SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1995 Commission file no. 0-12140
JMB INCOME PROPERTIES, LTD. - X
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 36-3235999
(State of organization)(I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois60611
(Address of principal executive office)(Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12 of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- -------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of class)
Indicate by check mark whether the registrant (1) has filed all
reportsrequired 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
Item405 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
State the aggregate market value of the voting stock held by
nonaffiliatesof the registrant. Not applicable.
Documents incorporated by reference: None
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings . . . . . . . . . . . 6
Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . 6
PART II
Item 5. Market for the Partnership's Limited
Partnership Interests and Related
Security Holder Matters . . . . . . . . 6
Item 6. Selected Financial Data . . . . . . . . 7
Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations . . . . . . . . . 11
Item 8. Financial Statements and
Supplementary Data. . . . . . . . . . . 17
Item 9. Changes in and Disagreements
with Accountants on Accounting and
Financial Disclosure. . . . . . . . . . 47
PART III
Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . 47
Item 11. Executive Compensation. . . . . . . . . 50
Item 12. Security Ownership of Certain
Beneficial Owners and Management. . . . 51
Item 13. Certain Relationships and
Related Transactions. . . . . . . . . . 52
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . 52
SIGNATURES . . . . . . . . . . . . . . . . . . . . 55
i
PART I
ITEM 1. BUSINESS
All references to "Notes" are to Notes to Consolidated
FinancialStatements contained in this report.
The registrant, JMB Income Properties, Ltd. - X (the
"Partnership"),isa limited partnership formed in 1983 and currently
governed by the Revised Uniform Limited Partnership Act of the State of
Illinois to invest in improved income-producing commercial and residential
real property. The Partnership sold $150,000,000 in limited partnership
interests (the "Interests") commencing on June 29, 1983, pursuant to a
Registration Statement on Form S-11 under the Securities Act of 1933
(Registration No. 2-83599). A total of 150,000 Interests were sold to the
public at $1,000 per Interest and the holders of 150,000 Interests were
admitted to the Partnership in fiscal 1984. The offering closed on
November 1, 1983. No Limited Partner has made any additional capital
contribution after such date. The Limited Partners of the Partnership
share in their portion of the benefits of ownership of the Partnership's
real property investments according to the number of Interests held.
The Partnership is engaged solely in the business of the
acquisition,operation, and sale and disposition of equity real estate
investments. Such equity investments are held by fee title and/or through
joint venture partnership interests. The Partnership's real estate
investments are located throughout the nation and it has no real estate
investments located outside of the United States. A presentation of
information about industry segments, geographic regions, raw materials or
seasonality is not applicable and would not be material to an
understandingof the Partnership's business taken as a whole. Pursuant to
the Partnership agreement, the Partnership is required to terminate no
later than October 31, 2033. The Partnership is self-liquidating in
nature. At sale of a particular property, the net proceeds, if any, are
generally distributed or reinvested in existing properties rather than
invested in acquiring additional properties. As discussed further in Item
7, the marketplaces in which the portfolio operates and real estate
marketsin general are in a recovery mode. The Partnership currently
expects to conduct an orderly liquidation of its remaining investment
portfolio as quickly as practicable and to wind up its affairs not later
than December 31, 1999, barring any unforeseen economic developments.
(Reference is also made to Note 1.)
The Partnership has made the real property investments set forth
inthefollowing table:
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASECAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- ------------------------------ ---------------------
<S> <C> <C> <C> <C>
1. Pylon Plaza,
Phase I & II
office building
Boca Raton,
Florida. . . . . 49,400 10/12/83 Phase I fee ownership of land and
sq.ft. 8/9/90 improvements
n.r.a. Phase II
12/9/91
2. North Hills Mall
shopping center
North Richland
Hills, Texas . . 221,000
sq.ft. 10/19/83 12% fee ownership of land and
g.l.a. improvements (b)(f)
3. Pasadena Town Square
shopping center
Pasadena, Texas. 245,000
sq.ft. 10/19/83 10/3/95 fee ownership of land and
g.l.a. improvements (g)
4. Collin Creek Mall
shopping center
Plano, Texas . . 332,000
sq.ft. 10/19/83 12/29/94 fee ownership of land and
g.l.a. improvements (d)
5. Animas Valley Mall
shopping center
Farmington,
New Mexico . . . 460,000
sq.ft. 10/24/83 6/30/95 fee ownership of land and
g.l.a. improvements (through joint
venture partnership) (d)
6. Royal Executive Park
office complex
Ryebrook,
New York . . . . 270,000
sq.ft. 12/16/83 22% fee ownership of land and
n.r.a. improvements (through joint
venture partnership) (c)(f)
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1995,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (e) SIZE PURCHASECAPITAL PERCENTAGE (a) TYPE OF OWNERSHIP
- ---------------------- ---------- ------------------------------ ---------------------
7. Towne Square Mall
shopping center
Owensboro,
Kentucky . . . . 357,000
sq.ft. 03/01/84 08/13/87 fee ownership of land and
g.l.a. improvements (through joint
venture partnership)
8. 40 Broad Street
office building
New York,
New York . . . . 247,800
sq.ft. 12/31/85 18% fee ownership of land and
n.r.a. improvements (through joint
venture partnership) (c)(f)
<FN>
- -----------------------
(a) The computation of this percentage for properties held at December 31, 1995 does not include
amountsinvestedfrom sources other than the original net proceeds of the public offering as described above and in
Item 7.
(b) Reference is made to Note 4 and to Schedule III for the current outstanding principal balance and
adescription of the long-term mortgage indebtedness secured by the Partnership's real property investment.
(c) Reference is made to Note 3 and to Schedule III for a description of the joint venture partnership
throughwhich the Partnership has made this real property investment.
(d) Reference is made to Note 7 for a description of the sale of this real property investment.
(e) Reference is made to Item 8 - Schedule III filed with this annual report for further information
concerningreal estate taxes and depreciation.
(f) Reference is made to Item 6 - Selected Financial Data for additional operating and lease expiration
dataconcerning this investment property.
(g) The lender realized upon its security and took title to the property. Reference is made to Note 2(d)
filedwith this annual report.
</TABLE>
The Partnership's real property investments are subject to
competitionfrom similar types of properties (including, in certain areas,
properties owned or advised by affiliates of the General Partners) in the
respective vicinities in which they are located. Such competition is
generally for the retention of existing tenants. Additionally, the
Partnership is in competition for new tenants in markets where significant
vacancies are present. Reference is made to Item 7 below for a discussion
of competitive conditions and future renovation and capital improvement
plans of the Partnership and certain of its significant investment
properties. Approximate occupancy levels for the properties are set forth
in the table in Item 2 below to which reference is hereby made. The
Partnership maintains the suitability and competitiveness of its
propertiesin its markets primarily on the basis of effective rents, tenant
allowances and service provided to tenants. In the opinion of the
ManagingGeneral Partner of the Partnership, all of the investment
properties held at December 31, 1995 are adequately insured.
In June 1995, the Partnership through Animas Valley Mall
Associatessold the land, building, related improvements and personal
property of the Animas Valley Mall and related land outparcel located in
Farmington, New Mexico, as described in the Partnership's Report on Form 8-
K (File No. 0-12140) for June 30, 1995, which description is hereby
incorporated by reference. Reference is made to Note 7(b) for a further
description of such transaction.
In October 1995, the mortgage lender concluded proceedings to
realizeupon its mortgage security and obtained title to the Pasadena Town
Square Mall located in Pasadena, Texas, as described in the Partnership's
Report on Form 8-K (File No. 0-12140) for October 3, 1995, which
description is hereby incorporated by reference. Reference is made to
Note2(d) for a further description of such transaction.
Reference is made to Note 8 for a schedule of minimum lease
paymentstobe received in each of the next five years, and in the
aggregatethereafter, under leases in effect at the Partnership's
propertiesas of December 31, 1995.
The Partnership has no employees other than personnel performing on-
site duties at certain of the Partnership's properties, none of whom
areofficers or directors of the Managing General Partner of the
Partnership.
The terms of transactions between the Partnership, the
GeneralPartnersand their affiliates are set forth in Item 11 below to
whichreference is hereby made for a description of such terms and
transactions.
ITEM 2. PROPERTIES
The Partnership owns directly or through joint venture
partnershipstheproperties or interests in the properties referred to under
Item 1 above to which reference is hereby made for a description of
saidproperties.
The following is a listing of principal businesses or
occupationscarried on in and approximate occupancy levels by quarter
duringfiscal years 1995 and 1994 for the Partnership's investment
properties owned during 1995:
<TABLE>
<CAPTION>
1994 1995
--------------------------------------------------
At At At At At At At At
Principal Business3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
---------------------- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. North Hills Mall
North Richland Hills,
Texas (a). . . . . . Retail 95% 95% 96% 95% 92% 89% 90% 92%
2. Pasadena Town Square
Pasadena, Texas. . . Retail 84% 80% 73% 72% 72% 72% 67% N/A
3. Animas Valley Mall
Farmington, New Mexico Retail 90% 90% 90% 90% 91% N/A N/A N/A
4. Royal Executive Park
Ryebrook, New York . Telecommuni-
cations 78% 78% 78% 78% 78% 78% 78% 78%
5. 40 Broad Street
New York, New York . Financial
Services 80% 86% 83% 83% 76% 76% 77% 77%
<FN>
- --------------------
Reference is made to Item 6, Item 7 and Note 7 for further information regarding property
occupancy,competitive conditions and tenant leases at the Partnership's investment properties.
An "N/A" indicates that the property was sold or disposed and was not owned by the Partnership at the end
ofthe quarter.
(a) The percentage represents physical occupancy which includes temporary tenants. Occupancy without
thetemporary tenants is 87% at March 31, 1994, 87% at June 30, 1994, 85% at September 30, 1994, 89% at December
31, 1994, 88% at March 31, 1995, 80% at June 30, 1995, 79% at September 30, 1995 and 77% at December 31, 1995.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending
legalproceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of holders during
fiscalyears 1994 or 1995.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1995, there were 14,815 record holders of
Interestsof the Partnership. There is no public market for Interests and
it is not anticipated that a public market for Interests will develop.
Upon request, the Managing General Partner may provide information
relatingto a prospective transfer of Interests to an investor desiring to
transfer his Interests. The price to be paid for the Interests, as well
asany other economic aspects of the transaction, will be subject to
negotiation by the investor. There are certain conditions and
restrictionson the transfer of Interests, including, among other things,
the requirement that the substitution of a transferee of Interests as a
Limited Partner of the Partnership be subject to the written consent of
theManaging General Partner. The rights of a transferee of Interests who
does not become a substituted Limited Partner will be limited to the
rightsto receive his share of profits or losses and cash distributions
fromthe Partnership, and such transferee will not be entitled to vote such
Interests. No transfer will be effective until the first day of the next
succeeding calendar quarter after the requisite transfer form satisfactory
to the Managing General Partner has been received by the Managing General
Partner. The transferee consequently will not be entitled to receive any
cash distributions or any allocable share of profits or losses for tax
purposes until such next succeeding calendar quarter. Profits or losses
from operations of the Partnership for a calendar year in which a
transferoccurs will be allocated between the transferor and the transferee
based upon the number of quarterly periods in which each was recognized as
the holder of the Interests, without regard to the results of the
Partnership's operations during particular quarterly periods and without
regard to whether cash distributions were made to the transferor or
transferee. Profits or losses arising from the sale or other disposition
of Partnership properties will be allocated to the recognized holder of
theInterests as of the last day of the quarter in which the Partnership
recognized such profits or losses. Cash distributions to a holder of
Interests arising from the sale or other disposition of Partnership
properties will be distributed to the recognized holder of the Interests
asof the last day of the quarterly period with respect to which such
distribution is made.
Reference is made to Item 6 below for a discussion of
cashdistributions made to the Limited Partners.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
YEARS ENDED DECEMBER 31, 1995, 1994, 1993, 1992 AND 1991
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1995 1994 1993 1992 1991
----------- ----------- ----------- ------------------------
<S> <C> <C> <C> <C> <C>
Total income . . . . .$ 15,186,857 29,251,376 31,189,187 28,537,104 29,489,719
============ =========== =========== =========== ===========
Operating earnings (loss)$ (8,075,141)(7,172,383) 2,189,882 347,102 (5,371,951)
Partnership's share of
operations of uncon-
solidated ventures . 761,233 1,116,541 2,405,822 (4,744,175) (6,945,209)
Venture partner's share
of consolidated
venture's operations -- -- -- 200,393 3,977,004
Gain on sale of interest
in unconsolidated
venture and disposi-
tion of investment
properties . . . . . 3,832,429 64,571,942 150,443 -- 71,311
Extraordinary item . . 3,934,532 -- -- -- --
------------ ----------- ----------- ----------- -----------
Net earnings (loss). .$ 453,053 58,516,100 4,746,147 (4,196,680) (8,268,845)
============ =========== =========== =========== ===========
Net earnings (loss)
per Interest (b):
Net operating earnings
(loss) . . . . . .$ (46.81) (38.76) 29.41 (26.85) (55.85)
Gain on sale of interest
in unconsolidated
venture and disposi-
tion of investment
properties . . . . 25.29 426.16 .99 -- .47
Extraordinary item . 25.97 -- -- -- --
------------ ----------- ----------- ----------- -----------
Net earnings (loss). .$ 4.45 387.40 30.40 (26.85) (55.38)
============ =========== =========== =========== ===========
Total assets . . . . .$ 56,832,712 170,327,264 140,905,552 139,176,753 149,275,407
Long-term debt . . . .$ 7,890,281 -- 46,800,991 74,095,311 74,353,958
Cash distributions
per Interest (c) . .$ 466.00 16.00 22.00 40.00 47.50
============ =========== =========== =========== ===========
<FN>
- -------------
(a) The above selected financial data should be read in
conjunctionwith the consolidated financial statements and the related notes
appearing elsewhere in this annual report.
(b) The net earnings (loss) per Interest is based upon the number
ofInterests outstanding at the end of each period (150,005).
(c) Cash distributions from the Partnership are generally not equal
toPartnership income (loss) for financial reporting or Federalincome tax
purposes. Each Partner's taxable income (or loss) from the Partnership in
each year is equal to his allocable share of the taxable income (loss) of
the Partnership, without regard to the cash generated or distributed by the
Partnership. Accordingly, cash distributions to the Limited Partners since
theinception of the Partnership have not resulted in taxable income to such
Limited Partners and have therefore represented a return of capital.
</TABLE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1995
<CAPTION>
Property
- --------
North Hills
Mall a) The gross leasable area ("GLA") occupancy rate and average base rent per square foot
asof December 31 for each of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>
1991. . . . . 86% 18.13
1992. . . . . 87% 15.90
1993. . . . . 99% 15.57
1994. . . . . 95% 15.94
1995. . . . . 92% 15.27
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base RentScheduled LeaseLease
b) Significant Tenants Square FeetPer AnnumExpiration DateRenewal Option(s)
------------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
General Cinema 28,472 $347,000 6/2005 N/A
(Movie Theatre)
No other tenants comprise
more than 10% of the
GLA at the property.
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration
ofleases for the next ten years at the North Hills Mall:
Annualized Percent of
Number of Approx. Total Base Rent Total 1995
Year Ending Expiring GLA of Expiringof Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- -------------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1996 24 31,863 372,216 12%
1997 6 19,627 141,312 5%
1998 6 8,653 203,988 7%
1999 8 7,898 169,740 5%
2000 5 10,709 264,084 9%
2001 4 10,312 178,680 6%
2002 4 7,099 177,852 6%
2003 6 13,130 208,512 7%
2004 5 17,907 298,068 10%
2005 5 44,690 732,984 24%
<FN>
(1) Excludes leases that expire in 1996 for which renewal leases or leases
withreplacement tenants have been executed as of March 25, 1996.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On June 29, 1983, the Partnership commenced an offering
of$150,000,000of Limited Partnership Interests pursuant to a
RegistrationStatement on Form S-11 under the Securities Act of 1933. All
Interests were subscribed and issued between June 29, 1983 and November 1,
1983 pursuant to the public offering from which the Partnership received
gross proceeds of $150,000,000.
After deducting selling expenses and other offering costs,
thePartnership had approximately $135,651,000 with which to make
investments in income-producing commercial and residential real property,
to pay legal fees and other costs (including acquisition fees) related to
such investments and for working capital. A portion of such proceeds
wasutilized to acquire the properties described in Item 1 above.
During February 1995, approximately $68,100,000 was distributed to
theLimited Partners, substantially all of which represented sales
proceedsfrom the December 1994, sale of the Collin Creek Mall as discussed
below. The Partnership has retained a portion of the Collin Creek Mall
sales proceeds as working capital as also discussed below. At December
31,1995, the Partnership and its consolidated venture had cash and cash
equivalents of approximately $21,432,000. Bank overdrafts of
approximately$378,000 as of December 31, 1995 have been subsequently
repaidas of January 1996. Such remaining funds are available for
distributions to partners and for working capital requirements including
tenant and capital improvements, to the extent not funded from future
operations, and to fund any cash flow deficits at Royal Executive Park as
discussed below. The Partnership and its consolidated venture have
currently budgeted in 1996 approximately $713,000 for tenant improvements
and other capital expenditures. The Partnership's share of such items and
its share of such similar items for its unconsolidated ventures in 1996 is
currently budgeted to be approximately $1,845,000. Actual amounts
expendedin 1996 may vary depending on a number of factors including actual
leasing activity, results of property operations, liquidity considerations
and other market conditions over the course of the year. The source of
capital for such items and for both short-term and long-term future
liquidity and distributions is expected to be through existing working
capital, net cash generated by the Partnership's investment properties and
through the sale of such investments. As more fully described in Notes 7
and 3(b), the Partnership sold the Collin Creek Mall in December 1994 and
Animas Valley Mall in June 1995. The Partnership's mortgage obligation
forNorth Hills Mall is a separate non-recourse loan secured individually
bythe property and is not an obligation of the entire investment
portfolio,and the Partnership and its ventures are not personally liable
for the payment of the mortgage indebtedness.
Currently, as more fully discussed below, the Partnership is
exploringthe addition of a major department store at the North Hills Mall
which, if undertaken, may require the Partnership to commit a substantial
amount of capital. Also, the Partnership may need to commit capital for
its share of leasing costs associated with the vacant space at the Royal
Executive Park office building as discussed below. Any decision to commit
additional amounts to these investment properties for any purpose will be
based on, among other things, the likelihood of the return of such
additional investment plus a reasonable profit thereon within the expected
holding period of these assets as discussed below. Future distributions
from sales or operations will depend upon a combination of the operating
cash flow from the remaining investment properties and the longer term
capital requirements of the Partnership. The Partnership distributed $4
per interest per quarter from operations to the Limited Partners in 1995.
Starting in May 1996, in an effort to reduce partnership
operatingexpenses,the Partnership expects to make semi-annual, rather
thanquarterly, distributions of available operating cash flow.
Occupancy at the 40 Broad Street property has remained
atapproximately77% during 1995. Tenant leases representing 16% of
theproperty expire in 1996, not all of whom are expected to renew.
ThePartnership will continue its aggressive leasing program; however,
thedowntown New York City market remains extremely competitive due to
thesignificant amount of space available primarily resulting from the
layoffs, cutbacks and consolidations by financial service companies and
related businesses which dominated this market. In addition to
competitionfor tenants in the downtown Manhattan market from other
buildings in the area, there is increasing competition from less expensive
alternatives to Manhattan. Rental rates in the downtown market are
currently at depressed levels and this can be expected to continue for the
foreseeable future while the current vacant space is gradually absorbed.
Little, if any new construction is planned for downtown over the next few
years and it is expected that the building will continue to be adversely
affected by the lower than originally expected effective rental rates
achieved upon releasing of existing leases which expire over the next few
years. In addition, new leases will likely require expenditures for lease
commissions and tenant improvements prior to tenant occupancy. This
decline in rental rates, the anticipated increase in re-leasing time and
the costs upon re-leasing will result in a decrease in cash flow from
operations over the near term.
The Partnership continues to seek the replacement of a major
tenant,which owns its own store, at the North Hills Mall with another
majortenant and/or adding another major tenant to the center. The major
tenant, which is currently using only the first level of its two-story
store, has expressed an interest in closing its store. In order to
replacethe major tenant with another and/or add another major tenant, the
Partnership may need to commit substantial capital. Though discussions
have been had between the Partnership and various prospective tenants, due
to local market conditions and the condition of the retail industry in
general, the Partnership has been unable to make significant progress in
this regard. Therefore, there can be no assurance that such replacement
and/or addition will ultimately occur. The Partnership completed the
fourth year of a five-year program to repair the property's roof and
parking lot. The total cost of the repair is expected to be approximately
$1,375,000, of which approximately $1,300,000 has been incurred to date.
In addition, the Partnership commenced an approximate $500,000 enhancement
program to upgrade the mall's entrances and exterior signage during 1995
and 1996, of which approximately $435,000 has been incurred to date. The
work scheduled in 1996 has been included in the budgeted improvement costs
described above. The total five-year costs will be partially recoverable
from tenants pursuant to provisions in their leases.
The Partnership and the mortgage lender agreed to extend the July
1,1995 maturity date of the mortgage loan on the North Hills Mall
untilDecember 1, 1995. During this extension, the Partnership made a
cumulative paydown of approximately $860,000. The interest rate of 12.5%
on the mortgage loan remained unchanged during this extension. On
November30, 1995, the Partnership refinanced the mortgage loan (with a
thenoutstanding balance of $6,972,974) with a new lender. The new
mortgageloan has a principal balance of $8,000,000 and monthly principal
and interest payments of $57,182, which are based upon an interest rate
perannum of 7.125% and a 25-year amortization schedule, through January 1,
2001 when the remaining principal balance of $7,318,330 is due and payable.
The non-recourse first mortgage secured by the Pasadena Town
SquareMall investment property matured in January, 1995. The
Partnershipcontinued to remit debt service payments to the lender based on
the cash generated by the property while negotiating for an extension or
refinancing of the loan. Further negotiations with the lender to obtain a
loan refinancing and/or extension proved futile. The Partnership, after
taking into consideration the costs to retain and/or add another anchor
tenant and associated mall leasing difficulties, current and projected
local economic conditions, decreasing sales and increased competition from
new and recently renovated retail properties within the trade area of
theinvestment property, decided not to commit any significant further
amounts of capital to this property.
Effective October 3, 1995, due to the Partnership's default in
thepayment of all amounts owed, the mortgage lender concluded proceedings
to realize upon its mortgage security and obtained title to the property.
Although the Partnership no longer has a ownership interest in
PasadenaTownSquare Mall, it has retained ownership of an approximately two
acre unencumbered unimproved land outparcel adjacent to the property.
ThePartnership recognized an extraordinary gain of $1,714,924 on the
discharge of indebtedness for financial reporting purposes in 1995. The
Partnership recognized a gain of $3,584,938 for Federal income tax
purposesin 1995 without any distributable proceeds. Previously, due to
thefactors discussed above, and due to the uncertainty of the
Partnership'sability to recover the net carrying value of the Pasadena
TownSquare investment property through future operations and sale, the
Partnership at December 31, 1994, recorded as a matter of prudent
accounting practice, a provision for value impairment of such investment
of$8,434,103. Such provision was recorded to reduce the net carrying
valueof the investment property to the then outstanding balance of the
related non-recourse financing.
The Partnership, through the Animas joint venture, sold the
AnimasValley Mall and a related land outparcel on June 30, 1995. The
mortgage loan secured by the property was satisfied in full from proceeds
of the sale. Reference is made to Note 7(b) for a further description of
this sale.
Royal Executive Park competes in a market where office
buildingdevelopment is virtually at a standstill, significant improvement
in the competitive market conditions is not expected for several years.
The competitive market conditions have resulted in lower than
originallyanticipated effective rental rates that can be achieved and high
releasing costs that will be incurred in conjunction with releasing space
which expires. Consequently, the property cash flow has been
significantlyreduced as a result of increased vacancy and the modification
of MCI's lease that resulted in an extension in return for reduced rent
that would approximate market rates. Therefore, the Partnership and joint
venture partner may need to contribute capital to the joint venture in the
future in order to pay for leasing costs associated with the lease-up of
the current vacant space. In response to the uncertainty of the
Partnership's ability to recover the net carrying value of the Royal
Executive Park joint venture investment through future operations and sale
during the estimated holding period, as of September 30, 1995, the
Partnership recorded as a matter of prudent accounting practice, a
provision for value impairment of such investment of $9,300,000. Such
provisions was recorded to reduce the net carrying value of the joint
venture investment to its then estimated fair value. There can be no
assurance that such fair value would be obtained by the Partnership in any
future sale or disposition transaction.
The property was managed by an affiliate of the joint venture
partnerunder an agreement which provided for fees equal to 2% of the base
rent paid by tenants. Effective July 1, 1994, an affiliate of the
GeneralPartner of the Partnership assumed the property management
responsibilities for the joint venture. The new manager essentially
assumed the previous management agreement with the exception that a
portionof the 2% management fee will be paid to the previous manager
annually by the new manager as compensation to the previous manager for
relinquishing management of the property. In addition, the affiliate
assumed the leasing responsibilities for the property. In December 1994,
the assets of the above affiliated property manager of the General Partner
of the Partnership were sold, and its interest in its management contracts
assigned, to an unaffiliated third party.
There are certain risks associated with the Partnership's
investmentsmade through joint ventures including the possibility that
thePartnership's joint venture partners in an investment might become
unable or unwilling to fulfill their financial or other obligations, or
that such joint venture partners may have economic or business interests
orgoals that are inconsistent with those of the Partnership.
As a result of the real estate market conditions discussed above,
thePartnership continues to conserve its working capital. All
expendituresare carefully analyzed and certain capital projects are
deferred when appropriate. The Partnership may also seek additional loan
modifications where appropriate. By conserving working capital, the
Partnership will be in a better position to meet the future needs of its
properties. The Partnership has decided to retain approximately $15.7
million of the Collin Creek Mall and the approximately $800,000 of the
Animas Valley Mall net sale proceeds (Notes 7 and 3(b)) in its working
capital. These funds will be available, if necessary or deemed
appropriateby the General Partners, for the programs to enhance the
Partnership's properties as discussed above. Due to the factors outlined
above, the Partnership has held certain of its investment properties
longerthan originally anticipated in an effort to maximize the return to
the Limited Partners. However, after reviewing the remaining properties
and the marketplaces in which they operate, the General Partners of the
Partnership expect to be able to conduct an orderly liquidation of its
remaining investment portfolio as quickly as practicable. Therefore, the
affairs of the Partnership are expected to be wound up no later than
December 31, 1999 (sooner if the properties are sold in the nearer term),
barring unforeseen economic developments.
RESULTS OF OPERATIONS
The aggregate decrease in cash and cash equivalents and in short-
terminvestments at December 31, 1995 as compared to December 31, 1994
isprimarily due to the February 1996 partial distribution of sale proceeds
of $68,102,270 from the sale of Collin Creek Mall in 1994.
The decrease in prepaid expenses, land, buildings and
improvements,accumulated depreciation, accrued rent receivable, current
portion of long-term debt, accounts payable, accrued interest and accrued
real estate taxes at December 31, 1995 as compared to December 31, 1994 is
primarily due to the sale of the Animas Valley Mall and a related land
outparcel in June 1995 (Note 3(b)) and the transfer of title to the lender
on Pasadena Town Square Mall in October 1995 (Note 2(d)).
The increase in escrow deposits at December 31, 1995 as compared
toDecember 31, 1994 is primarily due to the escrowing of real estate
taxpayments at the North Hills Mall investment property in compliance with
the refinanced loan.
The increase in deferred expenses at December 31, 1995 as compared
toDecember 31, 1994 is primarily due to the capitalization of
refinancingcosts in connection with the new mortgage loan at the North
Hills Mall investment property.
The decrease in investments in unconsolidated ventures at December
31,1995 as compared to December 31, 1994 is primarily due to the
Partnership provision for value impairment of $9,300,000 of its investment
in the Royal Executive Park Joint Venture as of September 30, 1995 (Note
3(c)).
The decrease in current portion of long-term debt and the
relatedincrease in long-term debt at December 31, 1995 as compared to
December 31, 1994 is also due to the reclassification of the mortgage loan
at the North Hills Mall investment property due to the refinancing in
November 1995 (Note 4(b)).
The decrease in rental income, mortgage and other
interest,depreciation, property operating expenses and amortization of
deferred expenses for the year ended December 31, 1995 as compared to the
year ended December 31, 1994 is primarily due to the sale of Collin Creek
Mall in December 1994 (Note 7(a)), the sale of the Animas Valley Mall and
arelated land outparcel in June 1995 (Note 3(b)) and the transfer of title
to the lender on Pasadena Town Square Mall in October 1995 (Note 2(d)).
The decrease in rental income for the year ended December 31, 1994
ascompared to the year ended December 31, 1993 is primarily the result
oflower effective rents obtained upon renewal by tenants and lower
occupancy at the Pasadena Town Square.
The increase in interest income for the year ended December 31,
1995ascompared to the year ended December 31, 1994 is primarily due to
theincrease in the Partnership's average balance in U.S.
Governmentobligations due to the temporary investment of proceeds from the
Collin Creek Mall investment property sale. In addition, the increase in
interest income for the year ended December 31, 1994 as compared to the
year ended December 31, 1993 is primarily due to the increase in the
Partnership's average balance in U.S. Government obligations and higher
rates earned in 1994.
The decrease in mortgage and other interest for the year
endedDecember31, 1994 as compared to the year ended December 31, 1993 is
due primarily to the lower interest rate charged on the Animas Valley
mortgage loan based on the loan modification in 1994 (Note 3(b)).
The increase in professional services for the year ended December
31,1995 as compared to the year ended December 31, 1994 is mainly due
toincreased legal costs at the Animas Valley Mall investment
propertyunrelated to the sale.
The increase in amortization of deferred expenses for the year
endedDecember 31, 1994 as compared to the year ended December 31, 1993
isprimarily due to the sale of the Collin Creek Mall in December 1994
(Note7).
The increase in general and administrative expenses for the year
endedDecember 31, 1995 as compared to the year ended December 31, 1994
areattributable primarily to an increase in reimbursable costs to
affiliates of the General Partner in 1995 and the recognition of certain
additional prior year reimbursable costs to such affiliates (Note 9).
The provision for value impairment of $9,300,000 in 1995 is due to
thePartnership reduction of the net carrying value of its investment in
theRoyal Executive Park Joint Venture as of September 30, 1995 (Note 3(c)).
The provision for value impairment of $8,434,103 in 1994 is due to
thereduction of the net carrying value of the Pasadena Town Square
investment property as of December 31, 1994.
The decrease in Partnership's share of operations of
unconsolidatedventures for the year ended December 31, 1995 as compared to
the year ended December 31, 1994 and for the year ended December 31, 1994
as compared to the year ended December 31, 1993 is due primarily to a
modification of the MCI lease at Royal Executive Park in mid-1994 that
included a reduction in the rent payable to the Royal Executive Park Joint
Venture as discussed in Note 3(c).
The gain of $3,832,429 on sale of investment properties during 1995
isthe result of the sale of the Animas Valley Mall and a related
landoutparcel in June 1995. The gain of $64,571,942 on sale of
investmentproperties during 1994 is the result of the outparcel sale at
theNorth Hills Mall ($517,128) in February 1994 and the sale of the Collin
Creek Mall ($64,054,814) in December 1994. The gain of $150,433 on sale
ofinvestment properties during 1993 is the result of the outparcel sale
atthe Animas Valley Mall. See Notes 2(c), 3(b) and 7.
The extraordinary item of $3,934,532 for the year ended December
31,1993 is due to the discharge of indebtedness of $2,219,608 and
$1,714,924 at both the Animas Valley Mall and Pasadena Town Square
investment properties in 1995, respectively. See Notes 2(d) and 3(b).
INFLATION
Due to the decrease in the level of inflation in recent
years,inflation generally has not had a material effect on rental income
orproperty operating expenses.
Inflation is not expected to significantly impact future
operationsdueto the expected liquidation of the Partnership by 1999.
However, to the extent that inflation in future periods would have an
adverse impact on property operating expenses, the effect would generally
be offset by amounts recovered from tenants as many of the long-term
leasesat the Partnership's commercial properties have escalation clauses
covering increases in the cost of operating and maintaining the properties
as well as real estate taxes. Therefore, there should be little effect
onoperating earnings if the properties remain substantially occupied.
Inaddition, substantially all of the leases at the Partnership's
shoppingcenter investment contain provisions which entitle the Partnership
to participate in gross receipts of tenants above fixed minimum amounts.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1995 and 1994
Consolidated Statements of Operations, years ended December 31,
1995, 1994 and 1993
Consolidated Statements of Partners' Capital Accounts,
years ended December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows, years ended December 31,
1995, 1994 and 1993
Notes to Consolidated Financial Statements
SCHEDULE
--------
Consolidated Real Estate and Accumulated DepreciationIII
SCHEDULES NOT FILED:
All schedules other than the one indicated in the index have
beenomitted as the required information is inapplicable or the information
is presented in the consolidated financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
JMB INCOME PROPERTIES, LTD. - X:
We have audited the consolidated financial statements of JMB
IncomeProperties, Ltd. - X (a limited partnership) and consolidated
ventureas listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are
theresponsibility of the General Partners of the Partnership.
Ourresponsibility is to express an opinion on these consolidated
financialstatements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditingstandards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial state-
mentsare 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 the General Partners of
the Partnership as well as evaluating the overall financial
statementpresentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred
toabovepresent fairly, in all material respects, the financial position
ofJMB Income Properties, Ltd. - X and consolidated venture as of December
31, 1995 and 1994, and the results of their operations and their cash
flowsfor each of the years in the three-year period ended December 31,
1995, in conformity with generally accepted accounting principles. Also
inour opinion, the related financial statement schedule, when considered
inrelation to the basic consolidated financial statements taken as a
whole,presents fairly, in all material respects, the information set
forththerein.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 25, 1996
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
------
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . $ 21,431,887 84,486,464
Short-term investments (note 1). . . . . . . . . . . . . . -- 2,880,712
Rents and other receivables, net of allowance for doubtful
accounts of $38,235 in 1995 and $109,345 in 1994 . . . . 485,078 455,293
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . 29,642 88,265
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . 772,831 35,190
------------ -----------
Total current assets . . . . . . . . . . . . . . . 22,719,438 87,945,924
------------ -----------
Investment properties, at cost (notes 2 and 3) - Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,133,642 8,486,896
Buildings and improvements . . . . . . . . . . . . . . . . 23,512,818 80,610,282
------------ -----------
26,646,460 89,097,178
Less accumulated depreciation. . . . . . . . . . . . . . . 7,645,144 31,896,865
------------ -----------
Total investment properties,
net of accumulated depreciation. . . . . . . . . 19,001,316 57,200,313
Investments in unconsolidated ventures, at equity
(notes 1, 3 and 10). . . . . . . . . . . . . . . . . . . . 14,404,307 24,030,924
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . 218,659 78,319
Accrued rents receivable . . . . . . . . . . . . . . . . . . 488,992 1,071,784
------------ -----------
$ 56,832,712 170,327,264
============ ===========
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1995 1994
------------ -----------
Current liabilities:
Bank overdrafts. . . . . . . . . . . . . . . . . . . . . . $ 378,034 --
Current portion of long-term debt (notes 2 and 4). . . . . 109,719 49,254,780
Accounts payable . . . . . . . . . . . . . . . . . . . . . 171,022 400,600
Accrued interest . . . . . . . . . . . . . . . . . . . . . 539,342 2,644,247
Accrued real estate taxes. . . . . . . . . . . . . . . . . 618,256 1,448,958
------------ -----------
Total current liabilities. . . . . . . . . . . . . 1,816,373 53,748,585
Tenant security deposits . . . . . . . . . . . . . . . . . . 16,500 19,844
Long-term debt, less current portion (note 4). . . . . . . . 7,890,281 --
------------ -----------
Commitments and contingencies (notes 2, 3, 4 and 9)
Total liabilities. . . . . . . . . . . . . . . . . 9,723,154 53,768,429
Partners' capital accounts (note 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . 1,000 1,000
Cumulative net earnings. . . . . . . . . . . . . . . . 1,152,263 1,367,150
Cumulative cash distributions. . . . . . . . . . . . . (250,000) (250,000)
------------ -----------
903,263 1,118,150
------------ -----------
Limited partners (150,005 interests):
Capital contributions, net of offering costs . . . . . 135,651,080 135,651,080
Cumulative net earnings. . . . . . . . . . . . . . . . 74,542,775 73,874,835
Cumulative cash distributions. . . . . . . . . . . . . (163,987,560) (94,085,230)
------------ -----------
46,206,295 115,440,685
------------ -----------
Total partners' capital accounts . . . . . . . . . 47,109,558 116,558,835
------------ -----------
$ 56,832,712 170,327,264
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . $13,190,501 29,048,572 31,068,579
Interest income. . . . . . . . . . . . . . 1,996,356 202,804 120,608
----------- ----------- -----------
15,186,857 29,251,376 31,189,187
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . 4,074,322 8,291,721 9,547,844
Depreciation . . . . . . . . . . . . . . . 1,690,411 4,471,238 4,361,608
Property operating expenses. . . . . . . . 7,360,538 14,459,130 14,290,240
Professional services. . . . . . . . . . . 270,316 198,131 346,151
Amortization of deferred expenses. . . . . 48,422 305,061 165,918
General and administrative . . . . . . . . 517,989 264,375 287,544
Provision for value impairment (note 1). . 9,300,000 8,434,103 --
----------- ----------- -----------
23,261,998 36,423,759 28,999,305
----------- ----------- -----------
Operating earnings (loss). . . . . . . (8,075,141) (7,172,383) 2,189,882
Partnership's share of operations of
unconsolidated ventures (note 1) . . . . . 761,233 1,116,541 2,405,822
----------- ----------- -----------
Net operating earnings (loss) (7,313,908) (6,055,842) 4,595,704
Gain on sale of investment
properties (notes 2(c), 3(b) and 7). . . . 3,832,429 64,571,942 150,443
----------- ----------- -----------
Earnings (loss) before extraordinary items . (3,481,479) 58,516,100 4,746,147
Extraordinary items (notes 2(d) and 3(b)). . 3,934,532 -- --
----------- ----------- -----------
Net earnings . . . . . . . . $ 453,053 58,516,100 4,746,147
=========== =========== ===========
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net earnings (loss) per limited partnership
interest (note 1):
Net operating earnings (loss) . . . . . $ (46.81) (38.76) 29.41
Gain on sale of investment properties . 25.29 426.16 .99
----------- ----------- -----------
Earnings (loss) before extraordinary items (21.52) 387.40 30.40
Extraordinary items . . . . . . . . . . 25.97 -- --
----------- ----------- -----------
Net earnings . . . . . . . . $ 4.45 387.40 30.40
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (150,005 INTERESTS) (note 1)
--------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS)DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ---------------------------------- ----------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance
at Decem-
ber 31,
1992. . . . $1,000 778,332 (250,000) 529,332 135,651,080 11,201,406 (88,385,040)58,467,446
Cash distri-
butions
($22 per
limited
partnership
interest) . -- -- -- -- -- -- (3,300,110)(3,300,110)
Net earnings
(note 5). . -- 185,332 -- 185,332 -- 4,560,815 -- 4,560,815
------ --------- ---------- -------- ----------- ---------- ---------------------
Balance
at Decem-
ber 31,
1993. . . . $1,000 963,664 (250,000) 714,664 135,651,080 15,762,221 (91,685,150)59,728,151
Cash distri-
butions
($16 per
limited
partnership
interest) . -- -- -- -- -- -- (2,400,080)
(2,400,080)
Net earnings
(note 5). . -- 403,486 -- 403,486 -- 58,112,614 -- 58,112,614
------ --------- ---------- --------- ----------- ---------- ----------------------
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (150,005 INTERESTS) (note 1)
--------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS)DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------------------- --------- ----------- ---------------------------------
Balance
at Decem-
ber 31,
1994. . . . $1,000 1,367,150 (250,000) 1,118,150 135,651,080 73,874,835 (94,085,230)115,440,685
Cash distri-
butions
($466 per
limited
partnership
interest) . -- -- -- -- -- -- (69,902,330)(69,902,330)
Net earnings
(loss)
(note 5). . -- (214,887) -- (214,887) -- 667,940 -- 667,940
------ --------- ---------- --------- ----------- ---------- ---------------------
Balance
at Decem-
ber 31,
1995. . . . $1,000 1,152,263 (250,000) 903,263 135,651,080 74,542,775(163,987,560)46,206,295
====== ========= ========== ========= =========== ========== =====================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . $ 453,053 58,516,100 4,746,147
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . 1,690,411 4,471,238 4,361,608
Amortization of deferred expenses. . . . . 48,422 305,061 165,918
Provision for value impairment (note 1). . 9,300,000 8,434,103 --
Partnership's share of operations of
unconsolidated ventures, net of
distributions. . . . . . . . . . . . . . 451,367 (943,809) (701,307)
Gain on sale of investment properties. . . (3,832,429) (64,571,942) (150,443)
Extraordinary items. . . . . . . . . . . . (3,934,532) -- --
Changes in:
Rents and other receivables. . . . . . . . (29,785) 176,667 213,526
Prepaid expenses . . . . . . . . . . . . . 58,623 144,854 (35,293)
Escrow deposits. . . . . . . . . . . . . . 35,190 (16,247) 127
Accrued rents receivable . . . . . . . . . 27,557 795,028 (1,500,623)
Accounts payable . . . . . . . . . . . . . (229,578) (384,017) (210,612)
Accrued interest . . . . . . . . . . . . . 834,600 (359,558) 848,342
Accrued real estate taxes. . . . . . . . . (295,413) (1,098,168) (89,713)
Tenant security deposits . . . . . . . . . (3,344) (12,034) (6,608)
------------ ----------- -----------
Net cash provided by operating
activities . . . . . . . . . . . . 4,574,142 5,457,276 7,641,069
Cash flows from investing activities:
Net sales and maturities of short-term
investments. . . . . . . . . . . . . . . . 2,880,712 309,267 113,429
Cash sales proceeds from sale of investment
property, net of selling expenses. . . . . 27,785,046 108,385,182 188,432
Additions to investment properties
(including changes in related payables). . (802,067) (3,006,843) (4,658,162)
Partnership distributions from
unconsolidated ventures. . . . . . . . . . -- -- 237,176
Partnership's contribution to
unconsolidated ventures. . . . . . . . . . (124,750) (424,153) --
Payment of deferred expenses . . . . . . . . (156,661) (54,962) (60,961)
------------ ----------- -----------
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1995 1994 1993
----------- ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . 29,582,280 105,208,491 (4,180,086)
------------ ----------- -----------
Cash flows from financing activities:
Bank overdrafts. . . . . . . . . . . . . . . 378,034 -- --
Cash proceeds from refinancing of
long-term debt . . . . . . . . . . . . . . 7,363,196 -- --
Payments of real estate escrow deposits from
refinancing. . . . . . . . . . . . . . . . 772,831 -- --
Payment of deferred refinancing expenses . . 59,084 -- --
Principal payments on long-term debt . . . . (35,881,814) (24,840,531) (258,647)
Distributions to limited partners. . . . . . (69,902,330) (2,400,080) (3,300,110)
------------ ----------- -----------
Net cash used in financing activities (97,210,999) (27,240,611) (3,558,757)
------------ ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . (63,054,577) 83,425,156 (97,774)
Cash and cash equivalents,
beginning of year. . . . . . . . . 84,486,464 1,061,308 1,159,082
------------ ----------- -----------
Cash and cash equivalents,
end of year. . . . . . . . . . . . $ 21,431,887 84,486,464 1,061,308
============ =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest,
net of amount capitalized ($136,915 in
1993). . . . . . . . . . . . . . . . . . . $ 3,239,722 8,651,279 8,699,502
============ =========== ===========
Non-cash investing and financing activities:
Extraordinary item:
Disposition of investment property (note 2(d)):
Balance due on mortgage note payable. . $ 14,399,992 -- --
Balance due on accrued interest cancelled 719,897 -- --
Reduction of investment properties. . . (13,555,611) -- --
Reduction of accrued real estate taxes. 535,289 -- --
Reduction of accrued rent receivables . (357,660) -- --
Reduction of deferred expenses. . . . . (26,983) -- --
------------ ----------- -----------
Non-cash gain recognized due to
lender realizing upon security . . $ 1,714,924 -- --
============ =========== ===========
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1995 1994 1993
----------- ----------- -----------
Sale of investment property (notes 3(b) and 7):
Balance due on accrued interest cancelled$ 2,219,608 -- --
============ =========== ===========
Non-cash gain recognized on
sale of investment property. . . . $ 2,219,608 -- --
============ =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
(1) OPERATIONS AND BASIS OF ACCOUNTING
The Partnership holds (either directly or through joint ventures)
anequity investment portfolio of United States real estate.
