UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994, or
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission file number 0-13418
CENTURY PROPERTIES GROWTH FUND XXII
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-2939418
------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5665 Northside Drive, N.W.,
Suite 370
Atlanta, Georgia 30328
--------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 916-9090
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
No market for the Limited Partnership Units exists and therefore a market
value for such Units cannot be determined.
DOCUMENTS INCORPORATED HEREIN BY REFERENCE:
Prospectus of Registrant dated September 25, 1984 and supplemented thereafter
incorporated in Parts I and IV.
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A limited partnership)
PART I
Item 1. Business.
Century Properties Growth Fund XXII (hereinafter referred to as "Registrant")
was organized in January 1984, as a California limited partnership under the
Uniform Limited Partnership Act of the California Corporations Code. Fox
Partners IV, a California general partnership, is the general partner of
Registrant. The general partners of Fox Partners IV are Fox Capital Management
Corporation (the "Managing General Partner") a California corporation, Fox
Realty Investors ("FRI"), a California general partner ship, and Fox Associates
84, a California general partnership.
Registrant's Registration Statement, filed pursuant to the Securities Act of
1933 (No. 2-89285), was declared effective by the Securities and Exchange
Commission ("Commission") on September 25, 1984. Registrant marketed its
securities pursuant to its Prospectus dated September 25, 1984, and thereafter
supplemented (hereinafter the "Prospectus"). The Prospectus was filed with the
Commission pursuant to Rule 424(b) of the Securities Act of 1933.
The principal business of Registrant is and has been to acquire, hold for
investment and ultimately sell income-producing real property. Registrant is a
"closed" limited partnership real estate syndicate formed to acquire
multi-family residential properties. For a further description of the business
of Registrant, see the sections entitled "Risk Management" and "Investment
Objectives and Policies" of the Prospectus.
Beginning in September 1984 through June 1986, Registrant offered $120,000,000
in Limited Partnership Units. Limited Partnership Units having an original
purchase price of $82,848,000 were sold. The net proceeds of this offering were
used to purchase eleven income-producing real properties. Registrant's property
portfolio is geographically diversified with properties acquired in eight
states. Leaseback agreements which covered ten of the properties, whereby the
seller assumed the risks of operating each property in its initial operating
phase, have now expired. Registrant's acquisition activities were completed in
September 1986 and since then the principal activity of Registrant has been
managing its portfolio. One property was acquired by the lender through
foreclosure in 1992. See Item 2, "Properties" for a description of Registrant's
properties.
Registrant is involved in only one industry segment, as described above. The
business of Registrant is not seasonal. Registrant does not engage in any
foreign operations or derive revenues from foreign sources. From March 1988
though December 1993, Registrant's affairs had been managed by Metric
Management, Inc. ("MMI") or its predecessor. On December 16, 1993, the services
agreement with MMI was modified and, as a result thereof, the Managing General
Partner began directly providing cash management services for Registrant as of
December 23, 1993 and day-to-day management of Registrant's affairs, including
portfolio management, accounting and investor relations services as of April 1,
1994.
2
<PAGE>
On December 6, 1993, the shareholders of the Managing General Partner entered
into a Voting Trust Agreement with NPI Equity Investments II, Inc. ("NPI Equity
II") pursuant to which NPI Equity II was granted the right to vote 100% of the
outstanding stock of the Managing General Partner. In addition, NPI Equity II
became the managing partner of FRI. As a result, NPI Equity II indirectly
became responsible for the operation and management of the business and affairs
of Registrant and the other investment partnerships originally sponsored by the
Managing General Partner and/or FRI. NPI Equity II is a wholly-owned subsidiary
of National Property Investors, Inc. ("NPI, Inc. "), a diversified real estate
management company with offices in Jericho, New York and Atlanta, Georgia. The
individuals who had served previously as partners of FRI and as officers and
directors of the Managing General Partner contributed their general partnership
interests in FRI to a newly formed limited partnership, Portfolio Realty
Associates, L.P. ("PRA"), in exchange for limited partnership interests in PRA.
The shareholders of the Managing General Partner and the prior partners of FRI,
in their capacity as limited partners of PRA, continue to hold indirectly
certain economic interests in Registrant and such other investment limited
partnerships, but have ceased to be responsible for the operation and management
of Registrant and such other partnerships.
On August 10, 1994, NPI, Inc., entered into an agreement with an affiliate
("Apollo") of Apollo Real Estate Advisors, L.P. to sell to Apollo up to
one-third of the stock of NPI, Inc. In addition, Apollo obtained general and
limited partnership interests in NPI-AP Management, L.P. ("NPI-AP"). NPI
Property Management Corporation ("NPI Management"), an affiliate of the Managing
General Partner, became the managing general partner of NPI-AP.
On October 12, 1994, NPI, Inc. sold one-third of its stock to Apollo. Apollo
is entitled to designate three of the seven directors of the Managing General
Partner and NPI Equity II. In addition, the approval of certain major actions
on behalf of Registrant requires the affirmative vote of at least five directors
of the Managing General Partner.
On October 12, 1994, affiliates of Apollo acquired (i) one-third of the stock
of the respective general partners of DeForest Ventures I L.P. ("DeForest I")
and DeForest Ventures II L.P. and (ii) an additional equity interest in NPI-AP
(bringing its total equity interest in such entity to one-third). NPI-AP is a
limited partner of DeForest I which was formed for the purpose of making tender
offers (the "Tender Offers") for limited partnership interests in Registrant as
well as 11 affiliated limited partnerships.
During the fourth quarter of 1994, DeForest I acquired 14,544 limited
partnership units or approximately 17.6% of the total limited partnership units
of Registrant. (See Item 12, Security Ownership of Certain Beneficial Owners
and Management.")
Both the income and the expenses of operating the properties owned by
Registrant are subject to factors outside Registrant's control, such as
oversupply of similar rental facilities resulting from overbuilding, increases
in unemployment or population shifts, changes in zoning laws or changes in
patterns of needs of the users. Expenses, such as local real estate taxes and
management expenses, are subject to change and cannot always be reflected in
rental increases due to market conditions or existing leases. The
profitability and marketability of developed real
3
<PAGE>
property may be adversely affected by changes in general and local economic
conditions and in prevailing interest rates, and favorable changes in such
factors will not necessarily enhance the profitability or marketability of such
properties. Even under the most favorable market conditions, there is no
guarantee that any property owned by Registrant can be sold or, if sold, that
such sale can be made upon favorable terms.
It is possible that legislation on the state or local level may be enacted in
the states where Registrant's properties are located which may include some form
of rent control. There have been, and it is possible there may be other
Federal, state and local regulations enacted relating to the protection of the
environment. The Managing General Partner is unable to predict the extent, if
any, to which such new legislation or regulations might occur and the degree to
which such existing or new legislation or regulations might adversely affect the
properties owned by Registrant.
Registrant monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain
cases environmental testing has been performed, which resulted in no material
adverse conditions or liabilities. In no case has Registrant received notice
that it is a potentially responsible party with respect to an environmental
clean up site.
Registrant maintains property and liability insurance on the properties and
believes such coverage to be adequate.
Registrant is affected by and subject to the general competitive conditions of
the residential real estate industry. In addition, each of Registrant's
properties competes in an area which normally contains numerous other
residential properties which may be considered competitive. In 1994 markets in
many areas remained depressed due in part to over-building which continues to
depress residential rental rates. An oversupply of properties, including those
held by banks, savings institutions, the Federal Deposit Insurance Corporation
and the Resolution Trust Corporation, affects the ability of Registrant to sell
such properties and their sales prices.
At this time, it appears that the investment objective of capital growth will
not be attained and that investors will not receive a return of all their
invested capital. The extent to which invested capital is returned to investors
is dependent upon the success of the general partner's strategy as set forth
herein as well as upon significant improvement in the performance of
Registrant's remaining properties and the markets in which such properties are
located and on the sales price of the remaining properties. In this regard,
some or all of the remaining properties will be held longer than originally
expected. The ability to hold and operate these properties is dependent on
Registrant's ability to obtain refinancing or debt modification as required.
Property Matters
Monterey Village Apartments - Registrant modified the existing debt
encumbering Monterey Village Apartments in January 1994. The terms of the
modified loan include a seven year extension with a reduction in the interest
rate from 10.50 percent to 8.25 percent per annum and a 30 year amortization
period. In addition, Registrant made a principal payment of $799,000 on the
loan. In connection with the modification, Registrant incurred extension fees
and costs totaling approximately $78,000.
4
<PAGE>
On March 24, 1995, Registrant entered into an agreement to sell this property
to an unaffiliated third party pursuant to an unsolicited offer. The sale is
subject to the purchaser completing its due diligence review. If the sale is
consumated, Registrant will receive approximately $3,000,000 in net proceeds.
Cooper's Pointe Apartments - On September 1, 1994, Registrant completed a debt
modification agreement with the Cooper's Pointe Apartments mortgagee. As
modified, the loan requires monthly debt service payments of approximately
$46,000, bears interest at 8.25% per annum and is being amortized over
20 years. The loan matures on August 31, 1999 with a balloon payment of
$4,746,000. As specified in the loan documents, Registrant is required to make
monthly deposits of $7,000 to a replacement reserve for future capital
improvements. Registrant incurred costs and extension fees in connection with
this modification of approximately $57,000. The loans securing Cooper's Pointe
Apartments and Copper Mill Apartments are cross collateralized.
Copper Mill Apartments - On September 1, 1994, Registrant completed a debt
modification agreement with the Copper Mill Apartments mortgagee. As modified,
the loan requires monthly debt service payments of approximately $31,000, bears
interest at 8.25% per annum and is being amortized over 20 years. The loan
matures on August 31, 1999 with a balloon payment of $3,240,000. As specified
in the loan documents, Registrant is required to make monthly deposits of $5,000
to a replacement reserve for future capital improvements. Registrant incurred
costs and extension fees in connection with this modification of approximately
$131,000. The loans securing Copper Mill and Cooper's Pointe Apartments are
cross collateralized.
Hampton Greens, Promontory Point, Stoney Creek and Woodcreek Apartments - On
December 28, 1994, Registrant refinanced its existing loans on these
properties. The refinanced loan was in the principal amount of $30,000,000,
bears interest at 90 day LIBOR plus 3.75% and matures on December 26, 1999.
Registrant is required to make monthly debt service payments in an amount equal
to the greater of (i) the interest due on the loan or (ii) $218,750 per month
through December 31, 1996, $225,000 per month from January 1, 1997 through
December 31, 1997 or $231,250 per month from January 1, 1998 through maturity.
To the extent Registrant is required to make payments in the amounts set forth
in clause (ii), the difference between such amount and the amount which would
otherwise have been paid pursuant to clause (i) will be applied to the loan
principal. In addition, Registrant is required to maintain a $500,000 working
capital reserve. In connection with this refinancing, Registrant transferred
ownership to Woodcreek Apartments to Century Stoney Greens, L.P., a
wholly-owned subsidiary of Registrant which had already held title to the other
three properties.
Employees
Services are performed for Registrant at its remaining properties by on-site
personnel all of whom are employees of NPI-AP, which directly manages
Registrant's remaining properties. All payroll and associated expenses of such
on-site personnel are fully reimbursed by Registrant to NPI-AP. Pursuant to a
management agreement, NPI-AP provides certain property management services to
Registrant in addition to providing on-site management. In addition, Registrant
and other affiliated partnerships employ, on a part-time basis, approximately 20
individuals who perform accounting, secretarial, transfer and administrative
services for them and Registrant pays for its pro rata portion of such services.
5
<PAGE>
Item 2. Properties.
A description of the multi-family residential properties in which Registrant
has or had an ownership interest is as follows. All of Registrant's properties
owned in fee.
<TABLE>
<CAPTION>
Portfolio
Date of Date of Percentage
Name and Location Purchase Sale Size (1)
----------------- -------- ------- ---- ----------
<S> <C> <C> <C> <C>
Wood Creek Apartments 05/84 - 432 units 10
1710 S. Gilbert Road
Mesa, Arizona
Plantation Creek Apartments(2) 06/84 - 484 units 18
6925 Roswell Road
Atlanta, Georgia
Stoney Creek Apartments 06/85 - 364 units 9
11333 Amanda Lane
Dallas, Texas
Four Winds Apartments 09/85 - 350 units 11
SEC of 79th Street & Switzer Road
Overland Park, Kansas
Promontory Point Apartments 10/85 - 252 units 7
2250 Ridgepoint
Austin, Texas
Cooper's Pointe Apartments 11/85 - 192 units 5
2225 Greenridge Road
Charleston, South Carolina
Hampton Greens Apartments 12/85 - 309 units 8
10911 Woodmeadow Parkway
Dallas, Texas
Monterey Village Apartments 04/86 - 224 units 8
10244 Arrow Highway
Rancho Cucamonga, California
Autumn Run Apartments 06/86 - 320 units 9
1627 Country Lakes Drive
Naperville, Illinois
Copper Mill Apartments 09/86 - 192 units 8
3400 Copper Mill Trace
Richmond, Virginia
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Portfolio
Date of Date of Percentage
Name and Location Purchase Sale Size (1)
----------------- -------- ------- ---- ----------
<S> <C> <C> <C> <C>
Fox Hollow Apartments(3) 01/85 07/92 208 units 7
1204 Brockett Road
Atlanta, Georgia
</TABLE>
(1) Represents the percentage of original cash invested in the individual
property of the total original cash invested in all properties.
(2) Formerly Post Creek Apartments.
(3) Property acquired by lender through foreclosure in July 1992 (See
Item 8, "Consolidated Financial Statements and Supplementary
Data - Note 8."
See, Item 8, "Consolidated Financial Statements and Supplementary Data", for
information regarding any encumbrances to which properties of Registrant are
subject.
An occupancy summary is set forth on the chart following:
CENTURY PROPERTIES GROWTH FUND XXII
OCCUPANCY SUMMARY
Average
Occupancy Rate(%)
for the Year Ended
December 31,
------------------------
1994 1993 1992
---- ---- ----
Wood Creek Apartments......................... 97 93 93
Plantation Creek Apartments................... 97 92 89
Stoney Creek Apartments....................... 93 91 91
Four Winds Apartments......................... 95 96 96
Promontory Point Apartments................... 96 96 95
Cooper's Pointe Apartments.................... 94 91 92
Hampton Greens Apartments..................... 95 95 94
Monterey Village Apartments................... 93 93 95
Autumn Run Apartments......................... 96 91 93
Copper Mill Apartments........................ 97 95 94
Item 3. Legal Proceedings.
Lawrence M. Whiteside, on behalf of himself and all others similarly situated,
v. Fox Capital Management Corporation et al., Superior Court of the State of
California, San Mateo County, Case No. 390018 ("Whiteside").
In November 1994, Lawrence Whiteside, a limited partner of Century Properties
Fund XIX, a limited partnership affiliated with the Managing General Partner,
commenced an action in the Superior Court of California, County of San Mateo,
against, among others, affiliates of the Managing General Partner. The action
alleges, among other things, that the Tender Offers constitute (a) a breach of
the fiduciary duty owed to the limited partners of partnerships whose general
partners are affiliated with the Managing General Partner, and (b) a breach of,
or an
7
<PAGE>
inducement to breach, the provisions of the partnership agreements of such
partnerships. The action, which has been brought as a class action on behalf of
limited partners, sought to enjoin the Tender Offers as well as monetary damages
in an unspecified amount. On November 3rd the Superior Court denied plaintiff's
motion for a temporary restraining order with respect to the Tender Offers and
on November 18th the Superior Court denied plaintiff's motion for a preliminary
injunction. (See below for information with respect to a proposed settlement of
the claims asserted in this action.)
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all others
similarly situated, v. DeForest Ventures I L.P., et. al., United States District
Court, Northern District of Georgia, Atlanta Division, Case No. 1-94-CV-2983-JEC
("Ruben").
In November 1994, Bonnie L. Ruben and Sidney Finkel, limited partners of
partnerships whose general partners are affiliated with the Managing General
Partner, commenced an action in the United States District Court, Northern
District of Georgia, against, among others, affiliates of the Managing General
Partner. The action alleges, among other things, that the Tender Offers
constitute (a) a breach of the fiduciary duty owed to the limited partners of
such partnerships, and (b) a breach of, or an inducement to breach, the
provisions of the partnership agreements of such partnerships. The action,
which has been brought as a class action on behalf of limited partners, sought
to enjoin the Tender Offers as well as monetary damages in an unspecified
amount. After the District County denied plaintiffs motion for a temporary
restraining order, the plaintiffs withdrew their request for a preliminary
injunction but are still seeking monetary damages and have added a third named
plaintiff, Robert Lewis. (See below for information with respect to a proposed
settlement of this action.)
Roger L. Vernon, individually and on behalf of all similarly situated persons
v. DeForest Ventures I L.P. et. al., Circuit Court of Cook County, County
Departments, Chancery Division, State of Illinois, Case No. 94CH0100592
("Vernon").
In November 1994, Roger L. Vernon, a limited partner of Century Properties
Fund XVIII, a limited partnership affiliated with the Managing General Partner,
commenced an action in the Circuit Court of Cook County, County Department,
Chancery Division against, among others, affiliates of the Managing General
Partner. The action alleges, among other things, that the Tender Offers
constitute (a) a breach of the fiduciary duty owed to the limited partners of
such partnerships, and (b) misuse of partnership assets. The action, which has
been brought as a class action on behalf of limited partners, sought to enjoin
the Tender Offers as well as monetary damages in an unspecified amount. The
plaintiffs request for a preliminary injunction was not timely as the action was
commenced after the consummation of the Tender Offers. (See below for
information with respect to a proposed settlement of the claims asserted in this
action.)
James Andrews, et al., on behalf of themselves and all others similarly
situated v. Fox Capital Management Corporation, et al., United States District
Court, Northern District of Georgia, Atlanta Division, Case No. 1-94-CV-3351-JEC
("Andrews").
In December 1994, James Andrews, a limited partner of Century Properties Fund
XV, a limited partnership affiliated with the Managing General Partner,
commenced an action in the United States District Court, Northern District of
Georgia, against,
8
<PAGE>
among others, affiliates of the Managing General Partner. The action alleges,
among other things, that the tender offers constitute (a) a breach of the
fiduciary duty owed to the limited partners of such partnerships, and (b) a
breach of, and an inducement to breach, the provisions of the partnership
agreement of such partnerships. The action, which has been brought as a class
action on behalf of limited partners, seeks monetary damages in an unspecified
amount. (See below for information with respect to a proposed settlement of
this action.
On March 16, 1995 the United States District Court for the Northern District
of Georgia, Atlanta Division, entered an order which granted preliminary
approval to a settlement agreement in the Ruben and Andrews actions,
conditionally certified two classes for purpose of settlement, and authorized
the parties to give notice to the classes of the terms of the proposed
settlement. Plaintiffs counsel in the Vernon and Whiteside action have joined
in the Settlement Agreement as well. The two certified classes constitute all
limited partners of Registrant and the eighteen other affiliated partnerships
who either tendered their units in connection with the October tender offers
or continue to hold their units in Registrant and the other affiliated
partnerships. Pursuant to the terms of the proposed settlement, which are
described in the notice sent to the class members in March 1995, (and more
fully described in the Amended Stipulation of Settlement submitted to the court
on March 14, 1995) all claims which either were made or could have been asserted
in any of the class actions would be dismissed with prejudice and/or released.
In consideration for the dismissal and/or release of such claims, among other
things, DeForest I would pay to each unitholder who tendered their units in
Registrant an amount equal to 15% of the original tender offer price less
attorney's fees and expenses. In addition, DeForest will commence a second
tender offer for an aggregate number of units of Registrant (including the units
purchased in the initial tender) constituting up to 49% of the total number of
units of Registrant at a price equal to the initial tender price plus 15% less
attorney's fees and expenses. Furthermore, under the terms of the proposed
settlement, the Managing General Partner would agree, among other things, to
provide Registrant a credit line of $150,000 per property which would bear
interest at the lesser of prime rate plus 1% and the rate permitted under the
partnership agreement of Registrant. A hearing on the final approval of the
settlement is scheduled for May 19, 1995.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this Report.
PART II
Item 5. Market for the Registrant's Equity and Related Security Holder
Matters.
The Limited Partnership Unit holders are entitled to certain distributions as
provided in the Partnership Agreement. Through December 1993 cash distributions
from operations have been $15 for each $1,000 of original investment. No market
for Limited Partnership Units exists nor is expected to develop.
No distributions from operations were made during the years ended December 31,
1994 and 1993. See Item 7, "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a discussion of Registrant's financial
ability to make distributions
9
<PAGE>
As of March 1, 1995, the approximate number of holders of Limited Partnership
Units was as follows 6,053.
Item 6. Selected Financial Data.
The following represents selected financial data for Registrant for the years
ended December 31, 1994, 1993, 1992, 1991 and 1990. The data should be read in
conjunction with the consolidated financial statements included elsewhere
herein. This data is not covered by the independent auditors' report.
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------
1994 1993 1992 1991 1990
------- -------- ------- ------- -------
(Amounts in thousands except per unit data)
<S> <C> <C> <C> <C> <C>
Total revenues $19,786 $ 18,616 $19,100 $18,927 $19,144
======= ======== ======= ======= =======
Loss before extraordinary item $(3,042) $ (3,143) $(3,976) $(5,898) $(5,354)
Extraordinary item - gain on
extinguishment of debt - 3,403 - - -
------- -------- ------- ------- -------
Net loss $(3,042) $ (3,143) $ (573) $(5,898) $(5,354)
======= ======== ======= ======= =======
Net loss per limited partnership
unit(1):
Loss before extraordinary item $ (32) $ (33) $ (42) $ (63) $ (57)
Extraordinary item - gain on
on extinguishment of debt - - 36 - -
------- -------- ------- ------- -------
Net loss $ (32) $ (33) $ (6) $ (63) $ (57)
======= ======== ======= ======= =======
Total assets $98,477 $102,995 $106,673 $120,659 $126,602
======= ======== ======= ======= =======
Long term obligations:
Notes payable $80,899 $ 81,848 $ 82,453 $ 95,318 $ 95,738
======= ======== ======= ======= =======
</TABLE>
--------
(1) $1,000 original contribution per unit, based on units outstanding during
the period after giving effect to the allocation of net loss to the general
partner.
10
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Liquidity and Capital Resources
Registrant holds investments in and operates residential real estate
properties. The properties are located in Arizona, Georgia, Texas, Kansas,
South Carolina, California, Illinois and Virginia. Registrant receives
rental income from its properties and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments. All
of Registrant's properties, except for its Autumn Run, Coopers Pointe and
Wood Creek properties, generated positive cash flow from operations for the
year ended December 31, 1994. Autumn Run experienced negative cash flow due
to substantial improvements to real estate. As of March 1, 1995, one of the
eleven properties originally purchased by Registrant was lost through
foreclosure.
Registrant uses working capital reserves from any undistributed cash flow from
operations and refinancing proceeds as its primary source of liquidity. There
have been no distributions since 1988. Although cash flow from operations is
expected to improve during the next twelve months, it is not currently
anticipated that Registrant will make any distributions from operations in the
near future.
The level of liquidity based upon cash and cash equivalents experienced a
$134,000 increase at December 31, 1994, as compared to 1993. Registrant's
$252,000 of net cash from operating activities and $841,000 of net cash from
investing activities was partially offset by $959,000 of net cash used in
financing activities. The increase in cash from investing activities included
$1,187,000 of proceeds received from the maturity of cash investments and a
$275,000 decrease in restricted cash, which was partially offset by $621,000 of
cash used for additions to real estate. Cash used in financing activities
consisted of a $799,000 partial repayment of the mortgage encumbering
Registrant's Monterey Village Apartment property, $29,457,000 used in the
satisfaction of notes payable and $703,000 of notes payable principal payments
which was offset by $30,000,000 of net proceeds from the refinancing of the
Hampton Greens, Stoney Creek, Wood Creek and Promontory Point mortgages.
Registrant plans a substantial exterior renovation project on its Plantation
Creek Apartment complex in 1995 which the Managing General Partner believes will
enable the property to better compete in the current market. The cash required
to complete the renovation will come from cash flow and working capital
reserves. All other increases (decreases) in certain assets and liabilities are
the result of the timing of receipt and payment of various operating activities.
Working capital reserves are being invested in a money market account, United
States Treasury bills or in repurchase agreements secured by United States
Treasury obligations (see Item 8, "Consolidated Financial Statements and
Supplementary Data", Note 1). The Managing General Partner believes that, if
market conditions remain relatively stable, cash flow from operations, when
combined with working capital reserves, will be sufficient to fund required
capital improvements and debt service payments (excluding the balloon payments)
in 1995 and the foreseeable future.
Registrant has a balloon payment of $10,452,000 on Four Winds Apartment
complex due September 1995. Registrant will attempt to extend the due date
of this loan or find replacement financing. If, however, the loan is not
refinanced or extended, or the property is not sold, Registrant could lose
this property through foreclosure. In that case, Registrant would incur a
loss of approximately $600,000. In addition, there are balloon payments
totaling approximately $23,565,000 due in 1996.
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<PAGE>
Registrant will attempt to extend the due dates of these loans or find
replacement financing.
During the fourth quarter of 1994, DeForest Ventures I L.P. acquired 14,544
limited partnership units or 17.6% of total limited partnership units of
Registrant. The Managing General Partner believes that the tender will not have
a significant impact on future operations or liquidity of Registrant (see Item
3, "Legal Proceedings").
At this time, it appears that the investment objective of capital growth will
not be attained and that investors will not receive a return of all of their
invested capital. The extent to which invested capital is returned to investors
is dependent upon the performance of Registrant's properties and the markets in
which such properties are located and on the sales price of the remaining
properties. In this regard, all of the remaining properties have been held
longer than originally expected. The ability to hold and operate these
properties is dependent on Registrant's ability to obtain refinancing or debt
modification as required.
Real Estate Market
The national real estate market has suffered from the effects of the real
estate recession including, but not limited to a downward trend in market
values of existing residential properties. In addition, the bail out of the
savings and loan associations and sales of foreclosed properties by auction
reduced market values and caused a further restriction on the ability to
obtain credit. As a result, Registrant's ability to refinance or sell its
existing properties may be restricted. These factors caused a decline in
market property values and serve to reduce market rental rates and/or sales
prices. Compounding these difficulties have been relatively low interest
rates, which encourage existing and potential tenants to purchase homes. In
addition, there has been a significant decline nationally in new household
formation. Despite the above, the rental market appears to be experiencing a
gradual strengthening and management anticipates that increases in revenue
will generally exceed increases in expenses during 1995. Furthermore,
management believes that the emergence of new institutional purchasers,
including real estate investment trusts and insurance companies, should
create a more favorable market value for Registrant's properties in the
future.
Results of Operations
1994 Compared 1993
Operating results improved by $101,000 for the year ended December 31, 1994,
as compared to 1993, due to increases in revenues of $1,170,000 and in
expenses of $1,069,000.
