SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Commission File
For the fiscal year ended December 31, 1995 Number 2-84760
WINTHROP GROWTH INVESTORS 1 LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Massachusetts 04-2839837
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One International Place, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of
the Act:
Units of Limited Partnership Interest
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10- K or any amendment to
this Form 10-K. [ X ]
No market exists for the limited partnership interests of the
Registrant, and, therefore, no aggregate market value can be computed.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Part of the Form 10K Document
into which incorporated Incorporated by Reference
I Prospectus of the Registrant dated May 11,
1984 as supplemented on August 21, 1984,
November 1989, August 24, 1984, November 2,
1984, (the "Prospectus")
Registrant's Current Report on Form 8-K
filed January 6, 1986
Registrant's Current Report on Form 8-K
filed March 17, 1986
III The Prospectus
<PAGE>
PART I
Item 1. Business.
Winthrop Growth Investors 1 Limited Partnership (the "Partnership" or
"Registrant") was organized under the Uniform Limited Partnership Act of the
Commonwealth of Massachusetts on June 20, 1983 for the purpose of owning and
leasing income-producing residential, com mercial and industrial properties. The
General Partners of the Partnership are Two Winthrop Properties, Inc., a
Massachusetts corporation (the "Managing General Partner"), and
Linnaeus-Lexington Associates Limited Partnership. The Managing General Partner
is wholly-owned by First Winthrop Corporation, a Delaware corporation ("First
Winthrop"), which is wholly-owned by Winthrop Financial Associates, A Limited
Partnership, a Maryland limited partnership ("WFA"). See "Change in Control."
The Partnership was initially capitalized with contributions of $1,000
from each of the General Partners and $5,000 from the Initial Limited Partner.
On June 24, 1983, the Partnership filed a Registration Statement on Form S-11
(the "Registration Statement") with the Securities and Exchange Commission (the
"Commission") with respect to the public offering of units of limited
partnership interest ("Units") in the Partnership. The Registration Statement,
covering the offering of 50,000 Units at a purchase price of $1,000 per Unit (an
aggregate of $50,000,000) was declared effective on May 11, 1984. The offering
terminated in February 1985, at which time Limited Partners had subscribed for
23,144 Units, representing capital contributions from Limited Partners of
$23,144,000. An additional five Units are held by WFC Realty Co., Inc., a
subsidiary of WFA ("WFC Realty"), such that there were 23,149 Units issued and
outstanding.
The Partnership's only business is owning and leasing income producing real
estate. The Partnership's investment objectives and policies are described at
pages 17-24 of its Prospectus dated May 11, 1984 (the "Prospectus") under the
caption "Investment Objectives and Policies," which description is attached
hereto as an exhibit and incorporated herein by this reference. The Prospectus
was filed with the Commission pursuant to Rule 424(b) on July 3, 1984.
The Partnership invested $18,176,787 of the original offering proceeds
(net of sales commissions and sales and organizational costs, but including
acquisition fees and expenses) in four properties. Two of the properties were
acquired in joint venture arrangements, one in a partnership arrangement and one
directly. Subsequent to the acquisition, the joint venture arrangements were
converted to limited partnerships.
<PAGE>
Following are historical average occupancies and rental rates for the four
properties in which the Partnership has acquired interests:
<TABLE>
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Sunflower
Average Rent $420 $401 $387 $371 $355
Average Occupancy 87.9% 91.1% 88.2% 91.9% 95.3%
Meadow Wood
Average Rent $468 $457 $448 $436 $426
Average Occupancy 89.9% 88.4% 91.8% 86.8% 92.2%
Stratford Place
Average Rent $640 $634 $620 $610 $588
Average Occupancy 95.6% 92.1% 94.5% 91.4% 95.1%
Stratford Village
Average Rent $541 $518 $477 $457 $445
Average Occupancy 89.5% 93.3% 97.5% 96.0% 94.7%
</TABLE>
Sunflower Apartments. Sunflower Apartments, is a 248 unit garden apartment
complex, located in Dallas, Texas approximately eight miles northeast of the
central business district. A description of the general character of this
property and the terms of acquisition is contained in the Supplement to the
Prospectus dated August 24, 1984, filed with the Commission pursuant to Rule
424(c) on September 7, 1984.
Sunflower is encumbered by a first mortgage securing a loan with a
principal balance, as of December 31, 1995, of $2,700,000.
On January 25, 1996, the Partnership refinanced the existing loan
encumbering Sunflower Apartments. The new loan is in the principal amount of
$2,700,000, bears interest at a rate of 7.46% per annum and matures on February
11, 2026. The monthly principal and interest payments under this loan are
$18,804.89. The mortgage can be prepaid at any time on or after 2006 upon
payment of a prepayment penalty which is reduced from 2006 to 2026.
In 1993, in connection with its ongoing evaluation, management of the
Partnership wrote down the carrying value of the property by $2,107,738 to its
estimated net realizable value (approximately $3.7 million).
During 1995, the Partnership completed $57,477 of capital improvements at
the property, consisting primarily of apartment upgrades, including replacing
appliances, carpeting and air conditioning units and property improvements
including landscaping. These improvements were funded primarily from the
Partnership's reserves. Capital improvements planned for 1996 consist of
exterior siding replacement and painting as well as carpet and appliance
replacements. These improvements are expected to cost approximately $263,000,
which amount approximately half will be funded from operating cash flow and half
from Partnership reserves.
The Managing General Partner believes that the Dallas residential rental
market where Sunflower is located has been competitive but is stable.
Meadow Wood Apartments. Meadow Wood Apartments is a 356 unit garden
apartment complex located in Jacksonville, Florida. A description of the general
character of this property and the terms of acquisition is contained in the
Supplement to the Prospectus dated November 2, 1984, filed with the Commission
pursuant to Rule 424(c) on November 6, 1984.
In 1995, the Partnership expended $289,555 on capital improvements,
consisting primarily of exterior siding replacement and painting and apartment
upgrades including carpet and appliance replacements . These improvements were
funded from a combination of Partnership reserves and cash flow. Capital
improvements costing approximately $120,000 are planned for 1996, including
furniture and office equipment, landscaping and asphalt repairs. These
improvements will be funded from cash flow and, if necessary, from Partnership
reserves.
The Jacksonville rental market became extremely competitive in 1991, and
was further impacted by the closing of the Jacksonville Naval Shipyard in 1992.
The market stabilized somewhat in 1993 but became increasingly competitive in
1994 and continued to remain competitive in 1995.
Stratford Place Apartments. Stratford Place Apartments is a 350 unit
garden apartment complex located in Gaithersburg, Maryland. A description of the
general character of this property and the terms of acquisition (including the
terms of the partnership arrangement with WFA and WFC Realty through which the
Partnership invested in Stratford Place Apartments) is contained in the
Partnership's Current Report on Form 8-K filed with the Commission on March 17,
1986, which description is attached hereto as an exhibit and incorporated herein
by this reference.
Stratford Place is encumbered by a first mortgage securing a loan with a
principal balance, as of December 31, 1995, of $10,027,183. This loan was due to
mature on February 1, 1996. The Partnership, however, was able to extend the
maturity date of the loan until May 1, 1996 for a fee of $10,000. It is
anticipated that the loan will be able to be refinanced prior to maturity. If
the loan is not refinanced or extended, the Partnership will be forced to sell
this property or risk losing it through foreclosure
In 1995, the Partnership spent $74,798 on capital improvements, which
included primarily apartment carpet and air conditioning replacements. These
improvements were funded from cash flow and Partnership reserves. Anticipated
capital improvements of approximately $133,000 for 1996 include exterior siding
repair and painting, apartment carpet replacement and mechanical systems repairs
and replacements. These capital improvements will be funded from operating cash
flow and, if necessary, Partnership reserves.
<PAGE>
In the opinion of the Managing General Partner, the Gaithersburg, Maryland
rental apartment market is currently stable.
Stratford Village. Stratford Village Apartments, is a 224 unit garden
apartment complex is located in Montgomery, Alabama. A description of the
general character of this property and the terms of acquisition is contained in
the Partnership's Current Report on Form 8-K filed with the Commission on
January 6, 1986, which description is attached hereto as an exhibit and
incorporated herein by this reference.
Stratford Village is encumbered by a first mortgage securing a loan with a
principal balance, as of December 31, 1995, of $5,295,397. This loan bears
interest at an annual rate of 7.72% and matures on November 1, 2024. Monthly
debt service payments are $38,194.
In 1995, the Partnership spent $118,342 on capital improvements, primarily
on roof and other structural repairs, landscaping, asphalt repairs and apartment
carpet replacement. These improvements were funded from cash flow. The
Partnership has budgeted capital improvements of approximately $120,000 for
1996, including apartment carpet replacement and asphalt repairs.
The Managing General Partner believes that the Montgomery, Alabama rental
apartment market is currently strong.
The Partnership maintains property and liability insurance on its
properties and believes such coverage to be adequate.
For the year ended December 31, 1995, rental revenues from Sunflower
Apartments, Meadow Wood Apartments, Stratford Place Apartments and Stratford
Village 17%, 27%, 37%, and 19%, respectively, of the total rental revenues of
the Partnership.
Employees
The Partnership does not have any employees. Services are performed for
the Partnership by the Managing General Partner and agents retained by the
Managing General Partner, including Winthrop Management, an affiliate of the
Managing General Partner.
Partnership Agreement Amendment
In August 1995, Section 10.1 of the Partnership's partnership agreement
was amended to clarify and remove any ambiguities pertaining to the requirements
for calling and voting at a meeting of Limited Partners, or taking action by
written consent of partners in lieu thereof. Such requirements include, among
other matters, that any action by written consent may be initiated only by the
Managing General Partner or by one or more or Limited Partners holding not less
than 10% of the outstanding Units.
<PAGE>
Change in Control
On December 22, 1994, Arthur J. Halleran, Jr., the sole general partner
of Linnaeus Associates Limited Partnership ("Linnaeus"), the sole general
partner of WFA, pursuant to an Investment Agreement entered into among Nomura
Asset Capital Corporation ("NACC"), Mr. Halleran and certain other individuals
who comprised the senior management of WFA, transferred the general partnership
interest in Linnaeus to W.L. Realty, L.P. ("W.L. Realty"). W.L. Realty is a
Delaware limited partnership, the general partner of which was, until July 18,
1995, A.I. Realty Company, LLC ("Realtyco"), an entity owned by certain
employees of NACC.
On July 18, 1995 Londonderry Acquisition II Limited Partnership (Londonderry
II"), a Delaware limited partnership, and affiliate of Apollo Real Estate
Advisors, L.P. ("Apollo"), acquired, among other things, Realtyco's general
partner interest in W.L. Realty and a sixty four percent (64%) limited
partnership interest in W.L. Realty, and WFA acquired the general partnership
interest in the Associate General Partner.
As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
and which in turn is the sole general partner of WFA. As a result of the
foregoing, effective July 18, 1995, Londonderry II, an affiliate of Apollo,
became the controlling entity of the Managing General Partner. In connection
with the transfer of control, the officers and directors of the Managing General
Partner resigned and Londonderry II appointed new officers and directors. See
Item 10, "Directors and Executive Officers of Registrant.
Item 2. Properties. See Item 1 above.
Item 3. Legal Proceedings.
The Partnership is not a party, nor are any of its properties subject, to
any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this report.
<PAGE>
PART II
Item 5. Market Price of and Dividends on the Registrant's Common Equity and
Related Stockholder Matters.
The Registrant is a partnership and thus has no common stock. There is no
active market for the Units. Trading in the Units is sporadic and occurs solely
through private transactions.
As of December 31, 1995, there were 1,322 holders of Units holding 23,139
units. During 1994, certain Limited Partners elected to abandon their interests
in the Partnership, reducing the number of outstanding Units to 23,139.
The Partnership Agreement requires that any "Cash Available for
Distribution" (defined under the Partnership Agreement as Cash Flow less any
amounts set aside from Cash Flow for the restoration or creation of reserves) be
distributed quarterly to the Partners in specified proportions and priorities.
During the years ended December 31, 1995 and 1994, the Partnership made cash
distributions with respect to the Units to holders thereof in the aggregate
amounts of $149,941 and $199,943 respectively.
See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of the Partnership's
ability to make distributions.
<PAGE>
Item 6. Selected Financial Data.
The following represents selected financial data for Registrant for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991. The data should be
read in conjunction with the financial statements included elsewhere herein.
This data is not covered by the independent auditors' report.
<TABLE>
For the years ended or as of December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Rental income $ 6,389,445 $ 6,118,605 $ 6,206,712 $ 5,896,067 $ 5,909,583
Income from short-term investments 62,914 64,797 83,073 90,572 131,581
Other income 302,456 265,873 219,853 247,178 277,236
Total Income $ 6,754,817 $ 6,449,275 $ 6,509,638 $ 6,233,817 $ 6,318,400
Total Expenses $ 7,065,946 $ 7,223,037 $ 9,431,805 $ 7,312,562 $ 7,072,300
Net income (loss) $ (311,129) $ (773,762) $(2,922,167) $(1,078,745) $ (753,900)
Net loss per weighted average
Unit of limited partnership interest
outstanding: $ (12.10) $ (30.10) $ (113.61) $ (41.94) $ (29.31)
Total assets $26,483,003 $27,511,241 $30,361,979 $33,717,221 $35,234,914
Mortgage notes payable $20,081,080 $20,711,814 $22,599,665 $22,788,736 $22,938,375
Total cash distributions per Unit of
limited partnership interest, including
amounts distributed after year end with
respect to the year: $ 6.48 $ 8.64 $ 8.64 $ 15.12 $ 45.90
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources.
The Partnership receives rental income from its properties and is
responsible for operating expenses, administrative expenses, capital
improvements and debt service payments. The Partnership's properties are leased
to tenants pursuant to leases with original terms ranging from three to fourteen
months.
As of December 31, 1995, the Partnership's balance of cash and cash
equivalents was $907,734, including funds held at the various properties in
which the Partnership has invested, a decrease of $15,480 as compared to 1994.
The Partnership has invested, and expects to continue to invest, such amounts in
short-term money market instruments until required for Partnership purposes.
The Partnership's interest income from its short-term investments and cash
flow derived from its investments in real properties were sufficient in 1995 to
pay general and administrative expenses, and are expected to be sufficient in
future years to pay these amounts.
Each of the properties in which the Partnership has invested requires cash
to make principal and interest payments on its mortgage indebtedness, to pay
operating expenses, management fees, general and administrative expenses and to
complete capital improvements. Three of the four properties (Stratford Village
Apartments, Meadow Wood Apartments and Stratford Place Apartments) were able to
meet these obligations from their operating income in 1995. Sunflower Apartments
operated at a slight deficit, which was funded by the Partnership's reserves.
Anticipated capital improvements in 1996 will be funded from a combination of
the Partnership's reserves and property cash flow. See "Item 1, Business" for a
description of anticipated capital improvements to be made at the properties in
1996.
The Partnership has maintained its quarterly distributions at the same
level during 1993 and 1994 and all but one quarter in 1995 because it required a
significant portion of its reserves to reduce the principal balance of the
Sunflower Apartments mortgage loan.
<PAGE>
The loan encumbering Sunflower Apartments matured on January 1, 1994 at
which point a balloon payment in the approximate amount of $2,808,696 was due.
In March 1994, the Partnership used $1 million of its reserves to make a
principal payment on the loan. As a result of that payment, the lender extended
the maturity of the loan to June 30, 1994. In June 1994, the Partnership made an
additional principal payment of $500,000 to further extend the maturity date to
August 31, 1994. On September 9, 1994, the Partnership and the lender agreed to
a modification of the loan that called for fixed monthly payments of principal
and interest to increase from $29,256 to $47,893. Such payments would have
retired the remaining balance of the loan on December 1, 1996. On January 25,
1996, the Partnership successfully completed refinancing for Sunflower
Apartments with Nomura Asset Capital Corporation in the amount of $2.7 million
with an interest rate of 7.46% per annum with a maturity date of February 11,
2026. The fixed monthly payment of interest and principal of $18,805 reflects a
significant decrease from the $47,893 required by the previous financing. The
Partnership is presently pursuing refinancing on the loan encumbering Stratford
Place Apartments. Although the existing loan matured on February 1, 1996 the
Partnership paid a fee of $10,000 and arranged an extension through May 1, 1996
in which the monthly payment of principal and interest will remain $103,596. The
Partnership anticipates refinancing to be complete by May 1, 1996.
Inflation and changing economic conditions could continue, however, to
affect vacancy levels, rental payment defaults and operating expenses, and thus,
would likely affect the Partnership's revenues and net income. The ability of
these properties to improve operations will also affect the liquidity of the
Partnership. The Partnership's liquidity could be adversely affected by
unanticipated or greater than anticipated operating expenses.
Results of Operations
1995 Compared to 1994: The Partnerships total revenue increased by
approximately 4.7% in 1995 compared to 1994 as revenues increased by $305,542
which was partially offset by an increase in expenses of $25,718. Rental income
increased by 4.4% from $6,118,605 in 1994 to $6,389,441 in 1995 as higher rental
income at Sunflower, Stratford Place and Meadowwood more than offset lower
rental income at Stratford Village. Average apartment rents for the
Partnership's properties increased by approximately 2.7% from $510 to $524. The
average occupancy stayed constant at approximately 91% in both 1994 and 1995.
Occupancy improvements at Meadowwood (from 89% to 90%) and Stratford Place (92%
to 96%) were offset by decreases at Stratford Village (from 94% to 89%) and
Sunflower (from 91% to 88%). Other income also improved by approximately 14%
from $265,873 in 1994 to $302,456 in 1995 primarily as a result of an increase
in collections for such fees as application, lease termination and late charges.
The expenses of operating the Partnership's properties increased by less
than 1%, from $3,471,106 in 1994 to $3,496,819 in 1995. Increases in the general
& administrative and utility categories were offset by savings recognized in
repair & maintenance.
<PAGE>
The Partnership's expenditures for capital improvements increased by
approximately 77% from $303,764 in 1994 to $540,170 in 1995. The Partnership
recovered approximately 22%, or $118,126 of these expenditures from the
replacement reserves. This recovery represented an increase of 76% or $51,034
from 1994. The increase in capital expenditures, by property, was as follows:
Meadowwood Apartments - $153,091 for exterior painting/siding; Stratford Village
- - $28,000 for landscaping and $14,350 for gutter installation; Stratford Place -
$11,078 for hvac improvements.
1994 Compared to 1993: The Partnership's total revenue decreased by
approximately 1.0% in 1994 compared to 1993 as revenue decreased by $60,363
along with an increase in expenses of $18,057. Rental income declined by 1.4%,
from $6,206,712 in 1993 to $6,118,605 in 1994 as lower rental income at
Stratford Place and Meadow Wood more than offset higher rental income at
Sunflower and Stratford Village. While average apartment rents for the
Partnership's properties increased by approximately 3.7%, from $492 to $510,
average occupancy declined from 93% in 1993 to 91% in 1994. Interest income
declined from $83,073 to $64,797 because the Partnership used a significant
portion of its reserves to reduce the principal balance of the mortgage loan
encumbering Sunflower Apartments. Other income (including revenues from laundry,
vending, late fees and lease termination fees) increased by approximately 20.1%
from $219,853 in 1993 to $265,873 in 1994, primarily as a result of increased
lease termination fees at Stratford Place and Stratford Village.
Expenses of operating the Partnership's properties increased by less than
1%, from $3,453,049 in 1993 to $3,471,106 in 1994. Increases in payroll and
insurance costs as well as higher real estate taxes were offset by lower utility
and repair and maintenance expenses.
Other expenses of the Partnership (depreciation and amortization, interest
expense and provision for writedown of real estate) decreased significantly from
1993 to 1994, predominantly because of a $2,107,738 provision in 1993 for
investment property writedown with respect to Sunflower Apartments. Aside from
this writedown, the Partnership's other expenses decreased by approximately 1.8%
from 1993 to 1994. Interest expense on the Partnership's mortgages decreased by
approximately 5.5% from 1993 to 1994, primarily as a result of lower interest
expense on the Sunflower mortgage loan, while depreciation and amortization
expenses remained essentially flat between 1993 and 1994.
The Partnership's net loss declined from $2,922,167 in 1993 to $773,762 in
1994, primarily as a result of the 1993 investment property writedown.
The Partnership's expenditures for capital improvements increased from
$148,349 in 1993 to $303,764 in 1994. These expenditures were mainly in the
areas of structural improvements, appliances, common area improvements and
carpeting.
Item 8. Financial Statements and Supplementary Data.
CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES
INDEX
FINANCIAL STATEMENTS
Report of Independent Public Accountants
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Operations for the Years
Ended December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Partners' Capital for the Years Ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
SCHEDULE
III - Real Estate and Accumulated Depreciation as of December 31, 1995
All schedules prescribed by Regulation S-X, other than the one indicated above,
have been omitted, as the required information is inapplicable or the
information is presented in the consolidated financial statements or related
notes.
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1995 AND 1994
TOGETHER WITH AUDITORS' REPORT
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Winthrop Growth Investors I Limited Partnership:
We have audited the accompanying consolidated balance sheets of Winthrop Growth
Investors I Limited Partnership (a Massachusetts limited partnership) as of
December 31, 1995 and 1994, and the related consolidated statements of
operations, changes in partners' capital and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits. We did not audit
the financial statements of two of the subsidiaries as of and for each of two
years in the period ended December 31, 1994, which statements reflect
approximately 49% of total consolidated assets as of December 31, 1994, and 47%
of consolidated revenues in 1994 and 1993. Those statements were audited by
other auditors whose reports have been furnished to us and our opinion, insofar
as it relates to the amounts included for those entities, is based solely on the
reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Winthrop Growth Investors I Limited Partnership as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995 in conformity
with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III listed in Item 14(a)(2) is
the responsibility of Winthrop Growth Investors I Limited Partnership management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not a required part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in our
audits of the basic financial statements and, in our opinion, fairly states, in
all material respects, the financial data required to be set forth therein in
relation to the basic financial statements as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
February 22, 1996
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
1995 1994
ASSETS
<S> <C> <C>
REAL ESTATE, AT COST:
Land $ 4,015,369 $ 4,015,369
Buildings and improvements, net of accumulated depreciation of $18,354,792 and
$16,783,845, respectively 19,403,961 20,434,738
-------------- --------------
23,419,330 24,450,107
OTHER ASSETS:
Cash and cash equivalents 907,734 923,214
Escrow accounts and other receivables 831,416 816,923
Deferred costs, net of accumulated amortization of $1,026,001 and $922,723,
respectively 1,017,720 1,120,998
Other 306,803 199,999
-------------- --------------
Total assets $ 26,483,003 $ 27,511,241
============== ==============
</TABLE>
<TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<S> <C> <C>
LIABILITIES:
Mortgage notes payable $ 20,081,080 $ 20,711,814
Accounts payable 102,478 105,449
Security deposits 162,052 133,245
Accrued expenses and other liabilities 381,688 343,958
-------------- --------------
Total liabilities 20,727,298 21,294,466
-------------- --------------
PARTNERS' CAPITAL:
Limited partners-
Units of limited partnership interest, $1,000 stated value per unit-
Authorized--50,005 units
Issued and outstanding--23,139 units 6,900,386 7,330,343
General partners (1,144,681) (1,113,568)
-------------- --------------
Total partners' capital 5,755,705 6,216,775
-------------- --------------
Total liabilities and partners' capital $ 26,483,003 $ 27,511,241
============== ==============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
1995 1994 1993
<S> <C> <C> <C>
REVENUE:
Rental $ 6,389,445 $ 6,118,605 $ 6,206,712
Interest on short-term investments 62,916 64,797 83,073
Other income 302,456 265,873 219,853
--------------- --------------- ---------------
Total revenue 6,754,817 6,449,275 6,509,638
--------------- --------------- ---------------
EXPENSES:
Real estate taxes 527,805 501,783 466,822
Payroll 706,130 657,827 551,748
Utilities 629,472 591,909 630,796
Repairs and maintenance 715,258 808,596 900,742
Insurance 175,756 159,038 127,155
General and administrative 412,584 435,459 460,198
Management fees 329,814 316,494 315,588
Interest 1,894,902 2,000,474 2,116,212
Depreciation 1,570,947 1,636,723 1,631,193
Amortization 103,278 114,734 123,613
Provision for write-down of real estate - - 2,107,738
--------------- --------------- ---------------
Total expenses 7,065,946 7,223,037 9,431,805
--------------- --------------- ---------------
Net loss $ (311,129) $ (773,762) $ (2,922,167)
=============== =============== ===============
NET LOSS ALLOCATED:
General partners $ (31,113) $ (77,376) $ (292,217)
Limited partners (280,016) (696,386) (2,629,950)
--------------- --------------- ---------------
$ (311,129) $ (773,762) $ (2,922,167)
=============== =============== ===============
NET LOSS PER UNIT OF LIMITED PARTNERSHIP INTEREST $ (12.10) $ (30.10) $ (113.61)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
Units of
Limited General Limited Total Partners'
Partnership Partners' Partners' Capital
Interest Capital Capital
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1992 23,149 $ (743,975) $ 11,056,629 $ 10,312,654
Net loss - (292,217) (2,629,950) (2,922,167)
Partner distributions - - (200,007) (200,007)
------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1993 23,149 (1,036,192) 8,226,672 7,190,480
Abandonments (10) - - -
Net loss - (77,376) (696,386) (773,762)
Partner distributions - - (199,943) (199,943)
------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1994 23,139 (1,113,568) 7,330,343 6,216,775
Net loss - (31,113) (280,016) (311,129)
Partner distributions - - (149,941) (149,941)
------------- ------------- ------------- -------------
BALANCE, DECEMBER 31, 1995 23,139 $ (1,144,681) $ 6,900,386 $ 5,755,705
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (311,129) $ (773,762) $ (2,922,167)
Adjustments to reconcile net loss to net cash provided by
operating activities-
Depreciation and amortization 1,674,225 1,751,457 1,754,806
Provision for write-down of real estate - - 2,107,738
Changes in assets and liabilities-
Increase (decrease) in accounts payable, accrued expenses
and security deposits 63,566 10,818 (43,997)
Increase in escrow accounts and other assets (121,297) (56,311) (15,587)
--------------- --------------- ---------------
Net cash provided by operating activities 1,305,365 932,202 880,793
--------------- --------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (540,170) (303,764) (148,349)
--------------- --------------- ---------------
Net cash used by investing activities (540,170) (303,764) (148,349)
--------------- --------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Refinancing costs refunded, net - - 47,025
Principal payments on mortgage notes (630,734) (1,887,851) (189,071)
Partner distributions (149,941) (199,943) (200,007)
Deferred financing costs - (11,982) -
--------------- --------------- ---------------
Net cash used by financing activities (780,675) (2,099,776) (342,053)
--------------- --------------- ---------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (15,480) (1,471,338) 390,391
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 923,214 2,394,552 2,004,161
--------------- --------------- ---------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 907,734 $ 923,214 $ 2,394,552
=============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(1) ORGANIZATION
Winthrop Growth Investors I Limited Partnership (the Partnership) was
organized on June 20, 1983 under the Uniform Limited Partnership Act of
the Commonwealth of Massachusetts for the purpose of investing in
income-producing residential, commercial and industrial real properties.
The Partnership has acquired two properties through joint venture
agreements, one through a partnership agreement and one through a fee
simple interest (the Properties). All of the Properties are residential
apartment complexes. The Partnership shall continue in full force and
effect until December 31, 2003 or until dissolution, in accordance with
the terms of the partnership agreement.
(2) SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Accounting
The accompanying consolidated financial statements are prepared on
the accrual basis of accounting in accordance with generally
accepted accounting principles. Revenues primarily consist of
rents, interest on investments, and laundry/vending income. Rental
revenue is recognized under the gross rent potential method by
crediting gross rent potential at the beginning of each month and
reducing gross potential by vacancy losses and concessions at the
end of each month.
(b) Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(c) Basis of Consolidation
The accompanying financial statements of the Partnership have been
consolidated with those of the Properties. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Continued)
(2) SIGNIFICANT ACCOUNTING POLICIES (Continued)
(d) Investments in the Properties
The Partnership acquired a 99%, 99.99%, 99.98% and 100% interest
(the Controlling Interest) in four real properties, DEK Associates
(DEK), Meadow Wood Associates (Meadow Wood), Stratford Place
Investors Limited Partnership (Stratford Place) and Stratford
Village Realty Trust (Stratford Village), respectively. The
Partnership's original investment in Meadow Wood was through a
joint venture agreement in which it owned a 95% general
partnership interest. Effective December 1, 1988, the Partnership
converted the joint venture into a limited partnership in which
the Partnership is the sole general partner. Subsequently, on
November 15, 1990, the Partnership restructured Meadow Wood into a
general partnership in which the Partnership now owns a 99.99%
general partnership interest. Effective October 7, 1988, the
Partnership also converted the joint venture of DEK into a limited
partnership. The Partnership has become the sole general partner
for both partnerships and continues to receive the same allocation
of income, losses and cash distributions as prior to the
conversion. Due to cumulative minority interest losses exceeding
the minority interest capital, the Partnership recorded 100% of
the losses of all the properties in 1995 and 1994.
