UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
___ For the fiscal year ended December 31, 1995, or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____ to _________________
Commission file number 0-13418
CENTURY PROPERTIES GROWTH FUND XXII
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-2939418
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
One Insignia Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 239-1000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
No market for the Limited Partnership Units exists and therefore a market
value for such Units cannot be determined.
DOCUMENTS INCORPORATED HEREIN BY REFERENCE:
Prospectus of Registrant dated September 25, 1984, and supplemented
thereafter incorporated in Parts I and IV.
CENTURY PROPERTIES GROWTH FUND XXII
(A limited partnership)
PART I
Item 1. Business.
Century Properties Growth Fund XXII (the "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 the
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
partnership, and Fox Associates 84, a California general partnership.
The 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.
The 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 the Registrant is and has been to acquire,
hold for investment and ultimately sell income-producing real property.
The Registrant is a "closed" limited partnership real estate syndicate
formed to acquire multi-family residential properties. For a further
description of the business of the Registrant, see the sections entitled
"Risk Management" and "Investment Objectives and Policies" of the Prospectus.
Beginning in September 1984 through June 1986, the 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.
The 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. The
Registrant's acquisition activities were completed in September 1986
and since then the principal activity of the Registrant has been managing
its portfolio. One property was acquired by the lender through foreclosure
in 1992. The Registrant sold its Monterey Village Apartments property in
1995. See "Property Matters" below. See "Item 2, Properties" for a
description of the Registrant's properties.
Both the income and the expenses of operating the properties owned
by the Registrant are subject to factors outside the Registrant's control,
such as oversupply of similar rental facilities resulting from overbuilding,
increases in unemployment or population shifts, changes in zoning laws or
changes in patterns of needs of the users. Expenses, such as local real
estate taxes and management expenses, are subject to change and cannot
always be reflected in rental increases due to market conditions or existing
leases. The profitability and marketability of developed real property may
be adversely affected by changes in general and local economic conditions
and in prevailing interest rates, and favorable changes in such factors
will not necessarily enhance the profitability or marketability of such
properties. Even under the most favorable market conditions, there is no
guarantee that any property owned by the 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 the Registrant's properties are located which
may include some form of rent control. There have been, and it is
possible there may be other Federal, state and local 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 the
Registrant.
The Registrant monitors its properties for evidence of pollutants,
toxins and other dangerous substances, including the presence of asbestos.
In certain cases environmental testing has been performed, which
resulted in no material adverse conditions or liabilities. In no case has
the Registrant received notice that it is a potentially responsible party
with respect to an environmental clean up site.
The Registrant maintains property and liability insurance on the
properties and believes such coverage to be adequate.
At this time, it appears that the original investment objective of
capital growth from the inception of the Registrant 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 the Registrant's
remaining properties and the markets in which such properties are located and
on the sales price of the remaining properties. In this regard, 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
the Registrant's ability to obtain refinancing or debt modification as
required.
Property Matters
Cooper's Pointe - On September 1, 1994, the Registrant completed a debt
modification agreement with the Cooper's Pointe Apartments mortgagee. As
modified, the loan required monthly debt service payments of
approximately $46,000, bearing interest at 8.25% per annum and was amortized
over 20 years. The loan matured on August 31, 1999, with a balloon payment
of $4,746,000. As specified in the loan documents, the Registrant was
required to make monthly deposits of $7,000 to a replacement reserve for
future capital improvements. The Registrant incurred costs and extension
fees in connection with this modification of approximately $57,000.
On December 29, 1995, the first mortgage encumbering Cooper's Pointe
Apartments was refinanced. The principal amount of the refinanced mortgage
was $4,250,000. The loan bears interest at 7.88% per annum, has a 30 year
amortization and matures in January 2006. See "Item 8, Consolidated
Financial Statements and Supplementary Data, Note 5" for additional
information with respect to this loan.
Copper Mill - On September 1, 1994, the Registrant completed a debt
modification agreement with the Copper Mill Apartments mortgagee. As
modified, the loan required monthly debt service payments of approximately
$31,000, bearing interest at 8.25% per annum and was amortized over 20 years.
The loan matured on August 31, 1999, with a balloon payment of $3,240,000.
As specified in the loan documents, the Registrant was required to make
monthly deposits of $5,000 to a replacement reserve for future capital
improvements. The Registrant incurred costs and extension fees in connection
with this modification of approximately $131,000.
On December 29, 1995, the first mortgage encumbering Copper Mill
Apartments was refinanced. The principal amount of the refinanced mortgage
was $6,100,000. The loan bears interest at 7.88% per annum, has a 30 year
amortization and matures in January 2006. See "Item 8, Consolidated
Financial Statements and Supplementary Data, Note 5" for additional
information with respect to this loan.
Hampton Greens - On December 29, 1995, the first mortgage encumbering
Hampton Greens Apartments was refinanced. The principal amount of the
refinanced mortgage is $5,800,000. The loan bears interest at 7.88% per
annum, has a 30 year amortization and matures in January 2006. See "Item 8,
Consolidated Financial Statements and Supplementary Data, Note 5" for
additional information with respect to this loan.
Stoney Creek - On December 29, 1995, the first mortgage encumbering
Stoney Creek Apartments was refinanced. The principal amount of the
refinanced mortgage is $7,050,000. The loan bears interest at 7.88% per
annum, has a 30 year amortization and matures in January 2006. See "Item 8,
Consolidated Financial Statements and Supplementary Data, Note 5" for
additional information with respect to this loan.
Four Winds - On January 17, 1996, the first mortgage encumbering Four
Winds Apartments was refinanced. The principal amount of the refinanced
mortgage is $9,675,000. The loan bears interest at 7.93% per annum, has a
30 year amortization and matures in February 2006. See "Item 8, Consolidated
Financial Statements and Supplementary Data, Notes 5 and 9" for additional
information with respect to this loan.
Plantation Creek - On January 17, 1996, the first mortgage
encumbering Plantation Creek Apartments was refinanced. The principal
amount of the refinanced mortgage is $15,900,000. The loan bears interest
at 7.93% per annum, has a 30 year amortization and matures in February
2006. See "Item 8, Consolidated Financial Statements and
Supplementary Data, Notes 5 and 9" for additional information with respect to
this loan.
Wood Creek - On January 17, 1996, the first mortgage encumbering Wood
Creek Apartments was refinanced. The principal amount of the refinanced
mortgage is $12,900,000. The loan bears interest at 7.93% per annum, has a
30 year amortization and matures in February 2006. See "Item 8, Consolidated
Financial Statements and Supplementary Data, Notes 5 and 9" for additional
information with respect to this loan.
In connection with the refinancings of Cooper's Pointe, Copper Mill,
Hampton Greens, Stoney Creek, Four Winds, Plantation Crossing and Wood
Creek, the lender required the Registrant to transfer each property into a
separate single asset entity. As a result, the Registrant transferred each
of these properties into limited partnerships in which the Registrant holds
a 99% limited partnership interest. The general partners of these
partnerships are corporations in which the Registrant is the sole
stockholder. See "Item 8, Consolidated Financial Statements and
Supplementary Data, Notes 5 and 9" for additional information with respect to
these loans.
Monterey Village - The Registrant modified the existing debt encumbering
Monterey Village Apartments in January 1994. The terms of the modified loan
included 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, the Registrant made a principal payment of $799,000 on the
loan. In connection with the modification, the Registrant incurred
extension fees and costs totaling approximately $78,000.
On August 18, 1995, the Registrant sold Monterey Village
Apartments to an unaffiliated third party for $10,609,000. The buyer
assumed the existing mortgage on the property (approximately
$7,359,000) and paid to the Registrant approximately $2,926,000. The sale
resulted in a gain of approximately $2,033,000. On January 11, 1996, the
Registrant distributed $2,548,000 to the limited partners and $52,000 to the
general partner from the proceeds received from this sale.
Hampton Greens, Promontory Point, Stoney Creek and Wood Creek
Apartments - On December 28, 1994, the 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. The 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 the 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, the Registrant is required to maintain a $500,000 working
capital reserve. In connection with this refinancing, the Registrant
transferred ownership to Wood Creek Apartments to Century Stoney Greens,
L.P., a wholly-owned subsidiary of the Registrant which had already
held title to the other three properties. The portion of this loan
attributable to Hampton Greens, Stoney Creek and Wood Creek was
refinanced as described above. The portion of the loan attributable to
Promontory Point was not refinanced.
Employees
Services are performed for the Registrant at its remaining
properties by on-site personnel all of whom are employees of NPI-AP
Management, L.P. ("NPI-AP"), an affiliate of the Managing General Partner,
which directly manages the Registrant's remaining properties. All payroll
and associated expenses of such on-site personnel are fully reimbursed by the
Registrant to NPI-AP. Pursuant to a management agreement, NPI-AP provides
certain property management services to the Registrant in addition to
providing on-site management.
Change in Control
From March 1988 through December 1993, the Registrant's affairs were
managed by Metric Management, Inc. ("MMI") or a predecessor. On December
16, 1993, the services agreement with MMI was modified and, as a result
thereof, the Managing General Partner began directly providing real estate
advisory and asset management services to the Registrant. As advisor, such
affiliate provides all partnership accounting and administrative services,
investment management, and supervisory services over property management and
leasing.
On December 6, 1993, the shareholders of the Managing General Partner
entered into a Voting Trust Agreement with NPI Equity Investments II, Inc.
("NPI Equity II") pursuant to which NPI Equity II was granted the right to
vote 100% of the outstanding stock of the Managing General Partner. In
addition, NPI Equity II became the managing partner of FRI. As a result, NPI
Equity II indirectly became responsible for the operation and management of
the business and affairs of the Registrant and the other investment
partnerships originally sponsored by the Managing General Partner and/or
FRI. The individuals who had served previously as partners of FRI and as
officers and directors of the Managing General Partner contributed their
general partnership interests in FRI to a newly formed limited partnership,
Portfolio Realty Associates, L.P. ("PRA"), in exchange for limited
partnership interests in PRA. The shareholders of the Managing General
Partner and the prior partners of FRI, in their capacity as limited partners
of PRA, continue to hold indirectly certain economic interests in the
Registrant and such other investment limited partnerships, but have ceased
to be responsible for the operation and management of the Registrant and such
other partnerships.
On August 10, 1994, an affiliate of Apollo Real Estate Advisors, L.P.
("Apollo") obtained general and limited partnership interests in NPI-AP.
On October 12, 1994, Apollo acquired one-third of the stock of National
Property Investors, Inc. ("NPI"), the parent corporation of NPI Equity II.