Revenues increased by $1,170,000 for the year ended December 31, 1994, as
compared to 1993, due to increases of $1,081,000 in rental revenue and of
$89,000 in interest and other income. Rental revenues increased at all of
Registrant's properties except for Monterey Village. The increase was primarily
due to increases in rental rates at all Registrant's properties except for
Monterey Village and improved occupancy at Registrant's Autumn Run, Cooper's
Pointe, Copper Mill, Plantation Creek, Wood Creek and Stoney Creek properties.
Interest and other income increased due to the receipt of $100,000 relating to
the release of a restrictive covenant on land adjacent to the Four Winds
Apartment complex which was slightly offset by a decrease in interest income due
to a decline in average working capital reserves available for investment.
12
<PAGE>
Expenses increased by $1,069,000 for the year ended December 31, 1994, as
compared to 1993, due to increases of $1,171,000 in operating expenses and
$242,000 in interest expense which was partially offset by decreases of $46,000
in depreciation expense and $298,000 in general and administrative expenses.
Operating expenses increased due to general repair and maintenance expenditures
associated with the various mortgage refinancings and rent up expenses at all of
Registrant's properties. Interest expense increased due to the write- off of
deferred financing fees in connection with the refinancing of seven of
Registrant's ten mortgages which was slightly offset by the partial repayment of
mortgage principal and a lower interest rate resulting from the debt
modification on the mortgage encumbering Registrant's Monterey Village
Apartments. Depreciation expense decreased due to the effect of assets becoming
fully depreciated. General and administrative expenses decreased due to bad debt
expenses recognized in 1993 relating to revenue bonds acquired when
Registrant's Fox Hollow property was purchased, partially offset by increased
costs associated with the management transition.
1993 Compared to 1992
In 1993 some of Registrant's properties experienced an improvement in
operations as a result of increased occupancy and/or slight increases in the
rental rates due, in part, to improvements in the local economies in which
the properties operate. The operating results of certain of Registrant's
properties continue to be affected by highly competitive market conditions
combined with the continued sluggish economy. Markets in some areas remained
depressed due, in part, to overbuilding which continued to depress rental
rates at some of Registrant's properties.
Loss before extraordinary item decreased $833,000 in 1993, as compared to
1992, primarily due to a decrease in operating, interest and depreciation
expenses due to the disposition of Fox Hollow Apartments in July 1992. In
addition, interest expense was further reduced by the lower interest rate
resulting from the refinancing of Promontory Point in 1992, the reduced
interest rate due to the extension on the Four Winds Apartments note payable
in September 1992 and the reduced interest rate due to the extension of
Cooper's Pointe Apartments note payable in 1993. Rental revenue remained
steady. Decreases due to the disposition of Fox Hollow Apartments and
decreased occupancy at Monterey Village and Autumn Run Apartments offset the
increases in rental revenue at Wood Creek and Promontory Point Apartments,
due to increased rental rates, and Plantation Creek Apartments, due to
increased occupancy. Operating expenses decreased only slightly as operating
expense increases at Four Winds Apartments and Autumn Run Apartments
substantially offset the disposition of Fox Hollow Apartments. Interest and
other income decreased due to a decrease in interest rates and cash available
for investments. General and administrative expenses increased due to an
increase in amounts paid for portfolio management services as a result of the
new services agreement and bad debt expense related to revenue bonds acquired
when Fox Hollow was purchased. The gain on property disposition recognized
in 1992 relates to Fox Hollow Apartments.
The extraordinary item-gain on extinguishment of debt recognized in 1992
relates to the discounted prepayment on the Stoney Creek, Hampton Greens and
Promontory Point Apartments notes payable.
13
Item 8. Consolidated Financial Statements and Supplementary Data.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1994
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Reports F - 2
Consolidated Financial Statements:
Balance Sheets at December 31, 1994 and 1993 F - 4
Statements of Operations for the Years Ended
December 31, 1994, 1993 and 1992 F - 5
Statements of Partners' Equity for the Years Ended
December 31, 1994, 1993 and 1992 F - 6
Statements of Cash Flows for the Years Ended
December 31, 1994, 1993 and 1992 F - 7
Notes to Consolidated Financial Statements F - 8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation at December 31, 1994 F - 17
</TABLE>
Consolidated financial statements and financial statement schedules not included
have been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in the consolidated
financial statements.
F - 1
<PAGE>
Imowitz Koenig & Co., LLP
Certified Public Accountants
To the Partners
Century Properties Growth Fund XXII
Atlanta, Georgia
Independent Auditors' Report
We have audited the accompanying consolidated balance sheet of Century
Properties Growth Fund XXII (a limited partnership) (the "Partnership") and its
subsidiary as of December 31, 1994, and the related consolidated statements of
operations, partners' equity and cash flows for the year then ended. Our audit
also included the additional information supplied pursuant to Item 14(a)(2).
These consolidated financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidatedfinancial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Growth Fund XXII and its subsidiary as of December 31, 1994, and the
results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles. Also in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements ta ken as a whole, presents fairly, in
all material respects, the information set forth therein.
[LOGO]
Certified Public Accountants
New York, N.Y.
January 18, 1995
100 East 42nd Street, New York, New York 10017
Telephone 212-867-8711 Facsimile 212-867-8723
<PAGE>
Deloitte &
Touche LLP
----------- -----------------------------------------------------------------
[LOGO] 50 Fremont Street Telephone: (415) 247-4000
San Francisco, California 94105-2230 Facsimile: (415) 247-4329
INDEPENDENT AUDITORS' REPORT
Century Properties Growth Fund XXII:
We have audited the accompanying consolidated balance sheet of Century
Properties Growth Fund XXII, (a limited partnership) (the "Partnership") and its
wholly-owned subsidiaries, as of December 31, 1993, and the related consolidated
statements of operations, partners' equity and cash flows for the years ended
December 31, 1993 and 1992. 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 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 over all financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such consolidated financial statements present fairly,in all
material respects, the financial position of the Partnership and its
wholly-owned subsidiaries at December 31, 1993, and the results of their
operations and their cash flows for the years ended December 31, 1993 and 1992
in conformity with generally accepted accounting principles.
The accompanying consolidated financial statements have beenprepared assuming
that the Partnership will continue as a going concern. As discussed in the
first paragraph of Note 11 to the consolidated financial statements, the
Partnership has balloon payments totaling $11,869,000 and $27,511,000 due in
1994 and 1995, respectively, which raises substantial doubt about the
Partnership's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 11. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
[LOGO]
March 18, 1994
---------------
Deloitte Touche
Tohmatsu
International
---------------
F - 3
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------
1994 1993
ASSETS -------------- ---------------
------
<S> <C> <C>
Cash and cash equivalents $ 475,000 $ 341,000
Restricted cash 500,000 775,000
Cash investments - 1,187,000
Other assets 862,000 520,000
Real Estate:
Real estate 139,861,000 139,240,000
Accumulated depreciation (43,985,000) (39,860,000)
-------------- --------------
Real estate, net 95,876,000 99,380,000
Deferred financing costs, net 734,000 792,000
-------------- --------------
Total assets $ 98,447,000 $102,995,000
-------------- --------------
-------------- --------------
LIABILITIES AND PARTNERS' EQUITY
--------------------------------
Notes payable $ 80,889,000 $ 81,848,000
Accrued expenses and other liabilities 1,361,000 1,908,000
-------------- --------------
Total liabilities 82,250,000 83,756,000
-------------- --------------
Commitments and Contingencies
Partners' Equity (Deficit):
General partner (7,173,000) (6,814,000)
Limited partners (82,848 units outstanding at
December 31, 1994 and 1993) 23,370,000 26,053,000
-------------- --------------
Total partners' equity 16,197,000 19,239,000
-------------- --------------
Total liabilities and partners' equity $ 98,447,000 $102,995,000
-------------- --------------
-------------- --------------
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
Revenues:
Rental $ 19,603,000 $18,522,000 $18,523,000
Interest and other income 183,000 94,000 170,000
Gain on property disposition - - 407,000
------------- ------------ ------------
Total revenues 19,786,000 18,616,000 19,100,000
Expenses (including $1,003,000 and $1,249,000 paid to
general partner and affiliates in 1994 and 1992):
Operating 10,353,000 9,182,000 9,193,000
Interest 7,927,000 7,685,000 8,694,000
Depreciation 4,125,000 4,171,000 4,594,000
General and administrative 423,000 721,000 595,000
------------- ------------ ------------
Total expenses 22,828,000 21,759,000 23,076,000
------------- ------------ ------------
Loss before extraordinary item (3,042,000) (3,143,000) (3,976,000)
Extraordinary item:
Gain on extinguishment of debt - - 3,403,000
------------- ------------ ------------
Net loss $ (3,042,000) $(3,143,000) $ (573,000)
-------------- ------------ ------------
-------------- ------------ ------------
Net loss per limited partnership unit:
Loss before extraordinary item $ (32) $ (33) $ (42)
Extraordinary item - - 36
-------------- -------------- -----------
Net loss $ (32) $ (33) $ (6)
-------------- -------------- -----------
-------------- -------------- -----------
</TABLE>
See notes to consolidated financial statements.
F - 5
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
General Limited Total
partner's partners' partners'
(deficit) equity equity
------------- ------------- --------------
<S> <C> <C> <C>
Balance - January 1, 1992 $ (6,375,000) $ 29,330,000 $22,955,000
Loss before extraordinary item (469,000) (3,507,000) (3,976,000)
Extraordinary item - Gain on extinguishment
of debt 401,000 3,002,000 3,403,000
------------- ------------- --------------
Balance - December 31, 1992 (6,443,000) 28,825,000 22,382,000
Net loss (371,000) (2,772,000) (3,143,000)
------------- ------------- --------------
Balance - December 31, 1993 (6,814,000) 26,053,000 19,239,000
Net loss (359,000) (2,683,000) (3,042,000)
------------- ------------- --------------
Balance - December 31, 1994 $ (7,173,000) $ 23,370,000 $16,197,000
------------- ------------- --------------
------------- ------------- --------------
</TABLE>
See notes to consolidated financial statements.
F - 6
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
Net loss $ (3,042,000) $ (3,143,000) $ (573,000)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation and amortization 4,709,000 4,528,000 4,942,000
Gain on property disposition - - (407,000)
Extraordinary item - gain on extinguishment of debt - - (3,403,000)
Expenses paid on attempted refinancing - - 84,000
Deferred financing costs paid (399,000) (94,000) (564,000)
Deferred financing costs refunded - 33,000 -
Changes in operating assets and liabilities:
Other assets (342,000) (203,000) 372,000
Accrued expenses and other liabilities (674,000) 70,000 455,000
----------- ----------- -----------
Net cash provided by operating activities 252,000 1,191,000 906,000
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
Additions to real estate (621,000) (1,305,000) (860,000)
Purchase of cash investments - (1,782,000) (3,848,000)
Proceeds from maturity of cash investments 1,187,000 595,000 3,848,000
Restricted cash decrease (increase) 275,000 11,000 (139,000)
------------- ------------- -------------
Net cash provided by (used in) investing activities 841,000 (2,481,000) (999,000)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
Notes payable proceeds 30,000,000 - 17,700,000
Notes payable principal payments (30,959,000) (605,000) (18,797,000)
Prepayment premiums paid - - (258,000)
------------- ------------- -------------
Net cash (used in) financing activities (959,000) (605,000) (1,355,000)
------------- ------------- -------------
Increase (Decrease) in Cash and Cash Equivalents 134,000 (1,895,000) (1,448,000)
Cash and Cash Equivalents at Beginning of Year 341,000 2,236,000 3,684,000
------------- ------------- -------------
Cash and Cash Equivalents at End of Year $ 475,000 $ 341,000 $ 2,236,000
------------- ------------- -------------
------------- ------------- -------------
Supplemental Disclosure of Cash Flow Information:
-------------------------------------------------
Interest paid in cash during the year $ 7,513,000 $ 7,284,000 $ 8,006,000
------------- ------------- -------------
------------- ------------- -------------
Supplemental Disclosure of Non-cash Investing and
-------------------------------------------------
Financing Activities:
---------------------
Financing Costs Accrued $ 127,000 $ - $ -
------------- ------------- -------------
------------- ------------- -------------
Disposition of rental property in 1992 - see Note 8.
Extinguishment of debt in 1992 - see Note 7.
</TABLE>
See notes to consolidated financial statements.
F - 7
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Growth Fund XXII (the "Partnership") is a limited
partnership organized under the laws of the State of California to acquire,
hold for investment, and ultimately sell income-producing real estate. The
Partnership currently owns ten residential apartment complexes, located in
Arizona, Georgia, Texas, Kansas, South Carolina, California, Illinois and
Virginia. The general partner of the Partnership is Fox Partners IV, a
California general partnership. The general partners of Fox Partners IV are
Fox Capital Management Corporation ("MGP"), a California corporation, Fox
Realty Investors ("FRI"), a California general partnership, Fox Partners 85,
a California general partnership and Fox Associates 84, a California general
partnership. The Partnership was organized in January 1984, but did not
commence operations until May 1984. The capital contributions of
$82,848,000 ($1,000 per unit) were made by the limited partners.
On December 6, 1993, the shareholders of MGP entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity II") pursuant to
which NPI Equity II was granted the right to vote 100 percent of the
outstanding stock of MGP. As a result, NPI Equity II indirectly became
responsible for the operation and management of the business and affairs of
the Partnership and the other investment partnerships originally sponsored
by MGP and/or FRI. NPI Equity II is a wholly-owned subsidiary of National
Property Investors, Inc. ("NPI, Inc."), a diversified real estate management
company with offices in Jericho, New York and Atlanta, Georgia. The
shareholders of MGP retain indirect economic interests in the Partnership
and such other investment limited partnerships, but have ceased to be
responsible for the operation and management of the Partnership and such
other partnerships.
On August 10, 1994, NPI, Inc. entered into an agreement with an affiliate of
Apollo Real Estate Advisors, L.P. ("Apollo") to sell to Apollo up to
one-third of the stock of NPI, Inc. In addition, Apollo obtained general
and limited partnership interests in NPI-AP Management L.P. ("NPI-AP"). NPI
Property Management Corporation ("NPI Management"), an affiliate of NPI,
Inc., became the managing general partner of NPI-AP and assigned its
interest in the management contract for the Partnership's properties to
NPI-AP as well as all other properties it manages for partnerships
affiliated with MGP.
On October 12, 1994, NPI, Inc. sold one-third of the stock of NPI, Inc. to
an affiliate of Apollo. Also, on October 12, 1994, affiliates of Apollo
acquired (i) one-third of the stock of the respective general partners of
DeForest Ventures I L.P. ("DeForest I") and DeForest Ventures II L.P.
("DeForest II") and (ii) an additional equity interest in NPI-AP (bringing
its total equity interest in such entity to one-third). NPI-AP is the sole
limited partner of DeForest II and one of the limited partners of DeForest
I. The shareholders who control DeForest Capital I Corporation, the sole
general partner of DeForest I, also control NPI, Inc. DeForest I has been
formed for the purpose of making tender offers for limited partnership
interests in the Partnership as well as eleven affiliated limited
partnerships. DeForest II has been formed for the purpose of making tender
offers for limited partnership interests in seven affiliated limited
partnerships. During the fourth quarter of 1994, DeForest I acquired
approximately 18% of total limited partnership units of the Partnership (see
Note 10).
F - 8
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Consolidation
The consolidated financial statements include the statements of the
Partnership and its wholly owned subsidiary, Century Stoney Greens, L.P.,
which was formed in 1991 into which the Stoney Creek, Hampton Greens and
Promontory Point Apartments were transferred. In 1994, in accordance with
the refinancing of the first mortgage, Wood Creek Apartments was also
transferred into Century Stoney Greens, L.P. All significant intercompany
transactions and balances have been eliminated.
Distributions
Cash distributions from operations have been suspended since 1988 and will
continue to be suspended in the foreseeable future to allow the Partnership
to implement repairs and improvements to the properties and to provide
resources for potential refinancing of properties.
New Accounting Pronouncements
In December 1991, the Financial Accounting Standards Board ("FASB") issued
Statement No. 107, "Disclosures About Fair Value of Financial Instruments."
This Statement was amended in October 1994 by FASB Statement No. 119,
"Disclosures About Derivative Financial Instruments and Fair Value of
Financial Instruments." These Statements will not affect the financial
position or results of operations of the Partnership but will require
additional disclosure on the fair value of certain financial instruments for
which it is practicable to estimate fair value. Disclosures under these
statements will be required in the 1995 financial statements.
Cash and Cash Equivalents
The Partnership considers cash investments with an original maturity of
three months or less at the time of purchase to be cash equivalents.
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to
$100,000 by the Federal Deposit Insurance Corporation ("FDIC"). Balances in
excess of $100,000 are usually invested in United States Treasury bills and
repurchase agreements, which are collateralized by United States Treasury
obligations. At times during the year, cash balances exceeded insured
levels. At December 31, 1994, the Partnership had $475,000 invested in
overnight repurchase agreements, secured by United States Treasury oblig
ations, which are included in cash and cash equivalents.
F - 9
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Real Estate
Real estate is stated at cost. A provision for impairment of value is
recorded when a decline in value of property is determined to be other than
temporary as a result of one or more of the following: (1) a property is
offered for sale at a price below its current carrying value, (2) a property
has significant balloon payments due within the foreseeable future for which
the Partnership does not have the resources to meet, and anticipates it will
be unable to obtain replacement financing or debt modification sufficient to
allow a continued hold of the property over a reasonable period of time, (3)
a property has been, and is expected to continue, generating significant
operating deficits and the Partnership isunable or unwilling to sustain such
deficit results of operations, and has been unable to, or anticipates it
will be unable to, obtain debt modification, financing or refinancing
sufficient to allow a continued hold of the property for a reasonable period
of time or, (4) a property's value has declined based on management's
expectations with respect to projected future operational cash flows and
prevailing economic conditions. An impairment loss is indicated when the
undiscounted sum of estimated future cash flows from an asset, including
estimated sales proceeds, and assuming a reasonable period of ownership up
to 5 years, is less than the carrying amount of the asset. The impairment
loss is measured as the difference between the estimated fair value and the
carrying amount of the asset. In the absence of the above circumstances,
real estate is stated at cost. Acquisition fees are capitalized as a cost
of real estate. Construction interest costs were capitalized as a cost of
real estate during the deve lopment and construction phase and are expensed
as incurred after construction is completed.
Depreciation
Depreciation is computed by the straight-line method over estimated useful
lives currently ranging from 27.5 to 30 years for buildings and improvements
and six to seven years for furnishings. Properties for which a provision
for impairment of value has been recorded and are expected to be disposed of
within the next year are not depreciated.
Deferred Financing Costs
Deferred financing costs are amortized as interest expense over the lives of
the related loans or expensed, if financing is not obtained. At December
31, 1994 and 1993, accumulated amortization of deferred financing costs
totaled $679,000 and $1,558,000, respectively.
Net Loss Per Limited Partnership Unit
The net loss per limited partnership unit is computed by dividing the net
loss allocated to the limited partners by 82,848 units outstanding.
F - 10
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Income Taxes
No provision for Federal and state income taxes has been made in the
consolidated financial statements because income taxes are the obligation of
the partners.
Reclassification
Certain amounts have been reclassified to conform with 1994 presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the Partnership Agreement, the Partnership may be charged
by the general partner and affiliates for services provided to the
Partnership. From March 1988 to December 1992 such amounts were assigned
pursuant to a services agreement by the general partner and affiliates to
Metric Realty Services, L.P. ("MRS"), which performed partnership management
and other services for the Partnership.
On January 1, 1993, Metric Management, Inc. ("MMI"), successor to MRS, a
company which is not affiliated with the general partner, commenced
providing certain property and portfolio management services to the
Partnership under a new services agreement. As provided in the new
services agreement, effective January 1, 1993, no reimbursements were made
to the general partner and affiliates after December 31, 1992. Subsequent
to December 31, 1992, reimbursements were made to MMI. On December 16, 1993,
the services agreement with MMI was modified and, as a result thereof, MGP
began directly providing cash management and other Partnership services on
various dates commencing December 23, 1993. On March 1, 1994, NPI
Management commenced providing certain property management services.
Related party expenses for the years ended December 31, 1994, 1993 and 1992
were as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------- ---- ----------
<S> <C> <C> <C>
Property management fees $ 825,000 $ - $ 925,000
Reimbursement of expenses:
Partnership accounting and investor services 158,000 - 266,000
Professional services 20,000 - 58,000
----------- ---- ----------
Total $ 1,003,000 $ - $1,249,000
=========== ==== ==========
</TABLE>
Property management fees are included in operating expenses. Reimbursed
expenses are primarily included in general and administrative expenses.
F - 11
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
In accordance with the Partnership Agreement, the general partner received a
Partnership management incentive allocation equal to ten percent of net and
taxable income (losses) and cash distributions. The general partner was
also allocated its two percent continuing interest in the Partnership's net
and taxable income (losses) and cash distributions after the above
allocation of the Partnership management incentive.
3. RESTRICTED CASH
Restricted cash of $500,000 at December 31, 1994 and $600,000 of the
restricted cash at December 31, 1993, consists of required reserves
maintained in accordance with the financing agreements on the Stoney Creek,
Hampton Greens, Promontory Point and Wood Creek Apartments, which properties
form a wholly owned subsidiary of the Partnership. In accordance with the
loan agreement, in the event the cash balance in the subsidiary falls below
the $500,000 requirement, future distributions and loans to the Partnership
will be restricted until the reserve fund is replenished (see Note 6).
4. CASH INVESTMENTS
Cash investments include all cash not considered cash or cash equivalents,
as defined in Note 1 or restricted cash, as defined in Note 3. Cash
investments at December 31, 1993 matured in January and February 1994 at
effective interest rates ranging from 3.25 to 3.28 percent per annum.
5. REAL ESTATE
Real estate, at December 31, 1994 and 1993, is summarized as follows:
1994 1993
-------- --------
Land $ 15,829,000 $ 15,829,000
Buildings and improvements 112,257,000 111,785,000
Furnishings 11,775,000 11,626,000
------------- --------------
Total 139,861,000 139,240,000
Accumulated depreciation (43,985,000) (39,860,000)
------------- --------------
Real estate, net $ 95,876,000 $ 99,380,000
============= ==============
6. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related notes
payable. At December 31, 1994 the notes, which are payable monthly, bear
interest at rates ranging from 7.4 to 9.4 percent. A balloon payment of
$10,452,000 is required on the Partnership's Four Winds Apartments on
September 30, 1995.
F - 12
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
6. NOTES PAYABLE (Continued)
Principal payments at December 31, 1994 are required as follows:
1995 $ 11,059,000
1996 23,936,000
1997 299,000
1998 325,000
1999 38,248,000
Thereafter 7,022,000
-------------
Total $ 80,889,000
=============
The Partnership finalized a debt modification agreement with the Monterey
Village Apartments mortgagee in January 1994. The terms of the loan include
a seven year extension with a reduction in the interest rate from 10.50
percent to 8.25 percent and a 30 year amortization period in exchange for a
principal payment of $799,000. In connection with the modification, the
Partnership incurred extension fees and costs totaling $78,000 of which
$25,000 was paid in 1993.
On September 1, 1994, the Partnership modified the debt on Cooper's Pointe
Apartments. The loan requires monthly payments of $46,000 at 8.25 percent
and is being amortized over 20 years. The loan matures on August 31, 1999
with a balloon payment of $4,746,000. As specified in the loan agreement,
the Partnership was required to establish with the lender an escrow account
for taxes and insurance and a replacement reserve account for future capital
improvements. The Partnership incurred costs and extension fees in connec
tion with this modification of $57,000.
On September 1, 1994, the Partnership completed a debt modification a
greement with the Copper Mill Apartments mortgagee. The loan requires
monthly payments of $31,000 at 8.25 percent and is being amortized over 20
years. The loan matures on August 31, 1999 with a balloon payment of
$3,240,000. As specified in the loan agreement, the Partnership was
required to establish with the lender an escrow account for taxes and
insurance and a replacement reserve account for future capital
improvements. The Partnership incurred costs and extension fees in
connection with this modification of $131,000.
The loans securing Copper Mill Apartments and Cooper's Pointe Apartments are
cross collateralized.
On December 28, 1994 the Partnership refinanced its existing loans on its
Hampton Greens, Promontory Point, Stoney Creek and Wood Creek Apartments
properties. The refinanced loan was in the principal amount of $30,000,000,
bears interest at 90 day LIBOR plus 3.75% and matures on December 26, 1999.
The Partnership is required to make monthly payments in an amount equal to
the greater of (i) the interest due on the loan or (ii) $218,750 per month
through December 31, 1996, $225,000 per month from January 1, 1997 through
December 31, 1997 or $231,250 per month from January 1, 1998 through
maturity. To the extent the Partnership is required to make payments in the
amounts set forth in clause
F - 13
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
6. NOTES PAYABLE (Continued)
(ii), the difference between such amount and the amount which would
otherwise have been paid pursuant to clause (i) will be applied to the loan
principal. In addition, the Partnership is required to maintain a $500,000
working capital reserve (see Note 3). In connection with this refinancing,
the Partnership transferred ownership of Woodcreek Apartments to Century
Stoney Greens, L.P., a wholly-owned subsidiary of the Partnership which had
already held title to the other three properties. The Partnership incurred
costs and extension fees in connection with this refinancing of $285,000, of
which $158,000 was paid in 1994.
The note payable on Four Winds Apartments with a balloon payment of
$10,956,000 was due in September 1992. The Partnership exercised its option
to extend the due date to September 1995. The interest rate on the loan was
reduced from 9.5 percent to 7.4 percent. The note matures September 1995
with a balloon payment of $10,452,000. The Partnership will attempt to
extend the due date of this loan or find replacement financing. If,however,
the loan is not refinanced or extended, or the property is not sold, the
Partnership could lose this property through foreclosure. In that case, the
Partnership would incur a loss of approximately $600,000.
Amortization of deferred financing costs totaled $584,000, $357,000 and
$348,000 for the years ended December 31, 1994, 1993 and 1992, respectively.
7. EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT OF DEBT
In January 1992 the Partnership obtained replacement financing on the Stoney
Creek and Hampton Greens Apartments. The initial advance under the
replacement financing totaled $12,500,000. Prior to January 7, 1994, an
additional $500,000 could have been drawn upon by the Partnership, provided
the properties achieved certain operating results as defined by the terms of
the replacement financing agreement. The Partnership did not draw upon any
of this amount. The existing notes of $8,135,000 and $7,085,000 w hich had
been due in 1995 and 1996, respectively, were prepaid at a discounted amount
totaling $12,900,000. As of December 31, 1992, $446,000 had been paid in
financing costs. The difference of $400,000 between the initial advance and
the discounted prepayment amount and related costs incurred in the close of
escrow of $344,000, were paid by the Partnership in 1992. The new financing
agreement provided for interest only payments at 3.625 percent over a 90
day LIBOR interest rate with the maximum interes t rate not to exceed 12
percent per annum. The agreement also required the Partnership to transfer
the properties into a separate wholly owned subsidiary and to
cross-collateralize the properties as security for the loan. The discount
amount of $2,320,000, was forgiven by the lender upon prepayment of the
original financing and was recognized by the Partnership as extraordinary
item - gain on extinguishment of debt in 1992, net of prepayment premiums
paid of $258,000 and the write-off of unamortized defer red costs on the
original financing of $132,000.
F - 14
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
7. EXTRAORDINARY ITEM - GAIN ON EXTINGUISHMENT OF DEBT (Continued)
In May 1992, the Partnership obtained replacement financing of $5,200,000 on
Promontory Point Apartments. The existing note of $6,978,000 with an
interest rate of 10 percent at March 31, 1992, which had been due in 1995,
was prepaid at a discounted amount totaling $5,450,000. In addition, the
Partnership paid an extension fee of $55,000 to the existing lender in order
to extend the period required to obtain replacement financing. As of
December 31, 1992, $283,000 had been paid in financing costs. The
difference of $250,000 between the refinancing proceeds and the discounted
prepayment was paid by the Partnership in 1992. The discount amount, net of
the extension fee paid of $55,000 was recognized by the Partnership as
extraordinary item - gain on extinguishment of debt in 1992.
8. DISPOSITION OF RENTAL PROPERTY
In July 1992, the Partnership allowed Fox Hollow Apartments, located in
Atlanta, Georgia, to be acquired through foreclosure by the holder of the
first loan. Accordingly, the Partnership was relieved of the first note
payable of $7,920,000 (which had been due in 1993), $72,000 in accrued
property taxes and $934,000 of accrued and unpaid interest. At date of
foreclosure, the carrying value of the property was $8,516,000 with closing
costs of $3,000. The gain on disposition was $407,000 which was recognized
in 1992.
9. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING
The difference between the accrual method of accounting for income tax
reporting and the accrual method of accounting used in the consolidated
financial statements are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Net (loss) - financial statements $ (3,042,000) $ (3,143,000) $ (573,000)
Differences resulted from:
Gain on property disposition - - 2,760,000
Depreciation (1,286,000) (1,505,000) (1,576,000)
Interest expense 110,000 131,000 66,000
Construction period interest amortization (315,000) (374,000) (374,000)
Gain on extinguishment of debt - - 757,000
Other 32,000 5,000 (29,000)
------------ ----------- -----------
Net income (loss) - income tax method $ (4,501,000) $(4,886,000) $ 1,031,000
============ =========== ===========
</TABLE>
F - 15
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
9. RECONCILIATION TO INCOME TAX METHOD OF ACCOUNTING (Continued)
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Taxable income (loss) per limited partnership
unit after giving effect of the allocation to
the general partner $ (48) $ (52) $ 11
============ =========== ===========
Partners' equity - financial statements $ 16,197,000 $19,239,000 $22,382,000
Differences resulted from:
Sales commissions and organization expenses 12,427,000 12,427,000 12,427,000
Depreciation (27,559,000) (26,273,000) (24,768,000)
Payments credited to rental properties 2,056,000 2,056,000 2,056,000
Interest expense 287,000 177,000 46,000
Construction period interest amortization (3,567,000) (3,252,000) (2,878,000)
Other 5,000 (27,000) (32,000)
Partners' (deficit) equity - income tax method $ (154,000) $ 4,347,000 $ 9,233,000
</TABLE>
10. LEGAL PROCEEDINGS
Limited partners in certain affiliated limited partnerships have instituted
lawsuits against, among others, MGP and FRI relating to the tender offer
(see Note 1). MGP believes that these lawsuits, which are expected to be
settled in 1995, will have no effect on the Partnership.
11. BASIS OF PRESENTATION AND OPERATING STRATEGY FOR THE YEARS ENDED
DECEMBER 31, 1993 AND 1992
The accompanying consolidated financial statements for the years ended
December 31, 1993 and 1992 have been prepared on a going concern basis which
contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. As of December 31, 1993 the Partnership had
balloon payments totaling $11,869,000 due on two properties, Monterey
Village and Copper Mill in August and December of 1994, respectively. In
addition, balloon payments totaling $27,511,000 were due in 1995 on F our
Winds, Woodcreek and Cooper's Pointe. The Partnership believes that its
current strategy, combined with cash generated from the Partnership's
properties with positive operations will allow the Partnership to meet its
capital and operating requirements. The outcome of this uncertainty cannot
presently be determined. The consolidated financial statements do not
include any adjustments that might result from the ultimate outcome of this
uncertainty.
The Partnership obtained debt modification or refinancing on all these
properties as of December 31, 1994, except for Four Winds Apartments (see
Note 6).
F - 16
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
<TABLE>
<CAPTION>
REAL ESTATE AND ACCUMULATED DEPRECIATION SCHEDULE III
DECEMBER 31, 1994
COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E
Cost Capitalized Gross Amount
Initial Cost Subsequent at Which Carried at
to Partnership to Acquisition Close of Period(1)
-------------- ----------------- --------------------------
Buildings Buildings
and and
Encum- Improve- Improve- Carrying Improve-
Description brances Land ments ments Costs Land ments Total(2)
----------- ------- ---- --------- -------- -------- ----- ------- --------
(Amounts in thousands)
---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PARTNERSHIP:
Plantation Creek
Apartments
Atlanta, Georgia $ 13,163 $ 2,653 $ 20,827 $ 1,635 $ -- $ 2,655 $ 22,460 $25,115
Four Winds Apartments
Overland Park,
Kansas 10,589 1,363 14,288 367 (92) 1,357 14,569 15,926
Cooper's Pointe
Apartments
Charleston, South
Carolina 5,361 513 6,696 268 (111) 510 6,856 7,366
Monterey Village
Apartments
Rancho Cucamonga,
California 7,401 1,438 10,403 97 (42) 1,433 10,463 11,896
Autumn Run
Apartments
Naperville, Illinois 10,714 1,462 14,957 587 (27) 1,458 15,521 16,979
Copper Mill
Apartments
Richmond, Virginia 3,661 933 8,061 313 (45) 929 8,333 9,262
<CAPTION>
Column A Column F Column G Column H Column I
Life
on which
Accum- depreciation
ulated Year is computed
Depre- of in latest
ciation Constr- Date statement of
Description (3) uction Acquired operations
----------- -------- ------- ------ ----------
<S> <C> <C> <C> <C>
PARTNERSHIP:
Plantation Creek
Apartments
Atlanta, Georgia $ 8,436 1977/1978 6/84 6 - 30 yrs
Four Winds Apartments
Overland Park,
Kansas 4,536 1987 9/85 6 - 30 yrs
Cooper's Pointe
Apartments
Charleston, South
Carolina 2,489 1986 11/85 6 - 30 yrs
Monterey Village
Apartments
Rancho Cucamonga,
California 3,441 1987 4/86 6 - 30 yrs
Autumn Run
Apartments
Naperville, Illinois 4,989 1987 6/86 6 - 30 yrs
Copper Mill
Apartments
Richmond, Virginia 2,594 1987 9/86 6 - 30 yrs
</TABLE>
See accompanying notes.
F - 17
<PAGE>
<PAGE>
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
<TABLE>
<CAPTION>
SCHEDULE III (Contnued)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
COLUMN COLUMN COLUMN COLUMN COLUMN
A B C D E
Cost Capitalized Gross Amount
Initial Cost Subsequent at Which Carried at
to Partnership to Acquisition Close of Period(1)
-------------------- -------------------- -----------------------------
Buildings Buildings
and and
Encum- Improve- Improve- Carrying Improve-
Description brances Land ments ments Costs Land ments Total(2)
-------- -------- -------- ------- -------- ------- -------- --------
(Amounts in thousands)
---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBSIDIARY:
Wood Creek
Apartments
Mesa, Arizona $ 12,500 $ 2,130 $13,440 $ 493 $ (118) $ 2,117 $13,828 $ 15,945
Stoney Creek
Apartments
Dallas, Texas 6,000 1,803 12,509 558 (927) 1,689 12,254 13,943
Promontory Point
Apartments
Austin, Texas 5,750 1,690 10,129 275 (694) 1,595 9,805 11,400
Hampton Greens
Apartments
Dallas, Texas 5,750 2,086 9,474 469 - 2,086 9,943 12,029
-------- -------- -------- ------ ------- ------- -------- --------
TOTAL $80,889 $16,071 $120,784 $5,062 $(2,056) $15,829 $124,032 $139,861
======== ======== ======== ====== ======= ======= ======== ========
<CAPTION>
Column A Column F Column G Column H Column I
Life
on which
Accum- depreciation
ulated Year is computed
Depre- of in latest
ciation Constr- Date statement of
Description (3) uction Acquired operations
----------- -------- ------- ------ ----------
<S> <C> <C> <C> <C>
(SUBSIDIARY:
Wood Creek
Apartments
Mesa, Arizona $ 5,468 1985 5/84 6 - 30 yrs
Stoney Creek
Apartments
Dallas, Texas 4,638 1983 6/85 6 - 30 yrs
Promontory Point
Apartments
Austin, Texas 3,642 1984 10/85 6 - 30 yrs
Hampton Greens
Apartments
Dallas, Texas 3,752 1986 12/85 6 - 30 yrs
--------
TOTAL $ 43,985
========
</TABLE>
See accompanying notes.
F - 18
<PAGE>
SCHEDULE III
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<TABLE>
<CAPTION>
NOTES:
-------
<S> <C>
(1) The aggregate cost for Federal income tax purposes is $138,688,000.
(2) Balance, January 1, 1992 $ 148,764,000
Improvements capitalized subsequent to acquisition 860,000
Cost of rental property foreclosed on (11,689,000)
---------------
Balance, December 31, 1992 137,935,000
Improvements capitalized subsequent to acquisition 1,305,000
---------------
Balance, December 31, 1993 139,240,000
Improvements capitalized subsequent to acquisition 621,000
---------------
Balance, December 31, 1994 $ 139,861,000
---------------
---------------
(3) Balance, January 1, 1992 $ 34,271,000
Additions charged to expense 4,594,000
Accumulated depreciation on rental property foreclosed on (3,176,000)
---------------
Balance, December 31, 1992 35,689,000
Additions charged to expense 4,171,000
---------------
Balance, December 31, 1993 39,860,000
Additions charged to expense 4,125,000
---------------
Balance, December 31, 1994 $ 43,985,000
---------------
---------------
</TABLE>
F - 19
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures.
Effective April 22, 1994, Registrant dismissed its prior Independent Auditors,
Deloitte & Touche, LLP ("Deloitte") and retained as its new Independent
Auditors, Imowitz Koenig & Company. Deloitte's Independent Auditors' Report on
Registrant's financial statements for calendar years ended December 31, 1993 and
1992 did not contain an adverse opinion or a disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting principles.
However, Deloitte's Independent Auditor's Report for the calendar year December
31, 1993 was modified due to the uncertainty regarding Registrant's ability to
continue as a going concern since Registrant has substantial balloon payments
due on Notes in 1994 and 1995; the financial statements did not include any
adjustments that might result from the outcome of this uncertainty. The
decision to change Independent Auditors was approved by the Managing General
Partner's Directors. During calendar years ended 1992, 1993 and through April
22, 1994 there were no disagreements between Registrant and Deloitte on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope of procedure which disagreements if not resolved to the
satisfaction of Deloitte, would have caused it to make reference to the subject
matter of the disagreements in connection with its reports.
Effective April 22, 1994, Registrant engaged Imowitz Koenig & Company as its
Independent Auditors. During the last two calendar years and through April 22,
1994, Registrant did not consult Imowitz Koenig & Company regarding any of the
matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
14
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Neither the Registrant, nor Fox Partners IV ("Fox"), the general partner of
Registrant, has any officers or directors. Fox Capital Management Corporation
(the "Managing General Partner'), the managing general partner of Fox, manages
and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters affecting its business.
The Managing General Partner and its affiliates also control, or act as, the
managing general partner of 30 other public limited partnerships. All of these
partnerships are engaged in the acquisition, leasing and disposition of real
estate. As of March 1, 1995, the names, ages and positions held by the officers
and directors of the Managing General Partner are as follows:
Has served as Director
and/or Officer of
Name and Age Positions Held NPI Equity II since
------------ -------------- ----------------------
Michael L. Ashner (42) President and 12/93
Director
Martin Lifton (62) Chairman and 12/93
Director
Arthur N. Queler (48) Secretary/Treasurer 12/93
and Director
G. Bruce Lifton (30) Vice President 12/93
Steven Lifton (33) Vice President 12/93
and Director (Director 10/94)
W. Edward Scheetz (30 ) Director 10/94
Ricardo Koenigsberger (28) Director 10/94
Lee Neibart (44) Director 10/94
Michael L. Ashner has been President and Director of National Property
Investors, Inc. ("NPI, Inc.") and a Director of NPI Property Management
Corporation ("NPI Management") since their formation in 1984. As the President
and a Director of NPI, Inc., Mr. Ashner has been involved with the sponsoring of
approximately 35 limited partnerships. Mr. Ashner is also the President and
Director of NPI Equity Investments, Inc. ("NPI Equity") and NPI Equity
Investments II, Inc. ("NPI Equity II"), each a wholly owned subsidiary of NPI,
Inc. NPI Equity and NPI Equity II control, or are, the managing general
partners of 31 public limited partnerships. In addition, since 1981 Mr. Ashner
has been President of Exeter Capital Corporation, a firm which has organized and
administered real estate limited partnerships. Prior to forming NPI, Inc., in
1984, Mr. Ashner served as a general partner of seven real estate limited
partnerships that were formed by Exeter Capital Corporation to own and operate
income producing real estate, including apartments, commercial office space and
retail space. He received his A.B. degree cum laude from Cornell
15
<PAGE>
University and received a J.D. degree magna cum laude from the University of
Miami School of Law, where he was an editor of the law review.
Martin Lifton is the Chairman of NPI, Inc. and a Director of NPI Equity, NPI
Equity II and NPI Management. In addition, Mr. Lifton is Chairman and President
of The Lifton Company, a real estate investment firm. Since entering the real
estate business over 35 years ago, Mr. Lifton has engaged in a wide range of
real estate activities, including the purchase of apartment complexes and other
properties in the New York City metropolitan area and in the southeastern United
States. Mr. Lifton's firm currently owns several apartment buildings in New
York City and Mr. Lifton is a partner in four industrial warehouse buildings in
California and an office building in Baltimore. In partnership with NPI, Inc.,
Mr. Lifton has purchased interests in five apartment complexes since 1988. Mr.
Lifton was also one of the founders of The Bank of Great Neck located in Great
Neck, New York, of which he currently is Chairman. Mr. Lifton received his B.S.
degree from the New York University.
Arthur N. Queler is a co-founder of NPI, Inc. of which he has been Executive
Vice President, Treasurer, Secretary and Director since 1984. Mr. Queler is
also the Vice President, Secretary, Treasurer and Director of NPI Management,
NPI Equity and NPI Equity II. In addition, since 1983, Mr. Queler has been
President of ANQ Securities, Inc., a NASD registered broker-dealer firm which
has been responsible for supervision of licensed brokers and coordination with a
nationwide broker-dealer network for the marketing of NPI investment programs.
Mr. Queler is a certified public accountant. He received his B.A. and M.B.A.
degrees from the City College of New York.
G. Bruce Lifton was appointed a Vice President of NPI, Inc. in January 1991
and was a director through October 1994. Mr. Lifton is a director of NPI
Management. He is also a Vice President of The Lifton Company, in which
position he has served for over five years with responsibility for
supervising the rehabilitation of several large apartment complexes. As an
officer of The Lifton Company, Mr. Lifton has been involved in a wide range
of matters, including apartment management, refinancing and cooperative
conversion. Mr. Lifton holds an A.B. degree from Tulane University as well
as a B.S.M. degree from the Freeman School of Business. He is a son of
Martin Lifton and the brother of Steven Lifton.
Steven Lifton is a Vice President of NPI, Inc. having been appointed to this
position in January 1991 and has been a director since 1992. In addition, he is
a Senior Vice President of The Lifton Company. With The Lifton Company he has
had extensive involvement in the budgeting, refinancing, rehabilitation and
overall operation of several thousand apartment units. Mr. Lifton has also
supervised the operation of other companies affiliated with The Lifton Company
which are engaged in the business of real estate brokerage, second mortgage
financing, land development and other real estate related activities. Mr.
Lifton received his B.B.A. degree from The George Washington University Business
School. He is a Director of The Bank of Great Neck. He is a son of Martin
Lifton and the brother of G. Bruce Lifton.
W. Edward Scheetz has been a Director of NPI, Inc. and NPI Equity since
October 1994. 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-
16
<PAGE>
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. Mr. Scheetz received an A.B. in
Economics, Magna Cum Laude, from Princeton University in 1986.
Ricardo Koenigsberger has been a Director of NPI, Inc. and NPI Equity since
October 1994. Since October 1990, Mr. Koenigsberger has been an associate of
Apollo and of Lion Advisors, L.P., which acts as financial advisor to and
representative for certain institutional investors with respect to securities
investments. For more than one year prior thereto, Mr. Koenigsberger was an
associate with Drexel Burnham Lambert Incorporated.
Lee Neibart has been a Director of NPI, Inc. and NPI Equity since October
1994. Mr. Neibart has also been an associate of Apollo since December 1993.
From 1986 to 1993, Mr. Neibart also served as Executive Vice President of the
Robert Martin Company, a private real estate development and management firm
based in Westchester County, New York, and from 1982 to 1985, Mr. Neibart
served as President of the New York Chapter of the National Association of
Industrial Office Parks, a professional real estate organization. Mr.
Neibart holds a B.A. from the University of Wisconsin and an M.B.A. from New
York University.
Except as stated above, no family relationships exist among any of the
officers or directors of NPI, Inc., or the Managing General Partner.
Each director and officer of the Managing General Partner will hold office
until the next annual meeting of stockholders of the Managing General Partner
and until his successor is elected and qualified.
Messrs. Ashner, Lifton and Queler currently are the beneficial owners of 66
2/3% of the outstanding stock of NPI, Inc.
Item 11. Executive Compensation
Registrant is not required to and did not pay any compensation to the officers
or directors of the Managing General Partner. The Managing General Partner does
not presently pay any compensation to any of its officers or directors. (See
Item 13, "Certain Relationships and Related Transactions.")
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Registrant is a limited partnership and has no officers or directors. The
Managing General Partner has discretionary control over most of the decisions
made by or for Registrant in accordance with the terms of the Partnership
Agreement.
17
<PAGE>
The following table sets forth certain information regarding limited
partnership units of Registrant owned by each person who is known by
Registrant to own beneficially or exercise voting or dispositive control over
more than 5% of Registrant's limited partnership units, by each of the
Managing General Partner's directors and by all directors and executive
officers of the Managing General Partner as a group as of March 1, 1995.
Name and address of Amount and nature of
Beneficial Owner Beneficial Ownership % of Class
---------------- -------------------- ----------
DeForest Ventures I L.P. (1) 14,544(2) 17.6
Michael L. Ashner (3) 38(4) *
Martin Lifton (3) 38(4) *
Arthur N. Queler (1) 38(4) *
Steven Lifton (3) 38(4) *
G. Bruce Lifton (1) 38(4) *
Ricardo Koenigsberger (5) _ _
Lee Neibart (5) _ _
W. Edward Scheetz (5) _ _
All directors and executive
officers as a group (eight persons) 38(4) *
________________
* Less than 1%
(1) Each of such persons may be reached at 5665 Northside Drive, N.W.,
Atlanta, Georgia 30328.
(2) Based upon information supplied to Registrant by DeForest Ventures I L.P.
(3) Each of such persons may be reached at 100 Jericho Quadrangle, Jericho,
New York 11753.
(4) Includes 38 units held by QAL Associates and QALA Associates, general
partnerships in which, among others, Messrs. Ashner, Martin Lifton, Queler,
Steven Lifton and G. Bruce Lifton are partners. Messrs. Ashner, Martin
Lifton, Queler, Steven Lifton and G. Bruce Lifton disclaim beneficial
ownership of 29.33, 29.33, 29.33, 35.28 and 35.28 units respectively.
(5) Each of such persons may be reached at 1301 Avenue of the Americas,
New York, New York 10038.
There are no arrangements known to Registrant, the operation of which may, at
a subsequent date, result in a change in control of Registrant, other than
the following:
In connection with the admission of NPI Equity II as the managing partner of
FRI, and the assumption of operational control over the Managing General
Partner, the former partners of FRI ("PRA") and former officers and directors of
the Managing General Partner reserved the right to terminate the Voting Trust
Agreement if certain events occur, such as an event of bankruptcy or the failure
to maintain an adequate net worth. In such event, (i) the shareholders of the
Managing General Partner may, but are not required to, terminate the Voting
Trust Agreement and regain voting control of the outstanding shares of the
Managing General Partner, in which case such shareholders would be entitled to
elect the directors and officers of the Managing General Partner and (ii) PRA
may, but is not required to, assume the position of managing general partner of
FRI.
18
<PAGE>
Pursuant to the terms of a loan made by Kidder Peabody Mortgage Capital
Corporation to DeForest Ventures I L.P. ("DeForest I") and DeForest Ventures II
L.P. ("DeForest II") in connection with the consummation of a tender offer for
limited partnership units in Registrant and 18 affiliated public limited
partnerships, NPI, Inc. pledged, as collateral for the loan, all of the issued
and outstanding capital stock of NPI Equity II. Accordingly, if either DeForest
I or DeForest II were unable to satisfy their loan obligations and the lender
was to foreclose on its collateral, the lender would become the sole shareholder
of NPI Equity II.
Item 13. Certain Relationships and Related Transactions.
In accordance with the Partnership Agreement, Registrant may be charged by the
general partner and affiliates for services provided to Registrant. From March,
1998 to December, 1992, such amounts were assigned pursuant to a services
agreement by the general partner and affiliates to Metric Realty Services, L.P.,
which performed partnership management and other services for the Partnership.
On January 1, 1993, Metric Management, Inc., a company which is not affiliated
with the general partner, commenced providing certain property and portfolio
management services to Registrant under a new services agreement. As provided
in the new services agreement effective January 1, 1993, no reimbursements were
made to the general partner and affiliates in 1993. Subsequent to December 31,
1992, reimbursements were made to Metric Management, Inc. On December 16, 1993,
the services agreement with Metric Management, Inc. was modified and, as a
result thereof, the Managing General Partner began directly providing cash
management services for Registrant as of December 23, 1993 and day-to-day
management of Registrant's affairs, including portfolio management, accounting
and investor relations services as of April 1, 1994. Related party expenses for
the years ended December 31, 1994, 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Property Management fees $ 825,000(1) $ - $ 925,000
Reimbursement of expenses:
Partnership accounting
and investor service 158,000 - 266,000
Professional Services 20,000 - 58,000
---------- --------- ----------
Total $1,003,000 $ - $1,249,000
========== ========= ==========
</TABLE>
_____________
(1) As compensation for NPI-AP's services as property manager of Registrant's
remaining properties, NPI-AP is entitled to receive 5% of the gross annual
receipts from all properties it manages for Registrant. A portion of these fees
was formerly paid to NPI Management.
In accordance with the Partnership Agreement, the general partners received a
management incentive allocation equal to ten percent of net and taxable income
(losses) and cash distributions. The general partner was also allocated its two
percent continuing interest in Registrant's net and taxable income (loss) and
cash distributions after the above allocation of management incentive.
Certain officers and directors of the Managing General Partner receive
compensation from affiliates of the Managing General Partner (but not from
Registrant) for services performed for various affiliated entities, which may
include services performed for Registrant.
19
<PAGE>
Pursuant to the terms of a loan made by Kidder Peabody Mortgage Capital
Corporation to DeForest I and DeForest II in connection with the consummation of
the tender offer for limited partnership units in Registrant and 18 affiliated
public limited partnerships, NPI, Inc. and its shareholders pledged, as
collateral for the loan, all of the issued and outstanding capital stock of NPI
Equity II and NPI, Inc., respectively. Accordingly, if either DeForest I or
DeForest II were unable to satisfy their loan obligations and the lender was to
foreclose on its collateral, the lender would become the sole shareholder of
NPI, Inc. and NPI Equity II.
One of several possible sources of funds to repay the loan is DeForest I's
distributable portion of the proceeds of any sale or refinancing of Registrant's
property attributable to Units tendered. Consequently, a conflict of interest
may exist for the Managing General Partner in determining whether and when to
sell and/or refinance Registrant's property. Any such conflict, however, may be
mitigated by the fact that (i) proceeds from the sale or refinancing of
properties owned by other partnerships in which DeForest I and DeForest II or
their affiliates may have an interest is available to them, (ii) there exist
other repayment sources, including voluntary loans and capital contributions
from the DeForest I and DeForest II partners, and (iii) DeForest I may be able
to refinance all or a portion of the DeForest I Loan.
As a result of the purchase of approximately 39,962 limited partnership units
pursuant to the tender offer, DeForest I could be in a position to significantly
influence all voting decisions with respect to Registrant. Under the
Partnership Agreement, unitholders holding a majority of the Units are entitled
to take action with respect to a variety of matters. When voting on matters,
DeForest I would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of its
affiliation with the Managing General Partner. However, DeForest I has agreed
for the benefit of non-tendering unitholders, that it will vote its Units: (i)
against any proposal to increase the fees and other compensation payable by
Registrant to the Managing General Partner and any of its affiliates; and (ii)
with respect to any other matter proposed by the Managing General Partner and
its affiliates, in proportion to votes cast by other unitholders. Except for the
foregoing, no other limitations are imposed on DeForest I's right to vote each
Unit acquired.
20
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1)(2) Consolidated Financial Statements and Financial Statement Schedules:
See Item 8 of this Form 10-K for Consolidated Financial
Statements of Registrant, Notes thereto, and Financial
Statement Schedules. (A Table of Contents to Consolidated
Financial Statements and Financial Statement Schedules is
included in Item 8 and incorporated herein by reference.)
(a) (3) Exhibits:
3.4. Agreement of Limited Partnership incorporated by reference
to Exhibit A to the Prospectus of Registrant dated on
September 25, 1984 and thereafter supplemented contained in
Registrant's Registration Statement on Form S-11 (Reg. No.
2-89285).
10. (a) Amended and Restated Note, made as of September 1, 1994, by
Registrant in favor of the Travelers Insurance Company
("Travelers") in the principal amount of $3,679,026.14
incorporated by reference to Registrant's Form 10-Q for the
quarter ended September 30, 1994.
