extent of the insurance proceeds or
condemnation award, if any, which Grantee shall have elected or shall be
required to apply to restoration of the Security, pay or cause to be paid to the
persons named in the certificate furnished pursuant to the foregoing paragraph
(i) of Clause B, the respective amounts stated in said certificate to be due
them (after taking into account a ten percent (10%) retainage ("Retainage")
prior to completion) and Grantee shall pay to Grantor the amounts stated in said
certificate to have been paid by Grantor (after taking into account the
Retainage prior to completion).
If upon completion of the Work there shall be insurance
proceeds or condemnation awards held by Grantee over and above the amounts
withdrawn pursuant to the foregoing provisions, plus Retainage, then Grantee, at
Grantee's option, may either retain such proceeds or awards and apply the same
in reduction of the Indebtedness in whatever order Grantee may elect, or Grantee
may pay over such proceeds or awards to Grantor.
Upon completion of the Work, in addition to the requirements
of the foregoing Clauses A, B, C, D, and E, Grantor shall promptly deliver to
Grantee:
(a) A written certificate of the architect or engineer, if any (or,
if none, a written certificate of Grantor), that the Work has been fully
completed in a good and workmanlike manner in accordance with the
approved plans and specifications, if any;
(b) A written report and endorsement to a policy of a title
insurance company acceptable to Grantee insuring the Security against
mechanics' and materialmen's liens;
(c) A certificate by Grantor in form and substance satisfactory to
Grantee, listing all costs and expenses in connection with the
completion of the Work and the amount paid by Grantor with respect to
the Work;
(d) If required, a temporary certificate of occupancy and all other
applicable certificates, licenses, consents and approvals issued by
governmental agencies or authorities with respect to the Security and by
the appropriate Board of Fire Underwriters or other similar bodies
acting in and for the locality in which the Security is situated,
provided that within thirty (30) days after completion of the Work,
Grantor shall obtain and deliver to Grantee a permanent certificate of
occupancy for the Security.
Upon receipt of the foregoing items, Grantee shall pay any Retainage
held by Grantee for the benefit of Grantor.
10. Disposition of Condemnation or Insurance Proceeds. Grantee, in its
absolute discretion, may decide whether and to what extent, if any, proceeds of
insurance or condemnation will be made available to Grantor for repair or
restoration of the Security, but Grantor shall effect such repair or restoration
as provided above whether or not Grantee makes any of such proceeds available
for that purpose. Notwithstanding the foregoing, Grantee agrees to make
insurance or condemnation proceeds available to Grantor for repair or
restoration provided:
(i) Not more than 20% of the Security is damaged or taken, and,
in the case of a condemnation, the portion of the Security
not taken by condemnation has not, in Grantee's sole
opinion, been rendered economically nonviable by the taking;
(ii) There has been no Event of Default under the Loan Documents
for the twelve (12) months preceding the damage or taking,
and there does not then exist an Event of Default, or any
state of facts which, with the passage of time or the giving
of notice, or both, would constitute an Event of Default;
(iii) Grantor can demonstrate to Grantee's satisfaction that
Grantor has the financial ability to make all scheduled
payments when due under the Loan Documents during repair or
restoration;
(iv) Such damage or taking occurs prior to the last loan year;
(v) The security of Grantee hereunder will not be impaired by
releasing such proceeds to Grantor;
(vi) Annual income from leases in place for the Security, as
determined by Grantee in its reasonable discretion, plus any
insurance for lost rents that will survive restoration
provide coverage for the portion of the Note allocable to
the Security as provided in Section 54(h), of at least 1.50
times the annual Debt Service Coverage (as hereinafter
defined);
(vii) The Work will return the Improvements to substantially the
size, design, and utility as existed immediately before
the casualty; and
(viii) The proceeds are released under escrow/construction funding
arrangements specified in Section 9 hereof.
"Debt Service Coverage" as used in this Deed shall mean the
ratio, as determined by Grantee, of (a) Net Operating Income from the Security
(and/or the property encumbered by the Second Deed and/or the Third Deed, as the
context may require), for the applicable period of time to (b) Total Annual Debt
Service. "Net Operating Income" is defined as gross income from operations of
the Security for the previous twelve (12)-month period from leases of apartments
therein (to the extent Grantee reasonably projects such income will continue for
the immediately succeeding twelve (12) month period), subtracting therefrom all
necessary and ordinary operating expenses applicable to the Security for such
period of time (both fixed and variable to the extent reasonably projected by
Grantee to continue for the next succeeding twelve (12) month period),
including, but not limited to, utilities, administrative, cleaning, landscaping,
security, repairs and maintenance, management fees, real estate and other taxes,
assessments and insurance, but excluding therefrom deductions for federal, state
and other income taxes, debt service expense, depreciation or amortization of
capital expenditures and other similar noncash items. Gross income shall not be
anticipated for any greater time period than that approved by generally accepted
accounting principles nor shall ordinary operating expenses by prepaid.
Documentation of Net Operating Income shall be certified by an officer of
Grantor with detail satisfactory to Grantee and shall be subject to the approval
of Grantee. "Total Annual Debt Service" shall mean the aggregate debt service
payments (including principal and interest) on the Note (or on the First Note
and/or the Second Note and/or the Third Note (all as hereinafter defined), as
the context may require) for the applicable time period.
If Grantee elects not to make the proceeds available for the
Work, then such proceeds shall be applied to reduce the Indebtedness in whatever
order Grantee may elect. Any application of such proceeds to the principal
indebtedness evidenced by the Note shall be at par and shall cause a pro rata
reduction in payments of interest and, if applicable, principal, under the Note;
provided, however, that if there exists an Event of Default, the prepayment fee
as provided in the Note shall also be due. If during the last two loan years,
Grantee applies insurance and/or Condemnation proceeds to pay down the Note, and
provided no Event of Default then exists, Grantor shall have the option of
prepaying the entire Note at par without any prepayment fee.
11. Fire and Other Casualty; Self-Help. If within one hundred twenty
(120) days after the occurrence of any damage to the Security in excess of
$50,000 or the condemnation of any portion of the Security, Grantor shall not
have submitted to Grantee and received Grantee's approval of plans and
specifications for the Work or shall not have obtained approval of such plans
and specifications from all governmental authorities whose approval is required,
or if, after such plans and specifications are approved by Grantee and all such
governmental authorities, Grantor shall fail to promptly commence the Work, or
if thereafter Grantor fails to perform the Work diligently or is delinquent in
the payment to mechanics, materialmen or others of the costs incurred in
connection with the Work (except to the extent caused by the failure of Grantee
to comply with the terms of this Deed), or, in the case of any loss or damage
not in excess of $50,000.00, if Grantor shall fail to commence the Work, or if
thereafter Grantor fails to perform the Work diligently or is delinquent in the
payment to mechanics, materialmen or others of the costs incurred in connection
with the Work (except to the extent caused by the failure of Grantee to comply
with the terms of this Deed), then, in addition to all other rights herein set
forth, and after giving Grantor twenty (20) days written notice of the
nonfulfillment of one or more of the foregoing conditions Grantee, or any
lawfully appointed receiver of the Security, may at its respective option,
perform or cause the Work to be performed and may take such other steps as it
deems advisable to perform the Work, and may enter upon the Security for any of
the foregoing purposes, and Grantor hereby waives, for Grantor and all others
holding under Grantor, any claim against Grantee or such receiver arising out of
anything done by Grantee or such receiver pursuant to this Section, and Grantee
may apply insurance proceeds (without the need to fulfill the requirements of
Section 9 hereof) to reimburse Grantee, and/or such receiver for all amounts
expended or incurred by them, respectively, in connection with the performance
of the Work, and any excess costs shall be paid by Grantor to Grantee upon
demand, with interest at the Default Rate (hereinafter defined), and such
payment shall be secured by the lien and security title of this Deed.
12. Rent Insurance Proceeds. If Grantor shall promptly commence and
diligently perform the Work, and there shall be no Event of Default under the
Loan Documents, then Grantee shall each month pay to Grantor out of the rent
insurance proceeds held by Grantee a sum equal to that amount, if any, of the
rent insurance proceeds paid by the insurer which is allocable to the rental
loss for the preceding month. Grantee at its option may waive any of the
foregoing conditions to the payment of rent insurance proceeds. If Grantor does
not fulfill the foregoing conditions entitling Grantor to monthly disbursements
of rent insurance proceeds, then such rent insurance proceeds may be applied by
Grantee, at Grantee's option, to the payment of the Indebtedness in whatever
order Grantee may elect.
13. [INTENTIONALLY LEFT BLANK]
14. Repair; Alterations; Waste; Environmental. Grantor shall keep all
of the Security in good and substantial repair, and expressly agrees that it
will neither permit nor commit any waste upon the Security, nor do any act or
suffer or permit any act to be done, whereby the lien and security title hereof
may be impaired and shall comply with all zoning laws, environmental laws, and
other laws, ordinances, rules and regulations made or promulgated by any
government or municipality, or by any agency thereof or by any other lawful
authority, which are now or may hereafter become applicable to the Security.
Grantor shall repair or restore any building now or hereafter under construction
on the Security and complete the same within a reasonable period of time.
Grantor agrees not to initiate or acquiesce in any zoning variance or
reclassification, without Grantee's prior written consent. Grantor shall not
construct any additional building or buildings or make any other improvements on
the Land, nor alter, remove or demolish any Improvements on the Land, without
the prior written consent of Grantee, which consent shall not be unreasonably
withheld.
Grantor shall comply with all terms and implement the
recommendations of that certain ADA Compliance Plan dated December 8, 1995 by
Wilson and Strickland,Inc.
If Grantor fails to observe any of the provisions of this
Section, or suffers or permits any Event of Default to exist under this Section,
Grantee or a lawfully appointed receiver of the Security at its option, from
time to time, may perform, or cause to be performed, any and all repairs and
such other work as it deems necessary to bring the Security into compliance with
the provisions of this Section and may enter upon the Security for any of the
foregoing purposes, and Grantor hereby waives any claim against Grantee and/or
such receiver, arising out of such entry or out of any other act carried out
pursuant to this Section. Grantor shall upon demand repay to Grantee and such
receiver, with interest at the Default Rate, all amounts expended or incurred by
them, respectively, in connection with any action taken pursuant to this
Section, and such repayment shall be secured by the lien and security title of
this Deed.
Grantor represents and warrants that there are and at all
times will be at least 415 parking spaces as part of the Security.
Except for matters reflected in the Environmental Site
Assessment - Wood Lake and Wood Ridge Apartments, prepared by ATC Environmental,
Inc., Project No. 70106-0004, dated October 19, 1995 (the Environmental
Report"), Grantor represents and warrants (i) that Grantor has not used and will
not use and, to the best of Grantor's knowledge, no prior owner or current or
prior tenant, subtenant, or other occupant of all or any part of the Security
has used or is using Hazardous Materials (hereinafter defined) on, from or
affecting the Security in any manner that violates the Environmental Laws
(hereinafter defined); (ii) that, to the best of Grantor's knowledge, no
Hazardous Materials have been disposed of on the Security, intentionally or
unintentionally, directly or indirectly, by any person whether related or
unrelated to Grantor, nor, to the best of Grantor's knowledge, have any
Hazardous Materials migrated onto the Security; and (iii) that Grantor will not
permit or suffer any such violation of the Environmental Laws.
For purposes of this Deed, the following terms shall have the
definition set forth:
"Hazardous Materials" shall mean and include those elements, materials,
compounds, mixtures, wastes or substances which are contained in any list of
hazardous substances adopted by the United States Environmental Protection
Agency (the "EPA") or any list of toxic pollutants designated by Congress or the
EPA or which are defined as hazardous, toxic, pollutant, infectious, flammable
or radioactive by any of the Environmental Laws (hereinafter defined) and,
whether or not included in such lists, shall be deemed to include all products
or substances containing petroleum, asbestos, and polychlorinated biphenyls.
"Environmental Laws" shall mean and include any Federal, State, or
local statute, law, ordinance, code, rule, regulation, order, or decree
regulating or relating to protection of human health or the environment, or
regulating or imposing liability or standards of conduct concerning the use,
storage, treatment, transportation, manufacture, refinement, handling,
production or disposal of any hazardous, toxic, or dangerous waste, substance,
element, compound, mixture or material, as now or at any time hereafter in
effect including, without limitation, the Federal Comprehensive Environmental
Response, Compensation and Liability Act, as amended, 42 U.S.C. Sections 9601 et
seq., the Superfund Amendments and Reauthorization Act, 42 U.S.C. Sections 9601
et seq., the Federal Oil Pollution Act of 1990, Sections 2701, et seq., the
Federal Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq., the
Federal Resource Conservation and Recovery Act as amended, 42 U.S.C. Sections
6901 et seq., the Federal Hazardous Materials Transportation Act, 49 U.S.C.
Sections 1801 et seq., the Federal Clean Air Act 42 U.S.C. Section 7401 et seq.,
the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq., the
River and Harbors Act of 1899, 33 U.S.C. Sections 401 et seq., the Georgia Air
Quality Act, O.C.G.A. Sections 12-9-1 et seq., the Georgia Water Quality Control
Act, O.C.G.A. Sections 12-5-20 et seq., the Ground-water Use Act of 1972,
O.C.G.A. Sections 12-5-90 et seq., the Georgia Safe Drinking Water Act of 1977,
O.C.G.A. Sections 12-5-170 et seq., the Erosion and Sedimentation Act of 1975,
O.C.G.A. Sections 12-7-1 et seq., the Georgia Comprehensive Solid Waste
Management Act, O.C.G.A. Sections 12-8-20 et seq., the Georgia Hazardous Waste
Management Act, O.C.G.A, Sections 12-8-60 et seq., the Georgia Asbestos Safety
Act, O.C.G.A. Sections 12-21-1 et seq., and the Georgia Hazardous Site Response
Act, O.C.G.A. Sections 12-8-90 et seq., as any such acts may be amended,
modified or supplemented, or rules and regulations of the EPA, the Georgia
Department of Natural Resources or any other agency or governmental board or
entity having jurisdiction over the Security.
Grantor represents and warrants that, except as set forth in
the Environmental Report, no generation, treatment, storage or disposal of any
Hazardous Materials has occurred or is occurring on the Security and that the
Grantor will not permit or suffer any such generation, treatment, storage or
disposal of Hazardous Materials on the Security or permit any lien under Georgia
law to attach to the Security or any portion thereof or any interest therein.
Grantor represents and warrants that it has not received any notice from any
governmental agency or any tenant of the Security with regard to such Hazardous
Materials, and has received no notice that the environmental and ecological
condition of the Security is in violation of any Environmental Law.
Grantor represents and warrants that, to the best of Grantor's
knowledge and belief and except as set forth in the Environmental Report, the
Security does not contain, and has not in the past contained, any asbestos
containing material in friable form and there is no current or potential
airborne contamination of the Security by asbestos fiber, including any
potential contamination that would be caused by maintenance or tenant finish
activities in the building(s).
Grantor represents and warrants that it has not received any notice
that the soil, surface water, and ground water of or on the Security are not
free from any spills of oil or other solid or liquid waste, toxic or hazardous
substance or contaminate, and Grantor, after making reasonable inquiry, has no
knowledge or any such spill.
In the event that any investigation, site monitoring,
containment, clean-up, removal, restoration or other remedial work of any kind
or nature (the "Remedial Work") is reasonably necessary or desirable under any
applicable Environmental Law, any judicial order, or by any governmental entity
or person because of, or in connection with, the current or future presence,
suspected presence, release or suspected release of a Hazardous Material in or
about the air, soil, ground water, surface water or soil vapor at, on, about,
under or within the Security (or any portion thereof), Grantor shall within
thirty (30) days after written demand for performance thereof by Grantee (or
such shorter period of time as may be required under any applicable
Environmental Law), commence and thereafter diligently prosecute to completion,
all such Remedial Work; provided, however, that Grantor may delay commencement
of the Remedial Work for such time that Grantor is in good faith and diligently
contesting the requirement of the governmental entity or person imposing the
obligation to perform the Remedial Work, but only if and to the extent such
contest is legally effective under the applicable Environmental Laws to permit
such delay without penalty. All Remedial Work shall be performed by contractors
approved in advance by Grantee, and under the supervision of a consulting
engineer approved by Grantee. All costs and expenses of such Remedial Work shall
be paid by Grantor including, without limitation, Grantee's reasonable
attorneys' fees, paralegal fees and costs incurred in connection with monitoring
or review of such Remedial Work. In the event Grantor shall fail to timely
prosecute to completion, such Remedial Work, Grantee may, but shall not be
required to, cause such Remedial Work to be performed and all costs and expenses
thereof, or incurred in connection therewith, shall become part of the
Indebtedness.
Grantor shall provide Grantee with prompt written notice (a)
upon Grantor's becoming aware of any release or threat of release of any
Hazardous Materials upon, under or from the Security; (b) upon Grantor's receipt
of any notice from any federal, state, municipal or other governmental agency or
authority in connection with any Hazardous Materials located upon or under or
emanating from the Security; and (c) upon Grantor's obtaining knowledge of any
incurrence of expense by any governmental agency or authority in connection with
the assessment, containment or removal of any Hazardous Materials located upon
or under or emanating from the Security.
15. Environmental Indemnification. Grantor will indemnify Grantee
against, and hold Grantee harmless from, any and all claim, liability, loss,
cost damage, charge, lien, debt, fine, penalty, injunctive relief, demand, suit,
judgment, adjudication, expense, or injury to person, property or natural
resources, including attorney's fees and consulting fees (any of the foregoing
being referred to herein as a "Claim"), arising out of, attributable to, which
may accrue out of, or which may result from (i) a violation or alleged violation
of the Environmental Laws in connection with the Security by any person or
entity or other source whether related or unrelated to Grantor, or (ii) the
actual or alleged presence, release, transportation, migration, generation,
treatment, processing, storage or use or disposal (herein collectively referred
to as a "Disposal") of Hazardous Materials (whether intentional or
unintentional, direct or indirect, foreseeable or unforeseeable) by any person
or entity or other source, whether related or unrelated to Grantor, provided
that in every case if Grantee owns the Security at the time of a Claim, such
violation or Disposal giving rise to such Claim occurred prior to the time
Grantee owned the Security. This indemnity shall survive the event of
foreclosure of the Deed or conveyance of the Security in lieu thereof.
16. Independence of Security. Grantor shall not by act or omission
permit any building or other improvement on any premises not subject to the lien
and security title of this Deed to rely on the Security or any part thereof or
any interest therein to fulfill any municipal or governmental requirement, and
Grantor hereby assigns to Grantee any and all rights to give consent for all or
any portion of the Security or any interest therein to be so used. Similarly, no
part of the Security shall rely on any premises not subject to the lien and
security title of this Deed or any interest therein to fulfill any governmental
or municipal requirement. Grantor shall not by act or omission impair the
integrity of the Real Property as a single zoning lot, and as one or more
complete tax parcels, separate and apart from all other premises. Any act or
omission by Grantor which would result in a violation of any of the provisions
of this Section shall be void.
17. No Other Liens. Grantor shall not consent, agree to, or permit any
mortgage, lien, security title, or security interest upon or affecting the
Security or any part thereof except as granted or permitted in this Deed and any
other lien or security interest granted to Grantee.
Grantor will promptly pay and discharge any and all amounts
which are now or hereafter become liens against the Security whether or not
superior to the lien and security title hereof or to any assignment of rents and
leases given to Grantee.
The covenants of this Section shall survive any sale of the
Security and any conveyance thereof by deed in lieu of foreclosure with respect
to any such liens in existence as of the date of transfer of title.
18. Management. During the term of the loan secured hereby, Grantor
shall at all times retain a professional management company to operate and
manage the Security. A written management agreement shall be required and the
management company and the form and content of the management agreement shall be
subject to Grantee's approval, which shall not be unreasonably withheld or
delayed. No change in such management shall be made without the prior written
approval of Grantee which shall not be unreasonably withheld or delayed, and any
attempted change in management without such consent shall be void. The
management agreement must provide that it is subordinate to the lien of this
Deed or terminable without cause upon thirty (30) days' prior written notice,
and may not be modified or amended in any material manner without Grantee's
prior written approval. Management fees shall not constitute a lien upon the
Security and Grantee shall have no liability for payment of such fees.
19. [INTENTIONALLY LEFT BLANK]
20. Sidewalks, Municipal Charges. Grantor will promptly pay and
discharge any and all license fees and similar charges, with penalties and
interest thereon, which may be imposed by the municipality in which the Security
is situated, for the use of vaults, chutes, areas and other space beyond the lot
line and under or abutting the public sidewalks in front of or adjoining the
Security, and Grantor will promptly cure any violation of law and comply with
any order of such municipality respecting the repair, replacement or condition
of the sidewalk or curb in front of or adjoining the Security, and in default
thereof Grantee may, upon five (5) days notice to Grantor, pay any and all such
license fees or similar charges, with penalties and interest thereon, and the
charges of the municipality for such repair or replacement, and any amount so
paid or advanced by Grantee and all costs and expenses incurred in connection
therewith (including, without limitation, attorneys' fees), with interest
thereon at the default rate specified in the Note, shall be a demand obligation
of Grantor to Grantee, and, to the extent permitted by law, shall be added to
the Indebtedness and shall be secured by the lien and security title of this
Deed.
21. Assignment of Rents and Leases. Grantor hereby presently,
irrevocably, absolutely and unconditionally grants, transfers, assigns and sets
over unto Grantee all of its right, title and interest in and to all present and
future leases, license agreements, concession agreements, lease termination
agreements and other occupancy agreements of any nature, oral or written, of the
Land and of space in the Improvements together with all modifications,
supplements, extensions, renewals and replacements thereof now existing or
hereafter made, and also together with the rights to sue for, collect and
receive all rents, prepaid rents, additional rents, royalties, security
deposits, damages payable upon default by tenant, or other sums in any of said
leases provided to be paid to the lessor thereunder, profits, income, license
fees, concession fees, lease termination fees and issues of the Security
(collectively, "Rents"), to be applied by Grantee in payment of the
Indebtedness, and also together with any and all guaranties of the obligations
of the tenants thereunder and the rights of Grantor to receive, hold and apply
all bonds and security in all of said leases provided to be furnished to the
lessor thereunder, and also together with the rights of Grantor to enforce any
and all of the agreements, terms, covenants and conditions in all of said leases
provided and to give notices thereunder. Grantee may receive and collect the
Rents upon the occurrence of an Event of Default for so long as any such Event
of Default shall exist, and during the pendency of any foreclosure proceeding
and during any redemption period. Grantor agrees to consent to a receiver if
this is believed necessary or desirable by Grantee to enforce its rights under
this Section. Grantee hereby grants to Grantor a revocable license to collect
the Rents as they respectively come due and to enforce said leases, so long as
there exists no Event of Default under this Deed.