(e) Income Taxes
No provision has been made for federal, state or local income
taxes in the accompanying consolidated financial statements of the
Partnership. The Partners are required to report on their
individual tax returns their allocable share of income, gains,
losses, deductions and credits of the Partnership.
(f) Distributions to Partners
The Partnership's management has determined that current year cash
available for distribution and cash retained from prior years'
operations were sufficient to support a distribution to the
limited partners of $149,941, $199,943 and $200,007 in 1995, 1994
and 1993, respectively.
(g) Depreciation
For financial statement purposes, each of the Properties
depreciates the cost of its real property over 25 years and its
personal property over 5 to 10 years using the straight-line
method. For tax purposes, depreciation is computed using the
accelerated cost recovery system (ACRS) over 18 or 19 years for
real property and five years for personal property.
<PAGE>
(2) SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Deferred Costs
Costs relating to the acquisition of the Properties are
capitalized and amortized over 25 years. Costs in excess of the
Partnership's initial basis in the net assets of the Properties
are amortized over the estimated useful lives of the underlying
assets.
(i) Reclassifications
Certain prior year amounts have been reclassified to conform with
the current year's presentation.
(3) STATEMENTS OF CASH FLOWS
For the purpose of the consolidated statements of cash flows, the
Partnership considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents.
The following details supplemental cash flow information:
1995 1994 1993
Cash paid for interest $ 1,891,994 $ 1,994,040 $ 2,031,935
(4) TRANSACTIONS WITH RELATED PARTIES
Two Winthrop Properties, Inc. (Two Winthrop or the Managing General
Partner), Winthrop Securities Co., Inc. (Winthrop Securities or the
Selling Agent) and Winthrop Management are wholly owned subsidiaries of
First Winthrop Corporation which, in turn, is wholly owned by Winthrop
Financial Associates, A Limited Partnership (WFA). WFA and its affiliates
manage or advise a large number of partnerships organized to own or
operate apartment complexes, as well as other real estate investments, or
to invest in other limited partnerships that own or operate apartment
complexes or other real estate investments.
Winthrop Management is the management agent for all four properties.
Pursuant to each management agreement, the partnerships and trust pay a
5% management fee based on gross rental collections. The total management
fee paid by the Properties for the years ended December 31, 1995, 1994
and 1993 amount to $329,814, $316,494 and $315,588, respectively.
<PAGE>
(4) TRANSACTIONS WITH RELATED PARTIES (Continued)
Beginning with the quarter in which the Investment Date occurs (February
1986) and for each quarter thereafter, the general partners generally are
entitled to percentages of cash available for distribution subordinated
to a specified minimum return to the limited partners, as described in
the partnership agreement.
During the liquidation stage of the Partnership, the general partners and
their affiliates are entitled to receive certain distributions,
subordinated to a specified minimum return to the limited partners, as
described in the partnership agreement.
(5) MORTGAGE NOTES PAYABLE
The mortgage notes payable by the Properties at December 31, 1995 and
1994 are as follows:
<TABLE>
1995 1994
<S> <C> <C>
DEK
9.5% mortgage notes, beginning November 1, 1991 through August 1, 1994,
monthly payments of $29,256 were applied first to accrued interest and
then to principal; effective January 1, 1994, management renegotiated the
loan. Two principal payments totaling $1,500,000 reduced the outstanding
loan balance to $1,198,544 as of August 31, 1994; beginning September 1,
1994, the note was due in monthly payments of $47,893 for principal and
interest through the scheduled maturity on December 1, 1996. This note
was subsequently paid off with proceeds from refinancing of the mortgage
in January, 1996. See Note 9
$ 546,204 $ 1,043,092
Meadow Wood
10.00% mortgage note, payable in equal monthly installments of $36,966
for principal and interest, with a final payment of $4,071,038 due at
maturity on
December 1, 2000 4,212,296 4,233,492
Stratford Place
9.6875% wrap mortgage note, payable in monthly principal and interest
installments of $87,789 through maturity on February 1, 1996, at which
time the final principal payment of $10,023,041 was due. Subsequent to
December 31, 1995, management extended the final payment due date to May
1, 1996. See Note 9
10,027,183 10,092,324
Stratford Village
7.72% mortgage note, payable in equal monthly installments of $38,194 for
principal and interest, through maturity on November 1, 2024 5,295,397 5,342,906
--------------- ---------------
$ 20,081,080 $ 20,711,814
=============== ===============
</TABLE>
<PAGE>
(5) MORTGAGE NOTES PAYABLE (Continued)
The 9.50% mortgage note agreement between DEK and Travelers Insurance
Company (Travelers) became effective in 1988. Under the terms of the
agreement, DEK was to make a final payment of $2,808,696 on January 1,
1994. During 1994, management renegotiated the loan under the terms
specified above. In connection with its ongoing evaluation of the
property, management of the Partnership wrote down the carrying value of
the property by $2,107,738 to its estimated net realizable value
(approximately $3.7 million) at December 31, 1993. The reserve is
reflected as a component of accumulated depreciation in the accompanying
balance sheet. Subsequent to December 31, 1995, DEK refinanced the
mortgage note with Nomura Asset Capital Corporation and paid off the
existing mortgage note with Travelers.
The 9.6875 wrap note payable by Stratford Place represents two separate
but wrap-around mortgages. The first mortgage is held by GMAC Commercial
Mortgage Corporation (GMAC) with an original principal amount of
$9,500,000. This loan bears interest at an annual rate of 10.625% at
December 31, 1995. The second mortgage, which wraps around the first
mortgage, was taken out to provide additional financing to Stratford
Place. The Klingbeil Company (Klingbeil) holds the second mortgage with
an original principal amount of $10,400,000. The second mortgage had an
annual interest rate of 9.6875% at December 31, 1995 and was payable in
monthly installments of principal and interest through February 1, 1996.
In January 1996, Stratford Place obtained a 90-day extension from GMAC.
On February 2, 1996, it paid off the wrap-around mortgage to Klingbeil in
the amount of $900,000, leaving GMAC as the sole holder of the mortgage.
See Note 9.
The mortgage notes payable are collateralized by the Properties' land
and buildings.
As of December 31, 1995, anticipated future principal payments are as
follows:
1996 $ 10,648,111
1997 81,281
1998 88,422
1999 96,202
2000 4,172,674
Thereafter 4,994,390
---------------
Total $ 20,081,080
===============
Based on the borrowing rates currently available to the Partnership for
mortgage notes with similar terms, the fair value of the Partnership's
aggregate mortgage note payable at December 31, 1995 is approximately
$20,653,000.
<PAGE>
(6) TAX LOSS
The Partnership's tax loss differs from that for financial reporting
purposes primarily due to the differences in the recognition of
depreciation and the amortization of deferred costs. A reconciliation of
the tax loss for 1995 and 1994 is as follows:
<TABLE>
1995 1994
<S> <C> <C>
Net loss for financial reporting purposes $ (311,129) $ (773,762)
Timing difference of recognition of rental income for tax and financial
reporting purposes 15,046 (7,412)
Depreciation (38,972) 68,094
Amortization of deferred costs (1,948) 8,660
-------------- --------------
Tax loss $ (337,003) $ (704,420)
============== ==============
</TABLE>
(7) COMMITMENTS AND CONTINGENCIES
As a general partner of the Properties, the Partnership, along with other
general partners of the Properties, is liable for all debts, liabilities
and other obligations of the Properties to the extent that they are not
paid by the respective Properties.
There is no leasing other than to individual tenants of residential
complexes. The leases normally are for one year with rent payable on the
first of each month. Rents are consistent with market rates in locations
where the properties are situated.
<PAGE>
(8) PROPERTY SUMMARY
The following is a summary of the Properties and the related mortgage
notes payable as of December 31, 1995.
<TABLE>
Land
Property/ Date of Buildings and Accumulated Interest Principal
Location Purchase Improvements Depreciation Rate Maturity Outstanding
<S> <C> <C> <C> <C> <C> <C>
Sunflower Apartments
Dallas, TX 08/31/84 $ 8,144,484 $ 4,904,625 9.50% 12/01/96* $ 546,204
Meadow Wood Apartments
Jacksonville, FL 12/03/84 10,921,719 4,612,173 10.00% 12/01/00 4,212,296
Stratford Place Apartments
Gaithersburg, MD 12/18/85 14,150,612 5,366,536 9.69% 02/01/96** 10,027,183
Stratford Village Apartments
Montgomery, AL 02/28/86 8,557,307 3,471,458 7.72% 11/01/24 5,295,397
--------------- ------------- -------------
$ 41,774,122 $ 18,354,792 $ 20,081,080
=============== ============= =============
</TABLE>
* Paid off in January 1996. See Note 5 and 9.
** Due date was extended to May 1, 1996 subsequent to year-end.
See Note 5 and 9.
(9) SUBSEQUENT EVENTS
On January 10, 1996, one of the Properties, Stratford Place, sent to GMAC
a good faith deposit of $47,500 and an application fee of $30,000 to
request an extension on the first mortgage held by GMAC which was
scheduled to mature on February 1, 1996. On January 24, 1996, Stratford
Place obtained a 90-day extension on the GMAC mortgage for an additional
fee of $10,000. On February 2, 1996, $900,000 was paid to Klingbeil in
order to pay off the wrap-around portion of the mortgage, leaving GMAC as
the sole mortgageholder. The Partnership is presently in the process of
refinancing the GMAC mortgage.
On January 24, 1996, DEK refinanced the mortgage note payable with Nomura
Asset Capital Corporation for $2,700,000. This mortgage note is secured
by the Property and carries an interest rate of 7.46% per annum. Under
the terms of the new agreement, DEK is required to make monthly principal
and interest payments of $18,805 through January 11, 2026, and the
remaining principal and any unpaid interest are due on February 11, 2026.
In connection with the refinancing, DEK paid off its loan payable to
Traveler's on January 29, 1996. Of the remaining net proceeds of
$1,669,757, the amount of $900,000 was funded to Stratford Place to pay
off the second mortgage held by Klingbeil. The balance will be used for
operations of DEK.
<PAGE>
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
SUPPLEMENTARY INFORMATION REQUIRED
PURSUANT TO SECTION 9.4 OF THE PARTNERSHIP AGREEMENT
DECEMBER 31, 1995
(UNAUDITED)
<TABLE>
Three
Months Year
Ended Ended
December 31, December 31,
1995 1995
(Unaudited) (Unaudited)
STATEMENTS OF CASH AVAILABLE FOR DISTRIBUTION:
<S> <C> <C>
Net loss $ (69,651) $ (311,129)
Amortization charges to income not affecting cash available for distribution 25,819 103,278
Net loss from the properties 39,214 232,869
Cash from reserves - 118,126
Cash available for distribution (4,618) 143,144
Distributions allocated to general partners - -
Distributions allocated to limited partners 49,981 149,941
</TABLE>
(a) Cash distributions were paid from current year cash available for
distribution and from cash retained from prior years' operations (see Note
2).
Fees and other compensation paid or accrued by the Partnership to the
general partners or their affiliates during the three months ended December
31, 1995.
Entity Receiving Compensation Form of Compensation Amount
Winthrop Management Property Management Fees $ 83,998
All other information required pursuant to Section 9.4 of the Partnership
Agreement is set forth in the accompanying consolidated financial
statements and related notes or Annual Partnership Report.
<PAGE>
WINTHROP GROWTH INVESTORS I LIMITED PARTNERSHIP
SCHEDULE III
DECEMBER 31,1995
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY THE PARTNERSHIP AS OF DECEMBER 31, 1995
Initial cost to the Properties and gross amount
at which carried as of December 31, 1995 ( b,c and d )
<TABLE>
Buildings, Accumulated Date
Number of Outstanding Improvements Depreciation Interest Depreciable
Description Apartments Encumbrance(A) Land & Personal Property Total (D) as of 12/31/95 Acquired Life
Apartment Complexes,
Location:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
The Sunflower 248 546,204 $1,624,345 6,520,139 8,144,484 4,904,625 8/31/84 5-25 Yrs
Apartments,
Dallas, TX
- - 99%
Meadow Wood 356 4,212,296 $689,883 10,231,836 10,921,719 4,612,173 12/03/84 5-25 Yrs
Apartments,
Jacksonville, FL
- - 99.99%
Stratford Place 350 10,027,183 $1,368,000 12,782,612 14,150,612 5,366,536 12/18/85 5-25 Yrs
Apartments,
Gaithersburg, MD
- - 99.98%
Stratford Village 224 5,295,397 $333,141 8,224,166 8,557,307 3,471,458 2/28/86 7-25 Yrs
Apartments,
Montgomery, AL
- - 100%
1178 $20,081,080 $4,015,369 $37,758,753 $41,774,122 $18,354,792
</TABLE>
(A) See Note 5 of Notes to Consolidated Financial Statements for
information regarding the terms of various encumbrances.
(B) The cost of the properties represents the purchase price of
the properties, but excluding acquisition fees and expenses.
(C) The total cost of land, buildings, improvements and personal
property net of accumulated depreciation at December 31, 1995
for federal income tax purposes is $18,858,086.
(D) Reconciliation of Cost:
<TABLE>
<S> <C>
Balance as of December 31, 1991 40,329,963
Additions during 1991 451,876
Balance as of December 31, 1992 40,781,839
Additions during 1993 148,349
Balance as of December 31, 1993 40,930,188
Additions during 1994 303,764
Balance as of December 31, 1994 41,233,952
Additions during 1995 540,170
Balance as of December 31, 1995 41,774,122
</TABLE>
(E) Reconciliation of Accumulated Depreciation:
<TABLE>
<S> <C>
Balance as of December 31, 1991 9,987,894
Depreciation Expense 1,611,332
Balance as of December 31, 1992 11,599,226
Provision for write-down of real estate 1,916,703
Depreciation Expense 1,631,193
Balance as of December 31, 1993 15,147,122
Depreciation Expense 1,636,723
Balance as of December 31, 1994 16,783,845
Depreciation Expense 1,570,947
Balance as of December 31, 1995 18,354,792
</TABLE>
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure.
None.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) and (b) Identification of Directors and Executive Officers.
Registrant has no officers or directors. The Managing General Partner manages
and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters effective its business. As
of March 1, 1996, the names of the directors and executive officers of the
Managing General Partner and the position held by each of them, are as follows:
Has Served as
Position Held with the a Director or
Name Managing General Partner Officer Since
Michael L. Ashner Chief Executive Officer 1-96
and Director
Ronald J. Kravit Director 7-95
W. Edward Scheetz Director 7-95
Richard J. McCready President and
Chief Operating Officer 7-95
Jeffrey D. Furber Executive Vice President 1-96
and Clerk
Anthony R. Page Chief Financial Officer 8-95
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
(c) Identification of Certain Significant Employees. None.
(d) Family Relationships. None.
(e) Business Experience. The Managing General Partner was incorporated in
Massachu setts in October 1978. The background and experience of the executive
officers and directors of the Managing General Partner, described above in Items
10(a) and (b), are as follows:
Michael L. Ashner, age 44, has been the Chief Executive Officer of Winthrop
Financial Associates, A Limited Partnership ("WFA") since January 15, 1996. From
June 1994 until January 1996, Mr. Ashner was a Director, President and
Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
W. Edward Scheetz, age 31, has been a Director of WFA since July 1995.
Mr. Scheetz was a director of NPI from October 1994 until January 1996. Since
May 1993, Mr. Scheetz has been a limited partner of Apollo Real Estate Advisors,
L.P. ("Apollo"), the managing general partner of Apollo Real Estate Investment
Fund, L.P., a private investment fund. Mr. Scheetz has also served as a Director
of Roland International, Inc., a real estate investment company since January
1994, and as a Director of Capital Apartment Properties, Inc., a multi-family
residential real estate investment trust, since January 1994. From 1989 to May
1993, Mr. Scheetz was a principal of Trammel Crow Ventures, a national real
estate investment firm.
Ronald J. Kravit, age 39, has been a Director of WFA since July 1995. Mr.
Kravit has been associated with Apollo since August 1995. From October 1993 to
August 1995, Mr. Kravit was a Senior Vice President with G. Soros Realty
Advisors/Reichman International. Mr. Kravit was a Vice President and Chief
Financial Officer of MAXXAM Property Company from July 1991 to October 1993.
Richard J. McCready, age 37, is the President and Chief Operating Officer
of WFA and its subsidiaries. Mr. McCready previously served as a Managing
Director, Vice President and Clerk of WFA and a Director, Vice President and
Clerk of the Managing General Partner and all other subsidiaries of WFA. Mr.
McCready joined the Winthrop organization in 1990.
Jeffrey D. Furber, age 36, has been the Executive Vice President of WFA and
the President of Winthrop Management since January 1996. Mr. Furber served as a
Managing Director of WFA from January 1991 to December 1995 and as a Vice
President from June 1984 until December 1990.
Anthony R. Page, age 32, has been the Chief Financial Officer for WFA since
August 1995. From July, 1994 to August 1995, Mr. Page was a Vice President with
Victor Capital Group, L.P. and from 1990 to July 1994, Mr. Page was a Managing
Director with Principal Venture Group. Victor Capital and Principal Venture are
investment banks emphasizing on real estate securities, mergers and
acquisitions.
<PAGE>
Peter Braverman, age 44, has been a Senior Vice President of WFA since
January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice
President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop Partners
81 Limited Partnership; Winthrop Residential Associates I, A Limited
Partnership; Winthrop Residential Associates II, A Limited Partnership; Winthrop
Residential Associates III, A Limited Partnership; 1626 New York Associates
Limited Partnership; 1999 Broadway Associates Limited Partnership; Indian River
Citrus Investors Limited Partnership; Nantucket Island Associates Limited
Partnership; One Financial Place Limited Partnership; Presidential Associates I
Limited Partnership; Riverside Park Associates Limited Partnership; Sixty-Six
Associates Limited Partnership; Springhill Lake Investors Limited Partnership;
Twelve AMH Associates Limited Partnership; Winthrop California Investors Limited
Partnership; Winthrop Interim Partners I, A Limited Partnership; Winthrop
Financial Associates, A Limited Partnership; Southeastern Income Properties
Limited Partnership; Southeastern Income Properties II Limited Partnership;
Winthrop Miami Associates Limited Partnership; and Winthrop Apartment Investors
Limited Partnership.
(f) Involvement in Certain Legal Proceedings. None.
Item 11. Executive Compensation.
The Partnership is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See Item 13, "Certain Relationships and Related Transactions.")
Item 12. Security Ownership of Certain Beneficial Owners and Management.
(a) Security ownership of certain beneficial owners.
No person or group is known by the Partnership to be the beneficial owner
of more than 5% of the outstanding Units at December 31, 1995. Under the Amended
and Restated Agreement of Limited Partnership of the Partnership dated as of May
11, 1984 (the "Partnership Agreement"), the voting rights of the Limited
Partners are limited and, in some circumstances, are subject to the prior
receipt of certain opinions of counsel or judicial decisions.
<PAGE>
Under the Partnership Agreement, the right to manage the business of the
Partnership is vested in the General Partners and is generally to be exercised
only by the Managing General Partner, although the consent of the Associate
General Partners is required for all purchases, financings, refinancings and
sales or other dispositions of the Partnership's real properties and with
respect to certain other matters. See Item 1 above for a description of the
General Partners.
(b) Security ownership of management.
As of December 31, 1995, an affiliate of the General Partner owned 10
Units in the Partnership. No officers, directors or general partners of the
General Partners own any Units.
(c) Changes in control.
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership
except as follows:
In connection with its acquisition of control of Linnaeus, Londonderry
II issued NACC a $22 million non-recourse purchase money note due 1998 (the
"Purchase Money Note"), as set forth in a loan agreement, dated as of July 14,
1995, by and between NACC and Londonderry II. Initial security for the Purchase
Money Note includes, among other things, the partnership interests in W.L.
Realty acquired by Londonderry II and the W.L. Realty partnership interest in
Linnaeus. Accordingly, if Londonderry II does not satisfy its obligations under
the Purchase Money Note, NACC would have the right to foreclose upon this
security and, as result, would gain control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
Under the Partnership Agreement, the General Partners and their affiliates
are entitled to receive various fees, commissions, cash distributions,
allocations of taxable income or loss and expense reimbursements from the
Partnership.
The total management fees paid to Winthrop Management, an affiliate of
WFA, for managing the Partnership's four properties for the years ended December
31, 1995, 1994 and 1993 was $329,814, $316,494 and $315,588, respectively. The
property management fee for each property is calculated as 5.0% of the
property's gross collections for the year.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1)(2) Financial Statements and Financial Statement Schedules:
See Item 8 of this Form 10-K for Financial Statements of the
Partnership, Notes thereto, and Financial Statement Schedules.
(A Table of Contents to Financial Statements and Financial
Statement Schedules is included in Item 8 and incorporated
herein by reference.)
(a) (3) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report and incorporated in this
Annual Report as set forth in said Index.
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized as of this 29th day of
March 1996.
WINTHROP GROWTH INVESTORS I
LIMITED PARTNERSHIP
By: TWO WINTHROP PROPERTIES, INC.,
Managing General Partner
By: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
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.
Signature/Name Title Date
/s/ Michael L. Ashner Chief Executive March 29, 1996
Michael L. Ashner Officer and Director
/s/ Ronald J. Kravit Director March 29, 1996
Ronald J. Kravit
/s/ Anthony R. Page Chief Financial Officer March 29, 1996
Anthony R. Page
<PAGE>
EXHIBIT INDEX
Exhibit No. Title of Document
3 Amended and Restated Agreement of Limited Partnership of (a)
Winthrop Growth Investors I Limited Partnership dated as
of May 11, 1984 (filed as an exhibit to the Partnership's
Registration Statement on Form 2-11, File No. 2-84760,
and incorporated herein by reference)
3(a) Amendment to Amended and Restated Agreement of Limited (e)
Partnership dated August 23, 1995
4(a) See Exhibit 3
10(a) Property Management Agreement between Winthrop Growth (a)
Investors I Limited Partnership and WP Management Co.,
Inc. dated May 11, 1984
10 (b) Documents related to Sunflower Apartments property
10 (c) Documents relating to the Meadow Wood Apartments prop- (a)
erty in Jacksonville, Florida
10 (d) Documents relating to the Stratford Place Apartments (b)
property in Gaithersburg, Maryland
10 (e) Documents relating to the Stratford Village Apartments (c)
property in Montgomery, Alabama
10 (f) Amendment Number One to the Joint Venture Agreement of (d)
DEK Associates Joint Venture, dated October 7, 1988
(Sunflower)
10 (g) Meadow Wood Winthrop Associates Limited Partnership (d)
Certificate and Agreement filed on December 1, 1988
10 (h) Management Agreement between Winthrop Management and (f)
Meadow Wood dated February 1, 1990
10 (i) Management Agreement between Stratford Place and (f)
Winthrop Management dated January 1, 1990
10 (j) Management Agreement between Sunflower and Winthrop (f)
Management dated April 1, 1990
<PAGE>
99(a) Pages 7-10, 17-24 and 24-27 of the Partnership's (f)
Prospectus dated May 11, 1984 (filed with the
Commission pursuant to Rule 424(b) on July 3, 1984)
(b) Supplement to the Partnership's Prospectus dated
August 24, 1984 (filed with the Commission pursuant
to Rule 424(c) on September 7, 1984)
(c) Supplement to the Partnership's Prospectus dated
November 2, 1984 (filed with the Commission pursuant
to Rule 424(c) on November 6, 1984)
(d) Supplement to the Partnership's Prospectus dated
November 8, 1984 (filed as a part of Post-Effective
Amendment No. 1 to the Partnership's Registration
Statement on Form S-11, File No. 2-84760, and
incorporated herein by reference)
- ------------
(a) Filed as an exhibit to the Partnership's Registration Statement on Form
S-11, File No. 2- 84760, and incorporated herein by reference.
(b) Filed as an exhibit to the Partnership's Current Report on Form 8-K dated
January 6, 1986, and incorporated herein by reference.
(c) Filed as an exhibit to the Partnership's Current Report on Form 8-K dated
March 17, 1986, and incorporated herein by reference.
(d) Filed as an exhibit to the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1989, and incorporated herein by reference.
(e) Filed as an exhibit to the Partnership's Current Report on Form 8-K filed on
September 6, 1995, and incorporated herein by reference.
(f) Filed as an exhibit to the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994, and incorporated herein by reference.
Exhibit 10(b)
NOTE
$2,700,000.00 as of January 25, 1996
For value received, DEK Associates Limited Partnership, a
Texas limited partnership, having its principal place of business at One
International Place, Boston, MA 02110 (hereinafter referred to as "Maker"),
promises to pay to the order of Nomura Asset Capital Corporation, a Delaware
corporation, at its principal place of business at Two World Financial Center,
Building B, New York, New York 10281 (hereinafter referred to as "Payee"), or at
such place as the holder hereof may from time to time designate in writing, the
principal sum of Two Million Seven Hundred Thousand and 00/100 Dollars
($2,700,000.00), in lawful money of the United States of America, with interest
thereon to be computed on the unpaid principal balance from time to time
outstanding at the Applicable Interest Rate (as hereinafter defined), and to be
paid in installments as follows:
A. A payment of interest only on February 11, 1996;
B. A constant payment of $18,804.89 (such amount
hereinafter the "Monthly Debt Service Payment
Amount")(a) on the eleventh day of March, 1996 and
on the eleventh day of each calendar month
thereafter up to and including the eleventh day of
January 11, 2026, each of such payments, subject
to the provisions of paragraphs 7 and 8 hereof to
be applied (a) to the payment of interest computed
at the Applicable Interest Rate, and (b) the
balance applied to the reduction of the principal
sum;
and the balance of said principal sum together with all accrued and unpaid
interest thereon shall be due and payable on the eleventh day of February, 2026
(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 composed of
twelve (12) months of thirty (30) days each 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. The constant payment required hereunder is based on an amortization
schedule of Three Hundred Sixty (360) months. All amounts due under this Note
shall be payable without setoff, counterclaim or any other deduction whatsoever
and are payable without relief from valuation and appraisement laws and with all
expenses, costs
<PAGE>
and charges incurred in collection or enforcement hereof including, without
limitation, attorneys' fees and court costs.
1. The term "Applicable Interest Rate" as used in this Note shall mean from
(a) the date of this Note through but not including the Optional Prepayment Date
(hereinafter defined), a rate of Seven and forty six hundredths percent (7.46%)
per annum (the "Initial Interest Rate"), and (b) from and after the Optional
Prepayment Date through and including the date this Note is paid in full, a rate
per annum equal to the greater of (i) the Initial Interest Rate plus five (5)
percentage points or (ii) the Treasury Rate (hereinafter defined) plus seven and
three quarter (7.75) percentage points (the "Revised Interest Rate"). For
purposes of this Note, (A) the term "Optional Prepayment Date" shall mean,
February 11, 2006, and (B) the term "Treasury Rate" shall mean, as of the
Optional Prepayment Date, the yield, calculated by linear interpolation (rounded
to the nearest one-thousandth of one percent (i.e., 0.001%)) of the yields of
noncallable United States Treasury obligations with terms (one longer and one
shorter) most nearly approximating the Maturity Date, as determined by Payee on
the basis of Federal Reserve Statistical Release H.15-Selected Interest Rates
under the heading U.S. Governmental Security/Treasury Constant Maturities, or
other recognized source of financial market information selected by Payee.