(b) Amended and Restated Deed of Trust, dated as of September
1, 1994, between Registrant and Travelers with respect to
Copper Mill Apartments incorporated by reference to
Registrant's Form 10-Q for the quarter ended September 30,
1994.
(c) Amended and Restated Note, made as of September 1, 1994, by
Registrant in favor of Travelers in the principal amount of
$5,388,360.35 incorporated by reference to Registrant's
Form 10-Q for the quarter ended September 30, 1994.
(d) Amended and Restated Mortgage, dated as of September 1,
1994, between Registrant and Travelers with respect to
Cooper's Pointe incorporated by reference to Registrant's
Form 10-Q for the quarter ended September 30, 1994.
(e) Promissory Note dated December 27, 1994 from Century Stoney
Greens, L.P. to USL Capital Corporation ("USL") in the
principal amount of $30,000,000.
(f) Form of Deed of Trust, Security Agreement, Assignment of
Leases and Rents, Fixture Filing and Financing Statement by
CSG to Howard E. Schreiber, Trustee for the benefit of USL.
16. Letter dated April 27, 1994 from Registrant's Former
Independent Auditors incorporated by reference to
Registrant's Current Report on Form 8-K dated April 22,
1994.
21
<PAGE>
(b) Reports on Form 8-K:
On October 12, 1994, a Current Report on Form 8-K was filed
with the Securities and Exchange Commission to provide for
the sale by National Property Investors, Inc., the parent
of NPI Equity Investments II, Inc., of one-third of its
stock to an affiliate of Apollo Real Estate Advisors, L.P.
22
<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 on this 24th day of March,
1995.
CENTURY PROPERTIES GROWTH FUND XXII
By: FOX PARTNERS IV
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION
A General Partner
By: /s/ Michael L. Ashner
----------------------
Michael L. Ashner
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signature/Name Title Date
-------------- ----- ----
Michael L. Ashner President and Director March 24, 1995
-----------------
Michael L. Ashner (Principal Executive Officer)
Martin Lifton Chairman and Director March 24, 1995
-----------------
Martin Lifton
Arthur N. Queler Secretary/Treasurer and Director March 24, 1995
-----------------
Arthur N. Queler (Principal Financial Officer)
Steven J. Lifton Vice President and Director March 24, 1995
-----------------
Steven J. Lifton
23
<PAGE>
Exhibit Index
Exhibit Page
------- ----
3.4. Agreement of Limited Partnership (1)
10.1 Amended and Restated Note, made as of September 1, 1994, by (2)
Registrant in favor of the Travelers Insurance Company
("Travelers") in the principal amount of $3,679,026.14
10.2 Amended and Restated Deed of Trust, dated as of September 1, (2)
1994, between Registrant and Travelers with respect to Copper
Mill Apartments
10.3 Amended and Restated Note, made as of September 1, 1994, by (2)
Registrant in favor of Travelers in the principal amount of
$5,388,360.35
10.4 Amended and Restated Mortgage, dated as of September 1, 1994, (2)
between Registrant and Travelers with respect to Cooper's Pointe
10.5 Promissory Note dated December 27, 1994 from Century Stoney
Greens, L.P. to USL Capital Corporation ("USL") in the principal
amount of $30,000.00
10.6 Form of Deed of Trust, Security Agreement, Assignment and Rents,
Fixture Filing and Financing Statement by CSG to Howard E.
Schreiber, Trustee for the benefit of USL
16 Letter dated April 27, 1994 from Registrant's Former Independent (3)
Auditors
___________________
(1) Incorporated by reference to Exhibit A to the Prospectus of Registrant
dated September 25, 1984, and thereafter supplemented, included in
Registration Statement on Form S-11 (Reg No. 2-89285).
(2) Incorporated by reference to Registrant's Form 10-Q for the quarter ended
September 30, 1994.
(3) Incorporated by reference to Registrant's Current Report on Form 8-K dated
April 22, 1994.
24
<PAGE>
Exhibit 10.5
PROMISSORY NOTE
$30,000,000.00 December 27, 1994
FOR VALUE RECEIVED, CENTURY STONEY GREENS, L.P., a California limited
partnership ("Borrower"), whose address is 5665 Northside Drive, N.W., Atlanta,
Georgia 30328, Attn: Peter Braverman, promises to pay USL CAPITAL CORPORATION,
a Delaware corporation ("Holder"), or order, at P.O. Box 70999, Chicago,
Illinois 60673-0999, or at such other place as Holder may from time to time in
writing designate, in lawful money of the United States of America, the
principal sum of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00) or such
other sum as may be the total amount outstanding pursuant to this Note, on or
before the Maturity Date (as hereinafter defined), together with accrued
interest on the principal balance outstanding from time to time, in like money,
from the date of this Note until fully repaid at the rates hereinafter set
forth. The initial advance under this Note is $30,000,000.00. Interest shall
be computed and shall accrue on the principal amount from time to time
outstanding from the date hereof to and including the Maturity Date at a rate
per annum equal to the Applicable Interest Rate (as hereinafter defined) from
time to time in effect.
1. Definitions. As used herein, the terms "Borrower" and "Holder" have the
meanings assigned in the preceding paragraph, and the following terms have
the following meanings:
(a) "Applicable Interest Rate" shall mean a rate per annum equal to the
lesser of (i) the LIBOR Rate plus three and three-quarters percent (3.75%)
from time to time in effect or (ii) the Maximum Rate (as hereinafter
defined).
(b) "Applicable Payment Rate" shall mean a rate equal to the greater of
(i) the Applicable Interest Rate or (ii) the Collection Rate (as
hereinafter defined). For purposes hereof, the "Collection Rate" shall
mean eight and three-quarters percent (8.75%) per annum for the period
from the initial funding of this Note through December 31, 1996; nine
percent (9.00%) per annum for the period from January 1, 1997 through
December 31, 1998; nine and one-quarter percent (9.25%) per annum for the
period from January 1, 1999 through the Maturity Date (as hereinafter
defined). To the extent the Applicable Interest Rate in any given month
is less than the Collection Rate in any given month, then the difference
(the "Surplus") between the amount calculated at the Collection Rate and
the amount calculated at the Applicable Interest Rate, will be paid as a
mandatory principal reduction of the Principal Balance (as hereinafter
defined), without premium or penalty.
(c) "Deed of Trust" shall mean individually and collectively, those
certain Deeds of Trust, Security Agreement, Assignment of Leases and
Rents, Fixture Filing and Financing Statement, dated as of even date with
this Note, from Borrower to the trustee specified therein, in trust for
Holder, covering certain real and personal property described therein
situated in the Counties of Dallas and Travis, State of Texas, and
Maricopa County, Arizona, respectively.
(d) "Default Rate" shall mean a rate per annum equal to the lesser of (i)
five percent (5%) plus the Applicable Interest Rate in effect from time to
time, or (ii) the Maximum Rate (as hereinafter defined).
(e) "Event of Default" shall have the meaning assigned to such term in
the Deed of Trust.
25
<PAGE>
(f) "LIBOR Rate" shall mean the average of interbank offered rates for
three-month dollar deposits in the London market based on quotations at
five major banks, as published from time to time in The Wall Street
Journal. If The Wall Street Journal ceases to publish such a compilation
of interbank offered rates, or if The Wall Street Journal ceases to be
published, then the Holder shall propose a substitute method of
determining the interest rate generally known as the three-month LIBOR
rate, which method, absent manifest error, shall be binding on Holder and
Borrower.
(g) "Loan" shall mean the $30,000,000.00 loan made by Holder to Borrower
evidenced by this Note.
(h) "Maturity Date" shall mean the earlier to occur of (i) five (5) years
less one day from the date hereof, or (ii) the date on which the entire
principal amount evidenced by this Note and all accrued interest thereon
shall be paid or be required to be paid in full, whether by prepayment,
acceleration or otherwise.
(i) "Maximum Rate" shall mean the higher of the maximum interest rate
allowed by applicable United States or Texas law, as amended from time to
time, in effect on the date for which a determination of interest accrued
hereunder is made. Holder hereby discloses that for purposes of
determining the highest lawful rate under the laws of the State of Texas,
the "quarterly ceiling" from time to time in effect, as defined in
subsection (a)(2) of Article 1.04, Title 79, Revised Civil Statutes of
Texas, 1925, as amended (Article 5069-1.04, Vernon's Civil Statutes) (the
"Statute"), shall be applicable to the indebtedness evidenced hereby;
provided, however, the Holder may, in accordance with and to the extent
permitted by applicable law, from time to time revise the election of the
quarterly ceiling as to current and future balances outstanding on the
indebtedness evidenced hereby for purposes of determining the highest
lawful rate, and may implement the "indicated rate ceiling" or the
"monthly ceiling" from time to time in effect, as such terms are defined
in subsections (a)(1) and (c) respectively, of the Statute, or any other
legally available "ceiling" as the highest lawful rate under Texas law.
(j) "Mortgaged Property" shall have the meaning assigned in the Deed of
Trust.
(k) "Other Security Documents" shall mean all and any of the documents
other than this Note, the Deed of Trust, and the Environmental Indemnity
Agreement (as described in the Deed of Trust), now or hereafter executed
by Borrower and/or others, and by or in favor of Holder, which wholly or
partially guarantee or secure this Note or are executed in connection with
this Note.
(l) "Principal Balance" shall mean the balance of the following sums
outstanding from time to time: (i) the initial $30,000,000.00 advance
hereunder plus (ii) any other sums advanced under the Deed of Trust and
the Other Security Documents, less (iii) any principal reduction made in
accordance with the terms of this Note.
2. Interest Rate. From the date of this Note to and including the Maturity
Date, the Principal Balance shall bear interest at the Applicable Interest
Rate from time to time in effect. The Applicable Interest Rate shall be
adjusted monthly, commencing on the first day of the calendar month
immediately following the date hereof and on the first day of each succeeding
month to and including the first day of the month in which the Maturity Date
occurs; provided, however, that such Applicable Interest Rate shall be based
on the LIBOR Rate in effect on the last day of the preceding calendar month.
To the extent permitted by Texas law, interest shall be calculated by the
method known as the "Banker's Rule" using the actual days the
26
<PAGE>
Principal Balance is outstanding hereunder divided by 360 days and multiplied
by the Applicable Interest Rate; provided, however, that in the event such
calculation is not permitted by Texas law, interest hereunder shall be
calculated on the basis of a 365-day or a 366-day year, as t he case may be.
Following the Maturity Date, interest shall accrue at the Default Rate.
3. Payment of Principal and Interest. From the date hereof, the Principal
Balance and interest thereon shall be due and shall be payable as follows:
(a) interest at the Applicable Payment Rate shall be payable monthly, in
arrears, commencing on February 1, 1995, and on the first day of each
succeeding month to and including the first day of the month in which this
Note is paid in full;
(b) principal payments shall be payable monthly, in arrears, commencing
February 1, 1995, and on the first day of each succeeding month to and
including the first day of the month in which this Note is paid in full to
the extent of the Surplus as described in Section 1(b) above;
(c) on the Maturity Date, a final installment shall be payable including:
(i) all unpaid amounts of the Principal Balance;
(ii) interest accrued and unpaid thereon at the Applicable
Interest Rate;
(iii) the Exit Fee (as hereinafter defined), if any; and
(iv) all other sums due under this Note, the Deed of Trust and
the Other Security Documents.
4. Application of Payments. Each payment received by Holder from Borrower
with respect to this Note shall be applied: First: to the payment of any
Exit Fee payable to Holder in accordance with Section 6 hereof to the extent
then due and owing; Second: to the payment of any prepayment premiums payable
to Holder; Third: to the payment of any late charges due and payable
hereunder; Fourth: to the repayment of any amounts advanced by Holder in
accordance with the Deed of Trust or Other Security Documents for insurance
premiums, taxes, assessments or for preservation or protection of the
collateral covered by those documents and to the payment of all costs and
expenses incurred by Holder in connection with the collection of this Note
(including, without limitation, all attorneys' fees payable hereunder);
Fifth: to the payment of accrued interest; and Sixth: to reduction of the
Principal Balance, or in such order or proportion as Holder, in Holder's sole
discretion, may determine. Payments shall be deemed made when good funds are
received by Holder.
BORROWER UNDERSTANDS THAT THIS NOTE IS NOT SELF-AMORTIZING AND THAT A
SUBSTANTIAL BALLOON PAYMENT WILL BE DUE ON THE MATURITY DATE.
5. Prepayment. This Note may be prepaid in whole (in accordance with the
terms of this Section 5) but not in part (except as a result of (i) the
Surplus as described in Section 1(b) of this Note, (ii) a partial release as
described in Section 9.26 of the Deed of Trust, or (iii) the receipt of any
insurance or condemnation proceeds from or on behalf of Borrower) at any time
upon not less than thirty (30) days written notice to Holder. Any such
prepayment of the outstanding Principal Balance of this Note, whether
voluntary or involuntary, shall be accompanied by interest accrued to the
date of prepayment, the Exit Fee described below (if any), and a prepayment
premium (except as a result of Holder's receipt of funds in accordance with
clauses (i) and (iii) referenced in the preceding sentence) in an amount
equal to
27
<PAGE>
the outstanding Principal Balance of this Note multiplied by: 3% during the
first year of the term of this Note, 2% during the second year of the term of
this Note, 1% during the third year of the term of this Note, and 0% for each
year of the term of this Note thereafter. There shall be no prepayment
premium or penalty for an involuntary prepayment if the making of such
involuntary prepayment would result in the total interest contracted for,
charged or received hereunder exceeding the Maximum Rate.
6. Exit Fee. None.
7. Maximum Rate of Interest. All agreements between the Borrower and the
Holder, whether now existing or hereafter arising and whether written or
oral, are hereby expressly limited so that in no contingency or event,
whether by reason of acceleration of the maturity of this Note or otherwise,
shall the amount paid, or agreed to be paid to the Holder for the use,
forbearance, or detention of the money to be loaned under this Note or
otherwise or for the payment or performance of any covenant or obligation
contained herein or in any other document evidencing, securing or pertaining
to the Loan, exceed the Maximum Rate. If from any circumstances whatsoever
fulfillment of any provision hereof or any of such other agreements shall
cause the amount paid to exceed the Maximum Rate, then ipso facto, the amount
paid to the Holder shall be reduced to the Maximum Rate, and if from any such
circumstances the Holder shall ever receive interest or anything which might
be deemed interest under applicable law which exceeds the Maximum Rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal of this Note and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal of this Note such
excess shall be refunded to the Borrower. All sums paid or agreed to be paid
to the Holder for the use, forbearance or detention of the indebtedness of
the Borrower to the Holder shall, to the extent permitted by applicable law,
(i) be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest
on account of such indebtedness does not exceed the Maximum Rate now or as
hereafter amended, throughout the term thereof, (ii) be characterized as a
fee, expense or other charge other than interest, and/or (iii) exclude any
voluntary prepayments and the effects thereof. The terms and provisions of
this paragraph shall control and supersede every other provision of all
agreements between the Holder and the Borrower.
8. Security. Payment of this Note is secured by the Deed of Trust and the
Other Security Documents. All of the agreements, conditions, covenants,
provisions and stipulations contained in the Deed of Trust and the Other
Security Documents which are to be kept and performed by Borrower are hereby
made a part of this Note to the same extent and with the same force and
effect as if they were fully set forth herein, and Borrower covenants and
agrees to keep and perform them, or cause them to be kept and performed,
strictly in accordance with their terms.
9. Late Charges. Time is of the essence hereof and if any of the Principal
Balance or interest on this Note or other sum due hereunder is not paid
within ten (10) days of when due, Borrower shall, at Holder's sole option,
pay to Holder a late charge payment of up to five percent (5%) of the amount
of such installment as specified in a written demand for same. Such late
charge shall not be applicable to the total payment due on the Maturity Date;
provided, however, no applicable grace or cure period shall apply to such
final payment. Such late charge shall be paid without prejudice to the right
of Holder to collect any other amounts provided to be paid or to declare a
default under this Note, the Deed of Trust or Other Security Documents. Any
late charges which may accrue shall be due and payable not later than the
date the next monthly installment is due under this Note. Borrower agrees
that the late charge is intended to compensate Holder for damages Holder will
suffer as a result of Borrower's late payment. Such damages include
additional expenses in servicing the Loan, sending out notices, computing
interest, segregating delinquent sums and accounting and data processing
costs. Borrower agrees that such damages are difficult or impractical to
ascertain, and the late charge is presumed to be the amount of damages
sustained by
28
<PAGE>
Holder for each late payment. Notwithstanding anything herein to the
contrary, the 10-day grace period is only applicable with respect to the
assessment of the late charge, and should not be construed as a modification
or waiver of the due date otherwise specified for any sums due Holder
hereunder or under the Other Security Documents. Failure to pay said late
charge following written demand shall constitute an Event of Default.
10. Default. Upon the occurrence of any Event of Default, and at the option
of Holder without any advance notice, the outstanding installment plus all
amounts then unpaid under this Note, the Deed of Trust, and any Other
Security Documents shall each bear interest at the Default Rate for so long
as the Event of Default shall remain uncured, payable monthly on the same day
of each month that monthly payments of interest are due under Section 3. In
addition, Holder, at its option and without further notice, demand or
presentment for payment to Borrower or others, may declare immediately due
and payable the unpaid Principal Balance and interest accrued thereon
together with all other sums owed by Borrower under this Note, the Deed of
Trust and the Other Security Documents (including, but not limited to
attorneys' fees as provided in Section 12), anything in this Note, the Deed
of Trust and the Other Security Documents to the contrary notwithstanding.
Payment of such sums may be enforced and recovered in whole or in part at
any time by one or more of the remedies provided to Holder in this Note, the
Deed of Trust or the Other Security Documents.
11. Remedies Cumulative. The remedies of Holder, as provided in this Note,
the Deed of Trust and the Other Security Documents, shall be cumulative and
concurrent and may be pursued singly, successively or together, at the sole
discretion of Holder, 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.
12. Attorneys' Fees. In the event that suit be brought hereon and Holder
prevails in such litigation, or an attorney be employed or expenses be
incurred to compel payment of this Note or any portion of the indebtedness
evidenced hereby, or to defend the priority of the Deed of Trust or as
otherwise provided in the Deed of Trust, Borrower promises to pay all such
reasonable attorneys' fees, costs and expenses (including attorneys' fees
incurred in collecting attorneys' fees) all as actually incurred by Holder
as a result thereof and including, without limitation (a) reasonable
attorneys' fees, costs and expenses incurred in appellate proceedings or in
any action or participation in, or in connection with, any case or proceeding
under Chapters 7 or 11 of the Bankruptcy Code or any successor thereto, and
(b) reasonable attorneys' fees, costs and expenses incurred as a result of
Holder exercising its rights to cure any Event of Default by Borrower under
this Note, the Deed of Trust or any Other Security Document, or as a result
of the foreclosure of the Deed of Trust, deed in lieu thereof, or trustee's
sale thereunder. Additionally, Borrower agrees to pay all reasonable
attorneys' fees, costs and expenses attributable to any subsequent
modification or restructure of this Note.
13. WAIVER OF NOTICE BY BORROWER. BORROWER WAIVES DILIGENCE, PRESENTMENT
FOR PAYMENT, DEMAND, NOTICE OF DEMAND, NOTICE OF NONPAYMENT OR DISHONOR,
NOTICE OF INTENTION TO ACCELERATE, NOTICE OF ACCELERATION, PROTEST AND NOTICE
OF PROTEST OF THIS NOTE, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW ALL
OTHER NOTICES IN CONNECTION WITH THE DELIVERY, ACCEPTANCE, PERFORMANCE,
DEFAULT, OR ENFORCEMENT OF THE PAYMENT OF THIS NOTE, EXCEPT SUCH NOTICES AS
ARE PROVIDED IN THE DEED OF TRUST.
29
<PAGE>
14. No Waiver by Holder. Holder shall not be deemed, by any act of omission
or commission, to have waived any of its rights or remedies hereunder unless
such waiver is in writing and signed by Holder, and then only to the extent
specifically set forth in the writing. The acceptance by Holder of any
payment hereunder which is less than payment in full of all amounts due and
payable at the time of such payment shall not constitute a waiver of the
right to exercise any of the foregoing options at that time or at any
subsequent time or nullify any prior exercise of any such option without the
express consent of Holder, except as and to the extent otherwise provided by
law. A waiver with reference to one event shall not be construed as
continuing or as a bar to or waiver of any right or remedy as to a subsequent
event.
15. GOVERNING LAW AND VENUE. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED AND CONSTRUED ACCORDING TO THE LAWS
OF THE UNITED STATES OF AMERICA AND THE LAWS OF THE STATE OF TEXAS. VENUE
FOR ANY ACTION TO COLLECT OR ENFORCE THE TERMS OF THIS NOTE OR THE LOAN
DOCUMENTS (AS HEREIN DEFINED) OTHER THAN AN ACTION FOR FORECLOSURE PURSUANT
TO THE ARIZONA DEED OF TRUST SHALL LIE IN THE DISTRICT COURT FOR DALLAS
COUNTY, TEXAS.
16. Construction of Certain Terms. Whenever used, the singular number shall
include the plural, the plural shall include the singular, and the words
"Holder" and "Borrower" shall be deemed to include their respective heirs,
administrators, executors, successors and assigns.
17. Notice. All notices which Holder or Borrower may be required or
permitted to give hereunder shall be made in the same manner as set forth in
Section 9.3 of the Deed of Trust.
18. Severability of Provisions. In the event any one or more of the
provisions hereof shall be invalid, illegal or unenforceable in any respect,
the validity of the remaining provisions hereof shall be in no way affected,
prejudiced or disturbed thereby.
19. Sale of Interest. Borrower acknowledges that Holder may, in its sole
discretion, sell all or any part of its interest in the loan as evidenced by
this Note. Any such sale may be at a discount or premium, subject to a
brokerage fee or involve a servicing agreement.
20. Headings. The section captions are inserted for convenience of
reference only and shall in no way alter or modify the text of such sections.
21. Further Agreements. In accordance with Section 26.02(a)(2) of the Texas
Business and Commerce Code, as amended, Borrower hereby acknowledges, with
respect to this Note and the Loan Documents (as defined in the Deed of
Trust), that:
1. THE RIGHTS AND OBLIGATIONS OF BORROWER AND HOLDER SHALL BE DETERMINED
SOLELY FROM THE WRITTEN LOAN DOCUMENTS AND ANY PRIOR ORAL AGREEMENTS
BETWEEN HOLDER AND BORROWER ARE SUPERSEDED BY AND MERGED INTO THE LOAN
DOCUMENTS.
2. THE LOAN DOCUMENTS MAY NOT BE VARIED BY ANY ORAL AGREEMENTS OR
DISCUSSIONS THAT OCCUR BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO
THE EXECUTION OF SUCH LOAN DOCUMENTS.
3. THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENTS BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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22. Limitation of Liability. The capitalized terms in this section shall
have the same meanings as provided therefor in the Deed of Trust, unless the
context hereof otherwise requires. Without impairing Holder's rights,
powers, privileges, liens or security interests in this Note or any other
documents existing as security for the payment hereof, Holder agrees that,
for enforcement of payment of this Note and for enforcement of obligations
under the Deed of Trust or Other Security Documents, it will look solely to
the Mortgaged Property as described in the Deed of Trust and such other
collateral, as may now or hereafter be given to secure the payment of this
Note, and no other property or assets of Borrower or its partners except as
described by the Deed of Trust or the Other Security Documents, shall be
subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies of Holder, or for any payment required to be
made under this Note or under the Deed of Trust or the Other Security
Documents or for the performance of any of the covenants or warranties
contained therein or herein; provided, however, Holder may pursue all of its
rights and remedies against the property of Borrower or its general partner
or any guarantors of this Note, described in the Deed of Trust or the Other
Security Documents, including, without limitation, the Mortgaged Property, to
the full extent of such rights and remedies at law or in equity including,
without limitation, all such rights and remedies as set forth in the Deed of
Trust, this Note and the Other Security Documents.
The foregoing provisions of this section shall not affect in any way the
validity or enforceability of any guaranty (whether of payment and/or
performance) given to Holder in connection with the loan evidenced hereby or
constitute a waiver by Holder of any rights to damages or other monetary
relief or any other remedy at law or equity against Borrower or its general
partner by reason of any one or more of the following: (1) any loss,
liability, damage, cost or expense (including reasonable attorneys' fees )
incurred or to be incurred by Holder (a) from Borrower's failure to perform
its obligation to properly account to Holder as mortgagee for any proceeds of
insurance or awards of condemnation as required by the Deed of Trust, to
properly apply same in accordance with the terms and provisions of the Loan
Documents, or for the misapplication or misappropriation by Borrower of
condemnation or insurance proceeds, rent or security deposits, working
capital reserves, any other project reserves or project escrows, or any use
by Borrower without the prior written consent of Holder of condemnation or
insurance proceeds, rent or security deposits, working capital reserves, any
other project reserves or project escrows after an Event of Default has
occurred and is continuing (provided, however, that to the extent rents,
working capital reserves, or any other project reserves or escrows are
reinvested in the Mortgaged Property or applied to the payment of this Note,
and/or to the extent that condemnation and insurance proceeds are applied in
accordance with the Deed of Trust, Borrower will not be liable pursuant to
the terms of the foregoing clause); or (b) because of Borrower's attempts to
interfere with Holder's rights under the Assignment of Leases and Rents
contained in the Deed of Trust (other than Borrower's pursuit of its rights
available at law or equity); or (c) because Borrower fails to apply proceeds
of rents (advance, prepaid or otherwise) and other income of the Mortgaged
Property towards the costs of maintena nce and operation of the Mortgaged
Property and to payment of taxes and assessments, lien claims, insurance
premiums and debt service and other indebtedness; or (d) from Borrower's
failure to pay for any loss, liability, damage, cost or expense (including
attorneys' fees) incurred by Holder in connection with either (i) any
violation, directive (threatened or otherwise), order, consent decree,
settlement, judgment or verdict arising from the presence, deposit, storage,
disposal, burial, dumping, injecting, spilling, leaking or other placement or
release in, on, over, under or from the Mortgaged Property of asbestos or a
"hazardous substance" as defined in 42 U.S.C. 9601, et seq. as amended from
time to time, or any other toxic or hazardous waste or waste products, or any
Hazardous Materials, or (ii) any other cost or expense related to the
environmental condition of the Mortgaged Property which results in a
diminution of value of the Mortgaged Property or is otherwise covered by the
indemnity set forth in the Indemnity Agreement of even date herewith
executed by Borrower in favor of Holder; or (e) from any fraud, material
misrepresentation, material misstatement and/or omission, or breach of
representations or warranties
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(including, without limitation, those related to the environmental condition
of the Mortgaged Property and those related to Borrower's title to the
Mortgaged Property) of Borrower whether contained in the Loan Documents or
other writing in connection with the Loan evidenced by this Note and the
other Loan Documents; or (f) because of Borrower's failure or refusal to pay
any Impositions; or (g) because of any waste (ordinary wear and tear excepted)
committed by Borrower with respect to the Mortgaged Property; or (h) from
Borrower's failure to purchase and maintain the insurance required by the
terms of the Deed of Trust; and/or (2) any loss, liability, damage, cost or
expense (including reasonable attorneys' fees) incurred or to be incurred by
Holder if and to the extent Borrower has received rentals, security deposits,
working capital reserves, any other project reserves, project escrows, other
revenues, or other payments or proceeds in respect of the Mortgaged Property
since the date of the last payment made to Holder under this Note prior to an
Event of Default, which rentals, security deposits, other revenues, or other
payments or proceeds have been misappropriated by Borrower, or so received at
a time when there were due and unpaid any ordinary and reasonable operating
expenses of the Mortgaged Property, ordinary and reasonable expenses for
capital improvements to the Mortgaged Property, debt service on this Note,
real estate taxes and assessments and insurance premiums in respect of the
Mortgaged Property, and not applied by Borrower to payment of such items. The
foregoing limitations on personal liability shall in no way impair or
constitute a waiver of the validity of this Note, the indebtedness secured by
the Mortgaged Property or the liens on, security title to, or security
interests in the Mortgaged Property or the right of Holder, as beneficiary or
secured party, to foreclose and/or enforce its rights with respect to the
Mortgaged Property after an Event of Default.