Grantor shall not otherwise assign or pledge, or contract,
expressly or by implication, to assign or pledge, any lease of the Land or space
in the Improvements or the rights to sue for, collect and receive any Rents, or
the rights to receive, hold and apply any bonds and security in any of said
leases provided to be furnished to the lessor thereunder, or the rights to
enforce any of the agreements, terms, covenants or conditions of said leases or
to give notices thereunder, unless in each instance the written consent thereto
of Grantee is first obtained.
Nothing in this Deed shall be construed to obligate Grantee,
expressly or by implication, to perform any of the covenants of Grantor as
lessor under any of the leases hereinabove assigned or to pay any sum of money
or damages therein provided to be paid by the lessor.
If Grantee shall from time to time suffer or permit Grantor to
sue for, collect or receive any Rents, or to receive, hold or apply any bonds or
security under said leases, or to enforce any of the agreements, terms,
covenants or conditions thereunder or to give notices thereunder, neither such
sufferance nor permission shall constitute a waiver or relinquishment by Grantee
of the rights hereunder and hereby assigned to Grantee with respect to any
subsequent Rents, or with respect to any subsequent receipt, holding or
application of bonds or security or any subsequent enforcement of such
agreements, terms, covenants or conditions or any subsequent notices.
22. Future Leases. The standard form of apartment lease used from time
to time by Grantor shall be presented to, and subject to the prior approval of,
Grantee. All such leases entered into after the date hereof shall be on such
standard form or forms approved by Grantee. All leases shall provide that in
addition to the annual minimum rental specified in the lease, the tenant will
pay its separately metered utility charges for heat, lighting, hot water and
sewer service.
All leases must be subordinate to the lien and security title
of this Deed unless Grantee otherwise specifies. Each lease must contain a
provision that, upon notice to tenant by Grantee, the lease shall become
superior, in whole or in part, to the lien and security title of this Deed.
Without limiting the foregoing, Grantee hereby reserves the right to subordinate
this Deed to any lease subsequently made by recording in the Records of Cobb
County, Georgia, in which this Deed is recorded a declaration to that effect,
executed by Grantee, which declaration once so recorded shall be binding upon
the tenant under such lease and such tenant's successors and assigns.
Within ten (10) days after request by Grantee, Grantor will
furnish to Grantee a true and complete copy of each lease, amendment,
modification, extension, or renewal of lease, hereafter made by Grantor with
respect to space in the Security.
Grantor will from time to time upon demand of Grantee, confirm
in writing the assignment to Grantee of any or all leases of the Land and space
in the Improvements, and such written confirmation shall be in such form as
Grantee shall require and as shall be necessary to make the same recordable.
23. Grantor's Obligations as Lessor. (a) Grantor shall, at Grantor's
cost and expense, promptly and fully perform each and every covenant, condition,
promise and obligation on the part of the lessor to be performed pursuant to the
terms of each and every lease or letting, written or oral, now or hereafter made
with respect to the Security or any part or parts thereof, the failure of which
when considered in the aggregate would reasonably be expected to have, or would
have, a material adverse effect on the Security, and shall not suffer or permit
there to exist any default in such performance on the part of such lessor or
permit any event to occur which would give the tenant under any such lease the
right to terminate the same or to offset rent.
(b) Grantor shall give Grantee immediate notice of any default
under any lease or of the receipt by Grantor of any notice of default from the
lessee or its successors or assigns under a lease, and Grantor shall furnish to
Grantee immediately any and all information which Grantee may reasonably request
concerning the performance and observance of all covenants, agreements and
conditions contained in the leases by the lessor thereunder to be kept, observed
and performed and concerning the compliance with all terms and conditions of the
leases.
(c) In the event of any failure by Grantor to keep, observe or
perform any covenant, agreement or condition contained in the leases or to
comply with the terms and conditions of the leases as required in clause (a) of
this Section 23, any performance, observance or compliance by Grantee pursuant
to this Deed on behalf of Grantor shall not remove or waive, as between Grantor
and Grantee the corresponding Event of Default under the terms of this Deed.
24. Leases; Foreclosure. Any proceedings or other steps taken by
Grantee to foreclose this Deed, or otherwise to protect the interests of Grantee
hereunder, shall not operate to terminate the rights of any present or future
tenant of space in the Improvements, notwithstanding that said rights may be
subject and subordinate to the lien and security title of this Deed, unless
Grantee specifically elects otherwise in the case of any particular tenant. The
failure to make any such tenant a defendant in any such foreclosure proceeding
and to foreclose such tenant's rights will not be asserted by Grantor or any
other defendant in such foreclosure proceeding as a defense to any proceeding
instituted by Grantee to foreclose this Deed or otherwise protect the interests
of Grantee hereunder.
25. [INTENTIONALLY LEFT BLANK]
26. Events of Default. Each of the following shall constitute an
"Event of Default" hereunder and shall entitle the Grantee to exercise its
remedies hereunder and under any of the other Loan Documents or as otherwise
provided by law:
(a) Any payment of any installment of principal or interest
due under the Note, or payment of any other sum due under the Note or under any
of the other Loan Documents, is not received by Grantee within five (5) business
days following the date when such payment was due;
(b) Failure of the Grantor in the observance or performance of
any covenant, promise or agreement provided in this Deed or in any other Loan
Document other than relating to the payment of indebtedness or money (a "failure
to perform") for thirty (30) days after the giving of notice by Grantee to
Grantor specifying the nature of the failure to perform; provided, however, that
if the nature of such failure to perform is such that the same cannot be cured
within such thirty (30) day period, such failure to perform shall not be deemed
an Event of Default if Grantor shall within such period commence to cure that
failure to perform and thereafter diligently prosecute the cure to completion,
but in no event more than one hundred twenty (120) days in the aggregate.
Notwithstanding anything contained herein to the contrary, the notice and cure
period provided under this clause(b) shall not be applicable to and shall not be
in addition to any specific notice and cure or performance period provided under
any other provision of this Deed, and the specific notice and cure or
performance period provided for in such provision shall control, and a failure
by Grantor to cure a default under such provision within the applicable cure
period shall be an Event of Default under this Deed;
(c) Any representation, warranty, or statement of the Grantor,
or the managing general partner of Grantor, contained herein or in any of the
Loan Documents, including without limitation the Environmental Indemnification
Agreement, or in any writing delivered to Grantee simultaneously with the
execution and delivery of the Loan Documents, proves to be untrue in any
material respect as of the date when made;
(d) Grantor, or the managing general partner of Grantor, shall
(i) have an order for relief entered in a proceeding under Title 11, United
States Code, whether such order shall result from a voluntary or involuntary
petition, (ii) seek or consent to the appointment of a receiver or trustee for
itself or for any of the Security, (iii) file a petition or initiate a
proceeding under the bankruptcy, insolvency, receivership, or similar laws of
the United States, any state or any jurisdiction, (iv) make a general assignment
for the benefit of creditors, or (v) be unable to pay its debts as they mature;
(e) A court shall enter an order, judgment or decree
appointing, without the consent of Grantor, or the managing general partner of
Grantor, a receiver or trustee for it or for any of the Security or approving a
petition filed against Grantor which seeks relief under the bankruptcy or other
similar laws of the United States, any state or any jurisdiction, and such
order, judgment or decree shall remain in force, undischarged or unstayed, sixty
(60) days after it is entered;
(f) Any default shall occur and be continuing beyond any cure
or grace period expressly provided under that certain Deed to Secure Debt and
Security Agreement (hereinafter referred to as the "Second Deed"), given by
Grantor to Grantee, dated of even date herewith and to be recorded on or about
the date hereof in the Records of Cobb County, Georgia, conveying an apartment
project known as "Wood Ridge Apartments" in Cobb County, Georgia, to secure the
Note; or
(g) Any default shall occur and be continuing beyond any cure
or grace period expressly provided under that certain Deed to Secure Debt and
Security Agreement (hereinafter referred to as the "Third Deed"), given by
Grantor to Grantee, dated of even date herewith and to be recorded on or about
the date hereof in the Records of Cobb County, Georgia, conveying an apartment
project known as "Plantation Crossing Apartments" in Cobb County, Georgia, to
secure the Note.
27. Remedies Upon Default. Immediately upon the occurrence of any Event
of Default, Grantee shall have the option, in addition to and not in lieu of or
substitution for all other rights and remedies provided in this Deed or any
other Loan Document or provided by law or in equity, and is hereby authorized
and empowered by Grantor, to do any or all of the following:
(a) Declare without notice the entire unpaid amount of the
Indebtedness immediately due and payable and, at Grantee's option, (i) to bring
suit therefor, or (ii) to bring suit for any delinquent payment of or upon the
Indebtedness, or (iii) to take any and all steps and institute any and all other
proceedings of law or in equity that Grantee deems necessary to enforce payment
of the Indebtedness and performance of other obligations secured hereunder and
to protect the lien and security title of this Deed.
(b) Grantee may sell the Security or any part of the Security
at one or more public sale or sales before the door of the courthouse of the
county in which the Land or any part of the Land is situated, to the highest
bidder of cash, in order to pay the Indebtedness, and all expenses of sale and
of all proceedings in connection therewith, including reasonable attorneys'
fees, after advertising the time, place and terms of sale once a week for four
(4) weeks immediately preceding such sale (but without regard to the number of
days) in a newspaper in which Sheriff's sales are advertised in said county. At
any such public sale, Grantee may execute and deliver to the purchaser a
conveyance of the Security or any part of the Security in fee simple with full
warranties of title, and to this end Grantor hereby constitutes and appoints
Grantee the agent and attorney-in-fact of Grantor to make such sale and
conveyance, and thereby to divest Grantor of all right, title and equity that
Grantor may have in and to the Security and to vest the same in the purchaser or
purchasers at such sale or sales, and all the acts and doings of said agent and
attorney-in-fact are hereby ratified and confirmed and any recitals in said
conveyance or conveyances as to facts essential to a valid sale shall be binding
upon Grantor. The aforesaid power of sale and agency hereby granted are coupled
with an interest and are irrevocable by death or otherwise, are granted as
cumulative of the other remedies provided hereby or by law for collection of the
Indebtedness and shall not be exhausted by one exercise thereof but may be
exercised until full payment of all of the Indebtedness. In the event of any
sale under this Deed by virtue of the exercise of the powers herein granted, or
pursuant to any order in any judicial proceeding or otherwise, the Security may
be sold as an entirety or in separate parcels and in such manner or order as
Grantee in its sole discretion may elect, and if Grantee so elects, Grantee may
sell the Personal Property covered by this Deed at one or more separate sales in
any manner permitted by the Uniform Commercial Code of the State of Georgia, and
one or more exercises of the powers herein granted shall not extinguish or
exhaust such powers, until the entire Security are sold or the Indebtedness is
paid in full. If the Indebtedness is now or hereafter further secured by any
chattel mortgages, pledges, contracts of guaranty, assignments of lease or other
security instruments, Grantee may at its option exhaust the remedies granted
under any of said security instruments either concurrently or independently, and
in such order as Grantee may determine.
(c) Cause to be brought down to date a title examination and
tax histories of the Security, procure title insurance or title reports or, if
necessary, procure new abstracts and tax histories.
(d) Procure an updated or entirely new environmental audit of
the Security including building, soil, ground water and subsurface
investigations; have the Improvements inspected by an engineer or other
qualified inspector and procure a building inspection report; procure an MAI or
other appraisal of the Security or any portion thereof; enter upon the Security
at any time and from time to time to accomplish the foregoing and to show the
Security to potential purchasers and potential bidders at foreclosure sale; make
available to potential purchasers and potential bidders all information obtained
pursuant to the foregoing and any other information in the possession of Grantee
regarding the Security.
(e) Grantee, upon application to a court of competent
jurisdiction, shall be entitled as a matter of strict right, without notice and
without regard to the adequacy or value of any security for the Indebtedness or
the solvency of any party bound for its payment, to the appointment of a
receiver to take possession of and whether or not a receiver has taken
possession of the Security to operate the Security and to collect and apply the
Rents, including those past due and unpaid, after payment of all necessary
charges and expenses, in reduction of the Indebtedness. The receiver shall have
all of the rights and powers permitted under the laws of the State of Georgia.
Except for damage caused by Grantee's willful misconduct, Grantor hereby waives
any claim Grantor may have against Grantee for mismanagement of the Security
during Grantee's operation of the Security under this subparagraph or as
mortgagee in actual possession under applicable statutes.
(f) Grantee shall have the right to enter and take possession
of the Security in accordance with the following:
(i) If an Event of Default shall have occurred, Grantor, upon
demand of Grantee, shall forthwith surrender to Grantee the actual
possession of the Security and, to the extent permitted by law, Grantee
itself, or by such officers or agents as it may appoint, may enter and
take possession of all of the Security without the appointment of a
receiver, or an application therefor, and may exclude Grantor and its
agents and employees wholly therefrom, and may have joint access with
Grantor to the books, papers and accounts of Grantor.
(ii) If Grantor shall for any reason fail to surrender or
deliver the Security or any part thereof after such demand by Grantee,
Grantee may obtain a judgment or decree conferring upon Grantee the
right to immediate possession or requiring Grantor to deliver immediate
possession of the Security to Grantee. Grantor will pay to Grantee, upon
ten (10) days notice, all expenses of obtaining such judgment or decree,
including reasonable compensation to Grantee, its attorneys and agents,
and all such expenses and compensation shall, until paid, become part of
the Indebtedness and shall be secured by this Deed.
(iii) Upon every such entering upon or taking possession of,
Grantee may hold, store, use, operate, manage and control the Security
and conduct the business thereof, and, from time to time (i) make all
necessary and proper maintenance, repairs, renewals, replacements,
additions, betterments and improvements thereto and thereon and purchase
or otherwise acquire additional fixtures, personalty and other property;
(ii) insure or keep the Security insured; (iii) manage and operate the
Security and exercise all the rights and powers of Grantor to the same
extent as Grantor could in its own name or otherwise act with respect to
the same; and (iv) enter into any and all agreements with respect to the
exercise by others of any of the powers herein granted to Grantee, all
as Grantee from time to time may determine to be in its best interest.
Grantee may collect and receive all the income, rents, issues, profits
and revenues from the Security, including those past due as well as
those accruing thereafter, and Grantee may apply any moneys and proceeds
received by Grantee, in whatever order or priority Grantee in its sole
discretion may determine, to the payment of (i) all expenses of taking,
holding, managing and operating the Security (including compensation for
the services of all persons employed for such purposes); (ii) the cost
of all such maintenance, repairs, renewals, replacements, additional,
betterments, improvements, purchases and acquisitions; (iii) the cost of
such insurance; (iv) such taxes, assessments and other similar charges
as Grantee may at its option pay; (v) other proper charges upon the
Security or any part thereof; (vi) the reasonable compensation, expenses
and disbursements of the attorneys and agents of Grantee; (vii) accrued
interest; (viii) deposits required in Paragraph 5 and other sums
required to be paid under this Deed; or (ix) overdue installments of
principal. Anything in this subparagraph to the contrary
notwithstanding, Grantee shall not be obligated to discharge or perform
the duties of a landlord to any tenant or incur any liability as the
result of any exercise by Grantee of its rights under this Deed, and
Grantee shall be liable to account only for the rents, incomes, issues,
profits and revenues actually received by Grantee.
(iv) In the event that all such interest, deposits and
principal installments and other sums due under any of the terms,
covenants, conditions and agreements of this Deed shall be paid and all
Events of Default shall be cured, and as a result thereof Grantee
surrenders possession of the Security to Grantor, the same right of
taking possession shall continue to exist if any subsequent Events of
Default shall occur.
(g) Grantee may, at its option without waiving any Event of
Default, pay, perform or observe any or all of Grantor's obligations under the
Loan Documents, and all payments made or costs or expenses incurred by Grantee
in connection therewith shall be secured hereby and shall be, without demand,
immediately repaid by Grantor to Grantee with interest thereon at the default
rate provided in the Note. Grantee shall be the sole judge of the necessity for
any such actions and of the amounts to be paid. Grantee is hereby empowered to
enter and to authorize others to enter upon the Security or any part thereof for
the purpose of performing or observing any such defaulted term, covenant or
condition without hereby becoming liable to Grantor or any person in possession
holding under Grantor.
(h) Apply against the Indebtedness in such order as Grantee
shall determine any funds held for the benefit of Grantor in escrow by Grantee
or by any third-party escrow agent under any of the Loan Documents, including
without limitation any funds held under the escrow established by Section 5 of
this Deed.
(i) Upon any foreclosure sale, Grantee may bid for and
purchase the Security and shall be entitled to apply all or any part of the
Indebtedness as a credit to the purchase price. In the event of any sale of the
Security by foreclosure, through judicial proceedings, by advertisement or
otherwise, the proceeds of any such sale which are applied in accordance with
the Deed shall be applied in the order following to: (i) all expenses incurred
for the collection of the Indebtedness and the foreclosure of this Deed,
including reasonable attorneys' fees, or such attorneys' fees as are permitted
by law; (ii) all sums expended or incurred by Grantee directly or indirectly in
carrying out the terms, covenants and agreements of the Note or notes evidencing
the Indebtedness, of this Deed and any other Loan Documents, together with
interest thereon as therein provided; (iii) all late payment charges, prepayment
fees, advances and other amounts due under any of the Loan Documents; (iv) all
accrued and unpaid interest upon the Indebtedness; (v) the unpaid principal
amount of the Indebtedness; and (vi) the surplus, if any, to the person or
persons legally entitled thereto.
In the event of any acceleration of the Indebtedness pursuant
to the first paragraph of this Section, Grantor shall pay to Grantee together
with the principal indebtedness and interest thereon an amount equal to the
prepayment fee provided for in the Note and such fee shall be included as part
of the Indebtedness.
Failure to exercise any option to accelerate in the event of a
default or other circumstance permitting the exercise of such option, shall not
constitute a waiver of the default or of the right to exercise such option at a
later time, or a waiver of the right to exercise such option in the event of any
other default or circumstance specified above.
28. Acceleration Interest. In addition to any late payment charge which
may be due under the Note, Grantor shall pay interest on all sums due hereunder
at a rate (the "Default Rate") equal to the lesser of (i) the interest rate set
forth in the Note plus four percent (4%) per annum, or (ii) the maximum rate
permitted by law, from and after the first to occur of the following events: if
Grantee elects to cause the acceleration of the Indebtedness; if a petition
under Title 11, United States Code, shall be filed by or against Grantor or if
Grantor shall seek or consent to the appointment of a receiver or trustee for
itself or for any of the Security, file a petition seeking relief under the
bankruptcy or other similar laws of the United States, any state or any
jurisdiction, make a general assignment for the benefit of creditors, or be
unable to pay its debts as they become due; if a court shall enter an order,
judgment or decree appointing, with or without the consent of Grantor, a
receiver or trustee for it or for any of the Security or approving a petition
filed against Grantor which seeks relief under the bankruptcy or other similar
laws of the United States, any state or any jurisdiction, and any such order,
judgment or decree shall remain in force, undischarged or unstayed, sixty (60)
days after it is entered; or if all sums due hereunder are not paid on the
Maturity Date as set forth in the Note.
29. Late Charge. In the event any sums due under the Note, this Deed or
any other Loan Document, are not paid by Grantor when due, without regard to any
cure or grace period, Grantor shall pay to Grantee for the month during which
such payment is not made when due and for each month or fraction thereof that
such sum remains unpaid, a late charge equal to the lesser of four percent (4%)
of such installment or the maximum amount allowed by law, as the reasonable
estimate by Grantee and Grantor of a fair average compensation for the loss that
may be sustained by Grantee due to the failure of Grantor to make timely
payments, and such amount shall be secured hereby. Such late charge shall be
paid without prejudice to the right of Grantee to collect any other amounts
provided to be paid or to declare an Event of Default under this Deed or any
other Loan Document.
30. Security Interest. This Deed shall, as to any equipment and other
Personal Property covered hereby, be deemed to constitute a security agreement,
and Grantor, as debtor, hereby grants to Grantee, as secured party, a security
interest therein pursuant to the Uniform Commercial Code as enacted in the State
of Georgia. Grantor agrees, upon request of Grantee, to furnish an inventory of
Personal Property owned by Grantor and subject to this Deed and, upon request by
Grantee, to execute any supplements to this Deed, any separate security
agreement and any financing statements and continuation statements in order to
include specifically said inventory of Personal Property or otherwise to perfect
the security interest granted hereby. Upon any Event of Default, Grantee shall
have all of the rights and remedies provided in said Code or otherwise provided
by law or by this Deed, including but not limited to the right to require
Grantor to assemble such Personal Property and make it available to Grantee at a
place to be designated by Grantee which is reasonably convenient to both
parties, the right to take possession of such Personal Property with or without
demand and with or without process of law and the right to sell and dispose of
the same and distribute the proceeds according to law. The parties hereto agree
that any requirement of reasonable notice shall be met if Grantee sends such
notice to Grantor at least five (5) days prior to the date of sale, disposition
or other event giving rise to the required notice, and that the proceeds of any
disposition of any such Personal Property may be applied by Grantee first to the
reasonable expenses in connection therewith, including reasonable attorneys'
fees and legal expenses incurred, and then to payment of the Indebtedness. With
respect to the Personal Property that has become so attached to the Real
Property that an interest therein arises under the real property law of the
State, this Deed shall also constitute a financing statement and a fixture
filing under the Georgia Uniform Commercial Code.