2. This Note is evidence of that certain loan made by Payee to Maker
contemporaneously herewith (the "Loan"). This Note is secured by, among other
things, (a) a Deed of Trust, Assignment of Leases and Rents and Security
Agreement (the "Deed of Trust") of even date herewith in the amount of the Note
given by Maker for the use and benefit of Payee covering the fee estate of Maker
in certain premises as more particularly described in the Deed of Trust, (b) an
Assignment of Leases of even date herewith executed by Maker in favor of Payee
(the "Assignment of Leases"), and (c) the other Loan Documents (as hereinafter
defined). The term "Loan Documents" as used in this Note relates collectively to
this Note, the Deed of Trust, the Assignment of Leases and all other documents
securing, evidencing or guaranteeing all or any portion of the Loan or otherwise
executed and/or delivered in connection with the Note and the Loan. Reference is
made to the Deed of Trust, Assignment of Leases and the other Loan Documents for
a description of the nature and extent of the security afforded thereby, the
rights of the holder hereof in respect of such security, the terms and
conditions upon which this Note is secured and the rights and duties of the
holder of this Note. The holder of this Note is entitled to the benefits of the
Deed of Trust, Assignment of Leases and the other Loan Documents and may enforce
the agreements contained therein and exercise the remedies provided therein or
otherwise in respect thereof, all in accordance with the terms thereof. No
reference herein to any of the Deed of Trust, Assignment of Leases and the other
Loan Documents and no other provision of this Note or of any of the Deed of
Trust, Assignment of Leases and the other Loan Documents shall alter or impair
the obligation of Maker, which is absolute and unconditional, to pay the
principal of and interest on this Note at the time and place and at the rates
and in the monies and funds described herein. All of the agreements, conditions,
covenants, provisions and stipulations contained in the Deed of Trust,
Assignment of Leases and the other Loan Documents which are to be kept and
performed by Maker are by this reference hereby made part of this Note to the
same extent and with the same force and effect as if they were fully set forth
in this Note, and Maker covenants and agrees to keep and perform the same, or
cause the same to be kept and performed, in accordance with their terms. All
capitalized terms not otherwise defined herein shall have the meaning set forth
in the Deed of Trust.
3. If any sum payable under this Note is not paid on the date
on which it is due, Maker shall pay to Payee upon demand an amount equal to the
lesser of five percent (5%) of such unpaid sum or the maximum amount permitted
by applicable law in order to defray a portion of the expenses incurred by Payee
in handling and processing such delinquent payment and to compensate Payee for
the loss of the use of such delinquent payment. If the day when any payment
required under this Note is due is not a Business Day (as hereinafter defined),
then payment shall be due on the first Business Day thereafter. The term
"Business Day" shall mean a day other than (i) a Saturday or Sunday, or (ii) any
day on which national banks in New York are not open for business.
4. The whole of the principal sum of this Note, together with
all interest accrued and unpaid thereon and all other sums due under the Loan
Documents (all such sums hereinafter collectively referred to as the "Debt"), or
any portion thereof, shall without notice become immediately due and payable at
the option of Payee if any payment required in this Note is not paid on the date
on which it is due or upon the happening of any other Event of Default (as
defined in the Deed of Trust). In the event that it should become necessary to
employ counsel to collect or enforce the Debt or to protect or foreclose the
security therefor, Maker also shall pay on demand all costs of collection
incurred by Payee, including attorneys' fees and costs reasonably incurred for
the services of counsel whether or not suit be brought.
5. Maker does hereby agree that upon the occurrence of an
Event of Default, Payee shall be entitled to receive and Maker shall pay to
Payee (a) interest on the entire unpaid principal sum and any other amounts due
at a rate (the "Default Rate") equal to the lesser of (i) the maximum rate
permitted by applicable law, or (ii) five percent (5%) above the Applicable
Interest Rate. The Default Rate shall be computed from the occurrence of the
Event of Default until the actual receipt and collection of the Debt (or that
portion thereof that is then due). Interest at the Default Rate shall be added
to the Debt and shall be secured by the Deed of Trust. This paragraph, however,
shall not be construed as an agreement or privilege to extend the date of the
payment of the Debt, nor as a waiver of any other right or remedy accruing to
Payee by reason of the occurrence of any Event of Default.
6. This Note may not be prepaid prior to the Optional Prepayment Date;
provided, however, Maker shall have the right and option to defease and/or
release the Trust Property (as defined in the Deed of Trust) from the lien of
the Deed of Trust in accordance with the terms and provisions of paragraph 57 of
the Deed of Trust (the "Defeasance Option"). Notwithstanding the foregoing
sentence, Maker shall have the privilege to prepay the entire principal balance
of this Note and any other amounts outstanding on any scheduled payment date
during the three (3) months preceding the Optional Prepayment Date without
payment of the Yield Maintenance Premium (as defined in the Deed of Trust) or
any other premium or penalty. In addition, on the Optional Prepayment Date or on
any scheduled payment date thereafter, the Maker may, at its option and upon
thirty (30) days prior written notice from Maker to Payee, prepay in whole or in
part the outstanding principal balance of this Note and any other amounts
outstanding without payment of the Yield Maintenance Premium or any other
premium or penalty. If prior to the Optional Prepayment Date and following the
occurrence of any Event of Default, Maker shall tender payment of an amount
sufficient to satisfy the Debt at any time prior to a sale of the Deed of Trust
Property, either through foreclosure or the exercise of the other remedies
available to Payee under the Deed of Trust, or, if Maker has any right of
redemption after such sale, prior to the expiration of such period of redemption
such tender by Maker shall be deemed to be voluntary and Maker shall pay, in
addition to the Debt, the Yield Maintenance Premium, if any, that would be
required under the Defeasance Option.
7. Notwithstanding anything to the contrary contained in this Note,
the following subparagraphs shall apply from and after the date that the
Disbursement Agreement (as defined in the Deed of Trust) is to be executed
pursuant to paragraph 59 of the Deed of Trust through the payments due on
January 11, 2006:
(a) In addition to monthly installments in an amount equal to the
Monthly Debt Service Payment Amount as set forth above, Maker shall pay on the
eleventh day of each calendar month the following payments from the Property
Cash Flow (as hereinafter defined) generated for the immediately preceding
calendar month in the listed order of priority:
(i) First, payments to the Tax and Insurance
Escrow Fund (as defined in the Deed of Trust) in
accordance with the terms and conditions of the
Deed of Trust;
(ii) Second, payments to the Replacement Escrow
Fund (as defined in the Deed of Trust) in
accordance with the terms and conditions of the
Deed of Trust;
(iii) Third, payments for monthly Cash Expenses (as
hereinafter defined) pursuant to the terms and
conditions of the related Approved Annual Budget (as
hereinafter defined);
<PAGE>
(iv) Fourth, payment for Extraordinary Expenses (as
hereinafter defined) approved by Payee, if any;
(v) Lastly, payment to the Maker of any excess
amounts.
Nothing in this paragraph (a) contained shall eliminate or
reduce the obligation of Maker to make payments of the items mentioned in
subparagraphs (i) and (ii) above pursuant to the terms of the Deed of Trust.
(b) For each calendar year commencing January 1, 2005 and for each
calendar year thereafter, the Maker shall submit to the Payee for the Payee's
written approval an annual budget (as to each of the Properties, an "Annual
Budget") not later than December 1 prior to the commencement of such calendar
year, in form satisfactory to Payee setting forth in reasonable detail budgeted
monthly operating income and monthly operating capital and other expenses for
the Trust Property. Payee's approval of the Annual Budget shall not be
unreasonably withheld or delayed. In the event Payee fails to approve or
disapprove the Annual Budget within thirty (30) days after receipt thereof by
Payee, said Annual Budget shall be deemed approved. Each Annual Budget shall
contain, among other things, limitations on management fees, third party service
fees, and other expenses as the Maker may reasonably determine. Payee shall have
the right to approve such Annual Budget and in the event that Payee objects to
the proposed Annual Budget submitted by Maker, Payee shall advise Maker of such
objections within fifteen (15) days after receipt thereof (and deliver to Maker
a reasonably detailed description of such objections) and Maker shall promptly
revise such Annual Budget and resubmit the same to Payee. Payee shall advise
Maker of any objections to such revised Annual Budget within ten (10) days after
receipt thereof (and deliver to Maker a reasonably detailed description of such
objections) and Maker shall promptly revise the same in accordance with the
process described in this subparagraph until the Payee approves an Annual
Budget. Each such Annual Budget approved by Payee in accordance with terms
hereof shall hereinafter be referred to as an "Approved Annual Budget." Until
such time that Payee approves a proposed Annual Budget, the most recently
Approved Annual Budget shall apply; provided that, such Approved Annual Budget
shall be adjusted to reflect actual increases in real estate taxes, insurance
premiums and utilities expenses.
(c) In the event that the Maker must incur an extraordinary operating
expense or capital expense not set forth in the Annual Budget or allotted for in
the Replacement Escrow Fund (each an "Extraordinary Expense"), then the Maker
shall promptly deliver to Payee a reasonably detailed explanation of such
proposed Extraordinary Expense for the Payee's approval.
(d) For the purposes of this Note the following terms
shall have the meanings ascribed to them:
(i) "Cash Expenses" shall mean, for any period, the
operating expenses for the operation and maintenance of
the Trust Property as set forth in an Approved Annual
Budget to the extent that such expenses are actually
incurred by Maker minus payments into the Tax and
Insurance Escrow Fund and the Replacement Escrow
Account; and
(ii) "Property Cash Flow" shall mean, for any period, all
Rents received with respect to the Properties minus the
Monthly Debt Service Payment Amount.
8. In the event that the Maker does not prepay the entire
principal balance of this Note and any other amounts outstanding on the Optional
Prepayment Date, the provisions of subparagraphs (b), (c) and (d) of paragraph 7
as set forth above shall remain in full force and effect, and the following
subparagraphs also shall apply:
(a) From and after the Optional Prepayment Date, interest shall
acccrue on the unpaid princpal balance from time to time outstanding on this
Note at the Revised Interest Rate. Subject to the provisions of this paragraph,
Maker shall continue to make payments in monthly installments beginning on the
Optional Prepayment Date and on the eleventh day of each calendar month
thereafter up to and including the Maturity Date in an amount equal to the
Monthly Debt Service Payment Amount. Each Monthly Debt Service Payment Amount
paid on and after the Optional Prepayment Date shall be applied first to the
payment of interest computed at the Initial Interest Rate with the remainder of
the Monthly Debt Service Payment Amount applied to the reduction of the
outstanding principal balance of this Note. Interest accrued at the Revised
Interest Rate and not paid pursuant to the preceding sentence shall be deferred
and added to the Debt and shall earn interest at the Revised Interest Rate to
the extent permitted by applicable law (such accrued interest is hereinafter
defined as "Accrued Interest". All of the Debt, including any Accrued Interest,
shall be due and payable on the Maturity Date.
(b) In addition to monthly installments in an amount equal to the
Monthly Debt Service Payment Amount as set forth above, Maker shall pay on the
eleventh day of each calendar the Maturity Date the following payments from the
Property Cash Flow in the listed order of priority:
<PAGE>
(i) First, payments to the Tax and Insurance Escrow Fund in
accordance with the terms and conditions of the Deed of
Trust;
(ii) Second payments to the Repalcement Escrow Fund in
accordance with the terms and conditions of the Deed of
Trust;
(iii) Third, payments for monthly Cash Expenses pursuant to
the terms and conditions of the related Approved Annual
Budget less management fees payable to Managing Agent if
such Managing Agent is an affiliate of or related to Maker;
(iv) Fourth, payment for Extraordinary Expenses approved by
Payee, if any;
(v) Fifth, payments to the Payee to be applied against the
outstanding principal due under this Note until such
princpal amount is paid in full;
(vi) Sixth, payments to the Payee for Accrued Interest;
(vii) Seventh, payments to the Payee for any outstanding
interest currently due and not yet delinquent;
(viii) Eighth, payment of management fees to Managing Agent
if such Managing Agent is an affiliate of or related to
Maker; and
(ix) Lastly, payment to the Maker of any excess amounts.
9. It is expressly stipulated and agreed to be the intent of Maker and
Payee at all times to comply with applicable state law or applicable United
States federal law (to the extent that it permits Payee to contract for, charge,
take, reserve, or receive a greater amount of interest than under state law) and
that this paragraph shall control every other covenant and agreement in this
Note, the Deed of Trust and the other Loan Documents. If the applicable law
(state or federal) is ever judicially interpreted so as to render usurious any
amount called for under this Note, the Deed of Trust or any of the other Loan
Documents, or contracted for, charged, taken, reserved, or received with respect
to the Debt, or if Payee's exercise of the option to accelerate the Maturity
Date, or if any prepayment by Maker results in Maker having paid any interest in
excess of that permitted by applicable law, then it is Maker's and Payee's
express intent that all excess amounts theretofore collected by Payee shall be
credited on the principal balance of this Note and all other Debt and the
provisions of this Note, the Deed of Trust and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply with the applicable law, but so as to permit the
recovery of the fullest amount otherwise called for hereunder or thereunder. All
sums paid or agreed to be paid to Payee 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 Debt
until payment in full so that the rate or amount of interest on account of the
Debt does not exceed the maximum lawful rate from time to time in effect and
applicable to the Debt for so long as the Debt is outstanding. Notwithstanding
anything to the contrary contained herein, the Deed of Trust or in any of the
other Loan Documents, it is not the intention of Payee to accelerate the
maturity of any interest that has not accrued at the time of such acceleration
or to collect unearned interest at the time of such acceleration.
10. This Note may not be modified, amended, waived, extended,
changed, discharged or terminated orally or by any act or failure to act on the
part of Maker or Payee, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought. Whenever used, the singular number
shall include the plural, the plural the singular, and the words "Payee" and
"Maker" shall include their respective successors, assigns, heirs, executors and
administrators. If Maker consists of more than one person or party, the
obligations and liabilities of each such person or party shall be joint and
several.
11. Maker and all others who may become liable for the payment
of all or any part of the Debt do hereby severally waive presentment and demand
for payment, notice of dishonor, protest, notice of protest, notice of
nonpayment, notice of intent to accelerate the maturity hereof and of
acceleration except as provide otherwise in the Loan Documents or by law. No
release of any security for the Debt or any person liable for payment of the
Debt, no extension of time for payment of this Note or any installment hereof,
and no alteration, amendment or waiver of any provision of the Loan Documents
made by agreement between Payee and any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or affect the
liability of Maker, and any other person or party who may become liable under
the Loan Documents for the payment of all or any part of the Debt.
12. Subject to the qualifications below, Payee shall not
enforce the liability and obligation of Maker to perform and observe the
obligations contained in this Note, the Deed of Trust or the other Loan
Documents by any action or proceeding wherein a money judgment shall be sought
against Maker, except that Payee may bring a foreclosure action, an action for
specific performance or any other appropriate action or proceeding to enable
Payee to enforce and realize upon its interest under this Note, the Deed of
Trust and the other Loan Documents, or in the Trust Property, the Rents (as
defined in the Deed of Trust), or
<PAGE>
any other collateral given to Payee pursuant to the Loan Documents; provided,
however, that, except as specifically provided herein, any judgment in any such
action or proceeding shall be enforceable against Maker only to the extent of
Maker's interest in the Trust Property, in the Rents and in any other collateral
given to Payee, and Payee, by accepting this Note, the Deed of Trust and the
other Loan Documents, agrees that it shall not sue for, seek or demand any
deficiency judgment against Maker in any such action or proceeding under or by
reason of or under or in connection with this Note, the Deed of Trust or the
other Loan Documents. The provisions of this paragraph shall not, however, (a)
constitute a waiver, release or impairment of any obligation evidenced or
secured by any of the Loan Documents; (b) impair the right of Payee to name
Maker as a party defendant in any action or suit for foreclosure and sale under
the Deed of Trust; (c) affect the validity or enforceability of or any guaranty
made in connection with the Loan or any of the rights and remedies of the Payee
thereunder; (d) impair the right of Payee to obtain the appointment of a
receiver; (e) impair the enforcement of the Assignment of Leases; or (f)
constitute a waiver of the right of Payee to enforce the liability and
obligation of Maker, by money judgment or otherwise, to the extent of any loss,
damage, cost, expense, liability, claim or other obligation incurred by Payee
(including attorneys' fees and costs reasonably incurred) arising out of or in
connection with the following:
(i) fraud or intentional material misrepresentation by Maker
or any guarantor in connection with the Loan;
(ii) the gross negligence or willful misconduct of Maker;
(iii) physical waste of the Trust Property;
(iv) the breach of any provision in that certain
Environmental and Hazardous Substance Indemnification
Agreement of even date herewith given by Maker to Payee or
in the Deed of Trust concerning environmental laws,
hazardous substances and asbestos and any indemnification of
Payee with respect thereto in either document;
(v) the removal or disposal of any portion of the Trust
Property after an Event of Default;
(vi) the misapplication or conversion by Maker of (A) any
insurance proceeds paid by reason of any loss, damage or
destruction to the Trust Property, (B) any awards or other
amounts received in connection with the condemnation of all
or a portion of the Trust Property, or (C) any Rents (as
defined in the Deed of Trust) (as defined in the Deed of
Trust) following an Event of Default;
(vii) failure to pay charges for labor or materials or other
charges that can create liens on any portion of the Trust
Property; and
(viii) any security deposits collected with respect to the
Trust Property which are not delivered to Payee upon a
foreclosure of the Trust Property or action in lieu thereof,
except to the extent any such security deposits were applied
in accordance with the terms and conditions of any of the
Leases (as defined in the Deed of Trust) prior to the
occurrence of the Event of Default that gave rise to such
foreclosure or action in lieu thereof.
Notwithstanding anything to the contrary in this Note or any of the Loan
Documents, Payee shall not be deemed to have waived any right which Payee may
have under Section 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
Deed of Trust or to require that all collateral shall continue to secure all of
the Debt owing to Payee in accordance with the Loan Documents.
13. The remedies of the holder hereof as provided in this Note
or in the Deed of Trust, Assignment of Leases or other Loan Documents shall be
cumulative and concurrent, and may be pursued singly, successively, or together
at the sole discretion of the holder hereof, and may be exercised as often as
occasion therefor shall occur; and the failure to exercise any such right or
remedy shall in no event be construed as a waiver or release thereof. Nothing
herein contained shall be construed as limiting the holder of this Note to the
remedies mentioned above.
14. Maker (and the undersigned representative of Maker, if
any) represents that Maker has full power, authority and legal right to execute,
deliver and perform its obligations pursuant to this Note, the Deed of Trust and
the other Loan Documents and that this Note, the Deed of Trust and the other
Loan Documents constitute valid and binding obligations of Maker.
15. If any term or provision of this Note or the application
thereof to any person or circumstance shall to any extent be invalid, illegal or
unenforceable, the remainder of this Note or the application of such term or
provision to persons or circumstances other than those as to which it is
invalid, illegal or unenforceable shall not be affected thereby.
16. All notices or other communications required or permitted
to be given pursuant hereto shall be given in the manner specified in the Deed
of Trust directed to the parties at their respective addresses as provided
therein.
<PAGE>
17. MAKER HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF
RIGHT BY JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT
ANY SUCH RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS,
OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY MAKER,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. PAYEE IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY MAKER.
18. (A) THIS NOTE WAS NEGOTIATED IN THE STATE OF NEW YORK, AND
MADE BY PAYEE AND ACCEPTED BY MAKER IN THE STATE OF NEW YORK, AND THE PROCEEDS
OF THIS NOTE WERE DISBURSED FROM THE STATE OF NEW YORK, WHICH STATE THE PARTIES
AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE PARTIES AND TO THE UNDERLYING
TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECTS, INCLUDING, WITHOUT LIMITING
THE GENERALITY OF THE FOREGOING, MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, THIS NOTE AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REGARD TO
PRINCIPLES OF CONFLICT LAWS) AND ANY APPLICABLE LAW OF THE UNITED STATES OF
AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE CREATION, PERFECTION,
AND ENFORCEMENT OF THE LIENS AND SECURITY INTERESTS CREATED PURSUANT TO THE
OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED ACCORDING TO THE LAW OF
THE STATE IN WHICH THE TRUST PROPERTY IS LOCATED, IT BEING UNDERSTOOD THAT, TO
THE FULLEST EXTENT PERMITTED BY THE LAW OF SUCH STATE, THE LAW OF THE STATE OF
NEW YORK SHALL GOVERN THE CONSTRUCTION, VALIDITY AND ENFORCEABILITY OF ALL LOAN
DOCUMENTS AND ALL OF THE OBLIGATIONS ARISING HEREUNDER OR THEREUNDER. TO THE
FULLEST EXTENT PERMITTED BY LAW, MAKER HEREBY UNCONDITIONALLY AND IRREVOCABLY
WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS
THE NOTE, AND THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
(B) ANY LEGAL SUIT, ACTION OR PROCEEDING AGAINST PAYEE OR
MAKER ARISING OUT OF OR RELATING TO THIS NOTE MAY AT PAYEE'S OPTION BE
INSTITUTED IN ANY FEDERAL OR STATE COURT IN THE CITY OF NEW YORK, COUNTY OF NEW
YORK, AND MAKER WAIVES ANY OBJECTIONS WHICH IT MAY NOW OR HEREAFTER HAVE BASED
ON VENUE AND/OR FORUM NON CONVENIENS OF ANY SUCH SUIT, ACTION OR PROCEEDING, AND
MAKER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUIT, ACTION OR PROCEEDING. MAKER DOES HEREBY DESIGNATE AND APPOINT WINTHROP
FINANCIAL ASSOCIATES AT C/O WINTHROP MANAGEMENT, 300 PARK AVENUE SOUTH, NEW
YORK, NEW YORK 10010 AS ITS AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON ITS
BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT,
ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK, NEW YORK, AND
AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND WRITTEN
NOTICE OF SAID SERVICE MAILED OR DELIVERED TO MAKER IN THE MANNER PROVIDED IN
THE DEED OF TRUST
<PAGE>
SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON MAKER, IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. MAKER (I) SHALL GIVE
PROMPT NOTICE TO PAYEE OF ANY CHANGED ADDRESS OF ITS AUTHORIZED AGENT HEREUNDER,
(II) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE A SUBSTITUTE AUTHORIZED
AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH SUBSTITUTE AGENT AND OFFICE
SHALL BE DESIGNATED AS THE PERSON AND ADDRESS FOR SERVICE OF PROCESS), AND (III)
SHALL PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO
HAVE AN OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A
SUCCESSOR.
<PAGE>
Maker has duly executed this Note the day and year first above written.
DEK ASSOCIATES LIMITED PARTNERSHIP,
a Texas limited partnership
By: WINTHROP GROWTH INVESTORS 1 LIMITED
PARTNERSHIP,
a Massachusetts limited partnership,
its sole general partner
By: TWO WINTHROP PROPERTIES, INC.,
a Massachusetts corporation,
a general partner
By:______________________________
Name: Alfred Trivilino
Title: Vice President
Pay to the order of ______________________, without recourse.
NOMURA ASSET CAPITAL CORPORATION
By: ......................................................
Name: Kathleen Corton
Title: Director
<PAGE>
DEK ASSOCIATES LIMITED PARTNERSHIP
(Grantor)
to
THOMAS R. KELSEY
(Trustee)
and
NOMURA ASSET CAPITAL CORPORATION
(Beneficiary)
DEED OF TRUST, ASSIGNMENT OF LEASES
AND RENTS AND SECURITY AGREEMENT
(Texas)
Dated: As of January , 1996
Property Location: Sunflower Apartments
Dallas, Texas
DOCUMENT PREPARED BY AND WHEN RECORDED, RETURN TO:
Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attn: Warner D. Norton, Esq.
<PAGE>
THIS DEED OF TRUST, ASSIGNMENT OF LEASES AND RENTS AND
SECURITY AGREEMENT (the "Deed of Trust"), made as of January , 1996, by DEK
ASSOCIATES LIMITED PARTNERSHIP, a Texas limited partnership, having its
principal place of business at c/o Winthrop Financial Associates, One
International Place, Boston, Massachusetts 02110, ("Grantor"), to Thomas R.
Kelsey, having an office at 1200 Smith Street, Suite 3300, Houston, Texas 77002-
4579, the trustee hereunder ("Trustee"), and to Nomura Asset Capital
Corporation, having its principal place of business at Two World Financial
Center, Bldg. B, New York, New York 10281 ("Beneficiary").
W I T N E S S E T H:
To secure the payment of an indebtedness in the original
principal sum of Two Million Seven Hundred Thousand and no/100 Dollars
($2,700,000.00), lawful money of the United States of America, to be paid with
interest according to a certain deed of trust note of even date herewith made by
Grantor to Beneficiary (the deed of trust note together with all extensions,
renewals or modifications thereof being hereinafter collectively called the
"Note") and all other sums due hereunder, under the other Loan Documents
(hereinafter defined) and under the Note (said indebtedness and interest due
under the Note and all other sums due hereunder under the Note and the other
Loan Documents being hereinafter collectively referred to as the "Debt"),
Grantor has deeded, mortgaged, given, granted, bargained, sold, alienated,
enfeoffed, conveyed, confirmed, warranted, pledged, assigned, and hypothecated
and by these presents does hereby deed, mortgage, give, grant, bargain, sell,
alien, enfeoff, convey, confirm, warrant, pledge, assign and hypothecate unto
Trustee (in trust), the real property described in Exhibit A attached hereto
(the "Premises") and the buildings, structures, fixtures, additions,
enlargements, extensions, modifications, repairs, replacements and improvements
now or hereafter located thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and estate of
Grantor now owned, or hereafter acquired, in and to the following property,
rights, interests and estates (the Premises, the Improvements, and the property,
rights, interests and estates hereinafter described are collectively referred to
herein as the "Trust Property"):
(a) all easements, rights-of-way, strips and gores of land,
streets, ways, alleys, passages, sewer rights, water, water courses, water
rights and powers, air rights and development rights, all rights to oil, gas,
minerals, coal and other substances of any kind or character, and all estates,
rights, titles, interests, privileges, liberties, tenements, hereditaments and
appurtenances of any nature whatsoever, in any way belonging, relating or
pertaining to the Premises and the
<PAGE>
Improvements and the reversion and reversions, remainder and remainders, and all
land lying in the bed of any street, road, highway, alley or avenue, opened,
vacated or proposed, in front of or adjoining the Premises, to the center line
thereof and all the estates, rights, titles, interests, dower and rights of
dower, curtsey and rights of curtsey, property, possession, claim and demand
whatsoever, both at law and in equity, of Grantor of, in and to the Premises and
the Improvements and every part and parcel thereof, with the appurtenances
thereto;
(b) all machinery, furniture, furnishings, equipment, computer
software and hardware, fixtures (including, without limitation, all heating, air
conditioning, plumbing, lighting, communications and elevator fixtures) and
other property of every kind and nature, whether tangible or intangible,
whatsoever owned by Grantor, or in which Grantor has or shall have an interest,
now or hereafter located upon the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or future operation and
occupancy of the Premises and the Improvements and all building equipment,
materials and supplies of any nature whatsoever owned by Grantor, or in which
Grantor has or shall have an interest, now or hereafter located upon the
Premises and the Improvements, or appurtenant thereto, or usable in connection
with the present or future operation, enjoyment and occupancy of the Premises
and the Improvements (hereinafter collectively referred to as the "Equipment"),
including any leases of any of the foregoing, any deposits existing at any time
in connection with any of the foregoing, and the proceeds of any sale or
transfer of the foregoing, and the right, title and interest of Grantor in and
to any of the Equipment that 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 Trust Property is located (the "Uniform Commercial
Code"), superior in lien to the lien of this Deed of Trust;
(c) all awards or payments, including interest thereon, that
may heretofore and hereafter be made with respect to the Premises and the
Improvements, whether from the exercise of the right of eminent domain or
condemnation (including, without limitation, any transfer made in lieu of or in
anticipation of the exercise of said rights), or for a change of grade, or for
any other injury to or decrease in the value of the Premises and Improvements;
(d) all leases and other agreements or arrangements heretofore
or hereafter entered into affecting the use, enjoyment or occupancy of, or the
conduct of any activity upon or in, the Premises and the Improvements, including
any extensions, renewals, modifications or amendments thereof (the "Leases") and
all rents, rent equivalents, moneys payable as damages or in lieu of rent or
rent equivalents, royalties (including, without limitation, all oil and gas or
other mineral royalties and bonuses), income, receivables, receipts, revenues,
deposits
<PAGE>
(including, without limitation, security, utility and other deposits), accounts,
cash, issues, profits, charges for services rendered, and other consideration of
whatever form or nature received by or paid to or for the account of or benefit
of Grantor or its agents or employees from any and all sources arising from or
attributable to the Premises and the Improvements (the "Rents"), together with
all proceeds from the sale or other disposition of the Leases and the right to
receive and apply the Rents to the payment of the Debt ;
(e) all proceeds of and any unearned premiums on any insurance
policies covering the Trust Property, including, without limitation, the right
to receive and apply the proceeds of any insurance, judgments, or settlements
made in lieu thereof, for damage to the Trust Property;
(f) the right, in the name and on behalf of Grantor, to appear
in and defend any action or proceeding brought with respect to the Trust
Property and to commence any action or proceeding to protect the interest of
Beneficiary in the Trust Property;
(g) all accounts, escrows, documents, instruments, chattel
paper, claims, deposits and general intangibles, as the foregoing terms are
defined in the Uniform Commercial Code, and all franchises, trade names,
trademarks, symbols, service marks, books, records, plans, specifications,
designs, drawings, permits, consents, licenses, management agreements, contract
rights (including, without limitation, any contract with any architect or
engineer or with any other provider of goods or services for or in connection
with any construction, repair, or other work upon the Trust Property),
approvals, actions, refunds of real estate taxes and assessments (and any other
governmental impositions related to the Trust Property), and causes of action
that now or hereafter relate to, are derived from or are used in connection with
the Trust Property, or the use, operation, maintenance, occupancy or enjoyment
thereof or the conduct of any business or activities thereon (hereinafter
collectively referred to as the "Intangibles"); and
(h) all proceeds, products, offspring, rents and profits from
any of the foregoing, including, without limitation, those from sale, exchange,
transfer, collection, loss, damage, disposition, substitution or replacement of
any of the foregoing.