Businessactivities consist of rentals to a wide variety of commercial and
retail companies, and the ultimate sale or disposition of such real estate.
The Partnership currently expects to conduct an orderly liquidation of
itsremaining investment portfolio and wind up its affairs not later
thanDecember 31, 1999.
The accompanying consolidated financial statements include
theaccountsof the Partnership and its venture, Animas Valley Mall
Associates ("Animas") (note 3(b)). The effect of all transactions between
the Partnership and its venture has been eliminated in the consolidated
financial statements. The equity method of accounting has been applied
inthe accompanying consolidated financial statements with respect to,
thePartnership's venture interests in Royal Executive Park - I
("RoyalExecutive Park") (note 3(c)) and JMB-40 Broad Street Associates
("Broad Street") (note 3(d)). Accordingly, the accompanying consolidated
financial statements do not include the accounts of Royal Executive Park
orof Broad Street.
The Partnership records are maintained on the accrual basis
ofaccounting as adjusted for Federal income tax reporting purposes.
Theaccompanying consolidated financial statements have been prepared from
such records after making appropriate adjustments to present the
Partnership's accounts in accordance with generally accepted accounting
principles ("GAAP") and to consolidate the accounts of the venture as
described above. Such GAAP and consolidation adjustments are not recorded
on the records of the Partnership. The net effect of these items for the
years ended December 31, 1995 and 1994 is summarized as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------------ ------------------------------
TAX BASIS
GAAP BASIS (Unaudited) GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . $56,832,712 64,374,114 170,327,264 151,765,387
Partners' capital accounts
(deficits) (note 5):
General partners. . . . . 903,263 161,278 1,118,150 (132,634)
Limited partners. . . . . 46,206,295 63,663,091 115,440,685 127,796,690
Net earnings (loss) (note 5):
General partners. . . . . (214,887) 293,912 403,486 773,816
Limited partners. . . . . 667,940 5,768,731 58,112,614 78,778,519
Net earnings per limited
partnership interest . . . . 4.45 40.11 387.40 525.17
=========== ========== =========== ===========
</TABLE>
The net earnings per limited partnership interest is based upon
thenumber of limited partnership interests outstanding at the end of
eachperiod (150,005).
The preparation of financial statements in accordance with
GAAPrequires the Partnership to make estimates and assumptions that affect
the reported or disclosed amount of assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expensesduring the reporting period. Actual results could differ from
those estimates.
Statement of Financial Accounting Standards No. 95 requires
thePartnership to present a statement which classifies receipts and
payments according to whether they stem from operating, investing or
financing activities. The required information has been segregated and
accumulated according to the classifications specified in the
pronouncement. Partnership distributions from unconsolidated ventures are
considered cash flow from operating activities only to the extent of the
Partnership's cumulative share of net earnings. The Partnership records
amounts held in U.S. Government obligations at cost, which approximates
market. For the purposes of these statements, the Partnership's policy is
to consider all such amounts held with original maturities of three months
or less ($21,431,887 and $84,486,464 at December 31, 1995 and 1994,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.
Deferred loan fees are amortized over the term of the respective
loanagreement.
Although certain leases of the Partnership provide for
tenantoccupancy during periods for which no rent is due and/or increases
inminimum lease payments over the term of the lease, the Partnership
accrues prorated rental income for the full period of occupancy on a
straight-line basis.
Statement of Financial Accounting Standards No. 107 ("SFAS
107"),"Disclosures about Fair Value of Financial Instruments", requires
allentities to disclose the SFAS 107 value of all financial assets
andliabilities for which it is practicable to estimate. Value is defined
in the Statement as the amount at which the instrument could be exchanged
in a current transaction between willing parties, other than in a forced
orliquidation sale. The Partnership believes the carrying amount of
itsfinancial instruments classified as current assets and
liabilities(excluding current portion of long-term debt) approximates SFAS
107 value due to the relatively short maturity of these instruments.
Thereis no quoted market value available for any of the Partnership's
otherinstruments. The debt, with a carrying balance of $8,000,000, has
been calculated to have an SFAS 107 value of $7,571,182 by discounting
thescheduled loan payments to maturity. Due to restrictions
ontransferability and prepayment or other property specific
competitiveconditions, the Partnership would be unable to refinance the
property to obtain such calculated debt amounts reported. (See note 4.)
The Partnership has no other significant financial instruments.
No provision for State or Federal income taxes has been made as
theliability for such taxes is that of the Partners rather than
thePartnership. However, in certain instances, the Partnership may
berequired under applicable law to remit directly to the tax
authoritiesamounts representing withholding from distributions paid to
partners.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership had acquired, either directly or through joint
venturearrangements (note 3), interests in three office buildings and
fiveshopping centers. Five investment properties have been sold or
disposed of by the Partnership. The remaining three investment properties
owned at December 31, 1995 were operating. The cost of the investment
properties represents the total cost to the Partnership or its
consolidatedventure plus miscellaneous acquisition costs.
Depreciation on the consolidated investment properties has
beenprovided over the estimated useful lives of the various components
asfollows:
YEARS
-----
Improvements--straight line . 30
Personal property--straight line 5
==
Maintenance and repair expenses are charged to operations as incurred.
Significant betterments and improvements are capitalized and
depreciatedover their estimated useful lives.
During March 1995, Statement of Financial Accounting Standards No.
121("SFAS 121") "Accounting for the Impairment of Long-Lived Assets and
forLong-Lived Assets to Be Disposed Of" was issued. SFAS 121, when
effective, will require that the Partnership record an impairment loss on
its long-lived assets to be held and used whenever their carrying value
cannot be fully recovered through estimated undiscounted future cash flows
from operations and sale. The amount of the impairment loss to be
recognized would be the difference between the long-lived asset's carrying
value and the asset's estimated fair value. Any long-lived assets
identified as "to be disposed of" would no longer be depreciated.
Adjustments for impairment loss would be made in each period as necessary
to report these assets at the lower of carrying value and fair value less
costs to sell. In certain situations, such estimated fair value could be
less than the existing non-recourse debt which is secured by the property.
There would be no assurance that any estimated fair value of these assets
would ultimately be obtained by the Partnership in any future sale or
disposition transaction.
Under the current impairment policy, provisions for value
impairmentare recorded with respect to investment properties whenever the
estimated future cash flows from a property's operations and projected
saleare less than the property's net carrying value. The amount of any
such impairment loss recognized by the Partnership is limited to the
excess, if any, of the property's carrying value over the outstanding
balance of the property's non-recourse indebtedness. An impairment loss
under SFAS 121 would be determined without regard to the nature or the
balance of such non-recourse indebtedness. Upon the disposition of a
property with the related extinguishment of the long-term debt for which
animpairment loss has been recognized under SFAS 121, the Partnership
wouldrecognize, at a minimum, a net gain (comprised of gain on
extinguishment of debt and gain or loss on sale or disposition of
property)for financial reporting purposes to the extent of any excess of
the then outstanding balance of the property's non-recourse indebtedness
over the then carrying value of the property, including the effect of any
reduction for impairment loss under SFAS 121.
The Partnership will adopt SFAS 121 as required in the first
quarterof1996. Based upon the Partnership's current assessment of the
impact of adopting SFAS 121, it is not anticipated that any significant
additional provisions for value impairment would be required for the
properties owned by the Partnership and its consolidated ventures, or by
the Partnership's unconsolidated ventures in the first period of
implementation of SFAS 121. In addition, upon the disposition of an
impaired property, the Partnership would generally recognize more net gain
for financial reporting purposes under SFAS 121 than it would have under
the Partnership's current impairment policy, without regard to the amount,
if any, of cash proceeds received by the Partnership in connection with
thedisposition. Although implementation of this new accounting statement
could significantly impact the Partnership's reported earnings, there
wouldbe no impact on cash flows. Further, any such impairment loss would
not be recognized for Federal income tax purposes.
The investment properties are pledged as security for the
long-termdebt, for which there is no recourse to the Partnership, as
described in note 4.
(b) Collin Creek Mall
During October 1983, the Partnership acquired a two-level
existingenclosed mall regional shopping center in Plano (Dallas), Texas.
The Partnership's purchase price for the mall was $49,000,000, which was
paid in cash at closing. In addition, the Partnership initially reserved
an additional $1,754,000 for capital improvements, tenant improvements,
lease-up expenses, financing fees and other expenditures. Also, in 1985,
the Partnership obtained a permanent loan in the amount of $25,000,000
(note 4), secured by the property.
In 1992 and 1993 the Partnership completed the renovation of the
foodcourt and main floor common area, added escalators at two locations
andupgraded the mall's interior and exterior signage. The total cost of
these enhancement programs was approximately $4,400,000. In addition, in
1994 the Partnership had commenced a parking lot repair project which was
to take five years to complete and cost approximately $1,300,000. In
December 1994, the Partnership sold the Collin Creek Mall. Reference is
made to note 7 for a further description of this sale.
(c) North Hills Mall
During October 1983, the Partnership acquired an existing
enclosedmallregional shopping center in North Richland Hills (Fort Worth),
Texas. The Partnership's purchase price for the mall was $13,000,000
whichwas paid in cash at closing. In addition, the Partnership initially
reserved an additional $465,000 for capital improvements, tenant
improvements, lease-up expenses, financing fees and other expenditures.
In 1985, the Partnership obtained a permanent loan in the amount
of$8,000,000 (note 4), secured by the property. The Partnership's
aggregate cash investment, including additional capital improvements and
other expenditures, is approximately $14,690,000.
Additionally, an affiliate of the General Partners of the
Partnershipobtained for the Partnership's benefit a right of first refusal
from the seller to acquire two additional parcels of land (approximately
10-acres) adjacent to the shopping center.
The Partnership continues to seek the replacement of a major
tenant,which owns its own store, with another major tenant and/or adding
another major tenant to the center. The major tenant, which is currently
using only the first level of its two-story store, has expressed an
interest in closing its store. In order to replace the major tenant with
another and/or add another major tenant, the Partnership may need to commit
substantial capital. Any decision to commit additional funds to
thisinvestment property for these purposes will be based on, among
otherthings, the likelihood of the return of such additional investment
plus a reasonable profit thereon. The Partnership believes the
replacementof the major tenant and/or addition of another major department
store to this center would greatly enhance the competitive position of
thiscenter within the North Richland Hills retail market. Though
discussions have been had between the Partnership and various prospective
tenants, due to local market conditions and the condition of the retail
industry in general, the Partnership has been unable to make significant
progress in this regard. Therefore, there can be no assurance that such
replacement and/or addition will ultimately occur.
In 1993, the Partnership completed a mall enhancement program
whichincluded the replacement of the floor in a portion of the mall, a
foodcourt remodel, and certain lighting improvements. The program
costapproximately $1,000,000. In addition, the Partnership completed
thefourth year of a five-year program to repair the property's roof
andparking lot. The total cost of the repair is expected to be
approximately $1,375,000, of which approximately $1,300,000 has been
incurred to date. Also, the Partnership commenced an approximate $500,000
enhancement program to upgrade the mall's entrances and exterior signage
during 1995 and 1996, of which approximately $435,000 has been incurred to
date. Such amounts are partially recoverable from tenants pursuant to
their leases.
On November 30, 1995, the Partnership refinanced the mortgage
loanwitha new lender as described in note 4(b).
In February 1994, the Partnership sold its sole remaining
landoutparcel to an unaffiliated third party. The sale price for the
outparcel was $700,000 (before selling costs and prorations). The
Partnership will retain these net sale proceeds in its working capital
reserve. The Partnership recognized a gain of $517,128 for financial
reporting purposes and a gain of $518,710 for Federal income tax purposes
in 1994.
(d) Pasadena Town Square Mall
During October 1983, the Partnership acquired an existing
enclosedmallregional shopping center in Pasadena (Houston), Texas.
ThePartnership's purchase price for the mall was $30,200,000 which was
paidin cash at closing. In addition, the Partnership initially reserved
anadditional $1,081,000 for capital improvements, tenant
improvements,lease-up expenses, financing fees and other expenditures. In
1985, the Partnership obtained a permanent loan in the amount of
$15,150,000 (note 4), secured by the property. The Partnership's
aggregatecash investment, including additional capital improvements and
other expenditures, was approximately $16,131,000.
The non-recourse first mortgage secured by the Pasadena Town
SquareMall investment property matured in January 1995. The
Partnershipcontinued to remit debt service payments to the lender based on
the cash generated by the property while negotiating for an extension or
refinancing of the loan. In 1995, the lender appointed a receiver to
oversee the property management obligations being performed by an
affiliateof the General Partner. The lender notified the Partnership of
its demand for payment of all sums owed. Further negotiations with the
lender to obtain a loan refinancing and/or extension proved futile. The
Partnership, after taking into consideration the costs to retain and/or
addanother anchor tenant and associated mall leasing difficulties, current
and projected local economic conditions, decreasing sales and increased
competition from new and recently renovated retail properties within the
trade area of the investment property, decided not to commit any
significant further amounts of capital to this property.
Effective October 3, 1995, due to the Partnership's default in
thepayment of all amounts owed, the mortgage lender concluded proceedings
to realize upon its mortgage security and obtained title to the property.
Although the Partnership no longer has a ownership interest in
PasadenaTownSquare Mall, it has retained ownership of an approximately two
acre unencumbered unimproved land outparcel adjacent to the property.
ThePartnership recognized an extraordinary gain of $1,714,924 on the
discharge of indebtedness for financial reporting purposes in 1995. The
Partnership recognized a gain of $3,584,938 for Federal income tax
purposesin 1995 without any net realizable proceeds. Previously, due to
the factors discussed above, and due to the uncertainty of the
Partnership's ability to recover the net carrying value of the Pasadena
Town Square investment property through future operations and sale, the
Partnership at December 31, 1994, recorded as a matter of prudent
accounting practice, a provision for value impairment of such investment
of$8,434,103. Such provisions were recorded to reduce the net carrying
value of the investment property to the then outstanding balance of the
related non-recourse financing.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at December 31, 1995 is a party to two operating
jointventure agreements. Pursuant to such agreements, the Partnership
madeinitial capital contributions of approximately $47,313,000 (before
legal and other acquisition costs and its share of operating deficits
asdiscussed below). Under certain circumstances, either pursuant to
theventure agreements or due to the Partnership's obligations as a
generalpartner, the Partnership may be required to make additional cash
contributions to the ventures.
The Partnership has acquired, through the above ventures, one
shoppingmall and two office buildings. The venture properties have been
financed under various long-term debt arrangements as described in note 4.
There are certain risks associated with the Partnership's investments
madethrough joint ventures including the possibility that the
Partnership'sjoint venture partners in an investment might become unable
orunwilling to fulfill its financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
(b) Animas Valley Mall
In October 1983, the Partnership acquired through a joint venture
withthe developer, an interest in a newly constructed regional enclosed
mall shopping center in Farmington, New Mexico, known as the Animas Valley
Mall. The Partnership contributed $9,000,000 in cash to the venture.
On June 30, 1995, the joint venture sold the land,
relatedimprovementsand personal property of the Animas Valley Mall and
related land outparcel located in Farmington, New Mexico for an aggregate
net sale price of approximately $27,800,000 (note 7).
Operating profits and losses were allocated to the Partnership and
thejoint venture partner according to their respective contributions to
fund operating deficits with any remaining losses allocated to the
Partnership.
In April 1992, the Partnership and its joint venture partner
settledcertain legal disputes regarding the joint venture agreement and
management of the property. Under the terms of the settlement, the
Partnership agreed, among other things to pay the unaffiliated venture
partner a certain settlement amount in connection with the disposition of
the property. On June 16, 1995, the joint venture acquired a 99% interest
in RIC Wausau Associates, L.L.C., a Wisconsin limited liability
company("LLC"), which owns an unimproved land parcel, for the sum of
$75,000. On
June 22, 1995, this interest in the LLC was assigned via a tax-
freeexchangeto the unaffiliated joint venture partner in return for
therelinquishment of its entire interest in the joint venture, including
any right to the settlement payment upon disposition discussed above.
Concurrently, the Partnership admitted the General Partner of
thePartnership into the joint venture with a 1% interest.
In April 1992, the joint venture finalized a modification of
theexisting long-term mortgage note secured by the Animas Valley Mall.
Under the terms of the modification, the joint venture, commencing with
theJanuary 1991 payment, was obligated to pay debt service of interest
onlyinstallments at a rate of 10.25% per annum, through the original term
of the note, with the deferred interest (2.25%) accruing at 12.5% and
payable monthly to the extent of any cash flow (as defined) or upon the
earlier of the sale of the property or maturity of the note in January
1994. The joint venture paid debt service through February 1994 in
accordance with these modified terms. In addition, under the terms of the
modification, the joint venture was required to make monthly real estate
tax escrow deposits. In April 1994, the joint venture and the existing
lender finalized an amendment to the loan (effective March 1, 1994)
providing for the extension of its maturity to March 1995 and lowering the
pay and accrual rate on the principal balance to 8% per annum. Any excess
cash flow generated by the property during this period was payable to the
lender quarterly towards interest accrued as of December 31, 1994
(approximately $2,200,000). As of the date of sale, no excess cash flow
was paid to the lender. The lender agreed to further extend the maturity
date to July 1, 1995 and subsequently to September 1, 1995 under the prior
modification terms. The lender agreed to allow the joint venture to retain
any net sale proceeds in excess of the $27,000,000 (as defined).
In December 1993, the joint venture sold a land outparcel at
theAnimasValley Mall to an unaffiliated third party. The sale price for
the outparcel was approximately $194,000 (before selling costs and
prorations). The joint venture retained these net sale proceeds as
workingcapital.
(c) Royal Executive Park
In December 1983, the Partnership acquired through a joint
venturewiththe developer, an interest in a completed three-building
officecomplex in Ryebrook, New York known as Royal Executive Park.
The Partnership contributed the sum of $25,948,000 to the
jointventurewhich was used to repay an interim construction loan secured
bythe property. The developer was obligated to contribute to the joint
venture amounts required to complete construction including tenant
improvements. The acquisition of the venture interest resulted in an
excess of the Partnership's basis in the property over its proportionate
share of the venture's assets of approximately $10,000,000. Such excess
was being amortized over the remaining useful life of the Venture's
property through an adjustment of the Partnership's share of the Venture's
operations. As discussed below, the Partnership recorded a provision for
value impairment at September 30, 1995.
Annual cash flow is distributed 49.9% to the Partnership and 50.1%
tothe joint venture partner. However, since the joint venture partner
didnot receive $2,605,200 of cash flow for each of the initial five years,
the joint venture partner will be entitled to receive such deficiency, up
to $400,000 from annual cash flow, if any, available for distribution to
the partners after the Partnership and the joint venture partners have
received $2,594,800 and $2,605,200, respectively, per annum. Operating
profits and losses are generally allocated to the joint venture partners
inthe same ratio that annual cash flow is distributed to the partners.
The joint venture agreement further provides that proceeds from
saleorrefinancing of the complex will be distributed 49.9% to the
Partnership and 50.1% to the joint venture partner.
The property was managed by an affiliate of the joint venture
partnerunder an agreement which provided for fees equal to 2% of the base
rent paid by tenants. Effective July 1, 1994, through November 1994 (note
6) a affiliate of the General Partner of the Partnership assumed the
property management responsibilities for the joint venture on essentially
the same terms. In addition, effective July 1, 1994, the same affiliate
ofthe General Partner assumed certain leasing responsibilities for the
property.
During the fourth quarter of 1993 New York Telephone Company's
lease(90,000 square feet) expired and it, along with certain of its
subtenants, vacated the building. MCI Realty Inc. (180,000 square feet),
which had been subleasing a portion of the New York Telephone space,
entered into a direct lease with the joint venture for 30,000 square feet.
The lease term expires in January 2001 and provides for an effective
rentalrate at market, which is substantially less than the rental rate
paidpreviously by New York Telephone. The joint venture continues to
actively market the remaining New York Telephone Company space to
prospective tenants. MCI approached the joint venture seeking a current
rent reduction in return for a lease extension beyond its prior lease
expiration date of March 31, 1998 on its 180,000 square foot lease. The
joint venture finalized a modification and extension of MCI's 180,000
square foot lease which provides for a reduction in MCI's rental rate,
effective July 1994, to a rental rate which approximates current market
rental rates. The agreement provides for set rental rate increases in
April 1998 and in April 2002. The extended lease expiration date is June
2006. In addition, the joint venture provided a tenant improvement
allowance of $1,500,000 to MCI in 1994 to enhance its leased space. The
joint venture's decision to modify MCI's 180,000 square foot lease was
based upon an analysis of current and expected future market conditions.
The joint venture believed, given the risk of losing this tenant in 1998
and the resulting potential downtime and costs associated with releasing
the space, that a current reduction in the rental rate and a contribution
towards enhancement of MCI's space in return for a long term extension of
its lease will maximize the property's cash flow over the long term. The
1994 costs associated with MCI's expansion and modification were paid for
from cash generated by the property in 1993 and 1994 and net capital
contributions by the Partnership and the joint venture partner totalling
$503,844 contributed in their respective ownership percentages.
While office building development in this market is virtually at
astandstill, significant improvement in the competitive market conditions
is not expected for several years. The competitive market conditions
haveresulted in lower than originally anticipated effective rental rates
that can be achieved and high releasing costs that will be incurred
inconjunction with releasing space which expires. Consequently, the
property cash flow has been significantly reduced as a result of increased
vacancy and the modification and extension of MCI's lease. Therefore,
thePartnership and joint venture partner may need to contribute capital to
the joint venture in the future in order to pay for leasing costs
associated with the lease-up of the current vacant space. In response to
the uncertainty of the Partnership's ability to recover the net carrying
value of the Royal Executive Park joint venture investment through
futureoperations and sale during the estimated holding period, as of
September 30, 1995, the Partnership recorded as a matter of prudent
accounting practice, a provision for value impairment of such investment
of$9,300,000. Such provisions were recorded to reduce the net carrying
value of the joint venture investment to its then estimated fair value.
(d) Broad Street
During December 1985, the Partnership acquired, through a
jointventurepartnership (the "Affiliated Joint Venture") with JMB
IncomeProperties, Ltd.-XII ("JMB Income-XII", a partnership sponsored by
the Managing General Partner of the Partnership) a 31.44% interest in
anexisting 24-story office building located at 40 Broad Street in New
York,New York. The Affiliated Joint Venture's purchase price for the
building was $65,100,000 (net of prorations and miscellaneous closing
costs), of which the Partnership provided approximately $20,470,000, which
was paid in cash at closing.
The Partnership will be allocated or distributed profits and
losses,cash flow from operations and sale or refinancing proceeds in the
ratio of its capital contributions to the Affiliated Joint Venture which
is31.44%. The Partnership and JMB Income - XII are current with respect
totheir required capital contributions to Broad Street.
The downtown New York City market remains extremely competitive due
tothe significant amount of space available primarily resulting from
thelayoffs, cutbacks and consolidations by financial service companies
andrelated businesses which dominated this market. Rental rates in
thedowntown market are currently at depressed levels and this can be
expected to continue for the foreseeable future while the current vacant
space is gradually absorbed. Little, if any, new construction is planned
for downtown over the next few years and it is expected that the building
will continue to be adversely affected by the lower than originally
projected effective rental rates now achieved upon releasing of existing
leases which expire over the next few years. In addition, new leases will
likely require expenditures for lease commissions and tenant improvements
prior to tenant occupancy. This decline in rental rates, the increase in
re-leasing time and the costs upon re-leasing will result in a continued
decrease in cash flow from operations over the near-term.
Until December 1994, the property was managed by an affiliate of
theGeneral Partners of the Partnership for a fee calculated as 2% of gross
receipts of the property (see note 6).
<TABLE>
(4) LONG-TERM DEBT
(a) Long-term debt consists of the following at December 31, 1995 and 1994:
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
12-1/2% mortgage note, secured by the North Hills Mall in
North Richland Hills (Fort Worth), Texas, payable in monthly
installments of $85,400 (including interest) until July 1995
when the outstanding balance of $7,832,745 was due and payable;
(modified and extended to December 1, 1995; refinanced in
December 1995 by the note described immediately below
(see note 4(b)). . . . . . . . . . . . . . . . . . . . . . $ -- 7,854,788
7-1/8% mortgage note, secured by the North Hills Mall in
North Richland Hills (Fort Worth), Texas; payable in
monthly installments of $57,182 (including interest)
until January 1, 2001 when the outstanding balance of
$7,318,330 is due and payable (note 4(b)). . . . . . . . . 8,000,000 --
13-5/8% mortgage note, secured by the Pasadena Town Square
Mall in Pasadena (Houston), Texas; retired at disposition
in October 1995; installments of $175,022 (including interest)
were due monthly until January 1995 when the outstanding
balance of $14,399,992 was originally due and payable
(note 2(d)). . . . . . . . . . . . . . . . . . . . . . . . -- 14,399,992
12-1/2% mortgage note, secured by the Animas Valley Mall
Shopping Center in Farmington, New Mexico, provided for
monthly payments of interest only aggregating $2,767,500
per annum until January 1994 when the remaining interest
and outstanding balance of $27,000,000 was originally due
and payable; (modified and extended to March 1995 in
April 1992, note 3(b)); retired upon sale of property
in June 1995 (see note 7(b)) . . . . . . . . . . . . . . . -- 27,000,000
----------- ------------
Total debt. . . . . . . . . . . . . . . . . . . . . . . 8,000,000 49,254,780
Less current portion of long-term debt. . . . . . . . . 109,719 49,254,780
----------- ------------
Total long-term debt . . . . . . . . . . . . . . . $ 7,890,281 --
=========== ============
</TABLE>
Five year maturities of long-term debt are summarized as follows:
1996. . . . . . . $109,719
1997. . . . . . . 117,797
1998. . . . . . . 126,470
1999. . . . . . . 135,781
2000. . . . . . . 145,777
========
(b) Debt Modification
The Partnership and the mortgage lender agreed to extend the July
1,1995 maturity date of the mortgage loan on the North Hills Mall
untilDecember 1, 1995. During this extension, the Partnership made a
cumulative paydown of approximately $860,000. The interest rate of 12.5%
on the mortgage loan remained unchanged during this extension. On November
30, 1995, the Partnership refinanced the mortgage loan (with a then
outstanding balance of $6,972,974) with a new lender. The new mortgage
loan has a principal balance of $8,000,000 and monthly principal and
interest payments of $57,182, which are based upon an interest rate per
annum of 7.125% and a 25-year amortization schedule, through January 1,
2001 when the remaining principal balance of $7,318,330 is due and payable.
(5) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits
orlosses of the Partnership from operations are allocated 96% to the
Limited Partners and 4% to the General Partners. Profits from the sale
orrefinancing of investment properties are to be allocated to the
GeneralPartners to the greater of 1% of such profits or the amount of
cashdistributable to the General Partners from any such sale or
refinancing(as described below). Losses from the sale or refinancing of
investment properties are to be allocated 1% to the General Partners. The
remaining sale or refinancing profits and losses will be allocated to the
Limited Partners.
An amendment to the Partnership Agreement, effective January 1,
1991,generally provides that notwithstanding any allocation contained in
the Agreement, if at any time profits are realized by the Partnership,
anycurrent or anticipated event would cause the deficit balance in
absoluteamount in the Capital Account of the General Partners to be
greaterthan their share of the Partnership's indebtedness (as defined)
after such event, then the allocation of Profits to the General Partners
shall be increased to the extent necessary to cause the deficit balance in
the Capital Account of the General Partners to be no less than their
respective shares of the Partnership's indebtedness after such event. In
general, the effect of this amendment is to allow the deferral of the
recognition of taxable gain to the Limited Partners.
The General Partners are not required to make any capital contribu-
tions except under certain limited circumstances upon termination of
thePartnership. Distributions of "cash flows" of the Partnership
areallocated 90% to the Limited Partners and 10% to the General Partners.
However, portions of such distributions to the General Partners
aresubordinated to the Limited Partners' receipt of a stipulated return
oncapital. Through December 31, 1995, a portion of the General
Partners'distributions have been deferred (note 9).
The Partnership Agreement provides that the General Partners
shallreceive as a distribution from the sale of a real property by
thePartnership 3% of the selling price and any cumulative deferrals of
their 10% distribution of disbursable cash, subject to certain limitations.
Any remaining proceeds (net after expenses and retained working capital)
will be distributed 85% to the Limited Partners and 15% to the
GeneralPartners. However, the Limited Partners shall receive 100% of such
net sale proceeds until the Limited Partners (i) have received
cashdistributions of sale or refinancing proceeds in an amount equal to
theLimited Partners' aggregate initial capital investment in the
Partnership, and (ii) have received cumulative cash distributions from the
Partnership's operations which, when combined with sale or refinancing
proceeds previously distributed, equal a 10% annual return on the Limited
Partners' average capital investment for each year (their initial capital
investment as reduced by sale or refinancing proceeds previously
distributed) commencing with the first fiscal quarter of 1984. Therefore,
in accordance with the Partnership Agreement, the General Partners have
deferred the receipt of certain sale proceeds ($3,481,080 or approximately
$23 per interest) from the Partnership in connection with the sale of the
Towne Square Mall, Collin Creek Mall and Animas Valley Mall.
(6) MANAGEMENT AGREEMENTS
The North Hills Mall, Pasadena Town Square (prior to the
lenderrealizing upon its security in October 1995) and Animas Valley Mall
(prior to its sale in June 1995) are/were managed by an affiliate of the
General Partners pursuant to management agreements which provide for
leasing commissions and an annual fee based upon a percentage of rental
income of the property, the aggregate of such commission and fee not to
exceed 6% of the gross receipts of the property. The Royal Executive Park
office building had been managed by an affiliate of the joint venture
partner under an agreement which provided for fees equal to 2% of the base
rent paid by tenants. Effective July 1, 1994, an affiliate of the
GeneralPartner of the Partnership assumed the property management
responsibilities for the joint venture. The new manager essentially
assumed the previous management agreement with the exception that a
portionof the 2% management fee will be paid to the previous manager
annually by the new manager as compensation to the previous manager for
relinquishing management of the property. In addition, the affiliate of
the General Partners assumed the leasing responsibilities for the property.
In December 1994, one of the affiliated property managers
soldsubstantially all of its assets and assigned its interest in its
management contracts to an unaffiliated third party. In addition, certain
of the management personnel of the property manager became management
personnel of the purchaser and its affiliates. The successor to the
affiliated property manager's assets is acting as the property manager of
the Royal Executive Park office building and the 40 Broad Street office
building after the sale on the same terms that existed prior to the sale.
(7) SALE OF INVESTMENT PROPERTY
(a) Collin Creek Mall
On December 29, 1994, the Partnership sold the land,
relatedimprovements and personal property of the Collin Creek Mall located
in Plano, Texas. The purchaser was not affiliated with the Partnership or
its General Partners and the sale price was determined by arm's-
lengthnegotiations. The sale price of the land, related improvements
andpersonal property was $108,000,000 (before selling costs and
prorations), all of which was paid in cash at closing. A portion of the
cash proceeds ($24,546,213) was utilized to retire the first mortgage
secured by the property. An affiliate of the General Partner retained
management of the property. The Partnership recognized a gain of
$64,054,814 for financial reporting purposes and has recognized a gain of
$79,757,206 for Federal income tax purposes in 1994.
(b) Animas Valley Mall
On June 30, 1995, the Partnership through Animas Valley
MallAssociatessold the land, building, related improvements and
personalproperty of the Animas Valley Mall and related land outparcel
located in Farmington, New Mexico. The purchaser was not affiliated with
the Partnership or its General Partners and the sale price was determined
by arm's-length negotiations. The aggregate sale price of the above
was$27,800,000 (before selling costs and prorations), all of which was
paidin cash at closing. A majority of the cash proceeds ($27,000,000)
wasutilized to retire the first mortgage secured by the improved property.
The Partnership recognized a gain of $3,832,429 on the sale of
theinvestment property and an extraordinary gain of $2,219,608 on
theforgiveness of debt for financial reporting purposes in 1995.
ThePartnership recognized a gain of $2,920,143 for Federal income tax
purposes in 1995.
(8) LEASES
As Property Lessor
At December 31, 1995, the Partnership and its consolidated venture's
principal assets is one shopping center. The Partnership has
determinedthat all leases relating to this property are properly
classifiedas operating leases; therefore, rental income is reported when
earned and the cost of the properties, excluding the cost of the land, is
depreciated over the estimated useful lives. Leases with tenants range in
term from one to thirty years and provide for fixed minimum rent and
partial reimbursement of operating costs. In addition, leases provide for
additional rent based upon percentages of tenants' sales volumes. A
substantial portion of the ability of retail tenants to honor their leases
is dependent upon the retail economic sector.
Minimum lease payments, including amounts representing executory
costs(e.g. taxes, maintenance, insurance) and any related profit, to be
received in the future under the operating leases are as follows:
1996. . . . . . . . . $ 2,577,902
1997. . . . . . . . . 2,319,292
1998. . . . . . . . . 2,200,595
1999. . . . . . . . . 2,049,964
2000. . . . . . . . . 1,857,783
Thereafter. . . . . . 7,462,994
-----------
Total. . . . . . $18,468,530
===========
Contingent rent (based on sales by property tenants) included
inconsolidated rental income was as follows for the years ended December
31, 1995, 1994 and 1993:
1993. . . . . . . . . $861,927
1994. . . . . . . . . 935,162
1995. . . . . . . . . 331,841
(9) TRANSACTIONS WITH AFFILIATES
The Partnership, pursuant to the Partnership Agreement, is
permittedtoengage in various transactions involving the Managing General
Partner and its affiliates including the reimbursement for salaries and
salary-related expenses of its employees, certain of its officers, and
other direct expenses relating to the administration of the Partnership
andthe operation of the Partnership's investments. Fees, commissions and
other expenses required to be paid by the Partnership to the General
Partners and their affiliates as of December 31, 1995, 1994 and 1993 are
asfollows:
<TABLE>
<CAPTION>
UNPAID AT
DECEMBER 31,
1995 1994 1993 1995
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees (note 6). . . . . . $295,394 695,178 667,066 --
Insurance commissions. . . . . . . 24,677 42,296 83,329 --
Reimbursement (at cost) for
accounting services. . . . . . . 90,169 98,245 78,135 --
Reimbursement (at cost) for
portfolio management
services . . . . . . . . . . . . 66,668 36,681 -- --
Reimbursement (at cost) for
legal services . . . . . . . . . 8,021 22,103 22,789 --
Reimbursement (at cost) for
administrative charges and
other out-of-pocket expenses . . 148,818 30,004 -- 72,923
-------- ------- ------- ------
$633,747 924,507 851,319 72,923
======== ======= ======= ======
<FN>
The above table reflects that during 1995, the Partnership recognized and paid certain 1994
administrativecharges of approximately $64,500 that had not previously been reimbursed.
</TABLE>
Effective October 1, 1995, the Managing General Partner of
thePartnership engaged independent third-parties to perform certain of
these administrative services for the Partnership which were previously
performed by, and partially reimbursed to, affiliates of the General
Partner. Use of such third parties is not expected to have a material
effect on the operations of the Partnership.
The General Partners have deferred (in accordance with the
Partnershipagreement, see note 5) payment of certain of their
distributionsof net cash flow from the Partnership. Accordingly,
$9,886,390 (approximately $66 per interest) of distributable cash and
$3,481,080 (approximately $23 per interest) of sale proceeds has been
deferred by the General Partners. These amounts, together with the unpaid
fees and expenses set forth in the chart above, do not bear interest and
may be paid in future periods in accordance with the Partnership agreement
to the extent of sufficient distributable proceeds from property
operations, sales or refinancings.
(10) INVESTMENTS IN UNCONSOLIDATED VENTURES
Summary financial information for Royal Executive Park and
BroadStreet (notes 3(c) and 3(d), respectively) as of and for the years
ended December 31, 1995 and 1994 are as follows:
1995 1994
------------ ------------
Current assets . . . . . . . $ 3,545,263 3,504,488
Current liabilities. . . . . (249,728) (201,656)
------------ ------------
Working capital . . . . 3,295,535 3,302,832
------------ ------------
Investment property, net . . 30,619,261 31,330,567
Other assets, net. . . . . . 4,333,707 3,965,694
Other liabilities, net . . . (143,555) (122,397)
Venture partners' equity . . (23,700,641) (14,445,772)
------------ ------------
Partners' capital . . . $ 14,404,307 24,030,924
============ ============
Represented by:
Invested capital. . . . $ 50,272,431 50,147,684
Cumulative cash distributions(36,667,835) (35,455,238)
Cumulative net earnings 799,711 9,338,478
------------ ------------
$ 14,404,307 24,030,924
============ ============
Total income . . . . . . . . $ 11,139,197 12,321,252
============ ============
Expenses applicable to operations$ 8,961,945 9,079,579
============ ============
Net earnings . . . . . . . . $ 2,177,252 3,223,673
============ ============
Also, for the year ended December 31, 1993, total income,
expensesapplicable to operations and net earnings were $16,077,877,
$10,052,562 and $6,025,315, respectively, for the unconsolidated ventures
listed above.
<TABLE>
SCHEDULE III
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT TO GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
------------------------------------------------------------------------------
BUILDINGS BUILDINGS BUILDINGS
AND AND AND
DESCRIPTION ENCUMBRANCE LAND IMPROVEMENTSIMPROVEMENTS LAND IMPROVEMENTS TOTAL (D)
- ----------- ----------- ----------------------------------------------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING
CENTERS:
North Richland
Hills,
Texas (C) . $8,000,000 3,170,275 9,829,725 13,683,093 2,642,818 23,512,818 26,155,636
Pasadena,
Texas (D) . -- 490,824 -- -- 490,824 -- 490,824
---------- ---------- ---------- ---------------------- ----------------------
Total. $8,000,000 3,661,099 9,829,725 13,683,093 3,133,642 23,512,818 26,646,460
========== ========== ========== ====================== ======================
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1995
ACCUMULATED DATE OF DATE OPERATION REAL ESTATE
DESCRIPTION DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
- ----------- ---------------- ------------ ------------------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTERS:
North Richland Hills,
Texas (C). . . . . . . $7,645,144 1979 10/19/83 5-30 years 618,719
Pasadena,
Texas (D). . . . . . . -- N/A 11/15/90 N/A 14,036
---------- ---------
Total. . . . . . . . $7,645,144 632,755
========== =========
<FN>
- ------------------
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the
properties, including amounts incurred subsequent to acquisition which were contemplated at the
time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1995 for Federal income tax
purposes was approximately $26,043,000.
(C) Reflects reallocation of initial costs between land and buildings and improvements.
(D) The Partnership still maintains ownership of approximately a two acre unencumbered
unimproved land outparcel adjacent to the Pasadena Town Square Mall; see note 2(d).
</TABLE>
<TABLE> SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - X
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURE
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION - CONTINUED
(E) Reconciliation of real estate owned at December 31, 1995, 1994 and 1993:
<CAPTION>
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period. . . . . . $ 89,097,178 154,841,597 150,221,424
Additions . . . . . . . . . . . . . . . . 802,067 3,006,843 4,658,162
Reductions during period (notes 2(c), 2(d),
3(b) and 7) . . . . . . . . . . . . . . (63,252,785) (60,333,437) (37,989)
Provision for value impairment. . . . . . -- (8,417,825) --
------------ ------------ ------------
Balance at end of period. . . . . . . . . $ 26,646,460 89,097,178 154,841,597
============ ============ ============
(F) Reconciliation of accumulated depreciation:
Balance at beginning of period. . . . . . $ 31,896,865 43,945,824 39,584,216
Depreciation expense. . . . . . . . . . . 1,690,411 4,471,238 4,361,608
Reductions during period (notes 2(c), 2(d),
3(b) and 7) . . . . . . . . . . . . . . (25,942,132) (16,520,197) --
------------ ------------ ------------
Balance at end of period. . . . . . . . . $ 7,645,144 31,896,865 43,945,824
============ ============ ============
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with, auditors during
fiscalyear 1994 and 1995.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Managing General Partner of the Partnership is JMB
RealtyCorporation ("JMB"), a Delaware corporation, substantially all of
theoutstanding stock of which is owned, directly or indirectly, by certain
of its officers and directors and members of their families. JMB
hasresponsibility for all aspects of the Partnership's operations, subject
to the requirement that sales of real property must be approved by
theAssociate General Partner of the Partnership, Income Associates-X,
anIllinois limited partnership with ABPP Associates, L.P. as its sole
general partner. ABPP Associates, L.P. is an Illinois limited partnership
with JMB as its general partner. ABPP Associates, L.P., as the general
partner of the Associate General Partner shall be directed by a majority
ininterest of its limited partners (who are generally officers, directors
and affiliates of JMB or its affiliates) as to whether to provide the
Associate General Partner's approval of any sale of real property (or any
interest therein) of the Partnership. The Partnership is subject to
certain conflicts of interest arising out of its relationships with the
General Partners and their affiliates as well as the fact that the General
Partners and their affiliates are engaged in a range of real estate
activities. Certain services have been and may in the future be provided
to the Partnership or its investment properties by affiliates of the
General Partners, including property management services and insurance
brokerage services. In general, such services are to be provided on terms
no less favorable to the Partnership than could be obtained from
independent third parties and are otherwise subject to conditions and
restrictions contained in the Partnership Agreement. The Partnership
Agreement permits the General Partners and their affiliates to provide
services to, and otherwise deal and do business with, persons who may be
engaged in transactions with the Partnership, and permits the Partnership
to borrow from, purchase goods and services from, and otherwise to do
business with, persons doing business with the General Partners or their
affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including,
incertain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The names, positions held and length of service therein of
eachdirector and executive and certain other officers of the Managing
General Partner of the Partnership are as follows at December 31, 1995:
SERVED IN
NAME OFFICE OFFICE SINCE
- ---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Chief Financial Officer 2/22/96
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
H. Rigel Barber Chief Executive Officer 8/01/93
Executive Vice President 1/02/87
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/17/84
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing
directorsorofficers. The foregoing directors have been elected to serve a
one-year term until the annual meeting of the Managing General Partner to
be held on June 5, 1996. All of the foregoing officers have been elected
to serve one-year terms until the first meeting of the Board of Directors
held after the annual meeting of the Managing General Partner to be held on
June 5, 1996. There are no arrangements or understandings between or
amongany of said directors or officers and any other person pursuant to
which any director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate
LimitedPartnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited
Partnership-IX ("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X
("Carlyle-X"), Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"),
Carlyle Real Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real
Estate Limited Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate
Limited Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited
Partnership-XV ("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI
("Carlyle-XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-
XVII"), JMB Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage
Partners, Ltd.-II ("Mortgage Partners-II"), JMB Mortgage Partners,
Ltd.-III("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV
("Mortgage Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income
Plus")and Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II") and the
managing general partner of JMB Income Properties, Ltd.-IV ("JMB
Income-IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income
Properties, Ltd.-VI ("JMB Income-VI"), JMB Income Properties, Ltd.-VII
("JMB Income-VII"),JMB Income Properties, Ltd.-IX"), JMB Income
Properties,Ltd.-XI ("JMB Income-XI"), JMB Income Properties, Ltd.-XII
("JMBIncome-XII"), and JMB Income Properties Ltd.-XIII ("JMB Income-XIII").