Nothing herein shall be deemed to be a waiver of any right which Holder may
have under the United States Bankruptcy Code to file a claim for the full
amount of the debt owing to Holder by Borrower or to require that all
Mortgaged Property shall continue to secure all of the indebtedness owing to
Holder in accordance with the Loan Documents. Holder may seek a judgment on
this Note (and, if necessary, name Borrower in such suit) as part of judicial
proceedings to foreclose under the Deed of Trust or to fore close pursuant to
any other instrument securing the indebtedness evidenced by this Note, or as
a prerequisite to any such foreclosure or to confirm any foreclosure or sale
pursuant to power of sale thereunder, and in the event any suit is brought on
this Note, or with respect to any indebtedness evidenced by this Note or
secured by the Deed of Trust or any judgment rendered in such judicial
proceedings, such judgment shall constitute a lien on and will be and can be
enforced on and against the Mortgaged Property conveyed by the Deed of Trust
or any such Other Security Documents and the rents, profits, issues, products
and proceeds thereof. Nothing herein stated shall impair the right of the
Holder to accelerate the maturity of this Note (or to avail itself of any of
its other rights and remedies) upon the occurrence of an Event of Default or
under any other instrument securing or evidencing the indebtedness
represented by this Note, nor shall anything herein stated impair or be
construed to impair the right of Holder to seek personal judgments and all
rights and remedies to enforce same allowed by law, jointly and severally
against any guarantors to the extent allowed by any applicable guarantees.
The provisions set forth in this Section 22 are not intended as any release
or discharge of the Indebtedness, or any monies due under this Note or under
any Other Security Documents, but are intended as a limitation on Holder's
right to sue for deficiency or personal judgment except as provided in this
section.
23. WAIVER OF JURY TRIAL. BORROWER AND HOLDER MUTUALLY, EXPRESSLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY FOR ANY PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS NOTE, OR ANY OTHER SECURITY
DOCUMENT CONNECTED WITH THIS TRANSACTION, IN THE INTEREST OF AVOIDING DELAYS
AND EXPENSES ASSOCIATED WITH JURY TRIALS.
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IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly
executed this Note the day and year first above written.
BORROWER:
CENTURY STONEY GREENS, L.P.,
a California limited partnership
By: Century Stoney Greens, Inc.,
a California corporation, sole
general partner
By:
----------------------
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Exhibit 10.6
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
Howard E. Schreiber, Esq.
Jenkens & Gilchrist, P.C.
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Instructions to County Recorder: Index this document as a Deed of Trust, as
an Assignment of Leases and Rents as a Fixture Filing and as a Financing
Statement
DEED OF TRUST, SECURITY AGREEMENT,
ASSIGNMENT OF LEASES AND RENTS, FIXTURE FILING
AND FINANCING STATEMENT
This Deed of Trust, Security Agreement, Assignment of Leases and Rents,
Fixture Filing and Financing Statement ("Deed of Trust") is executed
effective as of the 27th day of December, 1994, by CENTURY STONEY GREENS,
L.P., a California limited partnership ("Grantor"), whose address is set
forth below, as Grantor, to Howard E. Schreiber, Trustee, whose address is
set forth below, in trust for the benefit of USL CAPITAL CORPORATION ("USL"),
a Delaware corporation, whose address is set forth below, as Beneficiary.
Article 1
DEFINITIONS
1. Definitions
As used herein, the following terms shall have the following meanings:
1.1 Arizona Property: The "Arizona Property" as such term is defined in
Section 1.29.
1.2 Assignment: The assignment, contained in Article 4 of this Deed of
Trust, from Grantor to Beneficiary, of all of Grantor's right, title and
interest in and to the Leases and the Rents.
1.3 Awards: All awards and payments made or hereafter to be made by any
municipal, township, county, state, Federal or other governmental agencies,
authorities or boards or any other entity having the power of eminent domain
to Grantor, including any awards and payments for any taking of all or a
portion of the Mortgaged Property, as a result of, or by agreement in
anticipation of, the exercise of the right of condemnation or eminent domain,
or for any change or changes of grade of streets affecting the Mortgaged
Property.
1.4 Beneficiary: USL and its successors and assigns and the holders, from
time to time, of the Note.
1.5 Beneficiary's Address: 733 Front Street, San Francisco, California
94111, Attention: President, Real Estate Financing.
1.6 Buildings: All buildings, improvements, alterations or appurtenances
now, or at any time hereafter, located upon the Land or any part thereof.
1.7 Default Interest Rate: The lesser of (i) the interest rate of five
percent (5%) per annum plus the Applicable Interest Rate (as defined in the
Note, as herein defined), or (ii) the Maximum Rate (as defined in Section
9.10 below).
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1.8 Event(s) of Default: The happenings and occurrences described in
Article 6 of this Deed of Trust.
1.9 Exit Fee: None.
1.10 Fixtures: All fixtures now or hereafter affixed or attached to, or
installed in, or used in connection with, the Land or Buildings, whether or
not permanently affixed thereto, together with all accessions, replacements
and substitutions thereto or therefor and the proceeds thereof.
1.11 Grantor: The entity named as such in the preamble of this Deed of
Trust, and its heirs, administrators, executors, successors and assigns and
its successors in interest in and to the Mortgaged Property.
1.12 Grantor's Address: 5665 Northside Drive, N.W., Atlanta, Georgia 30328,
Attn: Peter Braverman.
1.13 Guarantor and Guarantor's Address: Century Properties Growth Fund
XXII, a California limited partnership, 5665 Northside Drive, N.W., Atlanta,
Georgia 30328, Attn: Peter Braverman.
1.14 Guaranty: That certain Unconditional Guaranty of even date herewith
(the "Guaranty") executed by Guarantor and guaranteeing certain obligations
of Grantor under this Deed of Trust, the Arizona Deed of Trust (as herein
defined), the Note, the Security Documents and the Indemnity Agreement.
1.15 Hazardous Materials: Any flammable explosives, radioactive materials,
oil or petroleum, chemical liquids or solids, polychlorinated biphenyls,
asbestos, liquid or gaseous products or hazardous wastes, pollutants, toxic
pollutants, toxic substances and similar substances and materials, including
all substances and materials defined as hazardous or toxic wastes, substances
or materials under any applicable law.
1.16 Impositions: All (i) real estate and personal property taxes and other
taxes and assessments, water and sewer rates and charges, and all other
governmental charges and any interest or costs or penalties with respect
thereto, and charges for an easement or agreement maintained for the benefit
of the Mortgaged Property which at any time prior to or after the execution
of the Security Documents may be assessed, levied, or imposed upon the
Mortgaged Property or the rent or income received therefrom or any use or
occupancy thereof, and (ii) other taxes, assessments, fees and governmental
charges levied, imposed or assessed upon or against Grantor or any of its
properties.
1.17 Indebtedness: The principal of and accrued interest on and all other
amounts, payments and premiums due under the Note (including any future
advances), and all other amounts, including without limitation the Exit Fee
(if any), now existing or hereafter arising of Grantor owing to Beneficiary
under and/or secured by the Security Documents, or any amendments,
modifications, renewals and extensions of any of the foregoing.
1.18 Indemnity Agreement: The Environmental Indemnity Agreement, dated as
of even date herewith, executed by Grantor in favor of Beneficiary.
1.19 Land: The real estate described in Schedule A attached hereto.
1.20 Leases: Any and all leases, subleases, licenses, concessions or grants
of other possessory interests now or hereafter in force, oral or written,
covering or affecting the Mortgaged Property, or any part thereof, together
with all rights, powers, privileges, options and other benefits of Grantor
thereunder.
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1.21 Loan Documents: The Note, the Indemnity Agreement, this Deed of Trust,
the Arizona Deed of Trust (as herein defined), the Guaranty, and any and all
other documents executed in connection herewith.
1.22 Mortgaged Property: The Land, the Buildings, the Fixtures, the Leases,
the Rents and the Personalty and all substitutions therefor, replacements and
accessions thereto, and proceeds derived therefrom, together with:
(i) all rights, privileges, permits, licenses, tenements, hereditaments,
rights-of-way, easements, appendages and appurtenances of the Land and/or
the Buildings belonging or in anyway appertaining thereto and all right,
title and interest of Grantor in and to any streets, ways, alleys, strips
or gores of land adjoining the Land or any part thereof;
(ii) all the estate, right, title, interest, claim or demand whatsoever
of Grantor, either at law or in equity, in and to the Land (including,
without limitation, water, mineral and sewer rights), the Buildings, the
Fixtures, the Leases, the Rents and the Personalty;
(iii) all the estate, right, title, interest, claim or demand whatsoever
of Grantor, either at law or in equity, in and to the Awards, or payments
with respect to casualties; and
(iv) all other interest of every kind and character which Grantor now has
or at any time hereafter acquires in and to the above described real and
personal property.
1.23 Note: That certain Promissory Note, dated of even date with this Deed
of Trust, made by Grantor to the order of Beneficiary, in the original
principal amount of $30,000,000.00, due and payable five (5) years less one
day from the date hereof unless earlier accelerated, secured by this Deed of
Trust and the Arizona Deed of Trust, together with all future advances,
extensions, renewals, modifications and amendments thereof.
1.24 Obligations: Any and all of the covenants, promises and other
obligations (other than the Indebtedness) made or owing by Grantor to or due
to Beneficiary under and/or as set forth in the Note and/or the Security
Documents, and any and all extensions, renewals, modifications and amendments
of any of the foregoing.
1.25 Permitted Encumbrances: The encumbrances described with particularity
in Schedule B attached hereto.
1.26 Personalty:
(i) All right, title and interest of Grantor in and to the tangible and
intangible personal property of Grantor (whether now owned or hereafter
acquired), including all equipment, inventory, goods, consumer goods,
accounts, chattel paper, instruments, project escrows, working capital
reserves (including, without limitation, Account No. 02285088 at
NationsBank of Georgia), money (which are rental, tax or insurance
deposits), general intangibles, documents, minerals, crops and timber (as
those terms are def ined in the Texas Uniform Commercial Code) and all
other personal property which is attached to, installed on or placed or
used on, in connection with or is acquired for such attachment,
installation, placement or use, or which arises out of the development,
improvement, financing, leasing, operation or use of (1) the Land together
with all rights, titles and interests appurtenant thereof, (2) any and all
Buildings, structures, open parking areas and other improvements, now or
any time hereafter situated, placed or constructed upon the Land or any
part thereof, (3) the Fixtures, or (4) other goods located on the Land or
Buildings, together with all additions, accessions, accessories,
amendments and modifications thereto,
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extensions, renewals, replacements,
enlargements and proceeds thereof, substitutions therefor, and income and
profits therefrom. The following are included, without limitation, in the
definition of Personalty: furnishings, building materials, supplies,
machines, engines, boilers, stokers, pumps, fans, vents, blowers,
dynamos, furnaces, elevators, ducts, shafts, pipes, furniture, cabinets,
shades, blinds, screens, plumbing, heating, air conditioning, lighting,
lifting, ventilating, refrigerating, cooking, medical, laundry and
incinerating equipment, partitions, drapes, carpets, rugs and other floor
coverings, awnings, call and sprinkler systems, fire prevention and
extinguishing apparatus and equipment, water tanks, swimming pools,
compressors, vacuum cleaning systems, disposals, dishwashers, washers,
dryers, ranges, ovens, kitchen equipment, cafeteria equipment,
recreational equipment, loan commitments, financing arrangements, bonds,
construction contracts, leases, licenses, permits, sales contracts,
insurance policies and the proceeds therefrom, plans and specifications,
surveys, rent rolls, books and records, rental, tax and insurance
deposits, and all other intangible personal property; and
(ii) All materials, supplies, equipment, apparatus and other items now or
hereafter attached to, installed on or in the Land or the Buildings, or
which in some fashion are deemed to be fixtures to the Land or Buildings
under the laws of the State of Texas, including the Texas Uniform
Commercial Code; and
(iii) Any and all leases, subleases, licenses, concessions or other
agreements (written or verbal, now or hereafter in effect) which grant a
possessory interest in and to, or the right to extract, mine, reside in,
sell or use the Mortgaged Property or any portion thereof, and all other
agreements, including, but not limited to, utility contracts, management
agreements, maintenance agreements and service contracts, which in any way
relate to the use, occupancy, operation, maintenance, enjoyment or
ownership of the Mortgaged Property, all contracts or agreements relating
to the sale of all or any part of the Mortgaged Property, save and except
any and all leases, subleases or other agreements pursuant to which
Grantor is granted a possessory interest in the Mortgaged Property.
1.27 Rents: All of the rents, revenues, income, profits, deposits, tenders
and other benefits payable under the Leases and Grantor's rights, title and
interest in and to the rents, revenues, income, profits, deposits, tenders
and other benefits payable and/or arising from the use or enjoyment of all or
any portion of the Mortgaged Property.
1.28 Security Agreement: The Security Agreement contained in this Deed of
Trust, wherein and whereby Grantor grants a security interest in the
Personalty and the Fixtures to Beneficiary.
1.29 Security Documents: This Deed of Trust, the Assignment, the Security
Agreement, the Guaranty, and any and all other documents (including, without
limitation, that certain Deed of Trust, Security Agreement, Assignment of
Leases and Rents, Fixture Filing and Financing Statement of even date
herewith executed by Grantor for the benefit of Beneficiary (the "Arizona
Deed of Trust") encumbering certain property located in Mesa, Maricopa
County, Arizona as more particularly described therein (the "Arizona
Property")) executed by Grantor now or hereafter securing the payment of the
Indebtedness or the observance or performance of the Obligations (but
specifically excluding the Indemnity Agreement).
1.30 Trustee: The person, persons or entity named as such in the preamble
of this Deed of Trust and, as the case may be, his, their or its successors
and assigns.
1.31 Trustee's Address: 1445 Ross Avenue, Suite 3200, Dallas, Texas 75202.
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Article 2
GRANT
2.1 Grant. To secure the payment of the Indebtedness and the performance
and discharge of the Obligations, Grantor by these presents hereby grants,
bargains, sells, assigns, mortgages, transfers, conveys and warrants unto
Trustee, in trust for the use and benefit of Beneficiary, with power of sale
and right of entry and possession, the Mortgaged Property, to have and to
hold the Mortgaged Property unto Trustee, its successors, substitutes and,
assigns forever. Grantor hereby binds itself, and Grantor's successors,
substitutes and assigns, to warrant and forever defend unto Beneficiary, its
successors and assigns, the title to the Mortgaged Property, subject to the
Permitted Encumbrances.
2.2 Condition of Grant. Provided always, that if Grantor shall pay or cause
to be paid the entire Indebtedness as and when the same shall become due and
payable and shall observe, perform and discharge the Obligations, then the
Security Documents and the estate and rights granted by Grantor shall cease,
terminate and become void, and shall be promptly released or reconveyed by
Beneficiary, at the cost and expense of Grantor.
Article 3
SECURITY AGREEMENT AND FIXTURE FILING
With respect to all Personalty and/or Fixtures and/or other collateral
constituting a part of the Mortgaged Property, this Deed of Trust shall
likewise be a security agreement, and for valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, and for the purpose of
further securing payment and performance of the Indebtedness and the
Obligations, Grantor hereby grants to Beneficiary a security interest and
lien in all rights, titles, and interests now owned or hereafter acquired by
Grantor in all Personalty and/or Fixtures. As to the Personalty and
Fixtures, the grant, transfer, and assignment provisions of this Article 3
shall control over the grant in trust provision of Section 2.1 of this Deed
of Trust. Grantor represents and warrants that, except for any financing
statement filed by Beneficiary, no presently effective financing statement
covering the Personalty and/or Fixtures or any part thereof, has been filed
with any filing officer, and no other security interest has atta ched or has
been perfected in the Personalty and/or Fixtures or any part thereof. This
Deed of Trust shall be effective as a financing statement filed as a fixture
filing with respect to all Fixtures included within the definitions of
Mortgaged Property and Personalty and/or Fixtures. Beneficiary shall have
all the rights with respect to the Fixtures and Personalty afforded to it by
the Uniform Commercial Code as adopted by the State of Texas, in addition to,
but not in limitation of, the other rights afforded Beneficiary by the Loan
Documents. This Deed of Trust shall also be effective as a financing
statement covering minerals or the like (including oil and gas) and accounts
subject to Subsection (e) of Section 9.103 of the Uniform Commercial Code. A
carbon, photographic or other reproduction of this Deed of Trust shall be
sufficient as a financing statement. Beneficiary shall have the right at any
time to file a manually executed counterpart or a carbon, photographic or
other reproduction of this Deed of Trust as a financing statement in either
the central or local UCC records of any jurisdiction wherein the Mortgaged
Property is located, but the failure of Beneficiary to do so shall not impair
(i) the effectiveness of this Deed of Trust as both a financing statement
covering oil, gas and accounts and as a fixture filing as permitted by
Section 9.402 of the Uniform Commercial Code, or (ii) the validity and
enforceability of this Deed of Trust in any respect whatsoever. The
following information is included for purposes of meeting the requirements
of a financing statement:
(a) The name of the debtor is Century Stoney Greens, L.P.
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(b) The name of the secured party is USL Capital Corporation.
(c) The address of the secured party is 733 Front Street, San Francisco,
California 94111, Attention: President, Real Estate Financing.
(d) The mailing address of the debtor is 5665 Northside Drive, N.W.,
Atlanta, Georgia 30328, Attention: Peter Braverman.
(e) This financing statement covers all of the debtor's Personalty and/or
Fixtures (whether now owned or hereafter acquired). The Personalty and/or
Fixtures includes (i) goods which are or are to become fixtures on the
Land described in Schedule A, and (ii) minerals or the like (including oil
and gas) located on the Land described in Schedule A, and (iii) the
Personalty. This financing statement is to be filed for record in the
real estate records. Debtor has an interest of record in the Land
described in Schedule A, and the names of the additional record owners of
the Land described in Schedule A, if any, are listed thereon.
(f) Proceeds and products of Personalty and/or Fixtures are also covered.
Article 4
ASSIGNMENT OF RENTS AND LEASES
4.1 Assignment of Rents. All of Grantor's right, title and interest in and
to the Rents are hereby absolutely and irrevocably assigned to Beneficiary to
be applied against the Indebtedness and the Obligations. Grantor hereby
appoints Beneficiary its true and lawful attorney-in-fact, with the right, at
Beneficiary's option at any time, to demand, receive and enforce payment, to
give receipts, releases and, satisfactions, and to sue, either in Grantor's
or Beneficiary's name, for all Rents. Notwithstanding the foregoing
Assignment of Rents, so long as no Event of Default has occurred which
remains uncured, Grantor may collect, receive, take, use and enjoy such
Rents, as they become due and payable, but not more than one month in advance
thereof. The foregoing assignment shall be fully operative without any
further action on the part of either party; and specifically Beneficiary
shall be entitled at its option, upon the occurrence of an Event of Default
hereunder and for so long as such Event of Default is continuing, to collect
all Rents from the Mortgaged Property whether or not Beneficiary takes
possession of the Mortgaged Property. Upon the occurrence of an Event of
Default hereunder, the permission hereby given to Grantor to collect the
Rents from the Mortgaged Property shall terminate. The permission given by
Beneficiary to Grantor shall be reinstated upon a cure of such Event of
Default with Beneficiary's specific consent which shall not be unreasonably
withheld. This Assignment shall not be deemed or construed to constitute
Beneficiary or Trustee as a mortgagee in possession nor obligate Beneficiary
or Trustee to take any action or to incur expenses or perform or discharge
any obligation, duty or liability. Exercise of any rights under this Section
and the application of the Rents to the Indebtedness or the Obligations shall
not cure or waive any Event of Default but shall be cumulative of all other
rights and remedies.
4.2 Assignment of Leases. Grantor hereby assigns to Beneficiary all right,
title and interest of Grantor in and to all Leases, together with all
security therefor and all monies payable thereunder, subject, however, to the
conditional permission given to Grantor above to collect the rentals under
any such Lease. The foregoing assignment of any Lease shall not be deemed to
impose upon Beneficiary any of the obligations or duties of Grantor provided
in any such Lease; and Grantor agrees to fully perform all obligations of the
lessor under all such Leases. Upon Beneficiary's request, Grantor shall
deliver to any new lessee a notice of this assignment in form satisfactory to
Beneficiary in its sole discretion. Beneficiary may deliver such a notice to
new lessees if Grantor fails to do so within a reasonable time after
Beneficiary's request. From time to time, upon request of Beneficiary,
Grantor shall
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specifically assign to Beneficiary, by an assignment in writing in form
approved by Beneficiary, all right, title and interest of Grantor in and to
any and all Leases, together with all security therefor and all monies payable
thereunder, subject to the conditional permission given to Grantor above to
collect the rentals under any such lease. Grantor shall also execute and
deliver to Beneficiary any notification, financing statement, or other
document reasonably required by Beneficiary to perfect the foregoing
assignment as to any such Lease.
4.3 Effect of Assignments. This instrument constitutes an absolute and
present assignment of the rents, royalties, issues, profits, revenue, income
and other benefits from the Mortgaged Property; subject, however, to the
conditional permission given to Grantor to collect, receive, take, use and
enjoy the same as provided above; provided, further, that the existence or
exercise of such right of Grantor shall not operate to subordinate this
assignment to any subsequent assignment by Grantor, in whole or in part, and
any such subsequent assignment by Grantor shall be subject to the rights of
Trustee and Beneficiary hereunder.
4.4 No Merger of Leasehold Estates. If both the lessor's and lessee's
estate under any Lease, or any portion thereof, becomes vested at any time in
one owner, this Deed of Trust and the lien created hereby shall not be
adversely affected by the application of the doctrine of merger unless
Beneficiary so elects in writing by recording a written declaration so
stating. Unless and until Beneficiary so elects, Beneficiary and any lessor
and lessee shall continue to have and enjoy all of the rights and privileges
to the separate estates. In addition, upon the foreclosure of the lien
created by this Deed of Trust on the Mortgaged Property, any Leases then
existing and affecting all or any portion of the Mortgaged Property shall not
be destroyed or terminated by merger or by the foreclosure unless Beneficiary
or any purchaser at the sale so elects. No act by or on behalf of
Beneficiary or such purchaser shall constitute a termination of any Lease
unless Beneficiary gives written notice thereof to the tenant or subtenant
affected.
4.5 Assignment to Beneficiary Controlling. The rights of Trustee in the
Leases and Rents created under Article 2 shall be subject to the rights of
Beneficiary in the Leases and Rents created under this Article 4.
Article 5
COVENANTS AND REPRESENTATIONS AND WARRANTIES
5.1 Covenants. Until the entire Indebtedness shall have been paid in full,
Grantor hereby covenants and agrees as follows:
5.1.1 Payment of Indebtedness. Grantor will promptly pay the Indebtedness
as and when same shall be due and payable under the Note, this Deed of Trust,
the Arizona Deed of Trust and the other Security Documents.
5.1.2 Compliance with Laws. Grantor will promptly and faithfully comply
with, conform to and obey all present and future laws, ordinances, rules,
regulations and requirements of every duly constituted governmental authority
or agency and of every Board of Fire Underwriters having jurisdiction, or
similar body exercising similar functions, which may be applicable to it or
to the Mortgaged Property, or any part thereof and which are presently being
enforced by such authorities, or to the use or manner of use, occupancy,
possession, operation, maintenance, alteration, repair or reconstruction of
the Mortgaged Property, or any part thereof, whether or not such law,
ordinance, rule, order, regulation or requirement shall necessitate
structural changes or improvements or interfere with the use or enjoyment of
the Mortgaged Property.
5.1.3 Payment of Impositions. Grantor will duly pay and discharge, or cause
to be paid and discharged, the Impositions, such Impositions or installments
thereof to be paid prior to the day before any fine, penalty, interest or
cost may be added thereto
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or imposed by law for the non-payment thereof; provided, however, that if, by
law, any Imposition may be paid in installments, Grantor may pay the same in
such installments; provided, further, Grantor shall have the right to contest
any such imposition prior to payment so long as (i) Grantor contests such
Imposition in good faith, (ii) Grantor sends advance written notice to
Beneficiary that Grantor is contesting such Imposition, (iii) Grantor posts a
bond with a party acceptable to Beneficiary which is sufficient to pay the
Imposition, and (iv) such contest does not impair the Mortgaged Property in
any manner.
5.1.4 Repair and Alterations.
(a) Grantor will keep the Mortgaged Property in good order and condition
and make all necessary or appropriate repairs, replacements and renewals
thereof and will use its best efforts to prevent any act or thing which
might impair the value or usefulness of the Mortgaged Property.
(b) Grantor will not commit or knowingly permit any waste of the
Mortgaged Property or any part thereof, or make or permit to be made any
alterations or additions to the Mortgaged Property which would have the
effect of materially diminishing the value thereof, or make or permit to
be made any other alterations or additions to the Mortgaged Property of a
material nature, without the prior written consent of Beneficiary.
(c) Grantor will not permit any of the Fixtures or Personalty to be
removed at any time from the Land and/or Buildings, without the prior
written consent of Beneficiary, unless actually replaced by an article of
equal suitability and value and owned by Grantor free and clear of any
lien or security interest except such as may be approved in writing by
Beneficiary.