TO HAVE AND TO HOLD the above granted and described Trust
Property unto and to the use and benefit of Trustee and its successors and
assigns, forever;
IN TRUST, WITH POWER OF SALE, to secure the payment to
Beneficiary of the Debt at the time and in the manner provided for its payment
in the Note and in this Deed of Trust;
<PAGE>
PROVIDED, HOWEVER, these presents are upon the express condition that, if
Grantor shall well and truly pay to Beneficiary the Debt at the time and in the
manner provided in the Note and this Deed of Trust and shall well and truly
abide by and comply with each and every covenant and condition set forth herein,
in the Note and in the other Loan Documents (hereinafter defined) in a timely
manner, these presents and the estate hereby granted shall cease, terminate and
be void;
AND Grantor represents and warrants to and covenants and
agrees with Beneficiary as follows:
PART I
GENERAL PROVISIONS
1. Payment of Debt and Incorporation of Covenants, Conditions
and Agreements. Grantor shall pay the Debt at the time and in the manner
provided in the Note and in this Deed of Trust. All the covenants, conditions
and agreements contained in (a) the Note and (b) all and any of the documents
including the Note and this Deed of Trust now or hereafter executed by Grantor
and/or others and by or in favor of Beneficiary, which evidences, secures or
guarantees all or any portion of the payments due under the Note or otherwise is
executed and/or delivered in connection with the Note and this Deed of Trust
(the "Loan Documents") are hereby made a part of this Deed of Trust to the same
extent and with the same force as if fully set forth herein. The Note is
evidence of that certain loan made to the Grantor by the Beneficiary (the
"Loan").
2. Warranty of Title. Grantor warrants that Grantor has good,
indefeasible fee simple title to the Trust Property and has the full power,
authority and right to execute, deliver and perform its obligations under this
Deed of Trust and to deed, encumber, mortgage, give, grant, bargain, sell,
alienate, enfeoff, convey, confirm, pledge, assign and hypothecate the same and
that Grantor possesses an unencumbered fee estate in the Premises and the
Improvements and that it owns the Trust 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 Deed of Trust and that this
Deed of Trust is and will remain a valid and enforceable first lien on and
security interest in the Trust Property, subject only to said exceptions.
Grantor shall forever warrant, defend and preserve such title and the validity
and priority of the lien of this Deed of Trust and shall forever warrant and
defend the same to Beneficiary against the claims of all persons whomsoever.
3. Insurance.
(a) Grantor, at its sole cost and expense, for
the mutual benefit of Grantor and Beneficiary, shall obtain and
<PAGE>
maintain during the entire term of this Deed of Trust (the "Term") policies of
insurance against loss or damage by fire and lightning and against loss or
damage by all other risks and hazards covered by a standard extended coverage
insurance policy including, without limitation, riot and civil commotion,
vandalism, malicious mischief, burglary and theft. Such insurance shall be in an
amount equal to the greatest of (i) the then full replacement cost of the
Improvements and Equipment, without deduction for physical depreciation, (ii)
the outstanding principal balance of the Loan, and (iii) such amount that the
insurer would not deem Grantor a co-insurer under said policies. The policies of
insurance carried in accordance with this paragraph shall be paid annually in
advance and shall contain a "Replacement Cost Endorsement" with a waiver of
depreciation, and shall have a deductible no greater than $25,000.00 unless so
agreed by Beneficiary.
(b) Grantor, at its sole cost and expense, for
the mutual benefit of Grantor and Beneficiary, shall also obtain and maintain
during the Term the following policies of insurance:
(i) Flood insurance if any part of the Trust Property is located in an area
identified by the Federal Emergency Management Agency as an area having special
flood hazards and in which flood insurance has been made available under the
National Flood Insurance Program in an amount at least equal to the outstanding
principal amount of the Loan or the maximum limit of coverage available with
respect to the Improvements and Equipment under said Program, whichever is less.
(ii) Comprehensive public liability insurance, including broad form
property damage, blanket contractual and personal injuries (including death
resulting therefrom) coverages and containing minimum limits per occurrence of
$1,000,000 and $2,000,000 in the aggregate for any policy year. In addition, at
least $3,000,000 excess and/or umbrella liability insurance shall be obtained
and maintained for any and all claims, including all legal liability imposed
upon Grantor and all court costs and attorneys' fee incurred in connection with
the ownership, operation and maintenance of the Trust Property.
(iii) Rental loss and/or business interruption insurance in an amount equal
to the greater of (A) estimated annual gross revenues from the operations of the
Trust Property or (B) the projected annual operating expenses (including debt
service) for the maintenance and operation of the Trust Property. The amount of
such insurance shall be increased from time to time during the Term as and when
new Leases and renewal Leases are entered into and the Rents increase or the
annual estimate of (or the actual) gross revenue, as may be applicable,
increases.
(iv) Insurance against loss or damage from (A) leakage of sprinkler systems
and (B) explosion of steam
<PAGE>
boilers, air conditioning equipment, high pressure piping, machinery and
equipment, pressure vessels or similar apparatus now or hereafter installed in
the Improvements (without exclusion for explosions), in an amount at least equal
to the outstanding principal amount of the Note or $2,000,000, whichever is
less.
(v) If the Trust Property includes
commercial property, worker's compensation insurance with respect to any
employees of Grantor, as required by any governmental authority or legal
requirement.
(vi) During any period of repair or
restoration, builder's "all risk" insurance in an amount equal to not less than
the full insurable value of the Trust Property against such risks (including,
without limitation, fire and extended coverage and collapse of the Improvements
to agreed limits) as Beneficiary may request, in form and substance acceptable
to Beneficiary.
(vii) If the Trust Property is or becomes a
"non-conforming use" under applicable zoning and building ordinances, ordinance
or law coverage to compensate for the cost of demolition and the increased cost
of construction.
(viii) Such other insurance as may from time to time be reasonably required
by Beneficiary in order to protect its interests.
(c) All policies of insurance (the "Policies")
required pursuant to this paragraph: (i) shall be issued by companies approved
by Beneficiary and licensed to do business in the state where the Trust Property
is located, with a claims paying ability rating of "AA" or better by Standard &
Poor's Rating Group or a rating of "A:X" or better in the current Best's
Insurance Reports; (ii) shall name Beneficiary and its successors and/or assigns
as their interest may appear as the beneficiary/mortgagee; (iii) shall contain a
Non-Contributory Standard Mortgagee Clause and a Lender's Loss Payable
Endorsement (Form 438 BFU NS), or their equivalents, naming Beneficiary as the
person to which all payments made by such insurance company shall be paid; (iv)
shall contain a waiver of subrogation against Beneficiary; (v) shall be
maintained throughout the Term without cost to Beneficiary; (vi) shall be
assigned and the originals delivered to Beneficiary; (vii) shall contain such
provisions as Beneficiary deems reasonably necessary or desirable to protect its
interest including, without limitation, endorsements providing that neither
Grantor, Beneficiary nor any other party shall be a co-insurer under said
Policies and that Beneficiary shall receive at least thirty (30) days prior
written notice of any modification, reduction or cancellation; and (viii) shall
be satisfactory in form and substance to Beneficiary and shall be approved by
Beneficiary as to amounts, form, risk coverage, deductibles, loss payees and
insureds. Grantor shall pay the premiums for such Policies (the "Insurance
Premiums") as the same
<PAGE>
become due and payable and shall furnish to Beneficiary evidence of the renewal
of each of the Policies with receipts for the payment of the Insurance Premiums
or other evidence of such payment reasonably satisfactory to Beneficiary
(provided, however, that Grantor is not required to furnish such evidence of
payment to Beneficiary in the event that such Insurance Premiums have been paid
by Beneficiary pursuant to Paragraph 5 hereof). If Grantor does not furnish such
evidence and receipts at least thirty (30) days prior to the expiration of any
expiring Policy, then Beneficiary may procure, but shall not be obligated to
procure, such insurance and pay the Insurance Premiums therefor, and Grantor
agrees to reimburse Beneficiary for the cost of such Insurance Premiums promptly
on demand. Within thirty (30) days after request by Beneficiary, Grantor shall
obtain such increases in the amounts of coverage required hereunder as may be
reasonably requested by Beneficiary, taking into consideration changes in the
value of money over time, changes in liability laws, changes in prudent customs
and practices, and the like. Beneficiary shall cooperate with Grantor to allow a
combination of insurance and co-insurance provided such resulting combination of
coverage is sufficient to satisfy the insurance requirements for a loan which is
rated "BBB" by the Rating Agencies.
(d) If the Trust Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty (an "Insured
Casualty"), Grantor shall give prompt notice thereof to Beneficiary. Following
the occurrence of an Insured Casualty, Grantor, regardless of whether insurance
proceeds are available, shall promptly proceed to restore, repair, replace or
rebuild the same to be of at least equal value and of substantially the same
character as prior to such damage or destruction, all to be effected in
accordance with applicable law. The expenses incurred by Beneficiary in the
adjustment and collection of insurance proceeds shall become part of the Debt
and be secured hereby and shall be reimbursed by Grantor to Beneficiary upon
demand.
(e) In case of loss or damages covered by any of
the Policies, the following provisions shall apply:
(i) In the event of an Insured Casualty that does not exceed $100,000.00,
Grantor may settle and adjust any claim without the consent of Beneficiary and
agree with the insurance company or companies on the amount to be paid upon the
loss; provided that such adjustment is carried out in a competent and timely
manner. In such case, Grantor is hereby authorized to collect and receipt for
any such insurance proceeds.
(ii) In the event an Insured Casualty shall exceed $100,000.00, then and in
that event, Beneficiary may settle and adjust any claim without the consent of
Grantor and agree with the insurance company or companies on the amount to be
paid on the loss and the proceeds of any such policy shall be due
<PAGE>
and payable solely to Beneficiary and held in escrow by Beneficiary in
accordance with the terms of this Deed of Trust.
(iii) In the event of an Insured Casualty
where the loss is in an aggregate amount less than twenty-five percent (25%) of
the original principal balance of the Note, and if, in the reasonable judgment
of Beneficiary, the Trust Property can be restored within six (6) months and
prior to maturity of the Note to an economic unit not less valuable (including
an assessment of the impact of the termination of any Leases due to such Insured
Casualty) and not less useful than the same was prior to the Insured Casualty,
and after such restoration will adequately secure the outstanding balance of the
Debt, then, if no Event of Default (as hereinafter defined) shall have occurred
and be then continuing, the proceeds of insurance (after reimbursement of any
expenses incurred by Beneficiary) shall be applied to reimburse Grantor for the
cost of restoring, repairing, replacing or rebuilding the Trust Property or part
thereof subject to the Insured Casualty, in the manner set forth below. Grantor
hereby covenants and agrees to commence and diligently to prosecute such
restoring, repairing, replacing or rebuilding; provided always, that Grantor
shall pay all costs (and if required by Beneficiary, Grantor shall deposit the
total thereof with Beneficiary in advance) of such restoring, repairing,
replacing or rebuilding in excess of the net proceeds of insurance made
available pursuant to the terms hereof.
(iv) Except as provided above, the proceeds
of insurance collected upon any Insured Casualty shall, at the option of
Beneficiary in its sole discretion, be applied to the payment of the Debt or
applied to reimburse Grantor for the cost of restoring, repairing, replacing or
rebuilding the Trust Property or part thereof subject to the Insured Casualty,
in the manner set forth below. Any such application to the Debt shall be without
any prepayment consideration except that if an Event of Default, or an event
with notice and/or the passage of time would constitute an Event of Default, has
occurred then the Grantor shall pay to Beneficiary an additional amount equal to
the Yield Maintenance Premium (hereinafter defined), if any, that would be
required under Paragraph 57 hereof if a Defeasance Deposit (hereinafter defined)
was to be made by Grantor. Any such application to the Debt shall be applied to
those payments of principal and interest last due under the Note but shall not
postpone or reduce any payments otherwise required pursuant to the Note other
than such last due payments.
(v) In the event Grantor is entitled to
reimbursement out of insurance proceeds held by Beneficiary, such proceeds shall
be disbursed from time to time upon Beneficiary being furnished with (1)
evidence satisfactory to it of the estimated cost of completion of the
restoration, repair, replacement and rebuilding, (2) funds or, at Beneficiary's
option, assurances satisfactory to Beneficiary that such funds are available,
sufficient in addition to the proceeds of
<PAGE>
insurance to complete the proposed restoration, repair, replacement and
rebuilding, and (3) such architect's certificates, waivers of lien, contractor's
sworn statements, title insurance endorsements, bonds, plats of survey and such
other evidences of cost, payment and performance as Beneficiary may reasonably
require and approve. Beneficiary may, in any event, require that all plans and
specifications for such restoration, repair, replacement and rebuilding be
submitted to and approved by Beneficiary prior to commencement of work. No
payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent (90%) of the value of the
work performed from time to time; funds other than proceeds of insurance shall
be disbursed prior to disbursement of such proceeds; and at all times, the
undisbursed balance of such proceeds remaining in the hands of Beneficiary,
together with funds deposited for that purpose or irrevocably committed to the
satisfaction of Beneficiary by or on behalf of Grantor for that purpose, shall
be at least sufficient in the reasonable judgment of Beneficiary to pay for the
cost of completion of the restoration, repair, replacement or rebuilding, free
and clear of all liens or claims for lien. Any surplus which may remain out of
insurance proceeds held by Beneficiary after payment of such costs of
restoration, repair, replacement or rebuilding shall be paid to any party
entitled thereto.
4. Payment of Taxes, Etc. Grantor shall pay all taxes,
assessments, water rates and sewer rents, now or hereafter levied or assessed or
imposed against the Trust Property or any part thereof (the "Taxes") and all
ground rents, maintenance charges, other impositions, and other charges,
including, without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Premises, now or hereafter levied
or assessed or imposed against the Trust Property or any part thereof (the
"Other Charges") as the same become due and payable. Grantor will deliver to
Beneficiary receipts for payment or other evidence satisfactory to Beneficiary
that the Taxes and Other Charges have been so paid or are not then delinquent no
later than thirty (30) days prior to the date on which the Taxes and/or Other
Charges would otherwise be delinquent if not paid. Grantor 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 Trust Property, and shall
promptly pay for all utility services provided to the Trust Property. Grantor
shall furnish to Beneficiary receipts for the payment of the Taxes and the Other
Charges prior to the date the same shall become delinquent (provided, however,
that Grantor is not required to furnish such receipts for payment of Taxes in
the event that such Taxes have been paid for by Beneficiary pursuant to
Paragraph 5 hereof).
5. Tax and Insurance Escrow Fund. Grantor shall pay
to Beneficiary on the eleventh day of each calendar month
(a) one-twelfth of the Taxes that Beneficiary estimates will be
payable during the next ensuing twelve (12) months in order to
<PAGE>
accumulate with Beneficiary sufficient funds to pay all such Taxes at least
thirty (30) days prior to their respective due dates, and (b) one-twelfth of the
Insurance Premiums that Beneficiary estimates will be payable for the renewal of
the coverage afforded by the Policies upon the expiration thereof in order to
accumulate with Beneficiary sufficient funds to pay all such Insurance Premiums
at least thirty (30) days prior to the expiration of the Policies (said amounts
in (a) and (b) above hereinafter called the "Tax and Insurance Escrow Fund").
The Tax and Insurance 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 Grantor to Beneficiary. Grantor hereby pledges to
Beneficiary and grants to Beneficiary a security interest in any and all monies
now or hereafter deposited in the Tax and Insurance Escrow Fund as additional
security for the payment of the Debt. Beneficiary will apply the Tax and
Insurance Escrow Fund to payments of Taxes and Insurance Premiums required to be
made by Grantor pursuant to Paragraphs 3 and 4 hereof. In making any payment
relating to the Tax and Insurance Escrow Fund, Beneficiary may do so according
to any bill, statement or estimate procured from the appropriate public office
(with respect to Taxes) or insurer or agent (with respect to Insurance
Premiums), without inquiry into the accuracy of such bill, statement or estimate
or into the validity of any tax, assessment, sale, forfeiture, tax lien or title
or claim thereof. If the amount of the Tax and Insurance Escrow Fund shall
exceed the amounts due for Taxes and Insurance Premiums pursuant to Paragraphs 3
and 4 hereof, Beneficiary shall, in its sole discretion, return any excess to
Grantor or credit such excess against future payments to be made to the Tax and
Insurance Escrow Fund. In allocating such excess, Beneficiary may deal with the
person shown on the records of Beneficiary to
be the owner of the Trust Property. If at any time Beneficiary determines that
the Tax and Insurance Escrow Fund is not or will not be sufficient to pay the
items set forth in (a) and (b) above, Beneficiary shall notify Grantor of such
determination and Grantor shall increase its monthly payments to Beneficiary by
the amount that Beneficiary estimates is sufficient to make up the deficiency at
least thirty (30) days prior to delinquency of the Taxes and/or expiration of
the Policies, as the case may be. Upon the occurrence of an Event of Default,
Beneficiary may apply any sums then present in the Tax and Insurance Escrow Fund
to the payment of the Debt in any order in its sole discretion. Until expended
or applied as above provided, any amounts in the Tax and Insurance Escrow Fund
shall constitute additional security for the Debt. The Tax and Insurance Escrow
Fund shall not constitute a trust fund and may be commingled with other monies
held by Beneficiary. No earnings or interest on the Tax and Insurance Escrow
Fund shall be payable to Grantor. If Beneficiary so elects at any time, Grantor
shall provide, at Grantor's expense, a tax service contract for the Term issued
by a tax reporting agency acceptable to Beneficiary. If Beneficiary does not so
elect, Grantor shall reimburse Beneficiary for the cost of making annual tax
searches throughout the Term.
<PAGE>
6. Replacement Escrow Fund. Grantor shall pay to Beneficiary on the eleventh day
of each calendar month the one twelfth of the amount estimated by Beneficiary in
its sole discretion to be due for replacements and repairs required to be made
to the Trust Property during the calendar year ("Replacement Escrow Fund").
Grantor hereby pledges to Beneficiary any and all monies now or hereafter
deposited in the Replacement Escrow Fund as additional security for the payment
of the Debt. Beneficiary may reassess its estimate of the amount necessary for
the Replacement Escrow Fund from time to time and in its sole discretion, and
may adjust the monthly amounts required to be deposited into the Replacement
Escrow Fund by thirty (30) days notice to Grantor. Beneficiary shall make
disbursements from the Replacement Escrow Fund as requested by Grantor, and
approved by Beneficiary in its sole discretion, on a quarterly basis in
increments of no less than $5,000.00 upon delivery by Grantor of Beneficiary's
standard form of draw request accompanied by copies of paid invoices for the
amounts requested and, if required by Beneficiary, lien waivers and releases
from all parties furnishing materials and/or services in connection with the
requested payment. Beneficiary may require an inspection of the Trust Property
at Grantor's expense prior to making a quarterly disbursement in order to verify
completion of replacements and repairs for which reimbursement is sought. The
Replacement Escrow Fund shall be held in an interest bearing account in
Beneficiary's name at a financial institution selected by Beneficiary in its
sole discretion. All earnings or interest on the Replacement Escrow Fund shall
be and become part of such Replacement Escrow Fund and shall be disbursed as
provided in this Paragraph 6. Upon the occurrence of an Event of Default,
Beneficiary may apply any sums then present in the Replacement Escrow Fund to
the payment of the Debt in any order in its sole discretion. Until expended or
applied as above provided, the Replacement Escrow Fund shall constitute
additional security for the Debt. The Replacement Escrow Fund shall not
constitute a trust fund and may be commingled with other monies held by
Beneficiary.
7. Condemnation. Grantor shall promptly give Beneficiary
written notice of the actual or threatened commencement of any condemnation or
eminent domain proceeding (a "Condemnation") and shall deliver to Beneficiary
copies of any and all papers served in connection with such Condemnation.
Following the occurrence of a Condemnation, Grantor, regardless of whether an
Award (hereinafter defined) is available, shall promptly proceed to restore,
repair, replace or rebuild the same to the extent practicable to be of at least
equal value and of substantially the same character as prior to such
Condemnation, all to be effected in accordance with applicable law.
(a) Beneficiary is hereby irrevocably appointed
as Grantor's attorney-in-fact, coupled with an interest, with exclusive power to
collect, receive and retain any award or payment ("Award") for any taking
accomplished through a
<PAGE>
Condemnation (a "Taking") and to make any compromise or settlement in connection
with such Condemnation, subject to the provisions of this Deed of Trust.
Notwithstanding any Taking by any public or quasi-public authority (including,
without limitation, any transfer made in lieu of or in anticipation of such a
Taking), Grantor shall continue to pay the Debt at the time and in the manner
provided for in the Note, in this Deed of Trust and the other Loan Documents and
the Debt shall not be reduced unless and until any Award shall have been
actually received and applied by Beneficiary to expenses of collecting the Award
and to discharge of the Debt. Beneficiary 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 in the Note. Grantor
shall cause any Award that is payable to Grantor to be paid directly to
Beneficiary.
(b) In the event of any Condemnation where the
Award is in an aggregate amount less than fifteen percent (15%) of the original
principal balance of the Note, and if, in the reasonable judgment of
Beneficiary, the Trust Property can be restored within six (6) months and prior
to maturity of the Note to an economic unit not less valuable (including an
assessment of the impact of the termination of any Leases due to such
Condemnation) and not less useful than the same was prior to the Condemnation,
and after such restoration will adequately secure the outstanding balance of the
Debt, then, if no Event of Default shall have occurred and be then continuing,
the proceeds of the Award (after reimbursement of any expenses incurred by
Beneficiary) shall be applied to reimburse Grantor for the cost of restoring,
repairing, replacing or rebuilding the Trust Property or part thereof subject to
Condemnation, in the manner set forth below. Grantor hereby covenants and agrees
to commence and diligently to prosecute such restoring, repairing, replacing or
rebuilding; provided always, that Grantor shall pay all costs (and if required
by Beneficiary, Grantor shall deposit the total thereof with Beneficiary in
advance) of such restoring, repairing, replacing or rebuilding in excess of the
Award made available pursuant to the terms hereof.
(c) Except as provided above, the Award collected
upon any Condemnation shall, at the option of Beneficiary in its sole
discretion, be applied to the payment of the Debt or applied to reimburse
Grantor for the cost of restoring, repairing, replacing or rebuilding the Trust
Property or part thereof subject to the Condemnation, in the manner set forth
below. Any such application to the Debt shall be without any prepayment
consideration except that if an Event of Default, or an event with notice and/or
the passage of time would constitute an Event of Default, has occurred then the
Grantor shall pay to Beneficiary an additional amount equal to the Yield
Maintenance Premium, if any, that would be required under Paragraph 57 hereof if
a Defeasance Deposit was to be made by Grantor. Any such application to the Debt
shall be applied to those payments of
<PAGE>
principal and interest last due under the Note but shall not postpone or reduce
any payments otherwise required pursuant to the Note other than such last due
payments. If the Trust Property is sold, through foreclosure or otherwise, prior
to the receipt by Beneficiary of such Award, Beneficiary shall have the right,
whether or not a deficiency judgment on the Note shall be recoverable or shall
have been sought, recovered or denied, to receive all or a portion of said Award
sufficient to pay the Debt.
(d) In the event Grantor is entitled to
reimbursement out of the Award received by Beneficiary, such proceeds shall be
disbursed from time to time upon Beneficiary being furnished with (1) evidence
satisfactory to it of the estimated cost of completion of the restoration,
repair, replacement and rebuilding resulting from such condemnation, (2) funds
or, at Beneficiary's option, assurances satisfactory to Beneficiary that such
funds are available, sufficient in addition to the proceeds of the Award to
complete the proposed restoration, repair, replacement and rebuilding, and (3)
such architect's certificates, waivers of lien, contractor's sworn statements,
title insurance endorsements, bonds, plats of survey and such other evidences of
costs, payment and performance as Beneficiary may reasonably require and
approve; and Beneficiary may, in any event, require that all plans and
specifications for such restoration, repair, replacement and rebuilding be
submitted to and approved by Beneficiary prior to commencement of work. No
payment made prior to the final completion of the restoration, repair,
replacement and rebuilding shall exceed ninety percent (90%) of the value of the
work performed from time to time; funds other than proceeds of the Award shall
be disbursed prior to disbursement of such proceeds; and at all times, the
undisbursed balance of such proceeds remaining in hands of Beneficiary, together
with funds deposited for that purpose or irrevocably committed to the
satisfaction of Beneficiary by or on behalf of Grantor for that purpose, shall
be at least sufficient in the reasonable judgment of Beneficiary to pay for the
costs of completion of the restoration, repair, replacement or rebuilding, free
and clear of all liens or claims for lien. Any surplus which may remain out of
the Award received by Beneficiary after payment of such costs of restoration,
repair, replacement or rebuilding shall, in the sole and absolute discretion of
Beneficiary, be retained by Beneficiary and applied to payment of the Debt.
8. Leases and Rents.
(a) Grantor does hereby absolutely and
unconditionally assign to Beneficiary, all Grantor's right, title and interest
in all current and future Leases and Rents, it being intended by Grantor that
this assignment constitutes a present, absolute assignment and not an assignment
for additional security only. Such assignment to Beneficiary shall not be
construed to bind Beneficiary to the performance of any of the covenants,
<PAGE>
conditions or provisions contained in any such Lease or otherwise impose any
obligation upon Beneficiary. Grantor agrees to execute and deliver to
Beneficiary such additional instruments, in form and substance satisfactory to
Beneficiary, as may hereafter be requested by Beneficiary to further evidence
and confirm such assignment. Nevertheless, subject to the terms of this
paragraph, Beneficiary grants to Grantor a revocable license to operate and
manage the Trust Property and to collect the Rents. Grantor shall hold the
Rents, or a portion thereof, sufficient to discharge all current sums due on the
Debt, in trust for the benefit of Beneficiary for use in the payment of such
sums. Upon an Event of Default, without the need for notice or demand, the
license granted to Grantor herein shall automatically be revoked, and
Beneficiary shall immediately be entitled to possession of all Rents, whether or
not Beneficiary enters upon or takes control of the Trust Property. Beneficiary
is hereby granted and assigned by Grantor the right, at its option, upon
revocation of the license granted herein, to enter upon the Trust Property in
person, by agent or by court-appointed receiver to collect the Rents. Any Rents
collected after the revocation of the license may be applied toward payment of
the Debt in such priority and proportions as Beneficiary in its sole discretion
shall deem proper.
(b) All Leases shall be written on the standard
form of lease which has been approved by Beneficiary. Upon request, Grantor
shall furnish Beneficiary with executed copies of all Leases. No material
changes may be made to the Beneficiary approved standard lease without the prior
written consent of Beneficiary. In addition, all renewals of Leases and all
proposed leases shall provide for rental rates comparable to existing local
market rates and shall be arms length transactions. All Leases shall provide
that they are subordinate to this Deed of Trust and that the tenant agrees to
attorn to Beneficiary.
(c) Grantor (i) shall observe and perform all the
obligations imposed upon the lessor under the Leases and shall not do or permit
to be done anything to impair the value of the Leases as security for the Debt;
(ii) shall promptly send copies to Beneficiary of all notices of default which
Grantor shall send or receive thereunder; (iii) shall enforce all the terms,
covenants and conditions contained in the Leases upon the part of the lessee
thereunder to be observed or performed, short of termination thereof; (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 the Leases or the
Rents; (vi) shall deliver to Beneficiary, upon request, tenant estoppel
certificates from each commercial tenant at the Trust Property in form and
substance reasonably satisfactory to Beneficiary, provided that Grantor shall
not be required to deliver such certificates more frequently than two (2) times
in any calendar year; and (vii) shall execute and deliver at the request of
Beneficiary all such further assurances, confirmations and
<PAGE>
assignments in connection with the Trust Property as Beneficiary shall from time
to time require. Except to the extent Grantor is acting in the ordinary course
of business as a prudent operator of property similar to the Trust Property,
Grantor (A) shall not, alter, modify or change the terms of the Leases in any
material respect without the prior written consent of Beneficiary; (B) shall not
convey or transfer or suffer or permit a conveyance or transfer of the Trust
Property 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, tenants under
the Leases; (C) shall not consent to any assignment of or subletting under the
Leases not in accordance with their terms, without the prior written consent of
Beneficiary; and (D) shall not cancel or terminate the Leases or accept a
surrender thereof, except if a tenant is in default thereunder; provided,
however, that any Lease may be cancelled if at the time of the cancellation
thereof a new Lease is entered into on substantially the same terms or more
favorable terms as the cancelled Lease.