Pursuant to the terms of the stock acquisition, Apollo was entitled to
designate three of the seven directors of the Managing General Partner
and NPI Equity II. In addition, the approval of certain major actions on
behalf of the Registrant required the affirmative vote of at least five
directors of the Managing General Partner.
On August 17, 1995, the stockholders of NPI entered into an agreement
to sell to IFGP Corporation, a Delaware corporation, an affiliate of
Insignia Financial Group, Inc. ("Insignia"), a Delaware corporation, all
of the issued and outstanding common stock of NPI, for an aggregate
purchase price of $1,000,000. NPI is the sole shareholder of NPI Equity
II, the general partner of FRI, and the entity which controls the Managing
General Partner. The closing of the transactions contemplated by the above
mentioned agreement (the "Closing") occurred on January 19, 1996.
Upon the Closing, the officers and directors of NPI, NPI Equity II and
the Managing General Partner resigned and IFGP Corporation caused new
officers and directors of each of those entities to be elected. See "Item
10, Directors and Executive Officers of the Registrant."
The Tender Offer
On October 12, 1994, affiliates of Apollo acquired (i) one-third of the
stock of the respective general partners of DeForest Ventures I L.P.
("DeForest I") and DeForest Ventures II L.P. and (ii) an additional equity
interest in NPI-AP (bringing its total equity interest in such entity to
one-third). NPI-AP is a limited partner of DeForest I which was formed for
the purpose of making tender offers for limited partnership units in
the Registrant as well as eleven affiliated limited partnerships.
On January 19, 1996, DeForest I and certain of its affiliates sold
all of its interest in the Registrant to Insignia NPI, L.L.C. ("Insignia
LLC"), an affiliate of Insignia. Pursuant to a Schedule 13-D filed by
Insignia LLC with the Securities and Exchange Commission, Insignia LLC
acquired 17,022.5 limited partnership units or approximately 21% of the total
limited partnership units of the Registrant. (See "Item 12, Security
Ownership of Certain Beneficial Owners and Management.")
Competition
The Registrant is affected by and subject to the general competitive
conditions of the residential real estate industry. In addition, each of
the Registrant's properties competes in an area which normally contains
numerous other residential properties which may be considered competitive.
Item 2. Properties.
A description of the multi-family residential properties in which the
Registrant has or had an ownership interest is as follows. All of the
Registrant's properties are owned in fee.
Date of
Name and Location Purchase Size
Wood Creek Apartments 05/84 432 units
1710 S. Gilbert Road
Mesa, Arizona
Plantation Creek Apartments(1) 06/84 484 units
6925 Roswell Road
Atlanta, Georgia
Stoney Creek Apartments 06/85 364 units
11333 Amanda Lane
Dallas, Texas
Four Winds Apartments 09/85 350 units
SEC of 79th Street & Switzer Road
Overland Park, Kansas
Promontory Point Apartments 10/85 252 units
2250 Ridgepoint
Austin, Texas
Date of
Name and Location Purchase Size
Cooper's Pointe Apartments 11/85 192 units
2225 Greenridge Road
Charleston, South Carolina
Hampton Greens Apartments 12/85 309 units
10911 Woodmeadow Parkway
Dallas, Texas
Autumn Run Apartments 06/86 320 units
1627 Country Lakes Drive
Naperville, Illinois
Copper Mill Apartments 09/86 192 units
3400 Copper Mill Trace
Richmond, Virginia
(1) Formerly Post Creek Apartments.
See, "Item 8, Consolidated Financial Statements and Supplementary Data",
for information regarding any encumbrances to which properties of the
Registrant are subject.
The following chart sets forth the average occupancy at the Registrant's
remaining properties for the years ended December 31, 1995, 1994, 1993, 1992,
and 1991:
CENTURY PROPERTIES GROWTH FUND XXII
OCCUPANCY SUMMARY
OCCUPANCY SUMMARY
Average
Occupancy Rate(%)
for the Year Ended
December 31,
--------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Wood Creek Apartments 97 97 93 93 88
Plantation Creek Apartments 95 97 92 89 89
Stoney Creek Apartments 94 93 91 91 93
Four Winds Apartments 97 95 96 96 94
Promontory Point Apartments 97 96 96 95 93
Cooper's Pointe Apartments 95 94 91 92 92
Hampton Greens Apartments 97 95 95 94 92
Autumn Run Apartments 95 96 91 93 94
Copper Mill Apartments 96 97 95 94 92
Item 3. Legal Proceedings.
Lawrence M. Whiteside, on behalf of himself and all others similarly
situated, v. Fox Capital Management Corporation et, al., Superior Court of
the State of California, San Mateo County, Case No. 390018. ("Whiteside")
Bonnie L. Ruben and Sidney Finkel, on behalf of themselves and all
others similarly situated, v. DeForest Ventures I L.P., DeForest Capital
I Corporation, MRI Business Properties Fund, Ltd. II, MRI Business
Properties Fund, Ltd. III, NPI Equity Investments II, Inc., Montgomery
Realty Company-84, MRI Associates, Ltd. II, Montgomery Realty Company-85
and MRI Associates, Ltd. III, United States District Court, Northern
District of Georgia, Atlanta Division("Ruben").
Roger L. Vernon, individually and on behalf of all similarly situated
persons v. DeForest Ventures I L.P. et. al., Circuit Court of Cook County,
County Departments, Chancery Division, Case No. 94CH0100592. ("Vernon")
James Andrews, et al., on behalf of themselves and all others
similarly situated v. Fox Capital Management Corporation, et al., United
States District Court, Northern District of Georgia, Atlanta
Division, Case No. 1-94-CV-3351-JEC. ("Andrews")
In the fourth quarter of fiscal 1994, limited partners in certain
limited partnerships affiliated with the Registrant, commenced actions in
and against, among others, the Managing General Partner. The actions
alleged, among other things, that the tender offers made by DeForest
Ventures I L.P. ("DeForest I") and DeForest Ventures II L.P. ("DeForest
II") in October 1994, constituted (a) a breach of the fiduciary duty owed by
the Managing General Partner to the limited partners of the Registrant,
and (b) a breach of, and an inducement to breach, the provisions of
the Partnership Agreement of the Registrant. The actions, which had been
brought as class actions on behalf of limited partners sought monetary
damages in an unspecified amount and, in the Whiteside action, to enjoin the
tender offers. The temporary restraining order sought in the Whiteside
action was denied by the court on November 3, 1994, and on November 18, 1994,
the court denied Whiteside a preliminary injunction.
On March 16, 1995, the United States Court for the Northern District of
Georgia, Atlanta Division, entered an order which granted preliminary
approval to a settlement agreement (the "Settlement Agreement") in the Ruben
and Andrews actions, conditionally certified two classes for purpose of
settlement, and authorized the parties to give notice to the classes of the
terms of the proposed settlement. Plaintiffs counsel in the Vernon and
Whiteside actions joined in the Settlement Agreement as well. The
Settlement Agreement received final approval on May 19, 1995, and the
actions were dismissed subject to satisfaction of the terms of the
Settlement Agreement. The two certified classes constituted all limited
partners of the Registrant and the eighteen other affiliated partnerships
who either tendered their units in connection with the October tender
offers or continued to hold their units in the Registrant and the other
affiliated partnerships. Pursuant to the terms of the Settlement Agreement,
which were described in the notice sent to the class members in March 1995,
(and more fully described in the Amended Stipulation of Settlement submitted
in the court on March 14, 1995) all claims which either were made or could
have been asserted in any of the class actions would be dismissed with
prejudice and/or released. In consideration for the dismissal and/or
release of such claims, among other things, DeForest I paid to each unit
holder who tendered their units in the Registrant an amount equal to 15%
of the original tender offer price less attorney's fees and expenses. In
addition, DeForest I commenced a second tender offer on June 2, 1995, for an
aggregate number of units of the Registrant (including the units
purchased in the initial tender) constituting up to 49% of the total
number of units of the Registrant at a price equal to the initial tender
price plus 15% less attorney's fees and expenses. Furthermore, under the
terms of the Settlement Agreement, the Managing General Partner agreed,
among other things, to provide the Registrant a credit line of $150,000
per property which would bear interest at the lesser of the prime rate
plus 1% and the rate permitted under the partnership agreement of the
Registrant. The second tender offer closed on June 30, 1995.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this Report.
PART II
Item 5. Market for the Registrant's Equity and Related Security
Holder Matters.
The Limited Partnership Unit holders are entitled to certain
distributions as provided in the Partnership Agreement. Through December
1995, cash distributions of $15 for each $1,000 of original investment
have been made. No market for Limited Partnership Units exists nor is expected
to develop.
No distributions from operations were made during the years ended
December 31, 1995 and 1994. On January 11, 1996, the Registrant distributed
$2,548,000 to the limited partners and $52,000 to the general partners from
the proceeds from the sale of the Monterey Village. See "Item 7,
Management's Discussion and Analysis of Financial Condition and Results
of Operations" for a discussion of the Registrant's financial ability to make
distributions
As of March 1, 1996, the approximate number of holders of Limited
Partnership Units was 5,837.
Item 6. Selected Financial Data.
The following represents selected financial data for the Registrant for
the years ended December 31, 1995, 1994, 1993, 1992, and 1991. The data
should be read in conjunction with the consolidated financial statements
included elsewhere herein. This data is not covered by the independent
auditors' report.
<TABLE>
<CAPTION>
For the Year Ended December 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(Amounts in thousands except per unit data)
<S> <C> <C> <C> <C> <C>
Total revenues $ 22,312 $ 19,786 $ 18,616 $ 19,100 $ 18,927
======== ======== ======== ======== ========
Income (loss) before
extraordinary item $ 286 $ (2,512) $ (3,143) $ (3,976) $ (5,898)
Extraordinary item - loss
on extinguishment of debt (711) (530) - - -
-------- -------- -------- -------- --------
Net loss $ (425) $ (3,042) $ (3,143) $ (573) $ (5,898)
======== ======== ======== ======== ========
Net income (loss) per limited
partnership unit(1):
Income (loss) before
extraordinary item $ 2.44 $ (26.74) $ (33.46) $ (42.33) $ (62.79)
Extraordinary item - gain
(loss) on extinguishment
of debt (7.57) (5.64) - 36.24 -
-------- -------- -------- -------- --------
Net loss $ (5.13) $ (32.38) $ (33.46) $ (6.09) $ (62.79)
======== ======== ======== ======== ========
Total assets $ 91,348 $ 98,477 $102,995 $106,673 $120,659
======== ======== ======== ======== ========
Long term obligations:
Notes payable $ 74,111 $ 80,899 $ 81,848 $ 82,453 $ 95,318
======== ======== ======== ======== ========
</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.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
The Registrant holds investments in and operates residential real estate
properties. The properties are located in Arizona, Georgia, Texas, Kansas,
South Carolina, Illinois and Virginia. The Registrant receives rental
income from its properties and is responsible for operating expenses,
administrative expenses, capital improvements and debt service payments. As
of March 1, 1996, two of the eleven properties originally purchased by
the Registrant were sold or otherwise disposed. On August 18, 1995, the
Registrant's Monterey Village Apartments was sold to an unaffiliated third
party for $10,609,000. After assumption of the mortgage balance of
$7,359,000, and closing costs of $324,000, the Registrant received net
proceeds of $2,926,000. The sale resulted in a gain of $2,033,000. In
connection with the sale of the property and the assumption of the related
outstanding debt, the Registrant recognized an extraordinary loss on
extinguishment of debt of $217,000. All of the Registrant's remaining
properties, except its Cooper's Pointe Apartments, generated positive cash
flow from operations during the year ended December 31, 1995. Cooper's
Pointe Apartments experienced negative cash flow due to significant
non-recurring exterior painting and repairs during this period.