JMB is also the sole general partner of the associate general partner of
most of the foregoing partnerships. Most of the foregoing directors and
officers are also officers and/or directors of various affiliated
companiesof JMB including Arvida/JMB Managers, Inc. (the general partner
ofArvida/JMB Partners, L.P. ("Arvida")), Arvida/JMB Managers-II, Inc. (the
general partner of Arvida/JMB Partners, L.P.-II ("Arvida-II") and Income
Growth Managers, Inc. (the corporate general partner of IDS/JMB Balanced
Income Growth, Ltd. ("IDS/BIG")). Most of such directors and officers are
also partners of certain partnerships which are associate general partners
in the following real estate limited partnerships: Carlyle-VII,
Carlyle-IX, Carlyle-X, Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV,
Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB
Income-IX, JMB Income-XI, JMB Income-XII, JMB Income-XIII, Mortgage
Partners, Mortgage Partners-II, Mortgage Partners-III, Mortgage
Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
The business experience during the past five years of each
suchdirector and officer of the Managing General Partner of the
Partnershipin addition to that described above is as follows:
Judd D. Malkin (age 58) is an individual general partner of
JMBIncome-IV and JMB Income-V. Mr. Malkin has been associated with JMB
since October, 1969. Mr. Malkin is a director of Urban Shopping Centers,
Inc., an affiliate of JMB that is a real estate investment trust in the
business of owning, managing and developing shopping centers. He is a
Certified Public Accountant.
Neil G. Bluhm (age 58) is an individual general partner of
JMBIncome-IV and JMB Income-V. Mr. Bluhm has been associated with JMB
since August, 1970. Mr. Bluhm is a director of Urban Shopping Centers,
Inc., an affiliate of JMB that is a real estate investment trust in the
business of owning, managing and developing shopping centers. He is a
member of the Bar of the State of Illinois and a Certified Public
Accountant.
Burton E. Glazov (age 57) has been associated with JMB since
June,1971and served as an Executive Vice President of JMB until December
1990. He is a member of the Bar of the State of Illinois and a Certified
Public Accountant.
Stuart C. Nathan (age 54) has been associated with JMB since
July,1972. Mr. Nathan is also a director of Sportmart Inc., a retailer
ofsporting goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 62) (President and Director of JMB Insurance
Agency,Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 49) has been associated with JMB
sinceDecember,1970 and served as an Executive Vice President of JMB
untilDecember 1990. Mr. Schreiber is President of Schreiber Investments,
Inc., a company which is engaged in the real estate investing business.
Heis also a senior advisor and partner of Blackstone Real Estate Partners,
an affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has
also served as a Trustee of Amli Residential Property Trust, a publicly-
traded real estate investment trust that invests in multi-family
properties. In addition, Mr. Schreiber is a director of Urban Shopping
Centers, Inc. an affiliate of JMB that is a real estate investment trust
inthe business of owning, managing and developing shopping centers, and a
director of a number of investment companies advised or managed by T. Rowe
Price Associates and its affiliates. He holds a Masters degree in
BusinessAdministration from Harvard University Graduate School of Business.
H. Rigel Barber (age 46) has been associated with JMB since
March,1982. He holds a J.D. degree from the Northwestern Law School and is
a member of the Bar of the State of Illinois.
Glenn E. Emig (age 48) has been associated with JMB since
December1979. Prior to becoming Executive Vice President of JMB in 1993,
Mr. Emig was Executive Vice President and Treasurer of JMB Institutional
Realty Corporation. He holds a Masters degree in Business Administration
from the Harvard University Graduate School of Business and is a Certified
Public Accountant.
Gary Nickele (age 43) has been associated with JMB since
February,1984. He holds a J.D. degree from the University of Michigan Law
School and is a member of the Bar of the State of Illinois.
Gailen J. Hull (age 47) has been associated with JMB since March,1982.
He holds a Masters degree in Business Administration from Northern
IllinoisUniversity and is a Certified Public Accountant.
Howard Kogen (age 60) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The General Partners
ofthe Partnership are entitled to receive a share of cash distributions,
when and as cash distributions are made to the Limited Partners, and a
share of profits or losses. Reference is made to Notes 5 and 9 for a
description of such transactions, distributions and allocations. In 1995,
1994 and 1993, no cash distributions were paid to the General Partners.
Affiliates of the Managing General Partner provided
propertymanagementservices to the Partnership for the North Hills Mall in
North Richland, Texas, the Pasadena Town Square shopping center in
Pasadena, Texas (through the date of disposition, October 3, 1995), the
Animas Valley Mall in Farmington, New Mexico (through the date of sale,
June 30, 1995), the Collin Creek Mall in Plano, Texas (through the date of
sale, December 29, 1994) and for the Pylon Plaza Office Building - Phase I
and II in Boca Raton, Florida (through the date of disposition, December
9,1991). Fees are calculated at 3% of fixed and percentage rents from
Animas Valley Mall, 5% of gross rents from Pylon Plaza, and 4% of fixed
andpercentage rents from North Hills Mall, Pasadena Town Square and Collin
Creek Mall. In 1995, such affiliate earned property management and
leasingfees amounting to $295,394, of which all was paid as of December
31,1995. As set forth in the Prospectus of the Partnership, the Managing
General Partner must negotiate such agreements on terms no less favorable
to the Partnership than those customarily charged for similar services in
the relevant geographical area (but in no event at rates greater than 6% of
the gross receipts from a property), and such agreements must be
terminableby either party thereto, without penalty, upon 60 days' notice.
JMB Insurance Agency, Inc., an affiliate of the Managing
GeneralPartner, earned and received insurance brokerage commissions in
1995aggregating $24,677 in connection with the provision of insurance
coverage for certain of the real property investments of the Partnership.
Such commissions are at rates set by insurance companies for the classes
ofcoverage provided.
The General Partners of the Partnership or their affiliates may
bereimbursed for their direct expenses or out-of-pocket expenses and
salaries relating to the administration of the partnership and operation
ofthe Partnership's real property investments. In 1995, the Managing
General Partner incurred such out-of-pocket expenses and salaries in the
amount of $313,676 of which $72,923 was paid at December 31, 1995.
The Partnership is permitted to engaged in various
transactionsinvolving affiliates of the Managing General Partner of the
Partnership, as described in Item 10 and Exhibit 21 hereto.
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the
outstandingInterests of the Partnership.
(b) The Managing General Partner, its officers and directors and the Associate General Partner own
thefollowing Interests of the Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
- -------------- ---------- -------------------------
<S> <C> <C> <C>
Limited Partnership JMB Realty Corporation 5 Interests Less than 1%
Interests directly
Limited Partnership Managing General Partner, 5 Interests Less than 1%
Interests its officers and directors directly
and the Associate General
Partner as a group
<FN>
No officer or directors of the Managing General Partner of the Partnership possesses a right to
acquirebeneficial ownership of Interests of the Partnership.
(c) There exists no arrangements, known to the Partnership, the operations of which may at a subsequent
dateresult in a change in control of the Partnership.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships
withthe Managing General Partner, affiliates or their management other
thanthose described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements and Supplementary Data
(SeeIndex to Financial Statements filed with thisannual report)
2. Exhibits.
3-A.* The Prospectus of the Partnership dated June 29, 1983
assupplemented September 12, 1983 and October 21, 1983, as filed with the
Commission pursuant to Rules 424(b) and 424(c), is hereby incorporated
herein by reference. Copies of pages 8-12, 57-59 and A-7 to A-11 are
herebyincorporated herein by reference.
3-B.* Amended and Restated Agreement of Limited
Partnershipsetforth as Exhibit A to the Prospectus, which agreement is
hereby incorporated herein by reference.
4-A.* Document relating to the mortgage loan secured by
theCollin Creek Mall in Plano, Texas is hereby incorporated herein by
reference.
4-B.* Document relating to the mortgage loan secured by
thePasadena Town Square shopping center in Pasadena, Texas is hereby
incorporated herein by reference.
4-C.* Modification document relating to the mortgage
loansecured by the Animas Valley Mall in Farmington, NewMexico is hereby
incorporated herein by reference.
4-D. Document relating to the mortgage loan secured by
theNorth Hills Mall in North Richland Hills, Texas, a copy of which is
filed herewith.
10-A. Acquisition documents relating to the purchase by
thePartnership of an interest in the 40 Broad Street office building in New
York, New York are hereby incorporated by reference to the Partnership's
Report onForm 8-K (File No. 0-12432) dated December 31, 1985.
10-B. Acquisition documents relating to the purchase by
thePartnership of an interest in the Royal Executive Park office complex in
Ryebrook, New York are herebyincorporated by reference to the Partnership's
Report on Form 8-K (File No. 0-12432) dated December 30,1983.
10-C. Acquisition documents relating to the purchase by
thePartnership of the Collin Creek Mall in Plano, Texas are hereby
incorporated by reference to the Partnership's Registration Statement on
Post-Effective Amendment No. 2 to Form S-11 (File No. 2-83599) dated June
29, 1983.
10-D. Acquisition documents relating to the purchase by
thePartnership of the North Hills Mall in North RichlandHills, Texas are
hereby incorporated by reference to the Partnership's Registration
Statement onPost-Effective Amendment No. 2 to Form S-11 (File No. 2-83599)
dated June 29, 1983.
10-E. Acquisition documents relating to the purchase by
thePartnership of the Pasadena Town Square shopping center in Pasadena,
Texas are hereby incorporated by reference to the Partnership's
Registration Statement onPost-Effective Amendment No. 2 to Form S-11 (File
No. 2-83599) dated June 29, 1983.
10-F. Acquisition documents including the venture
agreementrelating to the purchase by the Partnership of an interest in the
Animas Valley Mall in Farmington, NewMexico are hereby incorporated by
reference to thePartnership's Registration Statement on Post-Effective
Amendment No. 2 to Form S-11 (File No. 2-83599) dated June 29, 1983.
10-G. Sale documents relating to the outparcel sale at
theAnimas Valley Mall in Farmington, New Mexico are hereby incorporated by
reference to the Partnership's report on Form 10-K (File No. 0-12140) dated
March 25, 1994.
10-H. Sale documents relating to the sale of the Collin
CreekMall in Plano, Texas are hereby incorporated byreference to the
Partnership's report on Form 8-K (File No. 0-12140) dated January 13, 1995.
10-I. Sale documents relating to the sale of the Animas
ValleyMall in Farmington, New Mexico are hereby incorporated by reference
to the Partnership's report onForm 8-K (File No. 0-12140) dated July 14,
1995.
21. List of Subsidiaries.
24. Powers of Attorney.
27. Financial Data Schedule.
99-A. The Partnership's report on Form 8-K (File No. 0-
12140)describing the disposition of the Pasadena Town
Square Mall dated October 18, 1995, a copy of which is filed herewith.
99-B. The Partnership's report on Form 8-K (File NO. 0-
12140)describing the sale of the Animas Valley Mall
dated June 30, 1995, a copy of which is filed herewith.
___________
* Previously filed as Exhibits 3-A, 3-B, 4-A, 4-B and 4-
C,respectively, to the Partnership's Report for December 31,
1992 on Form 10-K (File No. 0-12432) dated March 19, 1993.
Although certain additional long-term debt instruments of
theRegistrant have been excluded from Exhibit 4 above, pursuantto Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the Securities and Exchange Commission upon request.
(b)The following report on Form 8-K has been filed for the
quartercovered by this report.
(1) The Partnership's report on Form 8-K (File No. 0-
12140)for October 3, 1995 (describing under Item 2 of
such report the Partnership's disposition of the Pasadena Town Square Mall)
was filed. The report is dated October 18, 1995. No financial statements
were required to be filed therewith.
No annual report or proxy material for the fiscal year 1995 has
beensent to the Partners of the Partnership. An annual report will be
sentto the Partners subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
SecuritiesAct of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - X
By: JMB Realty Corporation
Managing General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 25, 1996
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 dates indicated.
By: JMB Realty Corporation
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and
Chief Financial Officer
Date: March 25, 1996
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 25, 1996
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 25, 1996
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 25, 1996
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 25, 1996
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 25, 1996
By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 25, 1996
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 25, 1996
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE Page
------------ ----
3-A. Pages 8-12, 57-59 and A-7 to
A-11 of the Prospectus of the
Partnership dated June 29, 1983,
as supplemented September 12,
1983 and October 21, 1983 Yes --
3-B. Amended and Restated Agreement of
Limited Partnership Yes --
4-A. Mortgage loan documents related
to Collin Creek Mall Yes --
4-B. Mortgage loan documents related
to Pasadena Town Square
shopping center Yes --
4-C. Mortgage loan modification documents
related to Animas Valley Mall Yes --
4-D. Mortgage loan documents related
to North Hills Mall No
10-A. Acquisition documents related to
the 40 Broad Street office building Yes --
10-B. Acquisition documents related to
the Royal Executive Park office
complex Yes --
10-C. Acquisition documents related to
the Collins Creek Mall Yes --
10-D. Acquisition documents related to
the North Hills Mall Yes --
10-E. Acquisition documents related to
the Pasadena Town Square shopping
center Yes --
10-F. Acquisition documents related to
the Animas Valley Mall Yes --
10-G. Sale documents related to the
Animas Valley Mall Yes --
10-H. Sale documents related to the
Collin Creek Mall Yes --
10-I. Sale documents related to the
Animas Valley Mall Yes --
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
99-A. Form 8-K for October 18, 1995 No
99-B. Form 8-K for June 30, 1995 No
PROMISSORY NOTE
$8,000,000 New York, New York
As of November 30, 1995
FOR VALUE RECEIVED NORTH HILLS MALL ASSOCIATES, an Illinois
general partnership, as maker, having its principal place of business c/o
JMB Income Properties, LTD.-X, 900 Michigan Avenue, Suite 900, Chicago,
Illinois 60611 ("Borrower"), hereby unconditionally promises to pay to the
order of CHEMICAL BANK, a New York banking corporation, as payee, having an
address at 380 Madison Avenue, 11th Floor, New York, New York 10017
("Lender"), or at such other place as the holder hereof may from time to
time designate in writing, the principal sum of Eight Million 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
(defined below), and to be paid in installments as follows:
ARTICLE 1: PAYMENT TERMS
(a) A payment of interest only on January 1, 1995;
(b) A constant payment of $57,181.86 on the first day of
February, 1996 and on the first day of each calendar month thereafter up to
and including the first day of December, 2000;
each of the payments to be applied as follows:
(i) first, to the payment of interest computed at the
Applicable Interest Rate; and
(ii) the balance toward the reduction of the principal sum;
and the balance of the principal sum and all interest thereon shall be due
and payable on the first day of January, 2001 (the "Maturity Date").
Interest on the principal sum of this Note shall be calculated on the basis
of a three hundred sixty (360) day year based on twelve (12) thirty (30)
day months except that interest due and payable for a period of less than a
full month shall be calculated by multiplying the actual number of days
elapsed in such period by a daily rate based on said 360-day year.
ARTICLE 2: INTEREST
The term "Applicable Interest Rate" as used in the Security
Instrument (defined below) and this Note shall mean an interest rate equal
to SEVEN AND ONE HUNDRED TWENTY-FIVE THOUSANDTHS percent (7.125%) per
annum.
ARTICLE 3: DEFAULT AND ACCELERATION
(a) The whole of the principal sum of this Note, (b) interest,
default interest, late charges and other sums, as provided in this Note,
the Security Instrument or the Other Security Documents (defined below),
(c) all other monies agreed or provided to be paid by Borrower in this
Note, the Security Instrument or the Other Security Documents, (d) all sums
advanced pursuant to the Security Instrument to protect and preserve the
Property (defined below) and the lien and the security interest created
thereby, and (e) all sums advanced and costs and expenses incurred by
Lender in connection with the Debt (defined below) or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any part
thereof, or the acquisition or perfection of the security therefor, whether
made or incurred at the request of Borrower or Lender (all the sums
referred to in (a) through (e) above shall collectively be referred to as
the "Debt") shall without notice become immediately due and payable at the
option of Lender if any payment required in this Note is not paid prior to
the tenth (10th) day after the date when due or on the Maturity Date 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 Security
Instrument or any of the Other Security Documents (collectively, an "Event
of Default").
ARTICLE 4: DEFAULT INTEREST
Borrower does hereby agree that upon the occurrence of an Event
of Default, Lender shall be entitled to receive and Borrower shall pay
interest on the entire unpaid principal sum at a rate equal to the lesser
of (a) five percent (5%) plus the Applicable Interest Rate and (b) the
maximum interest rate which Borrower may by law pay (the "Default Rate").
The Default Rate shall be computed from the occurrence of the Event of
Default until the earlier of the date upon which the Event of Default is
cured or the date upon which the Debt is paid in full. Interest calculated
at the Default Rate shall be added to the Debt, and shall be deemed secured
by the Security Instrument. 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 Lender by reason
of the occurrence of any Event of Default.
ARTICLE 5: PREPAYMENT
(a) The principal balance of this Note may not be prepaid in
whole or in part prior to the third (3rd) Loan Year (defined below).
During the third (3rd) Loan Year or any time thereafter, the principal
balance of this Note may be prepaid in whole, but not in part, upon not
less than thirty (30) days and not more than forty (40) days prior written
notice to Lender specifying the date on which prepayment is to be made (the
"Prepayment Date") and upon payment of:
(i) all accrued interest to and including the Prepayment
Date;
(ii) all interest which would have accrued on the principal
balance of this Note after the Prepayment Date to and including the last
day of the calendar
-2-
month in which the Prepayment Date occurs (the "Interest
Shortfall Payment"), if such prepayment occurs on a date which is not the
first day of a month;
(iii) all other sums due under this Note, the Security
Instrument and all Other Security Documents; and
(iv) a prepayment consideration (the "Prepayment
Consideration") in an amount equal to the present value as of the
Prepayment Date of the Calculated Payments (defined below) from the
Prepayment Date through the Maturity Date determined by discounting such
payments at the Discount Rate (defined below).
Notwithstanding anything to the contrary herein, provided no Event of
Default exists under this Note, the Security Instrument or the Other
Security Documents, in the event of any prepayment which occurs during the
three (3) months prior to the Maturity Date, no Prepayment Consideration
shall be due in connection therewith, but Borrower shall be required to pay
all other sums due hereunder, including, without limitation, the Interest
Shortfall Payment, if any.
(b) The "Calculated Payments" are monthly payments of interest only
which would be due based on the principal amount outstanding on the
Prepayment Date and assuming an interest rate per annum equal to the
difference (if such difference is greater than zero) between (i) the
Applicable Interest Rate minus (ii) the Treasury Rate (defined below), plus
150 basis points. The "Discount Rate" is the rate which, when compounded
monthly, is equivalent to the Treasury Rate (defined below) when compounded
semi-annually, plus 150 basis points. The "Treasury Rate" is the yield
calculated by the linear interpolation of the yields, as reported in the
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 Prepayment Date, of the U.S. Treasury constant
maturities with maturity dates (one longer and one shorter) most nearly
approximating the Maturity Date. In the event Release H.15 is no longer
published, Lender shall select a comparable publication to determine the
Treasury Rate. Lender shall notify Borrower of the amount and the basis of
determination of the required Prepayment Consideration which shall be
conclusive and binding on Borrower absent manifest error. "Loan Year" as
used in this Article 5 shall mean each 365 or 366, if applicable, day
period after the first day of the first calendar month after the date of
this Note (or the date of this Note if it is dated the first day of a
calendar month).
(c) Lender shall not be obligated to accept any prepayment of the
principal balance
of this Note unless it is accompanied by all sums due in connection
therewith. Notwithstanding anything contained in this Article 5 to the
contrary, provided no Event of Default exists, no Prepayment Consideration
shall be due in connection with a complete or partial prepayment resulting
from a change in tax or debt credit laws or the application of insurance
proceeds or condemnation awards pursuant to Sections 3.3, 4.4 and 7.3 of
the Security Instrument, but Borrower shall be required to pay all other
sums due hereunder, including, without limitation, the Interest Shortfall
Payment, if applicable.
-3-
(d) If a Default Prepayment (defined below) occurs, Borrower shall
pay to Lender the entire Debt, including, without limitation, the following
amounts:
(i) if the Default Prepayment occurs prior to the time when
prepayment of the principal balance of this Note is permitted, an amount
equal to the sum of (A) the present value of the interest payments which
would have accrued on the principal balance of this Note (outstanding as of
the date of such Default Prepayment) at the Applicable Interest Rate from
the date of such Default Prepayment to the first day prepayment is
permitted pursuant to this Note discounted at a rate equal to the Treasury
Rate except that such Treasury Rate shall be based on the U.S. Treasury
constant maturity most nearly approximating the date upon which prepayment
is first permitted pursuant to this Note, and (B) the present value as of
the first day of the third (3rd) Loan Year of the Calculated Payments based
on the Treasury Rate in effect at the time of such Default Prepayment from
the first day of the third (3rd) Loan Year through the Maturity Date
determined by discounting such payments at the Discount Rate; and
(ii) if the Default Prepayment occurs at a time when prepayment of
the principal balance of this Note is permitted, the Prepayment
Consideration and the Interest Shortfall Payment, if applicable.
For purposes of this Note, the term "Default Prepayment" shall mean a
prepayment of the principal amount of this Note made after the occurrence
of any Event of Default or an acceleration of the Maturity Date under any
circumstances, including, without limitation, a prepayment occurring in
connection with reinstatement of the Security Instrument provided by
statute under foreclosure proceedings or exercise of a power of sale, any
statutory right of redemption exercised by Borrower or any other party
having a statutory right to redeem or prevent foreclosure, any sale in
foreclosure or under exercise of a power of sale or otherwise.
ARTICLE 6: SECURITY
This Note is secured by the Security Instrument and the Other
Security Documents. The term "Security Instrument" as used in this Note
shall mean the deed of trust and security agreement dated the date hereof
in the principal sum of $8,000,000 given by Borrower to (or for the benefit
of) Lender covering the fee estate of Borrower in certain premises located
in Tarrant County, State (Commonwealth) of Texas, and other property, as
more particularly described therein (collectively, the "Property") 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 Security Instrument now or hereafter executed
by Borrower and/or others and by or in favor of Lender, which wholly or
partially secure or guarantee payment of this Note or have been or shall be
executed in connection with the Note or the Debt, including without
limitation, any certificate and the Loan Commitment. Whenever used, the
singular number shall include the plural, the plural number shall include
the singular, and the words "Lender" and "Borrower" shall include their
respective successors, assigns, heirs, executors and administrators.
-4-
All of the terms, covenants and conditions contained in the Security
Instrument and the Other Security Documents are hereby made part of this
Note to the same extent and with the same force as if they were fully set
forth herein.
ARTICLE 7: SAVINGS CLAUSE
This Note is subject to the express condition that at no time shall
Borrower be obligated or required to pay interest on the principal balance
due hereunder at a rate which could subject Lender to either civil or
criminal liability as a result of being in excess of the maximum interest
rate which Borrower is permitted by applicable law to contract or agree to
pay. If by the terms of this Note, Borrower 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 or the Default
Rate, as the case may be, 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. All sums paid or agreed to be paid
to Lender for the use, forbearance, or detention of the Debt, shall, to the
extent permitted by applicable law, be amortized, prorated, allocated, and
spread throughout the full stated term of the Note until payment in full so
that the rate or amount of interest on account of the Debt does not exceed
the maximum lawful rate of interest from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding.
ARTICLE 8: LATE CHARGE
If any sum payable under this Note is not paid prior to the tenth
(10th) day after the date on which it is due, Borrower shall pay to Lender
upon demand an amount equal to the lesser of five percent (5%) of the
unpaid sum or the maximum amount permitted by applicable law to defray the
expenses incurred by Lender in handling and processing the delinquent
payment and to compensate Lender for the loss of the use of the delinquent
payment and the amount shall be secured by the Security Instrument and the
Other Security Documents.
ARTICLE 9: NO ORAL CHANGE
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 Borrower or Lender, 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.
ARTICLE 10: JOINT AND SEVERAL LIABILITY
If Borrower consists of more than one person or party, the
obligations and liabilities of each person or party shall be joint and
several.
-5-
ARTICLE 11: WAIVERS
Borrower 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 and all other notices of any kind except as expressly provided in
this Note, the Security Instrument or the Other Security Documents. 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 Security Instrument or the Other
Security Documents made by agreement between Lender or any other person or
party shall release, modify, amend, waive, extend, change, discharge,
terminate or affect the liability of Borrower, and any other person or
entity who may become liable for the payment of all or any part of the
Debt, under this Note, the Security Instrument or the Other Security
Documents. No notice to or demand on Borrower shall be deemed to be a
waiver of the obligation of Borrower or of the right of Lender to take
further action without further notice or demand as provided for in this
Note, the Security Instrument or the Other Security Documents. If Borrower
is a partnership, the agreements contained herein shall remain in full
force and effect, notwithstanding any changes in the individuals or
entities comprising the partnership, and the term "Borrower," an used
herein, shall include any alternate or successor partnership, but any
predecessor partnership shall not thereby be released from any liability.
If Borrower is a corporation, the agreements contained herein shall remain
in full force and effect notwithstanding any changes in the shareholders
comprising, or the officers and directors relating to, the corporation, and
the term "Borrower" as used herein, shall include any alternate or
successor corporation, but any predecessor corporation shall not be
relieved of liability hereunder. If Borrower is a limited liability
company, the agreements herein contained shall remain in full force and
effect, notwithstanding any changes in the individuals or entities
comprising the limited liability company and the term "Borrower," as used
herein, shall include any alternate or successor limited liability company,
but any predecessor limited liability company and its members shall not be
released from any liability. (Nothing in the foregoing sentence shall be
construed as a consent to, or a waiver of, any prohibition or restriction
on transfers of interests in such partnership, corporation or limited
liability company which may be set forth in the Security Instrument or any
Other Security Document.) The term "Borrower" shall not include any
partners in Borrower (if Borrower is a partnership), any shareholders,
directors or officers of Borrower (if Borrower is a corporation) or any
members in Borrower (if Borrower is a limited liability company).
-6-
ARTICLE 12: TRANSFER
Upon the transfer of this Note, Lender will endeavor to give Borrower
notice thereof, but Lender's failure to do so shall not affect the
enforceability or validity of this Note in any way. In connection with the
transfer, Lender may deliver all the collateral mortgaged, granted, pledged
or assigned pursuant to the Security Instrument and the Other Security
Documents, or any part thereof, to the transferee who shall thereupon
become vested with all the rights, obligations and liabilities herein or
under applicable law given to Lender with respect thereto, and Lender shall
thereafter forever be relieved and fully discharged from any liability or
responsibility in the matter; but Lender shall retain all rights hereby
given to it with respect to any liabilities and the collateral not so
transferred.
ARTICLE 13: WAIVER OF TRIAL BY JURY
BORROWER HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THIS NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THIS
NOTE, THIS NOTE, THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR
ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR
AGENTS IN CONNECTION THEREWITH.
ARTICLE 14: EXCULPATION
(a) Subject to Subsections (b), (c) and (d) below and
Section 11.10 and Article 15 of the Security Instrument, notwithstanding
anything to the contrary contained in this Note, the Security Instrument or
the Other Security Documents, and in addition to, and not in limitation of,
any limitation on liability provided by law or by any contract, agreement,
instrument or document, the remedies of Lender, for default or breach under
this Note, the Security Instrument, the Environmental Indemnity or any
Other Security Documents, shall be limited to its right against the
Property or other collateral subject thereto; without limitation on the
generality of the foregoing, and notwithstanding anything to the contrary
contained in this Note, the Security Instrument, the Environmental
Indemnity Agreement or any of the Other Security Documents, Borrower shall
not be personally liable, directly or indirectly, for the payment of the
indebtedness or any other liability evidenced by or created or arising
under or in connection with this Note, the Security Instrument, the
Environmental Indemnity Agreement or any of the Other Security Documents,
or for the performance of any of the obligations under this Note, the
Security Instrument, the Environmental Indemnity Agreement or the Other
Security Documents, and any judgement or decree in any action brought to
enforce the obligation of Borrower to pay such indebtedness or to enforce
any other obligations or liabilities shall be enforceable against Borrower
only to the extent of its interest in the Property and any such judgement
or decree shall not be subject to execution upon or be a lien upon the
assets of Borrower other than its interest in such Property and Lender
shall not seek any personal or
-7-
deficiency judgement against Borrower, and Lender and each of its
successors and assigns hereby waives any such liability. Notwithstanding
anything in this Note, the Security Instrument, the Environmental Indemnity
Agreement or any of the Other Security Documents to the contrary, no
present or future Principal in Borrower (as defined in Subsection (b)
below), shall be liable, directly or indirectly, under or in connection
with this Note, the Security Instrument, the Environmental Indemnity
Agreement or any of the Other Security Documents, or any amendments or
modifications to any of the foregoing made at any time or times, heretofore
or hereafter (and Lender and its successors and assigns shall have no
recourse against any property of any such Principal in Borrower); and the
Lender and each of its successors and assigns hereby waives any such
liability of any Principal in Borrower. Any obligation of any Principal in
Borrower to contribute, lend or otherwise make any payment to Borrower
(whether by reason of a negative capital account or otherwise) shall not be
considered an asset of Borrower. The provisions of this Subsection (a)
shall not (i) constitute a waiver, release or impairment of any obligation
of Borrower evidenced or secured by this Note, the Other Security Documents
or the Security Instrument; (ii) impair the right of Lender to name
Borrower as a party defendant in any action or suit for judicial
foreclosure and sale under the Security Instrument; (iii) impair the rights
of Trustee (defined in the Security Instrument) and Lender from exercising
their right to sell the Property pursuant to the power of sale granted
hereto; (iv) affect the validity or enforceability against the Borrower of
any indemnity (subject to Article 15 of the Security Instrument) made in
connection with this Note, the Security Instrument, or the Other Security
Documents; (v) impair the right of Lender to obtain the appointment of a
receiver; (vi) impair the enforcement (subject to Article 15 of the
Security Instrument) of the Assignment of Leases and Rents executed in
connection herewith; or (vii) impair the right of Lender to enforce
(subject to Article 15 hereof) the provisions of Sections 11.10, 13.2, 13.3
and 13.4 of the Security Instrument.
(b) Notwithstanding the provisions of this Article 14 to the
contrary, Borrower, but not any principal in Borrower, shall be personally
liable to Lender for the Losses
(as defined in the Security Instrument) it incurs to the extent of both the
Property encumbered by the Security Instrument and any other assets of
Borrower, but not any assets of any Principal in Borrower, due to: (i)
fraud or intentional misrepresentation by or on behalf of Borrower in
connection with the execution and the delivery of this Note, the Security
Instrument or the Other Security Documents, in each case to the extent of
the actual out-of-pocket Loss to Lender caused thereby; (ii) Borrower's
misapplication or misappropriation of Rents received by Borrower after
the occurrence of an Event of Default, to the extent of the amount of Rents
misapplied or misappropriated by Borrower and not applied to the expenses
of the Property; (iii) Borrower's misappropriation of tenant security
deposits or Rents collected in advance, to the extent of the amount so
misappropriated by Borrower and, with respect to the Rents, not applied to
expenses of the Property; (iv) Borrower's misapplication or the
misappropriation of insurance proceeds or condemnation awards, to the
extent of the proceeds misapplied or misappropriated; (v) any act of actual
waste or arson by Borrower, any principal, affiliate, member or general
partner thereof or by any Indemnitor (as defined in the Security
Instrument), to the extent of the actual out-of-pocket Loss to Lender
caused thereby; or (vi) Borrower's failure to comply with the provisions of
Sections 4.2, 7.1, 12.1 and 12.2 of the Security Instrument in each case,
to the extent of the actual out-of-pocket Loss to Lender caused thereby.
The term "Principal in Borrower" as used in this Note shall mean (1) any
constituent partner in or member of
-8-
Borrower, (2) any employee or agent in or of Borrower, and (3) any
shareholder, officer, director, partner, limited partner, member, manager,
trustee, beneficiary, employee or agent in or of any corporation,
partnership, limited liability company, trust or other entity that has any
direct or indirect interest in Borrower or in any partner or member of
Borrower.
(c) Notwithstanding the foregoing, the agreement of Lender
not to pursue recourse liability as set forth in Subsection (a) above SHALL
BECOME NULL AND VOID as to Borrower, but not any Principal in Borrower, and
shall be of no further force and effect in the event of Borrower's default
under Section 4.3 or Sections 8.1, 8.2, 8.3 or 8.4 of the Security
Instrument or if the Property or any part thereof shall become an asset in
(i) a voluntary bankruptcy or insolvency proceeding, or (ii) an involuntary
bankruptcy or insolvency proceeding which is not dismissed within one
hundred twenty (120) days of filing.
(d) Nothing herein shall be deemed to be a waiver of any
right which Lender may have under Sections 506(a), 506(b), 1111(b) or any
other provisions of the U.S. Bankruptcy Code to file a claim for the full
amount of the Debt secured by the Security Instrument or to require that
all collateral shall continue to secure all of the Debt owing to Lender in
accordance with this Note, the Security Instrument and the Other Security
Documents.
ARTICLE 15: AUTHORITY
Borrower represents that Borrower has full power, authority and legal
right to execute and deliver this Note, the Security Instrument and the
Other Security Documents and that this Note, the Security Instrument and
the Other Security Documents constitute valid and binding obligations of
Borrower.
ARTICLE 16: APPLICABLE LAW
This Note 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.
ARTICLE 17: SERVICE OF PROCESS
(a) (i) Borrower will maintain a place of business or an agent for
service of process in New York, New York and give prompt notice to Lender
of the address of such place of business and of the name and address of any
new agent appointed by it, as appropriate. Borrower further agrees that
the failure of its agent for service of process to give it notice of any
service of process will not impair or affect the validity of such service
or of any judgement based thereon. If, despite the foregoing, there is for
any reason no agent for service of process of Borrower available to be
served, and if it at that time has no place of business in New York, New
York, then Borrower irrevocably consents to service of process by
registered or certified mail, postage prepaid, to it at its address given
in or pursuant to the first paragraph hereof.
-9-
(ii) Borrower initially and irrevocably designated CT
Corporation System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, to receive for and on behalf of Borrower service of
process in New York, New York with respect to this Note.
(b) With respect to any claim or action arising hereunder or under
the Security Instrument or the Other Security Documents, Borrower (a)
irrevocably submits to the nonexclusive jurisdiction of the courts of the
State of New York and the United States District Court located in the
Borough of Manhattan in New York, New York, and appellate courts from any
thereof, and (b) irrevocably waives any objection which it may have at any
time to the laying on venue of any suit, action or proceeding arising out
of or relating to this Note brought in any such court, irrevocably waives
any claim that any such suit, action or proceeding brought in any such
court has been brought in an inconvenient forum.
(c) Nothing in this Note will be deemed to preclude Lender from
bringing an action or proceeding with respect hereto in any other
jurisdiction.
ARTICLE 18: COUNSEL FEES
In the event that it should become necessary to employ counsel to
collect the Debt or to protect or foreclose the security therefor, Borrower
also agrees to pay all reasonable fees and expenses of Lender, including,
without limitation, reasonable attorney's fees for the services of such
counsel whether or not suit be brought.
ARTICLE 19: NOTICES
All notices or other written communications hereunder shall be deemed
to have been properly given (i) upon delivery, if delivered in person or by
facsimile transmission with receipt acknowledged by the recipient thereof
and confirmed by telephone by sender, (ii) upon receipt after having been
deposited for overnight delivery with any reputable overnight courier
service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to Borrower: North Hills Mall Associates
c/o JMB Income Properties, LTD.-X
900 Michigan Avenue, Suite 900
Chicago, Illinois 60611
Attention: Stephen Lovelette
Facsimile No. (312) 915-2310
-10-
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90067
Attention: Real Estate Notices (SCS)
Facsimile No. (310) 201-8922
If to Lender: Chemical Bank
c/o Chemical Commercial Mortgage Banking Corp.
Servicing Department
380 Madison Avenue
11th Floor
New York, New York 10017
Attention: Janice Smith
Facsimile No. (212) 622-3553
and
Chemical Bank
Legal Department
270 Park Avenue
40th Floor
New York, New York 10017
Attention: Ronald A. Wilcox, Esq.
Facsimile No. (212) 270-7473
With a copy to: Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Joseph Philip Forte, Esq.
Facsimile No. (212) 912-7751
or addressed as such party may from time to time designate by written
notice to the other parties.
Either party by notice to the other may designate additional or
different addressees for subsequent notices or communications.
"Business Day" shall mean a day upon which commercial banks are
not authorized or required by law to close in New York, New York.
-11-
ARTICLE 20: MISCELLANEOUS
(a) Wherever pursuant to this Note (i) Lender exercises any
right given to it to approve or disapprove, (ii) any arrangement or term is
to be satisfactory to Lender, or (iii) any other decision or determination
is to made by Lender, the decision of Lender to approve or disapprove, all
decisions that arrangements or terms are satisfactory or not satisfactory
and all other decisions and determinations made by Lender, shall be in the
sole and absolute discretion of Lender and shall be final and conclusive,
except as may be otherwise expressly and specifically provided herein.
(b) Wherever pursuant to this Note it is provided that
Borrower pay any costs and expenses, such costs and expenses shall include,
but not be limited to, reasonable legal fees
and disbursements of Lender, whether with respect to retained firms or the
reimbursement for the expenses of in-house staff.
ARTICLE 21: SPECIAL TEXAS PROVISIONS
(a) In the event of any inconsistencies between the terms and
conditions of Articles 1-20 and Article 22 of this Note, and the terms and
conditions of this Article 21, the terms and conditions of Article 21 shall
control and be binding.
(b) The following language is hereby added to the end of the last
sentence of Article 1 entitled "Payment Terms":
",unless such calculation would result in a usurious rate, in
which case interest shall be calculated on the per annum basis
of a year of 365 or 366 days, as the case may be."
(c) The first sentence of Article 2 entitled "Interest" is hereby
deleted and the following substituted therefor:
The term "Applicable Interest Rate" as used herein shall
mean a rate per annum from the date of this Note through and
including the Maturity Date of the lesser of ----- % or the Highest Lawful
Rate (hereinafter defined). The term "Highest Lawful Rate" as used herein
shall mean, with respect to the Lender, the maximum nonusurious interest
rate, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Debt under laws applicable to the
Lender that are presently in effect or, to the extent allowed by law, under
such applicable laws that may hereafter be in effect and that allow a
higher maximum nonusurious interest rate than applicable laws now allow.
-12-
(d) The phrase "maximum interest rate which Borrower may by law
pay" is hereby deleted from Article 4, and the phrase "Highest Lawful Rate"
substituted therefore.
(e) The phrase "maximum amount permitted by applicable law" is
hereby deleted from Article 8 and the phrase "Highest Lawful Rate" is
substituted therefore.
(f) The following language is hereby added to the first sentence of
Article 11 entitled "Waivers" after the words" notice of dishonor...":
"notice of intention to accelerate, notice of acceleration,"
(g) The following language is hereby added after the word "and" and
immediately before the word "shall" found in the second sentence of Article
16:
",except to the extent that the applicable laws of the Untied
States of America apply,".
(g) THIS NOTE, AND THE OTHER SECURITY DOCUMENTS EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE LENDER AND THE OTHER RESPECTIVE
PARTIES HERETO AND THERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND
UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF
AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR
CONTEMPORANEOUS OR SUBSEQUENT AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
{NO FURTHER TEXT ON THIS PAGE}
-13-
ARTICLE 22: DEFINITIONS
The terms set forth below are defined in the following Sections
of this Note:
(a) Applicable Interest Rate: Article 2;
(b) Borrower: Preamble, Articles 6 and 11;
(c) Business Day: Article 19;
(d) Calculated Payments: Article 5, Section (b);
(e) Debt: Article 3;
(f) Default Prepayment: Article 5, Section (d);
(g) Default Rate: Article 4;
(h) Discount Rate: Article 5, Section (b);
(i) Event of Default: Article 3;
(j) Interest Shortfall Payment: Article 5, Subsection (a)(ii);
(k) Lender: Preamble and Article 6;
(l) Loan Year: Article 5, Section (b);
(m) Maturity Date: Article 1, Section (b);
(n) Other Security Documents: Article 6;
(o) Prepayment Consideration: Article 5, Subsection (a)(iv);
(p) Prepayment Date: Article 5, Section (a);
(q) Property: Article 6;
(r) Security Instrument: Article 6; and
(s) Treasury Rate: Article 5, Section (b).
-14-
IN WITNESS WHEREOF, Borrower has duly executed this Note as of the
day and year first above written.
NORTH HILLS MALL ASSOCIATES, an
Illinois general partnership
By: JMB REALTY CORPORATION, a
Delaware corporation, its general
partner
By: --------------------------
Name:
Title:
-15-
THE STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
This instrument was acknowledged before me on November 30,
1995, by Elizabeth Kogen, the Vice President of JMB Realty Corporation, a
Delaware corporation, a general partner of North Hills Mall Associates, an
Illinois general partnership, on behalf of said general partnership.
---------------------------------
Notary Public in and
for the State of New York
My Commission expires:
- ---------------------------------- --------------------------------
Print Name of Notary
-16-
- --------------------------------------------------------------------------
NORTH HILLS MALL ASSOCIATES, an Illinois general partnership, as assignor
(Borrower)
to
CHEMICAL BANK, as assignee
(Lender)
-----------------------------
ASSIGNMENT
OF LEASES AND RENTS
-----------------------------
Dated: November 30, 1995
Location: 7624 Grapevine Highway
North Richland Hills, Texas
County: Tarrant
PREPARED BY AND UPON
RECORDATION RETURN TO:
Messrs. Thacher, Proffitt & Wood
2 World Trade Center
New York, New York 10048
Attention: Ellen M. Goodwin, Esq.
File No.: 86000-00256
Title No.: G.F. No. 219349GWR
- ---------------------------------------------------------------------------
THIS ASSIGNMENT OF LEASES AND RENTS ("Assignment") made as of
the ----- day of November, 1995, by NORTH HILLS MALL ASSOCIATES, an
Illinois general partnership, as assignor, having its principal place of
business c/o JMB Income Properties, LTD.-X, 900 Michigan Avenue, Suite 900,
Chicago, Illinois 60611 ("Borrower") to CHEMICAL BANK, a New York banking
corporation, as assignee, having an address at 380 Madison Avenue, 11th
Floor, New York, New York 10017 ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of $8,000,000 in lawful
money of the United States of America (together with all extensions,
renewals, modifications, substitutions and amendments thereof, the "Note"),
with interest from the date thereof at the rates set forth in the Note,
principal and interest to be payable in accordance with the terms and
conditions provided in the Note.