(d) All security deposits of tenants, whether
held in cash or any other form, shall not be commingled with any other funds of
Grantor and, if cash, shall be deposited by Grantor at such commercial or
savings bank or banks as may be reasonably satisfactory to Beneficiary. Any bond
or other instrument which Grantor is permitted to hold in lieu of cash security
deposits under any applicable legal requirements shall be maintained in full
force and effect in the full amount of such deposits unless replaced by cash
deposits as hereinabove described, shall be issued by an institution reasonably
satisfactory to Beneficiary, shall, if permitted pursuant to any legal
requirements, name Beneficiary as payee or mortgagee thereunder (or at
Beneficiary's option, be fully assignable to Beneficiary) and shall, in all
respects, comply with any applicable legal requirements and otherwise be
reasonably satisfactory to Beneficiary. Grantor shall, upon request, provide
Beneficiary with evidence reasonably satisfactory to Beneficiary of Grantor's
compliance with the foregoing. Following the occurrence and during the
continuance of any Event of Default, Grantor shall, upon Beneficiary's request,
if permitted by any applicable legal requirements, turn over to Beneficiary the
security deposits (and any interest theretofore earned thereon) with respect to
all or any portion of the Trust Property, to be held by Beneficiary subject to
the terms of the Leases.
9. Representations and Covenants Concerning Loan.
Grantor represents, warrants and covenants as follows:
(a) The Note, this Deed of Trust and the other
Loan Documents are not subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury, nor would the operation of any of
the terms of the Note, this Deed of Trust or any of the other Loan Documents, or
the exercise of any right thereunder, render this Deed of Trust unenforceable,
in
<PAGE>
whole or in part, or subject to any right of rescission, set-off, counterclaim
or defense, including the defense of usury.
(b) All certifications, permits, licenses and
approvals, including, without limitation, certificates of completion and
occupancy permits required for the legal use, occupancy of the Trust Property,
have been obtained and are in full force and effect. The Trust Property is free
of material damage and is in good repair, and there is no proceeding pending for
the total or partial condemnation of, or affecting, the Trust Property.
(c) All of the Improvements which were included
in determining the appraised value of the Trust Property lie wholly within the
boundaries and building restriction lines of the Trust Property, and no
improvements on adjoining properties encroach upon the Trust Property, and no
easements or other encumbrances upon the Premises encroach upon any of the
Improvements, so as to affect the value or marketability of the Trust Property
except those which are insured against by title insurance. All of the
Improvements comply with all material requirements of any applicable zoning and
subdivision laws and ordinances.
(d) The Trust Property is not subject to any
Leases other than the Leases described in the rent roll delivered to Beneficiary
in connection with this Deed of Trust. No person has any possessory interest in
the Trust Property or right to occupy the same except under and pursuant to the
provisions of the Leases. The current Leases are in full force and effect and
there are no defaults thereunder by either party and there are no conditions
that, with the passage of time or the giving of notice, or both, would
constitute defaults thereunder.
(e) The survey of the Trust Property delivered to
Beneficiary in connection with this Deed of Trust, has been performed by a duly
licensed surveyor or registered professional engineer in the jurisdiction in
which the Trust Property is situated, is certified to the Beneficiary, its
successors and assigns, and the title insurance company, and is in accordance
with the most current minimum standards for title surveys as determined by the
American Land Title Association, with the signature and seal of a licensed
engineer or surveyor affixed thereto, and does not fail to reflect any material
matter affecting the Trust Property or the title thereto.
(f) The Trust Property is and shall at all times
remain in compliance with all statutes, ordinances, regulations and other
governmental or quasi-governmental requirements and private covenants now or
hereafter relating to the ownership, construction, use or operation of the Trust
Property.
(g) There has not been and shall never be
committed by Grantor or any other person in occupancy of or
<PAGE>
involved with the operation or use of the Trust Property any act or omission
affording the federal government or any state or local government the right of
forfeiture as against the Trust Property or any part thereof or any monies paid
in performance of Grantor's obligations under any of the Loan Documents. Grantor
hereby covenants and agrees not to commit, permit or suffer to exist any act or
omission affording such right of forfeiture.
(h) The Management Agreement (the "Management
Agreement") between Grantor and Winthrop Management ("Manager") pursuant to
which Manager operates the Trust Property is in full force and effect and there
is no default or violation by any party thereunder. The fee due under the
Management Agreement, and the terms and provisions of the Management Agreement,
are subordinate to this Deed of Trust and the Manager shall attorn to
Beneficiary.
10. Single Purpose Entity/Separateness. Grantor
represents, warrants and covenants as follows:
(a) Grantor does not own and will not own any
encumbered asset or property other than (i) the Trust Property, and (ii)
incidental personal property necessary for the ownership or operation of the
Trust Property.
(b) Grantor will not engage in any business other
than the ownership, management and operation of the Trust Property and Grantor
will conduct and operate its business as presently conducted and operated.
(c) Grantor will not enter into any contract or
agreement with any affiliate of the Grantor, any constituent party of Grantor,
any guarantor (a "Guarantor") of the Debt or any part thereof or any affiliate
of any constituent party or Guarantor, except upon terms and conditions that are
substantially similar to those that would be available on an arms-length basis
with third parties other than any such party.
(d) Grantor has not incurred and will not incur
any indebtedness, secured or unsecured, direct or indirect, absolute or
contingent (including guaranteeing any obligation), other than (i) the Debt,
(ii) trade and operational debt incurred in the ordinary course of business with
trade creditors and in amounts as are normal and reasonable under the
circumstances, and (iii) debt incurred in the financing of equipment and other
personal property used on the Premises. No indebtedness other than the Debt may
be secured (subordinate or pari passu) by the Trust Property.
(e) Grantor has not made and will not make any
loans or advances to any third party (including any affiliate or constituent
party, any Guarantor or any affiliate of any constituent party or Guarantor),
and shall not acquire obligations or securities of its affiliates.
<PAGE>
(f) Grantor is and will remain solvent and Grantor will pay its debts
and liabilities (including, as applicable, shared personnel and overhead
expenses) from its assets as the same shall become due.
(g) Grantor has done or caused to be done and
will do all things necessary to observe organizational formalities and preserve
its existence, and Grantor will not, nor will Grantor permit any constituent
party or Guarantor to amend, modify or otherwise change the partnership
certificate, partnership agreement, articles of incorporation and bylaws, trust
or other organizational documents of Grantor or such constituent party or
Guarantor without the prior written consent of Beneficiary.
(h) Grantor will maintain all of its books,
records, financial statements and bank accounts separate from those of its
affiliates and any constituent party and Grantor will file its own tax returns.
Grantor shall maintain its books, records, resolutions and agreements as
official records.
(i) Grantor will be, and at all times will hold
itself out to the public as, a legal entity separate and distinct from any other
entity (including any affiliate of Grantor, any constituent party of Grantor,
any Guarantor or any affiliate of any constituent party or Guarantor), shall
correct any known misunderstanding regarding its status as a separate entity,
shall conduct business in its own name, shall not identify itself or any of its
affiliates as a division or part of the other and shall maintain and utilize a
separate telephone number and separate stationery, invoices and checks.
(j) Grantor will maintain adequate capital for
the normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations.
(k) Grantor will not seek the dissolution,
winding up, liquidation, consolidation or merger in whole or in
part, of the Grantor.
(l) Grantor will not commingle the funds and
other assets of Grantor with those of any affiliate or constituent party, any
Guarantor, or any affiliate of any constituent party or Guarantor, or any other
person.
(m) Grantor has and will maintain its assets in
such a manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any affiliate or constituent party,
any Guarantor, or any affiliate of any constituent party or Guarantor, or any
other person.
<PAGE>
(n) Grantor does not and will not hold itself out
to be responsible for the debts or obligations of any other
person.
(o) Grantor shall allocate fairly and reasonably
any overhead for shared office space;
(p) The Grantor's obligation to indemnify its
directors and officers is fully subordinated to the Debt and does not constitute
a claim against the Grantor in the event the cash flow in excess of amounts
necessary to pay holders of the Debt is insufficient to pay such obligations.
(q) Grantor shall pay the salaries of its own
employees and maintain a sufficient number of employees in light
of contemplated business operations.
(r) Grantor shall not guarantee or become
obligated for the debts of any other entity or hold out its credit as being
available to satisfy the obligations of others.
(s) Grantor shall correct any misunderstanding
regarding the separate identity of the Grantor.
(t) Grantor shall not identify its partners,
members or shareholders, or affiliates of any of them, as a
division or part of it.
(u) Grantor shall not pledge its assets for the
benefit of any other entity.
11. Maintenance of Trust Property. Grantor shall cause the
Trust Property to be maintained in a good and safe condition and repair. The
Improvements and the Equipment shall not be removed, demolished or materially
altered (except for normal replacement of the Equipment) without the consent of
Beneficiary. Grantor shall promptly comply with all laws, orders and ordinances
affecting the Trust Property, or the use thereof. Grantor shall promptly repair,
replace or rebuild any part of the Trust Property that is destroyed by any
casualty, or becomes damaged, worn or dilapidated or that is affected by any
proceeding of the character referred to in Paragraph 7 hereof and shall complete
and pay for any structure at any time in the process of construction or repair
on the Premises. Grantor 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
Trust Property or any part thereof. If under applicable zoning provisions the
use of all or any portion of the Trust Property is or shall become a
nonconforming use, Grantor will not cause or permit such nonconforming use to be
discontinued or abandoned without the express written consent of Beneficiary.
Grantor shall not (i) change the use of the Trust Property, (ii) permit or
suffer to occur any waste on or to the
-19-
<PAGE>
Trust Property or to any portion thereof or (iii) take any steps whatsoever to
convert the Trust Property, or any portion thereof, to a condominium or
cooperative form of management. Grantor will not install or permit to be
installed on the Premises any underground storage tank.
12. Transfer or Encumbrance of the Trust Property.
(a) Grantor acknowledges that Beneficiary has
examined and relied on the creditworthiness and experience of Grantor in owning
and operating properties such as the Trust Property in agreeing to make the
Loan, and that Beneficiary will continue to rely on Grantor's ownership of the
Trust Property as a means of maintaining the value of the Trust Property as
security for repayment of the Debt. Grantor acknowledges that Beneficiary has a
valid interest in maintaining the value of the Trust Property so as to ensure
that, should Grantor default in the repayment of the Debt, Beneficiary can
recover the Debt by a sale of the Trust Property. Grantor shall not, without the
prior written consent of Beneficiary, sell, convey, alienate, mortgage,
encumber, pledge or otherwise transfer the Trust Property or any part thereof,
or permit the Trust Property or any part thereof to be sold, conveyed,
alienated, mortgaged, encumbered, pledged or otherwise transferred.
(b) A sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer within the meaning of this Paragraph 12 shall be
deemed to include (i) an installment sales agreement wherein Grantor agrees to
sell the Trust Property or any part thereof for a price to be paid in
installments; (ii) an agreement by Grantor leasing all or a substantial part of
the Trust 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, Grantor's right, title and interest in and to any Leases or any Rents; (iii)
if Grantor, Guarantor, or any general partner of Grantor or Guarantor is a
corporation, the voluntary or involuntary sale, conveyance or transfer 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 in one or a series of transactions 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 or any change in the control of
such corporation; and (iv) if Grantor, any Guarantor or any general partner of
Grantor or any Guarantor is a limited or general partnership, joint venture or
limited liability company, the change, removal, resignation or addition of a
general partner, managing partner, limited partner, joint venturer or member or
the transfer of the partnership interest of any general partner, managing
partner or limited partner or the transfer of the interest of any joint venturer
or member, except as provided below.
<PAGE>
Notwithstanding the foregoing, the following transfers (which shall include
pledges) shall not be prohibited hereby:
(i) Any transfer of a limited partnership
interest in Grantor or in Winthrop Growth
Investor 1 Limited Partnership ("WGI"), the
general partner of Grantor;
(ii) Any substitution of the general
partnership interest in the Grantor or WGI
by a corporation which meets or by a limited
partnership which (i) meets and whose
corporate general partner meets the single
purpose requirements set forth in Paragraph
10 hereof (hereinafter collectively, the
"Single Purpose Requirements"), and (ii) is
controlled by Winthrop Financial Associates,
A Limited Partnership ("WFA");
(iii) The transfer of an interest in the
general partner of Grantor or WGI to a
corporation provided the corporation meets
the Single Purpose Requirements or to a
limited partnership which meets and whose
corporate
general partner meets such Single Purpose
Requirements and provided further that such
new corporation or limited partnership
become a general partner of the Grantor and
provided further that such substitute
corporation or substitute limited
partnership is controlled by WFA;
(iv) Transfers of limited partnership interests in WFA will
be permitted;
(c) Beneficiary 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
Grantor's sale, conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Trust Property without Beneficiary's consent if such consent is
required. This provision shall apply to every sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Trust Property regardless of
whether voluntary or not, or whether or not Beneficiary has consented to any
previous sale, conveyance, alienation, mortgage, encumbrance, pledge or transfer
of the Trust Property.
(d) Beneficiary's consent to one sale,
conveyance, alienation, mortgage, encumbrance, pledge or transfer of the Trust
Property shall not be deemed to be a waiver of Beneficiary's right to require
such consent to any future occurrence of same. Any sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Trust Property made in
<PAGE>
contravention of this paragraph shall be null and void and of no
force and effect.
(e) Grantor agrees to bear and shall pay or
reimburse Beneficiary on demand for all reasonable expenses (including, without
limitation, reasonable attorneys' fees and disbursements, title search costs and
title insurance endorsement premiums) incurred by Beneficiary in connection with
the review, approval and documentation of any such sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer.
(f) Where Beneficiary's consent to the sale or
transfer of the Trust Property is required, such consent will not be
unreasonably withheld after consideration of all relevant factors, provided
that:
(i) no Event of Default or event which with
the giving of notice or the passage of time
would constitute an Event of Default shall
have occurred and remain uncured;
(ii) the proposed transferee ("Transferee")
shall be a reputable entity or person of
good character, creditworthy, with
sufficient financial worth considering the
obligations assumed and undertaken, as
evidenced by financial statements and other
information reasonably requested by
Beneficiary and shall conform in all
respects with the Single purpose
Requirements;
(iii) the Transferee and its property
manager shall have sufficient experience in
the ownership and management of properties
similar to the Trust Property, and
Beneficiary shall be provided with
reasonable evidence thereof (and Beneficiary
reserves the right to approve the Transferee
without approving the substitution of the
property manager);
(iv) Beneficiary shall have recommendations
in writing from the Rating Agencies (as
hereinafter defined) to the effect that such
transfer will not result in a
requalification, reduction or withdrawal of
any rating initially assigned or to be
assigned in a Secondary Market Transaction
(as hereinafter defined). The term "Rating
Agencies" as used herein shall mean each of
Standard & Poor's Ratings Group, a division
of McGraw-Hill, Inc., Moody's Investors
Service, Inc., Duff and Phelps Credit Rating
Co. and Fitch Investors Service, Inc. or any
other nationally-recognized statistical
<PAGE>
rating agency which has been approved by
Beneficiary;
(v) the Transferee shall have executed and
delivered to Beneficiary an assumption
agreement in form and substance acceptable
to Beneficiary, evidencing such Transferee's
agreement to abide and be bound by the terms
of the Note, this Deed of Trust and the
other Loan Documents, together with such
legal opinions and title insurance
endorsements as may be reasonably requested
by Beneficiary; and
(vi) Beneficiary shall have received an
assumption fee equal to one percent (1%) of
the then unpaid principal balance of the
Note in addition to the payment of all costs
and expenses incurred by Beneficiary in
connection with such assumption (including
reasonable attorneys' fees and costs).
13. Estoppel Certificates and No Default Affidavits.
(a) After request by Beneficiary, Grantor shall
within ten (10) days furnish Beneficiary with a statement, duly acknowledged and
certified, setting forth (i) the amount of the original principal amount of the
Note, (ii) the unpaid principal amount of the Note, (iii) the rate of interest
of the Note, (iv) the date installments of interest and/or principal were last
paid, (v) any offsets or defenses to the payment of the Debt, if any, and (vi)
that the Note, this Deed of Trust and the other Loan Documents are valid, legal
and binding obligations and have not been modified or if modified, giving
particulars of such modification.
(b) After request by Beneficiary, Grantor shall
within ten (10) days furnish Beneficiary with a certificate reaffirming all
representations and warranties of Grantor set forth herein and in the other Loan
Documents as of the date requested by Beneficiary or, to the extent of any
changes to any such representations and warranties, so stating such changes.
(c) If the Trust Property includes commercial
property, Grantor shall deliver to Beneficiary upon request, tenant estoppel
certificates from each commercial tenant at the Trust Property in form and
substance reasonably satisfactory to Beneficiary provided that Grantor shall not
be required to deliver such certificates more frequently than two (2) times in
any calendar year.
14. Changes in Laws Regarding Taxation. If any law is
enacted or adopted or amended after the date of this Deed of
Trust which deducts the Debt from the value of the Trust Property
<PAGE>
for the purpose of taxation or which imposes a tax, either directly or
indirectly, on the Debt or Beneficiary's interest in the Trust Property, Grantor
will pay such tax, with interest and penalties thereon, if any. In the event
Beneficiary is advised by counsel chosen by it that the payment of such tax or
interest and penalties by Grantor would be unlawful or taxable to Beneficiary or
unenforceable or provide the basis for a defense of usury, then in any such
event, Beneficiary shall have the option, by written notice of not less than
ninety (90) days, to declare the Debt immediately due and payable.
15. No Credits on Account of the Debt. Grantor 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 Trust Property, or any
part thereof, and no deduction shall otherwise be made or claimed from the
assessed value of the Trust Property, or any part thereof, for real estate tax
purposes by reason of this Deed of Trust or the Debt. In the event such claim,
credit or deduction shall be required by law, Beneficiary shall have the option,
by written notice of not less than ninety (90) days, to declare the Debt
immediately due and payable.
16. Documentary Stamps. If at any time the United States of
America, any State thereof or any subdivision of any such State shall require
revenue or other stamps to be affixed to the Note or this Deed of Trust, or
impose any other tax or charge on the same, Grantor will pay for the same, with
interest and penalties thereon, if any.
17. Controlling Agreement. It is expressly stipulated and
agreed to be the intent of Grantor, and Beneficiary at all times to comply with
applicable state law or applicable United States federal law (to the extent that
it permits Beneficiary to contract for, charge, take, reserve, or receive a
greater amount of interest than under state law) and that this Paragraph 17
shall control every other covenant and agreement in this Deed of Trust and the
other Loan Documents. If the applicable law (state or federal) is ever
judicially interpreted so as to render usurious any amount called for under the
Note or under any of the other Loan Documents, or contracted for, charged,
taken, reserved, or received with respect to the Debt, or if Beneficiary's
exercise of the option to accelerate the maturity of the Note, or if any
prepayment by Grantor results in Grantor having paid any interest in excess of
that permitted by applicable law, then it is Grantor's and Beneficiary's express
intent that all excess amounts theretofore collected by Beneficiary shall be
credited on the principal balance of the Note and all other Debt (or, if the
Note and all other Debt have been or would thereby be paid in full, refunded to
Grantor), and the provisions of the Note and the other Loan Documents
immediately be deemed reformed and the amounts thereafter collectible hereunder
and thereunder reduced, without the necessity of the execution of any new
documents, so as to comply
<PAGE>
with the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for hereunder or thereunder. All sums paid or agreed to be paid
to Beneficiary 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 Debt until payment in full so that
the rate or amount of interest on account of the Debt does not exceed the
maximum lawful rate from time to time in effect and applicable to the Debt for
so long as the Debt is outstanding. Notwithstanding anything to the contrary
contained herein or in any of the other Loan Documents, it is not the intention
of Beneficiary to accelerate the maturity of any interest that has not accrued
at the time of such acceleration or to collect unearned interest at the time of
such acceleration.
18. Financial Statements.
(a) The financial statements heretofore furnished
to Beneficiary are, as of the dates specified therein, complete and correct and
fairly present the financial condition of the Grantor and any other persons or
entities that are the subject of such financial statements, and are prepared in
accordance with generally accepted accounting principles. Grantor does not have
any contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or anticipated losses from any unfavorable commitments
that are known to Grantor and reasonably likely to have a materially adverse
effect on the Trust Property or the operation thereof as a multifamily
residential apartment project, except as referred to or reflected in said
financial statements. Since the date of such financial statements, there has
been no materially adverse change in the financial condition, operating or
business of Grantor from that set forth in said financial statements.
(b) Grantor will maintain full and accurate books
of accounts and other records reflecting the results of the operations of the
Trust Property and will furnish to Beneficiary on or before ninety (90) days
after the end of each calendar quarter the following items, each certified by
Grantor as being true and correct: (i) a written statement (rent roll) dated as
of the last day of each such calendar quarter identifying each of the Leases by
the term, space occupied, rental required to be paid, security deposit paid, any
rental concessions, and identifying any defaults or payment delinquencies
thereunder; (ii) monthly and year to date operating statements prepared for each
calendar month during each such calendar quarter, each of which shall include an
itemization of actual (not pro forma) capital expenditures during the applicable
period. Until a Secondary Market Transaction (hereinafter defined) has occurred,
the Grantor shall furnish monthly each of the items listed in the immediately
preceding sentence within thirty (30) days after the end of such month. Within
ninety (90) days following the end of each calendar year, Grantor shall furnish
statements of its financial affairs and condition including a balance sheet and
a
<PAGE>
statement of profit and loss for the Grantor in such detail as Beneficiary may
request, and setting forth the financial condition and the income and expenses
for the Trust Property for the immediately preceding calendar year prepared by
one of the "big six" public accounting firms. Grantor's annual financial
statements shall be accompanied by a certificate executed by the chief financial
officer of Grantor or the general partner of Grantor, as applicable, stating
that each such annual financial statement presents fairly the financial
condition of the Trust Property being reported upon and has been prepared in
accordance with generally accepted accounting principles consistently applied.
In addition, for the calendar year 1995, the Grantor shall submit its annual
operating statement prepared by the Grantor not later than January 20, 1996. At
any time and from time to time Grantor shall deliver to Beneficiary or its
agents such other financial data as Beneficiary or its agents shall reasonably
request with respect to the ownership, maintenance, use and operation of the
Trust Property.
(c) In the event that Grantor fails to provide to
Beneficiary or its designee any of the financial statements, certificates,
reports or information (the "Required Records") required by this Paragraph 18
within thirty (30) days after the date upon which such Required Record is due,
Grantor shall pay to Beneficiary, at Beneficiary's option and in its sole
discretion, an amount equal to $5,000 for each Required Record that is not
delivered; provided that, Beneficiary has given at least fifteen (15) days prior
written notice to Grantor of such failure by Grantor to timely submit the
applicable Required Record.
19. Performance of Other Agreements. Grantor shall
observe and perform each and every term to be observed or
performed by Grantor pursuant to the terms of any agreement or
recorded instrument affecting or pertaining to the Trust
Property.
20. Further Acts, Etc.
(a) Grantor will, at the cost of Grantor, and
without expense to Beneficiary, do, execute, acknowledge and deliver all and
every such further acts, deeds, conveyances, mortgages, assignments, notices of
assignment, Uniform Commercial Code financing statements or continuation
statements, transfers and assurances as Beneficiary shall, from time to time,
require, for the better assuring, conveying, assigning, transferring, and
confirming unto Beneficiary the property and rights hereby deeded, mortgaged,
given, granted, bargained, sold, alienated, enfeoffed, conveyed, confirmed,
pledged, assigned and hypothecated or intended now or hereafter so to be, or
which Grantor may be or may hereafter become bound to convey or assign to
Beneficiary, or for carrying out the intention or facilitating the performance
of the terms of this Deed of Trust or for filing, registering or recording this
Deed of Trust or for facilitating the sale of the Loan and the Loan Documents as
described in
<PAGE>
Paragraph 20(b) below. Grantor, on demand, will execute and deliver and hereby
authorizes Beneficiary to execute in the name of Grantor or without the
signature of Grantor to the extent Beneficiary may lawfully do so, one or more
financing statements, chattel mortgages or other instruments, to evidence more
effectively the security interest of Beneficiary in the Trust Property. Upon
foreclosure, the appointment of a receiver or any other relevant action, Grantor
will, at the cost of Grantor and without expense to Beneficiary, cooperate fully
and completely to effect the assignment or transfer of any license, permit,
agreement or any other right necessary or useful to the operation of or the
Trust Property. Grantor grants to Beneficiary an irrevocable power of attorney
coupled with an interest for the purpose of exercising and perfecting any and
all rights and remedies available to Beneficiary at law and in equity,
including, without limitation, such rights and remedies available to Beneficiary
pursuant to this paragraph.
(b) Grantor acknowledges that Beneficiary and its
successors and assigns may (i) sell this Deed of Trust, the Note and other Loan
Documents to one or more investors as a whole loan, (ii) participate the Loan
secured by this Deed of Trust to one or more investors, (iii) deposit this Deed
of Trust, the Note and other Loan Documents with a trust, which trust may sell
certificates to investors evidencing an ownership interest in the trust assets,
or (iv) otherwise sell the Loan or interest therein to investors (the
transactions referred to in clauses (i) through (iv) are hereinafter each
referred to as "Secondary Market Transaction"). Grantor shall cooperate with
Beneficiary in effecting any such Secondary Market Transaction and shall
cooperate to implement all requirements imposed by any Rating Agency involved in
any Secondary Market Transaction. Grantor shall provide such information, legal
opinions and documents relating to Grantor, Guarantor, if any, the Trust
Property and any tenants of the Improvements as Beneficiary may reasonably
request in connection with such Secondary Market Transaction. In addition,
Grantor shall make available to Beneficiary all information concerning its
business and operations that Beneficiary may reasonably request. Beneficiary
shall be permitted to share all such information with the investment banking
firms, Rating Agencies, accounting firms, law firms and other third-party
advisory firms involved with the Loan and the Loan Documents or the applicable
Secondary Market Transaction. It is understood that the information provided by
Grantor to Beneficiary may ultimately be incorporated into the offering
documents for the Secondary Market Transaction and thus various investors may
also see some or all of the information. Beneficiary and all of the aforesaid
third-party advisors and professional firms shall be entitled to rely on the
information supplied by, or on behalf of, Grantor and Grantor indemnifies
Beneficiary as to any losses, claims, damages or liabilities that arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in such information or arise out of or are based upon
the omission or
<PAGE>
alleged omission to state therein a material fact required to be stated in such
information or necessary in order to make the statements in such information, or
in light of the circumstances under which they were made, not misleading.
Beneficiary may publicize the existence of the Loan in connection with its
marketing for a Secondary Market Transaction or otherwise as part of its
business development.
21. Recording of Deed of Trust, Etc. Grantor forthwith upon
the execution and delivery of this Deed of Trust and thereafter, from time to
time, will cause this Deed of Trust, and any security instrument creating a lien
or security interest or evidencing the lien hereof upon the Trust Property and
each instrument of further assurance to be filed, registered or recorded in such
manner and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the lien or security interest
hereof upon, and the interest of Beneficiary in, the Trust Property. Grantor
will pay all filing, registration or recording fees, and all expenses incident
to the preparation, execution and acknowledgment of this Deed of Trust, any deed
of trust supplemental hereto, any security instrument with respect to the Trust
Property and any instrument of further assurance, and all federal, state, county
and municipal, taxes, duties, imposts, assessments and charges arising out of or
in connection with the execution and delivery of this Deed of Trust, any deed of
trust supplemental hereto, any security instrument with respect to the Trust
Property or any instrument of further assurance, except where prohibited by law
so to do. Grantor shall hold harmless and indemnify Beneficiary, its successors
and assigns, against any liability incurred by reason of the imposition of any
tax on the making and recording of this Deed of Trust.