The Registrant uses working capital reserves from any undistributed
cash flow from operations and refinancing proceeds as its primary source of
liquidity. On January 11, 1996, the Registrant distributed $2,548,000
($30.76 per unit) to the limited partners and $52,000 to the general
partners from the proceeds received from the sale of Monterey Village
Apartments in August 1995. On January 17, 1996, the Registrant refinanced
the mortgages that secured their Wood Creek, Plantation Creek and Four Winds
Apartments properties.
Liquidity based upon cash and cash equivalents experienced a
$4,242,000 increase at December 31, 1995, as compared to 1994. The
Registrant's increase in cash was provided by $2,496,000 of cash from
investing activities and $1,934,000 of cash from operating activities,
which was partially offset by $188,000 of cash used in financing
activities. Cash from investing activities included $2,926,000 of net
proceeds from the sale of the Registrant's Monterey Village Apartments
property which was partially offset by $430,000 of improvements to real
estate. Cash used in financing activities included $23,200,000 of notes
payable proceeds which was more than offset by $20,582,000 of cash used for
the repayment of notes payable, $2,037,000 of notes payable principal
payments, $506,000 of deferred financing costs paid and $263,000 of
prepayment premiums paid to extinguish debt. Cash from operating activities
increased due to improved operations. The Managing General Partner is
currently evaluating the Registrant's capital improvement requirements.
All other increases (decreases) in certain assets and liabilities are the
result of the timing of receipt and payment of various operating activities.
Working capital reserves are being invested in a money market account
or in repurchase agreements secured by United States Treasury obligations.
The Managing General Partner believes that, if market conditions remain
relatively stable, cash flow from operations, when combined with working
capital reserves, will be sufficient to fund required capital improvements
and debt service payments (excluding balloon payments beginning in
December 1999) during 1996 and the foreseeable future. The Registrant has a
balloon payment of $10,575,000 on Autumn Run Apartments complex due June
1996. The Registrant will attempt to extend the due date of this loan or find
replacement financing. If, however, this loan is not refinanced or
extended, or the property is not sold, the Registrant could lose this
property through foreclosure. If the Registrant's Autumn Run Apartments
were lost through foreclosure, the Registrant would recognize a loss of
approximately $700,000.
On December 29, 1995, the Registrant refinanced the mortgage that
encumbered its Hampton Greens Apartments property with a new first
mortgage in the amount of $5,800,000. The loan requires monthly payments
of approximately $42,000 at 7.88% interest and matures on January 1, 2006,
with a balloon payment of approximately $5,175,000. The loan may not be
prepaid without penalty.
On December 29, 1995, the Registrant refinanced the mortgage that
encumbered its Stoney Creek Apartments property with a new first mortgage in
the amount of $7,050,000. The loan requires monthly payments of
approximately $51,000 at 7.88% interest and matures on January 1, 2006, with
a balloon payment of approximately $6,291,000. The loan may not be prepaid
without penalty.
On December 29, 1995, the Registrant refinanced the mortgage that
encumbered its Cooper's Pointe Apartments property with a new first
mortgage in the amount of $4,250,000. The loan requires monthly payments
of approximately $31,000 at 7.88% interest and matures on January 1, 2006,
with a balloon payment of approximately $3,792,000. The loan may not be
prepaid without penalty.
On December 29, 1995, the Registrant refinanced the mortgage that
encumbered its Copper Mill Apartments property with a new first mortgage in
the amount of $6,100,000. The loan requires monthly payments of
approximately $44,000 at 7.88% interest and matures on January 1, 2006, with
a balloon payment of approximately $5,443,000. The loan may not be prepaid
without penalty.
In 1995, in connection with the above refinanced mortgages, the
Registrant recognized an extraordinary loss on extinguishment of debt of
$494,000, consisting of the write-off of unamortized deferred loan
costs and prepayment premiums.
On January 17, 1996, the Registrant refinanced the mortgage that
encumbered its Wood Creek Apartments property with a new first mortgage in
the amount of $12,900,000. The loan requires monthly payments of
approximately $94,000 at 7.93% interest and matures on February 1, 2006, with
a balloon payment of approximately $11,524,000. The loan may not be prepaid
without penalty.
On January 17, 1996, the Registrant refinanced the mortgage that
encumbered its Plantation Creek Apartments property with a new first
mortgage in the amount of $15,900,000. The loan requires monthly payments
of approximately $116,000 at 7.93% interest and matures on February 1,
2006, with a balloon payment of approximately $14,204,000. The loan may
not be prepaid without penalty.
On January 17, 1996, the Registrant refinanced the mortgage that
encumbered its Four Winds Apartments property with a new first mortgage in
the amount of $9,675,000. The loan requires monthly payments of
approximately $71,000 at 7.93% interest and matures on February 1, 2006, with
a balloon payment of approximately $8,643,000. The loan may not be prepaid
without penalty.
In connection with the above refinancings the Registrant was required
to transfer all the assets and liabilities of each of the properties to its
own newly formed, wholly-owned subsidiary.
As required by the terms of the settlement of the actions brought
against, among others, DeForest Ventures I L.P. ("DeForest I") relating to
the tender offer made by DeForest I in October 1994 (the "First Tender
Offer") for units of limited partnership interest in the Registrant and
certain affiliated partnerships, DeForest I commenced a second tender offer
(the "Second Tender Offer") on June 2, 1995 for units of limited partnership
interest in the Registrant. Pursuant to the Second Tender Offer, DeForest
I acquired an additional 2,391 units of the Registrant which, when added
to the units acquired during the First Tender Offer, represents
approximately 20% of the total number of outstanding units of the
Registrant. Also in connection with the settlement, an affiliate of the
Managing General Partner has made available to the Registrant a credit
line of up to $150,000 per property owned by the Registrant. The
Registrant has no outstanding amounts due under this line of credit.
Based on present plans, the Managing General Partner does not
anticipate the need to borrow in the near future. Other than cash and
cash equivalents, the line of credit is the Registrant's only unused
source of liquidity.
On January 19, 1996, the stockholders of NPI, the sole shareholder of
NPI Equity II, sold to IFGP Corporation all of the issued and outstanding
stock of NPI. In addition, an affiliate of Insignia purchased the limited
partnership units held by DeForest I and certain of its affiliates. IFGP
Corporation caused new officers and directors of NPI Equity II and the
Managing General Partner to be elected. The Managing General Partner does not
believe these transactions will have a significant effect on the
Registrant's liquidity or results of operations. See "Item 1
Business-Change in Control".
At this time, it appears that the original investment objective of
capital growth from inception of the Registrant will not be attained and
that investors will not receive a return of all of their invested
capital. The extent to which invested capital is returned to investors is
dependent upon the performance of the Registrant's remaining 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 the Registrant's ability to obtain
refinancing or debt modification as required.
Real Estate Market
The business in which the Registrant is engaged is highly competitive,
and the Registrant is not a significant factor in its industry. Each
investment property is located in or near a major urban area and,
accordingly, competes for rentals not only with similar properties in its
immediate area but with hundreds of similar properties throughout the
urban area. Such competition is primarily on the basis of location, rents,
services and amenities. In addition, the Registrant competes with
significant numbers of individuals and organizations (including similar
partnerships, real estate investment trusts and financial institutions)
with respect to the sale of improved real properties, primarily on the basis
of the prices and terms of such transactions.
Results of Operations
1995 Compared to 1994
Operating results, before the extraordinary loss on extinguishment of
debt, improved by $2,798,000 for the year ended December 31, 1995, as
compared to 1994, due to an increase in revenues of $2,526,000 and a
decrease in expenses of $272,000. Operating results improved due to the
$2,033,000 gain on sale of the Registrant's Monterey Village Apartments and
improved property operations.
With respect to the remaining properties, rental revenues increased
by $1,050,000 due to increases in rental rates at all of the Registrant's
properties. Occupancy remained relatively constant at all of the
Registrant's properties. In addition, interest and other income decreased
by $27,000 due to the receipt of $100,000 for the release of a restrictive
covenant on land adjacent to the Four Winds Apartments complex during the
year ended December 31, 1994, which was partially offset by an increase in
average working capital reserves available for investment coupled with an
increase in interest rates.
With respect to the remaining properties, expenses increased due to an
increase in operating expenses of $478,000 which was slightly offset by a
decrease in interest expense of $31,000. Operating expenses increased due
to increases in maintenance expenses at the Registrant's Cooper's Pointe,
Four Winds, Promontory Point, Wood Creek and Plantation Creek properties,
which were partially offset by a decrease in maintenance expenses at the
Registrant's Autumn Run, Copper Mill and Stoney Creek properties. Interest
expense decreased primarily due to mortgage principal amortization.
Depreciation expense remained relatively constant. In addition, general and
administrative expense decreased by $158,000 due to the reduction in asset
management costs effective July 1, 1994.
1994 Compared 1993
Operating results, before the extraordinary loss on extinguishment of
debt, improved by $631,000 for the year ended December 31, 1994, as compared
to 1993, due to increases in revenues of $1,170,000 and in expenses of
$539,000.
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 the Registrant's properties except for Monterey Village. The increase
was primarily due to increases in rental rates at all the Registrant's
properties except for Monterey Village and improved occupancy at the
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.
Expenses increased by $539,000 for the year ended December 31, 1994,
as compared to 1993, due to increases of $1,171,000 in operating expenses
which was partially offset by decreases of $288,000 in interest expense,
$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 the Registrant's properties. Interest
expense decreased due to the partial repayment of mortgage principal and
a lower interest rate resulting from the debt modification on the
mortgage encumbering the 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
the Registrant's Fox Hollow property was purchased, partially offset by
increased costs associated with the management transition.