5.1.5 Insurance. Grantor will purchase and maintain property insurance on
the Mortgaged Property protecting against such hazards, casualties and
contingencies as are usually covered by all risk property policies including,
but not limited to, fire, windstorms, flood (if the Mortgaged Property is
located in a flood plain) and such other risks as reasonably required by
Beneficiary. The policies shall be in effect in the locality where the
Mortgaged Property is situated, in amounts and with insurers acceptable to
Beneficiary having a Best's Insurance Rating of A-/XI or better, but in any
event not less than the full insurable value of the Buildings, Fixtures,
Personalty and all other contents on a replacement cost basis, and which
includes riders for increased replacement cost due to inflation and changes
in building codes and ordinances and business interruption insurance covering
the loss of rents for one year. All property insurance policies shall
include a mortgagee clause or loss payee endorsement for the benefit of
Beneficiary. No primary deductible or retention greater than $5,000 per
Apartment Project (as herein defined) and no coinsurance clauses shall be
called for in any such policies, unless agreed to in writing by Beneficiary.
Policies shall contain endorsements providing for breach of warranty,
adjustment of value for inflation, increased costs of demolition, and such
other conditions as may be required by Beneficiary. Policies shall be
endorsed with form 438BFUNS, or a similar endorsement acceptable to
Beneficiary, showing Beneficiary as an additional insured and loss payee as
its interests may appear, such loss payments to be applied to the
restoration, repair or replacement of the Mortgaged Property to the extent
provided herein under terms and conditions acceptable to Beneficiary;
provided, however, that if Beneficiary's security under this Deed of Trust is
impaired or an Event of Default has occurred and is continuing or an event
has occurred and is continuing which with the passage of time or the giving
of notice would constitute an Event of Default, then such payments shall, at
the sole option of Beneficiary, be applied to the payment of the
Indebtedness.
Grantor shall also maintain Commercial General Liability Insurance and
Excess/Umbrella Liability Insurance which shall respond to third-party claims
involving
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bodily injury, property damage and personal injury arising out of Grantor's
alleged actions or inactions; such policies shall contain endorsements naming
Beneficiary as additional insured under the policies as respects its interest as
mortgagee/secured party and as a loss payee. Such policies shall provide such
combined limits of coverage as Beneficiary shall specify, but in any event for
all of the Apartment Projects not less than Five Million Dollars ($5,000,000.00)
per occurrence and in the aggregate Five Million Dollars ($5,000,000.00) as to
liability for bodily injury, property damage and personal injury. No primary
deductible or retention shall be called for in the Commercial General Liability
policy. All such insurance policies purchased by Grantor shall be endorsed to
be primary and non-contributory to any insurance carried by the Beneficiary. In
addition, Grantor shall cause the Beneficiary to be named as an additional
insured on any excess or umbrella policy purchased by Grantor. Grantor shall
cause the policy or policies evidencing all insurance referred to in this
paragraph (and the insurer issuing such policy) to certify to Beneficiary that:
(a) the interest of Beneficiary shall be insured regardless of any breach or
violation by Grantor of any warranties, declarations or conditions in such
policy; (b) if any such insurance policy be subject to cancellation, termination
or be endorsed or sought to be endorsed to effect a change in coverage for any
reason whatsoever, such insurer will promptly notify Beneficiary and such
cancellation, termination or change shall not be effective as to Beneficiary
until thirty (30) days after receipt by Beneficiary of such notice; and (c)
Beneficiary may, but shall not be obligated to, make premium payments to prevent
such cancellation, and that such payments shall be accepted by such insurer. In
addition, Grantor shall furnish to Beneficiary duplicate executed copies of each
such policy at the time of execution hereof and copies of each renewal policy
not less than thirty (30) days prior to the expiration of the original policy
or the preceding renewal policy (as the case may be), together with receipts or
other evidence that the premiums have been paid and furnish to Beneficiary
certificates of insurance prepared by Grantor's insurance agent or broker which
show evidence of the required coverages and end orsements, and payment of
premiums thereon; and furnish to Beneficiary, on or before sixty (60) days after
the close of each fiscal year of Grantor a statement of Grantor of the amounts
of insurance maintained in compliance with this Section 5.1.5, of the risks
covered by such insurance and of the insurance company or companies which carry
such insurance, accompanied by copies of all certificates of insurance
evidencing the required coverages and endorsements.
5.1.6 Restoration Following Casualty. After the happening of any casualty
to the Mortgaged Property or any part thereof, Grantor shall give prompt
written notice thereof to Beneficiary.
(a) In the event of any damage to or destruction of the Buildings,
Beneficiary shall have the option in its sole discretion of applying or
paying all or part of the insurance proceeds (i) to any Indebtedness and
in such order as Beneficiary may determine or (ii) to the restoration of
the Buildings or (iii) to Grantor; provided, however, Beneficiary agrees
that if no Event of Default or event or condition which with the giving of
notice, the passage of time, or both, could mature into an Event of
Default then exists hereunder and if such proceeds do not exceed
$150,000.00 for the Apartment Project so damaged, the same shall be
applied to the restoration of the Buildings.
(b) In the event of such loss or damage, all proceeds of insurance shall
be payable to Beneficiary, and Grantor hereby authorizes and directs any
affected insurance company to make payment of such proceeds directly to
Beneficiary. Beneficiary is hereby authorized and empowered by Grantor to
settle, adjust, or compromise any claims for loss, damage, or destruction
under any policy or policies of insurance.
(c) Except to the extent that insurance proceeds are received by
Beneficiary and applied to the Indebtedness, nothing herein contained
shall be deemed to excuse Grantor from repairing or maintaining the
Mortgaged Property as
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provided in this Deed of Trust or restoring all damage or destruction to
the Mortgaged Property, regardless of whether or not there are insurance
proceeds available or whether any such proceeds are sufficient in amount,
and the application or release by Beneficiary of any insurance proceeds
shall not cure or waive any default or notice of default under this Deed
of Trust or invalidate any act done pursuant to such notice.
(d) No prepayment penalty shall be applicable to any insurance proceeds
received by Beneficiary under this Section 5.1.6.
5.1.7 Performance of Leases and Other Agreements. All Leases entered into
by Grantor after the date hereof shall be on Grantor's standard form lease
which form has been approved in advance and in writing by Beneficiary.
Grantor will duly and punctually perform all covenants and agreements
expressed as binding upon it under the Leases and under any other agreements
to which it is a party with respect to the Mortgaged Property or any part
thereof, and will use its best efforts to enforce or secure the performance
of each and every obligation and undertaking of the respective lessees under
the Leases and will appear and defend, at its cost and expense, any action or
proceeding arising under or in any manner connected with the Leases or the
obligations and undertakings of any lessee or other party thereunder.
5.1.8 Payment of Rents. Grantor hereby agrees that the respective lessees
under the Leases, upon notice from Beneficiary of the occurrence of an Event
of Default, shall thereafter pay to Beneficiary the Rents due and to become
due under the Leases without any obligation to determine whether an Event of
Default in fact exists.
5.1.9 Inspection. Grantor will permit Beneficiary, at all reasonable times
and with reasonable notice, to inspect the Mortgaged Property. Beneficiary
shall have the right, but not the obligation, to enter onto the Mortgaged
Property, at all reasonable times and upon reasonable notice except in the
case of an emergency, to inspect the Mortgaged Property for the existence of
Hazardous Materials on the Mortgaged Property and to determine the compliance
of the Mortgaged Property and its use with any law, rule or regulation
relating to industrial hygiene or environmental conditions, including soil
and ground water conditions and the compliance of the Grantor and the
Mortgaged Property with the conditions and covenants set forth herein with
respect to Hazardous Materials.
5.1.10 Hold Harmless. Grantor will defend and hold Beneficiary harmless
from any action, proceeding or claim affecting the Mortgaged Property, the
Security Documents or the Guaranty except if such action, proceeding or claim
is caused solely by the gross negligence or willful misconduct of
Beneficiary. Grantor shall appear in and defend (or pay the reasonable
expenses of Beneficiary to defend, if Beneficiary gives Grantor notice of its
election to handle such defense) any action or proceeding purporting to
affect the security of this Deed of Trust and/or the rights and/or powers of
Beneficiary hereunder, and Grantor shall pay all costs and expenses
(including costs of evidence of title and reasonable attorneys' fees) in any
action or proceeding in which Beneficiary may so appear and/or any suit by
Beneficiary to foreclose this Deed of Trust, to enforce any obligations
secured by this Deed of Trust, and/or to prevent the breach hereof.
Grantor's obligations under this Section 5.1.10 shall survive payment of the
Indebtedness and the release of the lien granted herein.
5.1.11 Books and Records. Grantor will maintain full and complete books of
account and other records reflecting the results of its operations (in
conjunction with its other operations as well as its operations of the
Mortgaged Property). Grantor will furnish or cause to be furnished to
Beneficiary (a) within fifteen (15) days after the end of each calendar
quarter, a detailed statement of income and expenses relating to the
Mortgaged Property for such period; (b) within sixty (60) days after the end
of each calendar quarter, the Guarantor's report on Form 10-Q as filed with
the Securities and Exchange Commission; (c) within ninety (90) days after the
end of the each calendar year, a detailed financial statement for Grantor;
(d) within 120 days after the end of
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each calendar year, the Guarantor's annual report on Form 10-K as filed with
the Securities and Exchange Commission; (e) within fifteen (15) days after the
end of each calendar quarter, a certified rent roll for the Mortgaged
Property; (f) within fifteen (15) days after the end of each calendar
quarter, a delinquency report and accounts receivable aging for the Mortgaged
Property for such month, all in reasonable detail and certified by Grantor;
and (g) within fifteen (15) days after the end of each calendar quarter, the
quarterly statement regarding reserve set forth in Section 5.1.21 hereof. All
such financial statements and reports shall be certified by Grantor as
accurate and complete in all material respects. At any time and from time to
time, Grantor shall deliver to Beneficiary such other financial data and other
information, including, without limitation, copies of all Leases, as
Beneficiary shall, from time to time, reasonably request with respect to
Grantor and the ownership and operation of the Mortgaged Property, and
Beneficiary (or its designee) shall have the right, at reasonable times and
upon reasonable notice, to audit Grantor's books of account and records at
Beneficiary's sole cost and expense.
5.1.12 Awards. Grantor will file and prosecute its claim or claims for any
Awards in good faith and with due diligence and cause the same to be
collected and paid over to Beneficiary, and hereby irrevocably authorizes and
empowers Beneficiary, if it so desires, to file such claim and collect any
Awards and agrees that the proceeds of any Awards will be applied by
Beneficiary in reduction of any portion of the Indebtedness as Beneficiary
may determine in accordance with Article 8 hereof.
5.1.13 Licenses. Grantor shall keep in full force and effect all licenses,
permits and other governmental approvals which are necessary for the
operation of the Mortgaged Property and related facilities, and furnish
evidence satisfactory to Beneficiary that the Mortgaged Property and the use
thereof comply with all applicable zoning and building laws, regulations,
ordinances and other applicable laws except as disclosed by Grantor in
writing to Beneficiary.
5.1.14 Junior Financing. Grantor shall not, without the prior written
consent of Beneficiary, such consent to be made in Beneficiary's sole
determination, incur any additional indebtedness or create or permit to be
created or to remain, any mortgage, pledge, lien, encumbrance or charge on,
or conditional sale or other title retention agreement with respect to, the
Mortgaged Property or any part thereof or income therefrom, other than the
Security Documents and the Permitted Encumbrances.
5.1.15 Mechanic's Lien. Grantor shall not permit or suffer any mechanic's,
materialmen's or other lien to be created or to remain a lien upon any of the
Mortgaged Property; provided however, Grantor shall have the right to contest
any such lien prior to payment so long as (i) Grantor contests such lien in
good faith, (ii) Grantor sends advance written notice to Beneficiary that
Grantor is contesting such lien, (iii) Grantor posts a bond with a party
acceptable to Beneficiary which is sufficient to pay the indebtedness
secured by such lien, and (iv) such contest does not impair the Mortgaged
Property.
5.1.16 Hazardous Materials.
(a) Without limiting the generality of Section 5.1.2 hereof, Grantor
shall not cause or permit the violation of any law relating to industrial
hygiene or environmental conditions in connection with the Mortgaged
Property, including soil and ground water conditions and underground
storage tanks ("USTs"); or use, cause, or permit a release (a "Release")
of a Hazardous Material, generate, or store any Hazardous Materials in,
on, under, over, from or affecting the Mortgaged Property, except in
accordance with all applicable laws; manufacture or dispose of any
Hazardous Materials in, on, under, over, from or affecting the Mortgaged
Property; or transport any Hazardous Materials to or from the Mortgaged
Property. Without Beneficiary's prior written consent (except in the case
of an emergency in which case Beneficiary will be advised by Grantor
within 24 hours thereafter), which shall not be unreasonably withheld,
Grantor shall take no
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remedial action with respect to any Hazardous Materials in, on, under,
over, from or affecting the Mortgaged Property, and shall not enter into
any settlement agreement, consent decree or other compromise or agreement
relating to any such Hazardous Materials. The foregoing shall not
constitute a waiver of Grantor's rights to seek contribution from
responsible parties. Furthermore, Beneficiary's consent to such action
shall not be construed to mean that Beneficiary has the capacity to cause
or determine the appropriate Hazardous Materials management practices of
Grantor, but only is intended for Beneficiary to assure that its
collateral hereunder is not being impaired.
(b) Grantor shall indemnify and hold Trustee and Beneficiary harmless
from any loss, liability, cost, expense and/or claim (including without
limitation the cost of any fines, remedial action, damage to the
environment and cleanup and the fees of experts and reasonable attorneys
fees) of or against Trustee and/or Beneficiary arising from (i) the use,
generation, storage, Release or disposal of any Hazardous Materials in,
on, under, over, from or affecting the Mortgaged Property or the transport
of any Hazardous Materials to or from the Mortgaged Property; and (ii)
the violation of any law relating to industrial hygiene or environmental
conditions in connection with the Mortgaged Property, including soil and
ground water conditions and USTs; and (iii) the breach of any of the
representations, warranties and covenants of Grantor with respect to
Hazardous Materials set forth in this Section 5.1.16 and Section 5.2
hereof. Beneficiary shall have the right to approve any counsel selected
by Grantor to defend Beneficiary hereunder. Beneficiary shall have the
right, but not the obligation, to enter into the Mortgaged Property during
the term of the Loan, to inspect the Mortgaged Property and to perform any
testing of the Mortgaged Property for the existence of any Hazardous
Materials thereon and to determine the compliance of the Mortgaged
Property and its uses with any environmental law. Beneficiary may hire
engineers and other consultants of its choice to perform the inspections,
and testing required in the foregoing paragraph at Grantor's sole
expense. The inspection of the Mortgaged Property by Beneficiary or its
agents will not relieve Grantor, of its obligation to comply with any
environmental laws. Grantor's obligations under this Section 5.1.16 shall
survive payment of the Indebtedness. To the extent Grantor delivers to
Beneficiary, within 60 days following full payment of the Indebtedness, a
copy of a Phase II Environmental Site Assessment of the Mortgaged Property
prepared by a geotechnical/environmental engineering firm approved in
writing by Beneficiary or other firm approved in writing by Beneficiary
which (A) certifies that (i) there are no Hazardous Materials or USTs
located in, over, under, from or affecting the Mortgaged Property and (ii)
there are no violations of laws, orders, regulations, requirements or
demands of governmental authorities which are based upon or in any way
related to any such Hazardous Materials or USTs in, on, under, over, from
or affecting the Mortgaged Property, and (B) is in form and content
acceptable to Beneficiary in Beneficiary's reasonable business judgment
(with Beneficiary to advise Grantor of the acceptability of same within 60
days following receipt thereof), Beneficiary agrees that the indemnity
obligations of Grantor, pursuant to this 5.1.16(b), shall terminate. At
the request of Grantor, and provided Grantor has complied with the
foregoing requirements, Beneficiary will provide written evidence of same.
Beneficiary, in approving such geotechnical/environmental engineering
firm, may consider not only such firm's reputation and qualifications, but
also its financial net worth and its limits of liability for comprehensive
liability insurance and errors and omissions insurance. Additionally,
Beneficiary shall have the right to approve the scope of services
performed and shall be named as an additional insured and an additional
contracting party of such firm for purposes of privity of contract.
5.1.17 Management. The Mortgaged Property shall at all times be operated by
NPI-AP Management, L.P., or such other management company approved in advance
and in writing by Beneficiary under a management contract satisfactory in
form and substance to Beneficiary. The interests of the Grantor and the
management company under such
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contract shall be subordinate to the rights of Beneficiary hereunder, and the
management agreement shall provide that Beneficiary may, at its option,
terminate such contract upon the occurrence of an Event of Default which
remains uncured following the expiration of any applicable cure periods.
5.1.18 Use of Mortgaged Property. Grantor shall not use the Mortgaged
Property or any part thereof, or allow the same to be used or occupied, for
any purpose other than for the purposes of an Apartment Complex (as defined
below), or for any unlawful purpose, or in violation of any certificate of
occupancy or other permit or certificate, or any law, ordinance or
regulation, covering or affecting the use or occupancy thereof. The term
"Apartment Complex" as used herein shall mean one or more buildings in which
there are multiple units leased by residential tenants from Grantor, as
landlord, and in which the preponderance of such units at any given time are
leased under written leases providing for an initial term of at least six (6)
months. Grantor will not suffer any act to be done or any condition to exist
on the Mortgaged Property or any part thereof or any article to be brought
thereon, which may be dangerous (unless safeguarded as required by law) or
which may constitute a nuisance public or private or which may void or make
voidable any insurance then in force with respect thereto.
5.1.19 No Other Real Estate. At all times during the term of the Note,
Grantor shall not own any real estate other than the Mortgaged Property and
the Arizona Property.
5.1.20 Use of Beneficiary's Name. Grantor shall not use the names either of
Beneficiary or Ford Motor Company or any of Beneficiary's or Ford Motor
Company's subsidiaries or affiliates in connection with the development and
operation of the Mortgaged Property.
5.1.21 Maintenance of Reserves. At all times during the term of the Note,
and for the exclusive benefit of the Mortgaged Property and the Arizona
Property, Grantor shall maintain a cash working capital balance of no less
than $500,000.00. In the event such reserve balance falls below $500,000.00,
such event shall not constitute an Event of Default; however, all
distributions, loans, or other cash transfers to Grantor's partners (general
and/or limited), Guarantor or any of their affiliates shall be suspended
until the reserve balance is replenished. Any distributions, loans or other
cash transfers to Grantor's partners (general and/or limited), Guarantor or
any of their affiliates in violation of this provision shall constitute an
Event of Default hereunder. Grantor shall, on a quarterly basis, send to
Beneficiary copies of monthly bank statements for the preceding quarter, so
that Beneficiary can verify the existence and maintenance of such working
capital reserves.
5.2 Representations and Warranties of Grantor. Grantor hereby represents
and warrants to Beneficiary as of the date hereof as follows, and agrees to
give written notice to Beneficiary of any breach of such representations and
warranties:
5.2.1 Good Standing/Licensing. Grantor (and its general partner and
Guarantor) is duly organized and validly existing under the laws of its state
of organization, is duly licensed or qualified to do business and is in good
standing and is authorized to do business in every jurisdiction in which the
nature of its businesses or properties makes such licensing or qualification
necessary and where a failure to so qualify or be licensed would have a
materially adverse effect on the business or operations of the Grantor (and
its general partner and Guarantor), and is in compliance with all laws,
regulations, ordinances and orders of public authorities applicable to
Grantor. The execution of the Note, the Security Documents, and the
Indemnity Agreement are within Grantor's partnership powers.
5.2.2 No Conflict. The execution, delivery and performance by Grantor of
the Note, the Security Documents, the Indemnity Agreement and by Guarantor of
the Guaranty will not violate any provision of law (including, but not
limited to, any law relating
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to usury), any order of any court or other agency or government, or any
indenture, agreement or other instrument to which Grantor or Guarantor is a
party or by which Grantor, Guarantor or any of their property is bound, or be
in conflict with, result in a br each of or constitute (with due notice and/or
lapse of time) a default under any such indenture, agreement or other
instrument, or violate the partnership agreement of the Grantor or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the property or assets of Grantor or Guarantor, except
as contemplated by the Note and the Security Documents, and no action with
respect thereto by Grantor or Guarantor is required.
5.2.3 Consents. No consent or approval of any regulatory body to the
execution, delivery and performance of the Note, the Security Documents, the
Indemnity Agreement or the Guaranty or the transactions contemplated thereby
is required by law.
5.2.4 Suits. There are no suits, proceedings or investigations pending or
threatened in writing against or affecting Grantor or Guarantor, at law or in
equity, or before or by any governmental or administrative agency or
instrumentality which, if adversely determined, would have a material adverse
effect on the business or condition of Grantor or Guarantor.
5.2.5 Judgments. No judgment, decree or order of any court or governmental
or administrative agency or instrumentality has been issued against Guarantor
or Grantor which has or may have any material adverse effect on the business
or condition of Grantor or Guarantor.
5.2.6 Information. All information, reports, papers and data given to
Beneficiary with respect to Grantor, Guarantor or others obligated under the
terms of the Security Documents, and the Guaranty are accurate and correct in
all material respects and complete insofar as completeness may be necessary
to give Beneficiary a true and accurate knowledge of the subject matter
thereof.
5.2.7 Title to Mortgaged Property/Right to Assign Leases. Grantor has good
and indefeasible title in fee simple to the Land and good and marketable
title to the Buildings, Fixtures and Personalty, and the right to assign the
Leases and Rents to Beneficiary free and clear of any prior assignment,
liens, charges, encumbrances, security interests and adverse claims
whatsoever except the Permitted Encumbrances.
5.2.8 Leases. Grantor has not executed any presently effective prior
assignment of the Leases or of its right, title and interest therein or in
the Rents to accrue thereunder.
5.2.9 Permitted Encumbrances. The Permitted Encumbrances have not
materially interfered with the operation of the Mortgaged Property, nor does
Grantor reasonably foresee any material interference arising from the
Permitted Encumbrances during the term of the Note.
5.2.10 Taxes. Grantor, its general partner and Guarantor have filed all
Federal, state, county, and municipal income tax returns required to have
been filed by them and have paid all taxes which have become due pursuant to
any assessments received by them, and Grantor and Guarantor do not know of
any basis for additional assessment in respect to such taxes.
5.2.11 Use of Mortgaged Property. The Mortgaged Property is being, and will
continue to be, used for the purpose of Apartment Complexes and is not now
nor ever has been homestead property (business or personal).
5.2.12 Hazardous Materials. To the best of Grantor's knowledge, after due
inquiry, no Release of a Hazardous Material has occurred in, on, under, over,
from or affecting the Mortgaged Property. Grantor has not received any
notice from any governmental agency or from any tenant under a Lease or from
any other party with
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respect to such Release. To the best of Grantor's knowledge, after due
inquiry, the Mortgaged Property is not in violation of any applicable
environmental or industrial hygiene laws, rules or regulations. Grantor has
not generated, stored, used, released or disposed of any Hazardous Material
in, on, under, over, from or affecting the Mortgaged Property or in, on,
under, over, from or affecting any adjoining property except to the extent
permitted by applicable environmental law.
5.2.13 Plans and Specifications. Grantor warrants that it has no actual
knowledge that the plans and specifications for the Buildings and
Improvements did not comply with all applicable laws, codes and other
governmental requirements at the time of construction. Grantor warrants that
the Buildings and Improvements comply with all applicable laws, codes and
other governmental requirements.
Article 6
EVENTS OF DEFAULT
6. Events of Default
The term "Event(s) of Default", as used in the Security Documents, the
Guaranty and the Note, shall mean the occurrence or happening, from time to
time, of any one or more of the following:
6.1 Payment of Indebtedness. If Grantor shall default in the due and
punctual payment of all or any portion of any installment of the Indebtedness
as and when the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment or by acceleration or otherwise and
such default shall continue for a period of ten (10) days; provided that
failure to pay the final installment due at maturity shall immediately
constitute an Event of Default hereunder.
6.2 Performance of Obligations. If Grantor shall default in the due
observance or performance of any of the Obligations other than payment of
money and such default shall not be curable, or if curable shall continue for
a period of thirty days after written notice thereof from Beneficiary to
Grantor (unless such default, if curable, requires work to be performed, acts
to be done or conditions to be remedied which by their nature cannot be
performed, done or remedied, as the case may be, within such thirty day
period and Grantor shall commence to cure such default within such thirty day
period and shall thereafter diligently and continuously process the same to
completion, but in no event shall the period for cure exceed 120 days unless
otherwise agreed in writing by Beneficiary, and in no event shall the period
for such cure extend beyond the maturity of the Note).
6.3 Bankruptcy Receivership, Insolvency, Etc. If voluntary or involuntary
proceedings under the Federal Bankruptcy Code, as amended, shall be commenced
by or against Grantor, any general partner of Grantor or Guarantor or
bankruptcy, receivership, insolvency, reorganization, dissolution,
liquidation or other similar proceedings shall be instituted by or against
Grantor, any general partner of, Grantor or Guarantor, with respect to all or
any part of Grantor's or Guarantor's property or the property of any general
partner of Grantor under the Federal Bankruptcy Code, as amended, or other
law of the United States or of any state or other competent jurisdiction, and
if such proceedings are instituted against Grantor, any general partner of
Grantor or Guarantor and it shall consent thereto or shall fail to cause the
same to be discharged within sixty days.
6.4 Laws Affecting Obligations and Indebtedness. If subsequent to the date
of this Deed of Trust, any governmental entity in which the Mortgaged
Property is located passes any law (a) which renders payment of the
Indebtedness and/or performance of the Obligations by Grantor or by Guarantor
unlawful, or (b) which prohibits Beneficiary
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from exercising any of its rights and remedies under the Note, the Security
Documents, the Indemnity Agreement or the Guaranty and such prohibition
impairs Beneficiary's prac tical realization of the benefits intended thereby.
6.5 False Representation. If any representation or warranty made by Grantor
or others in, under or pursuant to the Note, the Guaranty or the Security
Documents (including, but not limited to, any representation or warranty made
in Section 5.2 hereof) shall prove to have been false or misleading in any
material respect as of the date on which such representation or warranty was
made.
6.6 Destruction of Improvements. If any of the Buildings is demolished or
removed or demolition or removal thereof is imminent, eminent domain
proceedings excepted, unless Grantor is diligently repairing or replacing the
Mortgaged Property to Beneficiary's satisfaction in accordance with Section
5.1.6 hereof.
6.7 Default Under Other Deed of Trust. If the holder of any junior deed of
trust or any other lien on the Mortgaged Property (without hereby implying
Beneficiary's consent to any such junior deed of trust or lien) institutes
foreclosure or other proceedings for the enforcement of its remedies
thereunder, or if a default exists and is continuing beyond any applicable
grace or cure period under any other deed of trust or lien on the Mortgaged
Property. Notwithstanding anything herein to the contrary, the filing of a
foreclosure proceeding or suit to collect the debt secured by any such deed
of trust or lien shall immediately constitute an Event of Default hereunder.