22. Reporting Requirements. Grantor agrees to give
prompt notice to Beneficiary of the insolvency or bankruptcy
filing of Grantor or the death, insolvency or bankruptcy filing
of any Guarantor.
23. Events of Default. The Debt shall become
immediately due and payable at the option of Beneficiary upon the
happening of any one or more of the following events of default
(each an "Event of Default"):
(a) if any portion of the Debt is not paid when
due;
(b) subject to Grantor's right to contest as
provided herein, if any of the Taxes or Other Charges are not
paid when the same are due and payable;
(c) if the Policies are not kept in full force
and effect, or if certified copies of the Policies are not
delivered to Beneficiary within ten (10) days after request;
<PAGE>
(d) except as permitted herein, if Grantor
transfers or encumbers any portion of the Trust Property without
Beneficiary's prior written consent;
(e) if any representation or warranty of Grantor,
or of any Guarantor, made herein or in any other Loan Document or in any
certificate, report, financial statement or other instrument or document
furnished to Beneficiary shall have been false or misleading in any material
respect as of the date the representation or warranty was made;
(f) if Grantor or any Guarantor shall make an
assignment for the benefit of creditors;
(g) if a receiver, liquidator or trustee of
Grantor or of any Guarantor shall be appointed or if Grantor or any Guarantor
shall be adjudicated a bankrupt or insolvent, or if any petition for bankruptcy,
reorganization or arrangement pursuant to federal bankruptcy law, or any similar
federal or state law, shall be filed by or against, consented to, or acquiesced
in by, Grantor or any Guarantor or if any proceeding for the dissolution or
liquidation of Grantor or of any Guarantor shall be instituted; however, if such
appointment, adjudication, petition or proceeding was involuntary and not
consented to by Grantor or such Guarantor, upon the same not being discharged,
stayed or dismissed within ninety (90) days;
(h) if Grantor shall be in default under any
other deed of trust or security agreement covering any part of the Trust
Property whether it be superior or junior in lien to this Deed of Trust;
(i) subject to Grantor's right to contest as
provided herein, if the Trust Property becomes subject to any mechanic's,
materialman's or other lien except a lien for local real estate taxes and
assessments not then due and payable;
(j) if Grantor fails to cure properly any
violations of laws or ordinances affecting or which may be interpreted to affect
the Trust Property within thirty (30) days after Grantor first receives notice
of any such violations;
(k) except as permitted in this Deed of Trust,
the actual or threatened alteration, improvement, demolition or
removal of any of the Improvements without the prior consent of
Beneficiary;
(l) if Grantor shall continue to be in default
under any term, covenant, or provision of the Note or any of the other Loan
Documents, beyond applicable cure periods contained in those documents;
(m) if Grantor shall continue to be in default
under any other term, covenant or provision of this Deed of Trust
<PAGE>
not specified in (a) to (l) above, for ten (10) days after notice to Grantor
from Beneficiary, 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 Beneficiary in the
case of any other default, provided, however, that if such non-monetary default
is susceptible of cure but cannot reasonably be cured within such thirty (30)
day period and provided further that Grantor shall have commenced to cure such
non-monetary default within such thirty (30) day period and thereafter
diligently and expeditiously proceeds to cure same, such thirty (30) day period
shall be extended for such time as is reasonably necessary for Grantor, in the
exercise of due diligence, to cure such non-monetary default; such additional
period not to exceed sixty (60) days;
(n) if without Beneficiary's prior written
consent, (i) the Manager for the Trust Property under the Management Agreement
(or any successor management agreement) resigns or is removed, or (ii) the
ownership, management or control of such Manager is transferred to a person or
entity other than Winthrop Management, or (iii) there is any material change in
the Management Agreement (or any successor management agreement) Grantor.
Notwithstanding the foregoing, Grantor or any affiliates of Winthrop Financial
Associates may be substituted as Manager without Beneficiaries consent if the
Rating Agencies approves of such substitute;
(o) if Grantor ceases to continuously operate the
Trust Property or any material portion thereof as a multifamily residential
apartment project for any reason whatsoever (other than temporary cessation in
connection with any repair or renovation thereof undertaken with the consent of
Beneficiary);
(p) if there shall be default under any of the
other Loan Documents beyond any applicable cure periods contained in such
documents, whether as to Grantor or any of the Trust Property, or if any other
such event shall occur or condition shall exist, if the effect of such event or
condition is to accelerate the maturity of any portion of the Debt or to permit
Beneficiary to accelerate the maturity of all or any portion of the Debt;
(q) if on or before July 1, 2003, Grantor and
Winthrop Growth Investors 1 Limited Partnership, the sole general partner of
Grantor, fail to provide to Beneficiary evidence satisfactory to Beneficiary
that they have either (i) extended the expiration dates of each of their
respective limited partnership agreements to a date which is not earlier than
July 1, 2026 or (ii) taken other action such that Grantor and WGI will not
dissolve on December 31, 2003 and will continue in existence until a date not
earlier than July 1, 2026.
<PAGE>
24. Late Payment Charge. If any portion of the Debt is not paid on the date on
which it is due, Grantor shall pay to Beneficiary upon demand an amount equal to
the lesser of five percent (5%) of such unpaid portion of the Debt or the
maximum amount permitted by applicable law in order to defray a portion of the
expenses incurred by Beneficiary in handling and processing such delinquent
payment and to compensate Beneficiary for the loss of the use of such delinquent
payment, and such amount shall be secured by this Deed of Trust.
25. Right To Cure Defaults. Upon the occurrence of any Event
of Default or if Grantor fails to make any payment or to do any act as herein
provided, Beneficiary may, but without any obligation to do so and without
notice to or demand on Grantor and without releasing Grantor from any obligation
hereunder, make or do the same in such manner and to such extent as Beneficiary
may deem necessary to protect the security hereof. Beneficiary is authorized to
enter upon the Trust Property for such purposes or appear in, defend, or bring
any action or proceeding to protect its interest in the Trust Property or to
foreclose this Deed of Trust or collect the Debt, and the cost and expense
thereof (including reasonable attorneys' fees and disbursements to the extent
permitted by law), with interest at the Default Rate (as defined in the Note)
for the period after notice from Beneficiary that such cost or expense was
incurred to the date of payment to Beneficiary, shall constitute a portion of
the Debt, shall be secured by this Deed of Trust and the other Loan Documents
and shall be due and payable to Beneficiary upon demand.
26. Remedies.
(a) Upon the occurrence of any Event of Default,
Beneficiary may take such action, without notice or demand, as it deems
advisable to protect and enforce its rights against Grantor and in and to the
Trust Property by Beneficiary itself or otherwise, including, without
limitation, the following actions, each of which may be pursued concurrently or
otherwise, at such time and in such order as Beneficiary may determine, in its
sole discretion, without impairing or otherwise affecting the other rights and
remedies of Beneficiary:
(i) declare the entire Debt to be
immediately due and payable;
(ii institute a proceeding or proceedings,
judicial or nonjudicial, by advertisement or otherwise, for the complete
foreclosure of this Deed of Trust in which case the Trust 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;
(iii) with or without entry, to the extent
permitted and pursuant to the procedures provided by applicable
<PAGE>
law, institute proceedings for the partial foreclosure of this Deed of Trust for
the portion of the Debt then due and payable, subject to the continuing lien of
this Deed of Trust for the balance of the Debt not then due;
(iv) sell for cash or upon credit the Trust
Property or any part thereof and all estate, claim, demand, right, title and
interest of Grantor therein and rights of redemption thereof, pursuant to the
power of sale contained herein or otherwise, at one or more sales, as an
entirety or in parcels, at such time and place, upon such terms and after such
notice thereof as may be required or permitted by law;
(v)institute an action, suit or proceeding
in equity for the specific performance of any covenant, condition
or agreement contained herein, or in any of the other Loan
Documents;
(vi) recover judgment on the Note either
before, during or after any proceedings for the enforcement of
this Deed of Trust;
(vii)apply for the appointment of a trustee,
receiver, liquidator or conservator of the Trust Property, without notice and
without regard for the adequacy of the security for the Debt and without regard
for the solvency of the Grantor, any Guarantor or of any person, firm or other
entity liable for the payment of the Debt;
(viii) enforce Beneficiary's interest in the
Leases and Rents and enter into or upon the Trust Property, either personally or
by its agents, nominees or attorneys and dispossess Grantor and its agents and
servants therefrom, and thereupon Beneficiary may (A) use, operate, manage,
control, insure, maintain, repair, restore and otherwise deal with all and every
part of the Trust Property and conduct the business thereat; (B) complete any
construction on the Trust Property in such manner and form as Beneficiary deems
advisable; (C) make alterations, additions, renewals, replacements and
improvements to or on the Trust Property; (D) exercise all rights and powers of
Grantor with respect to the Trust Property, whether in the name of Grantor 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; and (E) apply the receipts from the Trust Property to the
payment of Debt, after deducting therefrom all expenses (including reasonable
attorneys' fees and disbursements) incurred in connection with the aforesaid
operations and all amounts necessary to pay the taxes, assessments insurance and
other charges in connection with the Trust Property, as well as just and
reasonable compensation for the services of Beneficiary, its counsel, agents and
employees;
<PAGE>
(ix) require Grantor to pay monthly in
advance to Beneficiary, or any receiver appointed to collect the Rents, the fair
and reasonable rental value for the use and occupation of any portion of the
Trust Property occupied by Grantor and require Grantor to vacate and surrender
possession to Beneficiary of the Trust Property or to such receiver and, in
default thereof, evict Grantor by summary proceedings or otherwise; or
(x) pursue such other rights and remedies as
may be available at law or in equity or under the Uniform Commercial Code
including without limitation the right to receive and/or establish a lock box
for all Rents proceeds from the Intangibles and any other receivables or rights
to payments of Grantor relating to the Trust Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Trust Property, this Deed of Trust shall continue as a lien on the remaining
portion of the Trust Property.
(b) The proceeds of any sale made under or by
virtue of this paragraph, together with any other sums which then may be held by
Beneficiary under this Deed of Trust, whether under the provisions of this
paragraph or otherwise, shall be applied by Beneficiary to the payment of the
Debt in such priority and proportion as Beneficiary in its sole discretion shall
deem proper.
(c) Beneficiary may adjourn from time to time any
sale by it to be made under or by virtue of this Deed of Trust by announcement
at the time and place appointed for such sale or for such adjourned sale or
sales; and, except as otherwise provided by any applicable provision of law,
Beneficiary, without further notice or publication, may make such sale at the
time and place to which the same shall be so adjourned.
(d) Upon the completion of any sale or sales
pursuant hereto, Beneficiary, or an officer of any court empowered to do so,
shall execute and deliver to the accepted purchaser or purchasers a good and
sufficient instrument, or good and sufficient instruments, conveying, assigning
and transferring all estate, right, title and interest in and to the property
and rights sold. Beneficiary is hereby irrevocably appointed the true and lawful
attorney of Grantor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Trust Property and rights so sold
and for that purpose Beneficiary may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons with
like power, Grantor hereby ratifying and confirming all that its said attorney
or such substitute or substitutes shall lawfully do by virtue hereof. Any sale
or sales made under or by virtue of this paragraph, whether made under the power
of sale herein granted or under or by virtue of judicial proceedings or of a
judgment or decree of foreclosure
<PAGE>
and sale, shall operate to divest all the estate, right, title, interest, claim
and demand whatsoever, whether at law or in equity, of Grantor in and to the
properties and rights so sold, and shall be a perpetual bar both at law and in
equity against Grantor and against any and all persons claiming or who may claim
the same, or any part thereof from, through or under Grantor.
(e) Upon any sale made under or by virtue of this
paragraph, whether made under the power of sale herein granted or under or by
virtue of judicial proceedings or of a judgment or decree of foreclosure and
sale, Beneficiary may bid for and acquire the Trust Property or any part thereof
and in lieu of paying cash therefor may make settlement for the purchase price
by crediting upon the Debt the net sales price after deducting therefrom the
expenses of the sale and costs of the action and any other sums which
Beneficiary is authorized to deduct under this Deed of Trust.
(f) No recovery of any judgment by Beneficiary
and no levy of an execution under any judgment upon the Trust Property or upon
any other property of Grantor shall affect in any manner or to any extent the
lien of this Deed of Trust upon the Trust Property or any part thereof, or any
liens, rights, powers or remedies of Beneficiary hereunder, but such liens,
rights, powers and remedies of Beneficiary shall continue unimpaired as before.
(g) Beneficiary may terminate or rescind any
proceeding or other action brought in connection with its exercise of the
remedies provided in this paragraph at any time before the conclusion thereof,
as determined in Beneficiary's sole discretion and without prejudice to
Beneficiary.
(h) Beneficiary may resort to any remedies and
the security given by the Note, this Deed of Trust or the Loan Documents in
whole or in part, and in such portions and in such order as determined by
Beneficiary's sole discretion. No such action shall in any way be considered a
waiver of any rights, benefits or remedies evidenced or provided by the Note,
this Deed of Trust or any of the other Loan Documents. The failure of
Beneficiary to exercise any right, remedy or option provided in the Note, this
Deed of Trust or any of the other Loan Documents shall not be deemed a waiver of
such right, remedy or option or of any covenant or obligation secured by the
Note, this Deed of Trust or the other Loan Documents. No acceptance by
Beneficiary of any payment after the occurrence of any Event of Default and no
payment by Beneficiary of any obligation for which Grantor is liable hereunder
shall be deemed to waive or cure any Event of Default with respect to Grantor,
or Grantor's liability to pay such obligation. No sale of all or any portion of
the Trust Property, no forbearance on the part of Beneficiary, and no extension
of time for the payment of the whole or any portion of the Debt or any other
indulgence given by Beneficiary to Grantor, shall operate to release or in any
manner affect the interest of
<PAGE>
Beneficiary in the remaining Trust Property or the liability of Grantor to pay
the Debt. No waiver by Beneficiary shall be effective unless it is in writing
and then only to the extent specifically stated. All costs and expenses of
Beneficiary in exercising its rights and remedies under this Paragraph 26
(including reasonable attorneys' fees and disbursements to the extent permitted
by law), shall be paid by Grantor immediately upon notice from Beneficiary, with
interest at the Default Rate for the period after notice from Beneficiary and
such costs and expenses shall constitute a portion of the Debt and shall be
secured by this Deed of Trust.
(i) The interests and rights of Beneficiary under
the Note, this Deed of Trust or in any of the other Loan Documents shall not be
impaired by any indulgence, including (i) any renewal, extension or modification
which Beneficiary may grant with respect to any of the Debt, (ii) any surrender,
compromise, release, renewal, extension, exchange or substitution which
Beneficiary may grant with respect to the Trust Property or any portion thereof;
or (iii) any release or indulgence granted to any maker, endorser, Guarantor or
surety of any of the Debt.
27. Right of Entry. In addition to any other rights or
remedies granted under this Deed of Trust, Beneficiary and its agents shall have
the right to enter and inspect the Trust Property at any reasonable time during
the Term. The cost of such inspections or audits shall be borne by Grantor
should Beneficiary determine that an Event of Default exists, including the cost
of all follow up or additional investigations or inquiries deemed reasonably
necessary by Beneficiary. The cost of such inspections, if not paid for by
Grantor following demand, may be added to the principal balance of the sums due
under the Note and this Deed of Trust and shall bear interest thereafter until
paid at the Default Rate.
28. Security Agreement. This Deed of Trust is both a real
property deed of trust and a "security agreement" within the meaning of the
Uniform Commercial Code. The Trust Property includes both real and personal
property and all other rights and interests, whether tangible or intangible in
nature, of Grantor in the Trust Property. Grantor by executing and delivering
this Deed of Trust has granted and hereby grants to Beneficiary, as security for
the Debt, a security interest in the Trust Property to the full extent that the
Trust Property may be subject to the Uniform Commercial Code (said portion of
the Trust Property so subject to the Uniform Commercial Code being called in
this paragraph the "Collateral"). Grantor hereby agrees with Beneficiary to
execute and deliver to Beneficiary, in form and substance satisfactory to
Beneficiary, such financing statements and such further assurances as
Beneficiary may from time to time, reasonably consider necessary to create,
perfect, and preserve Beneficiary's security interest herein granted. This Deed
of Trust shall also constitute a "fixture filing" for the purposes of the
Uniform Commercial Code. As such, this Deed of Trust
<PAGE>
covers all items of the Collateral that are or are to become fixtures.
Information concerning the security interest herein granted may be obtained from
the parties at the addresses of the parties set forth in the first paragraph of
this Deed of Trust. If an Event of Default shall occur, Beneficiary and Trustee,
in addition to any other rights and remedies which it may have, shall have and
may exercise immediately and without demand, any and all rights and remedies
granted to a secured party upon default under the Uniform Commercial Code,
including, without limiting the generality of the foregoing, the right to take
possession of the Collateral or any part thereof, and to take such other
measures as Beneficiary or Trustee may deem necessary for the care, protection
and preservation of the Collateral. Upon request or demand of Beneficiary or
Trustee, Grantor shall at its expense assemble the Collateral and make it
available to Beneficiary and Trustee at a convenient place acceptable to
Beneficiary. Grantor shall pay to Beneficiary and Trustee on demand any and all
expenses, including attorneys' fees and disbursements, incurred or paid by
Beneficiary and Trustee in protecting the interest in the Collateral and in
enforcing the rights hereunder with respect to the Collateral. Any notice of
sale, disposition or other intended action by Beneficiary and Trustee with
respect to the Collateral sent to Grantor in accordance with the provisions
hereof at least five (5) days prior to such action, shall constitute
commercially reasonable notice to Grantor. The proceeds of any disposition of
the Collateral, or any part thereof, may be applied by Beneficiary to the
payment of the Debt in such priority and proportions as Beneficiary in its sole
discretion shall deem proper. In the event of any change in name, identity or
structure of any Grantor, such Grantor shall notify Beneficiary thereof and
promptly after request shall execute, file and record such Uniform Commercial
Code forms as are necessary to maintain the priority of Beneficiary's lien upon
and security interest in the Collateral, and shall pay all expenses and fees in
connection with the filing and recording thereof. If Beneficiary shall require
the filing or recording of additional Uniform Commercial Code forms or
continuation statements, Grantor shall, promptly after request, execute, file
and record such Uniform Commercial Code forms or continuation statements as
Beneficiary shall deem necessary, and shall pay all expenses and fees in
connection with the filing and recording thereof, it being understood and
agreed, however, that no such additional documents shall increase Grantor's
obligations under the Note, this Deed of Trust and any of the other Loan
Documents. Grantor hereby irrevocably appoints Beneficiary as its
attorney-in-fact, coupled with an interest, to file with the appropriate public
office on its behalf any financing or other statements signed only by
Beneficiary, as secured party, in connection with the Collateral covered by this
Deed of Trust.
29. Actions and Proceedings. Beneficiary or Trustee
has the right to appear in and defend any action or proceeding
brought with respect to the Trust Property and to bring any
<PAGE>
action or proceeding, in the name and on behalf of Grantor, which Beneficiary,
in its sole discretion, decides should be brought to protect their interest in
the Trust Property. Beneficiary shall, at its option, be subrogated to the lien
of any deed of trust or other security instrument discharged in whole or in part
by the Debt, and any such subrogation rights shall constitute additional
security for the payment of the Debt.
30. Waiver of Setoff and Counterclaim. All amounts due under
this Deed of Trust, the Note and the other Loan Documents shall be payable
without setoff, counterclaim or any deduction whatsoever. Grantor hereby waives
the right to assert a setoff, counterclaim (other than a mandatory or compulsory
counterclaim) or deduction in any action or proceeding in which Beneficiary is a
participant, or arising out of or in any way connected with this Deed of Trust,
the Note, any of the other Loan Documents, or the Debt.
31. Contest of Certain Claims. Notwithstanding the provisions
of Paragraphs 4 and 23 hereof, Grantor shall not be in default for failure to
pay or discharge Taxes, Other Charges or mechanic's or materialman's lien
asserted against the Trust Property if, and so long as, (a) Grantor shall have
notified Beneficiary of same within five (5) days of obtaining knowledge
thereof; (b) Grantor shall diligently and in good faith contest the same by
appropriate legal proceedings which shall operate to prevent the enforcement or
collection of the same and the sale of the Trust Property or any part thereof,
to satisfy the same; (c) Grantor shall have furnished to Beneficiary a cash
deposit, or an indemnity bond satisfactory to Beneficiary with a surety
satisfactory to Beneficiary, in the amount of the Taxes, Other Charges or
mechanic's or materialman's lien claim, plus a reasonable additional sum to pay
all costs, interest and penalties that may be imposed or incurred in connection
therewith, to assure payment of the matters under contest and to prevent any
sale or forfeiture of the Trust Property or any part thereof; (d) Grantor shall
promptly upon final determination thereof pay the amount of any such Taxes,
Other Charges or claim so determined, together with all costs, interest and
penalties which may be payable in connection therewith; (e) the failure to pay
the Taxes, Other Charges or mechanic's or materialman's lien claim does not
constitute a default under any other deed of trust, mortgage or security
interest covering or affecting any part of the Trust Property; and (f)
notwithstanding the foregoing, Grantor shall immediately upon request of
Beneficiary pay (and if Grantor shall fail so to do, Beneficiary may, but shall
not be required to, pay or cause to be discharged or bonded against) any such
Taxes, Other Charges or claim notwithstanding such contest, if in the opinion of
Beneficiary, the Trust Property or any part thereof or interest therein may be
in danger of being sold, forfeited, foreclosed, terminated, cancelled or lost.
Beneficiary may pay over any such cash deposit or part thereof to the claimant
entitled thereto at any time when, in the
<PAGE>
judgment of Beneficiary, the entitlement of such claimant is
established.
32. Recovery of Sums Required to be Paid. Beneficiary 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
Beneficiary or Trustee thereafter to bring an action of foreclosure, or any
other action, for a default or defaults by Grantor existing at the time such
earlier action was commenced.
33. Marshalling and Other Matters. Grantor 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 Trust Property
or any part thereof or any interest therein. Further, Grantor hereby expressly
waives any and all rights of redemption from sale under any order or decree of
foreclosure of this Deed of Trust on behalf of Grantor, and on behalf of each
and every person acquiring any interest in or title to the Trust Property
subsequent to the date of this Deed of Trust and on behalf of all persons to the
extent permitted by applicable law.
34. Hazardous Substances. Grantor hereby represents and
warrants to Beneficiary that, to the best of Grantor's knowledge, except as
expressly set forth in the certain Environmental Report prepared in connection
with this Deed of Trust: (a) the Trust Property is not in direct or indirect
violation of any local, state, federal or other governmental authority, statute,
ordinance, code, order, decree, law, rule or regulation pertaining to or
imposing liability or standards of conduct concerning environmental regulation,
contamination or clean-up including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended ("CERCLA"),
the Resource Conservation and Recovery Act, as amended ("RCRA"), the Emergency
Planning and Community Right- to-Know Act of 1986, as amended, the Hazardous
Substances Transportation Act, as amended, the Solid Waste Disposal Act, as
amended, the Clean Water Act, as amended, the Clean Air Act, as amended, the
Toxic Substance Control Act, as amended, the Safe Drinking Water Act, as
amended, the Occupational Safety and Health Act, as amended, any state
super-lien and environmental clean-up statutes and all regulations adopted in
respect to the foregoing laws (collectively, "Environmental Laws"); (b) the
Trust Property is not subject to any private or governmental lien or judicial or
administrative notice or action or inquiry, investigation or claim relating to
hazardous and/or toxic, dangerous and/or regulated, substances, wastes,
materials, raw materials which include hazardous constituents, pollutants or
contaminants including without limitation, petroleum, tremolite, anthlophylie,
actinolite or polychlorinated biphenyls and any other substances or materials
which are included under or
<PAGE>
regulated by Environmental Laws or which are considered by scientific opinion to
be otherwise dangerous in terms of the health, safety and welfare of humans
(collectively, "Hazardous Substances"), provided that the term "Hazardous
Substances" shall not refer to substances or material used in the day-to-day
operation of a multi-family residential apartment building when such substances
or materials are used in non-reportable quantities and in strict compliance with
Environmental Law; (c) no Hazardous Substances are or have been, (including the
period prior to Grantor's acquisition of the Trust Property), discharged,
generated, treated, disposed of or stored on, incorporated in, or removed or
transported from the Trust Property other than in compliance with all
Environmental Laws; (d) to the Borrower's knowledge, no Hazardous Substances are
present in, on or under any nearby real property which could migrate to or
otherwise affect the Trust Property; and (e) no underground storage tanks exist
on any of the Trust Property, and (f) except as may have been disclosed in an
environemental report delivered to Lender prior to the date of the Deed of
Trust, no Asbestos is located in the Trust Property. So long as Grantor owns or
is in possession of the Trust Property, Grantor (i) shall keep or cause the
Trust Property to be kept free from Hazardous Substances and in compliance with
all Environmental Laws, (ii) shall promptly notify Beneficiary if Grantor shall
become aware of any Hazardous Substances on or near the Trust Property and/or if
Grantor shall become aware that the Trust Property is in direct or indirect
violation of any Environmental Laws and/or if Grantor shall become aware of any
condition on or near the Trust Property which shall pose a threat to the health,
safety or welfare of humans, and (iii) Grantor shall remove such Hazardous
Substances and/or cure such violations and/or remove such threats, as
applicable, as required by law (or as shall be required by Beneficiary in the
case of removal which is not required by law, but in response to the opinion of
a licensed hydrogeologist, licensed environmental engineer or other qualified
consultant engaged by Beneficiary ("Beneficiary's Consultant")), promptly after
Grantor becomes aware of same, at Grantor's sole expense. Nothing herein shall
prevent Grantor from recovering such expenses from any other party that may be
liable for such removal or cure. The obligations and liabilities of Grantor
under this Paragraph 34 shall survive any termination, satisfaction, or
assignment of this Deed of Trust and the exercise by Beneficiary of any of its
rights or remedies hereunder, including, without limitation, the acquisition of
the Trust Property by foreclosure or a conveyance in lieu of foreclosure.
Notwithstanding the foregoing, Grantor shall not be required
to remove any non-friable and undamaged asbestos unless such removal is required
by applicable law or if in the opinion of Beneficiary's consulting engineer such
asbestos creates a hazard to the tenants.
<PAGE>
35. Asbestos. Grantor represents and warrants that, to the best of Grantor's
knowledge, after due inquiry and investigation, no asbestos or any substance or
material containing asbestos ("Asbestos") is located on the Trust Property
except as may have been disclosed in an environmental report delivered to
Beneficiary prior to the date of this Deed of Trust. Grantor shall not install
in the Trust Property, nor permit to be installed in the Trust Property,
Asbestos and shall remove any Asbestos promptly upon discovery to the
satisfaction of Beneficiary, at Grantor's sole expense. Grantor shall in all
instances comply with, and ensure compliance by all occupants of the Trust
Property with, all applicable federal, state and local laws, ordinances, rules
and regulations with respect to Asbestos, and shall keep the Trust Property free
and clear of any liens imposed pursuant to such laws, ordinances, rules or
regulations. In the event that Grantor receives any notice or advice from any
governmental agency or any source whatsoever with respect to Asbestos on,
affecting or installed on the Trust Property, Grantor shall immediately notify
Beneficiary. The obligations and liabilities of Grantor under this Paragraph 35
shall survive any termination, satisfaction, or assignment of this Deed of Trust
and the exercise by Beneficiary of any of its rights or remedies hereunder,
including but not limited to, the acquisition of the Trust Property by
foreclosure or a conveyance in lieu of foreclosure.