Grantor warrants that (i) Grantor's (that is "Debtor's) name,
identity or corporate structure and residence or principal place of business are
as set forth in Exhibit B attached hereto and by this reference made a part
hereof; (ii) Grantor (that is, "Debtor") has been using or operating under said
name, identity or corporate structure without change for the time period set
forth in said Exhibit B; and (iii) the location of the collateral is upon the
Land. Grantor covenants and agrees that Grantor will furnish Grantee with notice
of any change in the matters addressed by clauses (i) and (iii) of this
paragraph within thirty (30) days of the effective date of any such change and
Grantor will promptly execute any financing statements or other instruments
deemed necessary by Grantee to prevent any filed financing statement from
becoming misleading or losing its perfected status.
31. Right of Entry. Grantee and Grantee's representatives may at all
times upon two (2) days prior telephone notice to Grantor enter upon the
Security and inspect the same, or cause it to be inspected by agents, employees
or independent contractors of Grantee, and show the same to others, but Grantee
shall not be obligated to make any such entry or inspection.
32. Estoppel Certificate. Grantor, within fifteen (15) days after
written request from Grantee, will furnish a signed statement in writing, duly
acknowledged, of the amount then due or outstanding hereunder and whether or not
any offsets or defenses exist against the Indebtedness, and if so, specifying
such offsets and defenses. Upon request by Grantee, Grantor shall exercise any
right it may have to request an estoppel certificate from any or all of the
tenants on the Security within five (5) days following Grantee's request.
33. Annual Statements. Grantor shall, within ninety (90) days after the
end of each fiscal year of Grantor, deliver to Grantee (a) annual statements
audited and certified by an independent certified public accountant reasonably
satisfactory to Grantee and prepared in accordance with generally accepted
accounting principles, together with any "Notes to Financial Statements",
showing in detail (l) a balance sheet for the Security as of the last day of
such fiscal year, (2) a statement of earnings from the Security for such fiscal
year showing, among other things, all rents and other income therefrom and all
expenses paid or incurred in connection with the operation of the Security, (3)
a statement of cash flow and accounts receivable for the Security; and (b) a
statement signed by Grantor listing all leases of space in the Improvements as
of the last day of such fiscal year, the respective areas demised thereunder,
the names of the tenants, the respective expiration dates of the leases, the
respective rentals provided for therein, and such other information as may
reasonably be requested by Grantee. Grantee hereby approves the certified public
accounting firm of Imowitz, Koenig & Co., LLP.
In addition, Grantor agrees upon request from time to time to
furnish Grantee (i) with unaudited quarterly cash flow reports for the Security
within forty-five (45) days after the end of each fiscal year quarter, (ii) with
current rent rolls for the Security, and (iii) with a proforma income statement
and current expense statement for the current and prior year by January 15 of
the current year.
If Grantor omits to prepare and deliver promptly any report
required by this Section, Grantee may elect, in addition to exercising any
remedy for an Event of Default as provided for in this Deed, to make an audit of
all books and records of Grantor and its beneficiaries, including without
limitation their bank accounts, which in any way pertain to the Security, and to
prepare the statement or statements which Grantor failed to procure and deliver.
Such audit shall be made and such statements shall be prepared by an independent
Certified Public Accountant to be selected by Grantee. Grantor shall pay all
expenses of the audit and other services, which expenses shall be secured hereby
as part of the Indebtedness and shall be immediately due and payable with
interest thereon at the Default Rate set forth herein.
Grantee shall afford any information received pursuant to this
Section the same degree of confidentiality that Grantee affords similar
information proprietary to Grantee; provided, however, that Grantee does not in
any way warrant or represent that such information received from Grantor will
remain confidential, and, provided further, that Grantee shall have the
unconditional right to disclose, as necessary, any such information in the event
Grantee sells, transfers, conveys, or assigns the Deed or any portion of the
Indebtedness.
34. Rights Cumulative. Each right and remedy of Grantee under this
Deed, the Note and any other Loan Documents, shall be in addition to every other
right and remedy of Grantee and such rights and remedies may be enforced
separately or in any combination.
35. Subrogation. To the extent that proceeds of the Indebtedness are
used to pay any outstanding lien, charge or encumbrance affecting the Security,
such proceeds have been advanced by Grantee at Grantor's request, and Grantee
shall be subrogated to all rights, interest and liens owned or held by any owner
or holder of such outstanding liens, charges and encumbrances, irrespective of
whether such liens, charges or encumbrances are released of record; provided,
however, that the terms and provisions hereof shall govern the rights and
remedies of Grantee and shall supersede the terms, provisions, rights, and
remedies under the lien or liens to which Grantee is subrogated hereunder.
36. No Waiver. Any failure by Grantee to insist upon the strict
performance by Grantor of any of the terms and provisions hereof shall not be
deemed to be a waiver of any of the terms and provisions hereof, and Grantee,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by Grantor of any and all of the terms and provisions
hereof to be performed by Grantor.
37. Deed Extension. The lien and security title hereof shall remain in
full force and effect during any postponement or extension of the time of
payment of the Indebtedness, or of any part thereof, and any number of
extensions or modifications hereof, or any additional notes taken by Grantee,
shall not affect the lien and security title hereof or the liability of Grantor
or of any subsequent obligor to pay the principal indebtedness unless and until
such lien or liability be expressly released in writing by Grantee.
38. Indemnification. Grantor shall indemnify and hold Grantee harmless
from and against all obligations, liabilities, losses, costs, expenses, fines,
penalties or damages (including attorneys' fees) which Grantee may incur by
reason of this Deed or with regard to the Security prior to the exercise of any
remedies under this Deed, except to the extent caused by the gross negligence or
intentional misconduct of Grantee. Grantor shall defend Grantee against any
claim or litigation involving Grantee for the same, and should Grantee incur
such obligation, liability, loss, cost, expense, fine, penalty or damage, then
Grantor shall reimburse Grantee upon demand. Any amount owed Grantee under this
provision shall bear interest at the Default Rate set forth herein and shall be
secured hereby.
39. Nonrecourse. Except as hereinafter in this Section and in Section
15 of the Note specifically provided, Grantor shall not be personally liable for
the payment of any sums due hereunder or the performance of any obligations of
Grantor hereunder or under any other Loan Document. No judgment for the
repayment of the Indebtedness will be enforced against the undersigned
personally or any property of the Grantor other than the Security and any other
security furnished under the Loan Documents in any action to foreclose this Deed
or to otherwise realize upon any security furnished under the Loan Documents or
to collect any amount payable under the Loan Documents. Notwithstanding the
foregoing:
(a) Nothing herein contained shall be construed as prohibiting
Grantee from exercising any and all remedies which the Loan Documents
permit, including the right to bring actions or proceedings against
Grantor and to enter a judgment against Grantor, so long as the exercise
of any remedy does not extend to execution against or recovery out of
any property of Grantor other than the security furnished under the Loan
Documents;
(b) Grantor shall be fully and personally liable for (i)
misapplying any condemnation awards or insurance awards attributable to
the Security, to the full extent of such awards so misapplied, (ii)
misapplying any security deposits attributable to the Security, to the
full extent of such deposits so misapplied, (iii) collecting any rents
in advance in violation of any covenant contained in the Loan Documents,
to the full extent of such rents so collected in advance, (iv)
committing fraud, misrepresentation or waste in connection with the
operation of the Security or the making of the loan evidenced hereby, to
the full extent of any loss, damage, expense or costs (including
reasonable attorneys' fees) incurred by Grantee resulting from such
fraud, misrepresentation or waste, (v) failing to pay any debt service
on any indebtedness related to the Security, operating and maintenance
expenses, insurance premiums, deposits into a reserve for replacements
or other sums required by the Loan Documents, but only to the extent of
any gross revenues from the Security during the period beginning twelve
(12) months prior to a notice of acceleration to Grantor through the
date of foreclosure or deed in lieu of foreclosure that were available
to pay such expenses but were not so used, (vi) failing to pay real
estate taxes and assessments which are a lien against the Security
during the period of Grantor's ownership (excluding any period during
which a receiver for the Security has been appointed by a court of
competent jurisdiction), to the full extent of such unpaid taxes
(excluding, however, any such real estate taxes and assessments for
which funds shall have been escrowed by Grantor with or for the benefit
of Grantee for the payment thereof as provided in Section 5 hereof), and
(vii) failing to maintain the levels of insurance required under this
Deed or any other of the Loan Documents, to the full extent of any
insurance proceeds that would have been available had such levels of
insurance been maintained;
(c) There shall be no limitation, in any event of Grantor's
personal liability under, and the exercise of any of Grantee's rights
under any indemnity from Grantor to Grantee including but not limited
to, the Environmental Indemnification Agreement of even date herewith
from Grantor to Grantee with regard to the Security except as may be
expressly set forth therein.
40. Attorneys' Fees. Any reference to "attorney fees", attorneys'
fees", or "attorney's fees", in this document includes but is not limited to
both the fees, charges and costs incurred by Grantee through its retention of
outside legal counsel and the allocable fees, costs and charges for services
rendered by Grantee's in-house counsel. Any reference to "attorney fees",
attorneys' fees", or "attorney's fees", shall also include but not be limited to
those attorneys or legal fees, costs and charges incurred by Grantee in the
collection of any Indebtedness, the enforcement of any obligations hereunder,
the protection of the Security, the foreclosure of this Deed, the sale of the
Security, the defense of actions arising hereunder and the collection,
protection or setoff of any claim the Grantee may have in a proceeding under
Title 11, United States Code. Attorneys' fees provided for hereunder shall
accrue whether or not Grantee has provided notice of default or of an intention
to exercise its remedies for such default.
41. Administrative Fees. Grantee shall have the right to charge
administrative fees during the term of the Note as Grantee may determine, in its
sole reasonable discretion, in connection with any servicing requests made by
Grantor requiring Grantee's evaluation, preparation and processing of any such
requests. Administrative fees shall not be charged for routine servicing matters
contemplated by the Loan Documents including, without limitation: processing
payments; processing insurance and UCC continuation documentation; processing
escrow draws; review of tenant leases, subordination non-disturbance and
attornment agreements and tenant estoppels on standard forms approved by Grantee
without material modifications. Such administrative fees shall apply without
limitation to requests for matters not permitted or contemplated by the Loan
Documents (including, without limitation: request for transfers or assignments,
requests for partial releases; requests for review of new easements), and to
requests, which, while contemplated by the Loan Documents, because of the nature
of the request, will require significantly more time than an institutional
lender, acting reasonably, would contemplate for such request (including without
limitation, request for the approval of tenant leases, tenant estoppels and
tenant subordination, non-disturbance and attornment agreements which contain
material differences from Grantee's standard form.) Grantee shall also be
entitled to reimbursement for professional fees it incurs for such
administration, including without limitation, those of architects, engineers and
attorneys (whether (i) employed by Grantee or its affiliate or (ii) engaged by
Grantee or its affiliates as independent contractors).
42. Protection of Security; Costs and Expenses. Grantor shall appear in
and defend any action or proceeding purporting to affect the security hereof or
the rights or powers of the Grantee, and shall pay all costs and expenses,
including without limitation cost of evidence of title and reasonable attorneys'
fees, in any such action or proceeding in which Grantee may appear, and in any
suit brought by Grantee to foreclose this Deed or to enforce or establish any
other rights or remedies of Grantee hereunder. If Grantor fails to perform any
of the covenants or agreements contained in this Deed, or if any action or
proceeding is commenced which affects Grantee's interest in the Security or any
part thereof, including, but not limited to, eminent domain, code enforcement,
or proceedings of any nature whatsoever under any federal or state law, whether
now existing or hereafter enacted or amended, relating to bankruptcy,
insolvency, arrangement, reorganization or other form of debtor relief, or to a
decedent, then Grantee may, but without obligation to do so and without notice
to or demand upon Grantor and without releasing Grantor from any obligation
hereunder, make such appearances, disburse such sums and take such action as
Grantee deems necessary or appropriate to protect Grantee's interest, including,
but not limited to, disbursement of reasonable attorneys' fees, entry upon the
Security to make repairs or take other action to protect the security hereof,
and payment, purchase, contest or compromise of any encumbrance, charge or lien
which in the judgment of Grantee appears to be prior or superior hereto. Grantor
further agrees to pay all reasonable expenses of Grantee (including without
limitation fees and disbursements of counsel) incident to the protection of the
rights of Grantee hereunder, or to enforcement or collection of payment of the
Indebtedness, whether by judicial or non-judicial proceedings, or in connection
with any bankruptcy, insolvency, arrangement, reorganization or other debtor
relief proceeding of Grantor, or otherwise. Any amounts disbursed by Grantee
pursuant to this Section shall be additional indebtedness of Grantor secured by
the Loan Documents as of the date of disbursement and shall bear interest at the
Default Rate. All such amounts shall be payable by Grantor immediately without
demand. Nothing contained in this Section shall be construed to require Grantee
to incur any expense, make any appearance, or take any other action.
43. Notices. Any notice, demand, request, statement or consent made
hereunder shall be in writing, signed by the party giving such notice, request,
demand, statement, or consent, and shall be deemed to have been properly given
when either delivered personally, delivered to a reputable overnight delivery
service providing a receipt or deposited in the United States mail, postage
prepaid and registered or certified return receipt requested, at the address set
forth below, or at such other address within the continental United States of
America as may have theretofore have been designed in writing. The effective
date of any notice given as aforesaid shall be the date of personal service, one
(1) business day after delivery to such overnight delivery service, or three (3)
business days after being deposited in the United States mail, whichever is
applicable. For purposes hereof, the addresses are as follows:
If to Grantee:
CIGNA Corporation
c/o CIGNA Investment, Inc.
900 Cottage Grove Road
Hartford, CT 06152-2319
Attn: Investment Services, S-319
with a copy to:
CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, CT 06152-2215
Attn: Real Estate Division, S-215A
If to Grantor:
Century Properties Fund XIX
5665 Northside Drive,N.W.
Suite 370
Atlanta, Georgia 30328
with a courtesy copy to:
Post & Heymann, LLP
Suite 214
100 Jericho Quadrangle
Jericho, New York 11753
Attn: David J. Heymann
Notwithstanding the foregoing agreement to provide a courtesy copy to
Grantor's attorneys, such copy shall be a courtesy copy only, and failure to
provide such courtesy copy shall have absolutely no effect or entitle Grantor to
any remedy whatsoever. Any notice duly given to Grantor shall be effective
whether or not the courtesy copy was given to Grantor's attorneys.
44. Release. Upon the satisfaction in full of the Indebtedness,
Grantee shall release of record the Security from the lien hereof and shall
surrender this Deed and all notes evidencing indebtedness secured by this Deed
to Grantor. Grantor shall pay all costs of recordation.
45. Applicable Law. The provisions hereof shall be construed in
accordance with the laws of the State of Georgia (the "State").
46. Invalidity. If any provision of this Deed shall be held invalid or
unenforceable, the same shall not affect in any respect whatsoever the validity
of the remainder of this Deed, except that if such provision relates to the
payment of a monetary sum, then the Grantee may, at its option, declare the
Indebtedness due and payable upon sixty (60) days prior written notice to
Grantor and, provided there exists no Event of Default hereunder, without
prepayment fee or premium.
47. Captions. The captions in this instrument are inserted only as a
matter of convenience and for reference, and are not and shall not be deemed to
be any part hereof.
48. Modifications. This Deed may not be changed or terminated except in
writing signed by both parties. The provisions of this Deed shall extend and be
applicable to all renewals, amendments, extensions, consolidations, and
modifications of the other Loan Documents, and any and all references herein to
the Loan Documents shall be deemed to include any such renewals, amendments,
extensions, consolidations or modifications thereof.
49. Bind and Inure. The provisions of this Deed shall be binding on the
Grantor and its heirs, successors and assigns, and any subsequent owners of the
Security. The covenants of Grantor herein shall run with the land, and this Deed
and all of the covenants herein contained shall inure to the benefit of the
Grantee, its successors and assigns.
50. Replacement of Note. Upon receipt of evidence reasonably
satisfactory to Grantor of the loss, theft, destruction or mutilation of the
Note, and in the case of any such loss, theft or destruction, upon delivery of
an indemnity agreement reasonably satisfactory to Grantor or, in the case of any
such mutilation, upon surrender and cancellation of the Note, Grantor will
execute and deliver, in lieu thereof, a replacement Note, identical in form and
substance to the Note and dated as of the date of the Note and upon such
execution and delivery all references in this Deed to the Note shall be deemed
to refer to such replacement Note.
51. Time of the Essence. Time is of the essence with respect to each
and every covenant, agreement and obligation of Grantor under this Deed, the
Note and any and all other instruments now or hereafter evidencing, securing or
otherwise relating to the Indebtedness.
52. Waiver of Grantor's Rights. BY EXECUTION OF THIS DEED AND BY
INITIALING THIS PARAGRAPH, GRANTOR EXPRESSLY: (A) ACKNOWLEDGES THE RIGHT OF
GRANTEE TO ACCELERATE THE INDEBTEDNESS EVIDENCED BY THE NOTE AND ANY OTHER
SECURED INDEBTEDNESS AND THE POWER OF ATTORNEY GIVEN HEREIN TO GRANTEE TO SELL
THE SECURITY BY NONJUDICIAL FORECLOSURE UPON DEFAULT BY GRANTOR WITHOUT ANY
JUDICIAL HEARING AND WITHOUT ANY NOTICE OTHER THAN SUCH NOTICE (IF ANY) AS IS
SPECIFICALLY REQUIRED TO BE GIVEN UNDER THE PROVISIONS OF THIS DEED; (B) WAIVES
ANY AND ALL RIGHTS WHICH GRANTOR MAY HAVE UNDER THE CONSTITUTION OF THE UNITED
STATES OF AMERICA (INCLUDING, WITHOUT LIMITATION, THE FIFTH AND FOURTEENTH
AMENDMENTS THEREOF), THE VARIOUS PROVISIONS OF THE CONSTITUTIONS FOR THE SEVERAL
STATES, OR BY REASON OF ANY OTHER APPLICABLE LAW, (1) TO NOTICE AND TO JUDICIAL
HEARING PRIOR TO THE EXERCISE BY GRANTEE OF ANY RIGHT OR REMEDY HEREIN PROVIDED
TO GRANTEE, EXCEPT SUCH NOTICE (IF ANY) AS IS SPECIFICALLY REQUIRED TO BE GIVEN
UNDER THE PROVISIONS OF THIS DEED AND (2) CONCERNING THE APPLICATION, RIGHTS OR
BENEFITS OF ANY STATUTE OF LIMITATION OR ANY MORATORIUM, REINSTATEMENT,
MARSHALLING, FORBEARANCE, APPRAISEMENT, VALUATION, STAY, EXTENSION, HOMESTEAD,
EXEMPTION OR REDEMPTION LAWS; (C) ACKNOWLEDGES THAT GRANTOR HAS READ THIS DEED
AND ANY AND ALL QUESTIONS OF GRANTOR REGARDING THE LEGAL EFFECT OF THIS DEED AND
ITS PROVISIONS HAVE BEEN EXPLAINED FULLY TO GRANTOR, AND GRANTOR HAS CONSULTED
WITH COUNSEL OF GRANTOR'S CHOICE PRIOR TO EXECUTING THIS DEED AND INITIALING
THIS PARAGRAPH; AND (D) ACKNOWLEDGES THAT ALL WAIVERS OF THE AFORESAID RIGHTS OF
GRANTOR HAVE BEEN MADE KNOWINGLY, INTENTIONALLY AND WILLINGLY BY GRANTOR AS PART
OF A BARGAINED FOR LOAN TRANSACTION AND THAT THIS DEED IS VALID AND ENFORCEABLE
BY GRANTEE AGAINST GRANTOR IN ACCORDANCE WITH ALL THE TERMS AND CONDITIONS
HEREOF.
INITIALED BY GRANTOR:
---------------------
53. Discontinuance of Proceedings. In case Grantee shall have proceeded
to enforce any right, power or remedy under this Deed by foreclosure, entry or
otherwise or in the event Grantee commences advertising of the intended exercise
of the sale under power provided hereunder, and such proceeding or advertisement
shall have been withdrawn, discontinued or abandoned for any reason, or shall
have been determined adversely to Grantee, then in every such case (i) Grantor
and Grantee shall be restored to their former positions and rights, (ii) all
rights, powers and remedies of Grantee shall continue as if no such proceeding
had been taken, (iii) each and every Event of Default declared or occurring
prior or subsequent to such withdrawal, discontinuance or abandonment shall and
shall be deemed to be a continuing Event of Default and (iv) neither this Deed,
nor the Note, nor the Indebtedness, nor any other instrument concerned
therewith, shall be or shall be deemed to have been reinstated or otherwise
Grantor hereby expressly waives the benefit of any statute or rule of law now
provided, or which may hereafter be provided, which would produce a result
contrary to or in conflict with the above.
54. Limitations on Transfers. Except as set forth in this Section,
neither the Security, nor any interest in the Security, nor any interest (direct
or indirect) in Grantor may be transferred, sold, assigned or conveyed. Grantee
may, at its option, accelerate the entire Indebtedness at any time during the
term of this Deed, if, without Grantee's prior written approval, which approval
may be granted or withheld in Grantee's sole discretion, either (i) Grantor
sells, assigns, transfers or otherwise ceases to own the Security (except
pursuant to a transfer expressly permitted pursuant to this Section, pursuant to
leases of individual apartment units in the ordinary course of Grantor's
business, pursuant to a condemnation of any portion of the Security or pursuant
to the replacement of any Personal Property with comparable Personal Property in
the ordinary course of Grantor's business), or (ii) an interest (direct or
indirect) in Grantor is transferred or assigned. Grantee hereby consents to the
transfer (directly or indirectly) of the interest in Grantor of the general
partner of Grantor to Insignia Financial Group, Inc. or any entity controlled
(directly or indirectly) by Insignia Financial Group, Inc.
Grantor shall be entitled to make a one-time sale, transfer or
assignment in whole or in part of its interest in the Security; subject to the
following terms and conditions:
(a) There shall then exist no Event of Default hereunder.