Borrower desires to secure the payment of the Debt (defined
below) and the performance of all its obligations under the Note and the
Other Obligations as defined in Article 2 of the Security Instrument
(defined below).
ARTICLE 1-ASSIGNMENT
Section 1.1PROPERTY ASSIGNED. Borrower hereby absolutely and
unconditionally assigns and grants to Lender the following property,
rights, interests and estates, now owned, or hereafter acquired by
Borrower:
(a) Leases. All existing and future leases affecting the
use, enjoyment, or occupancy of all or any part of that certain lot or
piece of land, more particularly described in Exhibit A annexed hereto and
made a part hereof, together with the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs, replacements
and improvements now or hereafter located thereon (collectively, the
"Property") and the right, title and interest of Borrower, its successors
and assigns, therein and thereunder.
(b) Other Leases and Agreements. All other leases and other
agreements, whether or not in writing, affecting the use, enjoyment or
occupancy of the Property or any portion thereof now or hereafter made,
together with any extension, renewal or replacement of the same, this
Assignment of other present and future leases and present and future
agreements being effective without further or supplemental assignment. The
leases described in Subsection 1.1(a) and the leases and other agreements
described in this Subsection 1.1(b), together with all other present and
future leases and present and future agreements and any extension or
renewal of the same are collectively referred to as the "Leases".
(c) Rents. All rents, additional rents, revenues, income,
issues and profits arising from the Leases and renewals and replacements
thereof and any cash or security deposited in connection therewith and
together will all rents, revenues, income, issues and profits (including
all oil and gas or other mineral royalties and bonuses) from the use,
enjoyment and occupancy of the Property (collectively, the "Rents").
(d) Bankruptcy Claims. All of Borrower's claims and rights
(the "Bankruptcy Claims") to the payment of damages arising from any
rejection by a lessee of any Lease under the Bankruptcy Code, 11 U.S.C.
Section 101 et seq., as the same may be amended (the "Bankruptcy Code").
(e) Lease Guaranties. All of Borrower's right, title and
interest in and claims under any and all lease guaranties, letters of
credit and any other credit support given by any guarantor in connection
with any of the Leases (individually, a "Lease Guarantor", collectively,
the "Lease Guarantors") to Borrower (individually, a "Lease Guaranty",
collectively, the "Lease Guaranties").
(f) Proceeds. All proceeds from the sale or other
disposition of the Leases, the Rents, the Leases Guaranties and the
Bankruptcy Claims.
(g) Other. All rights, powers, privileges, options and other
benefits of Borrower as lessor under the Leases and beneficiary under the
Lease Guaranties, including without limitation the immediate and continuing
right to make claim for, receive, collect and receipt for all Rents payable
or receivable under the Leases and all sums payable under the Lease
Guaranties or pursuant thereto (and to apply the same to the payment of the
Debt or the Other Obligations), and to do all other things which Borrower
or any lessor is or may become entitled to do under the Leases or the Lease
Guaranties.
(h) Entry. The right, at Lender's options, upon revocation
of the license granted herein, to enter upon the Property in person, by
agent or by court-appointed receiver, to collect the Rents.
(i) Power of Attorney. Borrower's irrevocable power of
attorney, coupled with an interest, to take any and all of the actions set
forth in Section 3.1 of this Assignment and any or all other actions
designated by Lender for the proper management and preservation of the
Property.
(j) Other Rights and Agreements. Any and all other rights of
Borrower in and to the items set forth in subsections (a) through (i)
above, and all amendments, modifications, replacements, renewals and
substitutions thereof.
Section 1.2CONSIDERATION. This Assignment is made in
consideration of that certain loan made by Lender to Borrower evidenced by
the Note and secured by that certain mortgage and security agreement, deed
of trust and security agreement, deed to secure debt and security agreement
or similar real estate security instrument given by Borrower to or for the
benefit of Lender, dated the date hereof, in the principal sum of
$8,000,000, covering the Property and intended to be duly recorded (the
"Security Instrument"). The principal sum, interest and all other sums due
and payable under the Note, the Security Instrument, this Assignment and
the Other Security Documents (defined below) are collectively referred to
as the "Debt". The documents other than this Assignment, the Note or the
Security Instrument now or hereafter executed by Borrower and/or others and
by or in favor of Lender which wholly
-2-
or partially secure or guarantee payment of the Debt or are executed in
connection herewith or the Loan Commitment are referred to herein as the
"Other Security Documents".
ARTICLE 2 - TERMS OF ASSIGNMENT
Section 2.1PRESENT ASSIGNMENT AND LICENSE BACK. It is
intended by Borrower that this Assignment constitute a present, absolute
assignment of the Leases, Rents, Lease Guaranties and Bankruptcy Claims,
and not an assignment for additional security only. Nevertheless, subject
to the terms of this Section 2.1, Lender grants to Borrower a revocable
license to collect and receive the Rents and other sums due under the Lease
Guaranties. Borrower shall hold the Rents and all sums received pursuant
to any Lease Guaranty, or a portion thereof sufficient to discharge all
current sums due on the Debt, in trust for the benefit of Lender for use in
the payment of such sums.
Section 2.2NOTICE TO LESSEES. Borrower hereby agrees to
authorize and direct the lessees named in the Leases or any other or future
lessees or occupants of the Property and all Lease Guarantors to pay over
to Lender or to such other party as Lender directs all Rents and all sums
due under any Lease Guaranties upon receipt from Lender of written notice
to the effect that Lender is then the holder of the Security Instrument and
that a Default (defined below) exists, and to continue so to do until
otherwise notified by Lender.
Section 2.3INCORPORATION BY REFERENCE. All representations,
warranties, covenants, conditions and agreements contained in the Security
Instrument as same may be modified, renewed, substituted or extended are
hereby made a part of this Assignment to the same extent and with the same
force as if fully set forth herein.
ARTICLE 3 - REMEDIES
Section 3.1REMEDIES OF LENDER. Upon or at any time after the
occurrence of a default under this Assignment or an Event of Default (as
defined in the Security Instrument) (a "Default"), the license granted to
Borrower in Section 2.1 of this Assignment shall automatically be revoked,
and Lender shall immediately be entitled to possession of all Rents and
sums due under any Lease Guaranties, whether or not Lender enters upon or
takes control of the Property. In addition, Lender may, at its option,
without waiving such Default, without notice and without regard to the
adequacy of the security for the Debt, either in person or by agent,
nominee or attorney, with or without bringing any action or proceeding, or
by a receiver appointed by a court, dispossess Borrower and its agents and
servants from the Property, without liability for trespass, damages or
otherwise and exclude Borrower and its agents or servants wholly therefrom,
and take possession of the Property and all books, records and accounts
relating thereto and have, hold, manage, lease and operate the Property on
such terms and for such period of time as Lender may deem proper and either
with or without taking possession of the Property in its own name, demand,
sue for or otherwise collect and receive all Rents and sums due under all
Lease Guaranties, including those past due and unpaid with full power to
make from time to time all alterations, renovations, repairs or
replacements thereto or thereof as may seem proper to Lender and may apply
the Rents and sums received pursuant to any Lease Guaranties to the payment
of the following in such order and proportion as Lender in its
-3-
sole discretion may determine, any law, custom or use to the contrary
notwithstanding: (a) all expenses of managing and securing the Property,
including, without being limited thereto, the salaries, fees and wages of a
managing agent and such other employees or agents as Lender may deem
necessary or desirable and all expenses of operating and maintaining the
Property, including, without being limited thereto, all taxes, charges,
claims, assessments, water charges, sewer rents and any other liens, and
premiums for all insurance which Lender may deem necessary or desirable,
and the cost of all alterations, renovations, repairs or replacements, and
all expenses incident to taking and retaining possession of the Property;
and (b) the Debt, together with all costs and reasonable attorneys' fees.
In addition, upon the occurrence of a Default, Lender, at its option, may
(1) complete any construction on the Property in such manner and form as
Lender deems advisable, (2) exercise all rights and powers of Borrower,
including, without limitation, the right to negotiate, execute, cancel,
enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all Rents from the Property and all sums due under any
Lease Guaranties, (3) either require Borrower to pay monthly in advance to
Lender, or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupancy of such part of the
Property as may be in possession of Borrower or (4) require Borrower to
vacate and surrender possession of the Property to Lender or to such
receiver and, in default thereof, Borrower may be evicted by summary
proceedings or otherwise.
Section 3.2OTHER REMEDIES. Nothing contained in this
Assignment and no act done or omitted by Lender pursuant to the power and
rights granted to Lender hereunder shall be deemed to be a waiver by Lender
of its rights and remedies under the Note, the Security Instrument, or the
Other Security Documents and this Assignment is made and accepted without
prejudice to any of the rights and remedies possessed by Lender under the
terms thereof. The right of Lender to collect the Debt and to enforce any
other security therefor held by it may be exercised by Lender either prior
to, simultaneously with, or subsequent to any action taken by it hereunder.
Borrower hereby absolutely, unconditionally and irrevocable waives any and
all rights to assert any setoff, counterclaim or crossclaim of any nature
whatsoever with respect to the obligations of Borrower under this
Assignment, the Note, the Security Instrument, the Other Security Documents
or otherwise with respect to the loan secured hereby in any action or
proceeding brought by Lender to collect same, or any portion thereof, or to
enforce and realize upon the lien and security interest created by this
Assignment, the Note, the Security Instrument, or any of the Other Security
Documents (provided, however, that the foregoing shall not be deemed a
waiver of Borrower's right to assert any compulsory counterclaim if such
counterclaim is compelled under local law or rule of procedure, nor shall
the foregoing be deemed a waiver of Borrower's right to assert any claim
which would constitute a defense, setoff, counterclaim or crossclaim of any
nature whatsoever against Lender in any separate action or proceeding).
Section 3.3OTHER SECURITY. Lender may take or release other
security for the payment of the Debt, may release any party primarily or
secondarily liable therefor and may apply any other security held by it to
the reduction or satisfaction of the Debt without prejudice to any of its
rights under this Assignment.
Section 3.4NON-WAIVER. The exercise by Lender of the option
granted it Section 3.1 of this Assignment and the collection of the Rents
and sums due under the Lease
-4-
Guaranties and the application thereof as herein provided shall not be
considered a waiver of any default by Borrower under the Note, the Security
Instrument, the Leases, this Assignment or the Other Security Documents.
The failure of Lender to insist upon strict performance of any term hereof
shall not be deemed to be a waiver of any term of this Assignment.
Borrower shall not be relieved of Borrower's obligations hereunder by
reason of (a) the failure of Lender to comply with any request of Borrower
or any other party to take any action to enforce any of the provisions
hereof or of the Security Instrument, the Note or the Other Security
Documents, (b) the release regardless of consideration, of the whole or any
part of the Property, or (c) any agreement or stipulation by Lender
extending the time of payment or otherwise modifying or supplementing the
terms of this Assignment, the Note, the Security Instrument or the Other
Security Documents. Lender may resort for the payment of the Debt to any
other security held by Lender in such order and manner as Lender, in its
discretion, may elect. Lender may take any action to recover the Debt, or
any portion thereof, or to enforce any covenant hereof without prejudice to
the right of Lender thereafter to enforce its rights under this Assignment.
The rights of Lender under this Assignment shall be separate, distinct and
cumulative and none shall be given effect to the exclusion of the others.
No act of Lender shall be construed as an election to proceed under any one
provision herein to the exclusion of any other provision.
Section 3.5BANKRUPTCY. (a) Upon or at any time after the
occurrence of a Default, Lender shall have the right to proceed in its own
name or in the name of Borrower in respect of any claim, suit, action or
proceeding relating to the rejection of any Lease, including, without
limitation, the right to file and prosecute, to the exclusion of Borrower,
any proofs of claim, complaints, motions, applications, notices and other
documents, in any case in respect of the lessee under such Lease under the
Bankruptcy Code.
(b) If there shall be filed by or against Borrower a
petition under the Bankruptcy Code, and Borrower, as lessor under any Lease
shall determine to reject such Lease pursuant to Section 365(a) of the
Bankruptcy Code, then Borrower shall give Lender not less than ten (10)
days' prior notice of the date which Borrower shall apply to the bankruptcy
court for authority to reject the Lease. Lender shall have the right, but
not the obligation, to serve upon Borrower within such ten-day period a
notice stating that (i) Lender demands that Borrower assume and assign the
Lease to Lender pursuant to Section 365 of the Bankruptcy Code and (ii)
Lender covenants to cure or provide adequate assurance of future
performance under the Lease. If Lender serves upon Borrower the notice
described in the preceding sentence, Borrower shall not seek to reject the
Lease and shall comply with the demand provided for in clause (i) of the
preceding sentence within thirty (30) days after the notice shall have been
given, subject to the performance by Lender of the covenant provided for in
clause (ii) of the preceding sentence.
ARTICLE 4 - NO LIABILITY, FURTHER ASSURANCES
Section 4.1NO LIABILITY OF LENDER. This Assignment shall not
be construed to bind Lender to the performance of any of the covenants,
conditions or provisions contained in any Lease or Lease Guaranty or
otherwise impose any obligation upon Lender. Lender shall not be liable
for any loss sustained by Borrower resulting from Lender's failure to let
the Property after a Default or from any other act or omission of Lender in
managing the Property
-5-
after a Default unless such loss is caused by the willful misconduct, bad
faith or gross negligence of Lender. Lender shall not be obligated to
perform or discharge any obligation, duty or liability under the Leases or
any Lease Guaranties or under or by reason of this Assignment and Borrower
shall, and hereby agrees, to indemnify Lender for, and to hold Lender
harmless from, any and all liability, loss or damage which may or might be
incurred under the Leases, any Lease Guaranties or under or by reason of
this Assignment and from any and all claims and demands whatsoever,
including the defense of any such claims or demands which my be asserted
against Lender by reason of any alleged obligations and undertakings on its
part to perform or discharge any of the terms, covenants or agreements
contained in the Leases or any Lease Guaranties, except if the same is due
to Lender's or its agents gross negligence, willful misconduct or bad
faith. Should Lender incur any such liability, the amount thereof,
including costs, expenses and reasonable attorneys' fees, shall be secured
by this Assignment and by the Security Instrument and the Other Security
Documents and Borrower shall reimburse Lender therefor immediately upon
demand and upon the failure of Borrower so to do Lender may, at its option,
declare all sums secured by this Assignment and by the Security Instrument
and the Other Security Documents immediately due and payable. This
Assignment shall not operate to place any obligation or liability for the
control, care, management or repair of the Property upon Lender, nor for
the carrying out of any of the terms and conditions of the Leases or any
Lease Guaranties; nor shall it operate to make Lender responsible or liable
for any waste committed on the Property by the tenants or any other
parties, or for any dangerous or defective condition of the Property,
including without limitation the presence of any Hazardous Substances (as
defined in the Security Instrument), or for any negligence in the
management, upkeep, repair or control of the Property resulting in loss or
injury or death to any tenant, licensee, employee or stranger.
Section 4.2NO MORTGAGEE IN POSSESSION. Nothing herein
contained shall be construed as constituting Lender a "mortgagee in
possession" in the absence of the taking of actual possession of the
Property by Lender. In the exercise of the powers herein granted Lender,
no liability shall be asserted or enforced against Lender, all such
liability being expressly waived and released by Borrower.
Section 4.3FURTHER ASSURANCES. Borrower will, at the cost of
Borrower, and without expense to Lender, do, execute, acknowledge and
deliver all and every such further acts, conveyances, assignments, notices
of assignments, transfers and assurances as Lender shall, from time to
time, require for the better assuring, conveying, assigning, transferring
and confirming unto Lender the property and rights hereby assigned or
intended now or hereafter so to be, or which Borrower may be or may
hereafter become bound to convey or assign to Lender, or for carrying out
the intention or facilitating the performance of the terms of this
Assignment or for filing, registering or recording this Assignment and, on
demand, will execute and deliver and hereby authorizes Lender to execute in
the name of Borrower to the extent Lender may lawfully do so, one or more
financing statements, chattel mortgages or comparable security instruments,
to evidence more effectively the lien and security interest hereof in and
upon the Leases.
-6-
ARTICLE 5 - SECONDARY MARKET
Section 5.1TRANSFER OF LOAN. Lender may, at any time, sell,
transfer or assign the Note, this Assignment and the Other Security
Documents, and any or all servicing rights with respect thereto, or grant
participations therein or issue mortgage pass-through certificates or other
securities evidencing a beneficial interest in a rated or unrated public
offering or private placement (the "Securities"). Lender may forward to
each purchaser, transferee, assignee, servicer, participant, investor in
such Securities or any credit rating agency rating such Securities
(collectively, the "Investor") and each prospective Investor, all documents
and information which Lender now has or may hereafter acquire relating to
the Debt and to Borrower and the Property, whether furnished by Borrower,
any indemnitor or otherwise, as Lender determines necessary or desirable.
Borrower agrees to cooperate with Lender in connection with any transfer
made or any Securities created pursuant to this Section, including, without
limitation, the delivery of an estoppel certificate required in accordance
with Subsection 7.4(c) of the Security Instrument and such other documents
as are required under this Assignment or under the Security Instrument.
Borrower shall also furnish and Borrower and any indemnitor consent to
Lender furnishing to such Investors or such prospective Investors any and
all information concerning the Property, the Leases, the financial
condition of Borrower and any indemnitor (to the extent Borrower and any
indemnitor furnished such documentation to Lender in connection with the
Loan) as may be requested by Lender, any Investor or any prospective
Investor in connection with any sale, transfer or participation interest.
ARTICLE 6 - MISCELLANEOUS PROVISIONS
Section 6.1CONFLICT OF TERMS. In case of any conflict between
the terms of this Assignment and the terms of the Security Instrument, the
terms of the Security Instrument shall prevail.
Section 6.2NO ORAL CHANGE. This Assignment 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
Borrower or Lender, but only by an agreement in writing signed by the party
against whom the enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
Section 6.3CERTAIN DEFINITIONS. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided
herein, words used in this Assignment may be used interchangeably in
singular or plural form and the word "Borrower" shall mean "each Borrower
and any subsequent owner or owners of the Property or any part thereof or
interest therein," the word "Lender" shall mean "Lender and any subsequent
holder of the Note," the word "Note" shall mean "the Note and any other
evidence of indebtedness secured by the Security Instrument," the word
"person" shall include an individual, corporation, partnership, limited
liability company, trust, unincorporated association, government,
governmental authority, and any other entity, the word "Property" shall
include any portion of the Property and any interest therein, the phrases
"attorneys' fees" and "counsel fees" shall include any and all attorneys',
paralegal and law clerk fees and disbursements, including, but not limited
to, fees and disbursements at the pre-trial, and appellate levels incurred
or paid
-7-
by Lender in protecting its interest in the Property, the Leases and the
Rents and enforcing its rights hereunder, and the word "Debt" shall mean
the principal balance of the Note with interest thereon as provided in the
Note and the Security Instrument and all other sums due pursuant to the
Note, the Security Instrument, this Assignment and the Other Security
Documents; 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.
Section 6.4AUTHORITY. Borrower represents and warrants that
it has full power and authority to execute and deliver this Assignment and
the execution and delivery of this Assignment has been duly authorized and
does not conflict with or constitute a default under any law, judicial
order or other agreement affecting Borrower or the Property.
Section 6.5INAPPLICABLE PROVISIONS. If any term, covenant or
condition of this Assignment is held to be invalid, illegal or
unenforceable in any respect, this Assignment shall be construed without
such provision.
Section 6.6DUPLICATE ORIGINALS; COUNTERPARTS. This Assignment
may be executed in any number of duplicate originals and each such
duplicate original shall be deemed to be an original. This Assignment may
be executed in several counterparts, each of which counterparts shall be
deemed an original instrument and all which together shall constitute a
single Assignment. The failure of any party hereto to execute this
Assignment, or any counterpart hereof, shall not relieve the other
signatories from their obligations hereunder.
SECTION 6.7 CHOICE OF LAW. THIS ASSIGNMENT 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, PERFECTION, PRIORITY AND ENFORCEMENT OF THE
LIEN OF THIS ASSIGNMENT, THE LAWS OF THE STATE WHERE THE PROPERTY IS
LOCATED SHALL APPLY.
Section 6.8TERMINATION OF ASSIGNMENT. Upon payment in full of
the Debt and the delivery and recording of a satisfaction or discharge of
Security Instrument duly executed by Lender, this Assignment shall become
and be void and of no effect.
Section 6.9NOTICES. All notices or other written
communications hereunder shall be deemed to have been properly given (i)
upon delivery, if delivered in person or by facsimile transmission with
receipt acknowledged by the recipient thereof and confirmed by telephone by
sender, (ii) upon receipt after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three (3)
Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
-8-
If to Borrower: North Hills Mall Associates
c/o JMB Income Properties, LTD.X
900 Michigan Avenue, Suite 900
Chicago, Illinois 60611
Attention: Stephen Lovelette
Facsimile No. (312) 915-2310
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90667
Attention: Real Estate Notices/SCS
Facsimile No. (310) 201-8922
If to Lender: Chemical Bank
c/o Chemical Commercial Mortgage Banking Corp.
Servicing Department
380 Madison Avenue
11th floor
New York, New York 10017
Attention: Janice Smith
Facsimile No. (212) 622-3553
and
Chemical Bank
Legal Department
270 Park Avenue
40th Floor
New York, New York 10017
Attention: Ronald A. Wilcox, Esq.
Facsimile No. (212) 270-7473
With a copy to: Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Joseph Philip Forte, Esq.
Facsimile No. (212) 912-7751
or addressed as such party may from time to time designate by written
notice to the other parties. For purposes of this Section 6.9, the term
"Business Day" shall mean a day on which commercial banks are not
authorized or required by law to close in New York, New York.
-9-
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
SECTION 6.10 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE
APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THIS ASSIGNMENT, THE NOTE,
THE SECURITY INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR
OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN
CONNECTION THEREWITH.
Section 6.11 SUBMISSION TO JURISDICTION. With respect to
any claim or action arising hereunder, Borrower (a) irrevocably submits to
the nonexclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in New
York, New York, and appellate courts from any thereof, and (b) irrevocably
waives any objection which it may have at any time to the laying on venue
of any suit, action or proceeding arising out of or relating to this
Assignment brought in any such court, irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.
Section 6.12 LIABILITY. If Borrower consists of more than
one person, the obligations and liabilities of each such person hereunder
shall be joint and several. This Assignment shall be binding upon and
inure to the benefit of Borrower and Lender and their respective successors
and assigns forever.
Section 6.13 HEADINGS, ETC. The headings and captions of
various paragraphs of this Assignment 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.
Section 6.14 NUMBER AND GENDER. 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.
Section 6.15 SOLE DISCRETION OF LENDER. Wherever pursuant
to this Assignment (a) Lender exercises any right given to it to approve or
disapprove, (b) any arrangement or term is to be satisfactory to Lender, or
(c) any other decision or determination is to be made by Lender, the
decision of Lender to approve or disapprove, all decisions that
arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and
absolute discretion of Lender and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.
Section 6.16 COSTS AND EXPENSES OF BORROWER. Wherever
pursuant to this Assignment it is provided that Borrower pay any costs and
expenses, such costs and expenses
-10-
shall include, but not be limited to, legal fees and disbursements of
Lender, whether with respect to retained firms or the reimbursement of the
expenses for in-house staff.
ARTICLE 7 - TEXAS PROVISIONS
Section 7.1 In the event of any inconsistencies between
the terms and conditions of this Assignment and this Article 7, the terms
and conditions of Article 7 shall control and be binding.
SECTION 7.2LEGAL REPRESENTATION, INDEMNITIES, WAIVERS. EACH
OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGES AND AGREES (a) THAT IT HAS
A DUTY TO READ THIS ASSIGNMENT AND THAT IT IS CHARGED WITH NOTICE AND
KNOWLEDGE OF THE TERMS HEREOF, (b) THAT IT HAS IN FACT READ THIS ASSIGNMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS ASSIGNMENT (c) THAT IT HAS BEEN REPRESENTED
BY LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS
EXECUTION OF THIS ASSIGNMENT AND HAS RECEIVED THE ADVICE OF SUCH COUNSEL IN
CONNECTION WITH ENTERING INTO THIS ASSIGNMENT AND (d) THAT IT RECOGNIZES
THAT CERTAIN OF THE TERMS OF THIS ASSIGNMENT PROVIDE FOR (i) CERTAIN
WAIVERS AND FOR (ii) THE ASSUMPTION BY ONE PARTY OF, AND/OR RELEASE OF THE
OTHER PARTY FROM, CERTAIN LIABILITIES THAT SUCH PARTY MIGHT OTHERWISE BE
RESPONSIBLE FOR UNDER THE LAW. EACH PARTY HERETO FURTHER AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
SUCH PROVISIONS OF THIS ASSIGNMENT ON THE BASIS THAT THE PARTY HAD NO
NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT SUCH PROVISIONS ARE NOT
"CONSPICUOUS."
SECTION 7.3THE NOTE, THIS ASSIGNMENT OF LEASES AND RENTS AND
THE OTHER SECURITY DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING
BETWEEN THE LENDER AND THE OTHER RESPECTIVE PARTIES HERETO AND THERETO AND
SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF ANY MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR SUBSEQUENT AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
-11-
Section 7.4The following words are hereby added after the
words "and bad faith of Lender" in Section 4.1 of this Assignment:
REGARDLESS OF ANY NEGLIGENCE (WHETHER SOLE, CONTRIBUTORY,
CONCURRENT, COMPARATIVE, IMPUTED OR IMPLIED) OR OTHER FAULT OF LENDER (SAVE
AND EXCEPT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER).
ARTICLE 8 - EXCULPATION
Section 8.1This Assignment shall be subject to the provisions
contained in Article 15 of the Security Instrument.
[NO FURTHER TEXT ON THIS PAGE]
-12-
ARTICLE 9-DEFINITIONS
The terms set forth below are defined in the following Sections of
this Assignment:
(a) Assignment: Preamble;
(b) Attorneys' Fees: Article 6, Section 6.3;
(c) Bankruptcy Claims: Article 1, Subsection 1.1(d);
(d) Bankruptcy Code: Article 1, Subsection 1.1(d);
(e) Borrower: Preamble and Article 6, Section 6.3;
(f) Business Day: Article 6, Section 6.9;
(g) Counsel Fees: Article 6, Section 6.3;
(h) Debt: Article 6, Section 6.3;
(i) Default: Article 3, Section 3.1;
(j) Investor: Article 5, Section 5.1;
(k) Lease Guaranties: Article 1, Subsection 1.1(e);
(l) Lease Guarantor: Article 1, Subsection 1.1(e);
(m) Lease Guaranty: Article 1, Subsection 1.1(e);
(n) Leases: Article 1, Subsection 1.1(b);
(o) Lender: Preamble and Article 6, Section 6.3;
(p) Note: Recitals and Article 6, Section 6.3;
(q) Other Security Documents: Article 1, Section 1.2;
(r) Person: Article 6, Section 6.3;
(s) Property: Article 1, Subsection 1.1(a) and Article 6, Section 6.3;
(t) Rents: Article 1, Subsection 1.1(c); and
(u) Security Instrument: Article 1, Section 1.2.
-13-
THIS ASSIGNMENT, together with the covenants and warranties
therein contained, shall inure to the benefit of Lender and any subsequent
holder of the Security Instrument and shall be binding upon Borrower, its
heirs, executors, administrators, successors and assigns and any subsequent
owner of the Property.
-14-
IN WITNESS WHEREOF, Borrower has executed this instrument the
day and year first above written.
NORTH HILLS MALL ASSOCIATES,
an Illinois general partnership
By: JMB REALTY CORPORATION, a
Delaware corporation
its general partner
By: ---------------------
Name:
Title:
THE STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
This instrument was acknowledged before me on November 30,
1995, by Elizabeth Kogen, the Vice President of JMB Realty Corporation, a
Delaware corporation, the general partner of North Hills Mall Associates,
and Illinois general partnership, on behalf of said limited partnership.
--------------------------------------
Notary Public in and
for the State of New York
My commission expires:
- -------------------------------- -------------------------------------
Print Name of Notary
EXHIBIT A
Legal Description of Property
(to be attached)
ATTENTION: COUNTY CLERK -- THIS INSTRUMENT COVERS GOODS THAT ARE OR ARE TO
BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN AND IS TO BE FILED
FOR RECORD IN THE RECORDS WHERE MORTGAGES AND DEEDS OF TRUST ON REAL ESTATE
ARE RECORDED. ADDITIONALLY, THIS INSTRUMENT SHOULD BE APPROPRIATELY
INDEXED, NOT ONLY AS A MORTGAGE OR DEED OF TRUST, BUT ALSO AS A FINANCING
STATEMENT COVERING GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL
PROPERTY DESCRIBED HEREIN. THE MAILING ADDRESSES OF THE BORROWER (DEBTOR)
AND LENDER (SECURED PARTY) ARE SET FORTH IN THIS INSTRUMENT.
- ---------------------------------------------------------------------------
NORTH HILLS MALL ASSOCIATES, an
Illinois general partnership, as Grantor
(Borrower)
to
MR. GLENDON W. ROSE, as Trustee
and
CHEMICAL BANK, as Beneficiary
(Lender)
-----------------------------------
DEED OF TRUST AND
SECURITY AGREEMENT
-----------------------------------
Dated: November 30, 1995
Location: 7624 Grapevine Highway
North Richland Hills, Texas
County: Tarrant
PREPARED BY AND UPON
RECORDATION RETURN TO:
Messrs. Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Ellen M. Goodwin, Esq.
File No.: 86000-00256
Title No.: G.F. No. 219349GWR
- --------------------------------------------------------------------------
TABLE OF CONTENTS
Page
ARTICLE 1 - GRANTS OF SECURITY. . . . . .-1-
Section 1.1 PROPERTY MORTGAGED . . . . . . . . . . . . . .-1-
Section 1.2 ASSIGNMENT OF RENTS. . . . . . . . . . . . . .-3-
Section 1.3 SECURITY AGREEMENT . . . . . . . . . . . . . .-4-
Section 1.4 PLEDGE OF MONIES HELD. . . . . . . . . . . . .-4-
ARTICLE 2 - DEBT AND OBLIGATIONS SECURED . . .-4-
Section 2.1 DEBT . . . . . . . . . . . . . . . . . . . . .-4-
Section 2.2 OTHER OBLIGATIONS. . . . . . . . . . . . . . .-5-
Section 2.3 DEBT AND OTHER OBLIGATIONS . . . . . . . . . .-5-
Section 2.4 PAYMENTS . . . . . . . . . . . . . . . . . . .-5-
ARTICLE 3 - BORROWER COVENANTS. . . . . .-6-
Section 3.1 PAYMENT OF DEBT. . . . . . . . . . . . . . . .-6-
Section 3.2 INCORPORATION BY REFERENCE . . . . . . . . . .-6-
Section 3.3 INSURANCE. . . . . . . . . . . . . . . . . . .-6-
Section 3.4 PAYMENT OF TAXES, ETC. . . . . . . . . . . . .-9-
Section 3.5 ESCROW FUND. . . . . . . . . . . . . . . . . -10-
Section 3.6 CONDEMNATION . . . . . . . . . . . . . . . . -11-
Section 3.7 LEASES AND RENTS . . . . . . . . . . . . . . -11-
Section 3.8 MAINTENANCE OF PROPERTY. . . . . . . . . . . -12-
Section 3.9 WASTE. . . . . . . . . . . . . . . . . . . . -13-
Section 3.10 COMPLIANCE WITH LAWS . . . . . . . . . . . . -13-
Section 3.11 BOOKS AND RECORDS. . . . . . . . . . . . . . -13-
Section 3.12 PAYMENT FOR LABOR AND MATERIALS. . . . . . . -15-
Section 3.13 PERFORMANCE OF OTHER AGREEMENTS. . . . . . . -15-
ARTICLE 4 - SPECIAL COVENANTS. . . . . -15-
Section 4.1 PROPERTY USE . . . . . . . . . . . . . . . . -15-
Section 4.2 ERISA. . . . . . . . . . . . . . . . . . . . -15-
Section 4.3 SINGLE PURPOSE ENTITY. . . . . . . . . . . . -16-
Section 4.4 RESTORATION. . . . . . . . . . . . . . . . . -18-
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES. . -21-
Section 5.1 WARRANTY OF TITLE. . . . . . . . . . . . . . -21-
Section 5.2 AUTHORITY. . . . . . . . . . . . . . . . . . -22-
Section 5.3 LEGAL STATUS AND AUTHORITY . . . . . . . . . -22-
Section 5.4 VALIDITY OF DOCUMENTS. . . . . . . . . . . . -22-
Section 5.5 LITIGATION . . . . . . . . . . . . . . . . . -22-
Section 5.6 STATUS OF PROPERTY . . . . . . . . . . . . . -22-
Section 5.7 NO FOREIGN PERSON. . . . . . . . . . . . . . -23-
Section 5.8 SEPARATE TAX LOT . . . . . . . . . . . . . . -23-
Section 5.9 ERISA COMPLIANCE . . . . . . . . . . . . . . -24-
-i-
Section 5.10 LEASES . . . . . . . . . . . . . . . . . . . -24-
Section 5.11 FINANCIAL CONDITION. . . . . . . . . . . . . -24-
Section 5.12 BUSINESS PURPOSES. . . . . . . . . . . . . . -24-
Section 5.13 TAXES. . . . . . . . . . . . . . . . . . . . -24-
Section 5.14 MAILING ADDRESS. . . . . . . . . . . . . . . -24-
Section 5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES. . . . . -24-
Section 5.16 DISCLOSURE . . . . . . . . . . . . . . . . . -25-
ARTICLE 6 - OBLIGATIONS AND RELIANCES. . . -25-
Section 6.1 RELATIONSHIP OF BORROWER AND LENDER. . . . . -25-
Section 6.2 NO RELIANCE ON LENDER. . . . . . . . . . . . -25-
Section 6.3 NO LENDER OBLIGATIONS. . . . . . . . . . . . -25-
Section 6.4 RELIANCE . . . . . . . . . . . . . . . . . . -25-
ARTICLE 7 - FURTHER ASSURANCES. . . . . -26-
Section 7.1 RECORDING OF SECURITY INSTRUMENT, ETC. . . . -26-
Section 7.2 FURTHER ACTS, ETC. . . . . . . . . . . . . . -26-
Section 7.3 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY STAMP
LAWS . . . . . . . . . . . . . . . . . . . . . . -26-
Section 7.4 ESTOPPEL CERTIFICATES. . . . . . . . . . . . -27-
Section 7.5 FLOOD INSURANCE. . . . . . . . . . . . . . . -28-
Section 7.6 SPLITTING OF SECURITY INSTRUMENT . . . . . . -28-
Section 7.7 REPLACEMENT DOCUMENTS. . . . . . . . . . . . -28-
ARTICLE 8 - DUE ON SALE/ENCUMBRANCE . . . -29-
Section 8.1 LENDER RELIANCE. . . . . . . . . . . . . . . -29-
Section 8.2 NO SALE/ENCUMBRANCE. . . . . . . . . . . . . -29-
Section 8.3 SALE/ENCUMBRANCE DEFINED . . . . . . . . . . -29-
Section 8.4 LENDER'S RIGHTS. . . . . . . . . . . . . . . -30-
Section 8.5 ONE-TIME TRANSFER. . . . . . . . . . . . . . -31-
ARTICLE 9 - PREPAYMENT. . . . . . . -32-
Section 9.1 PREPAYMENT BEFORE EVENT OF DEFAULT . . . . . -32-
Section 9.2 PREPAYMENT ON CASUALTY, CONDEMNATION AND
CHANGE IN TAX AND DEBT CREDIT LAWS . . . . . -32-
Section 9.3 PREPAYMENT AFTER EVENT OF DEFAULT. . . . . . -32-
ARTICLE 10 - DEFAULT . . . . . . . -33-
Section 10.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . -33-
Section 10.2 LATE PAYMENT CHARGE. . . . . . . . . . . . . -36-
Section 10.3 DEFAULT INTEREST . . . . . . . . . . . . . . -36-
ARTICLE 11 - RIGHTS AND REMEDIES . . . . -36-
Section 11.1 REMEDIES . . . . . . . . . . . . . . . . . . -36-
Section 11.2 APPLICATION OF PROCEEDS. . . . . . . . . . . -39-
Section 11.3 RIGHT TO CURE DEFAULTS . . . . . . . . . . . -39-
Section 11.4 ACTIONS AND PROCEEDINGS. . . . . . . . . . . -39-
-ii-
Section 11.5 RECOVERY OF SUMS REQUIRED TO BE PAID . . . . -39-
Section 11.6 EXAMINATION OF BOOKS AND RECORDS . . . . . . -39-
Section 11.7 OTHER RIGHTS, ETC. . . . . . . . . . . . . . -40-
Section 11.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY -40-
Section 11.9 VIOLATION OF LAWS. . . . . . . . . . . . . . -40-
Section 11.10 RECOURSE AND CHOICE OF REMEDIES. . . . . . . -41-
Section 11.11 RIGHT OF ENTRY . . . . . . . . . . . . . . . -41-
ARTICLE 12 - ENVIRONMENTAL HAZARDS. . . . -41-
Section 12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES -41-
Section 12.2 ENVIRONMENTAL COVENANTS. . . . . . . . . . . -42-
Section 12.3 LENDER'S RIGHTS. . . . . . . . . . . . . . . -43-
ARTICLE 13 - INDEMNIFICATION . . . . . -44-
Section 13.1 GENERAL INDEMNIFICATION. . . . . . . . . . . -44-
Section 13.2 MORTGAGE AND/OR INTANGIBLE TAX . . . . . . . -45-
Section 13.3 ERISA INDEMNIFICATION. . . . . . . . . . . . -45-
Section 13.4 ENVIRONMENTAL INDEMNIFICATION. . . . . . . . -45-
Section 13.5 DUTY TO DEFEND; ATTORNEYS' FEES AND OTHER FEES AND
EXPENSES . . . . . . . . . . . . . . . . . . -46-
ARTICLE 14 - WAIVERS . . . . . . . -47-
Section 14.1 WAIVER OF COUNTERCLAIM . . . . . . . . . . . -47-
Section 14.2 MARSHALLING AND OTHER MATTERS. . . . . . . . -47-
Section 14.3 WAIVER OF NOTICE . . . . . . . . . . . . . . -47-
Section 14.4 WAIVER OF STATUE OF LIMITATIONS. . . . . . . -47-
Section 14.5 SOLE DISCRETION OF LENDER. . . . . . . . . . -47-
Section 14.6 SURVIVAL . . . . . . . . . . . . . . . . . . -47-
Section 14.7 WAIVER OF TRIAL BY JURY. . . . . . . . . . . -48-
ARTICLE 15 - EXCULPATION . . . . . . -48-
Section 15.1 EXCULPATION. . . . . . . . . . . . . . . . . -48-
Section 15.2 RESERVATION OF CERTAIN RIGHTS. . . . . . . . -49-
Section 15.3 EXCEPTIONS TO EXCULPATION. . . . . . . . . . -49-
Section 15.4 RECOURSE . . . . . . . . . . . . . . . . . . -50-
Section 15.5 BANKRUPTCY CLAIMS. . . . . . . . . . . . . . -50-
ARTICLE 16 - NOTICES . . . . . . . -50-
Section 16.1 NOTICES. . . . . . . . . . . . . . . . . . . -50-
ARTICLE 17 - SERVICE OF PROCESS . . . . -52-
Section 17.1 CONSENT TO SERVICE . . . . . . . . . . . . . -52-
Section 17.2 SUBMISSION TO JURISDICTION . . . . . . . . . -52-
Section 17.3 JURISDICTION NOT EXCLUSIVE . . . . . . . . . -52-
-iii-
ARTICLE 18 - APPLICABLE LAW . . . . . -52-
Section 18.1 CHOICE OF LAW. . . . . . . . . . . . . . . . -52-
Section 18.2 USURY LAWS . . . . . . . . . . . . . . . . . -52-
Section 18.3 PROVISIONS SUBJECT TO APPLICABLE LAW . . . . -53-
ARTICLE 19 - SECONDARY MARKET. . . . . -53-
Section 19.1 TRANSFER OF LOAN . . . . . . . . . . . . . . -53-
ARTICLE 20 - COSTS. . . . . . . . -54-
Section 20.1 PERFORMANCE AT BORROWER'S EXPENSE. . . . . . -54-
Section 20.2 ATTORNEY'S FEES FOR ENFORCEMENT. . . . . . . -54-
ARTICLE 21 - DEFINITIONS . . . . . . -54-
Section 21.1 GENERAL DEFINITIONS. . . . . . . . . . . . . -54-
ARTICLE 22 - MISCELLANEOUS PROVISIONS. . . -55-
Section 22.1 NO ORAL CHANGE . . . . . . . . . . . . . . . -55-
Section 22.2 LIABILITY. . . . . . . . . . . . . . . . . . -55-
Section 22.3 INAPPLICABLE PROVISIONS. . . . . . . . . . . -55-
Section 22.4 HEADINGS, ETC. . . . . . . . . . . . . . . . -55-
Section 22.5 DUPLICATE ORIGINALS; COUNTERPARTS. . . . . . -55-
Section 22.6 NUMBER AND GENDER. . . . . . . . . . . . . . -55-
Section 22.7 SUBROGATION. . . . . . . . . . . . . . . . . -55-
ARTICLE 23 - SPECIAL TEXAS PROVISIONS. . . -56-
Section 23.1 . . . . . . . . . . . . . . . . . . . . . . -56-
Section 23.2 . . . . . . . . . . . . . . . . . . . . . . -56-
Section 23.3 . . . . . . . . . . . . . . . . . . . . . . -56-
Section 23.4 . . . . . . . . . . . . . . . . . . . . . . -57-
Section 23.5 . . . . . . . . . . . . . . . . . . . . . . -57-
Section 23.6 . . . . . . . . . . . . . . . . . . . . . . -57-
Section 23.7 POWER OF SALE. . . . . . . . . . . . . . . . -57-
Section 23.8 HOMESTEAD. . . . . . . . . . . . . . . . . . -60-
Section 23.9 FUTURE ADVANCES. . . . . . . . . . . . . . . -60-
Section 23.10 TRADE NAMES. . . . . . . . . . . . . . . . . -60-
Section 23.11 . . . . . . . . . . . . . . . . . . . . . . -60-
Section 23.12 . . . . . . . . . . . . . . . . . . . . . . -60-
Section 23.13 . . . . . . . . . . . . . . . . . . . . . . -61-
ARTICLE 24 - DEED OF TRUST PROVISIONS. . . -61-
Section 24.1 CONCERNING THE TRUSTEE . . . . . . . . . . . -61-
Section 24.2 TRUSTEE'S FEES . . . . . . . . . . . . . . . -61-
Section 24.3 CERTAIN RIGHTS . . . . . . . . . . . . . . . -61-
Section 24.4 RETENTION OF MONEY . . . . . . . . . . . . . -62-
Section 24.5 PERFECTION OF APPOINTMENT. . . . . . . . . . -62-
Section 24.6 SUCCESSION INSTRUMENT. . . . . . . . . . . . -62-
DEFINITIONS. . . . . . . . . . . . . . . . . .-v-
-iv-
DEFINITIONS
The terms set forth below are defined in the following Sections of this
Security Instrument:
(a) Affiliate: Article 8, Section 8.3;
(b) Applicable Laws: Article 3, Subsection 3.10(a);
(c) Applicable Laws: Article 3, Subsection 3.10(a);
(d) Attorneys' Fees/Counsel Fees: Article 21, Section 21.1;
(e) Borrower: Preamble and Article 21, Section 21.1;
(f) Business Day: Article 16, Section 16.1;
(g) Casualty Consultant: Article 4, Subsection 4.4(b)(iii):
(h) Casualty Retainage: Article 4, Subsection 4.4(b)(iv);
(i) Debt: Article 2, Section 2.1.;
(j) Default Prepayment: Article 9, Section 9.3;
(k) Default Rate: Article 10, Section 10.3;
(l) Environment Indemnity: Article 10, Subsection 10.1(q);
(m) Environmental Law: Article 12, Section 12.1;
(n) Environmental Liens: Article 12, Subsection 12.2(d);
(o) Environmental Report: Article 12, Subsection 12.1(a)
(p) ERISA: Article 4, Subsection 4.2(a);
(q) Escrow Fund: Article 3, Section 3.5;
(r) Event: Article 20, Section 20.1;
(s) Event of Default: Article 10, Section 10.1;
(t) Full Replacement Cost: Article 3, Subsection3.3(a)(i)(A);
(u) GAAP: Article 3, Subsection 3.11(a);
-v-
(v) Guarantor: Article 10, Subsection 10.1(f);
(w) Hazardous Substances: Article 12, Section 12.1;
(x) Immediate Family Member: Article 8, Section 8.3;
(y) Improvements: Article 1, Subsection 1.1(c);
(z) Indemnified Parties: Article 13, Section 13.1;
(aa) Indemnitor(s): Article 10, Subsection 10.1(q);
(ab) JMB: Article 8, Subsection 8.3(B);
(ac) Insurance Premiums: Article 3, Subsection 3.3(b);
(ad) Investor: Article 19, Section 19.1;
(ae) Land: Article 1, Subsection 1.1(a);
(af) Lease Guaranty: Article 3, Subsection 3.7(a);
(ag) Leases: Article 1, Subsection 1.1(f);
(ah) Lender: Preamble and Article 21, Section 21.1;
(ai) Loan: Article 5, Section 5.12;
(aj) Loan Application: Article 5, Section 5.15;
(ak) Losses: Article 13, Section 13.1;
(al) Major Tenants: Article 4, Subsection 4.4(b)(i)(L);
(am) Net Proceeds: Article 4, Subsection 4.4(b);
(an) Net Proceeds Deficiency: Article 4, Subsection 4.4(b)(vi);
(ao) Note: Recitals and Article 21, Section 21.1;
(ap) Obligations: Article 2, Section 2.3;
(aq) Other Charges: Article 3, Subsection 3.4(a);
(ar) Other Obligations: Article 2, Section 2.2;
(as) Other Security Documents: Article 3, Section 3.2;
-vi-
(at) Permitted Exceptions: Article 5, Section 5.1;
(au) Person: Article 21, Section 21.1;
(av) Personal Property: Article 1, Subsection 1.1(e);
(aw) Policies/Policy: Article 3, Subsection 3.3(b);
(ax) Properties: Article 3, Subsection 3.11(a)(v);
(ay) Property: Article 1, Section 1.1 and Article 21, Section
21.1;
(az) Qualified Insurer: Article 3, Subsection 3.3(b);
(ba) Rating Agency: Article 3, Subsection 3.3(b);
(bb) Release: Article 12, Section 12.1;
(bc) Remediation: Article 12, Section 12.1;
(bd) Rents: Article 1, Subsection 1.1(f);
(be) Restoration: Article 3, Subsection 3.3(h);
(bf) Securities: Article 19, Section 19.1;
(bg) Security Deposits: Article 3, Subsection 3.7(c);
(bh) Security Instrument: Preamble;
(bi) Taxes: Article 3, Subsection 3.4(a);
(bj) Transferee: Article 8, Section 8.5;
(bk) Transferee's Principals: Article 8, Subsection 8.5(i);
(bl) Trustee: Preamble and Article 21, Subsection 21.1;
(bm) Uniform Commercial Code: Article 1, Subsection 1.1(e);and
(bn) Urban: Article 8, Subsection 8.3(B).