Item 8. Consolidated Financial Statements and Supplementary Data.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1995
INDEX
Page
Independentt Auditors' Reports............................................. F-2
Consolidated Financial Statements:
Balance Sheets at December 31, 1995 and 1994............................. F-4
Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993...................................... F-5
Statements of Partners' Equity for the Years Ended
December 31, 1995, 1994 and 1993....................................... F-6
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993....................................... F-7
Notes to Consolidated Financial Statements............................... F-8
Financial Statement Schedule:
Schedule III - Real Estate and Accumulated Depreciation
at December 31, 1995................................................. F - 17
Consolidated financial statements and financial statement schedules not included
have been omitted because of the absence of conditions under which they are
required or because the information is included elsewhere in the consolidated
financial statements.
To the Partners
Century Properties Growth Fund XXII
Greenville, South Carolina
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of Century
Properties Growth Fund XXII (a limited partnership) (the "Partnership") and its
subsidiaries as of December 31, 1995 and 1994, and the related consolidated
statements of operations, partners' equity and cash flows for the years then
ended. Our audits also included the additional information supplied pursuant to
Item 14(a)(2). These consolidated financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Century
Properties Growth Fund XXII and its subsidiaries as of December 31, 1995 and
1994, and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly, in all material respects, the information set forth therein.
Imowitz Koenig & Co., LLP
Certified Public Accountants
New York, N.Y.
January 23, 1996
Independent Auditors' Report by
Deloitte & Touche
INDEPENDENT AUDITORS' REPORT
Century Properties Fund XXII:
We have audited the accompanying consolidated statements of operations,
partners' equity and cash flows of Century Properties Fund XXII (a limited
partnership) (the "Partnership") and its wholly-owned subsidiaries for the year
ended December 31, 1993. These financial statements are the responsibility of
the Partnership's management. Our responsibility is to express an opinion on
these financial statements based on our audit. We conducted our audit in
accordance with generally accepted auditing standards. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. In our opinion, such
consolidated financial statements present fairly, in all material respects, the
results of operations and cash flows of the Partnership and its wholly-owned
subsidiaries for the year ended December 31, 1993 in conformity with generally
accepted accounting principles. The accompanying 1993 consolidated financial
statements have been prepared assuming that the Partnership will continue as a
going concern. As discussed in the first paragraph of Note 8 to the 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 8. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
DELOITTE & TOUCHE LLP
San Francisco, California
March 18, 1994
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
------------------------------
1995 1994
----------- -----------
ASSETS
Cash and cash equivalents $ 4,717,000 $ 475,000
Restricted cash 500,000 500,000
Other assets 1,186,000 862,000
Real Estate:
Real estate 128,394,000 139,861,000
Accumulated depreciation (44,342,000) (43,985,000)
----------- -----------
Real estate, net 84,052,000 95,876,000
Deferred financing costs, net 893,000 734,000
----------- -----------
Total assets $91,348,000 $98,447,000
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Notes payable $74,111,000 $80,889,000
Accrued expenses and other liabilities
(including $116,000 to a related party
in 1995). 1,465,000 1,361,000
----------- -----------
Total liabilities 75,576,000 82,250,000
----------- -----------
Partners' Equity (Deficit):
General partner (7,173,000) (7,173,000)
Limited partners (82,848 units outstanding at
December 31, 1995 and 1994) 22,945,000 23,370,000
----------- -----------
Total partners' equity 15,772,000 16,197,000
----------- -----------
Total liabilities and partners' equity $91,348,000 $98,447,000
=========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
Revenues:
Rental $20,123,000 $19,603,000 $18,522,000
Interest and other income 156,000 183,000 94,000
Gain on property disposition 2,033,000 -- --
----------- ----------- -----------
Total revenues 22,312,000 19,786,000 18,616,000
----------- ----------- -----------
Expenses (including $1,802,000 and
$1,003,000 paid to the general
partner and affiliates in 1995
and 1994):
Operating 10,567,000 10,353,000 9,182,000
Interest 7,192,000 7,397,000 7,685,000
Depreciation 4,002,000 4,125,000 4,171,000
General and administrative 265,000 423,000 721,000
----------- ----------- -----------
Total expenses 22,026,000 22,298,000 21,759,000
----------- ----------- -----------
Income (loss) before extraordinary item 286,000 (2,512,000) (3,143,000)
Extraordinary item:
Loss on extinguishment of debt (711,000) (530,000) --
----------- ----------- -----------
Net loss $(425,000) $(3,042,000) $(3,143,000)
=========== =========== ===========
Net income (loss) per limited partnership
unit:
Income (loss) before extraordinary
item $ 2.44 $ (26.74) $ (33.46)
Extraordinary item (7.57) (5.64) --
----------- ----------- -----------
Net loss $ (5.13) $ (32.38) $ (33.46)
=========== =========== ===========
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
General Limited Total
partner's partners' partners'
(deficit) equity equity
----------- ------------ ------------
Balance - January 1, 1993 $(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 before extraordinary item (296,000) (2,216,000) (2,512,000)
Extraordinary item (63,000) (467,000) (530,000)
----------- ------------ ------------
Balance - December 31, 1994 (7,173,000) 23,370,000 16,197,000
Net income before extraordinary
item 84,000 202,000 286,000
Extraordinary item (84,000) (627,000) (711,000)
----------- ------------ ------------
Balance - December 31, 1995 $(7,173,000) $(22,945,000) $(15,772,000)
=========== ============ ============
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
------------- ------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (425,000) $ (3,042,000) $(3,143,000)
------------- ------------- ------------
Adjustments to reconcile net loss to
net cash (used in) provided by
operating activities:
Depreciation and amortization 4,152,000 4,179,000 4,528,000
Extraordinary item -
extinguishment of debt 711,000 530,000 --
Gain on property disposition (2,033,000) -- --
Changes in operating assets and
liabilities:
Other assets (324,000) (342,000) (203,000)
Accrued expenses and other
liabilities (147,000) (674,000) 70,000
------------- ------------- ------------
Net cash provided by operating
activities 1,934,000 651,000 1,252,000
------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to real estate (430,000) (621,000) (1,305,000)
Purchase of cash investments -- -- (1,782,000)
Proceeds from maturity of cash
investments -- 1,187,000 595,000
Restricted cash decrease (increase) -- 275,000 11,000
Net proceeds on sale of property 2,926,000 -- --
------------- ------------- ------------
Net cash provided by (used in)
investing activities 2,496,000 841,000 (2,481,000)
------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable proceeds 23,200,000 30,000,000 --
Notes payable principal payments (2,037,000) (703,000) (605,000)
Repayment of notes payable (20,582,000) (30,256,000) --
Deferred financing costs paid (506,000) (399,000) (94,000)
Deferred financing costs refunded -- -- 33,000
Costs paid to extinguish debt (263,000) -- --
------------- ------------- ------------
Net cash (used in) financing
activities (188,000) (1,358,000) (666,000)
------------- ------------- ------------
Increase (Decrease) in Cash and Cash
Equivalents 4,242,000 134,000 (1,895,000)
Cash and Cash Equivalents at
Beginning of year 475,000 341,000 2,236,000
------------- ------------- ------------
Cash and Cash Equivalents at
End of Year $ 4,717,000 $ 475,000 $ 341,000
============= ============= ============
Supplemental Disclosure of Cash
Flow Information:
Interest paid in cash during
the year $ 7,142,000 $ 7,513,000 $ 7,284,000
============= ============= ============
Supplemental Disclosure of Non-cash
Investing and Financing Activities:
Mortgage assumed on property sale
(see Note 6) $7,359,000 $ -- $ --
============= ============= ============
Refinancing of notes payable
(see Note 5)
See notes to consolidated financial statements.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Century Properties Growth Fund XXII (the "Partnership") is a limited partnership
organized in 1984 under the laws of the State of California to acquire, hold for
investment, and ultimately sell income-producing real estate. The Partnership
currently owns nine residential apartment complexes, located in Arizona,
Georgia, Texas, Kansas, South Carolina, 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
("FCMC"), 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 capital contributions of
$82,848,000 ($1,000 per unit) were made by the limited partners.
On December 6, 1993, the shareholders of FCMC entered into a Voting Trust
Agreement with NPI Equity Investments II, Inc. ("NPI Equity" or the "Managing
General Partner") pursuant to which NPI Equity was granted the right to vote 100
percent of the outstanding stock of FCMC and NPI Equity became the managing
general partner of FRI. As a result, NPI Equity became responsible for the
operation and management of the business and affairs of the Partnership and the
other investment partnerships originally sponsored by FCMC and/or FRI. NPI
Equity is a wholly-owned subsidiary of National Property Investors, Inc. ("NPI,
Inc."). The shareholders of FCMC and the partners in FRI retain indirect
economic interests in the Partnership and such other investment limited
partnerships, but have ceased to be responsible for the operation and management
of the Partnership and such other partnerships.
In October 1994, DeForest Ventures I L.P. ("DeForest I") made a tender offer for
limited partnership interests in the partnership, as well as eleven affiliated
limited partnerships. DeForest Ventures II, L.P. ("DeForest II") made tender
offers for limited partnership interests in seven affiliated limited
partnerships. Shareholders who controlled DeForest Capital I Corporation, the
sole general partner of DeForest I, also controlled NPI, Inc. As of December 31,
1995, DeForest I had acquired approximately 20% of total limited partnership
units of the Partnership (see Note 9).
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and
outstanding stock of NPI, Inc. to an affiliate of Insignia Financial Group,
Inc. ("Insignia"). In addition, an affiliate of Insignia acquired the limited
partnership interests of the Partnership held by DeForest I and certain of its
affiliates (see Note 9).
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Consolidation
The consolidated financial statements include the statements of the
Partnership, a wholly-owned subsidiary, which was formed in 1991 and four
wholly-owned subsidiaries which were formed in 1995 (see Note 5) All significant
intercompany transactions and balances have been eliminated.
Distributions
On January 11, 1996, the Partnership distributed $2,548,000 ($30.76 per unit) to
the limited partners and $52,000 to the general partners from the proceeds
received from the sale of the Partnership's Monterey Village Apartments
property.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Fair Value of Financial Instruments
In 1995, the Partnership implemented Statement of Financial Accounting Standards
("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments," as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments," which requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instrument could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates fair value due to
the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with an original
maturity of three months or less at the time of purchase to be cash equivalents.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Concentration of Credit Risk
The Partnership maintains cash balances at institutions insured up to $100,000
by the Federal Deposit Insurance Corporation. Balances in excess of $100,000 are
usually invested in repurchase agreements, which are collateralized by United
States Treasury obligations. Cash balances exceeded these insured levels during
the year. At December 31, 1995, the Partnership had approximately $4,450,000
invested in overnight repurchase agreements, secured by United States Treasury
obligations, which are included in cash and cash equivalents.