(b) A current property inspection by Grantee or Grantee's designee
must disclose that all reasonably necessary maintenance on, or damage or
destruction to the Security, has been completed or repaired.
(c) The proposed transferee shall be a Qualified Real Estate
Investor (as hereinafter defined).
(d) The proposed transferee must have specific related real estate
experience in the Metropolitan Statistical Area where the Security is
located.
(e) Prior to the proposed transfer, the proposed transferee shall
own or manage at least 1,000 apartment units.
(f) At least sixty (60) days prior to such transfer Grantor must
provide Grantee with all of the material provisions of such transfer
including, without limitation, the proposed date of transfer, the name,
net worth, background and address of the proposed transferee, and the
purchase price.
(g) Grantor shall provide Grantee with such evidence as Grantee may
require that the proposed transferee shall fulfill each and every
obligation of Grantor under the Loan Documents and such transfer shall
not affect or impair Grantee's security and rights under the Loan
Documents.
(h) If the proposed sale of the Security does not also include the
sale of the properties encumbered by the Second Deed (hereinafter
referred to as the "Second Deed Security") and the Third Deed
(hereinafter referred to as the "Third Deed Security"), then the
indebtedness then outstanding under the Note shall, pursuant to
documentation in all respects satisfactory to Grantee, be divided,
amended and restated into three separate notes to be secured separately
by this Deed, the Second Deed and the Third Deed, respectively, as
follows:
(i) The note to be secured by this Deed (hereinafter referred
to as the "First Note") shall be in the principal amount of
$7,750,000 (less a pro rata amount of any prior amortization
under the Note) and mandatory monthly amortization payments
shall be in the amount of $57,271.82. Otherwise the terms of the
First Note shall be the same as the terms of the Note.
(ii) The note to be secured by the Second Deed (hereinafter
referred to as the "Second Note") shall be in the principal
amount of $9,000,000 (less a pro rata amount of any prior
amortization under the Note) and mandatory monthly amortization
payments shall be in the amount of $66,509.21. Otherwise the
terms of the Second Note shall be the same as the terms of the
Note.
(iii) The note to be secured by the Third Deed (hereinafter
referred to as the "Third Note") shall be in the principal
amount of $5,250,000 (less a pro rata amount of any prior
amortization under the Note) and mandatory monthly amortization
payments shall be in the amount of $38,797.04. Otherwise the
terms of the Third Note shall be the same as the terms of the
Note.
In the event, after the proposed transfer, any two of the Security, the
Second Deed Security and the Third Deed Security, remain owned, directly
or indirectly, by the same or affiliated parties, then the notes and
deeds related to such properties shall be cross-defaulted and
cross-collateralized; otherwise such notes and deeds shall no longer be
cross-defaulted or cross-collateralized.
(i) Such notice received under (f) above shall be accompanied by
the payment of a non-refundable fee in the amount of one percent (1.0%)
of the outstanding balance of the principal portion of the Note
allocable to the Security as provided in (h) above, in cash or certified
check to be retained by Grantee in order to induce Grantee to allow the
proposed transferee to assume the obligations of Grantee under the Loan
Documents, and such fee shall be returned to Grantor if Grantee
disapproves of such transfer.
(j) If the Second Deed Security and/or the Third Deed Security are
not included in the proposed sale, then the loan-to-value ratio and Debt
Service Coverage as to the allocated loan amounts for such properties as
provided in (h) above, based on a then current appraisal using a 9%
capitalization rate and calculated only with regard to the remaining
property securing such remaining notes, must either (a) equal a 65%
loan-to-value ratio with Debt Service Coverage of at least 1.5, or (b)
equal or exceed the combined loan-to-value ratios and Debt Service
Coverage of the Security, the Second Deed Security and the Third Deed
Security immediately prior to the transfer. In the event they do not
exceed the foregoing required ratio and coverage, then the Second Note
and/or the Third Note will be required to be paid down at Grantee's
option so that the resulting loan-to-value ratio is 65% and Debt Service
Coverage is 1.5. In the event Grantee requires the Second Note and/or
the Third Note to be paid down, such paydown will not be subject to any
prepayment fee.
(k) The loan-to-value ratio for the note(s) and property(ies) being
transferred (calculated in the aggregate assuming cross-default and
cross-collateralization is to continue as to the transferred properties,
or calculated separately if cross-default and cross-collateralization is
not continued), based on a then current appraisal of the property(ies)
being transferred using a 9% capitalization rate must not exceed 65% and
Debt Service Coverage for the note(s) being transferred must be at least
1.5.
(l) Grantor shall pay for all of Grantee's costs and expenses
associated with the transfer, including without limitation, attorney's
fees charged by Grantee's staff counsel and special counsel.
(m) Notwithstanding the above, a sale of the Security and the
Second Deed Security, leaving the Third Deed Security as the only
remaining security for the Third Note is permitted only if, immediately
after such sale, the loan to value ratio as to the Third Note is no more
than 60% and the Debt Service Coverage for the Third Note, based only
upon the Third Deed Security, is at least 1.8.
For purposes of this Section, "Qualified Real Estate Investor"
is defined as any reputable corporation, partnership, joint venture, joint-stock
company, trust or individual with a substantial net worth and cash position
sufficient to own and operate this size and type of property which shall be
based in the United States, shall be free from any bankruptcy, reorganization or
insolvency proceedings or any criminal charges or proceedings, and shall not
have been, at the time of transfer or in the past, a litigant, plaintiff or
defendant in any suit brought against or by Grantee in connection with a
mortgage loan. Grantee agrees to be reasonable in the review of such
qualifications.
55. Sale of Security. Notwithstanding the provisions of Section 54,
Grantor shall have the right to sell, transfer or assign in whole or in part its
interest in the Security to any party (and to have this Deed cancelled in
connection therewith) so long as:
(a) Subsections (a), (j) and (l) of Section 54 are satisfied;
provided, however, that if as a result of such sale the only note
remaining outstanding is the Third Note and neither this Deed nor the
Second Deed remain outstanding as security for the Third Note, then
immediately after such sale, the loan to value ratio as to the Third
Note must be no more than 60% and the Debt Service Coverage for the
Third Note, based only upon the Third Deed Security, must be at least
1.8.
(b) Grantor must prepay the principal amount allocable to the
Security as provided in Section 54(h) above, in full in connection with
such sale.
(c) Grantor must pay a prepayment fee equal to the greater of (i)
one percent (1.0%) of the principal amount prepaid or (ii) Yield
Maintenance (as defined in the Note).
(d) Grantor must provide Grantee with notice of such sale at least
sixty (60) days prior to such sale.
56. Regarding Certain Capital Improvements and Repairs. Grantor shall,
within six (6) months from the date hereof, complete and pay for the
repair/replacement of certain exterior wood components of certain of the
apartment buildings included in the Security as contemplated by the
Architectural-Engineering Evaluation and Building Condition Report prepared by
Wilson and Strickland, Inc. dated October 26, 1995 and estimated to cost
approximately $47,500 (including the similar work required by the Second Deed
with regard to the Second Deed Security). On or before the last day of said six
(6) month period, Grantor will provide to Grantee a certificate of Grantor in
form and content satisfactory to Grantee, certifying that all said repairs
and/or replacements have been completed and paid for, together with such other
evidence as Grantee may reasonably request confirming that such work has been
completed and paid for.
If Grantor fails to complete such work in all material
respects within six (6) months of the date hereof, then Grantee shall have the
option upon thirty (30) days notice to Grantor to require that Grantor deposit
in escrow with an escrow agent chosen by Grantee and pursuant to an escrow
agreement satisfactory to Grantee, the funds necessary, in the reasonable
discretion of Grantee, to pay for the completion of the incomplete items. Such
escrowed funds shall be disbursed to Grantor if and when such work has been
completed to the reasonable satisfaction of Grantee. All escrowed funds shall
constitute additional security for the Note and upon the occurrence and during
the continuation of any Event of Default, Grantee, at its option, shall be
entitled to receive all such escrowed funds (including any interest earned
thereon) and apply them to any sums due Grantee under the Note or under this
Deed.
IN WITNESS WHEREOF, the Grantor has duly executed this Deed as a sealed
instrument on the day and year first above written.
GRANTOR:
Signed, Sealed and CENTURY PROPERTIES FUND XIX,
delivered in the a California limited partnership
presence of:
By: Fox Partners II, a California
- --------------------------- general partnership, its general
Unofficial Witness partner
By: Fox Capital Management
- --------------------------- Corporation, a California
Notary Public corporation, its general
partner
My Commission Expires:
By:
------------------------
- --------------------------- Name:
Title:
[NOTARIAL SEAL] Attest:
-------------------
Name:
Title:
[CORPORATE SEAL]
EXHIBIT A
Description of Land
EXHIBIT B
Description of "Debtor" and "Secured Party"
A. Debtor:
1. Name and Identity or Corporate Structure:
Century Properties Fund XIX, a California limited partnership.
2. The residence or principal place of business of Debtor in the
State of Georgia is located at 5665 Northside Drive, N.W.,
Atlanta, Fulton County, Georgia.
3. If Debtor has more than one place of business in the State of
Georgia, Debtor's chief executive office in the State of
Georgia is located at 5665 Northside Drive, N.W., Atlanta,
Fulton County, Georgia.
4. Debtor has been using or operating under said name and
identity or corporate structure without change for the
following time period: From July 1, 1984 until the
date hereof.
B. Secured Party: CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a
Connecticut corporation.
FIRST MORTGAGE NOTE
New York, New York
FOR VALUE RECEIVED _______________________________
________________, a _______ limited partnership, having its
principal place of business at _____________________________
______________________________________ (hereinafter referred
to as "Maker"), promises to pay to the order of [ORIGINATOR],
a ________ corporation, at its principal place of business at
_____________________________________________________________
(hereinafter referred to as "Payee"), or at such other
place as the holder hereof may from time to time designate
in writing, the principal sum of ________________________
________ AND 00/100 DOLLARS ($_______________) in lawful
money of the United States of America with interest thereon
to be computed from the date of this Note at the Applicable
Interest Rate (hereinafter defined), and to be paid as
hereinafter provided.
A. PAYMENT TERMS
Maker shall pay to Payee:
(i) a payment of interest only on the date hereof for
the period commencing on the date hereof and
ending December 31, 1995;
(ii) a constant payment of $_________ (the "Monthly
Payment") on February 1, 1996 and on the first
day of each calendar month (the "Monthly Payment
Date") thereafter to and including the first day
of December, 2005; and
(iii) the balance of the principal sum then outstanding
and all interest thereon shall be due and payable
on the first day of January, 2006 (the "Maturity
Date").
Each of such payments shall be applied as follows:
(i) First to the payment of interest computed at the
Applicable Interest Rate; and
(ii) The balance applied toward the reduction of the
principal sum.
B. INTEREST
The term "Applicable Interest Rate" as used in this
Note shall mean _____% per annum.
Interest on the principal sum of this Note will be
due and payable monthly, in level payments, on the first day
of each calendar month, based on a year of twelve months of
thirty days each.
C. DEFAULT AND ACCELERATION
The whole of the principal sum of this Note,
together with all interest accrued and unpaid thereon and all
other sums due under the Mortgage (hereinafter defined) and
this Note (all such sums hereinafter collectively referred to
as the "Debt") shall without notice become immediately due
and payable at the option of Payee if any payment required in
this Note is not paid within ten (10) days after written
notice from the Payee notifying Maker that the same is due or
on the happening of any other default, after the expiration
of any applicable notice and grace periods, herein or under
the terms of the Mortgage (hereinafter collectively an "Event
of Default"). All of the terms, covenants and conditions
contained in the Mortgage and the Other Security Documents
(hereinafter defined) are hereby made part of this Note to
the same extent and with the same force as if they were fully
set forth herein. In the event that it should become
necessary to employ counsel to collect the Debt or to
protect, sell or foreclose the security hereof, Maker also
agrees to pay reasonable attorney's fees for the services of
such counsel whether or not suit be brought.
D. PREPAYMENT
The principal balance of this Note may not be
prepaid, in whole or in part, prior to January 1, 2000.
Commencing on January 1, 2000 and at any time thereafter,
provided no default exists under the Mortgage or under this
Note, the principal balance of the Note may be prepaid in
whole, but not in part, on the first day of any calendar
month, upon not less than thirty (30) days or more than forty
five (45) days prior written notice (the "Prepayment Notice")
by certified mail to Payee specifying the date (the
"Prepayment Date") on which prepayment is to be made. Upon
any prepayment of this Note, whether voluntary or
involuntary, including, without limitation, any prepayment
as a result of acceleration or prepayment by court order or
trustee sale, Maker shall pay to Payee (a) all interest
accrued and unpaid on the principal balance of this Note to
and including the Prepayment Date, (b) all other sums due
under the Mortgage, this Note or the Other Security Documents
and (c) a prepayment premium (the "Premium") in an amount
equal to the greater of (i) one percent (1%) of the principal
balance of this Note outstanding after the application of the
Monthly Payment, if any, due on such Prepayment Date or (ii)
the product of (A) a fraction whose numerator is an amount
equal to the portion of the principal balance of the Debt
being prepaid and whose denominator is the entire outstanding
principal balance of the Debt on the date of such prepayment,
multiplied by (B) an amount equal to the remainder obtained
by subtracting (x) an amount equal to the entire outstanding
principal balance of the Debt as of the date of such
prepayment from (y) the present value as of the date of such
prepayment of the remaining scheduled payments of principal
and interest on the entire Debt (including any ballon
payment) determined by discounting such payments at the
Discount Rate (hereinafter defined). The calculation of the
Premium shall be made by Payee (or the then holder of the
Debt, as applicable), and shall, absent manifest error, be
final, conclusive and binding upon all parties.
"Discount Rate" shall mean the rate which, when
compounded monthly, is equivalent to the Treasury Rate
(hereinafter defined) when compounded semi-annually.
"Treasury Rate" shall mean the yield calculated by
the linear interpolation of the yield, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates
under the heading "U.S. government securities/Treasury
constant maturities" for the week ending prior to the date
of the relevant prepayment of the Debt, of U.S. Treasury
constant maturities with a maturity date (one longer and one
shorter) most nearly approximating the maturity date of the
Debt. In the event Release H.15 is no longer published,
Payee (or the then holder of the Debt, as applicable) shall
select a comparable publication to determine the Treasury
Rate.
In no event shall Payee be required to (i) accept
any prepayment hereunder without the payment of the Premium
then due or (ii) reinvest any prepayment proceeds in U.S.
Treasury obligations or otherwise. The Premium shall not be
due and payable for any prepayment (unless such prepayment
occurs after an acceleration of the Debt by Payee) made
during the six (6) month period immediately prior to the
Maturity Date.
Notwithstanding the foregoing: if following the
occurrence of any Event of Default, Maker shall tender
payment of an amount sufficient to satisfy the Debt at any
time prior to a foreclosure sale of the Mortgaged Property
(as defined in the Mortgage), and if at the time of such
tender prepayment of the Debt is not permitted, Maker shall,
in addition to the entire Debt, also pay to Payee a sum equal
to (a) all interest which would have accrued on the
outstanding principal balance of this Note at the Applicable
Interest Rate from the date of such tender to January 1, 2000
and (b) the Premium which would have been payable as of
January 1, 2000.
E. DEFAULT INTEREST
Maker does hereby agree that upon the occurrence
of an Event of Default or upon the failure of Maker to pay
the Debt in full on the Maturity Date, Payee shall be
entitled to receive and Maker shall pay interest ("Default
Interest") on the entire unpaid principal sum at the rate of
(i) four percent (4%) over the Applicable Interest Rate then
in effect or (ii) the maximum rate of interest which Maker
may by law pay, whichever is lower, to be computed from the
occurrence of the Event of Default until the actual receipt
and collection of the Debt (the "Default Interest Rate").
This charge shall be added to the Debt, and shall be deemed
secured by the Mortgage. This clause, however, shall not be
construed as an agreement or privilege to extend the date of
the payment of the Debt, nor as a waiver of any other right
or remedy accruing to Payee by reason of the occurrence of
any Event of Default.
F. SECURITY
This Note is secured by the Mortgage and the Other
Security Documents. The term "Mortgage" as used in this Note
shall mean the First Mortgage and Security Agreement dated as
of the date hereof in the principal sum of $_____________
given by Maker to Payee encumbering the fee estate of Maker
in certain premises located in _______ County, State of
_______, and other property, as more particularly described
therein and intended to be duly recorded in said County. The
term "Other Security Documents" as used in this Note shall
mean all and any of the documents other than this Note or the
Mortgage now or hereafter executed by Maker and/or others and
by or in favor of Payee, which wholly or partially secure or
guarantee payment of this Note. Whenever used, the singular
number shall include the plural, the plural the singular, and
the words "Payee" and "Maker" shall include their respective
successors, assigns, heirs, executors and administrators.
G. SAVINGS CLAUSE
This Note is subject to the express condition that
at no time shall Maker be obligated or required to pay
interest on the principal balance due hereunder at a rate
which could subject Payee to either civil or criminal
liability as a result of being in excess of the maximum
interest rate which Maker is permitted by applicable law to
contract or agree to pay. If by the terms of this Note, Maker
is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of such
maximum rate, the Applicable Interest Rate shall be deemed to
be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to
have been payments in reduction of principal and not on
account of the interest due hereunder.
H. LATE CHARGE
If any sum payable under this Note is not paid on
or before the date on which it is due, without taking into
account any applicable notice or grace period, Maker shall
pay to Payee upon demand an amount equal to the lesser of
five percent (5%) of such unpaid sum or the maximum amount
permitted by applicable law to defray the expenses incurred
by Payee in handling and processing such delinquent payment
and to compensate Payee for the loss of the use of such
delinquent payment and such amount shall be secured by the
Mortgage and the Other Security Documents. Nothing contained
herein is intended to affect the rights of Payee in and to
any Default Interest due to Payee pursuant to the provisions
of paragraph E hereof entitled "Default Interest."
I. MISCELLANEOUS
This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Maker or Payee, but only
by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
If Maker consists of more than one person or party,
the obligations and liabilities of each such person or party
shall be joint and several. The foregoing sentence, however,
is not intended to affect the limited liability of any
limited partner or stockholder of Maker afforded by
applicable partnership or corporate law.
Maker and all others who may become liable for the
payment of all or any part of the Debt do hereby severally
waive presentment and demand for payment, notice of dishonor,
protest and notice of protest and non-payment. No release of
any security for the Debt or extension of time for payment of
this Note or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note, the
Mortgage or the Other Security Documents made by agreement
between Payee and any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or
affect the liability of Maker, and any other who may become
liable for the payment of all or any part of the Debt, under
this Note, the Mortgage or the Other Security Documents.
Maker (and the undersigned representative of Maker,
if any) represents that Maker has full power, authority and
legal right to execute and deliver this Note, the Mortgage
and the Other Security Documents and that this Note, the
Mortgage and the Other Security Documents constitute valid
and binding obligations of Maker.
This Note shall be governed and construed in
accordance with the laws of the State of New York and the
applicable laws of the United States of America.
J. EXCULPATION
Payee shall not enforce the liability and
obligation of Maker to perform and observe the obligations
contained in this Note or the Mortgage by any action or
proceeding wherein a money judgment shall be sought against
Maker or any general or limited partner of Maker (hereinafter
collectively referred to as the "Exculpated Parties"), except
that Payee may bring a foreclosure action, action for
specific performance or other appropriate action or
proceeding to enable Payee to enforce and realize upon this
Note, the Mortgage, the Other Security Documents, and the
interest in the Mortgaged Property, the Rents (as defined in
the Mortgage) and any other collateral given to Payee created
by this Note, the Mortgage and the Other Security Documents;
provided, however, that any judgment in any such action or
proceeding shall be enforceable against the Exculpated
Parties only to the extent of Maker's interest in the
Mortgaged Property, in the Rents and in any other collateral
given to Payee. Payee, by accepting this Note and the
Mortgage, agrees that it shall not sue for, seek or demand
any deficiency judgment against the Exculpated Parties in any
such action or proceeding, under or by reason of or under or
in connection with the Mortgage, the Other Security Documents
or this Note. The provisions of this paragraph shall not,
however, (i) constitute a waiver, release or impairment of
any obligation evidenced or secured by the Mortgage, the
Other Security Documents or this Note; (ii) impair the right
of Payee to name Maker as a party defendant in any action or
suit for judicial foreclosure and sale under the Mortgage;
(iii) affect the validity or enforceability of any guaranty
made in connection with the Mortgage, this Note, or the Other
Security Documents; (iv) impair the right of Payee to obtain
the appointment of a receiver; (v) impair the enforcement of
the First Assignment of Leases and Rents dated the date
hereof given by Maker to Payee executed in connection
herewith; (vi) impair the right of Payee to bring suit with
respect to fraud or intentional misrepresentation by Maker,
the Exculpated Parties or any other person or entity in
connection with the Mortgage, this Note or the Other Security
Documents; (vii) impair the right of Payee to obtain the
Rents received by any of the Exculpated Parties after the
occurrence of an Event of Default; (viii) impair the right of
Payee to bring suit with respect to the Exculpated Parties'
misappropriation of tenant security deposits or Rents
collected in advance; (ix) impair the right of Payee to
obtain insurance proceeds or condemnation awards due to Payee
under the Mortgage; (x) impair the right of Payee to enforce
the provisions of sub-paragraphs 36(g) through 36(j),
inclusive and paragraphs 34 and 35 of the Mortgage against
the Maker (excluding the general and limited partners of
Maker); or (xi) impair the right of Payee to recover any part
of the Debt from the Maker (excluding the general and limited
partners of Maker) following the breach of any covenant
contained in paragraphs 9 or 56 of the Mortgage.
K. [LOCAL LAW PROVISIONS]
1. In the event of any inconsistencies between this
paragraph K and any other provisions of this Note, the terms
and conditions of this paragraph K shall control and be
binding.