-vii-
THIS DEED OF TRUST AND SECURITY AGREEMENT (the "Security
Instrument") is made as of the 30th day of November, 1995, by NORTH HILLS
MALL ASSOCIATES, an Illinois general partnership, having its principal
place of business at c/o JMB Income Properties, Ltd.-X, 900 Michigan
Avenue, Suite 900, Chicago, Illinois 60611, as grantor ("Borrower") to MR.
GLENDON W. ROSE, having an address c/o Commonwealth Land Title Company, 902
Fort Worth Club Tower, 777 Taylor Street, Fort Worth, Texas 76102, as
trustee ("Trustee"), for the benefit of CHEMICAL BANK, a New York banking
corporation, having an address at 380 Madison Avenue, 11th Floor, New York,
New York 10017, as beneficiary ("Lender").
RECITALS:
Borrower by its promissory note of even date herewith given to
Lender is indebted to Lender in the principal sum of EIGHT MILLION AND
00/100 DOLLARS ($8,000,000.00) in lawful money of the United States of
America (the note together with all extensions, renewals, modifications,
substitutions and amendments thereof shall collectively be referred to as
the "Note"), with interest from the date thereof at the rates set forth in
the Note, principal and interest to be payable in accordance with the terms
and conditions provided in the Note.
Borrower desires to secure the payment of the Debt (as defined
in Article 2) and the performance of all of its obligations under the Note
and the Other Obligations (as defined in Article 2).
ARTICLE 1 - GRANTS OF SECURITY
Section 1.1 PROPERTY MORTGAGED. Borrower does hereby
irrevocably mortgage, grant, bargain, sell, pledge, assign, warrant,
transfer and convey to Trustee, its successors and assigns, for the benefit
of Lender, and grant a security interest to Lender and Trustee in, the
following property, rights, interests and estates now owned, or hereafter
acquired, by Borrower (collectively, the "Property"):
(a) Land. The real property described in Exhibit A
attached hereto and made a part hereof (the "Land");
(b) Additional Land. All additional lands, estates
and development rights hereafter acquired by Borrower for use
in connection with the Land and the development of the Land and all
additional lands and estates therein which may, from time to time, by
supplemental mortgage or otherwise by expressly made subject to the lien of
this Security Instrument;
(c) Improvements. The buildings, structures,
fixtures, additions, enlargements, extensions, modifications,
repairs, replacements and improvements now or hereafter erected
or located on the Land (the "Improvements");
(d) Easements. All easements, rights-of-way or use,
rights, strips and gores of land, streets, ways, alleys,
passages, sewer rights, water, water courses,
water rights and powers, air rights and development rights, and
all estates, rights, titles, interests, privileges, liberties, servitudes,
tenements, hereditaments and appurtenances of any nature whatsoever, in any
way now or hereafter belonging, relating or pertaining to the Land 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 Land, 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 Borrower of, in and to the Land
and the Improvements and every part and parcel thereof, with the
appurtenances thereto;
(e) Fixtures and Personal Property. 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
Borrower, or in which Borrower has or shall have an interest, now or
hereafter located upon the Land and the Improvements, or appurtenant
thereto, and used in connection with the present or future operation and
occupancy of the Land and the Improvements and all building equipment,
materials and supplies of any nature whatsoever owned by Borrower, or in
which Borrower has or shall have an interest, now or hereafter located upon
the Land and the Improvements, or appurtenant thereto, or used in
connection with the present or future operation and occupancy of the Land
and the Improvements (collectively, the "Personal Property"), and the
right, title and interest of Borrower in and to any of the Personal
Property 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 Property is located (the "Uniform Commercial Code"),
superior in lien to the lien of this Security Instrument and all proceeds
and products of the above;
(f) Leases and Rents. All leases and other agreements
affecting the use, enjoyment or occupancy of the Land and the
Improvements heretofore or hereafter entered into (the "Leases") and all
right, title and interest of Borrower, its successors and assigns therein
and thereunder, including, without limitation, cash or securities deposited
thereunder to secure the performance by the lessees of their obligations
thereunder and all rents, additional rents, revenues, issues and profits
(including all oil and gas or other mineral royalties and bonuses) from the
Land and the Improvements (the "Rents") and upon the occurrence and during
the continuance of an Event of Default (defined below), 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;
(g) Condemnation Awards. All awards or payments,
including interest thereon, which may heretofore and hereafter
be made with respect to the 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 the right), or for a change
of grade, or for any other injury to or decrease in the value of the
Property;
-2-
(h) Insurance Proceeds. All proceeds of any insurance
policies covering the Property, including, without limitation, the
right, subject to the terms of this Security Instrument, to receive and
apply the proceeds of any insurance, judgements, or settlements made in
lieu thereof, for damage to the Property;
(i) Tax Certiorari. Upon the occurrence and
continuance of an Event of Default (defined below), all
refunds, rebates or credits in connection with a reduction in real estate
taxes and assessments charged against the Property as a result of tax
certiorari or any applications or proceedings for reduction;
(j) Conversion. Subject to the terms of this Security
Instrument, all proceeds of the conversion, voluntary or involuntary,
of any of the foregoing including, without limitation, proceeds of
insurance and condemnation awards, into cash or liquidation claims;
(k) Rights. The right, in the name and on behalf of
Borrower, to commence any action or proceeding to protect the
interest of Lender in the Property and while an Event of Default remains
uncured, to appear in and defend any action or proceeding brought with
respect to the Property;
(l) Agreements. All agreements, contracts,
certificates, instruments, franchises, permits, licenses, plans,
specifications and other documents, now or hereafter entered into, and all
rights therein and thereto, respecting or pertaining to the use,
occupation, construction, management or operation of the Land and any part
thereof and any Improvements or respecting any business or activity
conducted on the Land and any part thereof and all right, title and
interest of Borrower therein and thereunder (to the extent such agreements
referred to above are assignable to third parties), including, without
limitation, the right, upon the happening of any default hereunder, to
receive and collect any sums payable to Borrower thereunder;
(m) Trademarks. All tradenames, trademarks,
servicemarks, logos, copyrights, goodwill, books and records and all
other general intangibles relating to or used in connection with the
operation of the Property; and
(n) Other Rights. Any and all other rights of
Borrower in and to the items set forth in Subsections (a) through (m)
above.
Section 1.2 ASSIGNMENT OF RENTS. Borrower hereby
absolutely and unconditionally assigns to Lender and Trustee Borrower's
right, title and interest in and to all current and future Leases and
Rents; it being intended by Borrower that this assignment constitutes a
present, absolute assignment and not an assignment for additional security
only. Nevertheless, subject to the terms of this Section 1.2 and Section
3.7, Lender grants to Borrower a revocable license to collect and receive
the Rents. Borrower 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.
-3-
Section 1.3 SECURITY AGREEMENT. This Security Instrument
is both a real property mortgage and a "security agreement" within the
meaning of the Uniform Commercial Code. The Property includes both real
and personal property and all other rights and interests, whether tangible
or intangible in nature, or Borrower in the Property. By executing and
delivering this Security Instrument, Borrower hereby grants to Lender and
Trustee, as security for the Obligations (defined in Section 2.3), a
security interest in the Personal Property to the full extent that the
Personal Property may be subject to the Uniform Commercial Code.
Section 1.4 PLEDGE OF MONIES HELD. Borrower hereby
pledges to Lender any and all monies now or hereafter held by Lender,
including, without limitation, any sums deposited in the Escrow Fund (as
defined in Section 3.5), New Proceeds (as defined in Section 4.4) and
condemnation awards or payments described in Section 3.6, as additional
security for the Obligations until expended or applied as provided in this
Security Instrument.
CONDITIONS TO GRANT
TO HAVE AND TO HOLD the above granted and described Property
unto and to the use and benefit Lender and of Trustee, and for their
successors and assigns of Trustee, forever;
IN TRUST, WITH POWER OF SALE, to secure payment to Lender of
the Debt at the time and in the manner provided for its payment in the Note
and in this Security Instrument.
PROVIDED, HOWEVER, these presents are upon the express
condition that, if Borrower shall well and truly pay to Lender the Debt at
the time and in the manner provided in the Note and this Security
Instrument, shall well and truly perform the Other Obligations as set forth
in this Security Instrument 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.
ARTICLE 2 - DEBT AND OBLIGATIONS SECURED
Section 2.1 DEBT. This Security Instrument and the
grants, assignments and transfers made in Article 1 are given for the
purpose of securing the following, in such order of priority as Lender may
determine in its sole discretion (the "Debt"):
(a) the payment of the indebtedness evidenced by the Note in
lawful money of the United States of America;
(b) the payment of interest, default interest, late charges
and other sums, as provided in the Note, this Security Instrument or
the Other Security Documents (defined below);
(c) the payment of all other moneys agreed or provided to be
paid by Borrower in the Note, this Security Instrument or the Other
Security Documents;
-4-
(d) the payment of all sums advanced pursuant to this
Security Instrument to protect and preserve the Property and the lien
and the security interest created hereby; and
(e) the payment of all sums advanced and costs and expenses
incurred by Lender pursuant to this Security Instrument or any Other
Security Document in connection with the Debt or any part thereof, any
renewal, extension, or change of or substitution for the Debt or any part
thereof, or the acquisition or perfection of the security therefor, whether
made or incurred at the request of Borrower or Lender.
Section 2.2 OTHER OBLIGATIONS. This Security Instrument
and the grants, assignments and transfers made in Article 1 are also given
for the purpose of securing the following (the "Other Obligations"):
(a) the performance of all other obligations of Borrower
contained herein;
(b) the performance of each obligation of Borrower contained
in any other agreement given by Borrower to Lender which is for the
purpose of further securing the obligations secured hereby, and any
amendments, modifications and changes thereto; and
(c) the performance of each obligation of Borrower contained
in any renewal, extension, amendment, modification, consolidation,
change of, or substitution or replacement for, all or any part of the Note,
this Security Instrument or the Other Security Documents.
Section 2.3 DEBT AND OTHER OBLIGATIONS. Borrower's
obligations for the payment of the Debt and the performance of the Other
Obligations shall be referred to collectively below as the "Obligations."
Section 2.4 PAYMENTS. Unless payments are made in the
required amount in immediately available funds at the place where the Note
is payable, remittances in payment of all or any part of the Debt shall
not, regardless of any receipt or credit issued therefor, constitute
payment until the required amount is actually received by Lender in funds
immediately available at the place where the Note is payable (or any other
place as Lender, in Lenders sole discretion, may have established by
delivery of written notice thereof to Borrower) and shall be made and
accepted subject to the condition that any check or draft may be handled
for collection in accordance with the practice of the collecting bank or
banks. Acceptance of Lender of any payment in an amount less than the
amount then due shall be deemed an acceptance on account only, and the
failure to pay the entire amount then due shall be and continue to be an
Event of Default.
-5-
ARTICLE 3 - BORROWER COVENANTS
Borrower covenants and agrees that:
Section 3.1 PAYMENT OF DEBT. Borrower will pay the Debt
at the time and in the manner provided in the Note and in this Security
Instrument.
Section 3.2 INCORPORATION BY REFERENCE. 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 Security Instrument
now or hereafter executed by Borrower and/or others and by or in favor of
Lender, which wholly or partially secure or guaranty payment of the Note
(the "Other Security Documents"), are hereby made a part of this Security
Instrument to the same extent and with the same force as if fully set forth
herein.
Section 3.3 INSURANCE.
(a) Borrower shall obtain and maintain, or cause to be
maintained, insurance for Borrower and the Property providing at least the
following coverages:
(i) comprehensive all risk insurance on the Improvements and
the Personal Property, including contingent liability from Operation
of Building Laws, Demolition Costs and Increased Cost of Construction
Endorsements, in each case (A) in an amount not less than that amount
provided for in the Policy (defined below) delivered by Borrower to Lender
as of the date hereof, but the amount shall in no event be less than the
outstanding principal balance of the Note (the "Full Replacement Cost");
(B) containing an agreed amount endorsement with respect to the
Improvements and Personal Property waiving all co-insurance provisions; (C)
providing for no deductible in excess of the deductibles listed in the
Policy delivered by Borrower to Lender as of the date hereof; and (D)
containing an "Ordinance or Law Coverage" or "Enforcement" endorsement if
any of the Improvements or the use of the Property shall at any time
constitute legal non-conforming structures or uses in accordance with the
Policy delivered by Borrower to Lender as of the date hereof. The Full
Replacement Cost shall be redetermined from time to time (but not more
frequently than once in any twelve (12) calendar months) at the request of
Lender by an appraiser or contractor designated and paid by Borrower and
approved by Lender and the insurance company, or by an engineer or
appraiser in the regular employ of the insurer. After the first appraisal,
additional appraisals may be based on construction cost indices customarily
employed in the trade. No omission on the part of Lender to request any
such ascertainment shall relieve Borrower of any of its obligations under
this Subsection;
(ii) commercial general liability insurance against claims for
personal injury, bodily injury, death or property damage occurring
upon, in or about the Property, such insurance (A) to be on the so-called
"occurrence" form with a combined single limit of not less than $2,000,000;
(B) to continue at not less than the aforesaid limit until required to be
changed by Lender in writing by reason of changed economics conditions
making such protection inadequate; and (C) to cover at least the following
hazards: (1) premises and operations; (2) products and completed operations
on an "if any" basis; (3)
-6-
independent contractors; (4) blanket contractual liability for all
written and oral contracts; and (5) contractual liability covering the
indemnities contained in Article 13 hereof to the extent the same is
available;
(iii) business income insurance (A) with loss payable to
Lender; (B) covering all risks required to be covered by the
insurance provided for in Subsection 3.3(a)(i); (C) containing an extended
period of indemnity endorsement which provides that after the physical loss
to the Improvements and Personal Property has been repaired, the continued
loss of income will be insured until such income either returns to the same
level it was at prior to the loss, or the expiration of twelve (12) months
from the date of the loss, whichever first occurs, and notwithstanding
that the policy may expire prior to the end of such period; and (D) in an
amount equal to 100% of the projected gross income from the Property for a
period of twelve (12) months. The amount of such business income insurance
shall be determined prior to the date hereof and at least once each year
thereafter based on Borrower's reasonable estimate of the gross income from
the Property for the succeeding twelve-month period. All insurance
proceeds payable to Lender pursuant to this Subsection shall be held by
Lender and shall be applied to the obligationssecured hereunder from
time to time due and payable hereunder and under the Note; provided,
however, that nothing herein contained shall be deemed to relieve Borrower
of its obligations to pay the obligations secured hereunder on the
respective dates of payment provided for in the Note except to the extent
such amounts are actually paid out of the proceeds of such business income
insurance. Notwithstanding anything to the contrary in this Subsection
3.3(a)(iii), provided there is no Event of Default existingunder
this Security Instrument, the Note or the Other Security Documents, Lender
agrees that all insurance proceeds payable to Lender under this Subsection
shall be automatically disbursed to Borrower;
(iv) at all times during which structural construction,
repairs or alterations are being made with respect to the
Improvements (A) owner's contingent or protective liability insurance
covering claims not covered by or under the terms or provisions of the
above mentioned commercial general liability insurance policy; and (B) the
insurance provided for in Subsection 3.3(a)(i) written in a so-called
builder's risk completed value form (1) on a non-reporting basis, (2)
against all risks insured against pursuant toSubsection 3.3(a)(i), (3)
including permission to occupy the Property, and (4) with an agreed amount
endorsement waiving co-insurance provisions;
(v) workers' compensation, subject to the statutory limits of
the state in which the Property is located, and employer's liability
insurance with a limit of at least $1,000,000 per accident and per disease
per employee, and $1,000,000 for disease aggregate in respect of any work
or operations on or about the Property, or in connection with the Property
or its operation (if applicable);
(vi) comprehensive boiler and machinery insurance, if
applicable, in amounts as shall be reasonably required by Lender;
-7-
(vii) flood hazard insurance in any portion of the
Improvements is currently or at any time in the future located in a
federally designated "special flood hazard area"; and
(viii) such other insurance and in such amounts as Lender
from time to time may reasonably request against such other insurable
hazards which at the time are commonly insured against for property similar
to the Property located in or around the region inwhich the Property is
located.
(b) All insurance provided for in Subsection 3.3(a) hereof
shall be obtained under valid and enforceable polices (the "Policies" or in
the singular, the "Policy"), in such forms as may from time to time be
reasonably satisfactory to Lender, issued by financially sound and
responsible insurance companies authorized to do business in the state in
which the Property is located and reasonably approved by Lender. Lender
acknowledges that a Qualified Insurer shall not have a claims-paying
ability greater than AA rating by A.M. Best Company, Inc. The insurance
companies must have a general policy rating of A or better and a financial
class of VI or better by A.M. Best Company, Inc., and if there are any
Securities (defined in Section 19.1 below) issued which have been assigned
a rating by a credit rating agency approved by Lender (a "Rating Agency"),
the insurance company shall have a claims paying ability rating by such
Rating Agency equal to or greater than the rating of the highest class of
the Securities (each such insurer shall be referred to below as a
"Qualified Insurer"). Not less than fourteen (14) days prior to the
expiration dates of the Policies theretofore furnished to Lender pursuant
to Subsection 3.3 (a), certified copies of the Polices or original
insurance certificates, reasonably satisfactory to Lender, of renewals or
replacements of such Policies or certificates, marked "premium paid" or
accompanied by evidence satisfactory to Lender of payment of the premiums
due thereunder (the "Insurance Premiums"), shall be delivered by Borrower
to Lender; provided, however, that in the case of renewal Policies,
Borrower may furnish Lender with binders therefor to be followed by the
original Policies when issued.
(c) Borrower shall not obtain (i) any umbrella or blanket
liability or casualty Policy unless, in each case, such Policy is approved
in advance in writing by Lender and Lender's interest is included therein
as provided in this Security Instrument and such Policy is issued by a
Qualified Insurer, or (ii) separate insurance concurrent in form or
contributing in the event of loss with that required in Subsection 3.3(a)
to be furnished by, or which may be reasonably required to be furnished by,
Borrower. In the event Borrower obtains separate insurance or an umbrella
or a blanket Policy, Borrower shall notify Lender of the same and shall
cause certified copies of each Policy to be delivered as required in
Subsection 3.3(a). Any blanket insurance Policy shall specifically
allocate to the Property the amount of coverage from time to time required
hereunder and shall otherwise provide the same protection as would a
separate Policy insuring only the Property in compliance with the
provisions of Subsection 3.3(a).
(d) All Policies of insurance provided for or contemplated by
Subsection 3.3(a), except for the Policy referenced in Subsection
3.3(a)(v), shall name Lender and Borrower as the insured or additional
insured, as their respective interests may appear, and in the case of
property damage, boiler and machinery, and flood insurance, shall contain a
so-called New York
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standard non-contributing mortgagee clause in favor of Lender providing
that the loss thereunder shall be payable to Lender.
(e) All Policies of insurance provided for in Subsection
3.3(a) shall contain clauses or endorsements to the effect that:
(i) no act or negligence of Borrower, or anyone acting for
Borrower, or of any tenant under any Lease or other occupant, or
failure to comply with the provisions of any Policy which might otherwise
result in a forfeiture of the insurance or any partthereof, shall in any
way affect the validity or enforceability of the insurance insofar as
Lender is concerned;
(ii) the Policy shall not be materially changed (other than to
increase the coverage provided thereby) or canceled without at least
fourteen (14) days' written notice to Lender and any other party named
therein as an insured; and
(iii) each Policy shall provide that the issuers thereof
shall give written notice to Lender if the Policy has not been
renewed fourteen (14) days prior to its expiration; and
(iv) Lender shall not be liable for any Insurance Premiums
thereon or subject to any assessments thereunder.
(f) Borrower shall furnish to Lender, on or before thirty
(30) days after the close of each of Borrower's fiscal years, a certificate
of insurance, acceptable to Lender, or if required by Lender, a statement
certified by Borrower or a duly authorized officer of Borrower of the
amounts of insurance maintained in compliance herewith, of the risks
covered by such insurance and of the insurance company or companies which
carry such insurance and, if reasonably requested by Lender, verification
of the adequacy of such insurance by an independent insurance broker or
appraiser acceptable to Lender.
(g) If at any time Lender is not in receipt or written
evidence that all insurance required hereunder is in full force and effect,
Lender shall have the right, without notice to Borrower to take such action
as Lender deems necessary to protect its interest in the Property,
including, without limitation, the obtaining of such insurance coverage
required by this Security Instrument, and all expenses incurred by Lender
in connection with such action or in obtaining such insurance and keeping
it in effect shall be paid by Borrower to Lender upon demand and until paid
shall be secured by this Security Instrument and shall bear interest in
accordance with Section 10.3 hereof.
(h) If the Property shall be damaged or destroyed, in whole
or in part, by fire or other casualty, Borrower shall give prompt notice of
such damage to Lender and, subject to Borrower's receipt of insurance
proceeds provided that no Event of Default exists under this Security
Instrument, the Note and the Other Security Documents, shall promptly
commence and diligently prosecute the completion of the repair and
restoration of the Property as nearly as possible to the condition the
Property was in immediately prior to such fire or other casualty, with such
alterations as may be approved by Lender (the "Restoration") and otherwise
in
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accordance with Section 4.4 of this Security Instrument. Borrower shall
pay all costs of such Restoration whether or not such costs are covered by
insurance.
Section 3.4 PAYMENT OF TAXES, ETC. (a) Subject to
Subsection (b) below and Section 3.5 hereof, Borrower shall promptly pay
all taxes, assessments, water rates, sewer rents, governmental impositions,
and other charges, including without limitation vault charges and license
fees for the use of vaults, chutes and similar areas adjoining the Land,
now or hereafter levied or assessed or imposed against the Property or any
part thereof (the "Taxes"), all ground rents, maintenance charges and
similar charges, now or hereafter levied or assessed or imposed against the
Property or any part thereof (the "Other Charges"), and all charges for
utility services provided to the Property as same become due and payable.
Borrower will deliver to Lender, promptly upon Lender's request, evidence
satisfactory to Lender that the Taxes, Other Charges and utility service
charges have been so paid or are not then delinquent. Borrower 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
Property. Except to the extent sums sufficient to pay all Taxes and Other
Charges have been deposited with Lender in accordance with the terms of
this Security Instrument, Borrower shall furnish to Lender paid receipts
for the payment of the Taxes and Other Charges prior to the date the same
shall become delinquent.
(b) After prior written notice to Lender, Borrower, 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 or Other
Charges, provided that (i) no Event of Default has occurred and is
continuing under the Note, this Security Instrument or any of the Other
Security Documents, (ii) Borrower is permitted to do so under the
provisions of any other mortgage, deed of trust or deed to secure debt
affecting the Property, (iii) such proceeding shall suspend the collection
of the Taxes from Borrower and from the Property or Borrower shall have
paid all of the Taxes under protest, (iv) such proceeding shall be
permitted under and be conducted in accordance with the provisions of any
other instrument to which Borrower is subject and shall not constitute a
default thereunder, (v) neither the Property nor any part thereof or
interest therein will be in danger of being sold, forfeited, terminated,
canceled or lost, (vi) Borrower shall have deposited with Lender adequate
reserves for the payment of the Taxes, together with all interest and
penalties thereon, unless Borrower has paid all of the Taxes under protest,
and (vii) Borrower shall have furnished the security as may be required in
the proceeding, or as may be requested by Lender to insure the payment of
any contested Taxes, together with all interest and penalties thereon.
Section 3.5 ESCROW FUND. In addition to the initial
deposits with respect to Taxes and, if applicable, Insurance Premiums made
by Borrower to Lender on the date hereof to be held by Lender in escrow,
Borrower shall pay to Lender on the first day of each calendar month (a)
one-twelfth of an amount which would be sufficient to pay the Taxes
payable, or estimated by Lender to be payable, during the next ensuing
twelve (12) months and (b) at the option of Lender, if the liability or
casualty Policy maintained by Borrower covering the Property shall not
constitute an approved blanket or umbrella Policy pursuant to Subsection
3.3(c) hereof, one-twelfth of an amount which would be sufficient to pay
the Insurance Premiums due for the renewal of the coverage afforded by the
Policies upon the expiration thereof (the amounts in (a) and (b) above
shall be called the "Escrow Fund"). In the event Lender shall elect to
collect payments in escrow for Insurance Premiums, Borrower shall pay
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to Lender an initial deposit to be determined by Lender, in its reasonable
discretion, to increase the amounts in the Escrow Fund to an amount which,
together with anticipated monthly escrow payments, shall be sufficient to
pay all Insurance Premiums and Taxes as they become due. Borrower agrees
to notify Lender immediately of any changes to the amounts, schedules and
instructions for payment of any Taxes and Insurance Premiums of which it
has or obtains knowledge and authorizes Lender or its agent to obtain a
copy of the bills for Taxes and Other Charges directly from the appropriate
taxing authority. The Escrow Fund and the payments of interest or
principal or both, payable pursuant to the Note shall be added together and
shall be paid as an aggregate sum by Borrower to Lender. Lender will apply
the Escrow Fund to payments of Taxes and Insurance Premiums required to be
made by Borrower pursuant to Sections 3.3 and 3.4 hereof. If the amount of
the Escrow Fund shall exceed the amounts due for Taxes and Insurance
Premiums pursuant to Sections 3.3 and 3.4 hereof, Lender shall, in its
discretion, return any excess to Borrower or credit such excess against the
next future payments to be made to the Escrow Fund. In allocating such
excess, Lender may deal with the person shown on the records of Lender to
be the owner of the Property. If the Escrow Fund is not sufficient to pay
the items set forth in (a) and (b) above, Borrower shall promptly pay to
Lender, upon demand, an amount which Lender shall estimate as sufficient to
make up the deficiency. The Escrow Fund shall not constitute a trust fund
and may be commingled with other monies held by Lender. No earnings or
interest on the Escrow Fund shall be payable to Borrower.
Section 3.6 CONDEMNATION. Borrower shall promptly give
Lender notice of the actual or threatened commencement of any condemnation
or eminent domain proceeding known to Borrower and shall deliver to Lender
copies of any and all papers served in connection with such proceedings.
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), Borrower
shall continue to pay the Debt at the time and in the manner provided for
its payment in the Note and in this Security Instrument and the Debt shall
not be reduced until any award or payment therefor shall have been actually
received and applied by Lender, after the deduction of expenses of
collection, to the reduction or discharge of the Debt. Lender 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 or in the Note. Subject to Section 4.4 hereof, Lender may
apply any award or payment to the reduction or discharge of the Debt
whether or not then due and payable. If the Property is sold, through
foreclosure or otherwise, prior to the receipt by Lender of the award or
payment, Lender shall have the right, whether or not a deficiency judgement
on the Note shall have been sought, recovered or denied, to receive the
award or payment, or a portion thereof sufficient to pay the Debt.
Section 3.7 LEASES AND RENTS. (a) Except as otherwise
consented to by Lender, all proposed Leases shall be written on the
standard form of lease which shall have been approved by Lender. Upon
request, Borrower shall furnish Lender with executed copies of all Leases.
No material changes may be made to the Lender-approved standard lease
without the prior written consent of Lender not to be unreasonably
withheld. In addition, all renewals of Leases and all proposed Leases
shall provide for rental rates and terms comparable to existing local
market rates and terms and shall be arms-length transactions with bona
fide, independent third party tenants. Subject to Section 3.7(b), all
proposed Leases and renewals of existing Leases shall be subject to the
prior approval of Lender and its counsel, at Borrower's expense.
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All proposed Leases shall provide that they are subordinate to this
Security Instrument and that the lessee agrees to attorn to Lender.
Borrower (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 any of the Leases as security for the Debt; (ii) shall
promptly send copies to Lender of all notices of default which Borrower
shall send or receive thereunder; (iii) shall enforce all of the material
terms, covenants and conditions contained in the Leases upon the part of
the lessee thereunder to be observed or performed, short of termination
thereof; provided however, with respect to multifamily residential
property, a residential Lease may be terminated in the event of a default
by the tenant thereunder; (iv) shall not collect any of the Rents more than
one (1) month in advance; (v) shall not execute any other assignment of the
lessor's interest in any of the Leases or the Rents; (vi) shall not alter,
modify or change the terms of any Leases without the prior written consent
of Lender, or cancel or terminate any Leases or accept a surrender thereof
or convey or transfer or suffer or permit a conveyance or transfer of the
Land 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; (vii) shall not alter, modify or change the terms of any
guaranty, letter of credit or other credit support with respect to any of
the Leases (the "Lease Guaranty") or cancel or terminate such Lease
Guaranty without the prior written consent of Lender; and (viii) shall not
consent to any assignment of or subletting under any Leases not in
accordance with their terms, without the prior written consent of Lender.
(b) Notwithstanding the provisions of Subsection 3.7(a)
above, renewals, modifications and terminations of existing Leases and
proposed Leases for commercial space for in-line stores (i.e., such tenants
occupying less than 5,000 square feet in the Improvements) shall not be
subject to the prior approval of Lender or its counsel provided all of the
following conditions are satisfied: (i) the rental income pursuant to the
renewal or proposed Lease is not more than ten percent (10%) of the total
rental income for the in-line stores, (ii) the renewal or proposed Lease
covers less than ten percent (10%) of the in-line store space, in the
aggregate, (iii) the renewal or proposed Lease shall have a lease term not
to exceed ten (10) years including options to renew, (iv) no rent credits,
free rents or concessions have been granted under the renewal or proposed
Lease unless such terms are comparable to existing market rates and terms
as demonstrated by market information provided by Borrower to Lender, (v)
the renewal or proposed Lease is on the standard form of lease approved by
Lender with no material modifications and shall provide for rental rates
and terms comparable to existing local market rates and terms, and (vi) the
renewal or proposed Lease shall be an arms-length transaction with a bona
fide, independent third party tenant. Borrower shall deliver to Lender
copies of all Leases which are entered into pursuant to this Subsection 3.7
(b) within thirty (30) days after the execution of the Lease and the
submission of such Leases to Lender shall be deemed to be Borrower's
certification (subject to Article 15 hereof) that the conditions of this
Subsection 3.7 (b) have been satisfied unless expressly noted.
Section 3.8 MAINTENANCE OF PROPERTY. Borrower shall
cause the Property to be maintained in a good and safe condition and
repair. The Improvements and the Personal Property shall not be removed,
demolished or materially altered (except for normal replacement of the
Personal Property) without the consent of Lender. Subject to Borrower's
receipt of insurance proceeds as provided for herein provided that no Event
of Default exists under this Security Instrument, the Note and the Other
Security Documents, Borrower shall promptly repair, replace or rebuild any
part of the Property which may be destroyed by any casualty, or
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become damaged, worn or dilapidated or which may be affected by any
proceeding of the character referred to in Section 3.6 hereof and shall
complete and pay for any structure at any time in the process of
construction or repair on the Land. Borrower 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 defining the
uses which may be made of the Property or any part thereof without Lender's
written consent. If under applicable zoning provisions the use of all or
any portion of the Property is or shall become a nonconforming use,
Borrower will not cause or permit the nonconforming use to be discontinued
or abandoned without the express written consent of Lender.
Section 3.9 WASTE. Borrower shall not commit or suffer
any waste of the Property or make any change in the use of the Property
which will in any way materially increase the risk of fire or other hazard
arising out of the operation of the Property, or take any action that might
invalidate or give cause for cancellation of any Policy, or do or permit to
be done thereon anything that may in any way materially impair the value of
the Property or the security of this Security Instrument. Borrower will
not, without the prior written consent of Lender, permit any drilling or
exploration for or extraction, removal, or production of any minerals from
the surface or the subsurface of the Land, regardless of the depth thereof
or the method of mining or extraction thereof.
Section 3.10 COMPLIANCE WITH LAWS. (a) Borrower shall
promptly comply with all existing and future federal, state and local laws,
orders, ordinances, governmental rules and regulations or court orders
affecting the Property, or the use thereof ("Applicable Laws").
(b) Borrower will give Lender copies of any written notices of
any violation of Applicable Laws.
(c) Notwithstanding any provisions set forth herein or in any
document regrading Lender's approval of alterations of the Property,
Borrower shall not alter the Property in any manner which would increase
Borrower's responsibilities for compliance with Applicable Laws without the
prior written approval of Lender. Lender's approval of the plans,
specifications, or working drawings for alterations of the Property shall
create no responsibility or liability on behalf of Lender for their
completeness, design, sufficiency or their compliance with Applicable Laws.
The foregoing shall apply to tenant improvements constructed by Borrower or
by any of its tenants. Lender may condition any such approval upon receipt
of a certificate of compliance with Applicable Laws from an independent
architect, engineer, or other person reasonably acceptable to Lender.
(d) Borrower shall give prompt notice to Lender of the receipt
by Borrower of any notice related to a violation of any Applicable Laws and
of the commencement of any proceedings or investigations which relate to
compliance with Applicable Laws.
Section 3.11 BOOKS AND RECORDS.
(a) Borrower shall keep adequate books and records of account
in accordance with generally accepted accounting principles ("GAAP"), or in
accordance with other methods reasonably acceptable to Lender consistently
applied and furnish to Lender:
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(i) quarterly certified rent rolls signed and dated by
Borrower, detailing the names of all tenants of the Improvements, the
portion of Improvements occupied by each tenant, the base rent and any
other charges payable under each Lease and the term of each Lease,
including the expiration date, and any other information as is reasonably
required by Lender, within thirty (30) days after the end of each fiscal
quarter;
(ii) if requested in writing by Lender, monthly certified rent
rolls signed and dated by Borrower, detailing the names of all
tenants of the Improvements, the portion of Improvements occupied by each
tenant, the base rent and any other charges payable under each Lease and
the term of each Lease, including the expiration date, and any other
information as is reasonably required by Lender, within thirty (30) days
after written request by Lender;
(iii) quarterly operating statements of the Property,
prepared and certified by Borrower in the form reasonably required by
Lender, detailing the revenues received, the expenses incurred and the net
operating income before and after debt service (principal and interest) and
major capital improvements for that quarter and containing appropriate year
to date information, within sixty (60) days after the end of each fiscal
quarter;
(iv) an annual operating statement of the Property detailing
the total revenues received, total expenses incurred, total cost of
all capital improvements, total debt service and total cash flow, to be
prepared and certified by Borrower, in form acceptable to Lender, within
one hundred twenty (120) days after the close of each fiscal year of
Borrower;
(v) an annual balance sheet and profit and loss statement of
Borrower and JMB Income Properties, LTD.-X ("Properties"), in forms
acceptable to Lender, prepared and certified by Borrower and Properties, as
applicable, within one hundred twenty (120) days after the close of each
fiscal year of Borrower and Properties, as the case may be; and
(vi) an annual operating budget presented on a monthly basis
consistent with the annual operating statement described above for
the Property, including cash flow projections for the upcoming year, and
all proposed capital replacements and improvements at least fifteen (15)
days prior to the start of each fiscal year.
(b) Upon reasonable request from Lender, Borrower and
Properties shall furnish in a timely manner to Lender:
(i) a property management report for the Property, showing
the number of prospective tenants and deposits received from tenants
and any other information requested by Lender, in reasonable detail and
certified by Borrower (or the authorized leasing representative) to be true
and complete, but no more frequently than quarterly; and
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(ii) a list of all security deposits held in connection with
any Lease of any part of the Property, including the name and
identification number of the accounts in which such security deposits are
held and the name and address of the financial institutions inwhich
such security deposits are held.
(c) Borrower and Properties shall furnish Lender with such
other additional financial information (including State and Federal tax
returns) as may, from time to time, be reasonably required by Lender in
form and substance reasonably satisfactory to Lender.
(d) Borrower and Properties shall furnish to Lender and its
agents convenient facilities for the examination and audit of any such
books and records.
Section 3.12 PAYMENT FOR LABOR AND MATERIALS. Subject to
the right of Borrower to bond, Borrower will promptly pay when due all
bills and costs for labor, materials, and specifically fabricated materials
incurred in connection with the Property and never permit to exist beyond
the due date thereof in respect of the Property or any part thereof any
lien or security interest, even though inferior to the liens and the
security interests hereof, and in any event never permit to be created or
exist in respect of the Property or any part thereof any other or
additional lien or security interest other than the liens or security
interests hereof, except for the Permitted Exceptions (defined below).
Section 3.13 PERFORMANCE OF OTHER AGREEMENTS. Borrower
shall observe and perform each and every term to be observed or performed
by Borrower pursuant to the terms of any agreement or recorded instrument
affecting or pertaining to the Property, or given by Borrower to Lender for
the purpose of further securing an obligation secured hereby and any
amendments, modifications or changes thereto.
ARTICLE 4 - SPECIAL COVENANTS
Borrower covenants and agrees that:
Section 4.1 PROPERTY USE. The Property shall be used
only for retail shopping center, and for no other use without the prior
written consent of Lender, which consent may be withheld in Lender's sole
and absolute discretion.
Section 4.2 ERISA. (a) It shall not engage in any
transaction which would cause any obligation, or action taken or to be
taken, hereunder (or the exercise by Lender of any of its rights under the
Note, this Security Instrument and the Other Security Documents) to be a
non-exempt (under a statutory or administrative class exemption) prohibited
transaction under the Employee Retirement Income Security Act of 1974, as
amended ("ERISA").
(b) Borrower further covenants and agrees to deliver to
Lender such certifications (subject to Article 15 hereof) or other evidence
from time to time throughout the term of the Security Instrument, as
requested by Lender in its sole discretion, that (i) Borrower is not an
"employee benefit plan" as defined in Section 3(3) of ERISA, which is
subject to Title I of ERISA, or a "governmental plan" within the meaning of
Section 3(3) of ERISA; (ii)
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Borrower is not subject to state statutes regulating investments and
fiduciary obligations with respect to governmental plans; and (iii) one or
more of the following circumstances is true:
(A) Equity interests in Borrower are publicly offered
securities, within the meaning of 29 C.F.R. Section
2510.3-101(b)(2);
(B) Less than 25 percent of each outstanding class of
equity interests in Borrower are held by "benefit plan
investors" within the meaning of 29 C.F.R. Section 2510.3-101(f)(2); or
(C) Borrower qualifies as an "operating company" or a
"real estate operating company" within the meaning of 29 C.F.R.
Section 2510.3-101(c) or (e) or an investment company registered under The
Investment Company Act of 1940.