36. Environmental Monitoring. Grantor shall give prompt
written notices to Beneficiary of: (a) any proceeding or inquiry by any party
with respect to the presence of any Hazardous Substance or Asbestos on, under,
from or about the Trust Property, (b) all claims made or threatened by any third
party against Grantor or the Trust Property relating to any loss or injury
resulting from any Hazardous Substance or Asbestos, and (c) Grantor's discovery
of any occurrence or condition on any real property adjoining or in the vicinity
of the Trust Property that could cause the Trust Property to be subject to any
investigation or cleanup pursuant to any Environmental Law. Grantor shall permit
Beneficiary to join and participate in, as a party if it so elects, any legal
proceedings or actions initiated with respect to the Trust Property in
connection with any Environmental Law or Hazardous Substance, and Grantor shall
pay all attorneys' fees and disbursements incurred by Beneficiary in connection
therewith. Upon Beneficiary's request, at any time and from time to time while
this Deed of Trust is in effect but not more frequently than every three (3)
calendar years, unless Beneficiary has determined (in the exercise of its good
faith judgment) that reasonable cause exists for the performance of an
environmental inspection or audit of the Trust Property, Grantor shall provide
at Grantor's sole expense, (i) an inspection or audit of the Trust Property
prepared by a licensed hydrogeologist or licensed environmental engineer
approved by Beneficiary indicating the presence or absence of Hazardous
Substances on, in or near the Trust Property, and (ii) an inspection or audit of
the Trust Property prepared by a duly qualified engineering or
<PAGE>
consulting firm approved by Beneficiary, indicating the presence or absence of
Asbestos on the Trust Property. If Grantor fails to provide such inspection or
audit within sixty (60) days after such request Beneficiary may order same, and
Grantor hereby grants to Beneficiary and its employees and agents access to the
Trust Property and a license to undertake such inspection or audit. The cost of
such inspection or audit may be added to the Debt and shall bear interest
thereafter until paid at the Default Rate. In the event that any environmental
site assessment report prepared in connection with such inspection or audit
recommends that an operations and maintenance plan be implemented for Asbestos
or any Hazardous Substance, Grantor shall cause such operations and maintenance
plan to be prepared and implemented at Grantor's expense upon request of
Beneficiary. In the event that any investigation, site monitoring, containment
cleanup, removal, restoration, or other work of any kind is reasonably necessary
or desirable under an applicable Environmental Law (the "Remedial Work"),
Grantor shall commence within thirty (30) days after written demand by
Beneficiary for performance thereof and thereafter diligently prosecute to
completion all such Remedial Work and in any case as required under applicable
law. All Remedial Work shall be performed by contractors approved in advance by
Beneficiary, and under the supervision of a consulting engineer approved by
Beneficiary. All costs and expenses of such Remedial Work shall be paid by
Grantor including, without limitation, Beneficiary's reasonable attorneys' fees
and disbursements incurred in connection with monitoring or review of such
Remedial Work. In the event Grantor shall fail to timely commence, or cause to
be commenced, or fail to diligently prosecute to completion, such Remedial Work,
Beneficiary may, but shall not be required to, cause such Remedial Work to be
performed, and all costs and expenses thereof, or incurred in connection
therewith, may be added to the Debt and shall bear interest thereafter until
paid at the Default Rate.
37. Handicapped Access.
(a) Grantor agrees that the Trust Property shall
at all times strictly comply to the extent applicable with the requirements of
the Americans with Disabilities Act of 1990, the Fair Housing Amendments Act of
1988, all state and local laws and ordinances related to handicapped access and
all rules, regulations, and orders issued pursuant thereto including, without
limitation, the Americans with Disabilities Act Accessibility Guidelines for
Buildings and Facilities (collectively "Access Laws").
(b) Notwithstanding any provisions set forth
herein or in any other document regarding Beneficiary's approval of alterations
of the Trust Property, Grantor shall not alter the Trust Property in any manner
which would increase Grantor's responsibilities for compliance with the
applicable Access Laws without the prior written approval of Beneficiary. The
foregoing shall apply to tenant improvements constructed by Grantor or by
<PAGE>
any of its tenants. Beneficiary may condition any such approval upon receipt of
a certificate of Access Law compliance from an architect, engineer, or other
person acceptable to Beneficiary.
(c) Grantor agrees to give prompt notice to
Beneficiary of the receipt by Grantor of any complaints related to violation of
any Access Laws and of the commencement of any proceedings or investigations
which relate to compliance with applicable Access Laws.
38. Indemnification. In addition to any other indemnifications
provided herein or in the other Loan Documents, Grantor shall protect, defend,
indemnify and save harmless Beneficiary and Trustee from and against all
liabilities, obligations, claims, demands, damages, penalties, causes of action,
losses, fines, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements), imposed upon or incurred by or asserted
against Beneficiary or Trustee by reason of (a) ownership of this Deed of Trust,
the Trust Property or any interest therein or receipt of any Rents; (b) any
accident, injury to or death of persons or loss of or damage to property
occurring in, on or about the Trust Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets
or ways; (c) any use, nonuse or condition in, on or about the Trust Property or
any part thereof or on adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (d) any failure on the part of Grantor or
Trustee to perform or comply with any of the terms of this Deed of Trust; (e)
performance of any labor or services or the furnishing of any materials or other
property in respect of the Trust Property or any part thereof; (f) the presence,
disposal, escape, seepage, leakage, spillage, discharge, emission, release, or
threatened release of any Hazardous Substance or Asbestos on, from, or affecting
the Trust Property; (g) any personal injury (including wrongful death) or
property damage (real or personal) arising out of or related to such Hazardous
Substance or Asbestos; (h) any lawsuit brought or threatened, settlement
reached, or government order relating to such Hazardous Substance or Asbestos;
(i) any violation of the Environmental Laws, which are based upon or in any way
related to such Hazardous Substance or Asbestos including, without limitation,
the costs and expenses of any Remedial Work, attorney and consultant fees and
disbursements, investigation and laboratory fees, court costs, and litigation
expenses; (j) any failure of the Trust Property to comply with any Access Laws;
(k) any representation or warranty made in the Note, this Deed of Trust or any
of the other Loan Documents being false or misleading in any material respect as
of the date such representation or warranty was made; (l) any claim by brokers,
finders or similar persons claiming to be entitled to a commission in connection
with any Lease or other transaction involving the Trust Property or any part
thereof under any legal requirement or any liability asserted against
Beneficiary with respect thereto; and (m) the claims of any lessee of any or any
<PAGE>
portion of the Trust Property or any person acting through or under any lessee
or otherwise arising under or as a consequence of any Lease. Any amounts payable
to Beneficiary or Trustee by reason of the application of this paragraph shall
be secured by this Deed of Trust and shall become immediately due and payable
and shall bear interest at the Default Rate from the date loss or damage is
sustained by Beneficiary or Trustee until paid. The obligations and liabilities
of Grantor under this Paragraph 38 shall survive and termination, satisfaction,
or assignment of this Deed of Trust and the exercise by Beneficiary of any of
its rights or remedies hereunder, including, but not limited to, the acquisition
of the Trust Property by foreclosure or a conveyance in lieu of foreclosure.
39. Notices. All notices, consents, approvals and requests
required or permitted hereunder or under any other Loan Document shall be given
in writing and shall be effective for all purposes if hand delivered or sent by
(a) certified or registered United States mail, postage prepaid, or (b)
expedited prepaid delivery service, either commercial or United States Postal
Service, with proof of attempted delivery, and by telecopier (with answer back
acknowledged), addressed if to Beneficiary at its address set forth on the first
page hereof, and if to Grantor to Grantor's address set forth on the first page
hereof, or at such other address and person as shall be designated from time to
time by any party hereto, as the case may be, in a written notice to the other
parties hereto in the manner provided for in this paragraph. A notice shall be
deemed to have been given: in the case of hand delivery, at the time of
delivery; in the case of registered or certified mail, when delivered or the
first attempted delivery on a Business Day; or in the case of expedited prepaid
delivery and telecopy, upon the first attempted delivery on a Business Day. The
term "Business Day" shall mean any day other than a Saturday, Sunday or any
other day on which national banks in New York are not open for business.
40. Authority. (a) Grantor (and the undersigned representative
of Grantor, if any) represent and warrant that it (or they, as the case may be)
has full power, authority and right to execute, deliver and perform its
obligations pursuant to this Deed of Trust, and to deed, mortgage, give, grant,
bargain, sell, alien, enfeoff, convey, confirm, warrant, pledge, hypothecate and
assign the Trust Property pursuant to the terms hereof and to keep and observe
all of the terms of this Deed of Trust on Grantor's part to be performed; and
(b) Grantor represents and warrants that Grantor is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended and the related Treasury Department regulations, including temporary
regulations.
41. Waiver of Notice. Grantor shall not be entitled
to any notices of any nature whatsoever from Beneficiary or
Trustee except with respect to matters for which this Deed of
Trust specifically and expressly provides for the giving of
<PAGE>
notice by Beneficiary or Trustee to Grantor and except with respect to matters
for which Beneficiary or Trustee is required by applicable law to give notice,
and Grantor hereby expressly waives the right to receive any notice from
Beneficiary or Trustee with respect to any matter for which this Deed of Trust
does not specifically and expressly provide for the giving of notice by
Beneficiary or Trustee to Grantor.
42. Remedies of Grantor. In the event that a claim or
adjudication is made that Beneficiary has acted unreasonably or unreasonably
delayed acting in any case where by law or under the Note, this Deed of Trust or
any of the other Loan Documents, it has an obligation to act reasonably or
promptly, Beneficiary shall not be liable for any monetary damages, and
Grantor's remedies shall be limited to injunctive relief or declaratory
judgment.
43. Sole Discretion of Beneficiary. Wherever pursuant to this
Deed of Trust, Beneficiary exercises any right given to it to consent or not
consent or approve or disapprove, or any arrangement or term is to be
satisfactory to Beneficiary, the decision of Beneficiary to consent or not
consent, to approve or disapprove or to decide that arrangements or terms are
satisfactory or not satisfactory shall be in the sole discretion of Beneficiary
and shall be final and conclusive, except as may be otherwise expressly and
specifically provided herein.
44. Non-Waiver. The failure of Beneficiary or Trustee to
insist upon strict performance of any term hereof shall not be deemed to be a
waiver of any term of this Deed of Trust. Grantor shall not be relieved of
Grantor's obligations hereunder by reason of (a) the failure of Beneficiary or
Trustee to comply with any request of Grantor or Guarantor to take any action to
foreclose this Deed of Trust or otherwise enforce any of the provisions hereof
or of the Note, or the other Loan Documents, (b) the release, regardless of
consideration, of the whole or any part of the Trust Property, or of any person
liable for the Debt or any portion thereof, or (c) any agreement or stipulation
by Beneficiary extending the time of payment or otherwise modifying or
supplementing the terms of the Note, this Deed of Trust or any of the other Loan
Documents. Beneficiary may resort for the payment of the Debt to any other
security held by Beneficiary in such order and manner as Beneficiary, in its
sole discretion, may elect. Beneficiary 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 Beneficiary or Trustee thereafter to foreclosure this
Deed of Trust. The rights and remedies of Beneficiary or Trustee under this Deed
of Trust shall be separate, distinct and cumulative and none shall be given
effect to the exclusion of the others. No act of Beneficiary or Trustee shall be
construed as an election to proceed under any one provision herein to the
exclusion of any other provision. Beneficiary and Trustee shall not be limited
exclusively to the
<PAGE>
rights and remedies herein stated but shall be entitled to every right and
remedy now or hereafter afforded at law or in equity.
45. No Oral Change. This Deed of Trust, 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 Grantor or
Beneficiary, 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.
46. Liability. If Grantor consists of more than one person,
the obligations and liabilities of each such person hereunder shall be joint and
several. Subject to the provisions hereof requiring Beneficiary's consent to any
transfer of the Trust Property, this Deed of Trust shall be binding upon and
inure to the benefit of Grantor and Beneficiary and their respective successors
and assigns forever.
47. Inapplicable Provisions. If any term, covenant or
condition of the Note or this Deed of Trust is held to be
invalid, illegal or unenforceable in any respect, the Note and
this Deed of Trust shall be construed without such provision.
48. Headings, Etc. The headings and captions of
various paragraphs of this Deed of Trust 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.
49. Duplicate Originals. This Deed of Trust may be
executed in any number of duplicate originals and each such
duplicate original shall be deemed to be an original.
50. Definitions. Unless the context clearly indicates
a contrary intent or unless otherwise specifically provided
herein, words used in this Deed of Trust may be used interchangeably in singular
or plural form and the word "Grantor" shall mean "each Grantor and any
subsequent owner or owners of the Trust Property or any part thereof or any
interest therein," the word "Beneficiary" shall mean "Beneficiary and any
subsequent holder of the Note," the word "Trustee" shall mean "Trustee and any
subsequent holder of this Deed of Trust," the word "Note" shall mean "the Note
and any other evidence of indebtedness secured by this Deed of Trust," the word
"person" shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, and any other
entity, and the words "Trust Property" shall include any portion of the Trust
Property and any interest therein and the words "attorneys' fees" shall include
any and all attorneys' fees, paralegal and law clerk fees, including, without
limitation, fees at the pre-trial, trial and appellate levels incurred or paid
by Beneficiary in protecting its interest in the Trust Property and Collateral
and enforcing its rights hereunder. Whenever the
<PAGE>
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.
51. Homestead. Grantor hereby waives and renounces
all homestead and exemption rights provided by the Constitution
and the laws of the United States and of any state, in and to the
Trust Property as against the collection of the Debt, or any part
hereof.
52. Assignments. Beneficiary shall have the right to
assign or transfer its rights under this Deed of Trust without
limitation. Any assignee or transferee shall be entitled to all
the benefits afforded Beneficiary under this Deed of Trust.
53. Waiver of Jury Trial. GRANTOR HEREBY AGREES NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVES ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE NOTE, THIS DEED OF TRUST, OR THE OTHER LOAN DOCUMENTS,
OR ANY CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS
WAIVER OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY GRANTOR,
AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO
WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. BENEFICIARY IS HEREBY
AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS CONCLUSIVE
EVIDENCE OF THIS WAIVER BY GRANTOR.
54. Trustee's Fees; Substitute Trustee. (a) Grantor
shall pay all 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 Deed of Trust.
(b) 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 Deed of Trust, covenants
to perform and fulfill the trusts herein created, being liable, however, only
for willful negligence or 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 Grantor and to Beneficiary.
Beneficiary 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, Beneficiary may, without notice and without specifying any reason
therefor and without applying to any court,
<PAGE>
select and appoint a successor trustee, by an instrument recorded wherever this
Deed of Trust 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 Beneficiary.
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.
55. Power of Sale. (a) Upon the occurrence of an Event of
Default, Trustee, or the agent or successor of Trustee, at the request of
Beneficiary, shall sell or offer for sale the Trust Property in such portions,
order and parcels as Beneficiary may determine with or without having first
taken possession of same, to the highest bidder for cash at one or more public
auctions in accordance with the terms and provisions of the law of the State in
which the Trust Property is located. Such sale shall be made at the area within
the courthouse of the county in which the Trust Property (or any portion thereof
to be sold) is situated (whether the parts or parcels thereof, if any, in
different counties are contiguous or not, and without the necessity of having
any personal property hereby secured present at such sale) which is designated
by the applicable court of such County as the area in which public sales are to
take place, or, if no such area is designated, at the area at the courthouse
designated in the notice of sale as the area in which the sale will take place,
on such day and at such times as permitted under applicable law of the State
where the Trust Property is located, after advertising the time, place and terms
of sale and that portion of the Trust Property in accordance with such law, and
after having served written or printed notice of the proposed sale by certified
mail on each Grantor obligated to pay the Note and other secured indebtedness
secured by this Deed of Trust according to the records of Beneficiary in
accordance with applicable law. 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.
At any such public sale, Trustee may execute and deliver in
the name of Grantor to the purchaser a conveyance of the Trust Property or any
part of the Trust Property in fee simple. In the event of any sale under this
Deed of Trust by virtue of the exercise of the powers herein granted, or
pursuant to any order in any judicial proceeding or otherwise, the Trust
Property may be sold in its entirety or in separate parcels and in such manner
or order as Beneficiary in its sole discretion may elect, and if Beneficiary so
elects, Trustee may sell the personal property covered by this Deed of Trust at
one or more separate sales in any manner permitted by the Uniform Commercial
Code of the State in which the Trust Property is located, and one or more
exercises of the powers herein granted shall not extinguish or exhaust such
powers, until all the Trust Property is sold or the Note and other secured
indebtedness is paid in
<PAGE>
full. If the Note and other secured indebtedness is now or hereafter further
secured by any chattel Deed of Trusts, pledges, contracts or guaranty,
assignments of lease, or other security instruments, Beneficiary at its option
may exhaust the remedies granted under any of said security instruments either
concurrently or independently, and in such order as Beneficiary may determine.
(b) Upon any foreclosure sale or sales of all or any portion
of the Trust Property under the power herein granted, Beneficiary may bid for
and purchase the Trust Property and shall be entitled to apply all or any part
of the Debt as a credit to the purchase price.
(c) In the event of a foreclosure or a sale of all or any
portion of the Trust Property under the power herein granted, the proceeds of
said sale shall be applied, in whatever order Beneficiary in its sole discretion
may decide, to the expenses of such sale and of all proceedings in connection
therewith (including, without limitation, attorneys' fees), to insurance
premiums, liens, assessments, taxes and charges (including, without limitation,
utility charges advanced by Beneficiary), to payment of the outstanding
principal balance of the Debt, and to the accrued interest on all of the
foregoing; and the remainder, if any, shall be paid to Grantor, or to the person
or entity lawfully entitled thereto.
56. Recourse Provisions. Subject to the qualifications below,
Beneficiary shall not enforce the liability and obligation of Grantor, to
perform and observe the obligations contained in this Deed of Trust, the Note or
any of the other Loan Documents by any action or proceeding wherein a money
judgment shall be sought against Grantor, except that Beneficiary may bring a
foreclosure action, an action for specific performance or any other appropriate
action or proceeding to enable Beneficiary to enforce and realize upon its
interests under the Note, this Deed of Trust or the other Loan Documents or in
the Trust Property, the Rents or any other collateral given to Beneficiary
pursuant to this Deed of Trust and the other Loan Documents; provided, however,
that, except as specifically provided herein, any judgment in any such action or
proceeding shall be enforceable against Grantor only to the extent of Grantor's
interest in the Trust Property, the Rents and in any other collateral given to
Beneficiary, and Beneficiary, by accepting this Deed of Trust, the Note and the
other Loan Documents, agrees that it shall not sue for, seek or demand any
deficiency judgment against Grantor in any such action or proceeding under or by
reason of or in connection with this Deed of Trust, the Note or any of the other
Loan Documents. The provisions of this paragraph shall not, however, (i)
constitute a waiver, release or impairment of any obligation evidenced or
secured by this Deed of Trust, the Note or any of the other Loan Documents; (ii)
impair the right of Beneficiary to name Grantor, as a party defendant in any
action or suit for foreclosure and
<PAGE>
sale under this Deed of Trust; (iii) affect the validity or enforceability of
any guaranty made in connection with the Loan or any rights and remedies of
Beneficiary thereunder; (iv) impair the right of Beneficiary to obtain the
appointment of a receiver; (v) impair the enforcement of the Assignment of
Leases and Rents executed in connection herewith; or (vi) constitute a waiver of
the right of Beneficiary to enforce the liability and obligation of Grantor, by
money judgment or otherwise, to the extent of any loss, damage, cost, expense,
liability, claim or other obligation incurred by Beneficiary (including
attorneys' fees and costs reasonably incurred) arising out of or in connection
with the following:
(a) fraud or intentional misrepresentation by
Grantor or any Guarantor in connection with the Loan;
(b) the gross negligence or willful misconduct of
Grantor;
(c) physical waste of the Trust Property;
(d) the breach of any provision in that certain
Environmental and Hazardous Substance Indemnification Agreement of even date
herewith given by Grantor to Beneficiary or in this Deed of Trust concerning
Environmental Laws, Hazardous Substances and Asbestos or the breach of any
indemnification of Beneficiary
with respect thereto in either document;
(e) the removal or disposal of any portion of the
Trust Property after an Event of Default;
(f) the misapplication or conversion by Grantor
of (i) any insurance proceeds paid by reason of any loss, damage or destruction
to the Trust Property, (ii) any awards or other amounts received in connection
with the condemnation of all or a portion of the Trust Property, or (iii) any
Rents following an Event of Default;
(g) failure to pay charges for labor or materials
or other charges that can create liens on any portion of the
Trust Property; and
(h) any security deposits collected with respect
to the Trust Property which are not delivered to Beneficiary upon a foreclosure
of the Trust Property or action in lieu thereof, except to the extent any such
security deposits were applied in accordance with the terms and conditions of
any of the Leases prior to the occurrence of the Event of Default that gave rise
to such foreclosure or action in lieu thereof.
Notwithstanding anything to the contrary in any of the
Loan Documents Beneficiary shall not be deemed to have waived
any right which Beneficiary may have under Section 506(a),
506(b), 1111(b) or any other provisions of the U.S. Bankruptcy
<PAGE>
Code to file a claim for the full amount of the Debt secured by this Deed of
Trust or to require that all collateral shall continue to secure all of the Debt
owing to Beneficiary in accordance with the Loan
Documents.GrantorGrantorGrantorGrantor
57. Defeasance. (a) At any time after the date which
is three years from the date hereof and provided no Event of
Default exists, Grantor may obtain the release of the Trust
Property from the lien of this Deed of Trust upon the satisfaction of the
following conditions precedent:
(i) not less than thirty (30) days prior
written notice to Beneficiary specifying a
regularly scheduled payment date (the
"Release Date") on which the Defeasance
Deposit (hereinafter defined) is to be made;
(ii) the payment to Beneficiary of interest
accrued and unpaid on the principal balance
of the Note to and including the Release
Date;
(iii) the payment to Beneficiary of all
other sums, not including scheduled interest
or principal payments, due under the Note,
this Deed of Trust, the Assignment of
Leases, and the other Loan Documents;
(iv) the payment to Beneficiary of the Defeasance Deposit;
and
(v) the delivery to Beneficiary of:
(A) a security agreement, in form and substance
satisfactory to Beneficiary, creating a first priority
lien on the Defeasance Deposit and the U.S. Obligations
(hereinafter defined) purchased on behalf of Grantor
with the Defeasance Deposit in accordance with this
provision of this paragraph (the "Security Agreement");
(B) a release of the Trust Property from the lien of this
Deed of Trust (for execution by Beneficiary) in a form
appropriate for the jurisdiction in which the Trust
Property is located;
(C) an officer's certificate of Grantor certifying that the
requirements set forth in this subparagraph (a) have
been satisfied;
<PAGE>
(D) an opinion of counsel for Grantor in form satisfactory
to Beneficiary stating, among other things, that
Beneficiary has a perfected first priority security
interest in the Defeasance Deposit and the U.S.
Obligations purchased by Beneficiary on behalf of
Grantor;
(E) evidence in writing from the applicable Rating Agencies
to the effect that such release will not result in a
re- qualification, reduction or withdrawal of any
rating in effect immediately prior to such defeasance
for any securities issued in connection with a
Secondary Market Transaction; and
(F) such other certificates, documents or instruments as
Beneficiary may reasonably request.
In connection with the conditions set forth in subparagraph (a)(v) above,
Grantor hereby appoints Beneficiary as its agent and attorney-in-fact for the
purpose of using the Defeasance Deposit to purchase U.S. Obligations which
provide payments on or prior to, but as close as possible to, all successive
scheduled payment dates after the Release Date upon which interest and principal
payments are required under the Note (assuming that the Grantor were to prepay
the Note in full on the Optional Prepayment Date as such term is defined in the
Note) and in amounts equal to the scheduled payments due on such dates under the
Note (the "Scheduled Defeasance Payments"). Grantor, pursuant to the Security
Agreement or other appropriate document, shall authorize and direct that the
payments received from the U.S. Obligations may be made directly to Beneficiary
and applied to satisfy the obligations of the Grantor under the Note.
(b) Upon compliance with the requirements of this paragraph,
the Trust Property shall be released from the lien of this Deed of Trust and the
pledged U.S. Obligations shall be the sole source of collateral securing the
Note. Any portion of the Defeasance Deposit in excess of the amount necessary to
purchase the U.S. Obligations required by subparagraph (a) above and satisfy the
Grantor's obligations under this paragraph shall be remitted to the Grantor with
the release of the Trust Property from the lien of this Deed of Trust. In
connection with such release, Nomura Asset Capital Corporation ("NACC") shall
establish or designate a successor entity (the "Successor Grantor") and Grantor
shall transfer and assign all obligations, rights and duties under and to the
Note together with the pledged U.S. Obligations to such Successor Grantor. The
obligation of NACC to establish or designate a Successor Grantor shall be
retained by NACC notwithstanding the sale or transfer of this
<PAGE>
Deed of Trust unless such obligation is specifically assumed by the transferee.
Such Successor Grantor shall assume the obligations under the Note and the
Security Agreement and Grantor shall be relieved of its obligations thereunder.
The Grantor shall pay $1,000 to any such Successor Grantor as consideration for
assuming the obligations under the Note and the Security Agreement.
Notwithstanding anything in this Deed of Trust to the contrary, no other
assumption fee shall be payable upon a transfer of the Note in accordance with
this paragraph, but Grantor shall pay all costs and expenses incurred by
Beneficiary, including Beneficiary's attorneys' fees and expenses, incurred in
connection with this paragraph.
(c) For purposes of this paragraph, the following
terms shall have the following meanings:
(i) The term "Defeasance
Deposit" shall mean an amount equal to the remaining principal amount
of the Note, the Yield Maintenance Premium, any costs and expenses
incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled Defeasance
Payments and any revenue, documentary stamp or intangible taxes or any
other tax or charge due in connection with the transfer of the Note or
otherwise required to accomplish the agreements of this Paragraph 57;
(ii) The term "Yield
Maintenance Premium" shall mean the amount (if any) which, when added
to the remaining principal amount of the Note, will be sufficient to
purchase U.S. obligations providing the required Scheduled Defeasance
Payments; and
(iii) The term "U.S. Obligations" shall mean
direct non-callable obligations of the United States of America.
58. Miscellaneous.
(a) Any consent or approval by Beneficiary in any
single instance shall not be deemed or construed to be Beneficiary's consent or
approval in any like matter arising at a subsequent date, and the failure of
Beneficiary to promptly exercise any right, power, remedy, consent or approval
provided herein or at law or in equity shall not constitute or be construed as a
waiver of the same nor shall Beneficiary be estopped from exercising such right,
power, remedy, consent or approval at a later date. Any consent or approval
requested of and granted by Beneficiary pursuant hereto shall be narrowly
construed to be applicable only to Grantor and the matter identified in such
consent or approval and no third party shall claim any benefit by reason
thereof, and any such consent or approval shall not be deemed to constitute
Beneficiary a venturer or partner with Grantor nor shall privity of contract be
presumed to have been established with any such third party. If Beneficiary
deems it to be in its best interest to retain
<PAGE>
assistance of persons, firms or corporations (including, without limitation,
attorneys, title insurance companies, appraisers, engineers and surveyors) with
respect to a request for consent or
approval, Grantor shall reimburse Beneficiary for all costs reasonably incurred
in connection with the employment of such persons, firms or corporations.
(b) Grantor covenants and agrees that during the
Term, unless Beneficiary shall have previously consented in writing, (a) Grantor
will take no action that would cause it to become an "employee benefit plan" as
defined in 29 C.F.R. Section 2510.3-101, or "assets of a governmental plan"
subject to regulation under the state statutes, and (b) Grantor will not sell,
assign or transfer the Trust Property, or any portion thereof or interest
therein, to any transferee that does not execute and deliver to Beneficiary its
written assumption of the obligations of this covenant. Grantor further
covenants and agrees to protect, defend, indemnify and hold Beneficiary harmless
from and against all loss, cost, damage and expense (including without
limitation, all attorneys' fees and excise taxes, costs of correcting any
prohibited transaction or obtaining an appropriate exemption) that Beneficiary
may incur as a result of Grantor's breach of this covenant. This covenant and
indemnity shall survive the extinguishment of the lien of this Deed of Trust by
foreclosure or action in lieu thereof; furthermore, the foregoing indemnity
shall supersede any limitations on Grantor's liability under any of the Loan
Documents.
(c) The Loan Documents contain the entire
agreement between Grantor and Beneficiary relating to or connected with the
Loan. Any other agreements relating to or connected with the Loan not expressly
set forth in the Loan Documents are null and void and superseded in their
entirety by the provisions of the Loan Documents.
(d) Grantor represents and warrants to
Beneficiary that there has not been committed by Grantor or any other person in
occupancy of or involved with the operation or use of the Trust Property any act
or omission affording the federal government or any state or local government
the right of forfeiture as against the Trust Property or any part thereof or any
monies paid in performance of Grantor's obligations under the Note or under any
of the other Loan Documents. Grantor hereby covenants and agrees not to commit,
permit or suffer to exist any act, omission or circumstance affording such right
of forfeiture. In furtherance thereof, Grantor hereby indemnifies Beneficiary
and agrees to defend and hold Beneficiary harmless from and against any loss,
damage or injury by reason of the breach of the covenants and agreements or the
representations and warranties set forth in this paragraph. Without limiting the
generality of the foregoing, the filing of formal charges or the commencement of
proceedings against Grantor or all or any part of the Trust Property under any
federal or state law for which forfeiture of
<PAGE>
the Trust Property or any part thereof or of any monies paid in performance of
Grantor's obligations under the Loan Documents is a potential result, shall, at
the election of Beneficiary, constitute an Event of Default hereunder without
notice or opportunity to cure.