Real Estate
Real estate is stated at cost. Acquisition fees are capitalized as a cost of
real estate. In 1995, the Partnership adopted SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of ",
which requires impairment losses to be recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows are not sufficient to recover the asset's carrying amount. The impairment
loss is measured by comparing the fair value of the asset to its carrying
amouThe adoption of the SFAS had no effect on the Partnership's financial
statements.
Depreciation
Depreciation is computed by the straight-line method over estimated useful lives
currently ranging from 27.5 to 30 years for buildings and improvements and six
to seven years for furnishings.
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, 1995 and
1994, accumulated amortization of deferred financing costs totaled $322,000 and
$679,000, 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.
Income Taxes
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Reclassifications
Certain amounts in 1994 and 1993 have been reclassified to conform to the 1995
presentation.
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES
In accordance with the partnership agreement, the Partnership may be charged by
the general 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, the Managing General Partner began directly providing cash
management and other Partnership services on various dates commencing December
23, 1993. On March 1, 1994, an affiliate of NPI Equity commenced providing
certain property management services (see Notes 1 and 9). Related party fees and
expenses for the years ended December 31, 1995, 1994, and 1993 were as follows:
1995 1994 1993
---------- ---------- -----------
Financing fees $ 116,000 $ -- $ --
Property management fees 1,011,000 825,000 --
Real estate tax reduction fees 43,000 -- --
Reimbursement of expenses:
Partnership accounting and
investor services 174,000 158,000 --
Professional services -- 20,000 --
---------- ----------- -----------
Total $1,344,000 $ 1,003,000 $ --
========== =========== ===========
Property management fees and real estate tax reduction fees are included in
operating expenses. Reimbursed expenses are primarily included in general and
administrative expenses. Financing fees have been capitalized and are being
amortized over the life of the loans. In addition, approximately $574,000 of
insurance premiums which were paid to an affiliate of NPI Inc. under a master
insurance policy arranged by such affiliate, are included in operating expenses
for the year ended December 31, 1995.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
2. TRANSACTIONS WITH THE GENERAL PARTNER AND AFFILIATES (Continued)
In accordance with the partnership agreement, the general partner received a
Partnership management incentive allocation equal to ten percent of net and
taxable losses and cash distributions. The general partner was also allocated
its two percent continuing interest in the Partnership's net and taxable losses
and cash distributions after the above allocation of the Partnership management
incentive. Gains from the disposition of Partnership properties were allocated
first to the general partner to the extent of distributions received or they are
entitled to receive, then 12% of the remainder until any deficit in their
capital account is eliminated.
3. RESTRICTED CASH
Restricted cash of $500,000 at December 31, 1995 and 1994, consists of required
reserves maintained in accordance with Partnership financing agreements.
4. REAL ESTATE
Real estate, at December 31, 1995 and 1994, is summarized as follows:
1995 1994
------------- ------------
Land $ 14,396,000 $ 15,829,000
Buildings and improvements 103,304,000 112,257,000
Furnishings 10,694,000 11,775,000
------------ ------------
Total 128,394,000 139,861,000
Accumulated depreciation (44,342,000) (43,985,000)
------------ ------------
Real estate, net $ 84,052,000 $ 95,876,000
============ ============
5. NOTES PAYABLE
Individual rental properties are pledged as collateral for the related notes
payable. At December 31, 1995, the notes, which are payable monthly, bear
interest at rates ranging from 7.4 to 9.4 percent.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Hampton Greens Apartments property with a new first mortgage in the amount
of $5,800,000. The loan requires monthly payments of approximately $42,000 at
7.88% interest and matures on January 1, 2006, with a balloon payment of
approximately $5,175,000. The loan may not be prepaid without penalty. The
Partnership incurred closing costs and fees of $170,000 in connection with the
refinancing, of which $129,000 was paid in 1995. In connection with the
refinancing, the Partnership was required to transfer all the assets and
liabilities of Hampton Greens Apartments to a newly formed, wholly-owned
subsidiary, Hampton Greens CPGF 22, L.P.
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Stoney Creek Apartments property with a new first mortgage in the amount of
$7,050,000. The loan requires monthly payments of approximately $51,000 at 7.88%
interest and matures on January 1, 2006, with a balloon payment of approximately
$6,291,000. The loan may not be prepaid without penalty. The Partnership
incurred closing costs and fees of $230,000 in connection with the refinancing,
of which $151,000 was paid in 1995. In connection with the refinancing, the
Partnership was required to transfer all the assets and liabilities of Stoney
Creek Apartments to a newly formed, wholly-owned subsidiary, Stoney Creek CPGF
22, L.P.
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Cooper's Pointe Apartments property with a new first mortgage in the amount
of $4,250,000. The loan requires monthly payments of approximately $31,000 at
7.88% interest and matures on January 1, 2006, with a balloon payment of
approximately $3,792,000. The loan may not be prepaid without penalty. The
Partnership incurred closing costs and fees of $135,000 in connection with the
refinancing, of which $78,000 was paid in 1995. In connection with the
refinancing, the Partnership was required to transfer all the assets and
liabilities of Cooper's Pointe Apartments to a newly formed, wholly-owned
subsidiary, Cooper's Pointe CPGF 22, L.P.
On December 29, 1995, the Partnership refinanced the mortgage that encumbered
its Copper Mill Apartments property with a new first mortgage in the amount of
$6,100,000. The loan requires monthly payments of approximately $44,000 at 7.88%
interest and matures on January 1, 2006, with a balloon payment of approximately
$5,443,000. The loan may not be prepaid without penalty. The Partnership
incurred closing costs and fees of $210,000 in connection with the refinancing,
of which $135,000 was paid in 1995. In connection with the refinancing, the
Partnership was required to transfer all the assets and liabilities of Copper
Mill Apartments to a newly formed, wholly-owned subsidiary, Copper Mill CPGF 22,
L.P.
In 1995 and 1994, in connection with the refinancing of mortgages, the
Partnership recognized an extraordinary loss on extinguishment of debt of
$494,000 and $530,000, respectively, consisting of the write-off of unamortized
deferred loan costs and prepayment premiums.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
5. NOTES PAYABLE (Continued)
The mortgage encumbering the Partnership's Autumn Run Apartments property
matures on June 1, 1996, with a balloon payment of approximately $10,575,000.
The Partnership will attempt to extend the due date of this loan or find
replacement financing. If, however, this loan is not refinanced or extended, or
the property is not sold, the Partnership could lose this property through
foreclosure.
The note payable on Four Winds Apartments with a balloon payment of $10,452,000
was due in September 1995. The Partnership extended the due date of the note to
April 1996. In connection with the loan extension, the Partnership incurred fees
of $13,000. On January 17, 1996, the Partnership replaced the mortgage
encumbering Four Winds Apartments with a new first mortgage in the amount of
$9,675,000 (see Note 9).
The notes payable on the Partnership's Plantation Creek and Wood Creek
properties, which were due to mature in July 1996 and December 1999,
respectively, were refinanced on January 17, 1996 (see Note 9).
Principal payments at December 31, 1995 are required as follows:
1996 $ 11,006,000
1997 487,000
1998 528,000
1999 4,911,000
2000 618,000
Thereafter 59,080,000
------------
76,630,000
Less:
Additional proceeds received from
January 17, 1996 refinancings (2,519,000)
------------
Total $ 74,111,000
============
Principal payments reflect the refinancings that occurred on January 17, 1996,
regardless of their original due date. Approximately $2,500,000 of additional
proceeds were received from the January 17, 1996 refinancings.
Amortization of deferred financing costs totaled $150,000, $54,000 and $357,000
for the years ended December 31, 1995, 1994, and 1993, respectively.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
6. DISPOSITION OF RENTAL PROPERTY
On August 18, 1995, the Partnership sold its Monterey Village Apartments to an
unaffiliated third party for $10,609,000. After assumption of the mortgage
balance of $7,359,000, and closing costs of $324,000, the partnership received
net proceeds of $2,926,000. For financial reporting purposes the sale resulted
in a gain of $2,033,000.
In connection with the write-off of unamortized deferred loan costs and the
assumption of debt, the Partnership recognized an extraordinary loss on
extinguishment of debt of $217,000 in 1995.
7. 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:
1995 1994 1993
------------- ----------- ------------
Net loss - financial statements $ (425,000) $ (3,042,000) $(3,143,000)
Differences resulted from:
Gain on property disposition 582,000 -- --
Depreciation (1,085,000) (1,286,000) (1,505,000)
Interest expense -- 110,000 131,000
Construction period interest
amortization (187,000) (315,000) (374,000)
Other 48,000 32,000 5,000
------------ ----------- ------------
Net loss - income tax method $ (1,067,000) $ (4,501,000) $(4,886,000)
============ =========== ============
Taxable loss per limited
partnership unit after giving
effect to the allocation to the
general partner $ (12) $ (48) $ (52)
============ =========== ============
Partners' equity - financial
statements $ 15,772,000 $ 16,197,000 $ 19,239,000
Differences resulted from:
Sales commissions and
organization expenses 12,427,000 12,427,000 12,427,000
Depreciation (28,279,000) (27,562,000) (26,273,000)
Payments credited to rental
properties 2,014,000 2,056,000 2,056,000
Interest expense 287,000 287,000 177,000
Construction period interest
amortization (3,498,000) (3,567,000) (3,252,000)
Other 53,000 5,000 (27,000)
------------ ----------- ------------
Partners' (deficit) equity -
income tax method $ (1,224,000) $ (157,000) $ 4,347,000
============ =========== ============
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
8. BASIS OF PRESENTATION AND OPERATING STRATEGY FOR THE YEAR ENDED DECEMBER 31,
1993
The accompanying consolidated financial statements for the year ended December
31, 1993, have been prepared on a going concern basis which contemplates the
realization of assets and satisfaction of liabilities in the normal course of
business. 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 Four Winds, Woodcreek and Cooper's Pointe. The
Partnership believed that its current strategy, combined with cash generated
from the Partnership's properties with positive operations would allow the
Partnership to meet its capital and operating requirements. The outcome of this
uncertainty could not be determined. The consolidated financial statements do
not include any adjustments that might result from the ultimate outcome of this
uncertainty.
The Partnership sold Monterey Village and has refinanced the other properties as
of January 17, 1996 (see Notes 5 and 6).