Section 4.3 SINGLE PURPOSE ENTITY. It has not and shall
not:
(a) engage in any business or activity other than the
ownership, operation and maintenance of the Property, and activities
incidental thereto;
(b) acquire or own any material assets other than (i) the
Property, and (ii) such incidental Personal Property as may be necessary
for the operation of the Property;
(c) merge into or consolidate with any person or entity or
dissolve, terminate or liquidate in whole or in part, transfer or otherwise
dispose of all or substantially all of its assets or change its legal
structure, without in each case Lender's consent;
(d) fail to preserve its existence as an entity duly
organized, validly existing and in good standing (if applicable) under the
laws of the jurisdiction of its organization or formation, or without the
prior written consent of Lender, amend, modify, terminate or fail to comply
with the provisions of Borrower's Partnership Agreement, Articles or
Certificate of Incorporation, Articles of Organization or similar
organizational documents, as the case may be, as same may be further
amended or supplemented, if such amendment, modification, termination or
failure to comply would adversely affect the ability of Borrower to perform
its obligations hereunder, under the Note or under the Other Security
Documents;
(e) own any subsidiary or make any investment in, any person
or entity without the consent of Lender;
(f) commingle its assets with the assets of any of its
members, general partners, affiliates, principals or of any other person or
entity;
(g) incur any debt, secured or unsecured, direct or
contingent (including guaranteeing any obligation), other than the Debt,
except for trade payables in the ordinary course of its business of owning
and operating the Property, provided that such debt is paid when due;
-16-
(h) become insolvent and fail to pay its debts and
liabilities from its assets as the same shall become due;
(i) fail to maintain its records, books of account and bank
accounts separate and apart from those of the members, general partners,
principals and affiliates of Borrower, the affiliates of a member, general
partner or principal of Borrower, and any other person or entity;
(j) enter into any contract or agreement with any member,
general partner, principal or affiliate of Borrower or Indemnitor (defined
in Subsection 10.1(q)), or any member, general partner, principal or
affiliate thereof, except 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 any member, general partner,
principal or affiliate of Borrower, Indemnitor, or any member, general
partner, principal or affiliate thereof;
(k) seek the dissolution or winding up in whole, or in part,
of Borrower;
(l) maintain its assets in such a manner that it will be
costly or difficult to segregate, ascertain or identify its individual
assets from those of any member, general partner, principal or affiliate of
Borrower, or any member, general partner, principal or affiliate thereof or
any other person;
(m) hold itself out to be responsible for the debts of
another person;
(n) make any loans or advances to any third party, including
any member, general partner, principal or affiliate of Borrower, or any
member, general partner, principal or affiliate thereof;
(o) fail to file its own tax returns;
(p) agree to, enter into or consummate any transaction which
would render Borrower unable to furnish the certification or other evidence
referred to in Section 4.2(b) hereof;
(q) fail either to hold itself out to the public as a legal
entity separate and distinct from any other entity or person or to conduct
its business solely in its own name in order not (i) to mislead others as
to the identity with which such other party is transacting business, or
(ii) to suggest that Borrower is responsible for the debts of any third
party (including any member, general partner, principal or affiliate of
Borrower, or any member, general partner, principal or affiliate thereof);
(r) fail to 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; or
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(s) file or consent to the filing of any petition, either
voluntary or involuntary, to take advantage of any applicable insolvency,
bankruptcy, liquidation or reorganization statute, or make an assignment
for the benefit of creditors.
Section 4.4 RESTORATION AFTER CASUALTY/CONDEMNATION. In
the event of a casualty or a taking by eminent domain, the following
provisions shall apply in connection with the Restoration of the Property:
(a) If the Net Proceeds (defined below) shall be less than
$25,000 and the costs of completing the Restoration shall be less then
$25,000, the Net Proceeds will be disbursed by Lender to Borrower upon
receipt, provided that all of the conditions set forth in Subsection
4.4(b)(i) are met and Borrower delivers to Lender a written undertaking to
expeditiously commence and to satisfactorily complete with due diligence
the Restoration in accordance with the terms of this Security Instrument.
(b) If the Net Proceeds are equal to or greater than $25,000
or the costs of completing the Restoration is equal to or greater than
$25,000, Lender shall make the Net Proceeds available for the Restoration
in accordance with the provisions of this Subsection 4.4(b). The term "Net
Proceeds" for purposes of this Section 4.4 shall mean: (i) the net amount
of all insurance proceeds received by Lender pursuant to Subsections
3.3(a)(i), (iv), (vi) and (vii) of this Security Instrument as a result of
such damage or destruction, after deduction of its reasonable costs and
expenses (including, but not limited to, reasonable counsel fees), if any,
in collecting the same or (ii) the net amount of all awards and payments
received by Lender with respect to a taking referenced in Section 3.6 of
this Security Instrument, after deduction of its reasonable costs and
expenses (including, but not limited to, reasonable counsel fees), if any,
in collecting the same, whichever the case may be.
(i) The Net Proceeds shall be made available to Borrower for
the Restoration provided that each of the following conditions are
met:
(A) no Event of Default shall have occurred and be
continuing under the Note, this Security Instrument or any of
the Other Security Documents;
(B) less than seventy-five percent (75%) of the total
floor area of the Improvements has been damaged, destroyed or
rendered unusable as a result of such fire or other casualty or taking, as
applicable;
(C) Leases demising in the aggregate at least fifty
percent (50%) of the total rentable space in the Property which
has been demised under executed and delivered Leases in effect as of the
date of the occurrence of such fire or other casualty or taking, as
applicable, shall remain in full force and effect during and after the
completion of the Restoration, and Borrower furnishes to Lender evidence
satisfactory to Lender that ninety percent (90%) of the Major Tenants
(defined below) in occupancy immediately prior to such casualty or taking
shall continue to operate their respective retail stores at the Property
after the completion of the Restoration, (the term "Major Tenants" shall
mean: S&J Shoes, Inc. d/b/a The Shoe Box, Victorias' Secret Stores, Inc.,
The Limited Stores, Inc.,
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The Gap, Inc., Luby's Cafeterias, Inc., General Cinema
Corporation of Texas, and Tamoco Inc. d/b/a Tis the Season) or, if one or
more of such Major Tenants does not continue to operate its business after
such casualty or taking, another tenant or tenants occupies the
premises of such Major Tenant under a Lease permitted under Section 3.7 of
this Security Instrument;
(D) Borrower shall commence the Restoration as soon as
reasonably practicable (but in no event later than thirty (30)
days after such damage or destruction occurs) and shall diligently pursue
the same to satisfactory completion;
(E) Lender shall be satisfied that any operating
deficits which will be incurred with respect to the Property as
a result of the occurrence of any such fire or other casualty or taking, as
applicable, will be covered out of (1) the Net Proceeds, (2) the
insurance coverage referred to in Subsection 3.3(a)(iii), or (3) by other
funds of Borrower;
(F) Lender shall be satisfied that, upon the completion
of the Restoration, the gross cash flow and the net cash flow of the
Property will be restored to a level sufficient to cover all carrying costs
and operating expenses of the Property, including, without limitation, debt
service on the Note at a coverage ratio (after deducting all required
reserves as required by Lender from net operating income) of at least 3.0
to 1.0, which coverage ratio shall be determined by Lender in
its sole and absolute discretion on the basis of the Applicable Interest
Rate (as defined in the Note);
(G) Lender shall be satisfied that the Restoration
will be completed on or before the earliest to occur of (1) six
(6) months prior to the Maturity Date (as defined in the Note), (2) twelve
(12) months after the occurrence of such fire or other casualty
or taking, whichever the case may be, (3) the earliest date required for
such completion under the terms of any Leases which are required in
accordance with the provisions of this Subsection 4.4(b) to remain in
effect subsequent to the occurrence of such fire or other casualty or
taking, whichever the case may be, and the completion of the Restoration,
including under the terms of the Leases for the Major Tenants or (4) such
time as may be required under applicable zoning law, ordinance, rule or
regulation in order to repair and restore the Property to the condition it
was in immediately prior to such fire or other casualty or to as nearly as
possible the condition it was in immediately prior to such
taking, as applicable;
(H) Borrower shall execute and deliver to Lender a
completion guaranty in form and substance satisfactory to
Lender and its counsel pursuant to the provisions of which Borrower shall
guaranty to Lender the lien-free completion by Borrower of the Restoration
in accordance with the provisions of this Subsection 4.4(b);
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(I) the Property and the use thereof after the
Restoration will be in compliance with and permitted under all
applicable zoning laws, ordinances, rules and regulations; and
(J) the Restoration shall be done and completed by
Borrower in an expeditious and diligent fashion and in
compliance with all applicable governmental laws, rules and regulations
(including, without limitation, all applicable Environmental Laws (defined
below).
(ii) The Net Proceeds shall be held by Lender and, until
disbursed in accordance with the provisions of this Subsection
4.4(b), shall constitute additional security for the Obligations. The Net
Proceeds shall be disbursed by Lender to, or as directed by, Borrower from
time to time during the course of the Restoration, upon receipt of evidence
satisfactory to Lender that (A) all materials installed and work and labor
performed (except to the extent that they are to be paid for out of the
requested disbursement) in connection with the Restoration have been paid
for in full, and (B) there exist no notices of pendency, stop orders,
mechanic's or materialman's liens or notices of intention to file same, or
any other liens or encumbrances of any nature whatsoever on the Property
arising out of the Restoration which have not either been fully bonded to
the satisfaction of Lender and discharged of record or in the alternative
fully insured to the satisfaction of Lender by the title company insuring
the lien of this Security Instrument.
(iii) All plans and specifications required in connection
with the Restoration shall be subject to prior review and reasonable
acceptance in all respects by Lender and by an independent consulting
engineer selected by Lender (the "Casualty Consultant"). Lender shall have
the use of the plans and specifications and all permits, licenses and
approvals required or obtained in connection with the Restoration. The
identity of the contractors, subcontractors (if available to Borrower) and
materialmen (if available to Borrower) engaged in the Restoration, as well
as the contracts under which they have been engaged, shall be subject to
prior review and acceptance by Lender and the Casualty Consultant. All
costs and expenses incurred by Lender in connection with making the Net
Proceeds available for the Restoration including, without limitation,
reasonable counsel fees and disbursements and the Casualty Consultant's
fees, shall be paid by Borrower.
(iv) In no event shall Lender be obligated to make
disbursements of the Net Proceeds in excess of an amount equal to the costs
actually incurred from time to time for work in place as part of the
Restoration, as certified by the Casualty Consultant, minus the Casualty
Retainage. The term "Casualty Retainage" as used in this Subsection 4.4(b)
shall mean an amount equal to 10% of the costs actually incurred for work
in place as part of the Restoration, as certified by the Casualty
Consultant, until such time as the Casualty Consultant certifies to Lender
that Net Proceeds representing 50% of the required Restoration have been
disbursed. There shall be no Casualty Retainage with respect to costs
actually incurred by Borrower for work in place in completing the last 50%
of the required Restoration. The Casualty Retainage shall in no event, and
notwithstanding anything to the contrary set forth above in this Subsection
4.4(b), be less
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than the amount actually held back by Borrower from contractors,
subcontractors and materialmen engaged in the Restoration. The Casualty
Retainage shall not be released until the Casualty Consultant certifies to
Lender that the Restoration has been completed in accordance with the
provisions of this Subsection 4.4(b) and that all approvals necessary for
the re-occupancy and use of the Property have been obtained from all
appropriate governmental and quasi-governmental authorities, and Lender
receives evidence reasonably satisfactory to Lender that the costs of the
Restoration have been paid in full or will be paid in full out of the
Casualty Retainage, provided, however, that Lender will release the portion
of the Casualty Retainage being held with respect to any contractor,
subcontractor or materialman engaged in the Restoration as of the date upon
which the Casualty Consultant certifies to Lender that the contractor,
subcontractor or materialman has satisfactorily completed all work and has
supplied all materials in accordance with the provisions of the
contractor's, subcontractor's or materialman's contract, and the
contractor, subcontractor or materialman delivers the lien waivers and
evidence of payment in full of all sums due to the contractor,
subcontractor or materialman as may be reasonably requested by Lender or by
the title company insuring the lien of this Security Instrument.
(v) Lender shall not obligated to make disbursements of the
Net Proceeds more frequently than once every calendar month.
(vi) If at any time the Net Proceeds or the undisbursed
balance thereof shall not, in the reasonable opinion of Lender, be
sufficient to pay in full the balance of the costs which are estimated by
the Casualty Consultant to be incurred in connection with the completion of
the Restoration, Borrower shall deposit the deficiency (the "Net Proceeds
Deficiency") with Lender before any further disbursement of the Net
Proceeds shall be made. The Net Proceeds Deficiency deposited with Lender
shall be held by Lender and shall be disbursed for costs actually incurred
in connection with the Restoration on the same conditions applicable to the
disbursement of the Net Proceeds, and until so disbursed pursuant to this
Subsection 4.4(b) shall constitute additional security for the Obligations.
(vii) The excess, if any, of the Net Proceeds and the
remaining balance, if any, of the Net Proceeds Deficiency deposited with
Lender after the Casualty Consultant certifies to Lender that the
Restoration has been completed in accordance with the provisions of this
Subsection 4.4(b), and the receipt by Lender of evidence satisfactory to
Lender that all costs incurred in connection with the Restoration have been
paid in full, shall be remitted by Lender to Borrower, provided no Event of
Default shall have occurred and shall be continuing under the Note, this
Security Instrument or any of the Other Security Documents.
(c) All Net Proceeds not required (i) to be made available
for the Restoration or (ii) to be returned to Borrower as excess as Net
Proceeds pursuant to Subsection 4.4(b)(vii) may be retained and applied by
Lender toward the payment of the Debt whether or not then due and payable
to be applied to the payments then due or next coming due under the Note,
this Security Instrument or Other Security Documents, at the discretion of
Lender, the same may be paid, either in whole or in part, to Borrower for
such purposes as Lender shall designate, in its
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discretion. If Lender shall receive and retain Net Proceeds, the lien of
this Security Instrument shall be reduced only by the amount thereof
received and retained by Lender and actually applied by Lender in reduction
of the Debt.
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender that:
Section 5.1 WARRANTY OF TITLE. Borrower has good title
to the Property and has the right to mortgage, grant, bargain, sell,
pledge, assign, warrant, transfer and convey the same and that Borrower
possesses an unencumbered fee simple absolute estate in the Land and the
Improvements and that it owns the 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 Security Instrument
(the "Permitted Exceptions"). Borrower shall forever warrant, defend and
preserve the title and the validity and priority of the lien of this
Security Instrument and shall forever warrant and defend the same to Lender
and/or Trustee against the claims of all persons whomsoever.
Section 5.2 AUTHORITY. Borrower (and the undersigned
representative of Borrower, if any) has the necessary partnership power and
authority to execute this Security Instrument, and to mortgage, grant,
bargain, sell, pledge, assign, warrant, transfer and convey the Property
pursuant to the terms hereof and to keep and observe all of the terms of
this Security Instrument on Borrower's part to be performed.
Section 5.3 LEGAL STATUS AND AUTHORITY. Borrower (a) is
duly organized, validly existing and in good standing under the laws of its
state of organization or incorporation; (b) is duly qualified, to the
extent required by law, to transact business and is in good standing in the
State where the Property is located; and (c) has all necessary approvals,
governmental and otherwise, and full power and authority to own the
Property and carry on its business as now conducted and proposed to be
conducted. Borrower now has and shall continue to have the full right,
power and authority to operate and lease the Property, to encumber the
Property as provided herein and to perform all of the other obligations to
be performed by Borrower under the Note, this Security Instrument and the
Other Security Documents.
Section 5.4 VALIDITY OF DOCUMENTS. (a) The execution,
delivery and performance of the Note, this Security Instrument and the
Other Security Documents and the borrowing evidenced by the Note (i) are
within the corporate/partnership/company power of Borrower; (ii) have been
authorized by all requisite corporate/partnership/company action: (iii)
have received all necessary approvals and consents, corporate, governmental
or otherwise; (iv) to Borrower's actual knowledge, will not violate,
conflict with, result in a breach of or constitute (with notice or lapse of
time, or both) a default under any provision of law, any order or judgement
of any court or governmental authority, the articles of incorporation, by-
laws, partnership or trust agreement, articles of organization, operating
agreement, or other governing instrument of Borrower, or any indenture,
agreement or other instrument to which Borrower is a party or by which it
or any of its assets or the Property is bound; (v) will not result in the
creation or imposition of any lien, charge or encumbrance whatsoever upon
any of its assets, except the lien and security interest created hereby;
and (vi) will not require any authorization
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or license from, or any filing with, any governmental or other body (except
for the recordation of this instrument in appropriate land records in the
State where the Property is located and except for Uniform Commercial Code
filings relating to the security interest created hereby); and (b) the
Note, this Security Instrument and the Other Security Documents constitute
the legal, valid and binding obligations of Borrower.
Section 5.5 LITIGATION. There is no action, suit or
proceeding, judicial, administrative or otherwise (including any
condemnation or similar proceeding), pending or, to the best of Borrower's
knowledge, threatened or contemplated against, or affecting, Borrower or
the Property and there is no action, suit or proceeding, judicial,
administrative or otherwise, pending or, to the best of Borrower's
knowledge, threatened or contemplated against Properties or JMB (defined in
Section 8.3) that would have a material, adverse effect on the Property or
the Borrower's, JMB's or Properties' ability to pay its debts as they
become due, except as set forth in Schedule I attached.
Section 5.6 STATUS OF PROPERTY. (a) No portion of the
Improvements is located in an area identified by the Secretary of Housing
and Urban Development or any successor thereto as an area having special
flood hazards pursuant to the National Flood Insurance Act of 1968 or the
Flood Disaster Protection Act of 1973, as amended, or any successor law,
or, if located within any such area, Borrower has obtained and will
maintain the insurance prescribed in Section 3.3 hereof.
(b) Borrower has obtained all necessary certificates,
licenses and other approvals, governmental and otherwise, necessary for the
operation of the Property and the conduct of its business and all required
zoning, building code, land use, environmental and other similar permits or
approvals, all of which are in full force and effect as of the date hereof
and not subject to revocation, suspension, forfeiture or modification.
(c) To Borrower's actual knowledge after due inquiry of its
property manager, the Property and the present use and occupancy thereof
are in full compliance with all applicable zoning ordinances, building
codes, land use and environmental laws and other similar laws.
(d) The Property is served by all utilities required for the
current use thereof. All utility service is provided by public utilities
and the Property has accepted or is equipped to accept such utility
service.
(e) All public roads and streets necessary for service of and
access to the Property for the current use thereof have been completed, are
serviceable and all-weather and are physically and legally open for use by
the public.
(f) The Property is served by public water and sewer systems.
(g) The Property is free from damage caused by fire or other
casualty.
(h) All costs and expenses of any and all labor, materials,
supplies and equipment used in the construction of the Improvements have
been paid in full.
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(i) Borrower has paid in full for, and is the owner of, all
furnishings, fixtures and equipment (other than tenants' property) used in
connection with the operation of the Property, free and clear of any and
all security interests, liens or encumbrances, except the lien and security
interest created hereby.
(j) All liquid and solid waste disposal, septic and sewer
systems located on the Property are in a good and safe condition and repair
and in compliance with all Applicable Laws.
Section 5.7 NO FOREIGN PERSON. Borrower is not a
"foreign person" within the meaning of Sections 1445(f)(3) of the Internal
Revenue Code of 1986, as amended and the related Treasury Department
regulations, including temporary regulations.
Section 5.8 SEPARATE TAX LOT. The Property is assessed
for real estate tax purposes as one or more wholly independent tax lot or
lots, separate from any adjoining land or improvements not constituting a
part of such lot or lots, and no other land or improvements is assessed and
taxed together with the Property or any portion thereof.
Section 5.9 ERISA COMPLIANCE. (a) As of the date hereof
and throughout the term of this Security Instrument, (i) Borrower is not
and will not be an "employee benefit plan" as defined in Section 3(3) of
ERISA, which is subject to Title I of ERISA, and (ii) the assets of
Borrower do not and will not constitute "plan assets" of one or more such
plans for purposes of Title I ERISA; and
(b) As of the date hereof and throughout the term of this
Security Instrument (i) Borrower is not and will not be a "governmental
plan" within the meaning of Section 3(3) of ERISA and (ii) transactions by
or with Borrower are not and will not be subject to state statuses
applicable to Borrower regulating investments of and fiduciary obligations
with respect to governmental plans.
Section 5.10 LEASES. (a) Borrower is the sole owner of
the entire lessor's interest in the Leases; (b) to Borrower's actual
knowledge after due inquiry of the property manger, the Leases are valid
and enforceable; (c) the information contained in the certified rent roll
delivered to Lender reflects the material terms of all modifications and
amendments to the Leases; (d) none of the Rents reserved in the Leases have
been assigned or otherwise pledged or hypothecated; (e) none of the Rents
have been collected for more than one (1) month in advance; (f) the
premises demised under the Leases have been completed and the tenants under
the Leases have accepted the same and have taken possession of the same on
a rent-paying basis; (g) to Borrower's actual knowledge after due inquiry
of the property manager, no party under the Leases is in default and there
exist no offsets or defenses to the payment of any portion of the Rents.
Section 5.11 FINANCIAL CONDITION. (a) Borrower is
solvent, and no bankruptcy, reorganization, insolvency or similar
proceeding under any state or federal law with respect to Borrower has been
initiated, and (b) it has received reasonably equivalent value for the
granting of this Security Instrument.
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Section 5.12 BUSINESS PURPOSES. The loan evidenced by the
Note secured by the Security Instrument and the Other Security Documents
(the "Loan") is solely for the business purpose of Borrower, and is not for
personal, family, household, or agricultural proposes.
Section 5.13 TAXES. Borrower has filed all federal,
state, county, municipal, and city income and other tax returns required to
have been filed by it and has paid all taxes and related liabilities which
have become due pursuant to such returns or pursuant to any assessments
received by it. Borrower does not know of any basis for any additional
assessment in respect of any such taxes and related liabilities for prior
years.
Section 5.14 MAILING ADDRESS. Borrower's mailing address,
as set forth in the opening paragraph hereof or as changed in accordance
with the provisions hereof, is true and correct.
Section 5.15 NO CHANGE IN FACTS OR CIRCUMSTANCES. All
information given by Borrower to Lender in the application for the Loan
submitted to Lender (the "Loan Application") and in all financing
statements, financial reports, rent rolls, certificates and other documents
prepared by Borrower submitted in connection with the Loan Application or
in satisfaction of the terms thereof, are accurate, complete and correct in
all material respects. There has been no material adverse change in any
condition, fact, circumstance or event that would make any such information
inaccurate, incomplete or otherwise misleading.
Section 5.16 DISCLOSURE. Borrower has disclosed to Lender
all material facts and has not failed to disclose any material fact that
could cause any representation or warranty made herein to be materially
misleading.
ARTICLE 6 - OBLIGATIONS AND RELIANCES
Section 6.1 RELATIONSHIP OF BORROWER AND LENDER. The
relationship between Borrower and Lender is solely that of debtor and
creditor, and Lender has no fiduciary or other special relationship with
Borrower, and no term or condition of any of the Note, this Security
Instrument and the Other Security Documents shall be construed so as to
deem the relationship between Borrower and Lender to be other than that of
debtor and creditor.
Section 6.2 NO RELIANCE OF LENDER. The members, general
partners, principals and (if Borrower is a trust) beneficial owners of
Borrower are experienced in the ownership and operation of properties
similar to the Property, and Borrower and Lender are relying solely upon
such expertise and business plan in connection with the ownership and
operation of the Property. Borrower is not relying on Lender's expertise,
business acumen or advice in connection with the Property.
Section 6.3 NO LENDER OBLIGATIONS. (a) Notwithstanding
the provisions of Subsections 1.1(f) and (l) or Section 1.2, Lender is not
undertaking the performance of (i) any obligations under the Leases; or
(ii) any obligations with respect to such agreements, contracts,
certificates, instruments, franchises, permits, trademarks, licenses and
other documents.
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(b) By accepting or approving anything required to be
observed, performed or fulfilled or to be given to Lender pursuant to this
Security Instrument, the Note or the Other Security Documents, including
without limitation, any officer's certificate, balance sheet, statement of
profit and loss or other financial statement, survey, appraisal, or
insurance policy, Lender shall not be deemed to have warranted, consented
to, or affirmed the sufficiency, the legality of effectiveness of same, and
such acceptance or approval thereof shall not constitute any warranty or
affirmation with respect thereto by Lender.
Section 6.4 RELIANCE. Borrower recognizes and
acknowledges that in accepting the Note, this Security Instrument and the
Other Security Documents, Lender is expressly and primarily relying on the
truth and accuracy of the warranties and representations set forth in
Article 5 without any obligation to investigate the Property and
notwithstanding any investigation of the Property by Lender; that such
reliance existed on the part of Lender prior to the date hereof; that the
warranties and representations are a material inducement to Lender in
accepting the Note, this Security Instrument and the Other Security
Documents; and that Lender would not be willing to make the Loan and accept
this Security Instrument in the absence of the warranties and
representations as set forth in Article 5.
ARTICLE 7 - FURTHER ASSURANCES
Section 7.1 RECORDING OF SECURITY INSTRUMENT, ETC.
Borrower forthwith upon the execution and delivery of this Security
Instrument and thereafter, from time to time, will cause this Security
Instrument and any of the Other Security Documents creating a lien or
security interest or evidencing the lien hereof upon the 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 and perfect the lien or
security interest hereof upon, and the interest of Lender in, the Property.
Borrower will pay all taxes, filing, registration or recording fees, and
all expenses incident to the preparation, execution, acknowledgement and/or
recording of the Note, this Security Instrument, the Other Security
Documents, any note or deed of trust or mortgage supplemental hereto, any
security instrument with respect to the Property and any instrument of
further assurance, and any modification or amendment of the foregoing
documents, 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 Security Instrument, any deed of trust or
mortgage supplemental hereto, any security instrument with respect to the
Property or any instrument of further assurance, and any modification or
amendment of the foregoing documents, except where prohibited by law so to
do.
Section 7.2 FURTHER ACTS, ETC. Borrower will, at the
cost of Borrower, and without expense to Lender, do, execute, acknowledge
and deliver all and every such further acts, deeds, conveyances, deeds of
trust, mortgages, assignments, notices of assignments, transfers and
assurances as Lender shall, from time to time, reasonably require, for the
better assuring, conveying, assigning, transferring, and confirming unto
Lender and Trustee the property and rights hereby deeded, mortgaged,
granted, bargained, sold, conveyed, confirmed, pledged, assigned, warranted
and transferred or intended now or hereafter so to be, or which Borrower
may be or may hereafter become bound to convey or assign to Lender, or for
carrying out the
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intention or facilitating the performance of the terms of this Security
Instrument or for filing, registering or recording this Security
Instrument, or for complying with all Applicable Laws. Borrower, on
demand, will execute and deliver and hereby authorizes Lender to execute in
the name of Borrower or without the signature of Borrower to the extent
Lender may lawfully do so, one or more financing statements, chattel
mortgages or other instruments, to evidence more effectively the security
interest of Lender in the Property. Borrower grants to Lender an
irrevocable power of attorney coupled with an interest for the purpose of
exercising and perfecting any and all rights and remedies available to
Lender at law and in equity, including without limitation such rights and
remedies available to Lender pursuant to this Section 7.2. Notwithstanding
the foregoing, Lender shall exercise its right to the irrevocable power of
attorney granted under this Section 7.2 for the purpose of exercising and
perfecting any and all rights and remedies available at law and in equity
only in the event that Borrower refuses ten (10) days after demand by
Lender to execute and deliver such financing statements, chattel mortgages
or other instruments referred to herein. Lender shall not impose any
personal liability on Borrower through exercise of the power of attorney.
Section 7.3 CHANGES IN TAX, DEBT CREDIT AND DOCUMENTARY
STAMP LAWS. (a) If any law is enacted or adopted or amended after the date
of this Security Instrument which deducts the Debt from the value of the
Property for the purpose of taxation or which imposes a tax, either
directly or indirectly, on the Debt or Lender's interest in the Property,
Borrower will pay the tax, with interest and penalties thereon, if any. If
Lender is advised by counsel chosen by it that the payment of tax by
Borrower would be unlawful or taxable to Lender or unenforceable or provide
the basis for a defense of usury, then Lender shall have the option by
written notice of not less than one hundred twenty (120) days to declare
the Debt immediately due and payable.
(b) Borrower 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 Property, or any part thereof, and no
deduction shall otherwise be made or claimed from the assessed value of the
Property, or any part thereof, for real estate tax purposes by reason of
this Security Instrument or the Debt. If such claim, credit or deduction
shall be required by law, Lender shall have the option, by written notice
of not less than one hundred twenty (120) days, to declare the Debt
immediately due and payable.
(c) 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, this Security Instrument, or any of the
Other Security Documents or impose any other tax or charge on the same,
Borrower will pay for the same, with interest and penalties, thereon, if
any.
Section 7.4 ESTOPPEL CERTIFICATES. (a) After request by
Lender, Borrower, within ten (10) days, shall furnish Lender or any
proposed assignee with a statement, duly acknowledged and certified
(subject to Article 15), 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 terms of payment and
maturity date of the Note, (v) the date installments of interest and/or
principal were last paid, (v) that, except as provided in such statement,
there are no defaults or events which with the passage of time or the
giving of notice or both, would constitute an event of default under the
Note or the Security Instrument, (vi) that
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the Note and this Security Instrument are valid and binding obligations and
have not been modified or if modified, giving particulars of such
modification, (vii) whether any offsets or defenses exist against the
obligations secured hereby and, if any are alleged to exist, a detailed
description thereof, (viii) to the actual knowledge of Borrower after due
inquiry of the property manager that all Leases are in full force and
effect (or if not, specifying which are not) and (provided the Property is
not a residential multifamily property) have not been modified (or if
modified, setting forth all modifications), (ix) the date to which the
Rents thereunder have been paid pursuant to the Leases, (x) whether or not,
to the actual knowledge of Borrower after due inquiry of property manager,
any of the lessees under the Leases are in default under the Leases, and,
if any of the lessees are in default, setting forth the specific nature of
all such defaults, (xi) the amount of security deposits held by Borrower
under each Lease and that such amounts are consistent with the amounts
required under each Lease, and (xii) as to any other matters reasonably
requested by Lender and reasonably related to the Leases, the obligations
secured hereby, the Property or this Security Instrument. To the extent
that Borrower is unable to obtain and deliver to Lender a tenant estoppel
letter as required by this Section 7.4 after using reasonable efforts,
Borrower shall deliver to Lender an estoppel letter for such Lease subject
to Article 15 hereof. Notwithstanding anything continued in this Section
7.4 to the contrary, Borrower shall not be obligated to deliver tenant
estoppel letters during the first Loan Year (defined in the Note) unless
such estoppel letters are required by Lender in connection with the sale of
the Loan or by the Rating Agencies in connection with a securitization of
the Loan, and thereafter Borrower shall not be obligated to deliver such
tenant estoppel letters more than once a year unless Lender shall request
such estoppel letters in connection with a sale or the securitization of
the Loan.
(b) Borrower shall use its reasonable efforts to deliver to
Lender, promptly upon request, duly executed estoppel certificates from any
one or more lessees are required by Lender attesting to such facts
regarding the Lease as Lender may require, including but not limited to
attestations that each Lease covered thereby is in full force and effect
with no defaults thereunder on the part of any party, that none of the
Rents have been paid more than one month in advance, and that the lessee
claims no defense or offset against the full and timely performance of its
obligations under the Lease.
(c) Upon any transfer or proposed transfer contemplated by
Section 19.1 hereof, at Lender's request, Borrower shall provide an
estoppel certificate to the Investor (defined in Section 19.1) or any
prospective Investor in such form, substance and detail as Lender, such
Investor or prospective Investor may require with respect to the matters
set forth in the preceding Subsection (a).
Section 7.5 FLOOD INSURANCE. After Lender's request,
Borrower shall deliver evidence satisfactory to Lender that no portion of
the Improvements is situated in a federally designated "special flood
hazard area".
Section 7.6 SPLITTING OF SECURITY INSTRUMENT. This
Security Instrument and the Note shall, at any time until the same shall be
fully paid and satisfied, at the sole election of Lender, without expense
to Borrower, be split or divided into two notes and two security
instruments, each of which shall cover all or a portion of the Property to
be more particularly described therein. To that end, Borrower, upon
written request of Lender, shall
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execute, acknowledge and deliver, or cause to be executed, acknowledged and
delivered by the then owner of the Property, to Lender and/or its designee
or desginees substitute notes and security instruments in such principal
amounts, aggregating not more than the then unpaid principal amount of this
Security Instrument, and containing terms, provisions and clauses similar
to those contained herein and in the Note, and such other documents and
instruments as may be required by Lender.
Section 7.7 REPLACEMENT DOCUMENTS. Upon receipt of an
affidavit of an officer of Lender as to the loss, theft, destruction or
mutilation of the Note or any Other Security Document which is not of
public record, and, in the case of any such mutilation, upon surrender and
cancellation of such Note or Other Security Document, Borrower will issue,
in lieu thereof, a replacement Note or Other Security Document, dated the
date of such lost, stolen, destroyed or mutilated Note or Other Security
Document in the same principal amount thereof and otherwise of like tenor.
ARTICLE 8 - DUE ON SALE/ENCUMBRANCE
Section 8.1 LENDER RELIANCE. Borrower acknowledges that
Lender has examined and relied on the experience of Borrower and its
members, general partners, principals and (if Borrower is a trust)
beneficial owners in owning and operating properties such as the Property
in agreeing to make the loan secured hereby, and will continue to rely on
Borrower's ownership of the Property as a means of maintaining the value of
the Property as security for repayment of the Debt and the performance of
the Other Obligations. Borrower acknowledges that Lender has a valid
interest in maintaining the value of the Property so as to ensure that,
should Borrower default in the repayment of the Debt or the performance of
the Other Obligations, Lender can recover the Debt by a sale of the
Property.
Section 8.2 NO SALE/ENCUMBRANCE. Borrower agrees that
Borrower shall not, without the prior written consent of Lender, sell,
convey, mortgage, grant, bargain, encumber, pledge, assign, or otherwise
transfer the Property or any part thereof or permit the Property or any
part thereof to be sold, conveyed, mortgaged, granted, bargained,
encumbered, pledged, assigned, or otherwise transferred.
Section 8.3 SALE/ENCUMBRANCE DEFINED. A sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer within the meaning of this Article 8 shall be deemed to include,
but not limited to, (a) an installment sales agreement wherein Borrower
agrees to sell the Property or any part thereof for a price to be paid in
installments; (b) an agreement by Borrower leasing all or a substantial
part of the 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, Borrower's right, title and interest in and to any
Leases or any Rents; (c) if Borrower or any general or limited partner or
member of Borrower is a corporation, the voluntary or involuntary sale,
conveyance, transfer or pledge of such corporation's stock (or the stock of
any corporation directly or indirectly controlling such corporation by
operation of law or otherwise) or the creation or issuance of new stock by
which an aggregate of more than 10% of such corporation's stock shall be
vested in a party or parties who are not now stockholders; and (d) if
Borrower or any general or limited partner or any
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member of Borrower is a limited or general partnership or joint venture,
the change, removal or resignation of a general partner, limited partner or
managing partner or the transfer or pledge of the partnership interest of
any general partner, limited partner or managing partner or any profits or
proceeds relating to such partnership interest; and (e) if Borrower or any
general or limited partner or member of Borrower is a limited liability
company, the change, removal or resignation of a managing member or the
transfer of the membership interest of any managing member or any profits
or proceeds relating to such membership interest. Notwithstanding the
foregoing, the following transfers shall not be deemed to be a sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer within the meaning of this Article 8 and, accordingly, may be made
at any time and from time to time without Lender's consent:
(A) a transfer by devise or descent or by operation of law upon the
death of a member, partner or stockholder of Borrower or any general or
limited partner or member thereof or
(B) provided that no default has occurred and is continuing under the
Note, this Security Instrument or the Other Security Documents:
(ii) transfers of limited partnership interests in Properties;
(ii) transfers of the interests of the shareholders in JMB
Realty Corporation, a Delaware corporation ("JMB") (a)
amongst themselves, (b) to an Immediate Family Member (defined below) of
any such current shareholder (as of the date hereof),
(c) to a trust created by any such current shareholder for the benefit of
such current shareholder's Immediate Family Members, or (d) to an Affiliate
of any such current shareholders (as of the date thereof)
(notwithstanding anything to the contrary contained in this Subsection 8.3
(B)(ii), transfers of the interests of shareholders of JMB holding less
than a 25% interest in JMB as of the date hereof shall be freely
transferable without Lender's prior written consent provided no default has
occurred and is continuing under the Note, this Security Instrument or the
Other Security Documents);
(iii) transfers between JMB and Properties of their
respective general partnership interests in Borrower; and
(iv) transfers by JMB of all or any part of its interest in
Borrower or Properties of Urban Shopping Center, Inc. ("Urban") or to any
Affiliate of JMB.
For purposes of this Security Instrument, the term "Affiliate"
of a specified person or party means (a) any person or party that (either
directly or indirectly through one or more intermediaries) controls, is
under common control with or is controlled by, the specified person or
party, (b) any person or party that is a director, managing trustee, senior
corporate officer, managing or general partner, shareholder (holding at
least a 5% interest), beneficiary (for estate and trust purposes only),
managing member, or manager (of a limited liability company only) of or
subsidiary with control of, or under common control with, or controlled by,
any of the foregoing described in Subparagraph (a) above, and (c) any
Immediate Family Member or
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spouse of the specified person or party. For such purposes, control of a
specified person or a party (including the correlative terms "controlled
by" under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of the specified person or party, whether through ownership of
voting securities or equity interests, or the ability to appoint all or
some of a party's trustees, directors, officers, managers or persons in a
similar capacity or capacities, by contract or otherwise.
For purposes of this Security Instrument, the term "Immediate
Family Member" shall mean the spouse, child, parent, or grandchild of the
specified person.
Section 8.4 LENDER'S RIGHTS. Lender reserves the right to
condition the consent required hereunder upon a modification of the terms
hereof and on assumption of the Note, this Security Instrument and the
Other Security Documents as so modified by the proposed transferee, payment
of a transfer fee of not less than one percent (1%) of the principal
balance of the Note and all of Lender's expenses incurred in connection
with such transfer, the approval by a Rating Agency of the proposed
transferee, the proposed transferee's continued compliance
with the covenants set forth in Section 4.2 hereof, or such other
conditions as Lender shall determine in its sole discretion to be in the
interest of Lender. Lender 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 Borrower's sale,
conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, or
transfer of the Property without Lender's consent. This provision shall
apply to every sale, conveyance, mortgage, grant bargain, encumbrance,
pledge, assignment, or transfer of the Property regardless of whether
voluntary or not, or whether or not Lender has consented to any previous
sale, conveyance, mortgage, grant, bargain, encumbrance, pledge,
assignment, or transfer of the Property.
Section 8.5 ONE-TIME TRANSFER. Notwithstanding anything to
the contrary contained in this Article 8, Lender's consent to a one-time
sale, assignment, or other transfer of the Property shall not be
unreasonably withheld provided that (a) Lender receives forty-five (45)
days prior written notice of such transfer hereunder, (b) no default has
occurred and is continuing under this Security Instrument, the Note or the
Other Security Documents and (c) the proposed transferee (the "Transferee")
satisfies the following requirements:
(i) Transferee or Transferee's Principals (hereinafter
defined) must have demonstrated expertise in owning and
operating retail properties similar in location, size and operation to the
Property, which expertise shall be determined by Lender in Lender's sole
discretion. The term "Transferee's Principals" shall include Transferee's
(i) managing members, general partners or principal shareholders and (ii)
such other members, partners or shareholders which shall own an 8% or
greater interest in Transferee;
(ii) Transferee or Transferee's Principals shall, as of the
date of such transfer, have an aggregate net worth and
liquidity acceptable to Lender;
(iii) Transferee and Transferee's Principals must not have been
a party to any bankruptcy proceeding, voluntary or
involuntary, made an assignment for the benefit of creditors or taken
advantage of any insolvency act, or any
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act for the benefit of debtors within seven (7) years
prior to the date of the proposed transfer of the Property;
(iv) Transferee shall assume all of the obligations of
Borrower under the this Security Instrument, the Note and Other Security
Documents in a manner satisfactory to Lender in all respects, including,
without limitation, by entering into any assumption agreement in form and
substance satisfactory to Lender;
(v) There shall be no litigation pending against Transferee
or Transferee's Principals which is not acceptable to Lender;
(vi) Transferee and Transferee's Principals shall not have
materially defaulted under its or their obligations with
respect to any other indebtedness in a manner which is not acceptable to
Lender and with respect to immaterial defaults by
Transferee and Transferee's Principals under its or their obligations with
respect to any other indebtedness, such immaterial defaults shall be cured
as of the date of transfer;
(vii) Transferee and Transferee's Principals must be able to
satisfy all the special covenants set forth in Section
4.3 hereof and deliver (i) all organization documentation requested by
Lender, which shall be satisfactory to Lender in all respects, and (ii) all
certificates, agreements and covenants required by Lender;
(viii) Transferee shall be approved by the Rating Agencies
selected by Lender;
(ix) Borrower shall deliver, at its sole cost and expense, an
endorsement to the existing title policy insuring the Security Instrument,
as modified by the assumption agreement, as a valid first lien on the
Property and naming the Transferee as owner of the fee estate of the
Property, which endorsement shall insure that, as of the date of the
recording of the assumption agreement, the Property shall not be subject to
any additional exceptions or liens other than those contained in the title
policy issued in connection with this Security Instrument;
(x) Borrower shall pay Lender a processing fee equal to
$4,000 upon request for assumption of the Loan and a transfer fee equal to
1 % of the outstanding principal balance of the Loan at the time of such
transfer; and
(xi) Borrower shall pay any and all reasonable out-of-pocket
costs incurred in connection with the transfer of the Property (including,
without limitation, Lender's counsel fees and disbursements and all
recording fees, title insurance premiums and mortgage and
intangible taxes).
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ARTICLE 9 - PREPAYMENT
Section 9.1 PREPAYMENT BEFORE EVENT OF DEFAULT. The Debt
may be prepaid only in strict accordance with the express terms and
conditions of the Note including the payment of any prepayment
consideration.
Section 9.2 PREPAYMENT OF CASUALTY, CONDEMNATION AND
CHANGE IN TAX AND DEBT CREDIT LAWS. Provided no Event of Default exists
under the Note, this Security Instrument or the Other Security Documents,
in the event of any prepayment of the Debt pursuant to the terms of
Sections 3.3, 3.6, 4.4 or 7.3 hereof, no Prepayment Consideration (defined
in the Note) shall be due in connection therewith, but Borrower shall be
responsible for the Interest Shortfall Payment (defined in the Note), if
any, and all other amounts due under the Note, this Security Instrument and
the Other Security Documents.
Section 9.3 PREPAYMENT AFTER EVENT OF DEFAULT. If a
Default Prepayment (defined below) occurs, Borrower shall pay to Lender the
entire Debt, including without limitation, the following amounts:
(a) if the Default Prepayment occurs prior to the time when
prepayment of the principal balance of the Note is permitted, an amount
equal to the sum of (i) the present value of the interest payments
which would have accrued on the principal balance of the Note (outstanding
as of the date of such Default Prepayment) at the Applicable Interest Rate
(as defined in the Note) from the date of such Default Prepayment to the
first day prepayment is permitted pursuant to the Note discounted at a rate
equal to the Treasury Rate (as defined in the Note) except that such
Treasury Rate shall be based on the U.S. Treasury constant maturity most
nearly approximating the date upon which prepayment is first permitted
pursuant to the Note, and (ii) an amount equal to the present value as of
the first day of the third (3rd) Loan Year of the Calculated Payments
(defined in the Note) based on the Treasury Rate in effect at the time of
such Default Prepayment from the first day of the third (3rd) Loan Year
through the Maturity Date determined by discounting such payments at the
Discount Rate (as defined in the Note); or
(b) if the Default Prepayment occurs at a time when
prepayment of the principal balance of the Note is permitted, the
Prepayment Consideration and the Interest Shortfall Payment (defined
in the Note), if applicable.