(e) Grantor acknowledges that, with respect to
the Loan, Grantor is relying solely on its own judgement and advisors in
entering into the Loan without relying in any manner on any statements,
representations or recommendations of Beneficiary or any parent, subsidiary or
affiliate of Beneficiary. Grantor acknowledges that Beneficiary engages in the
business of real estate financings and other real estate transactions and
investments which may be viewed as adverse to or competitive with the business
of the Grantor or its affiliates. Grantor acknowledges that it is represented by
competent counsel and has consulted counsel before executing the Loan Documents.
(f) Grantor covenants and agrees to pay
Beneficiary upon receipt of written notice from Beneficiary, all reasonable
costs and expenses (including reasonable attorneys' fees and disbursements)
incurred by Beneficiary in connection with (i) the preparation, negotiation,
execution and delivery of this Deed of Trust and the other Loan Documents; (ii)
Grantor's performance of and compliance with Grantor's respective agreements and
covenants contained in this Deed of Trust and the other Loan Documents on its
part to be performed or complied with after the date hereof; (iii) Beneficiary's
performance and compliance with all agreements and conditions contained in this
Deed of Trust and the other Loan Documents on its part to be performed or
complied with after the date hereof; (iv) the negotiation, preparation,
execution, delivery and administration of any consents, amendments, waivers or
other modifications to this Deed of Trust and the other Loan Documents; and (v)
the filing and recording fees and expenses, title insurance fees and expenses,
and other similar expenses incurred in creating and perfecting the lien in favor
of Beneficiary pursuant to this Deed of Trust and the other Loan Documents.
59. Lock-Box Agreement. By February 11, 2005 the Grantor
hereby covenants and agrees to enter into one or more clearing and deposit
agreements acceptable to Beneficiary between Grantor, Beneficiary and one or
more certain financial institutions (together with any modification, amendment,
substitution or replacement thereof, hereinafter collectively referred to as the
"Disbursement Agreement") in the Beneficiary's then current form which shall
provide, among other things, that all Rents and other sums collected from, or
arising with respect to the Mortgaged Property be deposited in the deposit
account established in connection with such Disbursement Agreement and that such
amounts shall be disbursed in accordance with Paragraphs 7 and 8 of the Note.
The Borrower shall pay all costs and expenses required under the Disbursement
Agreement. Upon the occurrence of an Event of Default, Beneficiary may apply any
sums
<PAGE>
then held pursuant to the Disbursement Agreement to the payment of the Debt in
any order in its sole discretion. Until expended or applied, amounts held
pursuant to the Disbursement Agreement shall constitute additional security for
the Debt. The Disbursement Agreement when and if executed shall be a "Loan
Document" for all purposes under the Note, this Deed of Trust and the other Loan
Documents.
60. Management Agreement. In the event that the Grantor does
not prepay the entire principal balance of the Note and any other amounts
outstanding under the Loan Documents on the Optional Prepayment Date, the
Grantor shall terminate the Management Agreement and replace the manager with a
manger approved by Mortgagee.
PART II
SPECIAL STATE PROVISIONS
61. Construction of Deed of Trust. In the event of
any conflict between the terms and provisions of Part II and
Part I of this Deed of Trust, the terms and provisions of Part
II shall govern and control.
62. The following words are to be added to the
seventh line of the first recital paragraph on page one after
the words "under the Note":
"and under the Loan Documents (as hereinafter
defined)"
63. The words "cease, terminate and be void" in the last
sentence of the second to last paragraph of the recital section that begins
with the words "PROVIDED, HOWEVER, these presents are" shall be deleted and
replaced with the following:
"be released by Beneficiary at Grantor's expense."
64. Paragraph 2 above shall be deleted in its
entirety and replaced with the following:
"2. Warranty of Title. Grantor warrants that Grantor has
good, fee simple indefeasible title to the Trust Property and has the full
power, authority and right to execute, deliver and perform its obligations
under this Deed of Trust and to deed, encumber, mortgage, give, grant,
bargain, sell, alienate, enfeoff, convey, confirm, pledge, assign and
hypothecate the same and that Grantor possesses an unencumbered fee simple
indefeasible estate in the Premises and the Improvements and that it owns the
Trust 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 Deed of Trust and that this Deed of Trust is and
will remain a valid and enforceable first lien on and security interest in
<PAGE>
the Trust Property, subject only to said exceptions. Grantor shall forever
warrant, defend and preserve such title and the validity and priority of the
lien of this Deed of Trust and shall forever warrant and defend the same to
Beneficiary against the claims of all persons whomsoever."
65. The words "thirty (30) days" in the second to last
sentence of Paragraph 3(c) shall be deleted and replaced with the words
"fifteen (15) days".
66. The words "and irrevocable" shall be inserted in
the first sentence of Paragraph 8(a) after the words
"constitutes a present, absolute".
67. The words "or takes any other action or gives any
notice" shall be added to the end of the third to last sentence
of Paragraph 8(a).
68. The words "advance deposits and any other
deposits" shall be added after the phrase "security deposits,"
in the first sentence of Paragraph 8(d).
69. The following shall be inserted after Paragraph
8(d):
"(e) The assignments set forth in this paragraph
8 are not intended to constitute payment to Beneficiary or
Trustee unless Grantor's license to collect Rents is terminated, and then only
to the extent that the Rents are actually received by Beneficiary (as opposed
to constituting a portion of the voluntary payments of principal and interest
on the Note) and are not used for the operation or maintenance of the Trust
Property or for the payment of costs and expenses in connection therewith,
taxes, assessments, water charges, sewer rents, and other charges levied,
assessed or imposed against the Trust Property, insurance premiums, costs and
expenses with respect to any litigation affecting the Trust Property, the
leases, the concessions, and the rent, any wages and salaries of employees,
commissions of agents and attorneys fees. It is further the intent of Grantor
and Beneficiary that the Rents hereby absolutely assigned are no longer,
during the term of this Assignment, property of Grantor or property of any
estate of Grantor as defined in 11 U.S.C. ss. 541 and shall not constitute
collateral, cash or otherwise, of Grantor. The term Rents as used herein shall
mean the gross rents without deduction or offsets of any kind."
70. Paragraph 26 is hereby deleted in its entirety
and replaced with the following:
"26. Remedies.
(a) Upon the occurrence of any Event of Default,
Beneficiary or Trustee may take such action, without notice or
<PAGE>
demand, as Beneficiary deems advisable to protect and enforce its rights
against Grantor and in and to the Trust Property by Beneficiary itself, by
Trustee, or otherwise, including, without limitation, the following actions,
each of which may be pursued concurrently or otherwise, at such time and in
such order as Beneficiary may determine, in its sole discretion, without
impairing or otherwise affecting the other rights and remedies of Beneficiary
or Trustee:
(i) declare the entire Debt to be
immediately due and payable;
(ii) institute or cause the Trustee to
institute a proceeding or proceedings, judicial or nonjudicial, by
advertisement or otherwise, for the complete foreclosure of this Deed of Trust
in which case the Trust 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;
(iii) with or without entry, to the extent
permitted and pursuant to the procedures provided by applicable law, institute
or cause the Trustee to institute proceedings for the partial foreclosure of
this Deed of Trust for the portion of the Debt then due and payable, subject
to the continuing lien of this Deed of Trust for the balance of the Debt not
then due;
(iv) cause the Trustee to sell for cash or
upon credit the Trust Property or any part thereof and all estate, claim,
demand, right, title and interest of Grantor therein and rights of redemption
thereof, pursuant to the power of sale contained herein or otherwise, at one
or more sales, as an entirety or in parcels, at such time and place, upon such
terms and after such notice thereof as may be required or permitted by law;
(v) institute an action, suit or proceeding
in equity for the specific performance of any covenant,
condition or agreement contained herein, or in any of the other
Loan Documents;
(vi) recover judgment on the Note either
before, during or after any proceedings for the enforcement of
this Deed of Trust;
(vii) apply for the appointment of a trustee,
receiver, liquidator or conservator of the Trust Property, without notice and
without regard for the adequacy of the security for the Debt and without
regard for the solvency of the Grantor, any Guarantor or of any person, firm
or other entity liable for the payment of the Debt;
<PAGE>
(viii) enforce Beneficiary's interest in the
Leases and Rents and enter into or upon the Trust Property, either personally
or by its agents, nominees or attorneys and dispossess Grantor and its agents
and servants therefrom, and thereupon Beneficiary may (A) use, operate,
manage, control, insure, maintain, repair, restore and otherwise deal with all
and every part of the Trust Property and conduct the business thereat; (B)
complete any construction on the Trust Property in such manner and form as
Beneficiary deems advisable; (C) make alterations, additions, renewals,
replacements and improvements to or on the Trust Property; (D) exercise all
rights and powers of Grantor with respect to the Trust Property, whether in
the name of Grantor 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; and (E) apply the receipts from the
Trust Property to the payment of Debt, after deducting therefrom all expenses
(including reasonable attorneys' fees and disbursements) incurred in
connection with the aforesaid operations and all amounts necessary to pay the
taxes, assessments insurance and other charges in connection with the Trust
Property, as well as just and reasonable compensation for the services of
Beneficiary, its counsel, agents and employees;
(ix) require Grantor to pay monthly in
advance to Beneficiary, or any receiver appointed to collect the Rents, the
fair and reasonable rental value for the use and occupation of any portion of
the Trust Property occupied by Grantor and require Grantor to vacate and
surrender possession to Beneficiary of the Trust Property or to such receiver
and, in default thereof, evict Grantor by summary proceedings or otherwise; or
(x) pursue such other rights and remedies
as may be available at law or in equity or under the Uniform Commercial Code
including without limitation the right to receive and/or establish a lock box
for all Rents proceeds from the Intangibles and any other receivables or
rights to payments of Grantor relating to the Trust Property.
In the event of a sale, by foreclosure or otherwise, of less than all of the
Trust Property, this Deed of Trust shall continue as a lien on the remaining
portion of the Trust Property.
(b) The proceeds of any sale made under or by
virtue of this paragraph, together with any other sums which then may be held
by Beneficiary under this Deed of Trust, whether under the provisions of this
paragraph or otherwise, shall be applied by Beneficiary to the payment of the
Debt in such priority and proportion as Beneficiary in its sole discretion
shall deem proper.
<PAGE>
(c) Trustee may adjourn from time to time any sale by it to be made
under or by virtue of this Deed of Trust by announcement at the time and place
appointed for such sale or for such adjourned sale or sales; and, except as
otherwise provided by any applicable provision of law, Trustee, without
further notice or publication, may make such sale at the time and place to
which the same shall be so adjourned.
(d) Upon the completion of any sale or sales
pursuant hereto, Trustee shall execute and deliver to the accepted purchaser
or purchasers a good and sufficient instrument, or good and sufficient
instruments, conveying, assigning and transferring all estate, right, title
and interest in and to the property and rights sold by general warranty of
title. Trustee is hereby irrevocably appointed the true and lawful attorney of
Grantor, in its name and stead, to make all necessary conveyances,
assignments, transfers and deliveries of the Trust Property and rights so sold
and for that purpose Trustee may execute all necessary instruments of
conveyance, assignment and transfer, and may substitute one or more persons
with like power, Grantor hereby ratifying and confirming all that its said
attorney or such substitute or substitutes shall lawfully do by virtue hereof.
Any sale or sales made under or by virtue of this paragraph, whether made
under the power of sale herein granted or under or by virtue of judicial
proceedings or of a judgment or decree of foreclosure and sale, shall operate
to divest all the estate, right, title, interest, claim and demand whatsoever,
whether at law or in equity, of Grantor in and to the properties and rights so
sold, and shall be a perpetual bar both at law and in equity against Grantor
and against any and all persons claiming or who may claim the same, or any
part thereof from, through or under Grantor.
(e) Upon any sale made under or by virtue of
this paragraph, whether made under the power of sale herein granted or under
or by virtue of judicial proceedings or of a judgment or decree of foreclosure
and sale, Beneficiary may bid for and acquire the Trust Property or any part
thereof and in lieu of paying cash therefor may make settlement for the
purchase price by crediting upon the Debt the net sales price after deducting
therefrom the expenses of the sale and costs of the action and any other sums
which Beneficiary is authorized to deduct under this Deed of Trust.
(f) No recovery of any judgment by Beneficiary
and no levy of an execution under any judgment upon the Trust Property or upon
any other property of Grantor shall affect in any manner or to any extent the
lien of this Deed of Trust upon the Trust Property or any part thereof, or any
liens, rights, powers or remedies of Beneficiary hereunder, but such liens,
rights, powers and remedies of Beneficiary shall continue unimpaired as
before.
<PAGE>
(g) Beneficiary or Trustee may terminate or rescind any proceeding or
other action brought in connection with its exercise of the remedies provided
in this paragraph at any time before the conclusion thereof, as determined in
Beneficiary's sole discretion and without prejudice to Beneficiary or Trustee.
(h) Beneficiary may resort to any remedies and
the security given by the Note, this Deed of Trust or the Loan Documents in
whole or in part, and in such portions and in such order as determined by
Beneficiary's sole discretion. No such action shall in any way be considered a
waiver of any rights, benefits or remedies evidenced or provided by the Note,
this Deed of Trust or any of the other Loan Documents. The failure of
Beneficiary to exercise any right, remedy or option provided in the Note, this
Deed of Trust or any of the other Loan Documents shall not be deemed a waiver
of such right, remedy or option or of any covenant or obligation secured by
the Note, this Deed of Trust or the other Loan Documents. No acceptance by
Beneficiary of any payment after the occurrence of any Event of Default and no
payment by Beneficiary of any obligation for which Grantor is liable hereunder
shall be deemed to waive or cure any Event of Default with respect to Grantor,
or Grantor's liability to pay such obligation. No sale of all or any portion
of the Trust Property, no forbearance on the part of Beneficiary, and no
extension of time for the payment of the whole or any portion of the Debt or
any other indulgence given by Beneficiary to Grantor, shall operate to release
or in any manner affect the interest of Beneficiary in the remaining Trust
Property or the liability of Grantor to pay the Debt. No waiver by Beneficiary
shall be effective unless it is in writing and then only to the extent
specifically stated. All costs and expenses of Beneficiary in exercising its
rights and remedies under this Paragraph 26 (including reasonable attorneys'
fees and disbursements to the extent permitted by law), shall be paid by
Grantor immediately upon notice from Beneficiary, with interest at the Default
Rate for the period after notice from Beneficiary, and such costs and expenses
shall constitute a portion of the Debt and shall be secured by this Deed of
Trust.
(i) The interests and rights of Beneficiary
under the Note, this Deed of Trust or in any of the other Loan Documents shall
not be impaired by any indulgence, including (i) any renewal, extension or
modification which Beneficiary may grant with respect to any of the Debt, (ii)
any surrender, compromise, release, renewal, extension, exchange or
substitution which Beneficiary may grant with respect to the Trust Property or
any portion thereof; or (iii) any release or indulgence granted to any maker,
endorser, Guarantor or surety of any of the Debt."
71. The following shall be added to the definition of
Environmental Laws as defined in Paragraph 34 of the Deed of
<PAGE>
Trust after the words "Occupational Safety and Health Act, as amended,":
"the Texas Water Code, the Texas Solid Waste Disposal
Act and the Texas Clean Air Act"
72. The following paragraph shall be added after the
last sentence of Paragraph 38:
"IT IS SPECIFICALLY INTENDED BY GRANTOR, BENEFICIARY, AND
TRUSTEE THAT ALL INDEMNITY OBLIGATIONS AND LIABILITIES ASSUMED BY GRANTOR
HEREUNDER BE WITHOUT LIMIT AND WITHOUT REGARD TO THE CAUSE OR CAUSES THEREOF
(INCLUDING PREEXISTING CONDITIONS), STRICT LIABILITY, OR THE NEGLIGENCE OF ANY
PARTY OR PARTIES (INCLUDING BENEFICIARY AND TRUSTEE) WHETHER SUCH NEGLIGENCE
BE SOLE, JOINT OR CONCURRENT, OR PASSIVE. THE PARTIES SPECIFICALLY INTEND THAT
BENEFICIARY AND TRUSTEE ARE TO BE INDEMNIFIED AGAINST THEIR OWN NEGLIGENCE."
73. The words "recorded wherever this Deed of Trust is
recorded" shall be deleted and the words "in writing" shall be inserted in
lieu thereof after the words "by an instrument" in the third to last sentence
of Paragraph 54 (b).
74. The word "Grantor" in the second to last sentence of
Paragraph 55 (a) after the words "certified mail on each", shall be deleted
and replaced with the word "debtor". In addition, the second paragraph of
Paragraph 55(a) is deleted in its entirety and replaced with the following
paragraph:
"At any such public sale, Trustee may execute and deliver in
the name of Grantor to the purchaser a conveyance of the Trust Property or any
part of the Trust Property in fee simple with general warranty. In the event
of any sale under this Deed of Trust by virtue of the exercise of the powers
herein granted, or pursuant to any order in any judicial proceeding or
otherwise, the Trust Property may be sold in its entirety or in separate
parcels and in such manner or order as Beneficiary in its sole discretion may
elect, and if Beneficiary so elects, Trustee may sell the personal property
covered by this Deed of Trust at one or more separate sales in any manner
permitted by the Uniform Commercial Code of the State in which the Trust
Property is located, and one or more exercises of the powers herein granted
shall not extinguish or exhaust such powers, until all the Trust Property is
sold or the Note and other secured indebtedness is paid in full. If the Debt
and other secured indebtedness is now or hereafter further secured by any
chattel Deed of Trusts, pledges, contracts or guaranty, assignments of lease,
or other security instruments, Beneficiary at its option may exhaust the
remedies granted under any of said security instruments either concurrently or
independently, and in such order as Beneficiary may determine."
<PAGE>
75. Paragraph 56(h) is amended by inserting the words "deposits, advance
deposits or any other" after the words "any security" in the first sentence of
said paragraph.
76. Additional Special State Provisions
(a) Instrument. This Deed of Trust shall be deemed
to be and shall be enforceable as a deed of trust, leasehold
deed of trust, and financing statement.
(b) Foreclosure. Upon the occurrence of any Event of Default,
Beneficiary may request Trustee to proceed with foreclosure under the power of
sale which is hereby conferred, such foreclosure to be accomplished in
accordance with the following provisions:
(i) Public Sale. Trustee is hereby authorized
and empowered, and it shall be Trustee's special duty, upon such request of
Beneficiary, to sell the Trust Property, or any part thereof, at public
auction to the highest bidder for cash, with or without having taken
possession of same. Any such sale (including notice thereof) shall comply with
the applicable requirements, at the time of the sale, of Section 51.002 of the
Texas Property Code or, if and to the extent such statute is not then in
force, with the applicable requirements, at the time of the sale, of the
successor statute or statutes, if any, governing sales of Texas real property
under powers of sale conferred by deeds of trust. If there is no statute in
force at the time of the sale governing sales of Texas real property under
powers of sale conferred by deeds of trust, such sale shall comply with
applicable law, at the time of the sale, governing sales of Texas real
property under powers of sale conferred by deeds of trust. Trustee or his
successor or substitute may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Trustee, including the posting of notices, and the conduct of sale, but in the
name and on behalf of Trustee, his successor or substitute.
(ii) Right to Require Proof of Financial Ability
and/or Cash Bid. At any time during the bidding, the Trustee may require a
bidding party (A) to disclose its full name, state and city of residence,
occupation, and specific business office location, and the name and address of
the principal the bidding party is representing (if applicable), and (B) to
demonstrate reasonable evidence of the bidding party's financial ability (or,
if applicable, the financial ability of the principal of such bidding party),
as a condition to the bidding party submitting bids at the foreclosure sale.
If any such bidding party (the "Questioned Bidder") declines to comply with
the Trustee's requirement in this regard, or if such Questioned Bidder does
respond but the Trustee, in Trustee's sole and absolute discretion, deems the
information or the evidence of the financial ability of the Questioned Bidder
(or,
<PAGE>
if applicable, the principal of such bidding party) to be inadequate, then the
Trustee may continue the bidding with reservation; and in such event (1) the
Trustee shall be authorized to caution the Questioned Bidder concerning the
legal obligations to be incurred in submitting bids, and (2) if the Questioned
Bidder is not the highest bidder at the sale, or if having been the highest
bidder the Questioned Bidder fails to deliver the cash purchase price payment
promptly to the Trustee, all bids by the Questioned Bidder shall be null and
void. The Trustee may, in Trustee's sole and absolute discretion, determine
that a credit bid may be in the best interest of the Grantor and Beneficiary,
and elect to sell the Trust Property for credit or for a combination of cash
and credit; provided, however, that the Trustee shall have no obligation to
accept any bid except an all cash bid. In the event the Trustee requires a
cash bid and cash is not delivered within a reasonable time after conclusion
of the bidding process, as specified by the Trustee, but in no event later
than 3:45 p.m. local time on the day of sale, then said contingent sale shall
be null and void, the bidding process may be recommenced, and any subsequent
bids or sale shall be made as if no prior bids were made or accepted.
(iii) Sale Subject to Unmatured Debt. In
addition to the rights and powers of sale granted under the preceding
provisions of this subsection, if default is made in the payment of any
installment of the Debt, Beneficiary may, at Beneficiary's option, at once or
at any time thereafter while any matured installment remains unpaid, without
declaring the entire Debt to be due and payable, orally or in writing direct
Trustee to enforce this Deed of Trust and to sell the Trust Property subject
to such unmatured Debt and to the rights, powers, liens, security interests,
and assignments securing or providing recourse for payment of such unmatured
Debt, in the same manner, all as provided in the preceding provisions of this
subsection. Sales made without maturing the Debt may be made hereunder
whenever there is a default in the payment of any installment of the Debt,
without exhausting the power of sale granted hereby, and without affecting in
any way the power of sale granted under this subsection, the unmatured balance
of the Debt or the rights, powers, liens, security interests, and assignments
securing or providing recourse for payment of the Debt.
(iv) Partial Foreclosure. Sale of a part of the
Trust Property shall not exhaust the power of sale, but sales may be made from
time to time until the Debt is paid in full. It is intended by each of the
foregoing provisions of this subsection that Trustee may, after any request or
direction by Beneficiary, sell not only the Premises and the Improvements, but
also the Equipment and other interests constituting a part of the Trust
Property or any part thereof, along with the Premises and the Improvements or
any part thereof, as a unit and as a part of a single sale, or may sell at any
time or from
<PAGE>
time to time any part or parts of the Trust Property separately from the
remainder of the Trust Property. It shall not be necessary to have present or
to exhibit at any sale any of the Trust Property. Any sale of personal
property made hereunder shall be deemed to have been a public sale conducted
in a commercially reasonable manner if held contemporaneously with, or as part
of, and upon the same notice as required for the sale of real property under
the power of sale granted herein.
(v) Trustee's Deeds. After any sale under this
subsection, Trustee shall make good and sufficient deeds, assignments, and
other conveyances to the purchaser or purchasers thereunder in the name of
Grantor, conveying the Trust Property or any part thereof so sold to the
purchaser or purchasers with general warranty of title by Grantor. It is
agreed that in any deeds, assignments or other conveyances given by Trustee,
any and all statements of fact or other recitals therein made as to the
identity of Beneficiary, the occurrence or existence of any Event of Default,
the notice of intention to accelerate, or acceleration of, the maturity of the
Debt, the request to sell, notice of sale, time, place, terms and manner of
sale, and receipt, distribution, and application of the money realized
therefrom, the due and proper appointment of a substitute trustee, and without
being limited by the foregoing, any other act or thing having been duly done
by or on behalf of Beneficiary or by or on behalf of Trustee, shall be taken
by all courts of law and equity as prima facie evidence that such statements
or recitals state true, correct, and complete facts and are without further
question to be so accepted, and Grantor does hereby ratify and confirm any and
all acts that Trustee may lawfully do in the premises by virtue hereof.
(c) Receiver. Beneficiary, as a matter of right and without
regard to the sufficiency of the security for repayment of the Debt and
performance and discharge of the obligations hereunder, without notice to
Grantor and without any showing of insolvency, fraud, or mismanagement on the
part of Grantor, and without the necessity of filing any judicial or other
proceeding other than the proceeding for appointment of a receiver, shall be
entitled to the appointment of a receiver or receivers of the Trust Property
or any part thereof, and of the Rents, and Grantor hereby irrevocably consents
to the appointment of a receiver or receivers. Any receiver appointed pursuant
to the provisions of this subsection shall have the usual powers and duties of
receivers in such matters.
(d) Inapplicability of Credit Code. In no event
shall the provisions of Article 5069, ch. 15 of the Revised
Civil Statutes of Texas (which regulates certain revolving
credit loan accounts and revolving triparty accounts) apply to
the loan evidenced by the Loan Documents and/or secured hereby.
<PAGE>
(e) Entire Agreement. THIS DEED OF TRUST AND THE OTHER LOAN DOCUMENTS EMBODY
THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDER-STANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
(f) Maturity Date. The maturity date of the Note
secured hereby is the eleventh day of February, 2026.
(g) Notice of Indemnification. GRANTOR ACKNOWLEDGES
THAT THIS DEED OF TRUST PROVIDES FOR INDEMNIFICATION OF
BENEFICIARY BY GRANTOR PURSUANT TO PARAGRAPHS 21 AND 38.
77. GOVERNING LAW. THIS DEED OF TRUST WAS NEGOTIATED IN THE
STATE OF NEW YORK, AND THE PROCEEDS OF THE NOTE WERE DISBURSED IN THE STATE OF
NEW YORK, WHICH STATE THE PARTIES AGREE HAS A SUBSTANTIAL RELATIONSHIP TO THE
PARTIES AND TO THE UNDERLYING TRANSACTION EMBODIED HEREBY, AND IN ALL RESPECT,
INCLUDING WITHOUT LIMITATION, MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THIS DEED OF TRUST SHALL BE GOVERNED AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE WITH RESPECT TO
CONTRACTS MADE AND PERFORMED IN SUCH STATE (WITHOUT REFERENCE TO PRINCIPLES OF
CONFLICTS OF LAW APPLICABLE UNDER NEW YORK LAW) AND ANY APPLICABLE LAWS OF THE
UNITED STATES OF AMERICA, EXCEPT THAT AT ALL TIMES THE PROVISIONS FOR THE
CREATION, PERFECTION AND/OR FORECLOSURE AND ENFORCEMENT OF THE LIENS AND
SECURITY INTERESTS CREATED PURSUANT HERETO SHALL BE GOVERNED BY AND CONSTRUED
ACCORDING TO THE LAWS OF THE STATE IN WHICH THE TRUST PROPERTY IS LOCATED AND
ALL APPLICABLE FEDERAL LAWS.
78. Exculpation. The exculpation provisions of the
Note are incorporated herein by reference.
IN WITNESS WHEREOF, Grantor has executed this instrument the day and year first
above written.
DEK ASSOCIATES LIMITED
PARTNERSHIP,
a Texas limited partnership
By: WINTHROP GROWTH INVESTORS 1
LIMITED PARTNERSHIP,
a Massachusetts limited
partnership,
its sole general partner
By: TWO WINTHROP PROPERTIES,
INC.,
a Massachusetts
corporation,
a general partner
By:________________________
Name: Alfred Trivilino
Title: Vice President
STATE OF )
) ss.
COUNTY OF )
This instrument was acknowledged before me on the _____ day of January, 1996,
by Alfred Trivilino, the Vice President of Two Winthrop Properties, Inc., a
Massachusetts corporation, the general partner of Winthrop Growth Investors 1
Limited Partnership, a Massachusetts limited partnership, the sole general
partner of DEK Associates Limited Partnership, a Texas limited partnership, on
behalf of said corporation and partnerships.
(SEAL)
-------------------------------------
My commission Expires: Print Name of Notary:
-----------------------------------
-------------------------------------
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from audited financial
statements for the one year period ending
December 31, 1995 and is qualified in its
entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000722565
<NAME> Winthrop Growth Investors I
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLAR
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1.0000
<CASH> 907734
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2155939
<PP&E> 41774122
<DEPRECIATION> (18354792)
<TOTAL-ASSETS> 26483003
<CURRENT-LIABILITIES> 646218
<BONDS> 20081080
0
0
<COMMON> 0
<OTHER-SE> 5755705
<TOTAL-LIABILITY-AND-EQUITY> 26483003
<SALES> 0
<TOTAL-REVENUES> 6754817
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5171044
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1894902
<INCOME-PRETAX> (311129)
<INCOME-TAX> 0
<INCOME-CONTINUING> (311129)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (311129)
<EPS-PRIMARY> (12.10)
<EPS-DILUTED> 0
</TABLE>