9. SUBSEQUENT EVENTS
On January 19, 1996, the stockholders of NPI, Inc. sold all of the issued and
outstanding stock of NPI, Inc. to an affiliate of Insignia. In addition, an
affiliate of Insignia acquired the limited partnership interests of the
Partnership held by DeForest I and certain of its affiliates (see Note 1). As a
result of the transaction, the Managing General Partner of the Partnership is
controlled by Insignia. Insignia affiliates now provide property and asset
management services to the Partnership, maintain its books and records and
oversee its operations.
On January 17, 1996, the Partnership refinanced the mortgage that encumbered its
Wood Creek Apartments property with a new first mortgage in the amount of
$12,900,000. The loan requires monthly payments of approximately $94,000 at
7.93% interest and matures on February 1, 2006, with a balloon payment of
approximately $11,524,000. The loan may not be prepaid without penalty.
On January 17, 1996, the Partnership refinanced the mortgage that encumbered its
Plantation Creek Apartments property with a new first mortgage in the amount of
$15,900,000. The loan requires monthly payments of approximately $116,000 at
7.93% interest and matures on February 1, 2006, with a balloon payment of
approximately $14,204,000. The loan may not be prepaid without penalty.
On January 17, 1996, the Partnership refinanced the mortgage that encumbered its
Four Winds Apartments property with a new first mortgage in the amount of
$9,675,000. The loan requires monthly payments of approximately $71,000 at 7.93%
interest and matures on February 1, 2006, with a balloon payment of
approximately $8,643,000. The loan may not be prepaid without penalty.
In connection with the above refinancings the Partnership was required to
transfer all the assets and liabilities of each of the properties to its own
newly formed, wholly-owned subsidiary.
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
Cost capitalized Gross amount
Initial cost subsequent to carried at
to Partnership acquisition close of period (1)
----------------------- -------------------------- ------------------------------
Buildings and Carrying Buildings and
Description Encumbrances Land Improvements Improvements Costs Land Improvements Total (2)
----------- ------------ ---- ------------ ------------ ----- ---- ------------ ---------
(Amounts in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SUBSIDIARIES:
Copper Mill
Apartments
Richmond, Virginia $ 6,100 $ 933 $ 8,061 $ 325 $ (45) $ 929 $ 8,345 $ 9,274
Cooper's Pointe
Apartments
Charleston, South
Carolina 4,250 513 6,696 269 (111) 510 6,857 7,367
Wood Creek
Apartments
Mesa, Arizona 12,500 2,130 13,440 502 (118) 2,117 13,837 15,954
Stoney Creek
Apartments
Dallas, Texas 7,050 1,803 12,509 575 (927) 1,689 12,271 13,960
Promontory Point
Apartments
Austin, Texas 4,340 1,690 10,129 294 (694) 1,595 9,824 11,419
Hampton Greens
Apartments
Dallas, Texas 5,800 2,086 9,474 477 -- 2,086 9,951 12,037
PARTNERSHIP:
Plantation Creek
Apartments
Atlanta, Georgia $13,046 $ 2,653 $ 20,827 $1,823 $ -- $ 2,655 $ 22,648 $ 25,303
Four Winds Apartments
Overland Park,
Kansas 10,409 1,363 14,288 400 (92) 1,357 14,602 15,959
Autumn Run
Apartments
Naperville,
Illinois 10,616 1,462 14,957 729 (27) 1,458 15,663 17,121
------ ------ ------- -------- -------- ------ ------- -------
TOTAL $ 74,111 $ 14,633 $110,381 $ 5,394 $ (2,014) $ 14,396 $113,998 $128,394
======== ======== ======== ======== ========= ======== ======== ========
<CAPTION>
Column A Column F Column G Column H Column I
-------- -------- -------- -------- --------
Life
on which
depreciation
is computed
Accumulated in latest
Depreciation Year of Date statement of
Description (3) Construction Acquired operations
----------- ----------- ------------ -------- ----------
<S> <C> <C> <C> <C>
SUBSIDIARIES:
Copper Mill
Apartments
Richmond, Virginia $ 2,875 1987 9/86 6 - 30 yrs
Cooper's Pointe
Apartments
Charleston, South
Carolina 2,721 1986 11/85 6 - 30 yrs
Wood Creek
Apartments
Mesa, Arizona 5,897 1985 5/84 6 - 30 yrs
Stoney Creek
Apartments Dallas,
Texas 5,047 1983 6/85 6 - 30 yrs
Promontory Point
Apartments
Austin, Texas 3,961 1984 10/85 6 - 30 yrs
Hampton Greens
Apartments
Dallas, Texas 4,079 1986 12/85 6 - 30 yrs
PARTNERSHIP:
Plantation Creek
Apartments
Atlanta, Georgia $ 9,227 1977/1978 6/84 6 - 30 yrs
Four Winds Apartments
Overland Park,
Kansas 5,007 1987 9/85 6 - 30 yrs
Autumn Run
Apartments
Naperville,
Illinois 5,528 1987 6/86 6 - 30 yrs
--------
TOTAL $ 44,342
========
</TABLE>
See accompanying notes.
SCHEDULE III
CENTURY PROPERTIES GROWTH FUND XXII
(A Limited Partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
NOTES:
(1) The aggregate cost for Federal income tax purposes is $127,398,000.
(2) Balance, January 1, 1993 $ 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
Improvements capitalized subsequent to acquisition 430,000
Cost of rental property sold (11,897,000)
-------------
Balance, December 31, 1995 $ 128,394,000
=============
(3) Balance, January 1, 1993 $ 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
Additions charged to expense 4,002,000
Accumulated depreciation on rental property sold (3,645,000)
-------------
Balance, December 31, 1995 $ 44,342,000
=============
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures.
Effective April 22, 1994, the Registrant dismissed its prior
Independent Auditors, Deloitte & Touche, LLP ("Deloitte") and retained as
its new Independent Auditors, Imowitz Koenig & Company, LLP.
Deloitte's Independent Auditors' Report on the Registrant's financial
statements for the calendar year ended December 31, 1993 did not contain an
adverse opinion or a disclaimer of opinion, and 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 the
Registrant's ability to continue as a going concern since the 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
year ended 1993 and through April 22, 1994, there were no disagreements
between the Registrant and Deloitte on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
of procedure which disagreements if not resolved to the satisfaction of
Deloitte, would have caused it to make reference to the subject matter of the
disagreements in connection with its reports.
Effective April 22, 1994, the Registrant engaged Imowitz Koenig &
Company, LLP as its Independent Auditors. The Registrant did not consult
Imowitz Koenig & Company, LLP regarding any of the matters or events
set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K prior to April 22,
1994.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Neither the Registrant, nor Fox Partners IV ("Fox"), the general
partner of the Registrant, has any officers or directors. Fox Capital
Management Corporation (the "Managing General Partner'), the managing
general partner of Fox, manages and controls substantially all of the
Registrant's affairs and has general responsibility and ultimate authority
in all matters affecting its business. NPI Equity Investments II, Inc.,
which controls the Managing General Partner, is a wholly-owned affiliate of
National Property Investors, Inc., which in turn is owned by an affiliate
of Insignia (See "Item 1, Business - Change in Control"). Insignia is a full
service real estate service organization performing property management,
commercial and retail leasing, partnership administration, mortgage
banking, and real estate investment banking services for various entities.
Insignia commenced operations in December 1990 and is the largest
manager of multifamily residential properties in the United States and
is a significant manager of commercial property. It currently provides
property and/or asset management services for over 2,000 properties.
Insignia's properties consist of approximately 300,000 units of multifamily
residential housing and approximately 64 million square feet of commercial
space.
As of March 1, 1996, the names and positions held by the officers and
directors of the Managing General Partner are as follows:
<TABLE>
<CAPTION>
Has served as a
Director and/or
Officer of the Managing
Name Positions Held General Partner since
- ---- -------------- ---------------------
<S> <C> <C>
William H. Jarrard, Jr. President and Director January 1996
Ronald Uretta Vice President and January 1996
Treasurer
John K. Lines, Esquire Vice President, January 1996
Secretary and Director
Thomas R. Shuler Director January 1996
Kelley M. Buechler Assistant Secretary January 1996
</TABLE>
William H. Jarrard, Jr., age 49, has been President and a Director of
the Managing General Partner since January 1996. Mr. Jarrard has been a
Managing Director - Partnership Administration of Insignia since January 1991.
Ronald Uretta, age 40, has been Insignia's Chief Financial Officer
and Treasurer since January 1992. Since September 1990, Mr. Uretta has also
served as the Chief Financial Officer and Controller of Metropolitan Asset
Group.
John K. Lines, Esquire, age 36, has been a Director and Vice President
and Secretary of the Managing General Partner since January 1996,
Insignia's General Counsel since June 1994, and General Counsel and
Secretary since July 1994. From May 1993 until June 1994, Mr. Lines was the
Assistant General Counsel and Vice President of Ocwen Financial
Corporation, West Palm Beach, Florida. From October 1991 until May 1993,
Mr. Lines was a Senior Attorney with Banc One Corporation, Columbus, Ohio.
From May 1984 until October 1991, Mr. Lines was an attorney with Squire
Sanders & Dempsey, Columbus, Ohio.
Thomas R. Shuler, age 50, has been Managing Director - Residential
Property Management of Insignia since March 1991 and Executive Managing
Director of Insignia and President of Insignia Management Services since July
1994.
Kelley M. Buechler, age 38, has been the Assistant Secretary of the
Managing General Partner since January 1996 and Assistant Secretary of
Insignia since 1991.
No family relationships exist among any of the officers or directors of
the Managing General Partner.
Each director and officer of the Managing General Partner will hold
office until the next annual meeting of stockholders of the Managing General
Partner and until his successor is elected and qualified.
Item 11. Executive Compensation
The Registrant is not required to and did not pay any compensation to
the officers or directors of the Managing General Partner. The Managing
General Partner does not presently pay any compensation to any of its
officers or directors. (See "Item 13, Certain Relationships and Related
Transactions.")
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The Registrant is a limited partnership and has no officers or
directors. The Managing General Partner has discretionary control over
most of the decisions made by or for the Registrant in accordance with
the terms of the Partnership Agreement.
The following table sets forth certain information regarding limited
partnership units of the Registrant owned by each person who is known by the
Registrant to own beneficially or exercise voting or dispositive control
over more than 5% of the Registrant's limited partnership units, by each
of the Managing General Partner's directors and by all directors and
executive officers of the Managing General Partner as a group as of March 1,
1996.