For purposes of this Section 9.3, the term "Default Prepayment" shall mean
a prepayment of the principal amount of the Note made after the occurrence
of any Event of Default or an acceleration of the Maturity Date (as defined
in the Note) under any circumstances, including, without limitation, a
prepayment occurring in connection with reinstatement of this Security
Instrument provided by statute under foreclosure proceedings or exercise of
a power of sale, any statutory right of redemption exercised by Borrower or
any other party having a statutory right to redeem or prevent foreclosure,
any sale in foreclosure or under exercise of a power of sale or otherwise.
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ARTICLE 10 - DEFAULT
Section 10.1 EVENTS OF DEFAULT. The occurrence of any one
or more of the following events shall constitute an "Event of Default":
(a) if any portion of the Debt is not paid prior to the tenth
(10th) day after the same is due or if the entire Debt is not paid on
or before the Maturity Date;
(b) subject to Borrower's rights pursuant to Section 3.4
hereof, if any of the Taxes or Other Charges is not paid when the
same is due and payable except to the extent sums sufficient to pay such
Taxes and Other Charges have been deposited with Lender in accordance with
the terms of this Security Instrument;
(c) if the Policies are not delivered to Lender within thirty
(0) days after written request or if the Policies are not kept in
full force and effect;
(d) [intentionally omitted];
(e) if Borrower is in violation of or does not comply with
any of the provisions of Section 3.7 or Article 13 thirty (30) days
after notice from Lender or if Borrower violates or does not comply with
any of the provisions of Sections 4.3 or Article 8;
(f) if any representation of warranty or Borrower or any
member, general partner, principal or beneficial owner thereof, made
herein or in the Environmental Indemnity (defined below) or in any
certificate, report, financial statement or other instrument or document
furnished to Lender shall have been false or misleading in any material
respect when made;
(g) if (i) Borrower or any managing member or general partner
of Borrower, or any Guarantor or Indemnitor shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, conservatorship or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all
or any substantial part of its assets, or the Borrower or any managing
member or general partner of Borrower, or any Guarantor or Indemnitor shall
make a general assignment for the benefit of its creditors; or (ii) there
shall be commenced against Borrower or any managing member or general
partner of Borrower, any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an order
for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of ninety (90) days; or
(iii) there shall be commenced against the Borrower or any managing member
or general partner of Borrower, any case, proceeding or other action
seeking issuance of a warrant ofattachment, execution, distraint or
similar process against all or any substantial part of
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its assets which results in the entry of any order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within ninety (90) days from the entry thereof; or (iv) the
Borrower or any managing member or general partner of Borrower shall take
any action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Borrower or any managing member or general partner of
Borrower shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due;
(h) if Borrower shall be in default under any other mortgage,
deed of trust, deed to secure debt or other security agreement
covering any part of the Property whether it be superior or junior in lien
to this Security Instrument;
(i) if the 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 the lien shall remain
undischarged of record (by payment, bonding or otherwise) for a period of
forty-five (45) days;
(j) if any federal tax lien is filed against Borrower or the
Property and same is not discharged of record within forty-five (45)
days after same is filed;
(k) [intentionally omitted];
(l) if any condemnation proceeding is instituted which would,
in Lender's reasonable judgement, materially impair the use and
enjoyment of the Property for its intended purposes;
(m) if (i) Borrower fails to timely provide Lender with the
written certification and evidence referred to in Section 4.2 hereof,
or (ii) Borrower consummates a transaction which would cause the Security
Instrument of Lender's exercise of its rights under this Security
Instrument, the Note or the Other Security Documents to constitute a
nonexempt prohibited transaction under ERISA or result in a violation of a
state statute regulating governmental plans, subjecting Lender to liability
for a violation of ERISA or a state statue;
(n) if Borrower shall fail to reimburse Lender ten (10) days
after demand by Lender, with interest calculated at the Default Rate,
for all Insurance Premiums or Taxes, together with interest and penalties
imposed thereon, paid by Lender pursuant to this Security Instrument;
(o) if Borrower shall fail to deliver to Lender, ten (10)
days after request by Lender, the estoppel certificates required
pursuant to the terms of Subsections 7.4(a) and (c);
(p) if Borrower shall fail to deliver to Lender, ten (10)
days after request by Lender, the statements referred to in Section
3.11 in accordance with the terms thereof;
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(q) if any default occurs under that certain environmental
indemnity agreement dated the date hereof given by Borrower
("Indemnitor(s)") to Lender (the "Environmental Indemnity") and such
default continues after the expiration of applicable notice and grace
periods, if any;
(r) [Intentionally omitted]; or
(s) if for more than ten (10) days after notice from Lender,
Borrower shall continue to be in default under any other term,
covenant or condition of the Note, this Security Instrument or the Other
Security Documents 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 Lender
in the case of any other default, provided that if such default cannot
reasonably be cured within such thirty (30) day period and Borrower 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
Borrower 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.
Section 10.2 LATE PAYMENT CHARGE. If any monthly
installment of principal and interest is not paid prior to the tenth (10th)
day after the date on which it is due, Borrower shall pay to Lender upon
demand an amount equal to the lesser of five percent (5%) of such unpaid
portion of the outstanding monthly installment of principal and interest
then due or the maximum amount permitted by applicable law, to defray the
expense incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such delinquent
payment, and such amount shall be secured by this Security Instrument and
the Other Security Documents.
Section 10.3 DEFAULT INTEREST. Borrower will pay,
from the date of an Event of Default through the earlier of the date upon
which the Event of Default is cured or the date upon which the Debt is paid
in full, interest on the unpaid principal balance of the Note at a per
annum rate equal to the lesser of (a) five percent (5%) plus the Applicable
Interest Rate (as defined in the Note), and (b) the maximum interest rate
which Borrower may be law pay or Lender may charge and collect (the
"Default Rate").
ARTICLE 11 - RIGHTS AND REMEDIES
Section 11.1 REMEDIES. Upon the occurrence of any
Event of Default, Borrower agrees that Lender may or acting by or through
Trustee may take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Borrower and in and to
the Property, including, but not limited to, the following actions, each of
which may be pursued concurrently or otherwise, at such time and in such
order as Lender or Trustee may determine, in their its sole discretion,
without impairing or otherwise affecting the other rights and remedies of
Lender or Trustee;
(a) declare the entire unpaid Debt to be immediately due and
payable;
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(b) institute proceedings, judicial or otherwise, for the
complete foreclosure of this Security Instrument under any applicable
provision of law in which case the Property or any interest therein
may be sold for cash or upon credit in one or more parcels or in several
interests or portions and in any order or manner;
(c) with or without entry, to the extent permitted and
pursuant to the procedures provided by applicable law, institute
proceedings for the partial foreclosure of this Security Instrument for the
portion of the Debt then due and payable, subject to the continuing lien
and security interest of this Security Instrument for the balance of the
Debt not then due, unimpaired and without loss of priority;
(d) sell for cash or upon credit the Property or any part
thereof and all estate, claim, demand, right, title and interest of
Borrower therein and rights of redemption thereof, pursuant to power of
sale or otherwise, at one or more sales, as an entity or in parcels, at
such time and place, upon terms and after such notice thereof as may be
required or permitted by law;
(e) subject to Article 15 hereof, institute an action, suit
or proceeding in equity for the specific performance of any covenant,
condition or agreement contained herein, in the Note or in the Other
Security Documents;
(f) subject to Article 15 hereof, recover judgement on the
Note either before, during or after any proceedings for the
enforcement of this Security Instrument or the Other Security Documents;
(g) apply for the appointment of a receiver, trustee,
liquidator or conservator of the Property, without notice and without
regard for the adequacy of the security for the Debt and without regard for
the solvency of Borrower or of any person, firm or other entity liable for
the payment of the Debt;
(h) subject to any applicable law, the license granted to
Borrower under Section 1.2 shall automatically be revoked and Lender
may enter into or upon the Property, either personally or by its agents,
nominees or attorneys and dispossess Borrower and its agents and servants
therefrom, without liability for trespass, damages or otherwise and exclude
Borrower and its agents or servants wholly therefrom, and take possession
of all books, records and accounts relating thereto and Borrower agrees to
surrender possession of the Property and of such books, records and
accounts to Lender upon demand, and thereupon Lender may (i) use, operate,
manage, control, insure, maintain, repair, restore and otherwise deal with
all and every part of the Property and conduct the business thereat; (ii)
complete any construction on the Property in such manner and form as Lender
deems advisable; (iii) make alterations, additions, renewals, replacements
and improvements to or on the Property; (iv) exercise all rights and powers
of Borrower with respect to the Property, whether in the name of Borrower
or otherwise, including, without limitation, the right to make, cancel,
enforce or modify Leases, obtain and evict tenants, and demand, sue for,
collect and receive all Rents of the Property and every part thereof; (v)
require Borrower to pay monthly in advance to Lender, or any receiver
appointed to collect the Rents, the fair and reasonable rental value for
the use
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and occupation of such part of the Property as may be occupied by
Borrower; (vi) require Borrower to vacate and surrender possession of the
Property to Lender or to such receiver and, in default thereof, Borrower
may be evicted by summary proceedings or otherwise; and (vii) apply the
receipts from the Property to the payment of the Debt, in such order,
priority and proportions as Lender shall deem appropriate in its sole
discretion after deducing therefrom all expenses (including reasonable
attorneys' fees) incurred in connection with the aforesaid operations and
all amounts necessary to pay the Taxes, Other Charges, insurance and other
expenses in connection with the Property, as well as just and reasonable
compensation for the services of Lender, its counsel, agents and employees;
(i) exercise 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: (i) the right
to take possession of the Personal Property or any part thereof, and to
take such other measures as Lender or Trustee may deem necessary for the
care, protection and preservation of the Personal Property, and (ii)
request Borrower at its expense to assemble the Personal Property and make
it available to Lender at aconvenient place acceptable to Lender. Any
notice of sale, disposition or other intended action by Lender or Trustee
with respect to the Personal Property sent to Borrower in accordance with
the provisions hereof at least five (5) days prior to such action, shall
constitute commercially reasonable notice to Borrower;
(j) apply any sums then deposited in the Escrow Fund and any
other sums held in escrow or otherwise by Lender in accordance with
the terms of this Security Instrument or any Other Security Document to the
payment of the following items in any order in its uncontrolled discretion:
(i) Taxes and Other Charges;
(ii) Insurance Premiums;
(iii) Interest on the unpaid principal balance of
the Note;
(iv) Amortization of the unpaid principal balance of the
Note;
(v) All other sums payable pursuant to the Note, this
Security Instrument and the Other Security Documents, including without
limitation advances made by Lender pursuant to the terms of thisSecurity
Instrument;
(k) to the extent the Policies delivered to Lender in
accordance with Section 3.3 hereof are separate Policies, surrender the
Policies maintained pursuant to Article 3 hereof, collect the
unearned Insurance Premiums and apply such sums as a credit on the Debt in
such priority and proportion as Lender in its discretion shall deem proper,
and in connection therewith, Borrower hereby appoints Lender as agent and
attorney-in-fact (which is coupled with an interest and is therefore
irrevocable) for Borrower to collect such Insurance Premiums;
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(l) pursue such other remedies as Lender may have under
applicable law; or
(m) apply the undisbursed balance of any Net Proceeds
Deficiency deposit, together with interest thereon, to the payment of the
Debt in such order, priority and proportions as Lender shall deem to be
appropriate in its discretion.
In the event of a sale, by foreclosure, power of sale, or otherwise, of
less than all of the Property, this Security Instrument shall continue as a
lien and security interest on the remaining portion of the Property
unimpaired and without loss of priority. Notwithstanding the provisions of
this Section 11.1 to the contrary, if any Event of Default as described in
clause (i) or (ii) of Subsection 10.1(g) shall occur, the entire unpaid
Debt shall be automatically due and payable, without any further notice,
demand or other action by Lender.
Section 11.2 APPLICATION OF PROCEEDS. The purchase money,
proceeds and avails of any disposition of the Property, or any part
thereof, or any other sums collected by Lender pursuant to the Note, this
Security Instrument or the Other Security Documents, may be applied by
Lender to the payment of the Debt in such priority and proportions as
Lender in its discretion shall deem proper.
Section 11.3 RIGHT TO CURE DEFAULTS. Upon the occurrence
of any Event of Default or if Borrower fails to make any payment or to do
any act as herein provided, Lender may, but without any obligation to do so
and without notice to or demand on Borrower and without releasing Borrower
from any obligation hereunder, make or do the same in such manner and to
such extent as Lender may deem necessary to protect the security hereof.
Lender or Trustee is authorized to enter upon the Property for such
purposes, or appear in, defend, or bring any action or proceeding to
protect its interest in the Property or to foreclose this Security
Instrument 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 Section 11.3, shall constitute a portion of the Debt
and shall be due and payable to Lender upon demand. All such costs and
expenses incurred by Lender or Trustee in remedying such Event of Default
or such failed payment or act 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 Lender that such cost or expense was incurred
to the date of payment to Lender. All such costs and expenses incurred by
Lender together with interest thereon calculated at the Default Rate shall
be deemed to constitute a portion of the Debt and be secured by this
Security Instrument and the Other Security Documents and shall be
immediately due and payable upon demand by Lender thereof.
Section 11.4 ACTIONS AND PROCEEDINGS. Upon the occurrence
and during the continuance of an Event of Default, Lender or Trustee has
the right to appear in and defend any action or proceeding brought with
respect to the Property and to bring any action or proceeding, in the name
and on behalf of Borrower, which Lender, in its discretion, decided should
be brought to protect its interest in the Property.
Section 11.5 RECOVERY OF SUMS REQUIRED TO BE PAID. Lender
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 Lender or Trustee thereafter to bring an action
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of foreclosure, or any other action, for a default or defaults by Borrower
existing at the time such earlier action was commenced.
Section 11.6 EXAMINATION OF BOOKS AND RECORDS. Lender,
its agents, accountants and attorneys shall have the right to examine the
records and books of Borrower and/or Properties which reflect upon the
financial condition of the Property, at the Property or at any office
regularly maintained by Borrower or Properties, where the books and records
are located. Lender and its agents shall have the right to make copies and
extracts from the foregoing records but may not distribute or give to any
other party such copies and extracts and must keep same confidential unless
disclosure is mandated by law. In addition, Lender, its agents,
accountants and attorneys shall have the right to examine and audit the
books and records of Borrower and Properties pertaining to the income,
expenses and operation of the Property during reasonable business hours at
any office of Borrower or Properties where the books and records are
located at no expense to Borrower unless an Event of Default exists
hereunder, under the Note or under the Other Security Documents.
Section 11.7 OTHER RIGHTS, ETC. (a) The failure of Lender
or Trustee to insist upon strict performance of any term hereof shall not
be deemed to be a waiver of any term of this Security Instrument. Borrower
shall not be relieved of Borrower's obligations hereunder by reason of (i)
the failure of Lender or Trustee to comply with any request of Borrower to
take any action to foreclose this Security Instrument or otherwise enforce
any of the provisions hereof or of the Note or the Other Security
Documents, (ii) the release, regardless of consideration, of the whole or
any part of the Property, or of any person liable for the Debt or any
portion thereof, or (iii) any agreement or stipulation by Lender extending
the time of payment or otherwise modifying or supplementing the terms of
the Note, this Security Instrument or the Other Security Documents.
(b) Its is agreed that the risk of loss or damage to the
Property is on Borrower, and Lender shall have no liability whatsoever for
decline in value of the Property, for failure to maintain the Policies, or
for failure to determine whether insurance in force is adequate as to the
amount of risks insured. Possession by Lender shall not be deemed an
election of judicial relief, if any such possession is requested or
obtained, with respect to any Property or collateral not in Lender's
possession.
(c) Lender may resort for the payment of the Debt to any
other security held by Lender in such order and manner as Lender, in its
discretion, may elect. Lender or Trustee may take action to recover the
Debt, or any portion thereof, or to enforce any covenant hereof without
prejudice to the right of Lender or Trustee thereafter to foreclose this
Security Instrument. The rights of Lender or Trustee under this Security
Instrument shall be separate, distinct and cumulative and none shall be
given effect to the exclusion of the others. No act of Lender or Trustee
shall be construed as an election to proceed under any one provision herein
to the exclusion of any other provision. Subject to Article 15 hereof,
neither Lender nor Trustee shall be limited exclusively to the rights and
remedies herein but shall be entitled to every right and remedy now or
hereafter afforded at law or in equity.
Section 11.8 RIGHT TO RELEASE ANY PORTION OF THE PROPERTY.
Lender may release any portion of the Property for such consideration as
Lender may require without, as to
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the remainder of the Property, in any way impairing or affecting the lien
or priority of this Security Instrument, or improving the position of any
subordinate lienholder with respect thereto, except to the extent that the
obligations hereunder shall have been reduced by the actual monetary
consideration, if any, received by Lender for such release, and may accept
by assignment, pledge or otherwise any other property in place thereof as
Lender may require without being accountable for so doing to any other
lienholder. This Security Instrument shall continue as a lien and security
interest in the remaining portion of the Property.
Section 11.9 VIOLATION OF LAWS. If the Property is not in
material compliance with Applicable Laws, Lender may impose additional
requirements upon Borrower in connection herewith including, without
limitation, monetary reserves or financial equivalents.
Section 11.10 RECOURSE AND CHOICE OF REMEDIES.
Notwithstanding any other provision of this Security Instrument, but
subject to Article 15 hereof, Lender and other Indemnified Parties (defined
in Section 13.1 below) are entitled to enforce the obligations of Borrower
contained in Sections 13.2, 13.3 and 13.4 without first restoring to or
exhausting any security or collateral and without first having recourse to
the Note or any of the Property, through foreclosure, sale pursuant to a
power of sale or acceptance of a deed in lieu of foreclosure or otherwise,
and in the event Lender commences a foreclosure action against the
Property, or otherwise causes Trustee to exercise the power of sale
pursuant hereto Lender is entitled to pursue a deficiency judgement with
respect to such obligations against Borrower. Borrower is personally
liable for the obligations pursuant to Subsections 13.2, 13.3 and 13.4 only
to the extent provided in Article 15 hereof. The liability for such
obligations of Borrower is not limited to the original principal amount of
the Note. Notwithstanding the foregoing,nothing herein shall inhibit or
prevent Lender or Trustee from foreclosing, exercising a power of sale
pursuant to this Security Instrument or exercising any other rights and
remedies pursuant to the Note, this Security Instrument and the Other
Security Document, whether simultaneously with foreclosure proceedings or
in any other sequence. A separate action or actions may be brought and
prosecuted against Borrower, whether or not action is brought against any
other person or entity or whether or not any other person or entity is
joined in the action or actions. In addition, Lender and Trustee shall
have the right but not the obligation to join and participate in, as a
party if it so elects, any administrative or judicial proceedings or
actions initiated in connection with any matter addressed in Article 12 or
Section 13.4.
Section 11.11 RIGHT OF ENTRY. Lender and its agents shall
have the right to enter and inspect the Property at all reasonable times.
ARTICLE 12 - ENVIRONMENTAL HAZARDS
Section 12.1 ENVIRONMENTAL REPRESENTATIONS AND WARRANTIES.
Borrower represents and warrants, to the actual knowledge of Borrower,
except as set forth in the environmental report delivered to Lender dated
October -----, 1995 and any other report or information described in
Exhibit B (collectively, the Environmental Report), that: (a) there are no
Hazardous Substances (defined below) or underground storage tanks in, on,
or under the Property, except those that are in compliance with
Environmental Laws (defined below); (b) there are no past, present or
threatened Releases (defined below) of Hazardous Substances in,
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on, under or from the Property in violation of any Environmental Law except
as described in the Environmental Report; (c) there is no threat of any
Release of Hazardous Substances migrating to the Property in violation of
any Environmental Law except as described in the Environmental Report; (d)
there is no past or present non-compliance with Environmental Laws, or with
permits issued pursuant thereto, in connection with the Property except as
described in the Environmental Report; and (e) neither Borrower, not to
Borrower's actual knowledge after due inquiry of the property manager, any
tenant, has received, any written or oral notice or other communication
from any person or entity (including but not limited to a governmental
entity) relating to Hazardous Substances or Remediation (defined below)
thereof, of possible liability of any person or entity pursuant to any
Environmental Law, or any actual or potential administrative or judicial
proceedings in connection with any of the foregoing. "Environmental Law"
means any present and future (except with respect to representations made
as of the date hereof) federal, state and local laws, statutes, ordinances,
rules, regulations and the like as well as common law, relating to
Hazardous Substances or relating to liability for or costs of Remediation
or prevention of Releases of Hazardous Substances with respect to the
Property. "Environmental Law" includes, but is not limited to, the
following statutes, as amended any successor thereto, and any regulations
promulgated pursuant thereto, and any state or local statutes, ordinances,
rules, regulations and the like addressing similar issues: the
Comprehensive Environmental Response, Compensation and Liability Act; the
Emergency Planning and Community Right-To-Know Act; the Hazardous
Substances Transportation Act; the Resource Conservation and Recovery Act
(including but not limited to Subtitle I relating to underground storage
tanks); the Solid Waste Disposal Act; the Clean Water Act; the Clean Air
Act; the Toxic Substances Control Act; the Safe Drinking Water Act; the
Occupational Safety and Health Act; the Federal Water Pollution Control
Act; the Federal Insecticide, Fungicide and Rodenticide Act: the Endangered
Species act: the National Environmental Policy Act; and the River and
Harbors Appropriation Act. "Environmental Law" also includes, but is not
limited to, any present and future (except with respect to representations
made as of the date hereof) federal, state, and local laws, statutes,
ordinances, rules, regulations and the like, as well as common law;
conditioning transfer of property upon a negative declaration or other
approval of a governmental authority of the environmental condition of the
property; requiring notification or disclosure of Releases of Hazardous
Substances or other environmental condition of the Property to any
governmental authority or other person or entity, whether or not in
connection with transfer of title to or interest in property; imposing
conditions or requirements in connection with permits or other
authorization for lawful activity relating to the Property. "Hazardous
Substances" include but are not limited to any and all substances (whether
solid, liquid or gas) defined, listed or otherwise classified as
pollutants, hazardous wastes, hazardous substances, hazardous materials,
extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future (except with respect to representations
made as of the date here) Environmental Laws, including but not limited to
petroleum and petroleum products, regulated or friable asbestos and
regulated or friable asbestos-containing materials, polychlorinated
biphenyls, lead, radon, radioactive materials, flammables and explosives.
"Release" of any Hazardous Substance includes but is not limited to any
release, deposit, discharge, emission, leaking, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping,
disposing or other movement of Hazardous Substances. "Remediation"
includes but is not limited to any response, remedial, removal, or
corrective action, any activity to cleanup, detoxify, decontaminate,
contain or otherwise remediate any Hazardous Substance, any actions to
prevent, cure or mitigate any Release of any Hazardous Substance, any
action to comply with any Environmental Laws or
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with any permits issued pursuant thereto, or any inspection, investigation,
study, monitoring, assessment, audit, sampling and testing, laboratory or
other analysis, or evaluation permitted in accordance of the Environmental
Indemnity Agreement or this Article 12.
Section 12.2 ENVIRONMENTAL COVENANTS. Borrower covenants
and agrees that: (a) Borrower shall not cause nor permit any of its agents
or invitees or tenants to cause a violation of any Environmental Laws and
permits issued pursuant thereto; (b) Borrower shall not cause nor permit
any of its agents or invitees or tenants to cause Releases of Hazardous
Substances in, or, under or from the Property in violation of any
Environmental Law which shall not be promptly remediated by Borrower or
such tenant; (c) Borrower shall not cause nor permit any of its agents or
invitees or tenants to cause the presence or existence of Hazardous
Substances in, on, or under the Property, except those that are both (i) in
compliance with all Environmental Laws and with permits issued pursuant
thereto and (ii) fully disclosed to Lender in writing (other than cleaning
solutions and other retail products used in the normal course of the
operation of the Property); (d) Borrower shall keep the Property free and
clear of all liens and other encumbrances imposed pursuant to any
Environmental Law, whether due to any act or omission of Borrower or any
other person or entity (the "Environmental Liens"); (e) Borrower shall, at
its sole cost and expense, fully and expeditiously cooperate in all
activities pursuant to Section 12.3 below, including but not limited to
providing all relevant information and making knowledgeable persons
available for interviews; (f) Borrower shall, at its sole cost and expense,
perform any environmental site assessment or other investigation of
environmental conditions in connection with the Property, pursuant to any
reasonable written request of Lender based on a directive from any
governmental authority or court order (including but not limited to
sampling, testing and analysis of soil, water, air, building materials and
other materials and substances whether solid, liquid or gas), and share
with Lender the reports and other results thereof, and Lender and other
Indemnified Parties shall be entitled to rely on such reports and other
results thereof; (g) Borrower shall, at its sole cost and expense, comply
with all reasonable written requests of Lender to (i) reasonable effectuate
Remediation of any condition (including but not limited to a Release of a
Hazardous Substance) in, on, under or from the Property pursuant to any
directive from any governmental authority or any court order; (ii) comply
with any Environmental Law; and (iii) comply with any directive from any
governmental authority; (h) Borrower shall not do or knowingly allow any
tenant or other user of the Property to do any act that is contrary to any
requirement of any insurer; and (i) Borrower shall immediately notify
Lender in writing of (A) any presence or Releases or threatened Releases of
Hazardous Substances in, on, under, from or migrating towards the Property
in violation of any Environmental Law known to Borrower; (B) any non-
compliance with any Environmental Laws known to Borrower related in any way
to the Property; (C) any actual, or if known to Borrower,any potential
Environmental Lien; (D) any required Remediation of environmental
conditions relating to the Property; and (E) any written or oral notice or
other communication which Borrower becomes aware from any source whatsoever
(including but not limited to a governmental entity) relating in any way to
Hazardous Substances or Remediation thereof relating to the Property,
possible liability of any person or entity pursuant to any Environmental
law, or any actual or potential administrative or judicial proceedings in
connection with anything referred to in this Article 12. Any failure of
Borrower to perform its obligations pursuant to this Section 12.2 after
notice and expiration of applicable cure periods shall constitute bad faith
waste with respect to the Property.
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Section 12.3 LENDER'S RIGHTS. If Lender has reason to suspect
the presence or the threatened presence of Hazardous Substances at the
Property, Lender and any other person or entity designated by Lender,
including but not limited to any receiver, any representative of a
governmental entity, and any environmental consultant, shall have the
right, but not the obligation, to enter upon the Property upon reasonable
notice and at all reasonable times to assess any and all aspects of the
environmental condition of the Property and its use, including but not
limited to conducting any environmental assessment or audit (the scope of
which shall be determined in Lender's sole and absolute discretion) and
taking samples of soil, groundwater or other water, air, or building
materials, and conducting other invasive testing. Borrower shall cooperate
with and provide access to Lender and any such person or entity designated
by Lender. Lender agrees that any such assessment of the Property
performed by Lender pursuant to this Section beyond the scope of a Phase I
environmental site assessment shall be performed based upon the information
in the Phase I environmental site assessment which shall give Lender reason
to suspect the presence or threatened presence of Hazardous Substances in
violation of this Article 12 or the Environmental Indemnity Agreement.
ARTICLE 13 - INDEMNIFICATION
Section 13.1 GENERAL INDEMNIFICATION. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all monetary
losses and damages (including punitive damages paid or payable by
Indemnified Parties to third parties, but excluding consequential damages)
and any and all actual out-of-pocket costs, expenses, fines, penalties,
charges, fees, amounts paid in settlement or pursuant to actions,
proceedings, judgments or awards, amounts paid to satisfy claims, suits,
liabilities (including, without limitation, strict liabilities),
obligations or debts of whatever kind or nature (including but not limited
to reasonable attorneys' fees and other costs of defense) (the "Losses")
incurred directly by any Indemnified Parties to any governmental or third
party and directly arising out of any one or more of the following: (a)
any and all lawful action that may be taken by Lender in connection with
the enforcement of the provisions of this Security Instrument or the Note
or any of the Other Security Documents, whether or not suit is filed in
connection with same, or in connection with Borrower and/or any member,
partner, joint venturer or shareholder thereof becoming a party to a
voluntary or involuntary federal or state bankruptcy, insolvency or similar
proceeding; (b) any accident, injury to or death of persons or loss of or
damage to property occurring in, on or about the Property or any part
thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (c) the enforcement by any Indemnified
Party of the provisions of this Article 13; (d) any and all claims and
demands whatsoever which may be asserted against Lender by reason of any
alleged obligations or undertakings on its part to perform or discharge any
of the terms, covenants, or agreements contained in any Lease; (e) the
payment of any commission, charge or brokerage fee to anyone claiming to be
entitled to such commission other than through Lender and which may be
payable in connection with the funding of the Loan evidenced by the Note
and secured by this Security Instrument; or (f) any misrepresentation made
by Borrower in this Security Instrument or any Other Security Document.
Any amounts payable to lender by reason of the application of this Section
13.1 shall become immediately due and payable and shall bear interest at
the Default Rate from the date loss or damage is sustained by Lender until
paid. Notwithstanding anything to the contrary contained in this Security
Instrument, the indemnities of Borrower
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contained in this Section 13.1 shall not apply in the event of any
Indemnified Parties' gross negligence of wilful misconduct. For purposes
of this Article 13, the term "Indemnified Parties" means Lender and any
person or entity who is or will have been involved in the origination of
the Loan, any person or entity who is or will have been involved in the
servicing of the Loan, any person or entity in whose name the encumbrance
created by this Security Instrument is or will have been recorded, persons
and entities who may hold or acquire or will have held a full or partial
interest in the Loan (including, but not limited to, Investors or
prospective Investors in the Securities, as well as custodians, trustees
and other fiduciaries who hold or have held a full or partial interest in
the Loan for the benefit of third parties) as well as the respective
directors, officers, shareholders, partners, members, employees, agents,
servants, representatives, affiliates, subsidiaries, participants,
successors and assigns of any and all of the foregoing (including but not
limited to any other person or entity who holds or acquires or will have
held a participation or other full or partial interest in the Loan or the
Property, whether during the term of the loan or as a part of or following
a foreclosure of the Loan and including, but not limited to, any successors
by merger, consolidation or acquisition of all or a substantial portion of
Lender's assets and business).
Section 13.2 MORTGAGE AND/OR INTANGIBLE TAX. Borrower shall,
as its sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all Losses
imposed upon or incurred by or asserted against any Indemnified Parties and
directly or indirectly arising out of or in any way relating to any tax on
the making and/or recording of this Security Instrument, the Note or any of
the Other Security Documents.
Section 13.3 ERISA INDEMNIFICATION. Borrower shall, at its
sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all Losses
(including, without limitation, reasonable attorneys' fees and costs
incurred in the investigation, defense, and settlement of Losses incurred
in correcting any prohibited transaction or in the sale of a prohibited
loan, and in obtaining any individual prohibited transaction exemption
under ERISA that may be required, in Lender's sole discretion) that Lender
may incur, directly or indirectly, as a result of a default by Borrower
under Sections 4.2 or 5.9 or Subsection 4.3(p).
Section 13.4 ENVIRONMENTAL INDEMNIFICATION. Borrower shall,
at its sole cost and expense, protect, defend, indemnify, release and hold
harmless the Indemnified Parties from and against any and all Losses and
actual out-of-pocket costs of Remediation (whether or not performed
voluntarily) imposed upon or incurred by or asserted against any
Indemnified Parties, and directly arising out of any one or more of the
following: (a) any presence of any Hazardous Substances in, on, above, or
under the Property in violation of Environmental Laws; (b) any past,
present or threatened Release of Hazardous Substances in, on, above, under
or from the Property in violation of Environmental Law; (c) any activity by
Borrower, any person or entity affiliated with Borrower or any tenant or
other user of the Property in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence, disposition or
other Release, generation, production, manufacturing, processing, refining,
control, management, abatement, removal, handling, transfer or
transportation to or from the Property of any Hazardous Substances at any
time located in, under, on or above the Property in violation of any
Environmental Law; (d) any activity by Borrower, any person or entity
affiliated with
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Borrower or any tenant or other user of the Property in connection with any
actual or proposed Remediation of any Hazardous Substances at any time
located in, under, on or above the Property in violation of any
Environmental Law, whether or not such Remediation is voluntary or pursuant
to court or administrative order, including but not limited to any removal,
remedial or corrective action; (e) any past or present violations of any
Environmental Laws (or permits issued pursuant to any Environmental Law) in
connection with the Property or operations thereon, including but not
limited to any failure by Borrower, any person or entity affiliated with
Borrower or any tenant or other user of the Property to comply with any
order of any governmental authority in connection with any Environmental
Laws; (f) the imposition, recording or filing of any Environmental Lien
encumbering the Property; (g) any administrative processes or proceedings
or judicial proceedings in any way connected with any matter addressed in
Article 12 and this Section 13.4; (h) any past or present injury to,
destruction of or loss of natural resources in any way connected with the
Property in violation of Environmental Laws, including but not limited to
costs to investigate and assess such injury, destruction or loss; (i) any
acts of Borrower or other users of the Property in arranging for disposal
or treatment, or arranging with a transporter for transport for disposal or
treatment, of Hazardous Substances owned or possessed by such Borrower or
other users, at any facility or incineration vessel owned or operated by
another person or entity and containing such or similar Hazardous
Substances in violation of Environmental Laws; (j) any acts of Borrower or
other users of the Property, in accepting any Hazardous Substances for
transport to disposal or treatment facilities, incineration vessels or
sites selected by Borrower or such other users, from which there is a
Release, or a threatened Release of any Hazardous Substance in violation of
Environmental Laws which causes the incurrence of costs for Remediation;
(k) any personal injury, wrongful death, or property damage arising under
any statutory or common law or tort law theory, including but not limited
to damages assessed for the maintenance of a private or public nuisance or
for the conducting of an abnormally dangerous activity on or near the
Property relating to Hazardous Substances in violation of any Environmental
Law at the Property; and (l) any misrepresentation or inaccuracy in any
representation or warranty or material breach or failure to perform any
covenants or other obligations pursuant to Article 12.
Section 13.5 DUTY TO DEFEND; ATTORNEYS' FEES AND OTHER FEES
AND EXPENSES. Upon written request by any Indemnified Party, Borrower
shall defend such Indemnified Party (if requested by any Indemnified Party,
in the name of the Indemnified Party) by attorneys and other professionals
approved by the Indemnified Parties. Notwithstanding the foregoing, any
Indemnified Parties may, in their sole and absolute discretion, engage
their own attorneys and other professionals to defend or assist them, and,
at the option of Indemnified Parties, their attorneys, together with the
attorneys engaged by Borrower, shall control the resolution of claim or
proceeding. Upon demand, Borrower shall pay or, in the sole and absolute
discretion of the Indemnified Parties, reimburse, the Indemnified Parties
for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals
in connection therewith.
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ARTICLE 14 - WAIVERS
Section 14.1 WAIVER OF COUNTERCLAIM. Borrower hereby waives
the right to assert a counterclaim, other than a mandatory or compulsory
counterclaim, in any action or proceeding brought against it by Lender
arising out of or in any way connected with this Security Instrument, the
Note, any of the Other Security Documents, or the Obligations.
Section 14.2 MARSHALLING AND OTHER MATTERS. Borrower 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 Property or any part thereof or any interest therein.
Further, Borrower hereby expressly waives any and all rights of redemption
from sale under any order or decree of foreclosure of this Security
Instrument on behalf of Borrower, and on behalf of each and every person
acquiring any interest in or title to the Property subsequent to the date
of this Security Instrument and on behalf of all persons to the extent
permitted by applicable law.
Section 14.3 WAIVER OF NOTICE. Borrower shall not be entitled
to any notices of any nature whatsoever from Lender or Trustee except with
respect to matters for which this Security Instrument specifically and
expressly provides for the giving of notice by Lender or Trustee to
Borrower and except with respect to matters for which Lender or Trustee is
required by applicable law to give notice, and Borrower hereby expressly
waives the right to receive any notice from Lender or Trustee with respect
to any matter for which this Security Instrument does not specifically and
expressly provide for the giving of notice by Lender or Trustee to
Borrower.
Section 14.4 WAIVER OF STATUTE OF LIMITATIONS. Borrower
hereby expressly waives and releases to the fullest extent permitted by
law, the pleading of any statute of limitations as a defense to payment of
the Debt or performance of its Other Obligations.
Section 14.5 SOLE DISCRETION OF LENDER. Wherever pursuant to
this Security Instrument (a) Lender exercises any right given to it to
approve or disapprove, (b) any arrangement or term is to be satisfactory to
Lender, or (c) any other decision or determination is to be made by Lender,
the decision of Lender to approve or disapprove, all decisions that
arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the sole and
absolute discretion of Lender and shall be final and conclusive, except as
may be otherwise expressly and specifically provided herein.
Section 14.6 SURVIVAL. The indemnifications made pursuant to
Subsections 13.3 and 13.4 and the representations and warranties,
covenants, and other obligations arising under Article 12, shall continue
indefinitely in full force and effect and shall survive and shall in no way
be impaired by: any satisfaction or other termination of this Security
Instrument, any assignment or other transfer of all or any portion of this
Security Instrument or Lender's interest in the Property (but, in such
case, shall benefit both Indemnified Parties and any assignee or
transferee), any exercise of Lender's rights and remedies pursuant hereto
including but not limited to foreclosure or acceptance of a deed in lieu of
foreclosure, any exercise of any rights and remedies pursuant to the Note
or any of the Other Security Documents, any transfer of all or any portion
of the Property (whether by Borrower or by Lender following foreclosure or
acceptance of a deed in lieu of foreclosure or at any other time), any
amendment to this Security
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Instrument, the Note or the Other Security Documents, and any act or
omission that might otherwise be construed as a release or discharge of
Borrower from the obligations pursuant hereto. Notwithstanding anything to
the contrary in this Section 14.6 the obligations, the covenants and the
indemnities contained in Article 12 and Sections 13.3 and 13.4 shall
survive the satisfaction or termination of the Note, the Security
Instrument and any Other Security Documents or the transfer of the Property
for a period of two (2) years following the date of such satisfaction or
termination of the Note, this Security Instrument or the Other Security
Documents or the transfer of the Property in accordance with this Security
Instrument. Notwithstanding the preceding sentence, the indemnities set
forth in Section 13.4 shall not apply to those obligations and liabilities
that Borrower can prove from Hazardous Substances that (i) were not present
on the Property prior to (A) the date Lender or its nominee acquired title
to the Property, whether by foreclosure, exercise of power of sale,
acceptance of a deed-in-lieu of foreclosure or otherwise, (B) the date that
Borrower sold or otherwise transferred the Property with Lender's consent
or (C) The date that Borrower repaid the Loan and (ii) were not the result
of any act or negligence of Borrower or Borrower's affiliates or agents.
Section 14.7 WAIVER OF TRIAL BY JURY. BORROWER HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE,
RELATING DIRECTLY OR INDIRECTLY TO THE LOAN EVIDENCED BY THE NOTE, THE
APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE NOTE, THIS SECURITY
INSTRUMENT OR THE OTHER SECURITY DOCUMENTS OR ANY ACTS OR OMISSIONS OF
LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION
THEREWITH.
ARTICLE 15 - EXCULPATION
Section 15.1 EXCULPATION. Subject to Sections 11.10, 15.2,
15.3, 15.4 and 15.5 hereof, notwithstanding anything to the contrary
contained in this Security Instrument, the Note or the Other Security
Documents, and in addition to, and not in limitation of, any limitation on
liability provided by law or by any contract, agreement, instrument or
document, the remedies of Lender, for default or breach under the Note, the
Security Instrument, the Environmental Indemnity or any Other Security
Documents, shall be limited to its rights against the Property or other
collateral subject thereto; without limitation on the generality of the
foregoing, and notwithstanding anything to the contrary contained in the
Note, this Security Instrument, the Environmental Indemnity Agreement or
any of the Other Security Documents, Borrower shall not be personally
liable, directly or indirectly, for the payment of the indebtedness or any
other liability evidenced by or created or arising under or in connection
with the Note, this Security Instrument, the Environmental Indemnity
Agreement or any of the Other Security Documents, or for the performance of
any of the obligations under the Note, this Security Instrument, the
Environmental Indemnity Agreement or the Other Security Documents, and any
judgment or decree in any action brought to enforce the obligation of
Borrower to pay such indebtedness or to enforce any other obligations or
liabilities shall be enforceable against Borrower only to the extent of its
interest in the Property and any such judgment or decree shall not be
subject to execution upon or be a lien upon the assets of Borrower other
than its interest in such Property and Lender shall not seek any personal
or deficiency judgment against
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Borrower, and Lender and each of its successors and assigns hereby waives
any such liability. Notwithstanding anything in this Security Instrument,
the Note, the Environmental Indemnity Agreement or the Other Security
Documents to the contrary, no present or future Principal in Borrower (as
defined in Section 15.3 below) shall be liable, directly or indirectly,
under or in connection with this Security Instrument, the Note, the
Environmental Indemnity Agreement or any of the Other Security Documents,
or any amendments or modifications to any of the foregoing made at any time
or times, heretofore or hereafter (and Lender and its successors and
assigns shall have no recourse against any property of any such Principal
in Borrower); and Lender and each of its successors and assigns hereby
waives any such liability. Any obligation of any Principal in Borrower to
contribute, lend or otherwise make any payment to Borrower (whether by
reason of a negative capital account or otherwise) shall not be considered
an asset of Borrower.
Section 15.2 RESERVATION OF CERTAIN RIGHTS. The provisions of
Section 15.1 shall not (a) constitute a waiver, release or impairment of
any obligation of Borrower evidenced or secured by the Note, the Other
Security Documents or this Security Instrument; (b) impair the right of
Lender to name Borrower as a party defendant in any action or suit for
judicial foreclosure and sale under this Security Instrument; (c) impair
the rights of Trustee and Lender from exercising their right to sell the
Property pursuant to the power of sale granted hereto; (d) affect the
validity or enforceability against the Borrower (subject to this Article
15) of any indemnity made in connection with the Note, this Security
Instrument, or the Other Security Documents; (d) impair the right of Lender
to obtain the appointment of a receiver; (e) impair the enforcement against
the Borrower (subject to this Article 15) of the Assignment of Leases and
Rents executed in connection herewith; or (f) impair the right of Lender to
enforce (subject to this Article 15 hereof) the provisions of Sections
11.10, 13.2, 13.3 and 13.4 of this Security Instrument.
Section 15.3 EXCEPTIONS TO EXCULPATION. Notwithstanding the
provisions of this Article to the contrary, Borrower, but not any Principal
in Borrower, shall be personally liable to Lender for the Losses it incurs
to the extent of both the Property encumbered by this Security Instrument
and any other assets of Borrower, but not any assets of any Principal in
Borrower, due to: (i) fraud or intentional misrepresentation by or on
behalf of Borrower in connection with the execution and the delivery of the
Note, this Security Instrument or the Other Security Documents, in each
case to the extent of the actual out-of-pocket Loss to Lender caused
thereby; (ii) Borrower's misapplication or misappropriation of Rents
received by Borrower after the occurrence of an Event of Default, to the
extent of the amount of Rents misapplied or misappropriated by Borrower and
not applied to the expenses of the Property; (iii) Borrower's
misappropriation of tenant security deposits or Rents collected in advance,
to the extent of the amount so misappropriated by Borrower and, with
respect to the Rents, not applied to expenses of the Property; (iv)
Borrower's misapplication or the misappropriation of insurance proceeds or
condemnation awards, to the extent of the proceeds misapplied or
misappropriated; (v) any act of actual waste or arson by Borrower, any
principal, affiliate, member of general partner thereof to the extent of
the actual out-of-pocket Loss incurred by Lender to third parties thereby;
or (vi) Borrower's failure to comply with the provisions of Sections 4.2,
7.1, 12.1 and 12.2 of this Security Instrument in each case, to the extent
of the actual out-of-pocket Loss incurred by Lender to third parties
thereby. The term "Principal in Borrower" as used in this Security
Instrument shall mean (1) any constituent partner or member in or of
Borrower, (2) any
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employee or agent of Borrower, and (3) any shareholder, officer, director,
partner, limited partner, member, manager, trustee, beneficiary, employee
or agent of any corporation, partnership, limited liability company, trust
or other entity that has any direct or indirect interest in Borrower or in
any partner or member of Borrower.