[ADD LOCAL PROVISIONS, IF ANY]
[NO FURTHER TEXT ON THIS PAGE]
IN WITNESS WHEREOF, Maker has duly executed this
Note the day and year first above written.
Witnesses: _______________________________
________________, a _______
limited partnership
______________________ By: ___________________________,
Name: ___________________________
a ___________ corporation,
its general partner
______________________ By:_______________________,
Name: Name:
Title:
This instrument prepared by:
Jeffrey J. Temple, Esq.
White & Case
1155 Avenue of the Americas
New York, New York 10036
______________________________________,
a ________ limited partnership
(Mortgagor)
to
SECORE FINANCIAL CORPORATION,
a ____________ corporation
(Mortgagee)
______________________
FIRST MORTGAGE AND
SECURITY AGREEMENT
______________________
Dated: As of December __, 1995
Location:
County:
PREPARED BY AND UPON
RECORDATION RETURN TO:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
THIS FIRST MORTGAGE AND SECURITY AGREEMENT (the
"Mortgage"), is made as of the ____ day of December, 1995,
by ______________________________________________________, a
_______ limited partnership having its principal place of
business at ________________________________________________
_________________________________________________, as
mortgagor ("Mortgagor"), and SECORE FINANCIAL CORPORATION, a
________ corporation, having its principal place of business
at ____ __________________________________________________,
as mortgagee ("Mortgagee").
W I T N E S S E T H:
To secure the payment of an indebtedness in the
principal sum of _________________________________ AND 00/100
DOLLARS ($_____________), lawful money of the United States
of America, to be paid with interest according to a certain
note dated the date hereof made by Mortgagor to Mortgagee
(the note, together with all extensions, renewals or
modifications thereof being hereinafter collectively called
the "Note") (said indebtedness, interest and all other
amounts evidenced and/or secured by the Note, this Mortgage
and the Other Security Documents being collectively called
the "Debt"), Mortgagor has mortgaged, given, granted,
bargained, sold, aliened, enfeoffed, conveyed, confirmed,
pledged, assigned, set over and hypothecated and by these
presents does mortgage, give, grant, bargain, sell, alien,
enfeoff, convey, confirm, pledge, assign, set over and
hypothecate unto Mortgagee, its successors and assigns, the
real property described in Exhibit A attached hereto (the
"Premises") and the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter located
thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and
estate of Mortgagor now owned, or hereafter acquired, in and
to the following property, rights, interests and estates (the
Premises, the Improvements together with the following
property, rights, interests and estates being hereinafter
collectively referred to as the "Mortgaged Property"):
(a) all easements, rights-of-way, strips and gores
of land, streets, ways, alleys, passages, sewer rights,
water, water courses, water rights and powers, and
rights and development rights, and all estates, rights,
titles, interests, privileges, liberties, tenements,
hereditaments and appurtenances of any nature
whatsoever, in any way belonging, relating or pertaining
to the Premises and the Improvements and the reversion
and reversions, remainder and remainders, and all land
lying in the bed of any street, road or avenue, opened
or proposed, in front of or adjoining the Premises, to
the center line thereof and all the estates, rights,
titles, interests, dower and rights of dower, curtesy
and rights of curtesy, property, possession, claim and
demand whatsoever, both at law and in equity, of
Mortgagor of, in and to the Premises and the
Improvements and every part and parcel thereof, with the
appurtenances thereto;
(b) all machinery, equipment, fixtures (including
but not limited to all heating, air conditioning,
plumbing, lighting, communications and elevator
fixtures) and other property of every kind and nature
whatsoever owned by Mortgagor, or in which Mortgagor has
or shall have an interest, now or hereafter located upon
the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or
future management, maintenance, operation and occupancy
of the Premises and the Improvements and all building
equipment, materials and supplies of any nature
whatsoever owned by Mortgagor, or in which Mortgagor has
or shall have an interest, now or hereafter located upon
the Premises and the Improvements, or appurtenant
thereto, or usable in connection with the present or
future management, maintenance, operation and occupancy
of the Premises and the Improvements (hereinafter
collectively called the "Equipment"), and the right,
title and interest of Mortgagor in and to any of the
Equipment which may be subject to any security
interests, as defined in the Uniform Commercial Code,
as adopted and enacted by the state or states where any
of the Mortgaged Property is located (the "Uniform
Commercial Code"), superior in lien to the lien of this
Mortgage;
(c) all awards or payments, including interest
thereon, which may heretofore and hereafter be made with
respect to the Mortgaged Property, whether from the
exercise of the right of eminent domain (including but
not limited to any transfer made in lieu of or in
anticipation of the exercise of said right), or for a
change of grade, or for any other injury to or decrease
in the value of the Mortgaged Property;
(d) all written leases and other rental agreements
(collectively, the "Written Leases"), affecting the use,
enjoyment or occupancy of the Premises and the
Improvements heretofore or hereafter entered into (the
Written Leases and all other similar agreements
hereinafter collectively referred to as the "Leases")
and all rents, revenues, issues and profits (including
all oil and gas or other mineral royalties and bonuses)
from the Premises and the Improvements (the "Rents") and
all proceeds from the sale or other disposition of the
Leases and the right to receive and apply the Rents to
the payment of the Debt;
(e) all proceeds of and any unearned premiums on
any insurance policies covering the Mortgaged Property,
including, without limitation, the right to receive and
apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the
Mortgaged Property;
(f) the right, in the name and on behalf of
Mortgagor, to appear in and defend any action or
proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to
protect the interest of Mortgagee in the Mortgaged
Property;
(g) all right, title and interest of Mortgagor
arising from the operation of the Property in and to all
payments for goods or property sold or leased or for
services rendered, whether or not yet earned by
performance, and not evidenced by an instrument or
chattel paper (hereinafter referred to as "Accounts
Receivable"), including, without limiting the generality
of the foregoing, all rights to payment from any
consumer credit/charge card organization or entity (such
as, or similar to, the organizations or entities which
sponsor and administer the American Express Card, the
Visa Card, the Mastercard, the Carte Blanche Card, or
the Discover Card). Accounts Receivable shall include
those now existing or hereafter created, substitutions
therefor, proceeds (whether cash or noncash, movable or
immovable, tangible or intangible) received upon the
sale, exchange, transfer, collection or other
disposition or substitution thereof and any and all of
the foregoing and proceeds therefrom;
(h) all contract rights, with respect to, or which
may in any way pertain to, the Premises or the business
of the Mortgagor, including, without limitation, all
refunds, rebates, security deposits, or other expectancy
under or from any such account or contract right;
(i) all general intangibles with respect to, or
which may in any way pertain to, the Premises or the
business of the Mortgagor, including, without
limitation, any trade names, or other names under or by
which the Premises may at any time be operated or known,
the good will of the Mortgagor in connection therewith
and the right of the Mortgagor to carry on business
under any or all such name or names and any variant or
variants thereof, insofar as the same may be
transferable by the Mortgagor without breach of any
agreement pursuant to which the Mortgagor may have
obtained its right to use such name or names, and any
and all trademarks, prints, labels, advertising concepts
and literature;
TO HAVE AND TO HOLD the above granted and described
Mortgaged Property unto and to the use and benefit of
Mortgagee, and the successors and assigns of Mortgagee,
forever;
PROVIDED, HOWEVER, these presents are upon the
express condition that, if Mortgagor shall well and truly pay
to Mortgagee the Debt at the time and in the manner provided
in the Note and this Mortgage and shall well and truly abide
by and comply with each and every covenant and condition set
forth herein and in the Note, these presents and the estate
hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and
covenants and agrees with Mortgagee as follows:
PART I
PROVISIONS OF GENERAL APPLICATION
1. Payment of Debt and Incorporation of
Covenants, Conditions and Agreements. Mortgagor will pay
the Debt at the time and in the manner provided in the Note
and in this Mortgage. All the covenants, conditions and
agreements contained in (a) the Note and (b) all and any of
the documents other than the Note or this Mortgage now or
hereafter executed by Mortgagor and/or others and by or in
favor of Mortgagee, which wholly or partially secure or
guaranty payment of the Note including but not limited to the
First Assignment of Leases and Rents (the "Assignment of
Rents") between Mortgagor, as assignor and Mortgagee, as
assignee (collectively, the "Other Security Documents"), are
hereby made a part of this Mortgage to the same extent and
with the same force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that
Mortgagor has good title to the Mortgaged Property and has
the right to mortgage, give, grant, bargain, sell, alien,
enfeoff, convey, confirm, pledge, assign and hypothecate and
grant a security interest in the same and that Mortgagor
possesses an unencumbered fee estate in the Premises and the
Improvements and that it owns the Mortgaged Property free and
clear of all liens, encumbrances and charges whatsoever
except for those exceptions shown in the title insurance
policy insuring the lien of this Mortgage. Mortgagor shall
forever warrant, defend and preserve such title and the
validity and priority of the lien of this Mortgage and shall
forever warrant and defend the same to Mortgagee against the
claims of all persons whomsoever.
3. Insurance. (a) Mortgagor will keep the
Mortgaged Property insured against loss or damage by fire,
flood and such other hazards, risks and matters, as Mortgagee
may from time to time require, including, without limitation,
rental value insurance against the abatement in rent or
business interruption insurance for at least twelve (12)
months, general public liability in an amount not less than
$1,000,000.00, including excess liability coverage and
umbrella liability insurance, boiler and machinery insurance,
and earthquake and/or hurricane insurance. Mortgagor shall
pay the premiums for such insurance (the "Insurance
Premiums") as the same become due and payable. All policies
of insurance (the "Policies") shall (i) be issued under forms
acceptable to Mortgagee (containing the standard New York
mortgagee non-contribution clause naming the Mortgagee as the
insured mortgagee and the person to which all payments made
by the Qualified Insurer (hereinafter defined) shall be
paid); (ii) provide for at least thirty (30) days prior
written notice to the Mortgagee of any cancellation,
reduction in an amount or change in insurance coverage; (iii)
contain a replacement cost endorsement for 100% of all
replacement costs relating to the Improvements (without
deduction for depreciation); (iv) contain an "enforcement" or
"Law and Ordinance" endorsement in form and substance
satisfactory to Mortgagee; and (v) be issued by insurers
qualified under the laws of the State in which the Mortgaged
Property is located, duly authorized and licensed to transact
insurance business in such State and reflecting a claims-
paying ability of A or better as determined by Standard &
Poors' Corporation ("S&P"), Duff and Phelps Credit Rating Co.
("Duff"), if rated by Duff, Fitch Investors Service, Inc.
("Fitch"), if rated by Fitch, and a claims paying ability of
A2 as determined by Moody's Investors Service, Inc.
("Moody's"), if rated by Moody's (each such insurer
hereinafter referred to as a "Qualified Insurer",
collectively "Qualified Insurers"). Such insurance shall not
be invalidated due to the use or occupancy of the Property
for purposes more hazardous than are permitted by the policy.
The maximum amount deductible permitted under each insurance
policy shall be such as is customarily carried by owners or
managing agents operating first class multi-family residences
of similar type and size of the Mortgaged Property.
Mortgagor shall deliver the Policies, or duplicate originals
of the same, to Mortgagee. Not later than sixty (60) days
prior to the expiration date of each of the Policies,
Mortgagor will deliver evidence satisfactory to Mortgagee of
the renewal of each of the Policies. The Mortgagor shall not
insure the Mortgaged Property under any insurance policy
other than as expressly set forth herein.
(a) If the Mortgaged Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty,
Mortgagor shall give prompt notice thereof to Mortgagee. The
net amount of all insurance proceeds received by Mortgagee
with respect to such damage or destruction, shall be held in
a segregated account (the "Net Proceeds Account") and
invested in an Eligible Investment (hereinafter defined).
Mortgagee shall be entitled to deduct from such insurance
proceeds all of its administrative costs and expenses
reasonably incurred in connection with the investing and
collection of such insurance proceeds, and the balance if any
(the "Net Proceeds") shall be disbursed by Mortgagee in
accordance with the terms and conditions set forth herein to
pay for the costs and expenses of the Restoration
(hereinafter defined) provided (i) no Event of Default has
occurred and remains uncured under this Mortgage, the Note or
any of the Other Security Documents, (ii) Mortgagor proceeds
promptly after the insurance claims are settled with the
restoration, replacement, rebuilding or repair of the
Mortgaged Property as nearly as possible to the condition the
Mortgaged Property was in immediately prior to such fire or
other casualty (the "Restoration"), (iii) the Restoration
shall be done in compliance with all applicable laws, rules
and regulations, and, following the Restoration, the
Mortgaged Property shall be permitted under all applicable
zoning laws to be used for, and shall continue to be used
for, all purposes associated with multi-family residences,
(iv) a set of the plans and specifications in connection with
the Restoration shall be submitted to Mortgagee and shall be
acceptable to Mortgagee in all respects, (v) all costs and
expenses incurred by Mortgagee in connection with making the
Net Proceeds available for the Restoration of the Mortgaged
Property including, without limitation, counsel fees and
inspecting engineer fees incurred by Mortgagee, shall be paid
by Mortgagor, (vi) rental loss insurance is available to
offset fully any abatement of rent to which any tenant of the
Mortgaged Property may be entitled or any rent loss arising
out of the cancellation of any Lease as a result of the
casualty, throughout the Restoration and a reasonable-lease-
up period following the Restoration, and (vii) in Mortgagee's
judgment, the Restoration must be able to be completed within
one (1) year after the loss and at least one (1) year prior
to the Maturity Date of the Note. The term "Eligible
Investment" shall mean any investment approved by Mortgagee
in its sole discretion.
(b) The Net Proceeds shall be held in trust in the
Net Proceeds Account. The Net Proceeds shall be paid by
Mortgagee (or by a disbursing agent ("Depository") selected
by Mortgagee), to, or as directed by, Mortgagor from time to
time during the course of the Restoration, upon receipt of
evidence, and certification from Mortgagor, satisfactory to
Mortgagee, that (i) all materials installed and work and
labor performed (except to the extent they are to be paid for
out of the requested payment) in connection with the
Restoration have been paid for in full, (ii) no notices of
intention, mechanics' or other liens or encumbrances on the
Mortgaged Property arising out of the Restoration exist, and
(iii) the balance of the Net Proceeds plus the balance of any
deficiency deposits given by Mortgagor to Mortgagee or
Depository pursuant to the provisions of this paragraph
hereinafter set forth shall be sufficient to pay in full the
balance of the cost of the Restoration. Mortgagor shall pay
all fees and expenses of the Depository in connection with
the above.
(c) Notwithstanding anything to the contrary
contained herein, if the Net Proceeds shall be less than
$50,000.00, only one disbursement shall be required upon the
completion of the Restoration to the satisfaction of
Mortgagee. If the Net Proceeds shall be $50,000.00 or more,
Mortgagee shall disburse the Net Proceeds as provided above,
however, in no event shall Mortgagee be required to disburse
such Net Proceeds, or any portion thereof, more often than
once every thirty (30) days. If at any time the Net
Proceeds, or the undisbursed balance thereof, shall not be
sufficient to pay in full the balance of the cost of the
Restoration, Mortgagor shall deposit the deficiency with
Mortgagee or Depositary before any further disbursement of
the Net Proceeds shall be made.
(d) Any amount of the Net Proceeds received by
Mortgagee and not required to be disbursed for the
Restoration pursuant to the provisions of this paragraph
hereinabove set forth shall be retained and applied by
Mortgagee toward the payment of the Debt whether or not then
due and payable in such priority and proportions as Mortgagee
in its discretion shall deem proper. Upon the receipt and
retention by Mortgagee of such insurance proceeds, the lien
of this Mortgage shall be reduced only by the amount thereof
received and retained by Mortgagee and actually applied by
Mortgagee in reduction of the Debt.
(e) Notwithstanding anything to the contrary
contained herein, Mortgagee shall not be obligated to make
the Net Proceeds available for Restoration of the Mortgaged
Property unless the principal balance of the Note following
the completion of the Restoration (assuming the amount of Net
Proceeds received by Mortgagee in excess of the cost of the
Restoration (as estimated by Mortgagee) is applied to the
prepayment of the Note) will be in an amount sufficient to
cause (i) the Debt Service Coverage Ratio (hereinafter
defined) applicable to the Mortgaged Property immediately
following the Restoration to be not less than 1.3 to 1.0 and
(ii) in the event of any Restoration involving Net Proceeds
of more than $250,000.00, the ratio of (a) the appraised
value of the Mortgaged Property after completion of the
Restoration (as determined by an independent third-party
appraiser holding an MAI designation and having a national
practice and at least ten (10) years real estate experience
appraising properties of a similar nature and type as the
Mortgaged Property) to (b) the then outstanding principal
balance of the Note to be equal to or greater than the
Minimum Loan to Value Ratio (hereinafter defined). The term
"Minimum Loan to Value Ratio" means a ratio equal to the
lesser of (i) 1.33 to 1.0 or (ii) the ratio of (a) the
appraised value of the Mortgaged Property on the date hereof
to (b) the then outstanding principal balance of the Note.
The fee for such appraisal shall be paid for by the
Mortgagor.
4. Payment of Taxes, etc. Mortgagor shall pay
all taxes, assessments, water rates and sewer rents, now or
hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Taxes") and all ground
rents, maintenance charges, other governmental impositions,
and other charges, including, without limitation, vault
charges and license fees for the use of vaults, chutes and
similar areas adjoining the Premises, now or hereafter levied
or assessed or imposed against the Mortgaged Property or any
part thereof (the "Other Charges") as same become due and
payable. Upon written request from Mortgagee, Mortgagor will
deliver to Mortgagee evidence satisfactory to Mortgagee that
the Taxes and Other Charges have been so paid or are not then
delinquent. Mortgagor shall not suffer and shall promptly
cause to be paid and discharged any lien or charge whatsoever
which may be or become a lien or charge against the Mortgaged
Property, and shall promptly pay for all utility services
provided to the Mortgaged Property. Mortgagor shall furnish
to Mortgagee receipts for the payment of the Taxes, Other
Charges and said utility services prior to the date the same
shall become delinquent.
Notwithstanding the above, after prior written
notice to Mortgagee, Mortgagor, at its own expense, may
contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any
of the Taxes, provided that (i) no Event of Default under the
Note or this Mortgage shall have occurred and be continuing,
(ii) such proceeding shall suspend the collection of the
Taxes from Mortgagor and from the Mortgaged Property, (iii)
such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to
which Mortgagor is subject and shall not constitute a default
thereunder, (iv) neither the Mortgaged Property nor any part
thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost, (v) Mortgagor shall
have set aside adequate reserves for the payment of the
Taxes, together with all interest and penalties thereon, and
(vi) Mortgagor shall have furnished such security as may be
reasonably required in the proceeding, or as may be requested
by Mortgagee to insure the payment of any such Taxes,
together with all interest and penalties thereon.
1. Escrow Fund. Mortgagor will comply with any
requirement imposed by any Rating Agency (as hereinafter
defined) as a condition of its initial rating, the Federal
National Mortgage Association ("FNMA") or the Federal Home
Loan Mortgage Corporation ("Freddie Mac"), with respect to
the establishment of an escrow for Taxes and Insurance.
2. Condemnation. (a) Mortgagor shall give
Mortgagee prompt notice of the actual or threatened
commencement of any condemnation or eminent domain proceeding
and shall deliver to Mortgagee copies of any and all papers
served in connection with such proceedings. If less than 25%
of the land constituting the Mortgaged Property is taken,
then the net amount of all awards and payments received by
Mortgagee with respect to such taking shall be held in a
segregated account (the "Net Awards Account") and invested in
an Eligible Investment. Mortgagee shall be entitled to
deduct from the condemnation award all of its administrative
costs and expenses incurred in connection with investing and
collecting such condemnation award and the balance, if any
(hereinafter referred to as the "Net Award"), will be
disbursed by Mortgagee to pay for the costs and expenses of
the Condemnation Restoration (hereinafter defined), provided
(i) Mortgagor is not in default under this Mortgage, the Note
or any of the Other Security Documents, (ii) Mortgagor
proceeds promptly after the making of any award of payment
for such taking with the restoration, replacement, rebuilding
or repair of the Mortgaged Property as nearly as possible to
the condition the Mortgaged Property was in immediately prior
to such taking (the "Condemnation Restoration"), (iii) the
Condemnation Restoration shall be done in compliance with all
applicable laws, rules and regulations, and, following the
Condemnation Restoration, the Mortgaged Property shall be
permitted under all applicable zoning laws to be used for,
and shall continue to be used for, all purposes associated
with multi-family residences, (iv) a set of plans and
specifications in connection with the Condemnation
Restoration shall be submitted to Mortgagee and shall be
satisfactory to Mortgagee in all respects, (v) Mortgagor
shall have reimbursed Mortgagee for all costs and expenses
incurred by Mortgagee in connection with making the Net Award
available for the Condemnation Restoration of the Mortgaged
Property, including, without limitation, counsel fees,
inspecting engineer fees and appraisal fees incurred by
Mortgagee, (vi) rental loss proceeds are available to offset
in full any loss in rents throughout the Condemnation
Restoration and a reasonable lease-up period following the
completion of the Condemnation Restoration and (vii) in the
opinion of Mortgagee the Condemnation Restoration of the
Mortgaged Property can be completed within one (1) year after
the taking and at least one (1) year prior to the maturity
date of the Note.
(a) The Net Award shall be held in trust by
Mortgagee in the Net Awards Account and shall be paid by
Mortgagee or a Depository designated by Mortgagee to, or as
directed by, Mortgagor from time to time during the course
of the Condemnation Restoration, upon receipt of evidence
satisfactory to Mortgagee, that (i) all materials installed
and work and labor performed (except to the extent they are
to be paid for out of the requested payment) in connection
with the Condemnation Restoration have been paid for in full,
(ii) there exist no notices of intention, mechanics' or other
liens or encumbrances on the Mortgaged Property arising out
of the Condemnation Restoration, and (iii) the balance of the
Net Award plus the balance of any deficiency deposits given
by Mortgagor to Mortgagee or Depositary pursuant to the
provisions of this paragraph hereinafter set forth shall be
sufficient to pay in full the balance of the cost of the
Condemnation Restoration.