Name and address of Amount and nature of
Beneficial Owner Beneficial Ownership % of Class
- ---------------- -------------------- ----------
Insignia NPI L.L.C.(1) 17,022.5(2) 21
All directors and executive
officers as a group
(5 persons) - -
_________________
(1) The business address for Insignia NPI, L.L.C. is One Insignia
Financial Plaza, Greenville, South Carolina 29602.
(2) Based upon information supplied to the Registrant by Insignia NPI,
L.L.C.
There are no arrangements known to the Registrant, the operation of
which may, at a subsequent date, result in a change in control of the
Registrant.
Item 13. Certain Relationships and Related Transactions.
In accordance with the Registrant's partnership agreement, the
Registrant may be charged by the general partner and affiliates for services
provided to the Registrant. On January 1, 1993, Metric Management, Inc.
("MMI"), a company which is not affiliated with the general partner,
commenced providing certain property and portfolio management services to
the 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 after December 31, 1992. Subsequent
to December 31, 1992, reimbursements were made to MMI. On December 16,
1993, the services agreement with MMI was modified and, as a result
thereof, the Managing General Partner began directly providing cash
management and other partnership services on various dates commencing
December 23, 1993. On March 1, 1994, an affiliate of NPI Equity II commenced
providing certain property management services. Related party fees and
expenses for the years ended December 31, 1995, 1994 and 1993 were as
follows:
1995 1994 1993
---------- ----------- -----------
Financing fees $ 116,000 $ - $ -
Property management fees 1,011,000 825,000 -
Real estate tax reduction fees 43,000 - -
Reimbursement of expenses:
Partnership accounting and
investor services 174,000 158,000 -
Professional services - 20,000 -
---------- ----------- -----------
Total $1,344,000 $ 1,003,000 $ -
=====================================
Property management fees and real estate tax reduction fees are
included in operating expenses. Reimbursed expenses are primarily included
in general and administrative expenses. Financing fees have been
capitalized and are being amortized over the life of the loans. In addition,
approximately $574,000 of insurance premiums which were paid to an affiliate
of NPI under a master insurance policy arranged by such affiliate, are
included in operating expenses for the year ended December 31, 1995.
In accordance with the Registrant's partnership agreement, the general
partner received a partnership management incentive allocation equal to ten
percent of net and taxable losses and cash distributions. The general
partner was also allocated its two percent continuing interest in the
Registrant's net and taxable losses and cash distributions after the above
allocation of the partnership management incentive. Gains from the
disposition of the Registrant's properties were allocated first to the
general partner to the extent of distributions received or they are entitled
to receive, then 12% of the remainder until any deficit in their capital
account is eliminated.
As a result of its ownership of 17,022.5 limited partnership units,
Insignia NPI L.L.C. ("Insignia LLC") could be in a position to significantly
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. When voting on
matters, Insignia LLC would in all likelihood vote the Units it acquired
in a manner favorable to the interest of the Managing General Partner
because of its affiliation with the Managing General Partner. However,
Insignia LLC has agreed for the benefit of non-tendering unitholders, that
it will vote its Units: (i) against any proposal to increase the fees and
other compensation payable by the Registrant to the Managing General
Partner and any of its affiliates; and (ii) with respect to any proposal
made by the Managing General Partner or any of its affiliates, in
proportion to votes cast by other unitholders. Except for the foregoing,
no other limitations are imposed on Insignia LLC's right to vote each Unit
acquired.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)(1)(2) Consolidated Financial Statements and Financial Statement
Schedules:
See "Item 8" of this Form 10-K for
Consolidated Financial Statements of the
Registrant, Notes thereto, and Financial
Statement Schedules. (A Table of Contents to
Consolidated Financial Statements and
Financial Statement Schedules is included in
"Item 8" and incorporated herein by reference.)
(a) (3) Exhibits:
2.1 NPI, Inc. Stock Purchase Agreement, dated as of August
17, 1995, incorporated by reference to the Registrant's
Current Report on Form 8-K dated August 17, 1995.
2.2 Partnership Units Purchase Agreement dated as of August
17, 1995, incorporated by reference to Exhibit 2.1 to
Form 8-K filed by Insignia Financial Group, Inc.
("Insignia) with the Securities and Exchange Commission
on September 1, 1995.
2.3 Management Purchase Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.2 to Form 8-K filed
by Insignia with the Securities and Exchange Commission on
September 1, 1995.
2.4 Limited Liability Company Agreement of Riverside Drive
L.L.C., dated as of August 17, 1995, incorporated by
reference to Exhibit 2.4 to Form 8-K filed by Insignia
with the Securities and Exchange Commission on September
1, 1995.
2.5 Master Indemnity Agreement dated as of August 17, 1995,
incorporated by reference to Exhibit 2.5 to Form 8-K
filed by Insignia with the Securities and Exchange
Commission on September 1, 1995.
3.4. Agreement of Limited Partnership incorporated by
reference to Exhibit A to the Prospectus of the
Registrant dated on September 25, 1984, and
thereafter supplemented contained in the Registrant's
Registration Statement on Form S-11 (Reg. No. 2-89285).
10(a) 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 incorporated by
reference to the Registrant's Form 10-K for the year
ended December 31, 1994.
10(b) 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 incorporated by reference to the Registrant's Form
10-K for the year ended December 31, 1994.
10(c) Form of Promissory Note from the Registrant to Secore
Financial Corporation ("Secore") relating to the
refinancing of each of Cooper's Pointe, Copper Mill, Four
Winds, Hampton Greens, Plantation Creek, Stoney Creek,
and Wood Creek.
10(d) Form of Mortgage/Deed of Trust and Security Agreement
from the Registrant to Secore relating to the
refinancing of each of Cooper's Pointe, Copper Mill, Four
Winds, Hampton Greens, Plantation Creek, Stoney Creek and
Wood Creek.
16. Letter dated April 27, 1994 from the Registrant's Former
Independent Auditors incorporated by reference to the
Registrant's Current Report on Form 8-K dated April 22,
1994.
(b) Reports on Form 8-K:
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized on this 28th day of
March, 1996.
CENTURY PROPERTIES GROWTH FUND XXII
By: FOX PARTNERS IV
Its General Partner
By: FOX CAPITAL MANAGEMENT CORPORATION
A General Partner
By: William H. Jarrard, Jr.
-----------------------
William H. Jarrard, Jr.
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
- -------------- ----- ----
/s/ William H. Jarrard, Jr. President and March 28, 1996
- ---------------------------
William H. Jarrard, Jr. Director
/s/ Ronald Uretta Principal Financial March 28, 1996
- -----------------
Ronald Uretta Officer and Principal
Accounting Officer
/s/ John K. Lines Director March 28, 1996
- -----------------
John K. Lines
Exhibit Index
Exhibit Page
2.1 NPI, Inc. Stock Purchase Agreement (1)
2.2 Partnership Units Purchase Agreement (2)
2.3 Management Purchase Agreement (3)
2.4 Limited Liability Company Agreement of (4)
Riverside Drive L.L.C.
2.5 Master Indemnity Agreement (5)
3.4. Agreement of Limited Partnership (6)
10.1 Promissory Note dated December 27, 1994, from Century (7)
Stoney Greens, L.P. to USL Capital Corporation
("USL") in the principal amount of $30,000.00
10.2 Form of Deed of Trust, Security Agreement, (7)
Assignment and Rents, Fixture Filing and
Financing Statement by CSG to Howard E. Schreiber,
Trustee for the benefit of USL
10.3 Form of Promissory Note from the Registrant to Secore
Financial Corporation ("Secore") relating to the
refinancing of each of Cooper's Pointe, Copper
Mill, Four Winds, Hampton Greens, Plantation
Creek, Stoney Creek, and Wood Creek.
10.4 Form of Mortgage/Deed of Trust and Security
Agreement from the Registrant to Secore relating to
the refinancing of each of Cooper's Pointe, Copper
Mill, Four Winds, Hampton Greens, Plantation
Creek, Stoney Creek and Wood Creek.
16 Letter dated April 27, 1994, from the Registrant's (8)
Former Independent Auditors
___________________
(1) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated August 17, 1995
(2) Incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(3) Incorporated by reference to Exhibit 2.2 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(4) Incorporated by reference to Exhibit 2.4 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(5) Incorporated by reference to Exhibit 2.5 to Form 8-K filed by Insignia
Financial Group, Inc. with the Securities and Exchange Commission on
September 1, 1995.
(6) Incorporated by reference to Exhibit A to the Prospectus of the Registrant
dated September 25, 1984, and thereafter supplemented, included in
Registration Statement on Form S-11 (Reg No. 2-89285).
(7) Incorporated by reference to the Registrant's Form 10-K for the year ended
December 31, 1994.
(8) Incorporated by reference to the Registrant's Current Report on Form 8-K
dated April 22, 1994.
FIRST MORTGAGE NOTE
New York, New York
FOR VALUE RECEIVED _______________________________
________________, a _______ limited partnership, having its
principal place of business at _____________________________
______________________________________ (hereinafter referred
to as "Maker"), promises to pay to the order of [ORIGINATOR],
a ________ corporation, at its principal place of business at
_____________________________________________________________
(hereinafter referred to as "Payee"), or at such other
place as the holder hereof may from time to time designate
in writing, the principal sum of ________________________
________ AND 00/100 DOLLARS ($_______________) in lawful
money of the United States of America with interest thereon
to be computed from the date of this Note at the Applicable
Interest Rate (hereinafter defined), and to be paid as
hereinafter provided.
A. PAYMENT TERMS
Maker shall pay to Payee:
(i) a payment of interest only on the date hereof for
the period commencing on the date hereof and
ending December 31, 1995;
(ii) a constant payment of $_________ (the "Monthly
Payment") on February 1, 1996 and on the first
day of each calendar month (the "Monthly Payment
Date") thereafter to and including the first day
of December, 2005; and
(iii) the balance of the principal sum then outstanding
and all interest thereon shall be due and payable
on the first day of January, 2006 (the "Maturity
Date").
Each of such payments shall be applied as follows:
(i) First to the payment of interest computed at the
Applicable Interest Rate; and
(ii) The balance applied toward the reduction of the
principal sum.
B. INTEREST
The term "Applicable Interest Rate" as used in this
Note shall mean _____% per annum.
Interest on the principal sum of this Note will be
due and payable monthly, in level payments, on the first day
of each calendar month, based on a year of twelve months of
thirty days each.