Section 15.4 RECOURSE. Notwithstanding the foregoing, the
agreement of Lender not to pursue recourse liability as set forth in
Section 15.1 above SHALL BECOME NULL AND VOID as to Borrower, but not any
Principal in Borrower, and shall be of no further force and effect in the
event of Borrower's default under Section 4.3 or Sections 8.1, 8.2, 8.3 or
8.4 or if the Property or any part thereof shall become an asset in (i) a
voluntary bankruptcy or insolvency proceeding, or (ii) an involuntary
bankruptcy or insolvency proceeding which is not dismissed within one
hundred twenty (120) days of filing.
Section 15.5 BANKRUPTCY CLAIMS. Nothing herein shall be deemed
to be a waiver of any right which Lender may have under Sections 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy Code to file
a claim for the full amount of the Debt secured by this Security Instrument
or to require that all collateral shall continue to secure all of the Debt
owing to Lender in accordance with the Note, this Security Instrument and
the Other Security Documents.
ARTICLE 16 - NOTICES
Section 16.1 NOTICES. All notices or other written
communications hereunder shall be deemed to have been properly given (i)
upon delivery, if delivered in person or by facsimile transmission with
receipt acknowledged by the recipient thereof and confirmed by telephone by
sender, (ii) upon receipt after having been deposited for overnight
delivery with any reputable overnight courier service, or (iii) three (3)
Business Days after having been deposited in any post office or mail
depository regularly maintained by the U.S. Postal Service and sent by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
If to Borrower: North Hills Mall Associates
c/o JMB Income Properties, Ltd.-X
900 Michigan Avenue, Suite 900
Chicago, Illinois 60611
Attention: Stephen Lovelette
Facsimile No.: (312) 915-2310
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, California 90667
Attention: Real Estate Notices (SCS)
Facsimile No.: (310) 201-8922
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If to Lender: Chemical Bank
c/o Chemical Commercial Mortgage Banking Corp.
Servicing Department
380 Madison Avenue
11th Floor
New York, New York 10017
Attention: Janice Smith
Facsimile No.: (212) 622-3553
and
Chemical Bank
Legal Department
270 Park Avenue
40th Floor
New York, New York 10017
Attention: Ronald A. Wilcox, Esq.
Facsimile No.: (212) 270-7473
With a copy to: Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Attention: Joseph Philip Forte, Esq.
Facsimile No.: (212) 912-7751
If to Trustee: Mr. Glendon W. Rose
c/o Commonwealth Land Title Company
902 Fort Worth Club Tower
777 Taylor Street
Fort Worth, Texas 76102
Facsimile: (813) 335-9719
or addressed as such party may from time to time designate by written
notice to the other parties.
Either party by notice to the other may designate additional or
different addresses for subsequent notices or communications.
For purposes of this Subsection, "Business Day" shall mean a
day on which commercial banks are not authorized or required by law to
close in New York, New York.
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ARTICLE 17 - SERVICE OF PROCESS
Section 17.1 CONSENT TO SERVICE. (a) Borrower will maintain a
place of business or an agent for service of process in New York, New York
and give prompt notice to Lender of the address of such place of business
and of the name and address of any new agent appointed by it, as
appropriate. Borrower further agrees that the failure of its agent for
service of process to give it notice of any service of process will not
impair or affect the validity of such service or of any judgment based
thereon. If, despite the foregoing, there is for any reason no agent for
service of process of Borrower available to be served, and if it at that
time has no place of business in New York, New York, then Borrower
irrevocably consents to service of process by registered or certified mail,
postage prepaid, to it as its address given in or pursuant to the first
paragraph hereof.
(b) Borrower initially and irrevocably designates CT
Corporation System, with offices on the date hereof at 1633 Broadway, New
York, New York 10019, to receive for and on behalf of Borrower service of
process in New York, New York with respect to this Security Instrument.
Section 17.2 SUBMISSION TO JURISDICTION. With respect to any
claim or action arising hereunder or under the Note or the Other Security
Documents, Borrower (a) irrevocably submits to the nonexclusive
jurisdiction of the courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York, New York,
and appellate courts from any thereof, and (b) irrevocably waives any
objection which it may have at any time to the laying on venue of any suit,
action or proceeding arising out of or relating to this Security Instrument
brought in any such court, irrevocably waives any claim that any such suit,
action or proceeding brought in any such court has been brought in an
inconvenient forum.
Section 17.3 JURISDICTION NOT EXCLUSIVE. Nothing in this
Security Instrument will be deemed to preclude Lender from bringing an
action or proceeding with respect hereto in any other jurisdiction.
ARTICLE 18 - APPLICABLE LAW
Section 18.1 CHOICE OF LAW. THIS SECURITY INSTRUMENT 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 SATE OF NEW YORK, PROVIDED
HOWEVER, THAT WITH RESPECT TO THE CREATION, PERFECTION, PRIORITY AND
ENFORCEMENT OF THE LIEN OF THIS SECURITY INSTRUMENT, AND THE DETERMINATION
OF DEFICIENCY JUDGMENTS, THE LAWS OF THE STATE WHERE THE PROPERTY IS
LOCATED SHALL APPLY.
Section 18.2 USUARY LAWS. This Security Instrument and the
Note are subject to the express condition that at no time shall Borrower 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
- 52 -
liability as a result of being in excess of the maximum interest rate which
Borrower is permitted by applicable law to contract or agree to pay. If by
the terms of this Security Instrument or the Note, Borrower is an 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 Security Instrument and
the Note 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. All sums paid or agreed to be paid to Lender for the use,
forbearance, or detention of the Debt, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread throughout
the full stated term of the Note until payment in full so that the rate or
amount of interest on account of the Debt does not exceed the maximum
lawful rate of interest from time to time in effect and applicable to the
Debt for so long as the Debt is outstanding.
Section 18.3 PROVISIONS SUBJECT TO APPLICABLE LAW. All
rights, powers and remedies provided in this Security Instrument may be
exercised only to the extent that the exercise thereof does not violate any
applicable provisions of law and are intended to be limited to the extent
necessary so that they will not render this Security Instrument invalid,
unenforceable or not entitled to be recorded, registered or filed under the
provisions of any applicable law. If any term of this Security Instrument
or any application thereof shall be invalid or unenforceable,the remainder
of this Security Instrument and any other application of the term shall not
be affected thereby.
Article 19 - SECONDARY MARKET
Section 19.1 TRANSFER OF LOAN. Lender may, at any time,
sell, transfer or assign the Note, this Security Instrument and the Other
Security Documents, and any or all servicing rights with respect thereto,
or grant participations therein or issue mortgage pass-through certificates
or other securities evidencing a beneficial interest in a rated or unrated
public offering or private placement (the "Securities"). Lender may
forward to each purchaser, transferee, assignee, servicer, participant, or
investor in such Securities (collectively, the "Investor") or any Rating
Agency rating such Securities and each prospective Investor, all documents
and information which Lender now has or may hereafter acquire relating to
the Debt and to Borrower and the Property, whether furnished by Borrower,
and Indemnitor(s) or otherwise, as Lender determines necessary or
desirable. Borrower agrees to cooperate with Lender in connection with any
transfer made or any Securities created pursuant to this Section,
including, without limitation, the delivery of an estoppel certificate
required in accordance with Subsection 7.4(c) hereof and such other
documents as are required under this Security Instrument. Borrower shall
also furnish and Borrower and any Indemnitor consent to Lender furnishing
to such Investors or such prospective Investors or such Rating Agency any
and all information concerning the Property, the Leases, the financial
condition of Borrower and any Indemnitor as may be requested by Lender, any
Investor, any prospective Investor or any Rating Agency in connection with
any sale, transfer or participation interest (to the extent Borrower and
Indemnitor furnished such documentation to Lender in connection with the
Loan).
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ARTICLE 20 - COSTS
Section 20.1 PERFORMANCE AT BORROWER'S EXPENSE. Borrower
acknowledges and confirms that Lender shall impose certain reasonable
administrative processing and/or commitment fees in connection with (a) the
extension, renewal, modification, amendment and termination of the Loan,
(b) the release or substitution of collateral therefor, (c) obtaining
certain consents, waivers and approvals with respect to the Property, or
(d) the review of any Lease or proposed Lease or the preparation or review
of any subordination, non-disturbance agreement (the occurrence of any of
the above shall be called an "Event"). Borrower further acknowledges and
confirms that is shall be responsible for the payment of all costs of
reappraisal of the Property or any part thereof, if required by any
governmental or quasi-governmental authority. Borrower hereby acknowledges
and agrees to pay, immediately, with or without demand, all such reasonable
fees (as the same may be increased or decreased from time to time), and any
additional fees of a similar type or nature which may be imposed by Lender
from time to time,upon the occurrence of any Event or otherwise. Wherever
it is provided for herein that Borrower pay any costs and expenses, such
costs and expenses shall include, but not be limited to, all reasonable
legal fees and disbursements of Lender, whether with respect to retained
firms or the reimbursement for the expenses of in-house staff.
Section 20.2 ATTORNEY'S FEES FOR ENFORCEMENT. (a)
Borrower shall pay all reasonable legal fees incurred by Lender in
connection with (i) the preparation of the Note, this Security Instrument
and the Other Security Documents and (ii) the items set forth in Section
20.1 above, and (b) Borrower shall pay to Lender on demand any and all
reasonable expenses, including legal expenses and attorney's fees, incurred
or paid by Lender in protecting its interest in the Property or Personal
Property or in collecting any amount payable hereunder or in enforcing its
rights hereunder with respect to the Property or Personal Property, whether
or not any legal proceeding is commenced hereunder or thereunder and
whether or not any default or Event of Default shall have occurred and is
continuing, together with interest thereon at the Default Rate from the
date paid or incurred by Lender until such expenses are paid by Borrower.
Article 21- DEFINITIONS
Section 21.1 GENERAL DEFINITIONS. Unless the context
clearly indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Security Instrument may be used
interchangeably in singular or plural form and the word "Borrower" shall
mean "each Borrower and any subsequent owner or owners of the Property or
any part thereof or any interest therein," the word "Lender" shall mean
"Lender and any subsequent holder of the Note," the word "Trustee" shall
mean "Trustee and any substitute Trustee of the estates, properties,
powers, trusts and rights conferred upon Trustee pursuant to this Security
Instrument," the word "Note" shall mean "the Note and any other evidence of
indebtedness secured by this Security Instrument," the word "person" shall
include an individual, corporation, partnership, limited liability company
trust, unincorporated association, government, governmental authority, and
any other entity, the word "Property" shall include any portion of the
Property and any interest therein, and the phrases "attorneys' fees" and
"counsel fees" shall include any and all attorneys', paralegal and law
clerk fees and disbursements, including, but not limited to, fees and
disbursements at the pre-trial, trial and appellate levels incurred or paid
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by Lender in protecting its interest in the Property, the Leases and the
Rents and enforcing its rights hereunder.
Article 22 - MISCELLANEOUS PROVISIONS
Section 22.1 NO ORAL CHANGE. This Security Instrument,
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 Borrower or Lender, 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.
Section 22.2 LIABILITY. If Borrower consists of more than
one person, the obligations and liabilities of each such person hereunder
shall be joint and several. This Security Instrument shall be binding upon
and inure to the benefit of Borrower and Lender and their respective
successors and assigns forever.
Section 22.3 INAPPLICABLE PROVISIONS. If any term,
covenant or condition of the Note or this Security Instrument is held to be
invalid, illegal or unenforceable in any respect, the Note and this
Security Instrument shall be construed without such provision.
Section 22.4 HEADINGS, ETC. The headings and captions of
various Sections of this Security Instrument 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.
Section 22.5 DUPLICATE ORIGINALS; COUNTERPARTS. This
Security Instrument may be executed in any number of duplicate originals
and each duplicate original shall be deemed to be an original. This
Security Instrument may be executed in several counterparts, each of which
counterparts shall be deemed an original instrument and all of which
together shall constitute a single Security Instrument. The failure of any
party hereto to execute this Security Instrument, or any counterpart
hereof, shall not relieve the other signatories from their obligations
hereunder.
Section 22.6 NUMBER AND GENDER. 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.
Section 22.7 SUBROGATION. If any or all of the proceeds
of the Note have been used to extinguish, extend or renew any indebtedness
heretofore existing against the Property, then, to the extent of the funds
so used, Lender shall be subrogated to all of the rights, claims, liens,
titles, and interests existing against the Property heretofore held by, or
in favor of, the holder of such indebtedness and such former rights,
claims, liens, titles, and interests, if any, are not waived but rather are
continued in full force and effect in favor of Lender and are merged with
the lien and security interest created herein as cumulative security for
the repayment of the Debt, the performance and discharge of Borrower's
obligations hereunder, under the Note and the Other Security Documents and
the performance and discharge of the Other Obligations.
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Article 23 - SPECIAL TEXAS PROVISIONS
Section 23.1 In the event of any inconsistencies between the
terms and conditions of this Article 23 and the terms and conditions of
this Security Instrument, the terms and conditions of this Article 23 shall
control and be binding.
Section 23.2 The following words are hereby added after the
words "other mineral royalties and bonuses" in subparagraph (f) of Section
1.1 of Article 1 of this Security Instrument entitled "Leases and Rents":
and all rents, revenues, bonus money, royalties, rights, and
benefits accruing to Borrower under all present and future oil, gas and
mineral leases on any parts of the Land and the Improvements
Section 23.3 The following words are hereby added after the
words "Borrower in the Property" at the end of the second sentence in
Section 1.3 of Article 1 of this Security Instrument entitled "Security
Agreement":
including, without limitation, all goods, equipment,
furnishings, fixtures, furniture, chattels and personal property of
whatever nature owned by Borrower now or hereafter attached or affixed to
or used in and about the Improvements on the Land or otherwise located on
the Land, and all fixtures, accessions and appurtenances thereto, and all
renewal or replacements of or substitutions for any of the foregoing, all
building materials and equipment now or hereafter delivered to the Land and
intended to be installed therein and all security deposits and advance
rentals under lease agreements now or at any time hereafter covering or
affecting any of the Property and held by or for the benefit of Borrower,
all monetary deposits which Borrower has been required to give to any
public or private utility with respect to utility services furnished to the
Property, all funds, accounts, instruments, documents, general intangibles
(including trademarks, trade names and symbols used in connection
therewith) and notes or chattel paper arising from or by virtue of any
transactions related to the Property, all permits, licenses, franchises,
certificates and other rights privileges obtained in connection with the
Property, all oil, gas and other hydrocarbons and other minerals produced
from or allocated to the Property and all products processed or obtained
therefrom, the proceeds thereof, and all accounts and general intangibles
under which such proceeds may arise and all proceeds thereof.
This Security Instrument shall be effective as a
financing statement filed as a fixture filing with respect to
all fixtures included within the Property and is to be filed for record in
the real estate records in the Office of the County Clerk where the
Property (including said fixtures) is situated. This Security Instrument
shall also be effective as a financing statement covering minerals or the
like (including oil and gas) and accounts subject to Subsection (e) of
Section 9.103 of the Texas Business and Commerce Code, as amended, and is
to be filed for record in the real estate records of the county where the
Property is situated. The
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mailing address of Borrower and the address of Lender from
which information concerning the security interest may be obtained are set
forth above.
Section 23.4 The words "Borrower shall not" in Section 8.2 of
Article 8 of this Security Instrument entitled "No Sale/Encumbrance" are
hereby deleted and the words "it shall constitute an Event of Default if
Borrower shall" are substituted therefor.
Section 23.5 The word "nonusurious" is hereby added
immediately following the word "maximum" in Section 10.2 of Article 10 of
this Security Instrument entitled "Late Payment Charge".
Section 23.6 The following language is added immediately after
the word "AND" and before the word "SHALL" found in the third line of
Section 18.1: "EXCEPT TO THE EXTENT THAT THE APPLICABLE LAWS OF THE UNITED
STATES OF AMERICA APPLY,".
Section 23.7 POWER OF SALE. (a) Upon the occurrence of an
Event of Default, it shall thereupon be the duty of the above named
Trustee, or his successor or substitute, as hereinafter provided, to
enforce this trust at the request of any Lender (which request shall be
presumed) and to sell the Property with or without first having taken
possession of the same and in whole or in part, as the acting Trustee may
elect (all rights to a marshalling of assets of Borrower being expressly
waived hereby), to the highest bidder for cash at public auction at the
county courthouse of any County in which the Property is situated, in the
area of such courthouse designated for real property foreclosure sales in
accordance with applicable law (or in the absence of any such designation,
in the area set forth in the notice of sale hereinafter described) on the
first Tuesday of any month between the hours of 10:00 A.M. and 4:00 P.M.
(commencing no earlier than such time as may be designated in the
hereinafter described notice of sale), after giving notice of the time,
place and terms of sale and the property to be sold by (i) the acting
Trustee or any person chosen by him filing a copy of the notice thereof in
the office of the County Clerk of each County where the property are
situated and by posting or casing to be posted written or printed notice
thereof at least twenty-one (21) days preceding the date of said sale at
the County Courthouse door of each County, and (ii) the Lender or any
person chosen by it, at least twenty-one (21) days preceding the date of
said sale, serving written notice of such proposed sale by certified mail
on each debtor obligated to pay the Debt evidenced by the Note according
to the records of Lender. Service of such notice to each debtor shall be
completed upon deposit of the notice enclosed in a postpaid wrapper,
properly addressed to each debtor at the most recent address as shown by
the records of Lender, in a post office or official depository under the
care and custody of the United States Postal Service. The affidavit of any
person having knowledge of the facts to the effect that such service was
completed shall be prima facie evidence of the fact of service. After such
sale, the acting Trustee shall make due conveyance with general warranty to
the purchaser or purchasers and the Borrower binds itself, its heirs,
assigns, executors, administrators, successors and legal representatives to
warrant and forever defend the title of such purchaser or purchasers. Any
abstract of title to the Property furnished in connection with the Loan
shall be delivered and become the property of the purchaser at said sale.
-57-
(b) Upon the occurrence of an Event of Default, any
Lender shall have the right and option to proceed with foreclosure in
satisfaction of such item or items by directing the Trustee, or his
successor or substitute as hereinafter provided, to proceed as if under a
full foreclosure, conducting the sale as herein provided, and without
declaring the whole Debt due, and provided that if sale is made because of
default as hereinabove mentioned, such sale may be made subject to the
unmatured part of the Note and the Debt secured hereby, and it is agreed
that such sale, if so made, shall not in any manner affect any other
Obligations secured hereby, but as to such other Obligations this Security
Instrument and the liens created hereby shall remain in full force and
effect just as though no sale had been made under the provisions of the
Article. It is further agreed that several sales may be made hereunder
without exhausting the right of sale for any other breach of any of the
Obligations secured hereby, it being the purpose to provide for a
foreclosure and sale of the Property for any matured portion of any of the
Debt secured hereby or other items provided for herein without exhausting
the power to foreclose and to sell the Property for any other part of the
Debt secured hereby whether matured at the time or subsequently maturing.
(c) The Proceeds from any such sale shall be supplied
by the acting Trustee as follows:
FIRST: To the payment of all expenses of
advertising, selling and conveying the Property,
including a reasonable commission to the acting Trustee.
SECOND: To the payment to the Lender of all unpaid
Debt, including accrued interest to the date of sale, in
such priority and proportions as Lender in its discretion shall deem
proper.
THIRD: The balance, if any, shall be paid to
Borrower.
(d) The acting Trustee hereunder shall have the right
to sell the Property in whole or in part and in such parcels and order as
he may determine, and the right of sale hereunder shall not be exhausted by
one or more sales, but successive sales may be had until all of the
Property have been legally sold. In the event any sale hereunder is not
completed or is defective in the opinion of Lender or the holder or any
part of the Debt, such sale shall not exhaust the power of sale hereunder,
and Lender or such holder shall have the right to cause a subsequent sale
or sales to be made by the Trustee or any successor or substitute, Trustee.
Likewise, Lender may become the purchaser at any such sale if it is the
highest bidder, and shall have the right, after paying or accounting for
all costs of said sale or sales, to credit the amount of the bid upon the
amount of the Debt owing, in lieu of cash payment. The purchaser or
purchasers at foreclosure shall have the right to affirm or disaffirm any
Lease of the Property.
(e) It shall not be necessary for the acting Trustee to
have constructively in his possession any part of the real or personal
property covered by this Security Instrument, and the title and right of
possession of said property shall pass to the purchaser or purchasers at
any sale hereunder as fully as if the same had been actually present and
delivered. Likewise, on foreclosure of this Security Instrument whether by
power of sale herein contained
-58-
or otherwise, Borrower or any person claiming any part of the Property by,
through or under Borrower, shall not be entitled to a marshalling of assets
or a sale in inverse order of alienation.
(f) The recitals and statements of fact contained in
any notice or in any conveyance to the purchaser or purchasers at any sale
hereunder shall be prima facie evidence of the truth of such facts, and all
prerequisites and requirements necessary to the validity of any such sale
shall be presumed to have been performed.
(g) Any sale under the powers granted by this Security
Instrument shall be a perpetual bar against Borrower, its heirs,
successors, assigns and legal representatives.
(h) In the event of a foreclosure under the powers
granted by this Security Instrument, Borrower, and all other persons in
possession of any part of the Property shall be deemed tenants at will of
the purchaser at such foreclosure sale and shall be liable for a reasonable
rental for the use of the Property; and if any such tenants refuse to
surrender possession of the Property upon demand, the purchaser shall be
entitled to institute and maintain the statutory action of forcible entry
and detainer and procure a writ of possession thereunder, and Borrower
expressly waives all damages sustained by reason thereof.
(i) To the extent Section 51.003 of the Texas Property
Code, or any amendment thereto or judicial interpretation thereof, requires
that the "fair market value" of the Property shall be determined as of the
foreclosure date in order to enforce a deficiency against Borrower or any
other party liable for the repayment of the Debt, the term "fair market
value" shall include those matters required by law and shall also include
the additional factors as follows:
(i) The Property is to be valued "AS IS, WHERE
IS" and "WITH ALL FAULTS" and there shall be no
assumption of restoration of or refurbishment of the Property after the
date of foreclosure;
(ii) There shall be an assumption of a prompt
resale of the Property for an all cash sales price by the
purchaser at the foreclosure so that no extensive holding period should be
factored into the determination of "fair market value" of the Property;
(iii) An offset to the fair market value of
the Property, as determined hereunder, shall be made by
deducting from such value the reasonable estimated closing costs relating
to the sale of the Property including but not limited to
brokerage commissions, title policy expenses, tax prorations, escrow fees,
and other common charges which are incurred by a seller of real property
similar to the Property; and
(iv) After consideration of the factors required
by law and those required above (including the addition
of any income to be generated by the Property), an additional discount
factor shall be calculated based upon the estimated time it will take to
effectuate a sale of the Property so that
-59-
the "fair market value" as so determined is discounted to
be as of the date of the foreclosure of the Property.
Section 23.8 HOMESTEAD. The property forms no part of any
property owned, used or claimed by Borrower as a residence or business
homestead and is not exempt from forced sale under the laws of the State of
Texas. Borrower hereby disclaims and renounces each and every claim to the
Property as a homestead.
Section 23.9 FUTURE ADVANCES. This Security Instrument
shall also secure such future or additional indebtedness of Borrower to
Lender or such future or additional advances for construction,
improvements, preservation, maintenance and operation of the Property and
the security for payment of the Debt as may be made by Lender, whether such
future advances are obligatory or are to be made at Lender's option, to
Borrower, for any purpose.
Section 23.10 TRADE NAMES. Borrower does not do any
business with respect to the Property under any trade name other than North
Hills Mall Associates.
Section 23.11 The following words are hereby added to Article
13 after the words "in any way relating to any one or more of the
following" in Section 13.1; "in any way relating to anyone or more of the
following" in Section 13.4; and "by attorneys and other professionals
approved by the Indemnified Parties" in Article 13.5:
REGARDLESS OF ANY NEGLIGENCE (WHETHER SOLE, CONTRIBUTORY,
CONCURRENT, COMPARATIVE, IMPUTED OR IMPLIED) OR OTHER FAULT OF INDEMNIFIED
PARTIES EXCEPT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF INDEMNIFIED
PARTIES.
Section 23.12 LEGAL REPRESENTATION, INDEMNITIES, WAIVERS. EACH
OF THE PARTIES HERETO SPECIFICALLY ACKNOWLEDGES AND AGREES (a) THAT IT HAS
A DUTY TO READ THIS DEED OF TRUST AND THAT IT IS CHARGED WITH NOTICE AND
KNOWLEDGE OF THE TERMS HEREOF, (b) THAT IT HAS IN FACT READ THIS DEED OF
TRUST AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS DEED OF TRUST (c) THAT IS HAS BEEN
REPRESENTED BY LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS
PRECEDING ITS EXECUTION OF THIS DEED OF TRUST AND HAS RECEIVED THE ADVISE
OF SUCH COUNSEL IN CONNECTION WITH ENTERING INTO THIS DEED OF TRUST AND (d)
THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS DEED OF TRUST PROVIDE
FOR (i) CERTAIN WAIVERS AND FOR (ii) THE ASSUMPTION BY ONE PARTY OF, AND/OR
RELEASE OF THE OTHER PARTY FROM, CERTAIN LIABILITIES THAT SUCH PARTY MIGHT
OTHERWISE BE RESPONSIBLE FOR UNDER THE LAW. EACH PARTY HERETO FURTHER
AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY SUCH PROVISIONS OF THIS DEED OF TRUST ON THE
-60-
BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT
SUCH PROVISIONS ARE NOT "CONSPICUOUS."
Section 23.13 THE NOTE, THIS DEED OF TRUST AND THE OTHER
SECURITY DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN
THE LENDER AND THE OTHER RESPECTIVE PARTIES HERETO AND THERETO AND
SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR SUBSEQUENT AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
ARTICLE 24 - DEED OF TRUST PROVISIONS
Section 24.1 CONCERNING THE TRUSTEE. Trustee shall be
under no duty to take any action hereunder except as expressly required
hereunder or by law, or to perform any act which would involve Trustee in
any expense or liability or to institute or defend any suit in respect
hereof, unless properly indemnified to Trustee's reasonable satisfaction.
Trustee, by acceptance of this Security Instrument, covenants to perform
and fulfill the trusts herein created, being liable, however, only for
gross negligence or willful misconduct, and hereby waives any statutory fee
and agrees to accept reasonable compensation, in lieu thereof, for any
services rendered by Trustee in accordance with the terms hereof. Trustee
may resign at any time upon giving thirty (30) days' notice to Borrower and
to Lender. Lender may remove Trustee at any time or from time to time and
select a successor trustee. In the event of the death, removal,
resignation, refusal to act, or inability to act of Trustee, or in its sole
discretion for any reason whatsoever Lender may, without notice and without
specifying any reason therefor and without applying to any court, select
and appoint a successor trustee, by an instrument recorded wherever this
Security Instrument is recorded and all powers, rights, duties and
authority of Trustee, as aforesaid, shall thereupon become vested in such
successor. Such substitute trustee shall not be required to give bond for
the faithful performance of the duties of Trustee hereunder unless required
by Lender. The procedure provided for in this paragraph for substitution
of Trustee shall be in addition to and not in exclusion of any other
provisions for substitution, by law or otherwise.
Section 24.2 TRUSTEE'S FEES. Borrower shall pay all
reasonable costs, fees and expenses incurred by Trustee and Trustee's
agents and counsel in connection with the performance by Trustee of
Trustee's duties hereunder and all such costs, fees and expenses shall be
secured by this Security Instrument.
Section 24.3 CERTAIN RIGHTS. With the approval of Lender,
Trustee shall have the right to take any and all of the following actions:
(i) to select, employ, and advise with counsel (who may be, but need not
be, counsel for Lender) upon any matters arising hereunder, including the
preparation, execution, and interpretation of the Note, this Security
Instrument or the Other Security Documents, and shall be fully protected in
relying as to legal matters on the
-61-
advice of counsel, (ii) to execute any of the trusts and powers hereof and
to perform any duty hereunder either directly or through his/her agents or
attorneys, (iii) to select and employ, in and about the execution of
his/her duties hereunder, suitable accountants, engineers and other
experts, agents and attorneys-in-fact, either corporate or individual, not
regularly in the employ of Trustee, and Trustee shall not be answerable for
any act, default, negligence, or misconduct or any such accountant,
engineer or other expert, agent or attorney-in-fact, it selected with
reasonable area, or for any error of judgement of act done by Trustee in
good faith, or be otherwise responsible or accountable under any
circumstances whatsoever, except for Trustee's gross negligence or bad
faith, and (iv) any and all other lawful action as Lender may instruct
Trustee to take to protect or enforce Lender's rights hereunder. Trustee
shall not be personally liable in case of entry by Trustee, or anyone
entering by virtue of the powers herein granted to Trustee, upon the
Property for debts contracted for or liability or damages incurred in the
management or operation of the Property. Trustee shall have the right to
rely on any instrument, document, or signature authorizing or supporting an
action taken or proposed to be taken by Trustee hereunder, believed by
Trustee in good faith to be genuine. Trustee shall be entitled to
reimbursement for actual expenses incurred by Trustee in the performance of
Trustee's duties hereunder and to reasonable compensation for such of
Trustee's services hereunder as shall be rendered.
Section 24.4 RETENTION OF MONEY. All moneys received by
Trustee shall, until used or applied as herein provided, be held in trust
for the purposes for which they were received, but need not be segregated
in any manner from any other moneys (except to the extent required by
applicable law) and Trustee shall be under no liability for interest on nay
moneys received by Trustee hereunder.
Section 24.5 PERFECTION OF APPOINTMENT. Should any deed,
conveyance, or instrument of any nature be required from Borrower by any
Trustee or substitute trustee to more fully and certainly vest in and
confirm to the Trustee or substitute trustee such estates rights, powers,
and duties, then, upon request by the Trustee or substitute trustee, any
and all such deeds, conveyances and instruments shall be made, executed,
acknowledged, and delivered and shall be caused to be recorded and/or filed
by Borrower.
Section 24.6 SUCCESSION INSTRUMENTS. Any substitute
trustee appointed pursuant to any of the provisions hereof shall, without
any further act, deed, or conveyance, become vested with all the estates,
properties, rights, powers, and trusts of its or his/her predecessor in the
rights hereunder with like effect as if originally named as Trustees
herein; but nevertheless, upon the written request of Lender or of the
substitute trustee, the Trustee ceasing to act shall execute and deliver
any instrument transferring to such substitute trustee, upon the trusts
herein expressed, all the estates, properties, rights, powers, and trusts
of the Trustee so ceasing to act, and shall duly assign, transfer and
deliver any of the property and moneys held by such Trustee to the
substitute trustee so appointed in the Trustee's place.
[NO FURTHER TEXT ON THIS PAGE]
-62-
IN WITNESS WHEREOF, THIS SECURITY INSTRUMENT has been executed by
Borrower the day and year first above written:
BORROWER:
NORTH HILLS MALL ASSOCIATES, an
Illinois general partnership
By: JMB REALTY CORPORATION, a
Delaware corporation, its
general partner
By: ELIZABETH H. KOGEN
Name: Elizabeth H. Kogen
Title: Vice President
-63-
THE STATE OF NEW YORK )
)
COUNTY OF NEW YORK )
This instrument was acknowledged before me on November 30,
1995, by Elizabeth Kogen, the Vice President of JMB Realty Corporation, a
Delaware corporation, a general partner of North Hills Mall Associates, an
Illinois general partnership, on behalf of said general partnership.
DAPHNE H. HARONSON
Notary Public in and
for the State of New York
My Commission expires:
- ------------------------------ -----------------------------------
Print Name of Notary
-64-
EXHIBIT A
(Description of Land)
ALL of that certain lot, piece or parcel of land, with the
buildings and improvements thereon, situate, lying and being.
-65-
SCHEDULE I
[None]
-66-
LIST OF SUBSIDIARIES
The Partnership is a general partner in JMB-40 Broad
StreetAssociates,an Illinois general partnership which holds title to the
40 Broad Street Building. The Partnership is a general partner in
RoyalExecutive Park-I, a New York general partnership which holds title to
the Royal Executive Park Office Complex. Reference is made to Note 3 for
asummary description of the terms of such partnership agreements.
ThePartnership's interest in the foregoing joint venture partnerships, and
the results of their operations are included in the consolidated
financialstatements of the Partnership filed with this annual report.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of
JMBRealty Corporation, the managing general partner of JMB INCOME
PROPERTIES, LTD. - X, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, and any and all
amendments thereto, hereby ratifying and confirming all that said
attorneysand agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power
ofAttorney the 5th day of February, 1996.
H. RIGEL BARBER
- -----------------------
H. Rigel Barber Chief Executive Officer
GLENN E. EMIG
- -----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of
authorityto sign, in the name and on behalf of the above named officers, a
Report on Form 10-K of said partnership for the fiscal year ended December
31, 1995, and any and all amendments thereto, the 5th day of February,
1996.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers of
JMBRealty Corporation, the managing general partner of JMB INCOME
PROPERTIES, LTD. - X, do hereby nominate, constitute and appoint GARY
NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officers a Report on Form 10-K of said
partnership for the fiscal year ended December 31, 1995, and any and all
amendments thereto, hereby ratifying and confirming all that said
attorneysand agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power
ofAttorney the 5th day of February, 1996.
NEIL G. BLUHM
- ----------------------- President and Director
Neil G. Bluhm
JUDD D. MALKIN
- ----------------------- Chairman and Chief Financial Officer
Judd D. Malkin
A. LEE SACKS
- ----------------------- Director of General Partner
A. Lee Sacks
STUART C. NATHAN
- ----------------------- Executive Vice President
Stuart C. Nathan Director of General Partner
A. Lee Sacks
The undersigned hereby acknowledge and accept such power of
authorityto sign, in the name and on behalf of the above named officers, a
Report on Form 10-K of said partnership for the fiscal year ended December
31, 1995, and any and all amendments thereto, the 5th day of February,
1996.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000719244
<NAME> JMB INCOME PROPERTIES, LTD. - X
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 21,431,887
<SECURITIES> 0
<RECEIVABLES> 1,287,551
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 22,719,438
<PP&E> 26,646,460
<DEPRECIATION> 7,645,144
<TOTAL-ASSETS> 56,832,712
<CURRENT-LIABILITIES> 1,816,373
<BONDS> 7,890,281
<COMMON> 0
0
0
<OTHER-SE> 47,109,558
<TOTAL-LIABILITY-AND-EQUITY> 56,832,712
<SALES> 13,190,501
<TOTAL-REVENUES> 15,186,857
<CGS> 0
<TOTAL-COSTS> 9,057,063
<OTHER-EXPENSES> 830,613
<LOSS-PROVISION> 9,300,000
<INTEREST-EXPENSE> 4,074,322
<INCOME-PRETAX> (8,075,141)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,313,908)
<DISCONTINUED> 3,832,429
<EXTRAORDINARY> 3,934,532
<CHANGES> 0
<NET-INCOME> 453,053
<EPS-PRIMARY> 4.45
<EPS-DILUTED> 4.45
</TABLE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 3, 1995
JMB INCOME PROPERTIES, LTD. - X
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 0-12140 36-3235999
- ------------------- -------------- --------------------
(State or other (Commission (I.R.S. Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
-----------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
-------------------------------------------------------------------
PASADENA TOWN SQUARE
PASADENA, TEXAS
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. JMB Income Properties, Ltd.
- - X (the "Partnership") was the owner of Pasadena Town Square (the
"Property") located in Pasadena, Texas. The non-recourse first mortgage
secured by the property matured in January, 1995. The Partnership
continued to remit debt service payments to the lender based on the cash
generated by the Property while negotiating for an extension or refinancing
of the loan. As previously reported, the lender had a receiver appointed
for the Property and had made a demand for payment of all sums owed.
Further negotiations with the lender (American General Mortgage Company)
proved futile and, effective October 3, 1995, due to the Partnership's
default in the payment of all amounts owed, the mortgage lender concluded
proceedings to realize upon its mortgage security represented by the land,
building and related improvements of the Property. The Property, a
shopping center, consists of 244,307 square feet of gross leasable area
and was approximately 67% occupied at the time of the transfer of title.
The Partnership has retained ownership of an approximately two acre
unencumbered unimproved land outparcel adjacent to the Property.
The Partnership expects to recognize a gain of approximately
$1,200,000 and $3,700,00 in 1995 for financial reporting and Federal
income tax purposes, respectively. Furthermore, pursuant to the terms of
the Partnership agreement, the gain on disposition in 1995 will be
allocated 1% to the General Partners and 99% to the Limited Partners.
There will be no distributable proceeds as a result of this transaction.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements - Not Applicable.
(b) Pro Forma Financial Information - Narrative.
As a result of the transfer of title of the Property,
after October 3, 1995 there will be no further rental
income, mortgage and other interest, depreciation and
amortization and property operating expenses recorded
in the consolidated financial statements of the Partnership
attributable to the Partnership's investment in the
Property. For the most recent fiscal year (the year
ended December 31, 1994) these amounts were approximately
$5,574,000, $1,970,000, $964,000 and $11,346,000,
respectively. For the most recent quarter (the quarter
ended June 30, 1995) these amounts were approximately
$2,497,000, $979,000, $295,000 and $1,409,000, respectively.
Also, as a result of the transfer of title of the Property,
and excluding the remaining land outparcel, there are no
further assets and liabilities attributable to the
Partnership's investment in the Property, which at
June 30, 1995 consisted of cash and other current assets of
approximately $1,013,000, land, buildings and improvements
(net of accumulated depreciation) of approximately
$13,601,000, other assets of approximately $29,000,
current liabilities (including mortgage debt and related
accrual interest) of approximately $15,315,000 and other
liabilities of approximately $4,000.
(C) Exhibits - None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - X
BY: JMB Realty Corporation
(Managing General Partner)
By: GAILEN J. HULL
Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Dated: October 18, 1995
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 30, 1995
JMB INCOME PROPERTIES, LTD. - X
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 0-12140 36-3235999
- ------------------- -------------- --------------------
(State or other) (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Organization
900 N. Michigan Avenue, Chicago, Illinois 60611-1575
-----------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code: (312) 915-1987
-------------------------------------------------------------------
ANIMAS VALLEY MALL
FARMINGTON, NEW MEXICO
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On June 30,
1995, Animas Valley Mall Associates ("Associates"), an Illinois general
partnership, sold the land, building, related improvements and personal
property of the shopping center known as Animas Valley Mall ("Animas")
located in Farmington, New Mexico. In addition, Associates sold
concurrently an unencumbered small land outparcel ("Outparcel") located
at Animas. Associates consists of JMB Income Properties, Ltd. - X (the
"Partnership"), an Illinois limited partnership, and JMB Realty
Corporation, the General Partner of the Partnership. The Purchaser of
Animas and the Outparcel, Price Development Company, a Maryland limited
partnership, is not affiliated with the Partnership or its General
Partners and the sale prices were determined by arm's-length
negotiations. Animas is a enclosed regional shopping mall containing
approximately 460,000 square feet of owned space. Department store
spaces included in the owned space above include Dillards (72,000 square
feet), Sears (66,000 square feet), J.C. Penneys (51,000 square feet) and
Bealls (32,000 square feet). Separately, Best (50,000 square feet) owns
their space at Animas. At the time of sale, Animas was
approximately 91% occupied.
The purchase price of Animas was $27,500,000 (before closing costs
and prorations) which was paid in cash at closing. Associates used a
portion of the proceeds to repay the existing first mortgage note of
$27,000,000 plus a portion of the related accrued interest. The lender
had previously agreed to allow Associates to retain a portion of the net
sale proceeds upon sale. As a result, the lender did not receive all of
the accrued interest owed to them under the mortgage note, but accepted
the $27,174,000 payment in full satisfaction of the mortgage note. The
purchase price of the Outparcel was $300,000 (before closing costs and
prorations) which was paid in cash at closing.
Pursuant to the Associates Venture Agreement, substantially all of
the proceeds will be allocable to the Partnership. The Partnership
Agreement provides that the General Partners shall receive as a
distribution from the sale of real property by the Partnership 3% of the
selling price and any deferrals of their 10% distribution of
disburseable cash from the Partnership's operations, subject to certain
limitations. Any remaining proceeds (net after expenses and retained
working capital) will be distributed 85% to the Limited Partners and 15%
to the General Partners. However, prior to any such distributions, the
Limited Partners shall receive 100% of such net sale proceeds until the
Limited Partners (i) have received cash distributions of net sale or
refinancing proceeds in an amount equal to the Limited Partners'
aggregate initial capital investment in the Partnership, and (ii) have
received cumulative cash distributions from the Partnership's operations
which, when combined with the net sale or refinancing proceeds
previously distributed, equal a 10% annual return on the Limited
Partners' average capital investment for each year (their initial
capital investment as reduced by net sale or refinancing proceeds
previously distributed) commencing with the first fiscal quarter of
1984. The Limited Partners have not yet received cash distributions of
net sale or refinancing proceeds in an amount equal to their initial
capital investment in the Partnership.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a). Financial Statements - Not Applicable.
(b). Pro Forma Financial Information - Narrative.
As a result of the sale of Animas, after June 30, 1995 there
will be no further rental income, mortgage and other interest,
depreciation and property operating expenses recorded in the
consolidated financial statements of the Partnership, attributable to
the Partnership's investment in Animas, which for the most recent fiscal
year (the year ended December 31, 1994) were approximately $5,088,000,
$2,261,000, $1,150,000 and $2,103,000 and for the most recent quarter
(the quarter ended March 31, 1995) were approximately $1,345,000,
$540,000, $287,000 and $607,000, respectively. Also, as a result of the
sale of Animas, there are no further assets and liabilities,
attributable to the Partnership's investment in Animas, which at March
31, 1995 consisted of cash and other current assets of approximately
$385,000, land, buildings and improvements (net of accumulated
depreciation) of approximately $23,876,000, other assets of
approximately $187,000, current liabilities of approximately $29,709,000
and other liabilities of approximately $2,000. Associates expects to
recognize a gain, of which all will be substantially allocated to the
Partnership, for financial reporting and federal income tax reporting
purposes in 1995.
(C). Exhibits
1. Shopping Center Purchase Agreement between
Animas Valley Mall Associates and Price Development Company Limited
Partnership dated June 27, 1995
2. Outparcel Purchase Agreement between Animas
Valley Mall Associates and Price Development Company Limited Partnership
dated June 27, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - X
BY: JMB Realty Corporation
(Managing General Partner)
By: C. SCOTT NELSON
----------------
C. Scott Nelson, Vice President
Director of Partnership
Financial Reporting
Dated: July 14, 1995