(b) Notwithstanding anything to the contrary
contained herein, Mortgagee shall not be obligated to make
the Net Award available for the Condemnation Restoration of
the Mortgaged Property unless the principal balance of the
Note after the completion of the Condemnation Restoration
(assuming the amount of the Net Award received by Mortgagee
in excess of the cost of the Condemnation Restoration as
estimated by Mortgagee is applied to the prepayment of the
Note) will be sufficient to cause (i) the Debt Service
Coverage Ratio applicable to the Mortgaged Property
immediately following the Condemnation Restoration to be not
less than 1.3 to 1.0 and (ii) in the event of any
Condemnation Restoration involving Net Award of more than
$250,000.00, the ratio of (a) the appraised value of the
Mortgaged Property after completion of the Condemnation
Restoration (as determined by an independent third-party
appraiser holding an MAI designation and having a national
practice and at least ten (10) years real estate experience
appraising properties of a similar nature and type as the
Mortgaged Property) to (b) the then outstanding principal
balance of the Note to be equal to or greater than the
Minimum Loan to Value Ratio.
(c) Notwithstanding anything to the contrary
contained herein, if the Net Award shall be less than
$50,000.00, only one such disbursement shall be required upon
the completion of the Condemnation Restoration to the
satisfaction of Mortgagee. If the Net Award shall be
$50,000.00 or more, Mortgagee shall disburse the Net Award
as provided above, however, in no event shall Mortgagee be
required to disburse such Net Award, or any portion thereof,
more often than once every thirty (30) days. If at any time
the Net Award, or the undisbursed balance thereof, shall not
in the opinion of Mortgagee be sufficient to pay in full the
balance of the cost of Condemnation Restoration, Mortgagor
shall deposit such deficiency with Mortgagee or Depository
before any further disbursement of the Net Award shall be
made.
(d) Notwithstanding anything to the contrary
contained herein, and notwithstanding any taking by any
public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking),
Mortgagor shall continue to pay the Debt at the time and in
the manner provided for in the Note and in this Mortgage and
the Debt shall not be reduced until any award or payment
therefor shall have been actually received and applied in
accordance with this paragraph 6. Mortgagee shall not be
limited to the interest paid on the award by the condemning
authority but shall be entitled to receive out of the award
interest at the rate or rates provided herein and in the
Note.
(e) Any amount of the Net Award received by
Mortgagee and not required to be disbursed for the
Condemnation Restoration pursuant to the provisions of this
paragraph hereinabove set forth may be retained and applied
by Mortgagee to the discharge of the Debt, whether or not
then due and payable, in such priority and proportions as
Mortgagee in its discretion shall deem proper. If the
Mortgaged Property is sold through foreclosure or otherwise
prior to the receipt by Mortgagee of such award or payment,
Mortgagee shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or
denied, to receive such award or payment or a portion thereof
sufficient to pay the Debt, whichever is less. Mortgagor
shall file and prosecute its claim or claims for any such
award or payment in good faith and with due diligence and
cause the same to be collected and paid over to Mortgagee,
and Mortgagor hereby irrevocably authorizes and empowers
Mortgagee, in the name of Mortgagor or otherwise, to collect
and receipt for any such award or payment and to file and
prosecute such claim or claims, and although it is hereby
expressly agreed that the same shall not be necessary in any
event, Mortgagor shall upon demand of Mortgagee make, execute
and deliver any and all assignments and other instruments
sufficient for the purpose of assigning any such award or
payment to Mortgagee, free and clear of any encumbrances of
any kind or nature whatsoever.
3. Leases and Rents. (a) Mortgagee is hereby
granted and assigned by Mortgagor the right to enter the
Mortgaged Property for the purpose of enforcing its interest
in the Leases and the Rents, this Mortgage constituting a
present, absolute assignment of the Leases and the Rents.
Nevertheless, subject to the terms of this paragraph 7,
Mortgagee grants to Mortgagor a revocable license to operate
and manage the Mortgaged Property and to collect the Rents.
Mortgagor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums. Upon or at any time after
an Event of Default, the license granted to Mortgagor herein
may be revoked by Mortgagee, and Mortgagee may enter upon the
Mortgaged Property, and collect, retain and apply the Rents
toward payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper.
(a) All Written Leases shall be written on the
standard form of lease which has been approved by Mortgagee.
Upon written request from Mortgagee, Mortgagor shall furnish
Mortgagee with executed copies of all Leases and all
modifications thereto as soon as may be practicable. No
material changes may be made to the Mortgagee-approved
standard forms except as may be required by applicable law.
In addition, all renewals of Leases and all proposed leases
shall provide for rental rates comparable to existing local
market rates and shall be arms-length transactions.
Mortgagor shall not enter into any lease having a term of
more than three (3) years. All Leases must be Written Leases
unless such Leases create periodic tenancies on a month to
month basis or for a shorter period and are terminable upon
not more than thirty (30) days' notice. [All Leases shall
provide that they are subordinate to this Mortgage and that
the lessee agrees to attorn to Mortgagee.] Mortgagor (i)
shall observe and perform all the obligations imposed upon
the lessor under the Leases and shall not do or permit to be
done anything to impair the value of the Leases as security
for the Debt; (ii) shall enforce all of the terms, covenants
and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed; (iii) shall
not collect any of the Rents more than one (1) month in
advance; (iv) shall not execute any other assignment of
lessor's interest in the Leases or the Rents; (v) shall not
materially alter, modify or change the terms of the Leases,
or cancel or terminate the Leases or accept a surrender
thereof or convey or transfer or suffer or permit a
conveyance or transfer of the Premises or of any interest
therein so as to effect a merger of the estates and rights
of, or a termination or diminution of the obligations of,
lessees thereunder, except that Mortgagor may terminate any
Lease in exercising its rights as landlord thereunder upon a
default by the tenant under said Lease; (vi) shall not alter,
modify or change the terms of any guaranty of the Leases or
cancel or terminate such guaranty; (vii) shall not consent to
any assignment of or subletting under the Leases not in
accordance with their terms; and (viii) shall execute and
deliver all such further assurances, confirmations and
assignments in connection with the Mortgaged Property as
Mortgagee shall from time to time require.
4. Maintenance of Mortgaged Property. (a)
Mortgagor shall cause the Mortgaged Property to be maintained
in a good and safe condition and repair. The Improvements
and the Equipment shall not be removed, demolished or
materially altered (except for normal replacement of the
Equipment). Mortgagor shall promptly comply with all laws,
orders and ordinances affecting the Mortgaged Property, or
the use thereof. Mortgagor shall promptly repair, replace or
rebuild any part of the Mortgaged Property which may be
destroyed by any casualty, or become damaged, worn or
dilapidated or which may be affected by any proceeding of the
character referred to in paragraph 6 hereof and shall
complete and pay for any structure at any time in the process
of construction or repair on the Premises. Mortgagor shall
not initiate, join in, acquiesce in, or consent to any change
in any private restrictive covenant, zoning law or other
public or private restriction, limiting or otherwise changing
the uses which may be made of the Mortgaged Property or any
part thereof. If under applicable zoning provisions the use
of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned
without the express written consent of Mortgagee.
(a) Mortgagor hereby represents that all
inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the
Mortgaged Property and with respect to the use and occupancy
of the same, including but not limited to, certificates of
occupancy and fire underwriter certificates, have been made
by or obtained from the appropriate governmental authorities.
Mortgagor hereby represents, warrants and covenants that it
has obtained and will maintain all permits and licenses
required to operate the Mortgaged Property as a multi-family
residential development. Mortgagor has and shall continue to
comply in all material respects with and make all payments
required under all laws, ordinances, regulations, covenants,
conditions and restrictions now or hereafter affecting the
Mortgaged Property or any part thereof or the business or the
activity conducted thereon. Mortgagor will not commit,
suffer, permit or allow any act to be done in or upon the
Mortgaged Property in violation of any law, ordinance or
regulation. Mortgagor is in material compliance and shall
continue to comply in all material respects with all existing
and future requirements of all governmental authorities
having jurisdiction over the Mortgaged Property.
5. Transfer or Encumbrance of the Mortgaged
Property. (a) Mortgagor acknowledges that Mortgagee has
examined and relied on the creditworthiness of Mortgagor and
the experience of Mortgagor in owning properties such as the
Mortgaged Property in agreeing to make the loan secured
hereby, and that Mortgagee will continue to rely on
Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as
security for repayment of the Debt. Mortgagor acknowledges
that Mortgagee has a valid interest in maintaining the value
of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can
recover the Debt by a sale of the Mortgaged Property. Except
as otherwise provided in subparagraph 9(c) hereof, Mortgagor
shall not sell, convey, alien, mortgage, encumber, pledge or
otherwise transfer the Mortgaged Property or any part
thereof, or permit the Mortgaged Property or any part thereof
to be sold, conveyed, aliened, mortgaged, encumbered, pledged
or otherwise transferred.
(a) A sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer within the meaning of this
paragraph 9 shall be deemed to include (i) an installment
sales agreement wherein Mortgagor agrees to sell the
Mortgaged Property or any part thereof for a price to be paid
in installments; (ii) an agreement by Mortgagor leasing all
or a substantial part of the Mortgaged Property for other
than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security
interest in, Mortgagor's right, title and interest in and to
any Leases or any Rents; (iii) if Mortgagor or any general
partner of Mortgagor is a corporation, the voluntary or
involuntary sale, conveyance or transfer of such
corporation's stock or the creation or issuance of new stock
by which an aggregate of more than 49% of such corporation's
stock shall be vested in a party or parties who are not now
stockholders, except for any sale, conveyance or transfer of
such corporation's stock to an Affiliate provided Mortgagee
shall have received prior written notice of such transfer;
(iv) if Mortgagor or any general partner of Mortgagor is a
limited or general partnership or joint venture, the change,
removal or resignation of a general partner or managing
partner or the transfer of the partnership interest of any
general partner or managing partner, except for any transfer
of such partnership interest to an Affiliate, and excluding
the removal or resignation of any non-Affiliate or non-
managing general partner where the managing general partner
shall remain following such removal or resignation, provided,
in either case, Mortgagee shall have received prior written
notice of such transfer resignation or removal; (v) any
transfer of any interest by the Manager (hereinafter defined)
other than as permitted under paragraph 54; and (vi) any
transfer of the beneficial interest of any Mortgagor in any
trust holding legal title to the Mortgaged Property.
(b) Notwithstanding anything to the contrary
contained herein:
(i) Upon sixty (60) days prior written notice to
Mortgagee, Mortgagor shall have the limited right
to transfer legal title to the Mortgaged Property
to a Single Purpose Entity Transferee (hereinafter
defined) provided (a) such Single Purpose Entity
Transferee assumes all of the obligations of the
Mortgagor under this Mortgage, the Note and the
Other Security Documents in a manner satisfactory
to Mortgagee in all respects, including, without
limitation, by entering into an assumption
agreement with Mortgagor and Mortgagee in form and
substance reasonably satisfactory to Mortgagee (an
"Assumption Agreement"), (b) the Single Purpose
Entity Transferee shall have been newly formed
exclusively and solely for the purpose of owning
and operating the Mortgaged Property and shall
have been engaged in no other business activities
prior to the transfer of title to such Single
Purpose Entity Transferee and must be a "United
States person" as defined by Section 7701(a)(30)
of the United States Internal Revenue Code of
1986, as amended, (c) the Single Purpose Entity
Transferee or the management agent it employs to
manage the Mortgaged Property shall have Adequate
Real Estate Experience (hereinafter defined), (d)
the Single Purpose Entity Transferee shall deliver
to Mortgagee evidence of the fulfillment of the
requirements of subsection (b) above, (e) the
Single Purpose Entity Transferee shall deliver any
and all organizational documentation requested by
Mortgagee, which documentation shall be reasonably
satisfactory to Mortgagee in all respects, and
shall deliver an opinion of counsel of the Single
Purpose Entity Transferee covering the Assumption
Agreement in form and substance similar to the due
execution, delivery and enforcement opinions
delivered by counsel to Mortgagor in connection
with the execution of this Mortgage, (f) the
Single Purpose Entity Transferee shall deliver any
certificates and opinions of counsel, enter into
agreements and covenants, or cause each of its
general partners (or any other principal thereof)
to deliver certificates, enter into agreements and
covenants, which certificates, agreements,
opinions of counsel and covenants shall be similar
in nature to those delivered, executed and made by
Mortgagor or any general partner of Mortgagor in
connection with the execution of this Mortgage or
the Securitization (hereinafter defined) relating
to the single purpose nature of the Single Purpose
Entity Transferee or otherwise, and (g) Mortgagor
shall deliver, at its sole cost and expense, an
endorsement to the existing title policy insuring
the Mortgage as modified by the Assumption
Agreement as a valid first lien on the Mortgaged
Property, naming the Single Purpose Entity
Transferee as owner of the fee estate of the
Mortgaged Property, which endorsement shall insure
that, as of the date of the recording of the
Assumption Agreement, the Mortgaged Property shall
not be subject to any additional exceptions or
liens other than those contained in the original
title policy insuring the lien of this Mortgage
and delivered in connection with the execution of
this Mortgage. Any and all costs incurred in
connection with the above (including Mortgagee's
counsel's fees and disbursements and expenses and
all recording fees, mortgage or intangible taxes,
and title insurance premiums), shall be paid by
Mortgagor. Mortgagee shall respond to Mortgagor's
request to transfer legal title to the Mortgaged
Property within forty-five (45) days of delivery
of all of the information required by subsections
(a)-(g) above. The failure of Mortgagee to
respond to such request shall not be deemed
consent to the transfer.
For purposes of this Mortgage, the term "Adequate Real
Estate Experience" shall mean an entity which manages
first class multi-family residential complexes of a type
and size similar to the Mortgaged Property, and which
manages in the aggregate no less than 1,000 residential
units at the time of such transfer.
For purposes of this Mortgage, the term "Single Purpose
Entity Transferee" shall mean an entity that:
A. shall not own any asset other than the
Mortgaged Property;
B. shall not engage in any business other
than those necessary for the ownership,
management or operation of the Mortgaged
Property and any such business transactions
with any general partner, principal or
Affiliate of the Single Purpose Entity
Transferee or any affiliate of the general
partner of the Single Purpose Entity
Transferee shall be entered into upon terms
and conditions that are intrinsically fair
and substantially similar to those that would
be available on an arms-length basis with
third parties other than an Affiliate of the
Single Purpose Entity Transferee or the
general partner or an Affiliate of the
general partner of the Single Purpose Entity
Transferee;
C. shall not incur any debt, secured or
unsecured, direct or contingent
(including guaranteeing any obligation),
other than the Debt;
D. shall not make any loans or advances to
any third party (including any
Affiliates of such Single Purpose Entity
Transferee or the general partner or an
Affiliate of the general partner of such
Single Purpose Entity Transferee);
E. shall be solvent and pay its debts from
its assets as the same become due;
F. shall do or cause to be done all things
necessary to preserve its existence, and
shall not amend, modify or otherwise change
its partnership certificate, partnership
agreement, articles of incorporation or by-
laws in a manner which adversely affects such
Single Purpose Entity Transferee's existence
as a single purpose entity;
G. shall maintain books and records and
bank accounts separate from those of its
Affiliates, including its general partners;
H. shall be, and at all times shall hold
itself out to the public as, a legal entity
separate and distinct from any other entity
(including any affiliate thereof, including
the general partner or any affiliate of the
general partner of such Single Purpose Entity
Transferee);
I. shall file its own tax returns;
J. shall maintain adequate capital for the
normal obligations reasonably foreseeable in
a business of its size and character and in
light of its contemplated business
operations;
K. shall not seek the dissolution or
winding up, in whole or in part, of the
Single Purpose Entity Transferee or
voluntarily file, or consent to the filing
of, a petition for bankruptcy,
reorganization, assignment for the benefit of
creditors or similar proceeding;
L. shall not commingle its funds or other
assets with any other person or entity, and
M. shall have at least one member of its
board of directors (if a corporation) that is
not affiliated with or employed by National
Property Investors, Inc. or any of its
Affiliates.
For purposes of this Mortgage, the term
"Affiliate" shall mean a corporation or other
entity which shall (i) control, (ii) be
controlled by, or (iii) be under common
control with either Mortgagor, any general
partner of Mortgagor, or National Property
Investors, Inc.
(ii) The consummation of the transactions contemplated
pursuant to that certain Partnership Units Purchase
Agreement, dated August 17, 1995, among National
Property Investors, Inc. and related entities and
Insignia Financial Group, Inc. and related entities, and
certain other agreements relating thereto shall not be
deemed to be a transfer in violation of the provisions
of this paragraph 9
(iii) Mortgagor may sell, convey or transfer stock or
partnership interest as described in subsections
9(b)(iii) and (iv) hereof by Mortgagor or the general
partner of Mortgagor, provided that:
1. No Event of Default shall have occurred
and be continuing;
2. The transferee shall be a person, firm
or corporation whose character,
financial strength, stability and
experience shall be similar to the
existing Mortgagor and any general
partner of Mortgagor as of the date
hereof and otherwise reasonably
satisfactory to Mortgagee;
3. The transferee shall deliver such
organizational documentation and other
material necessary to establish the
transfer; and
4. The transferee shall pay the costs and
expenses of Mortgagee and Mortgagee's
counsel incurred in connection with the
review and approval of such stock or
partnership transfer.
(a) Mortgagee shall not be required to demonstrate
any actual impairment of its security or any increased risk
of default hereunder in order to declare the Debt immediately
due and payable upon Mortgagor's sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property without Mortgagee's consent. This
provision shall apply to every sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged
Property regardless of whether voluntary or not, or whether
or not Mortgagee has consented to any previous sale,
conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Mortgaged Property.
1. Estoppel Certificates. (a) After request by
Mortgagee, Mortgagor, within ten (10) days, shall furnish
Mortgagee with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount
of the Note, (ii) the unpaid principal amount of the Note,
(iii) the rate of interest of the Note, (iv) the date
installments of interest and/or principal were last paid, (v)
any offsets or defenses to the payment of the Debt, if any,
and (vi) that the Note and this Mortgage are valid, legal and
binding obligations and have not been modified or if
modified, giving particulars of such modification.
2. Changes in the Laws Regarding Taxation. If
any law is enacted or adopted or amended after the date of
this Mortgage which deducts the Debt from the value of the
Mortgaged Property for the purpose of taxation or which
imposes a tax, either directly or indirectly, on the Debt or
Mortgagee's interest in the Mortgaged Property, Mortgagor
will pay such tax, with interest and penalties thereon, if
any. In the event Mortgagee is advised by counsel chosen by
it that the payment of such tax or interest and penalties by
Mortgagor would be unlawful or taxable to Mortgagee or
unenforceable or provide the basis for a defense of usury,
then in any such event, Mortgagee shall have the option, by
written notice of not less than ninety (90) days, to declare
the Debt immediately due and payable.
3. No Credits on Account of the Debt. Mortgagor
will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or
Other Charges assessed against the Mortgaged Property, or any
part thereof, and no deduction shall otherwise be made or
claimed from the assessed value of the Mortgaged Property, or
any part thereof, for real estate tax purposes by reason of
this Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Mortgagee shall have
the option, by written notice of not less than ninety (90)
days, to declare the Debt immediately due and payable.
4. Documentary Stamps. If at any time the United
States of America, any State thereof or any subdivision of
any such State shall require revenue or other stamps to be
affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with
interest and penalties thereon, if any.
5. Usury Laws. This Mortgage and the Note are
subject to the express condition that at no time shall
Mortgagor be obligated or required to pay interest on the
Debt at a rate which could subject the holder of the Note to
either civil or criminal liability as a result of being in
excess of the maximum interest rate which Mortgagor is
permitted by applicable law to contract or agree to pay. If
by the terms of this Mortgage or the Note, Mortgagor is at
any time required or obligated to pay interest on the Debt
at a rate in excess of such maximum rate, the rate of
interest under the same shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall
be computed at such maximum rate and all prior interest
payments in excess of such maximum rate shall be applied and
shall be deemed to have been payments in reduction of the
principal balance of the Note.
6. Books and Records. Mortgagor shall keep
adequate books and records of account which accurately
reflect the operations of, and income and expenses
attributable to, the Mortgaged Property and furnish to
Mortgagee the following statements, all of which shall be in
form and substance acceptable to Mortgagee:
(i) monthly and an annual occupancy
statement listing each and every
Lease, identifying the leased premises,
names of all tenants, monthly rental and
all other charges payable under the
Lease, date to which paid, date of
occupancy, date of expiration, any and
every special provision, concession or
inducement granted to tenants and such
other information as is reasonably
requested by Mortgagee, signed, dated
and certified as true and accurate by
the general partner of Mortgagor and
Mortgagor;
(ii) monthly and an annual operating
statement of the operation of the
Mortgaged Property in a form pre-
approved by Mortgagee and otherwise
satisfactory to Mortgagee, showing in
reasonable detail total revenues
received and total expenses, prepared
and certified by the general partner of
Mortgagor and Mortgagor;
(iii) an annual balance sheet and profit
and loss statement of Mortgagor,
prepared and certified by the general
partner of Mortgagor and Mortgagor
within ninety (90) days after the close
of each fiscal year; and
(iv) such annual and monthly balance
sheets and profit and loss
statements and other financial
statements as may, from time to time, be
required by Mortgagee.
7. Performance of Other Agreements. Mortgagor
shall observe and perform each and every term to be observed
or performed by Mortgagor pursuant to the terms of any
agreement or recorded instrument affecting or pertaining to
the Mortgaged Property.