6.8 Security Documents and Loan Documents. If a default shall occur and be
continuing after the expiration of any applicable grace or cure period under
any of the Security Documents, the Guaranty, or under any of the other Loan
Documents.
6.9 Due on Sale. If, without the prior written consent of Beneficiary
(except as provided in Section 9.26 below), there is directly or indirectly
(a) any lease for an entire Apartment Complex, or any sale, transfer,
assignment, agreement for deed, conveyance, hypothecation or encumbrance,
whether voluntary or involuntary, of all or part of the Mortgaged Property or
any interest therein, or (b) any sale, assignment, pledge, encumbrance or
transfer of more than twenty percent (20%), in the aggregate, of the
partnership interests or the corporate voting stock in Grantor or its general
partner, or (c) a seizure of the Mortgaged Property, or attachment of any
lien on the Mortgaged Property, whether voluntary or involuntary, which has
not been removed or bonded off to Beneficiary's satisfaction within 30 days
of such attachment.
6.10 Judgment. If a final judgment for the payment of money in excess of
One Hundred Thousand Dollars ($100,000.00) shall be rendered against either
Grantor or Guarantor and the same shall remain unpaid for a period of 60
consecutive days during which period execution shall not be effectively
stayed.
6.11 Other Real Estate. If Grantor owns real estate other than the
Mortgaged Property and the Arizona Property.
6.12 Dissolution. The dissolution, termination or death, as may be
applicable, of Grantor, Guarantor or any of their respective general
partners.
6.13 Distribution from Reserve Account. The distribution, loan or other
cash transfer to Grantor's partners (general and/or limited), Guarantor or
any of their affiliates in contravention of the terms of Section 5.1.21
above, and the failure to repay same within ten (10) days of such occurrence.
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Article 7
DEFAULT AND FORECLOSURE
7.1 Remedies. If an Event of Default shall occur, Beneficiary may, at its
option, by or through Trustee or otherwise, exercise one or more or all of
the following remedies:
7.1.1 Acceleration. Declare the unpaid portion of the Indebtedness to be
immediately due and payable, without further notice or demand (each of which
hereby is expressly waived by Grantor), whereupon the same shall become
immediately due and payable.
7.1.2 Operation of Mortgaged Property. Hold, lease, operate or otherwise
use or permit the use of the Mortgaged Property, or any portion thereof, in
such manner, for such time and upon such terms as Beneficiary may deem to be
in its best interest (making such repairs, alterations, additions and
improvements thereto, from time to time, as Beneficiary shall deem necessary
or desirable) and collect and retain all earnings, rents, profits or other
amounts payable in connection therewith.
7.1.3 Judicial Proceedings. Institute proceedings for the complete or
partial foreclosure of this Deed of Trust or take such steps to protect and
enforce its rights whether by action, suit or proceeding in equity or at law
for the specific performance of any covenant, condition or agreement in the
Note or in this Deed of Trust (without being required to foreclose this Deed
of Trust), or in aid of the execution of any power herein granted, or for any
foreclosure hereunder, or for the enforcement of any oth er appropriate legal
or equitable remedy or otherwise as Beneficiary shall elect.
7.1.4 Sale of Mortgaged Property. Cause the Mortgaged Property and all
estate, right, title and interest, claim and demand therein, or any part
thereof to be sold as follows:
Upon the occurrence of an Event of Default the Trustee, or his successor or
substitute, is authorized and empowered and it shall be his special duty at
the request of Beneficiary to sell the Mortgaged Property or any part thereof
situated within the State of Texas at the courthouse door of any county in
the State of Texas in which any part of the Mortgaged Property is situated,
at public vendue to the highest, bidder for cash between the hours of ten
o'clock a.m. and four o'clock p.m., but not later than t hree hours after the
earliest time at which sale will begin as set forth in the notice, on the
first Tuesday in any month after having given notice of such sale in
accordance with the statutes of the State of Texas then in force governing
sales of real estate under powers conferred by deed of trust. Any sale made
by the Trustee hereunder may be as an entirety or in such parcels as
Beneficiary may request, and any sale may be adjourned by announcement at the
time and place appointed for such sale without further notice except as may
be required by law. The sale by the Trustee of less than the whole of the
Mortgaged Property shall not exhaust the power of sale herein granted, and
the Trustee is specifically empowered to make successive sale or sales under
such power until the whole of the Mortgaged Property shall be sold; and if
the proceeds of such sale of less than the whole of the Mortgaged Property
shall be less than the aggregate of the Secured Indebtedness secured hereby
and the expense of executing this trust as provided herein, this Deed of
Trust and the lien hereof shall remain in full force and effect as to the
unsold portion of the Mortgaged Property just as though no sale had been
made; provided, however, that Grantor shall never have any right to require
the sale of less than the whole of the Mortgaged Property but Beneficiary
shall have the right, at its sole election, to request the Trustee to sell
less than the whole of the Mortgaged Property. After each sale, the Trustee
shall make to the purchaser or purchasers at such sale good and sufficient
conveyances in the name of Grantor, conveying the property so sold to the
purchaser or purchasers in fee simple with general warranty of title binding
upon the Grantor but not upon the Trustee or Beneficiary, and shall receive
the proceeds of said sale or sales and apply the same as
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herein provided. The power of sale granted herein shall not be exhausted by
any sale held hereunder by the Trustee or his substitute or successor, and
such power of sale may be exercised from time to time and as many times as
Beneficiary may deem necessary until all of the Mortgaged Property has been
duly sold and all Secured Indebtedness has been fully paid. In the event any
sale hereunder is not completed or is defective in the opinion of Beneficiary,
such sale shall not exhaust the power of sale hereunder and Beneficiary shall
have the right to cause a subsequent sale or sales to be made hereunder. Any
and all statements of fact or other recitals made in any deed or deeds given
by the Trustee or any successor or substitute appointed hereunder as to the
occurrence of an Event of Default or the nonpayment of the Secured
Indebtedness or as to Beneficiary having declared all of said indebtedness to
be due and payable, or as to the request to sell, or as to notice of time,
place and terms of sale and the property to be sold having been duly given, or
as to the refusal, failure or inability to act of the Trustee, substitute or
successor, or of the appointment of a substitute Trustee, shall be taken as
prima facie evidence of the truth of the facts so stated and recited. The
Trustee or his successor or substitute may appoint or delegate to the extent
permitted by law any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by the Trustee, including the posting
of notices and the conduct of sale, but in the name and on behalf of the
Trustee, his successor or substitute. If the Trustee or his successor or
substitute shall have given notice of sale hereunder, any successor or
substitute Trustee thereafter appointed may complete the sale and the
conveyance of the property pursuant thereto as if such notice had been given
by the successor or substitute Trustee conducting the sale.
7.1.5 Receiver. Beneficiary shall be entitled, as a matter of strict right,
without notice and ex parte, and without regard to the value or occupancy of
the security, or the solvency of the Grantor or of Guarantor, or the adequacy
of the Mortgaged Property as security for the Note, to have a receiver
appointed to enter upon and take possession of the Mortgaged Property,
collect the Rents and profits therefrom and apply the same as the court may
direct, such receiver to have all the rights and powers permitted under the
laws of the jurisdiction in which the Mortgaged Property is located. Grantor
hereby waives any requirements on the receiver or Beneficiary to post any
surety or other bond. Beneficiary or the receiver may also take possession
of, and for these purposes use, any and all Personalty which is a part of the
Mortgaged Property and used by Grantor in the rental or leasing thereof, or
any part thereof. The expense, (including the receiver's fees, counsel fees,
costs and agent's compensation) incurred pursuant to the powers herein
contained shall be secured by this Deed of Trust. Beneficiary shall (after
payment of all costs and expenses incurred) apply such Rents, issues and
profits received by it on the Indebtedness in the order set forth in Section
7.7 hereof. The right to enter and take possession of the Mortgaged
Property, to manage and operate the same, and to collect the Rents, issues
and profits thereof, whether by receiver or otherwise, shall be cumulative to
any other right or remedy hereunder or afforded by law, and may be exercised
concurrently therewith or independently thereof. Beneficiary shall be liable
to account only for such Rents, issues and profits actually received by
Beneficiary.
7.1.6 Additional Rights and Remedies. With or without notice, and without
releasing Grantor from the Indebtedness or Obligations, and without becoming
a mortgagee in possession, Beneficiary and Trustee shall have the right to
cure any breach or default of Grantor and, in connection therewith, to enter
upon the Mortgaged Property and to do such acts and things as Beneficiary or
Trustee deem necessary or desirable to protect the security hereof including,
but without limitation, to appear in and defend any action or proceedings
purporting to affect the security hereof or the rights or powers of
Beneficiary or Trustee hereunder; to pay, purchase, contest or compromise any
encumbrance, charge, lien or claim of lien which, in the judgment of either
Beneficiary or Trustee, is prior or superior hereto, the judgment of
Beneficiary or Trustee being conclusive as between the parties hereto; to
obtain insurance; to pay any premiums or charges with respect to insurance
required to be carried hereunder; and to employ counsel, accountants,
contractors and other appropriate persons to assist them.
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7.1.7 Beneficiary as Purchaser. Beneficiary shall have the right to become
the purchaser at any sale held by the Trustee or by any court, receiver or
public officer, and Beneficiary shall have the right to credit upon the
amount of the bid made therefor, the amount of Indebtedness payable to it out
of the net proceeds of such sale. Beneficiary upon any such purchase, shall
acquire good title to the Mortgaged Property so purchased, free from the lien
of this Deed of Trust and free of all rights of redemption, if any, in
Grantor. Recitals contained in any conveyance made to any purchaser at any
sale made hereunder shall presumptively establish the truth and accuracy of
the matters therein stated, including, without limiting the generality of the
foregoing, nonpayment of the unpaid principal sum of, and the interest
accrued on, the Note after the same have become due and payable,
advertisement and conduct of such sale in the manner provided herein or
appointment of any successor Trustee hereunder; and Grantor does hereby
ratify and confirm any and all acts that said Beneficiary or its successors
may lawfully do in the premises by virtue of the terms and conditions of this
instrument.
7.1.8 Receipt to Purchaser. Upon any sale, whether made under the power of
sale herein granted and conferred or by virtue of judicial proceedings, the
receipt of the Trustee, or of the officer making sale under judicial
proceedings, shall be sufficient discharge to the purchaser or purchasers at
any sale for his or their purchase money, and such purchaser or purchasers,
his or their assigns or personal representatives, shall not, after paying
such purchase money and receiving such receipt of the Trustee or of such
officer therefor, be obliged to see to the application of such purchase
money, or be in anywise answerable for any loss, misapplication or
nonapplication thereof.
7.1.9 Effect of Sale. Any sale or sales of the Mortgaged Property, whether
under the power of sale herein granted and conferred or by virtue of judicial
proceedings, shall operate to divest all right, title, interest, claim, and
demand whatsoever either at law or in equity, of Grantor of, in, and to the
premises and the property sold, and shall be a perpetual bar, both at law and
in equity, against Grantor, Grantor's successors, and against any and all
persons claiming or who shall thereafter claim all or any of the property
sold from, through or under Grantor, or Grantor's successors or assigns;
nevertheless, Grantor, if requested by the Trustee so to do, shall join in
the execution and delivery of all proper conveyances, assignments and
transfers of the properties so sold.
7.1.10 Remedies Under UCC. Upon the occurrence of an Event of Default,
Beneficiary may exercise its rights of enforcement, if they can be exercised
without a breach of the peace, with respect to the Personalty and/or the
Fixtures under the applicable provisions of the Uniform Commercial Code as
enacted in the State of Texas, and/or under other applicable Texas law, and
in conjunction with, in addition to or in substitution for those rights and
remedies:
(a) Beneficiary may enter upon Grantor's premises to take possession of,
assemble and collect the Personalty and/or Fixtures and any and all books
related to the Mortgaged Property; and
(b) Beneficiary may require Grantor to assemble the Personalty and/or
Fixtures and make same available at a place Beneficiary designates which
is mutually convenient to allow Beneficiary to take possession or dispose
of the Personalty and/or Fixtures; and
(c) Written notice mailed to Grantor as provided herein at least five (5)
days prior to the date of public sale of the Personalty and/or Fixtures or
prior to the date after which private sale of the Personalty and/or
Fixtures will be made shall constitute reasonable notice; and
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(d) Any sale made pursuant to the provisions of this Subsection shall be
deemed to have been a public sale conducted in a commercially reasonable
manner if held contemporaneously with and upon the same notice as required
for the sale of the Mortgaged Property under power of sale as provided in
Subsection 7.1.4 of this Deed of Trust; and
(e) In the event of a foreclosure sale, whether made by the Trustee under
the terms hereof, or under judgment of a court, the Mortgaged Property
may, at the option of Beneficiary, be sold as a whole; and
(f) It shall not be necessary that Beneficiary take possession of the
Personalty and/or Fixtures or any part thereof prior to the time that any
sale pursuant to the provisions of this section is conducted and it shall
not be necessary that the Personalty and/or Fixtures or any part thereof
be present at the location of such sale; and
(g) Prior to application of proceeds of disposition of the Personalty
and/or Fixtures to the Indebtedness, such proceeds shall be applied to the
reasonable expenses of retaking, holding, preparing for sale or lease,
selling, leasing and the like and the reasonable attorneys' fees and legal
expenses incurred by Beneficiary; and
(h) Any and all statements of fact or other recitals made in any bill of
sale or assignment or other instrument evidencing any foreclosure sale
hereunder as to nonpayment of the Indebtedness or as to the occurrence of
any Event of Default, or to Beneficiary having declared all of such
Indebtedness to be due and payable, or as to notice of time, place and
terms of sale and of the Mortgaged Property to be sold having been duly
done by Beneficiary, shall be taken as prima facie evidence of the truth
of the facts so stated and recited; and
(i) Beneficiary 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
Beneficiary, including the sending of notices and the conduct of the sale,
but in the name and on behalf of Beneficiary.
7.1.11 Entry on and Operation of Property by the Trustee. Upon the
occurrence of an Event of Default and in addition to all other rights herein
conferred on the Trustee, the Trustee (or any person, firm or corporation
designated by the Trustee) shall have the right and power, but shall not be
obligated, to enter upon and take possession of any of the Mortgaged
Property, and of all books, records, and accounts relating thereto and to
exclude Grantor, and Grantor's agents or servants, wholly therefrom, and to
hold, lease, operate, use, administer, manage, and operate the same to the
extent that Grantor shall be at the time entitled and in his place and stead
for such time, and upon such terms as Beneficiary may deem to be in its best
interest (making such repairs, alterations, additions, and improvements
thereto, from time to time, as Beneficiary shall deem necessary or desirable)
and collect and retain all earnings, rents, profits, or other amounts payable
in connection therewith. The Trustee, or any person, firm or corporation
designated by the Trustee, may operate the same without any liability to
Grantor in connection with such operations, except to use ordinary care in
the operation of said properties, and the Trustee or any person, firm or
corporation designated by them, shall have the right to collect, receive and
receipt for all Rents from the Mortgaged Property, to make repairs, purchase
machinery and equipment, and to exercise every power, right and privilege of
Grantor with respect to the Mortgaged Property. All costs, expenses and
liabilities of every character incurred by the Trustee or Beneficiary in
managing, operating, maintaining, protecting or preserving the Mortgaged
Property, respectively, shall constitute a demand obligation owing by Grantor
to Beneficiary and shall bear interest from date of expenditure until paid at
the same rate as is provided in the Note for interest on past due principal,
all of which shall constitute a portion of the Indebtedness and shall be
secured by this Deed of Trust and by any other instrument securing the
Indebtedness.
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If necessary to obtain the possession provided for above, the Trustee or
Beneficiary, as the case may be, may invoke any and all remedies to dispossess
Grantor including specifically one or more actions for forcible entry and
detainer, trespass to try title and restitution. When and if the expenses of
such operation have been paid and the Indebtedness paid, the Mortgaged
Property shall, if there has been no sale or foreclosure, be returned to
Grantor.
7.1.12 Change in Laws. If any statute now applicable in any state in which
any of the Mortgaged Property is now located provides, or shall hereafter be
amended to provide, a different procedure for the sale of real property under
a power of sale in a deed of trust or mortgage, Beneficiary may, in its sole
discretion, if same be permitted by applicable law, follow the sale procedure
set forth in this Article VII or that prescribed in such statute, as amended.
7.1.13 Other. Exercise any other remedy specifically granted under the
Security Documents or the Guaranty, or now or hereafter existing in equity,
at law, by virtue of statute or otherwise, including the rights described
below.
7.2 Separate Sales. Any real estate or any interest or estate therein sold
pursuant to any writ of execution issued on a judgment obtained by virtue of
the Note, this Deed of Trust or the other Security Documents, or pursuant to
any other judicial proceedings under this Deed of Trust or any other deed of
trust, or pursuant to the power of sale granted herein, may be sold in one
parcel, as an entirety or in such parcels, and in such manner or order as
Beneficiary, in its sole discretion, may elect.
7.3 Remedies Cumulative and Concurrent. The rights and remedies of
Beneficiary as provided in the Note, this Deed of Trust, the Guaranty and in
the Security Documents shall be cumulative and concurrent and may be pursued
separately, successively or together against Grantor or Guarantor or against
other obligors or against the Mortgaged Property, or any one or more of them,
at the sole discretion of Beneficiary, and may be exercised as often as
occasion therefor shall arise. The failure to exercise any such right or
remedy shall in no event be construed as a waiver or release thereof, nor
shall the choice of one remedy be deemed an election of remedies to the
exclusion of other remedies.
7.4 No Cure or Waiver. Neither Beneficiary's nor Trustee's nor any
receiver's entry upon and taking possession of all or any part of the
Mortgaged Property nor any collection of rents, issues, profits, insurance
proceeds, condemnation proceeds or damages, other security or proceeds of
other security, or other sums, nor the application of any collected sum to
any Indebtedness and Obligations, nor the exercise of any other right or
remedy by Beneficiary or Trustee or any receiver shall impair the status of
the security, or cure or waive any default or notice of default under this
Deed of Trust, or nullify the effect of any notice of default or sale (unless
all Indebtedness and Obligations which are then due have been paid and
performed and Grantor has cured all other defaults), or prejudice Beneficiary
or Trustee in the exercise of any right or remedy, or be construed as an
affirmation by Beneficiary of any tenancy, lease or option or a subordination
of the lien of this Deed of Trust.
7.5 Payment of Costs, Expenses and Attorneys' Fees. Grantor agrees to pay
to Beneficiary immediately and without demand all costs and expenses incurred
by Trustee and Beneficiary in exercising the remedies under the Note, the
Guaranty and the Security Documents (including, but without limitation, court
costs and reasonable attorneys' fees, whether incurred in litigation or not)
with interest at the Default Interest Rate from the date of expenditure until
said sums have been paid. Beneficiary shall be entitled to bid, at the sale
of the Mortgaged Property held pursuant to the power of sale granted herein
or pursuant to any judicial foreclosure of this instrument, the amount of
said costs, expenses and interest in addition to the amount of the other
Indebtedness and Obligations as a credit bid, the equivalent of cash.
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7.6 Grantor's Waiver of Appraisement, Marshalling, Other Rights. Grantor
agrees, to the full extent that Grantor may lawfully so agree, that Grantor
will not at any time insist upon or plead or in any manner whatsoever claim
the benefit of any appraisement, valuation, stay, extension or redemption law
now or hereafter in force, in order to prevent or hinder the enforcement or
foreclosure of this instrument or the absolute sale of the Mortgaged Property
or the possession thereof by any purchaser at any sale made pursuant to any
provision hereof, or pursuant to the decree of any court of competent
jurisdiction; but Grantor, for Grantor and all who may claim through or under
Grantor, so far as Grantor or those claiming through or under Grantor now or
hereafter lawfully may, hereby waives the benefit of all such laws. Grantor,
for Grantor and all who may claim through or under Grantor, waives to the
extent that Grantor may lawfully do so, any and all right to have the
Mortgaged Property marshalled upon any foreclosure of the lien hereof, or
sold in inverse order of alienation, and agrees that the Trustee or any court
having jurisdiction to foreclose such lien may sell the Mortgaged Property as
an entirety. If any law in this section referred to and now or hereafter in
force, of which Grantor or Grantor's successor or successors might take
advantage despite the provisions hereof, shall hereafter be repealed or cease
to be in force, such law shall not thereafter be deemed to constitute any
part of the contract he rein contained or to preclude the operation or
application of the provisions of this section.
7.7 Application of Proceeds. The proceeds of any sale of all or any portion
of the Mortgaged Property and the amounts generated by any holding, leasing,
operation or other use of the Mortgaged Property shall be applied by
Beneficiary in the following order:
(a) first, to the payment of the Exit Fee, if any, owing under the Note
or the Security Documents;
(b) second, to the payment of prepayment premiums, if any, owing under
the Note or the Security Documents;
(c) third, to the payment of late charges, if any, owing under the Note
or the Security Documents;
(d) fourth, to the payment of the costs and expenses of taking possession
of the Mortgaged Property and of holding, using, leasing, repairing,
improving and selling the same (including without limitation payment of
any Impositions or other taxes);
(e) fifth, to the extent allowed by law, to the payment of attorneys'
fees and other legal expenses, including expenses and fees incurred on
appeals, and legal expenses and fees of a receiver;
(f) sixth, to the payment of accrued and unpaid interest on the
Indebtedness; and
(g) seventh, to the payment of the balance of the Indebtedness. The
balance, if any, shall be paid to the parties entitled to receive it under
applicable law.
7.8 Strict Performance. Any failure by Beneficiary to insist upon strict
performance by Grantor or Guarantor of any of the terms and provisions of the
Security Documents, the Guaranty or of the Note shall not be deemed to be a
waiver of any of the terms or provisions of the Security Documents, the
Guaranty or the Note and Beneficiary shall have the right thereafter to
insist upon strict performance by Grantor or Guarantor of any and all of
them.
7.9 No Conditions Precedent to Exercise of Remedies. Neither Grantor nor
any other person now or hereafter obligated for payment of all or any part of
the
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Indebtedness (including Guarantor) shall be relieved of such obligation
by reason of the failure of Beneficiary to comply with any request of Grantor
or Guarantor or of any other person so obligated to take action to foreclose
on this Deed of Trust or otherwise enforce any provisions of the Security
Documents, the Guaranty or the Note, or by reason of the release, regardless
of consideration, of all or any part of the security held for the
Indebtedness, or by reason of any agreement or stipulation between any
subsequent owner of the Mortgaged Property and Beneficiary extending the time
of payment or modifying the terms of the Security Documents or Note without
first having obtained the consent of Grantor, Guarantor or such other person;
and in the latter event Grantor, Guarantor and all such other persons shall
continue to be liable to make payment according to the terms of any such
extension or modification agreement, unless expressly released and discharged
in writing by Beneficiary.
7.10 Release of Collateral. Beneficiary may release, regardless of
consideration, any part of the security held for the Indebtedness or
Obligations without, as to the remainder of the security, in any way
impairing or affecting the liens of the Security Documents or their priority
over any subordinate lien. Without affecting the liability of Grantor,
Guarantor or any other person (except any person expressly released in
writing), for payment of any Indebtedness secured hereby or for performance
of any Obligations contained herein, and without affecting the rights of
Beneficiary with respect to any security not expressly released in writing,
Beneficiary may, at any time and from time to time, either before or after
maturity of said Note, and without notice or consent: (a) release any person
liable for payment of all or any part of the Indebtedness or for performance
of any Obligations; (b) make any agreement extending the time or otherwise
altering terms of payment of all or any part of the Indebtedness, or
modifying or waiving any Obligation, or subordinating, modifying or otherwise
dealing with the lien or charge hereof; (c) exercise or refrain from
exercising or waive any right Beneficiary may have; (d) accept additional
security of any kind; (e) release or otherwise deal with any property, real
or personal, securing the Indebtedness, including all or any part of the
Mortgaged Property.
7.11 Other Collateral. For payment of the Indebtedness, Beneficiary may
resort to any other security therefor held by Beneficiary in such order and
manner as Beneficiary may elect.
7.12 Discontinuance of Proceedings. In the event Beneficiary shall have
proceeded to enforce any right under the Note, the Guaranty or the Security
Documents and such proceedings shall have been discontinued or abandoned for
any reason, then in every such case Grantor, Guarantor and Beneficiary shall
be restored to their former positions and the rights, remedies and powers of
Beneficiary shall continue as if no such proceedings had been taken.
7.13 Release of Liability or Personalty. Without affecting the liability of
any person (other than any person released pursuant to the provisions of this
section) for payment of any Indebtedness secured hereby, and without
affecting or impairing in any way the priority or extent of the liens of the
Loan Documents upon any property not specifically released pursuant hereto,
Beneficiary may at any time and from time to time (a) release any person
liable for payment of any Indebtedness secured hereby; (b) extend the time
or agree to alter the terms of payment of any of the Indebtedness; (c) accept
additional security of any kind; (d) release any property securing the
Indebtedness; or (e) consent to the creation of any easement on or over the
Mortgaged Property or any covenants restricting the use or occupancy thereof.
7.14 Other Collateral. For payment of the Indebtedness, Beneficiary may
resort to any other security therefor held by Beneficiary in such order and
manner as Beneficiary may elect.
7.15 Prepayment Premium. Grantor shall have no right to voluntarily prepay
the principal amount of the Note, in whole or in part, except as set forth in
the Note.
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Article 8
CONDEMNATION
8.1 Condemnation. Grantor hereby assigns, transfers and sets over to
Beneficiary all rights of Grantor to any Awards or payment in respect of (a)
any taking of all or a portion of the Mortgaged Property as a result of, or
by agreement in anticipation of, the exercise of the right of condemnation or
eminent domain; (b) any such taking of any appurtenances to the Mortgaged
Property or of vaults, areas or projections outside the boundaries of the
Mortgaged Property, or rights in, under or above the alleys, streets or
avenues adjoining the Mortgaged Property, or rights and benefits of light,
air, view or access to said alleys, streets, or avenues or for the taking of
space or rights therein, below the level of, or above the Mortgaged Property;
and (c) any damage to the Mortgaged Property or any part thereof due to
governmental action, but not resulting in, a taking of any portion of the
Mortgaged Property, such as, without limitation, the changing of the grade of
any street adjacent to the Mortgaged Property. Grantor hereby agrees to file
and prosecute its claim or claims for any such award or payment in good faith
and with due diligence and cause the same to be collected and paid over to
Beneficiary, and hereby irrevocably authorizes and empowers Beneficiary, in
the name of Grantor or otherwise, to collect and receipt for any such award
or payment and, in the event Grantor fails to act, or in the event that an
Event of Default has occurred and is continuing, to file and prosecute such
claim or claims. Notwithstanding the foregoing, to the extent (i) such
condemnation proceeds for the affected Apartment Project (as herein defined)
do not exceed $25,000 in the aggregate, and (ii) the operations of the
Mortgaged Property are not materially impaired (e.g., such condemnation has
no material negative impact on the generation of income of the Mortgaged
Property, such as the condemnation only affects landscaping) as a result of
such condemnation, Grantor may utilize such proceeds to restore the Mortgaged
Property to its pre-condemnation condition.