8. Further Acts, etc. Mortgagor will, at the
cost of Mortgagor, and without expense to Mortgagee, do,
execute, acknowledge and deliver all and every such further
acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Mortgagee shall,
from time to time, require, for the better assuring,
conveying, assigning, transferring, and confirming unto
Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, aliened, enfeoffed, conveyed,
confirmed, pledged, assigned and hypothecated or intended now
or hereafter so to be, or which Mortgagor may be or may
hereafter become bound to convey or assign to Mortgagee, or
for carrying out the intention or facilitating the
performance of the terms of this Mortgage or for filing,
registering or recording this Mortgage. Mortgagor on demand,
will execute and deliver and hereby authorizes Mortgagee to
execute in the name of Mortgagor or without the signature of
Mortgagor to the extent Mortgagee may lawfully do so, one or
more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor
grants to Mortgagee an irrevocable power of attorney coupled
with an interest for the purpose of perfecting any and all
rights and remedies available to Mortgagee at law and in
equity pursuant to the terms of the Note, this Mortgage or
the Other Security Documents, including without limitation
such rights and remedies available to Mortgagee pursuant to
this paragraph 17.
9. Recording of Mortgage, etc. Mortgagor
forthwith upon the execution and delivery of this Mortgage
and thereafter, from time to time, will cause this Mortgage,
and any security instrument creating a lien or security
interest or evidencing the lien hereof upon the Mortgaged
Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such
places as may be required by any present or future law in
order to publish notice of and fully to protect the lien or
security interest hereof upon, and the interest of Mortgagee
in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to
the preparation, execution and acknowledgment of this
Mortgage, any mortgage supplemental hereto, any security
instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all federal, state,
county and municipal, taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution
and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged
Property or any instrument of further assurance, except where
prohibited by law so to do. Mortgagor shall hold harmless
and indemnify Mortgagee, its successors and assigns, against
any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
10. Prepayment. If permitted by the Note, the
Debt may be prepaid in accordance with the terms thereof.
11. Events of Default. The Mortgagee may declare
the Debt immediately due and payable upon any one or more of
the following events ("Event of Default"):
(a) if any portion of the Debt is not paid within
ten (10) days after written notice is delivered by the
Mortgagee notifying Mortgagor that the same is overdue;
(b) except as otherwise provided in paragraph 4
hereof, if any of the Taxes or Other Charges is not paid
when the same is due and payable;
(c) if the Policies are not kept in full force and
effect, or if the Policies (or duplicate originals
thereof) are not delivered to Mortgagee upon request;
(d) if Mortgagor violates or does not comply with
any of the provisions of paragraphs 7, 9, 34, 35 or 56
hereof;
(e) if any representation or warranty of Mortgagor
made herein or in any certificate, report, financial
statement or other instrument or document furnished to
Mortgagee shall have been false or misleading in any
material respect when made;
(f) if Mortgagor shall make an assignment for the
benefit of creditors or if Mortgagor shall generally not
be paying its debts as they become due;
(g) if a receiver, liquidator or trustee of
Mortgagor shall be appointed or if Mortgagor shall be
adjudicated a bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or arrangement pursuant
to federal bankruptcy law, or any similar federal or
state law, shall be filed by or against, consented to,
or acquiesced in by, Mortgagor or if any proceeding for
the dissolution or liquidation of Mortgagor shall be
instituted; however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented
to by Mortgagor, upon the same not being discharged,
stayed or dismissed within ninety (90) days;
(h) if Mortgagor shall be in default under any
other mortgage or security agreement covering any part
of the Mortgaged Property whether it be superior or
junior in lien to this Mortgage;
(i) the Mortgaged Property becomes subject to any
mechanic's, materialman's or other lien other than a
lien for local real estate taxes and assessments not
then due and payable and such lien shall remain
undischarged of record (by payment, bonding or
otherwise) on the earlier of (i) thirty (30) days after
Mortgagor shall have notice (written or oral) of such
lien or (ii) following a judgment in favor of the holder
of such lien, one week prior to the date on which such
lien may be foreclosed;
(j) if Mortgagor fails to cure promptly any
violations of laws or ordinances affecting or which may
be interpreted to affect the Mortgaged Property;
provided, however, after prior written notice to
Mortgagee, Mortgagor, at its own expense, may contest
by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the
validity or application of any building, fire or zoning
law or ordinance affecting the Mortgaged Property
provided that (i) no other Event of Default exists under
the Note, this Mortgage, or the Other Security
Documents, (ii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of
any other instrument to which Mortgagor is subject and
shall not constitute a default thereunder, (iii) neither
the Mortgaged Property nor any part thereof or interest
therein will be in danger of being sold, forfeited,
terminated, canceled or lost, and (iv) if by the terms
of such law or ordinance, compliance therewith pending
the prosecution of any such proceeding may legally be
delayed without incurring any lien, charge or liability
of any kind against the Mortgaged Property, or any part
thereof, and without subjecting the Mortgagor or the
Mortgagee to any liability, civil or criminal, for
failure to comply therewith; or
(k) if Mortgagor shall continue to be in default
under any of the other terms, covenants or conditions
of the Note, this Mortgage or the Other Security
Documents for five (5) days after notice from Mortgagee
in the case of any default which can be cured by the
payment of a sum of money or for thirty (30) days after
notice from Mortgagee in the case of any other default,
provided that if such default cannot reasonably be cured
within such thirty (30) day period and Mortgagor shall
have commenced to cure such default within such thirty
(30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for so long as it
shall require Mortgagor in the exercise of due diligence
to cure such default, it being agreed that no such
extension shall be for a period in excess of ninety (90)
days.
12. Remedies of Mortgagee. Upon the occurrence
of an Event of Default, (a) Mortgagor will pay, from the date
of that Event of Default, interest on the unpaid principal
balance of the Note at the rate of (i) four percent (4%) over
the Applicable Interest Rate (as defined in the Note) due
under the Note or (ii) the maximum interest rate which
Mortgagor may by law pay, whichever is lower (the "Default
Rate"), and (b) Mortgagee shall have the right to exercise
any and all rights and remedies available at law and in
equity.
13. Sale of Mortgaged Property. If this Mortgage
is foreclosed or if the Mortgaged Property is sold pursuant
to the exercise of a power of sale, the Mortgaged Property,
or any interest therein, may at the discretion of Mortgagee,
be sold in one or more parcels or in several interests or
portions and in any order or manner.
14. Right to Cure Defaults. Upon the occurrence
of any Event of Default, if Mortgagor fails to make any
payment or perform any act as herein provided Mortgagee may,
but without any obligation to do so and without notice to or
demand on Mortgagor and without releasing Mortgagor from any
obligation hereunder, make or do the same in such manner and
to such extent as Mortgagee may deem necessary to protect the
security hereof. Mortgagee is authorized to enter upon the
Mortgaged Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in
the Mortgaged Property or to foreclose this Mortgage or
collect the Debt, and the cost and expense thereof (including
reasonable attorneys' fees to the extent permitted by law),
with interest as provided in this paragraph 23, shall
constitute a portion of the Debt and shall be due and payable
to Mortgagee upon demand. All such costs and expenses
incurred by Mortgagee in remedying such Event of Default or
in appearing in, defending, or bringing any such action or
proceeding shall bear interest at the Default Rate, for the
period after notice from Mortgagee that such cost or expense
was incurred to the date of payment to Mortgagee. All such
costs and expenses incurred by Mortgagee together with
interest thereon calculated at the Default Rate shall be
deemed to constitute a portion of the Debt and be secured by
this Mortgage and the Other Security Documents and shall be
immediately due and payable upon demand by Mortgagee
therefor.
15. Late Payment Charge. If any portion of the
Debt is not paid on or before the date on which it is due
without taking into account any applicable notice or grace
period, Mortgagor shall pay to Mortgagee upon demand an
amount equal to the lesser of five percent (5%) of such
unpaid portion of the Debt or the maximum amount permitted
by applicable law, to defray the expense incurred by
Mortgagee in handling and processing such delinquent payment
and to compensate Mortgagee for the loss of the use of such
delinquent payment, and such amount shall be secured by this
Mortgage and the Other Security Documents.
16. Prepayment After Event of Default. If
following the occurrence of any Event of Default, Mortgagor
shall tender payment of an amount sufficient to satisfy the
Debt in whole or in part at any time prior to a foreclosure
sale of the Mortgaged Property, or a sale of the Mortgaged
Property pursuant to the exercise of a power of sale, such
tender shall be deemed to be a voluntary prepayment of the
principal balance of the Note and Mortgagor shall, in
addition to the entire Debt, also pay to Mortgagee a sum
equal to the interest which would have accrued on the
principal balance of the Note at the Applicable Interest Rate
as defined in the Note from the date of such tender to the
earlier of (i) the Maturity Date as defined in the Note or to
(ii) the first day of the period during which prepayment of
the principal balance of the Note would have been permitted
together with a Premium (as defined in the Note) equal to the
prepayment consideration which would have been payable as of
the first day of the period during which prepayment would
have been permitted. If at the time of such tender
prepayment of the principal balance of the Note is permitted,
such tender by Mortgagor shall be deemed to be a voluntary
prepayment of the principal balance of the Note, and
Mortgagor shall, in addition to the entire Debt, also pay to
Mortgagee the applicable Premium specified in the Note and
this Mortgage, if any.
17. Right of Entry. Mortgagee and its agents
shall have the right to enter and inspect the Mortgaged
Property at all reasonable times.
18. Appointment of Receiver. The holder of this
Mortgage, upon the occurrence of an Event of Default or in
any action to foreclose this Mortgage or upon the actual or
threatened waste to any part of the Mortgaged Property, shall
be entitled to the appointment of a receiver without notice
and without regard to the value of the Mortgaged Property as
security for the Debt, or the solvency or insolvency of any
person liable for the payment of the Debt.
19. Reasonable Use and Occupancy. In addition to
the rights which Mortgagee may have herein, upon the
occurrence of any Event of Default, Mortgagee, at its option,
may require Mortgagor to pay monthly in advance to Mortgagee,
or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such
part of the Mortgaged Property as may be occupied by
Mortgagor or may require Mortgagor to vacate and surrender
possession of the Mortgaged Property to Mortgagee or to such
receiver and, in default thereof, Mortgagor may be evicted by
summary proceedings or otherwise.
20. Security Agreement. This Mortgage is both a
real property mortgage and a "security agreement" within the
meaning of the Uniform Commercial Code. The Mortgaged
Property includes both real and personal property and all
other rights and interests, whether tangible or intangible
in nature, of Mortgagor in the Mortgaged Property. Mortgagor
by executing and delivering this Mortgage has granted and
hereby grants to Mortgagee, as security for the Debt, a
security interest in the Mortgaged Property to the full
extent that the Mortgaged Property may be subject to the
Uniform Commercial Code (said portion of the Mortgaged
Property so subject to the Uniform Commercial Code being
called in this paragraph 29 the "Collateral"). If an Event
of Default shall occur, Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may
exercise immediately and without demand, any and all rights
and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of
the Collateral or any part thereof, and to take such other
measures as Mortgagee may deem necessary for the care,
protection and preservation of the Collateral. Upon request
or demand of Mortgagee, Mortgagor shall at its expense
assemble the Collateral and make it available to Mortgagee
at a convenient place acceptable to Mortgagee. Mortgagor
shall pay to Mortgagee on demand any and all reasonable
expenses, including legal expenses and attorneys' fees,
incurred or paid by Mortgagee in protecting its interest in
the Collateral and in enforcing its rights hereunder with
respect to the Collateral. Any notice of sale, disposition
or other intended action by Mortgagee with respect to the
Collateral sent to Mortgagor in accordance with the
provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to
Mortgagor unless otherwise required by law. The proceeds of
any disposition of the Collateral, or any part thereof, may
be applied by Mortgagee to the payment of the Debt in such
priority and proportions as Mortgagee in its discretion shall
deem proper.
21. Actions and Proceedings. Mortgagee has the
right to appear in and defend any action or proceeding
brought with respect to the Mortgaged Property and to bring
any action or proceeding, in the name and on behalf of
Mortgagor, which Mortgagee, in its discretion, decides should
be brought to protect its interest in the Mortgaged Property.
Mortgagee shall, at its option, be subrogated to the lien of
any mortgage or other security instrument discharged in whole
or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
22. Waiver of Counterclaim. Mortgagor hereby
waives the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or
proceeding brought against it by Mortgagee, and waives trial
by jury in any action or proceeding brought by either party
hereto against the other or in any counterclaim asserted by
Mortgagee against Mortgagor, or in any matters whatsoever
arising out of or in any way connected with this Mortgage,
the Note, any of the Other Security Documents or the Debt.
23. Recovery of Sums Required To Be Paid.
Mortgagee shall have the right from time to time to take
action to recover any sum or sums which constitute a part of
the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without
prejudice to the right of Mortgagee thereafter to bring an
action of foreclosure, or to sell the Mortgaged Property
pursuant to the exercise of a power of sale, or to bring any
other action, for a default or defaults by Mortgagor existing
at the time such earlier action was commenced.
24. Marshalling and Other Matters. Mortgagor
hereby waives, to the extent permitted by law, the benefit
of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force
and all rights of marshalling in the event of any sale
hereunder of the Mortgaged Property or any part thereof or
any interest therein. Further, Mortgagor hereby expressly
waives any and all rights of redemption from sale under any
order or decree of foreclosure of this Mortgage on behalf of
Mortgagor, and on behalf of each and every person acquiring
any interest in or title to the Mortgaged Property subsequent
to the date of this Mortgage and on behalf of all persons to
the extent permitted by applicable law.
25. Hazardous Materials. Mortgagor represents and
warrants that, except as otherwise disclosed in that certain
environmental report delivered by Mortgagor to Mortgagee in
connection with the origination of this Mortgage, to the best
of Mortgagor's knowledge, after due inquiry and
investigation, (a) there are no Hazardous Materials
(hereinafter defined) on the Mortgaged Property, except those
in compliance with all applicable federal, state and local
laws, ordinances, rules and regulations, and (b) no owner or
occupant nor, to the best of Mortgagor's knowledge, any prior
owner or occupant of the Mortgaged Property has received any
notice or advice from any governmental agency or any source
whatsoever with respect to Hazardous Materials on, from or
affecting the Mortgaged Property. Mortgagor covenants that
the Mortgaged Property shall be kept free of Hazardous
Materials, and neither Mortgagor nor any occupant of the
Mortgaged Property shall use, transport, store, dispose of or
in any manner deal with Hazardous Materials on the Mortgaged
Property, except in compliance with all applicable federal,
state and local laws, ordinances, rules and regulations.
Mortgagor shall comply with, and ensure compliance by all
occupants of the Mortgaged Property with, all applicable
federal, state and local laws, ordinances, rules and
regulations, and shall keep the Mortgaged Property free and
clear of any liens imposed pursuant to such laws, ordinances,
rules or regulations. At any time after the occurrence of an
Event of Default and the continuance thereof, Mortgagee may
enter upon the Mortgaged Property and conduct such
environmental tests and studies as Mortgagee shall require.
The cost and expense of such tests and studies shall be borne
by Mortgagor and such amounts shall be secured by this
Mortgage. In the event that Mortgagor receives any notice
or advice from any governmental agency or any source
whatsoever with respect to Hazardous Materials on, from or
affecting the Mortgaged Property, Mortgagor shall immediately
notify Mortgagee. Mortgagor shall conduct and complete all
investigations, studies, sampling, and testing, and all
remedial actions necessary to clean up and remove all
Hazardous Materials from the Mortgaged Property in accordance
with all applicable federal, state, and local laws,
ordinances, rules and regulations. The term "Hazardous
Materials" as used in this Mortgage shall include, without
limitation, gasoline, petroleum products, explosives,
radioactive materials, polychlorinated biphenyls or related
or similar materials, or any other substance or material
defined as a hazardous or toxic substance or material by any
federal, state or local law, ordinance, rule, or regulation,
but excluding Asbestos, as defined in paragraph 35 hereof.
The obligations and liabilities of Mortgagor under this
paragraph 34 shall survive any entry of a judgment of
foreclosure, the sale of the Mortgaged Property pursuant to
the exercise of a power of sale, or the delivery of a deed in
lieu of foreclosure of this Mortgage.
26. Asbestos. Mortgagor represents and warrants
that, except as otherwise disclosed in that certain asbestos
survey (the "Asbestos Survey") delivered by Mortgagor to
Mortgagee in connection with the origination of this
Mortgage, to the best of Mortgagor's knowledge, after due
inquiry and investigation, there is no asbestos or material
containing asbestos ("Asbestos") on the Mortgaged Property,
and that no owner or occupant nor to the best of Mortgagor's
knowledge, any prior owner or occupant of the Mortgaged
Property has received any notice or advice from any
governmental agency or any source whatsoever with respect to
Asbestos on, affecting or installed on the Mortgaged
Property. Mortgagor covenants that, except as otherwise
disclosed in the Asbestos Survey, the Mortgaged Property
shall be kept free of Asbestos, and neither Mortgagor nor any
occupant of the Mortgaged Property shall install, or permit
to be installed, Asbestos on the Mortgaged Property.
Mortgagor shall comply with, and ensure compliance by all
occupants of the Mortgaged Property with, all applicable
federal, state and local laws, ordinances, rules and
regulations with respect to Asbestos, and shall keep the
Mortgaged Property free and clear of any liens imposed
pursuant to such laws, ordinances, rules or regulations. In
the event that Mortgagor receives any notice or advice from
any governmental agency or any source whatsoever with respect
to Asbestos on, affecting or installed on the Mortgaged
Property, Mortgagor shall immediately notify Mortgagee.
Mortgagor shall conduct and complete all investigations,
studies, sampling, and testing, and all remedial actions
necessary to manage and remove all Asbestos from the
Mortgaged Property in accordance with all applicable federal,
state and local laws, ordinances, rules and regulations. The
obligations and liabilities of Mortgagor under this paragraph
35 shall survive any entry of a judgment of foreclosure, the
sale of the Mortgaged Property pursuant to the exercise of a
power of sale, or delivery of a deed in lieu of foreclosure
of this Mortgage.
27. Indemnification. Mortgagor shall protect,
defend, indemnify and save harmless Mortgagee from and
against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including
without limitation reasonable attorneys' fees and expenses),
imposed upon or incurred by or asserted against Mortgagee
(except any liability, obligation, claim, damage, penalty,
cause of action, cost or expense imposed upon or incurred by
Mortgagee by reason of the gross negligence or willful
misconduct of Mortgagee) by reason of (a) ownership of this
Mortgage, the Mortgaged Property or any interest therein
arising pursuant to the terms of this Mortgage or receipt of
any Rents; (b) any accident, injury to or death of persons
or loss of or damage to property occurring in, on or about
the Mortgaged Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (c) any use, nonuse or
condition in, on or about the Mortgaged Property or any part
thereof or on the adjoining sidewalks,curbs, adjacent
property or adjacent parking areas, streets or ways; (d) any
failure on the part of Mortgagor to perform or comply with
any of the terms of this Mortgage; (e) performance of any
labor or services or the furnishing of any materials or other
property in respect of the Mortgaged Property or any part
thereof; (f) the failure of any person to file timely with
the Internal Revenue Service an accurate Form 1099-B,
Statement for Recipients of Proceeds from Real Estate, Broker
and Barter Exchange Transactions, which may be required in
connection with this Mortgage, or to supply a copy thereof in
a timely fashion to the recipient of the proceeds of the
transaction in connection with which this Mortgage is made;
(g) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release
of any Hazardous Materials on, from, or affecting the
Mortgaged Property or any other property or the presence of
Asbestos on the Mortgaged Property; (h) any personal injury
(including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous
Materials or Asbestos; (i) any lawsuit brought or threatened,
settlement reached, or government order relating to such
Hazardous Materials or Asbestos; or (j) any violation of
laws, orders, regulations, requirements, or demands of
government authorities, which are based upon or in any way
related to such Hazardous Materials or Asbestos including,
without limitation, the costs and expenses of any remedial
action required by such governmental authorities, attorney
and consultant fees, investigation and laboratory fees, court
costs, and litigation expenses. Any amounts payable to
Mortgagee by reason of the application of this paragraph 36
shall be secured by this Mortgage and shall become
immediately due and payable upon demand and shall bear
interest at the Default Rate commencing on the fifth (5th)
day following such demand until paid. The obligations and
liabilities of Mortgagor under this paragraph 36 shall
survive any termination, satisfaction, assignment, entry of
a judgment of foreclosure or delivery of a deed in lieu of
foreclosure of this Mortgage.
28. Notices. Any notice, demand, statement,
request or consent made hereunder shall be effective and
valid only if in writing and delivered personally or by a
reputable overnight courier service and shall be deemed given
when received at the address, as set forth above, of the
party to whom such notice is to be given, or to such other
address as Mortgagor or Mortgagee, as the case may be, shall
in like manner designate in writing. In the event delivery
is not accepted, notice shall be deemed given on the date
such delivery is refused.
29. Authority. (a) Mortgagor (and the
undersigned representative of Mortgagor, if any) has full
power, authority and legal right to execute this Mortgage,
and to mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, pledge, hypothecate, assign and grant a
security interest in the Mortgaged Property pursuant to the
terms hereof and to keep and observe all of the terms of this
Mortgage on Mortgagor's part to be performed.
(a) Mortgagor represents and warrants that
Mortgagor is not a "foreign person" within the meaning of
1445(f)(3) of the Internal Revenue Code of 1986, as amended
and the related Treasury Department regulations, including
temporary regulations.
30. Waiver of Notice. Mortgagor shall not be
entitled to any notices of any nature whatsoever from
Mortgagee except with respect to matters for which this
Mortgage specifically and expressly provides for the giving
of notice by Mortgagee to Mortgagor and except with respect
to matters for which Mortgagee is required by applicable law
to give notice, and Mortgagor hereby expressly waives the
right to receive any notice from Mortgagee with respect to
any matter for which this Mortgage does not specifically and
expressly provide for the giving of notice by Mortgagee to
Mortgagor.
31. Remedies of Mortgagor. In the event that a
claim or adjudication is made that Mortgagee has acted
unreasonably or unreasonably delayed acting in any case where
by law or under the Note, this Mortgage or the Other Security
Documents, it has an obligation to act reasonably or
promptly, Mortgagee shall not be liable for any monetary
damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
32. Sole Discretion of Mortgagee. Wherever
pursuant to this Mortgage, Mortgagee exercises any right
given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory
shall be in the sole discretion of Mortgagee, except as may
be otherwise expressly and specifically provided herein.
33. Non-Waiver. The failure of Mortgagee to
insist upon strict performance of any term hereof shall not
be deemed to be a waiver of any term of this Mortgage.
Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply
with any request of Mortgagor to take any action to foreclose
this Mortgage or otherwise enforce any of the provisions
hereof or of the Note or the Other Security Documents, (b)
the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for
the Debt or any portion thereof, or (c) any agreement or
stipulation by Mortgagee extending the time of payment or
otherwise modifying or supplementing the terms of the Note,
this Mortgage or the Other Security Documents. Mortgagee may
resort for the payment of the Debt to any other security held
by Mortgagee in such order and manner as Mortgagee, in its
discretion, may elect. Mortgagee may take action to recover
the Debt, or any portion thereof, or to enforce any covenant
hereof without prejudice to the right of Mortgagee thereafter
to foreclose this Mortgage. The rights of Mortgagee under
this Mortgage shall be separate, distinct and cumulative and
none shall be given effect to the exclusion of the others.
No act of Mortgagee shall be construed as an election to
proceed under any one provision herein to the exclusion of
any other provision. Mortgagee shall not be limited
exclusively to the rights and remedies herein stated but
shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.
34. No Oral Change. This Mortgage, and any
provisions hereof, may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Mortgagor or Mortgagee,
but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is
sought.
35. Liability. If Mortgagor consists of more than
one person, the obligations and liabilities of each such
person hereunder shall be joint and several. The foregoing
sentence, however, is not intended to affect the limited
liability of any limited partner or stockholder of Mortgagor
afforded by applicable partnership or corporate law. This
Mortgage shall be binding upon and inure to the benefit of
Mortgagor and Mortgagee and their respective successors and
assigns forever.
36. Inapplicable Provisions. If any term,
covenant or condition of the Note or this Mortgage is held
to be invalid, illegal or unenforceable in any respect, the
Note and this Mortgage shall be construed without such
provision.
37. Headings. etc. The headings and captions of
various paragraphs of this Mortgage are for convenience of
reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions
hereof.
38. Duplicate Originals. This Mortgage may be
executed in any number of duplicate originals and each such
duplicate original shall be deemed to be an original.
39. Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Mortgage may be used
interchangeably in singular or plural form and the word
"Mortgagor" shall mean "each Mortgagor and any subsequent
owner or owners of the Mortgaged Property or any part thereof
or any interest therein," the word "Mortgagee" shall mean
"Mortgagee and any subsequent holder of the Note," the word
"Note" shall mean "the Note and any other evidence of
indebtedness secured by this Mortgage," the word "person"
shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged
Property" shall include any portion of the Mortgaged Property
and any interest therein. Whenever the context may require,
any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
40. CHOICE OF LAW. THIS MORTGAGE SHALL BE DEEMED
TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED,
CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT WITH RESPECT
TO THE CREATION, ATTACHMENT, PERFECTION, PRIORITY AND
ENFORCEMENT OF THE LIEN AND SECURITY INTEREST OF THIS
MORTGAGE, THE LAWS OF THE STATE WHERE THE MORTGAGED PROPERTY
IS LOCATED SHALL APPLY.
41. Exculpation. Mortgagee shall not enforce the
liability and obligation of Mortgagor to perform and observe
the obligations contained in the Note or this Mortgage by any
action or proceeding wherein a money judgment shall be sought
against Mortgagor or any general or limited partner of
Mortgagor (hereafter collectively referred to as the
"Exculpated Parties"), except that Mortgagee may bring a
foreclosure action, action for specific performance or other
appropriate action or proceeding to enable Mortgagee to
enforce and realize upon this Mortgage, the Other Security
Documents, and the interest in the Mortgaged Property, the
Rents and any other collateral given to Mortgagee created by
this Mortgage and the Other Security Documents; provided,
however, that any judgment in any such action or proceeding
shall be enforceable against the Exculpated Parties only to
the extent of Mortgagor's interest in the Mortgaged Property,
in the Rents and in any other collateral given to Mortgagee.
Mortgagee, by accepting the Note and this Mortgage, agrees
that it shall not sue for, seek or demand any deficiency
judgment against the Exculpated Parties in any such action
or proceeding, under or by reason of or in connection with
the Note, the Other Security Documents or this Mortgage. The
provisions of this paragraph shall not, however, (i)
constitute a waiver, release or impairment of any obligation
evidenced or secured by the Note, the Other Security
Documents or this Mortgage; (ii) impair the right of
Mortgagee to name Mortgagor as a party defendant in any
action or suit for judicial foreclosure and sale under this
Mortgage; (iii) affect the validity or enforceability of any
guaranty made in connection with the Note, this Mortgage, or
the Other Security Documents; (iv) impair the right of
Mortgagee to obtain the appointment of a receiver; (v) impair
the enforcement of the Assignment of Leases and Rents
executed in connection herewith; (vi) impair the right of
Mortgagee to bring suit with respect to fraud or intentional
misrepresentation by the Exculpated Parties or any other
person or entity in connection with the Note, this Mortgage
or the Other Security Documents; (vii) impair the right of
Mortgagee to obtain the Rents received by any of the
Exculpated Parties after the occurrence of an Event of
Default; (viii) impair the right of Mortgagee to bring suit
with respect to the Exculpated Parties' misappropriation of
tenant security deposits or Rents collected in advance; (ix)
impair the right of Mortgagee to obtain insurance proceeds
or condemnation awards due to Mortgagee under this Mortgage;
(x) impair the right of Mortgagee to enforce the provisions
of sub-paragraphs 36(g) through 36(j), inclusive and
paragraphs 34 and 35 of this Mortgage against the Mortgagor
(excluding any general or limited partner thereof); or (xi)
impair the right of Mortgagee to recover any part of the Debt
from the Mortgagor (excluding the general and limited
partners of Mortgagor), following the breach of any covenant
contained in paragraph 9 or 56 hereof.
42. [TO BE LIMITED TO CERTAIN PROPERTIES] Capital
Improvements Account. Mortgagor shall establish and maintain
for the benefit of Mortgagee a reserve account (the "Capital
Improvements Account") for the purpose of creating a reserve
for certain capital improvements in connection with the
Mortgaged Property which are described on a schedule (the
"Capital Improvements Schedule") in the engineering report
for the Mortgaged Property delivered to, and approved by,
Mortgagee (collectively, the "Capital Improvements").
Mortgagor shall deposit the amount set forth on the Capital
Improvements Schedule into the Capital Improvements Account
on the date hereof. Mortgagor, on a periodic basis (but not
more often than once every thirty (30) days), may request
disbursements ("Disbursements") from the Capital Improvements
Account provided: (i) Mortgagor shall have delivered a
written request for the Disbursement to Mortgagee, which
request shall (a) specify which "line item" set forth on the
Capital Improvements Schedule Mortgagor has incurred expenses
for, (b) set forth the amount of the requested Disbursement,
(c) contain a certification from the managing general partner
of Mortgagor and Mortgagor that the work for which the
Disbursement is requested has been completed and is then due
and payable and (d) if requested by Mortgagee, such other
evidence of completion of work, including but not limited to
any and all invoices or other work orders, (ii) the
Disbursement does not exceed the amount allocated to the line
item as such amount is set forth on the Capital Improvements
Schedule, and (iii) no Event of Default shall have occurred.
Disbursements shall be made by Mortgagee to Mortgagor by wire
transfer or as otherwise directed by Mortgagor within ten
(10) days after receipt by Mortgagee of Mortgagor's written
request in the form required above. The Capital Improvements
Account shall be held by Mortgagee as additional and
collateral security for the Debt and Mortgagor hereby grants
Mortgagee a security interest in, and pledges to Mortgagee
the Capital Improvements Account. The Capital Improvements
Account shall be held by Mortgagee as additional security for
the Debt and if Mortgagor breaches any term, covenant or
provision of the Note, this Mortgage or any Other Security
Document, Mortgagee may apply the proceeds of the Capital
Improvements Account to cure such default, and following the
acceleration of the maturity of the Note, in the reduction of
the Debt. The Capital Improvements Account shall be an
interest bearing account maintained at a bank satisfactory to
Mortgagee in its sole discretion, and Mortgagee shall have no
liability for its selection of the bank, type of account,
fluctuations in interest rate or for the amount of interest
earned on the account. Interest earned on the Capital
Improvements Account shall remain in the Capital Improvements
Account until such time as the account is released to the
Mortgagor or the proceeds are applied by Mortgagee to the
payment of the Debt as provided herein. Upon the completion
of all of the Capital Improvements, Mortgagee shall release
the sums remaining in the Capital Improvements Account, if
any, to Mortgagor.
43. Reserve Account. Mortgagor will comply with
any requirements of any Rating Agency as a condition of its
initial rating, or if required by either FNMA or Freddie Mac,
with respect to the establishment of a reserve account for
necessary repairs and replacements of existing improvements
on the Mortgaged Property.
44. Operations and Maintenance Plan. [LIMIT TO
LANDINGS] Mortgagor shall, within forty-five (45) days from
the date hereof deliver to Mortgagee an operation and
maintenance plan (the "O&M Plan") with respect to the
maintenance or removal of any asbestos, hazardous and toxic
wastes and substances, PCB's and storage tanks on the
Mortgaged Property, which O&M Plan appoints an "Asbestos
Program Manager" in charge of managing all asbestos-related
activities on the Mortgaged Property. Mortgagor shall (i)
diligently perform and observe all of the terms, covenants
and conditions of the O&M Plan on the part of Mortgagor to
be performed and observed to the end that all things shall
be done which are necessary to keep unimpaired the rights of
Mortgagor under the O&M Plan and (ii) promptly notify
Mortgagee of the giving of any notice to Mortgagor of any
default by the Asbestos Program Manager in the performance
or observance of any of the terms, covenants or conditions
of the O&M Plan on the part of the Asbestos Program Manager
to be performed and observed and deliver to Mortgagee a true
copy of each such notice. Mortgagee shall have the right to
approve any O&M Plan which may affect the Mortgaged Property.
45. Management Agreements. The Improvements have
been operated under the terms and conditions of that certain
management agreement entered into between Mortgagor and the
manager (the "Manager") set forth therein delivered to, and
approved by, Mortgagee (hereinafter, together with any
renewals or replacements thereof, being referred to as the
"Management Agreement"). Mortgagor acknowledges that
Mortgagee has examined and relied on the Manager's experience
in operating properties such as the Mortgaged Property in
agreeing to make the loan secured hereby, and that Mortgagee
will continue to rely on the Manager's management of the
Mortgaged Property as a means of maintaining the value of the
Mortgaged Property as security for repayment of the Debt.
Mortgagor shall (i) diligently perform and observe all of the
terms, covenants and conditions of the Management Agreement
on the part of Mortgagor to be performed and observed to the
end that all things shall be done which are necessary to keep
unimpaired the rights of Mortgagor under the Management
Agreement and (ii) promptly notify Mortgagee of the giving of
any notice to Mortgagor of any default by Mortgagor in the
performance or observance of any of the terms, covenants or
conditions of the Management Agreement on the part of
Mortgagor to be performed and observed and deliver to
Mortgagee a true copy of each such notice. Mortgagor shall
not surrender the Management Agreement, consent to the
assignment by the Manager of its interest under the
Management Agreement, or terminate or cancel the Management
Agreement or modify, change, supplement, alter or amend the
Management Agreement, in any respect, either orally or in
writing, and Mortgagor hereby assigns to Mortgagee as further
security for the payment of the Debt and for the performance
and observance of the terms, covenants and conditions of this
Mortgage, all the rights, privileges and prerogatives of
Mortgagor to surrender the Management Agreement or to
terminate, cancel, modify, change, supplement, alter or amend
the Management Agreement in any respect, and any such
surrender of the Management Agreement or termination,
cancellation, modification, change, supplement, alteration or
amendment of the Management Agreement without the prior
consent of Mortgagee shall be void and of no force and
effect. If Mortgagor shall default in the performance or
observance of any material term, covenant or condition of the
Management Agreement on the part of Mortgagor to be performed
or observed, then, without limiting the generality of the
other provisions of this Mortgage, and without waiving or
releasing Mortgagor from any of its obligations hereunder,
Mortgagee shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take
any action as may be appropriate to cause all the terms,
covenants and conditions of the Management Agreement on the
part of Mortgagor to be performed or observed to be promptly
performed or observed on behalf of Mortgagor, to the end that
the rights of Mortgagor in, to and under the Management
Agreement shall be kept unimpaired and free from default.
Mortgagee and any person designated by Mortgagee shall have,
and are hereby granted, the right to enter upon the Mortgaged
Property at any time and from time to time for the purpose of
taking any such action. If the Manager under the Management
Agreement shall deliver to Mortgagee a copy of any notice
sent to Mortgagor of default under the Management Agreement,
such notice shall constitute full protection to Mortgagee for
any action taken or omitted to be taken by Mortgagee in good
faith, in reliance thereon. Mortgagor shall, from time to
time, use its best efforts to obtain from the Manager under
the Management Agreement such certificates of estoppel with
respect to compliance by Mortgagor with the terms of the
Management Agreement as may be requested by Mortgagee.
Mortgagor shall exercise each individual option, if any, to
extend or renew the term of the Management Agreement upon
demand by Mortgagee made at any time within one (1) year of
the last day upon which any such option may be exercised, and
Mortgagor hereby expressly authorizes and appoints Mortgagee
its attorney-in-fact to exercise any such option in the name
of and upon behalf of Mortgagor, which power of attorney
shall be irrevocable and shall be deemed to be coupled with
an interest.
Notwithstanding anything to the contrary contained
herein, Mortgagor may replace the Manager or accept the
resignation of the Manager or consent to a transfer by the
Manager, provided:
(1) No Event of Default shall have occurred and
be continuing;
(2) the new manager or holder of the stock or
partnership interest shall be a person, firm or
corporation whose character, financial strength,
stability and experience shall be similar to the
existing Manager and otherwise have Adequate Real Estate
Experience (it being understood that Insigna Financial
Group, Inc. or any Affiliate thereof shall be deemed an
acceptable replacement);
(3) the new manager shall deliver all
organizational documentation and other materials
evidencing its Adequate Real Estate Experience and
otherwise be acceptable to Mortgagee;
(4) the Mortgagor shall pay the reasonable costs
and expenses of Mortgagee and Mortgagee's counsel
incurred in connection with the review and approval of
such new manager; and
(5) the terms of any new management agreement
affecting the Mortgaged Property must be acceptable to
Mortgagee in all respects, provided, however, if the
terms and conditions of the new management agreement
shall be substantially similar to the Management
Agreement and the management fee due thereunder is no
greater than the fee provided in the Management
Agreement, such new management agreement shall be deemed
acceptable to Mortgagee.
1. Rating Agencies. The terms "Rating Agency"
or "Rating Agencies" shall mean any nationally recognized
rating agency(s) sought by Mortgagee to obtain ratings with
respect to this Mortgage or the Securitization (hereinafter
defined). Mortgagee intends to, but is not required to,
either (i) deposit this Mortgage, the Note and the Other
Security Documents in a trust in exchange for the issuance,
to or at the direction of the Mortgagee, of multiple classes
of mortgage pass-through certificates evidencing the entire
beneficial ownership interest in such trust or (ii) issue
multiple classes of bonds (also, "Securities") representing
non-recourse obligations secured by this Mortgage, the Note
and the Other Security Documents (the "Securities"). An
election will be made under the federal tax code to treat
this Mortgage, the Note and the Other Security Documents and
the related assets as one or more real estate mortgage
investment conduits. The Securities may be sold either in a
public offering or a private placement. The foregoing events
and all matters incidental thereto are herein referred to as
the "Securitization". Anything in paragraphs 5, 52 or 58 of
this Mortgage contained to the contrary notwithstanding: (i)
the provisions of paragraphs 5, 52 and 58 of this Mortgage
which require a Mortgagor to comply with certain requirements
("Requirements") which may be imposed by any Rating Agency,
FNMA or Freddie Mac shall be of no force or effect unless
Mortgagee notifies Mortgagor prior to the 270th day (the
"Deadline") following the Date hereof that it will be
required to comply with any such Requirements; and (ii) in
the event that Mortgagee so notifies Mortgagor prior to the
Deadline, (a) Mortgagee shall not prevent Mortgagor from
contacting the entity imposing such Requirements to discuss
the necessity of and/or details relating to such
Requirements, and (b) Mortgagor will not pursue such
discussion in a manner which materially delays the completion
of any related Securitization, and in any event Mortgagor
will either comply with the Requirements in question or cause
the Debt to be prepaid in full at par on or prior to the
Deadline.
2. Single Purpose Entity. Mortgagor hereby
represents and warrants to, and covenants with, Mortgagee
that, as of the date hereof and until such time as the Debt
shall be paid in full, Mortgagor:
(a) does not own and shall not own any encumbered
asset other than (i) the Mortgaged Property, (ii) and
(ii) such incidental personal property necessary for the
operation of the Mortgaged Property;
(b) is not engaged and shall not engage in any
business other than those necessary for the ownership,
management or operation of the Mortgaged Property and
any business transactions with any general partner,
principal or affiliate of Mortgagor or any affiliate of
the general partner of Mortgagor shall be entered into
upon terms and conditions that are intrinsically fair
and substantially similar to those that would be
available on an arms-length basis with third parties
other than an Affiliate;
(c) has not incurred and shall not incur any debt,
secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than the Debt and
the type of indebtedness permitted pursuant to Paragraph
57 hereof;
(d) has not made and shall not make any loans or
advances to any third party (including any Affiliate);
(e) is and shall be solvent and pay its debt from
its assets as the same shall become due;
(f) has done or caused to be done and shall do all
things necessary to preserve its existence, and shall
not, nor shall any partner, limited or general, or
shareholder thereof, amend, modify or otherwise change
its partnership certificate, partnership agreement,
articles of incorporation or by-laws in a manner which
adversely affects Mortgagor's existence as a single
purpose entity;
(g) shall conduct and operate its business as
presently conducted and operated;
(h) shall maintain books and records and bank
accounts separate from those of its affiliates,
including its general partners;
(i) shall be, and at all times shall hold itself
out to the public as, a legal entity separate and
distinct from any other entity (including any affiliate
thereof, including the general partner or any affiliate
of the general partner of the Mortgagor);
(j) shall file its own tax returns;
(k) shall maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated
business operations;
(l) shall not seek the dissolution or winding up,
in whole or in part, of the Mortgagor or voluntarily
file, or consent to the filing of, a petition for
bankruptcy, reorganization, assignment for the benefit
of creditors or similar proceeding;
(m) shall not commingle the funds and other assets
of the Mortgagor with those of any general partner, any
Affiliate or any other person; and
(n) shall have at least one member of its board
of directors that is not affiliated with or employed by
National Property Investors, Inc. or any of its
Affiliates.
3. No Other Indebtedness. During the term of the
Note and prior to the satisfaction or discharge of this
Mortgage, Mortgagor shall not create, incur, assume, or
suffer to exist any Indebtedness (hereinafter defined). For
purposes of the foregoing, the term "Indebtedness" shall mean
with respect to Mortgagor on a particular date (a) all
indebtedness of Mortgagor for borrowed money or for the
deferred purchase price of property or which is evidenced by
a note, bond, debenture, trust deed, bankers' acceptance or
similar instrument, (b) all obligations of Mortgagor under
any lease of real property (excluding Leases under which
Mortgagor is the landlord), (c) all obligations of Mortgagor
in respect of letters of credit, acceptances, or similar
obligations issued or created for the account of Mortgagor,
and (d) all liabilities secured by any lien or any property
owned by Mortgagor even though Mortgagor has not assumed or
otherwise become liable for the payment thereof.
Notwithstanding the foregoing, Indebtedness shall not include
(x) account payables to trade creditors of up to
[$__________] (which may include Affiliates of Mortgagor and
its partners and their employees) for goods and services
which are not aged more than sixty (60) days from the billing
date and current operating liabilities (other than for
borrowed monies) not more than sixty (60) days past due in
each case incurred in the ordinary course of business as
presently conducted and paid within the specified times,
unless contested in good faith and by appropriate proceeds
and (y) the indebtedness evidenced by the Note and secured
by this Mortgage.
4. Lockbox. Mortgagor will comply with any
requirement imposed by any Rating Agency as a condition of
its initial rating, FNMA or Freddie Mac with respect to the
establishment of lockbox arrangements with respect to the
operation of the Mortgaged Property.
PART II
[LOCAL LAW PROVISIONS]
1. In the event of any inconsistencies between
the terms and conditions of PART I of this Mortgage and PART
II, the terms and conditions of PART II shall control and be
binding.
[ADD LOCAL PROVISIONS, IF ANY]
IN WITNESS WHEREOF, this Mortgage has been executed
by Mortgagor the day and year first above written.
Witnesses: ___________________________________
________________, a _______ limited
partnership
_______________________ By: ____________________________,
Name: a ________ corporation, its
general partner
_______________________ By: ____________________________
Name: Name:
Title:
This instrument prepared by:
Jeffrey J. Temple, Esq.
White & Case
1155 Avenue of the Americas
New York, New York 10036
ACKNOWLEDGEMENT
[TO BE PROVIDED]
[Sketch of Subject Property
(This is not a survey)]
<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> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 2,868,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 94,428,000
<DEPRECIATION> 34,894,000 <F1>
<TOTAL-ASSETS> 64,379,000
<CURRENT-LIABILITIES> 0
<BONDS> 62,342,000
<COMMON> 0
0
0
<OTHER-SE> 663,000
<TOTAL-LIABILITY-AND-EQUITY> 64,379,000
<SALES> 0
<TOTAL-REVENUES> 14,630,000
<CGS> 0
<TOTAL-COSTS> 10,570,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,001,000
<INCOME-PRETAX> (2,047,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,047,000)
<DISCONTINUED> 0
<EXTRAORDINARY> (1,636,000)
<CHANGES> 0
<NET-INCOME> (3,683,000)
<EPS-PRIMARY> (36.39)
<EPS-DILUTED> (36.39)
<FN>
<F1> Depreciation includes a $500,000 allowance for impairment of value.
</FN>
</TABLE>