8.2 Application of Proceeds. All proceeds received by Beneficiary with
respect to a taking of all or any part of the Mortgaged Property or with
respect to damage to all or any part of the Mortgaged Property from
governmental action not resulting in a taking of the Mortgaged Property,
shall be applied as follows, in the order of priority indicated:
(a) first, to the payment of the Exit Fee, if any, owing under the Note
or the Security Documents;
(b) second, to the payment of prepayment premiums, if any, owing under
the Note or the Security Documents;
(c) third, to the payment of late charges, if any, owing under the Note
or the Security Documents;
(d) fourth, to the payment of the costs and expenses including reasonable
attorneys' fees incurred in connection with collecting the sale proceeds;
(e) fifth, to the extent allowed by law, to the payment of attorneys fees
and other legal expenses, including expenses and fees incurred on appeals,
and legal expenses and fees of a receiver;
(f) sixth, to the payment of accrued and unpaid interest on the
Indebtedness; and
(g) seventh, to the payment of the balance of the Indebtedness. The
balance, if any, shall be paid to the parties entitled to receive it under
applicable law.
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Article 9
MISCELLANEOUS
9.1 Further Assurances. Grantor, upon the reasonable written request of
Beneficiary, will execute, acknowledge and deliver, or arrange for the
execution, acknowledgment and delivery of, such further instruments
(including, without limitation, financing statements, estoppel certificates
and declarations of no set-off, attornment agreements and acknowledgments of
the Assignment) and do such further acts as may be reasonably necessary,
desirable or proper to carry out more effectively the purpose of the Security
Documents, to facilitate the assignment or transfer of the Note, the Security
Documents, the Indemnity Agreement and the Guaranty and to subject to the
liens of the Security Documents any property intended by the terms thereof to
be covered thereby, and any renewals, additions, substitutions, replacements
or betterments thereto. Upon any failure of Grantor to execute and deliver
such instruments, certificates and other documents on or before fifteen (15)
days after receipt of written request therefor, Beneficiary may make, execute
and record any and all such instruments, and certificates and Grantor
irrevocably appoints Beneficiary the agent and attorney-in-fact of Grantor to
do so.
9.2 Recording and Filing. Grantor, at its expense, will cause the Security
Documents, all supplements thereto and any financing statements at all times
to be recorded and filed and re-recorded and re-filed in such manner and in
such places as Beneficiary shall reasonably request, and will pay all such
recording, filing, re-recording and re-filing taxes, fees and other charges.
9.3 Notice. All notices, demands, requests and other communications
required under the Security Documents and the Note shall be in writing and
shall be deemed effective upon mailing by U.S. certified or registered mail,
postage prepaid (or to the extent permitted by applicable law, overnight
courier service), addressed to the party, for whom it is intended at the
Grantor's Address or the Trustee's Address, as the case may be, or in the
case of notices to Beneficiary, to Beneficiary at the Beneficiary's Address
and to 733 Front Street, San Francisco, California 94111, Attention:
President, Real Estate Financing. Any party may designate a change of
address by written notice to the other, given at least 10 business days
before such change of address is to become effective. Grantor may, from time
to time, change the address to which notice of default and notice of sale
hereunder shall be sent by both recording a request therefor and sending a
copy of such request to Beneficiary.
9.4 Beneficiary's Right to Perform the Obligations. If Grantor shall fail
to make any payment or perform any act required by the Note or the Security
Documents, then, at any time thereafter, without notice to or demand upon
Grantor and without waiving or releasing any obligation or default,
Beneficiary may make such payment or perform such act for the account of and
at the expense of Grantor, and shall have the right to enter the Mortgaged
Property for such purpose and to take all such action thereon and with
respect to the Mortgaged Property as may be necessary or appropriate for such
purpose. All sums so paid by Beneficiary, and all costs, and expenses,
including, without limitation, reasonable attorneys' fees and expenses so
incurred together with interest thereon at the Default Interest Rate, from
the date of payment or incurring, shall constitute additions to the
Indebtedness secured by the Security Documents, and shall be paid by Grantor
to Beneficiary, on demand. If Beneficiary shall elect to pay any
Imposition, Beneficiary may do so in reliance on any bill, statement or
assessment procured from the appropriate public office, without inquiring
into the accuracy thereof or into the validity of such Imposition. Grantor
shall indemnify Beneficiary for all losses and expenses, including reasonable
attorneys' fees, incurred by reason of any acts performed by Beneficiary
pursuant to the provisions of this Section 9.4 or by reason of the Security
Documents or the Guaranty, and any funds expended by Beneficiary to which it
shall be entitled to be indemnified, together with interest thereon at the
Default Interest Rate from the date of such
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expenditures, shall constitute additions to the Indebtedness and shall be
secured by the Security Documents and shall be paid by Grantor to Beneficiary
upon demand.
9.5 Covenants Running with the Land. All covenants contained in the
Security Documents shall run with the Mortgaged Property until the liens and
security interest created hereby are released by Beneficiary.
9.6 Severability. In case any one or more of the Obligations shall be
invalid, illegal or unenforceable in any respect, the validity of the Note,
this Deed of Trust, the Security Documents, the Indemnity Agreement and
remaining Obligations shall be in no way affected, prejudiced or disturbed
thereby.
9.7 Modification. The Security Documents and the terms of each of them may
not be changed, waived, discharged or terminated orally, but only by an
instrument or instruments in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is asserted.
9.8 Non-Assumable. The loan evidenced by the Note and secured by this Deed
of Trust is personal to Grantor, and Beneficiary made such loan to Grantor,
based upon the credit of Grantor and Guarantor and Beneficiary's judgment of
the ability of Grantor to repay the entire Indebtedness and therefore this
Deed of Trust may not be assumed by any subsequent holder of an interest in
the Mortgaged Property without Beneficiary's prior written consent. This
Section 9.8 is subject to the terms of Section 6.9 hereof . Beneficiary
shall notify Grantor promptly in writing of any transaction or event
described in Section 6.9 hereof.
9.9 Tax on Indebtedness or Deed of Trust. In the event of the passage,
after the date of this Deed of Trust, of any law deducting from the value of
land for the purposes of taxation, any lien thereon, or imposing upon
Beneficiary the obligation to pay the whole, or any part, of the taxes or
assessments or charges or liens herein required to be paid by Grantor, or
changing in any way the laws relating to the taxation of deeds of trust,
mortgages or debts as to affect this Deed of Trust or the Indebtedness, the
entire unpaid balance of the Indebtedness shall, at the option of
Beneficiary, after thirty (30) days written notice to Grantor, become due and
payable; provided, however, that if, in the opinion of Beneficiary's counsel,
it shall be lawful for Grantor to pay such taxes, assessments, or charges, or
to reimburse Beneficiary therefor, then there shall be no such acceleration
of the time for payment of the unpaid balance of the Indebtedness if a
mutually satisfactory agreement for reimbursement, in writing, is executed
by Grantor and delivered to Beneficiary within the aforesaid period.
9.10 Maximum Rate of Interest. All agreements between Grantor and
Beneficiary, whether now existing or hereafter arising and whether written or
oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of the maturity of the Note or
otherwise, shall the amount paid, or agreed to be paid to Beneficiary for the
use, forbearance, or detention of the money to be loaned under the Note or
otherwise or for the payment or performance of any covenant or obli gation
contained herein or in the Note, exceed the Maximum Rate. The term "Maximum
Rate" as used herein shall mean the higher of the maximum interest rate
allowed by applicable United States or Texas law as amended from time to
time, in effect on the date for which a determination of interest accrued
hereunder is made. The determination of the maximum rate permitted by
applicable Texas law shall be made pursuant to the indicated rate ceiling as
defined in Tex. Rev. Civ. Stat. Ann. art. 5069-1.04. If from any
circumstances whatsoever fulfillment of any provision hereof or of any such
other documents, at the time performance of such provisions shall be due,
shall involve transcending the limit of validity prescribed by applicable
usury law, ipso facto, the obligation to be fulfilled shall be reduced to the
limit of such validity, and if from any such circumstance, Beneficiary shall
have ever received interest or anything which might be deemed interest under
applicable law which would exceed the Maximum Rate, such amount which would
be excessive interest shall be applied
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to the reduction of the principal amount owing on account of the Note or the
amounts owing on other obligations of Grantor to Beneficiary hereunder and not
to the payment of interest, or if such excessive interest exceeds the unpaid
balance of the principal of the Note and the amounts owing on other
obligations of Grantor to Beneficiary hereunder as the case may be, such
excess shall be refunded to Grantor. All sums paid or agreed to be paid to
Beneficiary for the use, forbearance or detention of the Indebtedness of
Grantor to Beneficiary shall, to the extent permitted by applicable law, (i)
be amortized, prorated, allocated and spread throughout the full term of such
Indebtedness until payment in full so that the actual rate of interest on
account of such Indebtedness does not exceed the Maximum Rate throughout the
term thereof, (ii) be characterized as a fee, expense or other charge other
than interest, and/or (iii) exclude any voluntary prepayments and the effects
thereof.
9.11 Survival of Warranties and Covenants. The warranties, representations,
covenants and agreements set forth in the Security Documents shall survive
the making of the loan and the execution and delivery of the Note, and shall
continue in full force and effect until the Indebtedness shall have been paid
in full, except such obligations as specified in Section 5.1.10 and 5.1.16
hereof which shall survive.
9.12 APPLICABLE LAW. THE LOAN DOCUMENTS AND THE SECURITY DOCUMENTS,
INCLUDING, WITHOUT LIMITATION, THIS DEED OF TRUST, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
9.13 Tax and Insurance Escrow. Upon the occurrence of an Event of Default
(whether or not cured as may be permitted herein), Beneficiary shall have the
option to require Grantor to pay Beneficiary, on each of the monthly due
dates of interest payments, as set forth in the Note, an amount equal to
one-twelfth of the annual (i) Impositions and (ii) insurance premiums for
such insurance as is required hereunder. Grantor shall also pay into such
account such additional amounts, to be determined by Beneficiary from time
to time, as will provide a sufficient fund, at least thirty days prior to the
due dates of the next installment of such Impositions and premiums, for
payment of such Impositions and premiums so as to realize the maximum
discounts permitted by law. Amounts held hereunder by Beneficiary shall be
non-interest bearing and may be commingled with Beneficiary's other funds.
Upon assignment of this Deed of Trust, Beneficiary shall have the right to
pay over the balance of such amounts then in its possession to the assignee
and Beneficiary shall thereupon be completely released from all liability
with respect to such amounts. Upon full payment of the Indebtedness, or, at
the election of Beneficiary at any prior time, the balance of such amounts
shall be paid over to Grantor and no other party shall have any right or
claim thereto. Amounts held by Beneficiary pursuant to this Section 9.13
shall (a) be made available to Grantor in sufficient time to allow Grantor to
satisfy Grantor's obligations under th e Security Documents to pay
Impositions and required insurance premiums, within the maximum discount
period, where applicable and (b) not bear interest.
9.14 Loan Expenses. Grantor shall pay all costs and expenses in connection
with the preparation, execution, delivery and performance of the Note, the
Guaranty, the Indemnity Agreement and the Security Documents and the
transactions contemplated thereby, including (but not limited to) costs and
fees incurred by Beneficiary's independent inspector, reasonable fees and
disbursements of its and Beneficiary's counsel, broker's fees, costs and
expenses of procuring any environmental audits required to be procured by
Grantor, recording costs and expenses, conveyance fees, documentary stamp,
intangible and other taxes, and costs and expenses of surveys, appraisals and
policies of title insurance, physical damage insurance, and liability
insurance. Grantor shall also pay any and all expenses associated with any
future amendment and modifications to the Loan.
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9.15 Substitution of Trustee. Beneficiary may appoint a substitute or
successor trustee or trustees in place of the Trustee or Trustees, with or
without any reason, and without other formality than a designation in writing
of a substitute or successor. Beneficiary may exercise this irrevocable
appointment power at any time without specifying any reason therefor. The
power of appointment of a successor Trustee or Trustees may be exercised as
often as and whenever the Beneficiary may choose, and the exerc ise of the
power of appointment, no matter how often, shall not be an exhaustion
thereof. Whenever in this Deed of Trust reference is made to the Trustee or
Trustees, it shall be construed to mean the Trustee or Trustees for the time
being, whether original or successors or successor in trust; and all title,
estate, rights, powers, trusts, and duties hereunder given or appertaining to
or devolving upon the Trustee or Trustees shall be in each of the Trustees so
that any action hereunder or purporting to be hereunder of any one of the
original or any successor Trustees shall for all purposes be considered to
be, and as effective as, the action of all the Trustees.
9.16 No Representations by Beneficiary. By accepting or approving anything
required to be observed, performed or fulfilled or to be given to
Beneficiary, pursuant to the Security Documents, including (but not limited
to) any officer's certificate, survey, appraisal or insurance policy,
Beneficiary shall not be deemed to have warranted or represented the
sufficiency, legality, effectiveness or legal effect of the same, or of any
term, provision or condition thereof, and such acceptance or approval thereof
shall not be or constitute any warranty or representation with respect
thereto by Beneficiary.
9.17 Acceptance of Trust. Trustee accepts the Trust created by this Deed of
Trust when this Deed of Trust, duly executed and acknowledged, is made a
public record as provided by law.
9.18 Release. Upon the payment of all sums secured hereby, Beneficiary
shall execute and deliver to Grantor a release of the lien created hereunder;
provided, however, that Beneficiary shall not be responsible for recording
same in the real property records and Grantor shall be solely responsible for
the payment of any recordation fees. The recitals in any such release of any
matters or facts contained in such release shall be conclusive proof thereof.
9.19 Compensation of Trustee. Trustee shall be entitled to reasonable
compensation for all services rendered or expenses incurred in the
administration or execution of the trusts hereby created and Grantor hereby
agrees to pay same (so long as such services are not a duplication of
attorney fees). Trustee and Beneficiary shall be indemnified, held harmless
and reimbursed by Grantor for any liability, damage or expense, including
reasonable attorneys' fees and amounts paid in settlement, which they or
either of them may incur or sustain in the execution of this trust or in the
doing of any act which they, or either of them, are required or permitted to
do by the terms hereof or by law, except as a result of their sole gross
negligence or willful misconduct.
9.20 Brokerage Commission. Any brokerage commission or finder's fee payable
in connection with the loan evidenced by the Note shall be payable by Grantor
and not by Beneficiary, and Grantor shall indemnify Beneficiary and hold
Beneficiary harmless against any claim of any broker or finder arising out of
such loan.
9.21 Headings. The article headings and the section and subsection captions
are inserted for convenience of reference only and shall in no way alter or
modify the text of such articles, sections and subsections.
9.22 No Further Agreements. In accordance with Section 26.02(a)(2) of the
Texas Business and Commerce Code, as amended, Grantor hereby acknowledges,
with respect to the Loan Documents, that:
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1. THE RIGHTS AND OBLIGATIONS OF GRANTOR AND BENEFICIARY SHALL BE
DETERMINED SOLELY FROM THE WRITTEN LOAN DOCUMENTS AND ANY PRIOR ORAL
AGREEMENTS BETWEEN BENEFICIARY AND GRANTOR ARE SUPERSEDED BY AND MERGED
INTO THE LOAN DOCUMENTS.
2. THE LOAN DOCUMENTS MAY NOT BE VARIED BY ANY ORAL AGREEMENTS OR
DISCUSSIONS THAT OCCUR BEFORE, CONTEMPORANEOUSLY WITH, OR SUBSEQUENT TO
THE EXECUTION OF SUCH LOAN DOCUMENTS.
3. THE WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENTS BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
9.23 Extension of Prior Liens. If any or all of the proceeds of the Note
have been used to pay any indebtedness heretofore existing against the
Mortgaged Property, then, to the extent of such funds so used, Beneficiary
shall be subrogated to all of the rights, claims, liens, titles and interests
heretofore existing against the Mortgaged Property to secure the indebtedness
so paid and the former rights, claims, liens, titles and interests, if any,
are not waived but rather shall continue in full force and effect in favor of
Beneficiary as cumulative security for the repayment of the Indebtedness and
the satisfactions of the Obligations regardless of whether said liens or
debts are acquired by Beneficiary by assignment or are released by the holder
thereof upon payment.
9.24 Limitation of Liability. Without impairing Beneficiary's rights,
powers, privileges, liens or security interest of this Deed of Trust or any
other document existing as security for the payment of the Indebtedness,
Beneficiary agrees that, for enforcement of payment of the Note, it will look
solely to the Mortgaged Property and such other collateral, as may now or
hereafter be given to secure the payment of the Note, and no other property
or assets of Grantor or its general partner(s), except as described in this
Deed of Trust, or the Security Documents, shall be subject to levy, execution
or other enforcement procedure for the satisfaction of the remedies of
Beneficiary, or for any payment required to be made under the Note or under
this Deed of Trust or for the performance of any of the covenants or
warranties contained therein or herein; provided, however, Beneficiary may
pursue all of its rights and remedies against the property of Grantor or its
partner(s) described in the Deed of Trust, or the other Security Documents,
including, without limitation, the Mortgaged Property, to the full extent of
such rights and remedies at law or in equity including, without limitation,
all such rights and remedies as set forth in this Deed of Trust, the Note and
the other Security Documents.
The foregoing provisions of this section shall not affect in any way the
validity or enforceability of any guaranty (whether of payment and/or
performance) given to Beneficiary in connection with the loan secured hereby
or constitute a waiver by Beneficiary of any rights to damages or other
monetary relief or any other remedy at law or equity against Grantor or its
general partner(s) by reason of any one or more of the following: (1) any
loss, liability, damage, cost or expense (including reasonable attorneys'
fees) incurred or to be incurred by Beneficiary (a) from Grantor's failure to
perform its obligation to properly account to Beneficiary as mortgagee for
any proceeds of insurance or awards of condemnation as required by this Deed
of Trust, to properly apply same in accordance with the terms and provisions
of the Loan Documents, or for the misapplication or misappropriation by
Grantor of condemnation or insurance proceeds, rent or security deposits,
working capital reserves, any other project reserves or project escrows, or
any use by Grantor without the prior written consent of Beneficiary of
condemnation or insurance proceeds, rent or security deposits, working
capital reserves, any other project reserves or escrows after an Event of
Default has occurred and is continuing (provided, however, that to the extent
rents, working capital reserves, or any other project reserves or escrows are
reinvested in the Mortgaged Property or applied to the payment of the Note,
and/or to the extent that
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condemnation and insurance proceeds are applied in accordance with this Deed
of Trust, Grantor will not be liable pursuant to the terms of the foregoing
clause); or (b) because of Grantor's attempts to interfere with Beneficiary's
rights under the Assignment of Leases and Rents contained in this Deed of
Trust (other than Grantor's pursuit of its rights available at law); or (c)
because Grantor fails to apply proceeds of rents (advance, prepaid or
otherwise) and other income of the Mortgaged Property towards the costs of
maintenance and operation of the Mortgaged Property and to payment of
taxes and assessments, lien claims, insurance premiums and debt service and
other indebtedness; or (d) from Grantor's failure to pay for any loss,
liability, damage, cost or expense (including attorneys' fees) incurred by
Beneficiary in connection with either (i) any violation, directive (threatened
or otherwise), order, consent decree, settlement, judgment or verdict arising
from the presence, deposit, storage, disposal, burial, dumping, injecting,
spilling, leaking or other placement or release in, on, over, under or from the
Mortgaged Property of asbestos or a "hazardous substance" as defined in 42
U.S.C. 9601, et seq. as amended from time to time, or any other toxic or
hazardous waste or waste products, or any Hazardous Materials, or (ii) any
other cost or expense related to the environmental condition of the Mortgaged
Property which results in a diminution of value of the Mortgaged Property or
is otherwise covered by the indemnity set forth in the Indemnity Agreement; or
(e) from any fraud, material misrepresentation, material misstatement and/or
omission, or breach of representations or warranties (including, without
limitation, those related to the environmental condition of the Mortgaged
Property and those related to Grantor's title to the Mortgaged Property) of
Grantor whether contained in the Loan Documents or other writing in connection
with the Loan evidenced by the Note and the other Loan Documents; or (f)
because of Grantor's failure or refusal to pay any Impositions; or (g)
because of any waste (ordinary wear and tear excepted) committed by Grantor
with respect to the Mortgaged Property; or (h) from Grantor's failure to
purchase and maintain the insurance required by the terms of this Deed of
Trust; and/or (2) any loss, liability, damage, cost or expense (including
reasonable attorneys' fees) incurred or to be incurred by Beneficiary if and
to the extent Grantor has received rentals, security deposits, working capital
reserves, any other project reserves, project escrows, other revenues, or
other payments or proceeds in respect of the Mortgaged Property since the date
of the last payment made to Beneficiary under the Note prior to an Event of
Default, which rentals, security deposits, other revenues, or other payments
or proceeds have been misappropriated by Grantor, or so received at a time
when there were due and unpaid any ordinary and reasonable operating expenses
of the Mortgaged Property, ordinary and reasonable expenses for capital
improvements to the Mortgaged Property, debt service on the Note, real estate
taxes and assessments and insurance premiums in respect of the Mortgaged
Property, and not applied by Grantor to payment of such items. The foregoing
limitations on personal liability shall in no way impair or constitute a
waiver of the validity of the Note, the indebtedness secured by the Mortgaged
Property or the liens on, security title to, or security interests in the
Mortgaged Property or the right of Beneficiary, as beneficiary or secured
party, to foreclose and/or enforce its rights with respect to the Mortgaged
Property after an Event of Default.
Nothing herein shall be deemed to be a waiver of any right which Beneficiary
may have under the United States Bankruptcy Code to file a claim for the full
amount of the debt owing to Beneficiary by Grantor or to require that all
Mortgaged Property shall continue to secure all of the indebtedness owing to
Beneficiary in accordance with the Loan Documents. Beneficiary may seek a
judgment on the Note as part of judicial proceedings to foreclose under this
Deed of Trust or to foreclose pursuant to any other instrument securing the
indebtedness evidenced by the Note, or as a prerequisite to any such
foreclosure or to confirm any foreclosure or sale pursuant to power of sale
thereunder, and in the event any suit is brought on the Note, or with respect
to any indebtedness evidenced by the Note or secured by this Deed of Trust or
any judgment rendered in such judicial proceedings, such judgment shall
constitute a lien on and will be and can be enforced on and against the
Mortgaged Property conveyed by this Deed of Trust or any such other security
instruments and the rents, profits, issues, products and proceeds thereof.
Nothing herein stated shall impair the right of the
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Beneficiary to accelerate the maturity of the Note (or to avail itself of any
of its other rights and impair the right of the Beneficiary to accelerate the
maturity of the Note (or to avail itself of any of its other rights and
remedies) upon the occurrence of an Event of Default hereunder or under any
other instrument securing or evidencing the in debtedness represented by the
Note, nor shall anything herein stated impair or be construed to impair the
right of Beneficiary to seek personal judgments and all rights and remedies to
enforce same allowed by law, jointly and severally against any guarantors to
the extent allowed by any applicable guarantees. The provisions set forth in
this Section 9.24 are not intended as any release or discharge of the
Indebtedness (as defined in this Deed of Trust), or any monies due under the
Note or under any other Loan Documents, but are intended as a limitation on
Beneficiary's right to sue for deficiency or personal judgment except as
provided in this section.
9.25 WAIVER OF JURY TRIAL. GRANTOR AND BENEFICIARY MUTUALLY, EXPRESSLY,
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY FOR ANY PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS DEED OF TRUST, IN THE INTEREST OF
AVOIDING DELAYS AND EXPENSES ASSOCIATED WITH JURY TRIALS.
9.26 Partial Release of Collateral. The Mortgaged Property is hereunder
comprised of three distinct Apartment Projects (collectively, the "Apartment
Projects", individually, the "Apartment Project"): Stoney Creek Apartments,
Hampton Greens Apartments and Promontory Point Apartments; however, this Deed
of Trust is one of two lien instruments which secures the Note. Therefore,
the provisions of Section 9.18 notwithstanding, in connection with a sale of
any of the Apartment Projects comprising the Mortgaged Property, Beneficiary
agrees that Grantor shall have the right to obtain a partial release of the
Mortgaged Property from the lien of this Deed of Trust upon compliance with
the following conditions:
(a) no Event of Default shall then exist under this Deed of Trust, the
Arizona Deed of Trust, any other Security Document, or any other document
evidencing or further securing any indebtedness secured hereby;
(b) Beneficiary shall have received thirty (30) days prior written notice
from Grantor identifying the Apartment Project to be released;
(c) Beneficiary shall receive a cash payment (the "Release Price") to pay
down the Principal Balance (as defined in the Note) as follows: Stoney
Creek Apartments ($6,720,000.00), Hampton Greens Apartments
($6,440,000.00) and Promontory Point Apartments (6,440,000.00) plus all
accrued interest thereon;
(d) Beneficiary shall also receive a cash payment in an amount equal to
the Prepayment Premium (if any) calculated with respect to the portion of
the Note being prepaid as a result of any such Apartment Project being
released, at the time the designated Apartment Project is released.
IN WITNESS WHEREOF, Grantor has executed this Deed of Trust effective as of
the date first above written.
GRANTOR:
CENTURY STONEY GREENS, L.P.,
a California limited partnership
By: Century Stoney Greens, Inc.,
a California corporation, sole general
partner
By:
---------------------------------
, Vice President
64
<PAGE>
ACKNOWLEDGMENT
STATE OF NEW YORK
COUNTY OF NASSAU
This instrument was acknowledged before me on this ___ day of December, 1994,
by ______________, Vice President of Century Stoney Greens, Inc., a
California corporation, on behalf of said corporation, acting as sole general
partner of CENTURY STONEY GREENS, L.P., a California limited partnership, on
behalf of said partnership.
-----------------------------------
Notary Public, State of New York
-----------------------------------
Notary's Name Printed:
[SEAL]
My Commission Expires:
---------------------------
65
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Century
Properties Growth Fund XXII and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 475,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 139,861,000
<DEPRECIATION> (43,985,000)
<TOTAL-ASSETS> 98,447,000
<CURRENT-LIABILITIES> 0
<BONDS> 80,889,000
<COMMON> 0
0
0
<OTHER-SE> 16,197,000
<TOTAL-LIABILITY-AND-EQUITY> 98,447,000
<SALES> 0
<TOTAL-REVENUES> 19,603,000
<CGS> 0
<TOTAL-COSTS> 14,478,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,927,000
<INCOME-PRETAX> (3,042,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,042,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,042,000)
<EPS-PRIMARY> (32)
<EPS-DILUTED> (32)
</TABLE>