C. DEFAULT AND ACCELERATION
The whole of the principal sum of this Note,
together with all interest accrued and unpaid thereon and all
other sums due under the Mortgage (hereinafter defined) and
this Note (all such sums hereinafter collectively referred to
as the "Debt") shall without notice become immediately due
and payable at the option of Payee if any payment required in
this Note is not paid within ten (10) days after written
notice from the Payee notifying Maker that the same is due or
on the happening of any other default, after the expiration
of any applicable notice and grace periods, herein or under
the terms of the Mortgage (hereinafter collectively an "Event
of Default"). All of the terms, covenants and conditions
contained in the Mortgage and the Other Security Documents
(hereinafter defined) are hereby made part of this Note to
the same extent and with the same force as if they were fully
set forth herein. In the event that it should become
necessary to employ counsel to collect the Debt or to
protect, sell or foreclose the security hereof, Maker also
agrees to pay reasonable attorney's fees for the services of
such counsel whether or not suit be brought.
D. PREPAYMENT
The principal balance of this Note may not be
prepaid, in whole or in part, prior to January 1, 2000.
Commencing on January 1, 2000 and at any time thereafter,
provided no default exists under the Mortgage or under this
Note, the principal balance of the Note may be prepaid in
whole, but not in part, on the first day of any calendar
month, upon not less than thirty (30) days or more than forty
five (45) days prior written notice (the "Prepayment Notice")
by certified mail to Payee specifying the date (the
"Prepayment Date") on which prepayment is to be made. Upon
any prepayment of this Note, whether voluntary or
involuntary, including, without limitation, any prepayment
as a result of acceleration or prepayment by court order or
trustee sale, Maker shall pay to Payee (a) all interest
accrued and unpaid on the principal balance of this Note to
and including the Prepayment Date, (b) all other sums due
under the Mortgage, this Note or the Other Security Documents
and (c) a prepayment premium (the "Premium") in an amount
equal to the greater of (i) one percent (1%) of the principal
balance of this Note outstanding after the application of the
Monthly Payment, if any, due on such Prepayment Date or (ii)
the product of (A) a fraction whose numerator is an amount
equal to the portion of the principal balance of the Debt
being prepaid and whose denominator is the entire outstanding
principal balance of the Debt on the date of such prepayment,
multiplied by (B) an amount equal to the remainder obtained
by subtracting (x) an amount equal to the entire outstanding
principal balance of the Debt as of the date of such
prepayment from (y) the present value as of the date of such
prepayment of the remaining scheduled payments of principal
and interest on the entire Debt (including any ballon
payment) determined by discounting such payments at the
Discount Rate (hereinafter defined). The calculation of the
Premium shall be made by Payee (or the then holder of the
Debt, as applicable), and shall, absent manifest error, be
final, conclusive and binding upon all parties.
"Discount Rate" shall mean the rate which, when
compounded monthly, is equivalent to the Treasury Rate
(hereinafter defined) when compounded semi-annually.
"Treasury Rate" shall mean the yield calculated by
the linear interpolation of the yield, as reported in Federal
Reserve Statistical Release H.15-Selected Interest Rates
under the heading "U.S. government securities/Treasury
constant maturities" for the week ending prior to the date
of the relevant prepayment of the Debt, of U.S. Treasury
constant maturities with a maturity date (one longer and one
shorter) most nearly approximating the maturity date of the
Debt. In the event Release H.15 is no longer published,
Payee (or the then holder of the Debt, as applicable) shall
select a comparable publication to determine the Treasury
Rate.
In no event shall Payee be required to (i) accept
any prepayment hereunder without the payment of the Premium
then due or (ii) reinvest any prepayment proceeds in U.S.
Treasury obligations or otherwise. The Premium shall not be
due and payable for any prepayment (unless such prepayment
occurs after an acceleration of the Debt by Payee) made
during the six (6) month period immediately prior to the
Maturity Date.
Notwithstanding the foregoing: if following the
occurrence of any Event of Default, Maker shall tender
payment of an amount sufficient to satisfy the Debt at any
time prior to a foreclosure sale of the Mortgaged Property
(as defined in the Mortgage), and if at the time of such
tender prepayment of the Debt is not permitted, Maker shall,
in addition to the entire Debt, also pay to Payee a sum equal
to (a) all interest which would have accrued on the
outstanding principal balance of this Note at the Applicable
Interest Rate from the date of such tender to January 1, 2000
and (b) the Premium which would have been payable as of
January 1, 2000.
E. DEFAULT INTEREST
Maker does hereby agree that upon the occurrence
of an Event of Default or upon the failure of Maker to pay
the Debt in full on the Maturity Date, Payee shall be
entitled to receive and Maker shall pay interest ("Default
Interest") on the entire unpaid principal sum at the rate of
(i) four percent (4%) over the Applicable Interest Rate then
in effect or (ii) the maximum rate of interest which Maker
may by law pay, whichever is lower, to be computed from the
occurrence of the Event of Default until the actual receipt
and collection of the Debt (the "Default Interest Rate").
This charge shall be added to the Debt, and shall be deemed
secured by the Mortgage. This clause, however, shall not be
construed as an agreement or privilege to extend the date of
the payment of the Debt, nor as a waiver of any other right
or remedy accruing to Payee by reason of the occurrence of
any Event of Default.
F. SECURITY
This Note is secured by the Mortgage and the Other
Security Documents. The term "Mortgage" as used in this Note
shall mean the First Mortgage and Security Agreement dated as
of the date hereof in the principal sum of $_____________
given by Maker to Payee encumbering the fee estate of Maker
in certain premises located in _______ County, State of
_______, and other property, as more particularly described
therein and intended to be duly recorded in said County. The
term "Other Security Documents" as used in this Note shall
mean all and any of the documents other than this Note or the
Mortgage now or hereafter executed by Maker and/or others and
by or in favor of Payee, which wholly or partially secure or
guarantee payment of this Note. Whenever used, the singular
number shall include the plural, the plural the singular, and
the words "Payee" and "Maker" shall include their respective
successors, assigns, heirs, executors and administrators.
G. SAVINGS CLAUSE
This Note is subject to the express condition that
at no time shall Maker be obligated or required to pay
interest on the principal balance due hereunder at a rate
which could subject Payee to either civil or criminal
liability as a result of being in excess of the maximum
interest rate which Maker is permitted by applicable law to
contract or agree to pay. If by the terms of this Note, Maker
is at any time required or obligated to pay interest on the
principal balance due hereunder at a rate in excess of such
maximum rate, the Applicable Interest Rate shall be deemed to
be immediately reduced to such maximum rate and all previous
payments in excess of the maximum rate shall be deemed to
have been payments in reduction of principal and not on
account of the interest due hereunder.
H. LATE CHARGE
If any sum payable under this Note is not paid on
or before the date on which it is due, without taking into
account any applicable notice or grace period, Maker shall
pay to Payee upon demand an amount equal to the lesser of
five percent (5%) of such unpaid sum or the maximum amount
permitted by applicable law to defray the expenses incurred
by Payee in handling and processing such delinquent payment
and to compensate Payee for the loss of the use of such
delinquent payment and such amount shall be secured by the
Mortgage and the Other Security Documents. Nothing contained
herein is intended to affect the rights of Payee in and to
any Default Interest due to Payee pursuant to the provisions
of paragraph E hereof entitled "Default Interest."
I. MISCELLANEOUS
This Note may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Maker or Payee, but only
by an agreement in writing signed by the party against whom
enforcement of any modification, amendment, waiver,
extension, change, discharge or termination is sought.
If Maker consists of more than one person or party,
the obligations and liabilities of each such person or party
shall be joint and several. The foregoing sentence, however,
is not intended to affect the limited liability of any
limited partner or stockholder of Maker afforded by
applicable partnership or corporate law.
Maker and all others who may become liable for the
payment of all or any part of the Debt do hereby severally
waive presentment and demand for payment, notice of dishonor,
protest and notice of protest and non-payment. No release of
any security for the Debt or extension of time for payment of
this Note or any installment hereof, and no alteration,
amendment or waiver of any provision of this Note, the
Mortgage or the Other Security Documents made by agreement
between Payee and any other person or party shall release,
modify, amend, waive, extend, change, discharge, terminate or
affect the liability of Maker, and any other who may become
liable for the payment of all or any part of the Debt, under
this Note, the Mortgage or the Other Security Documents.
Maker (and the undersigned representative of Maker,
if any) represents that Maker has full power, authority and
legal right to execute and deliver this Note, the Mortgage
and the Other Security Documents and that this Note, the
Mortgage and the Other Security Documents constitute valid
and binding obligations of Maker.
This Note shall be governed and construed in
accordance with the laws of the State of New York and the
applicable laws of the United States of America.
J. EXCULPATION
Payee shall not enforce the liability and
obligation of Maker to perform and observe the obligations
contained in this Note or the Mortgage by any action or
proceeding wherein a money judgment shall be sought against
Maker or any general or limited partner of Maker (hereinafter
collectively referred to as the "Exculpated Parties"), except
that Payee may bring a foreclosure action, action for
specific performance or other appropriate action or
proceeding to enable Payee to enforce and realize upon this
Note, the Mortgage, the Other Security Documents, and the
interest in the Mortgaged Property, the Rents (as defined in
the Mortgage) and any other collateral given to Payee created
by this Note, the Mortgage and the Other Security Documents;
provided, however, that any judgment in any such action or
proceeding shall be enforceable against the Exculpated
Parties only to the extent of Maker's interest in the
Mortgaged Property, in the Rents and in any other collateral
given to Payee. Payee, by accepting this Note and the
Mortgage, agrees that it shall not sue for, seek or demand
any deficiency judgment against the Exculpated Parties in any
such action or proceeding, under or by reason of or under or
in connection with the Mortgage, the Other Security Documents
or this Note. The provisions of this paragraph shall not,
however, (i) constitute a waiver, release or impairment of
any obligation evidenced or secured by the Mortgage, the
Other Security Documents or this Note; (ii) impair the right
of Payee to name Maker as a party defendant in any action or
suit for judicial foreclosure and sale under the Mortgage;
(iii) affect the validity or enforceability of any guaranty
made in connection with the Mortgage, this Note, or the Other
Security Documents; (iv) impair the right of Payee to obtain
the appointment of a receiver; (v) impair the enforcement of
the First Assignment of Leases and Rents dated the date
hereof given by Maker to Payee executed in connection
herewith; (vi) impair the right of Payee to bring suit with
respect to fraud or intentional misrepresentation by Maker,
the Exculpated Parties or any other person or entity in
connection with the Mortgage, this Note or the Other Security
Documents; (vii) impair the right of Payee to obtain the
Rents received by any of the Exculpated Parties after the
occurrence of an Event of Default; (viii) impair the right of
Payee to bring suit with respect to the Exculpated Parties'
misappropriation of tenant security deposits or Rents
collected in advance; (ix) impair the right of Payee to
obtain insurance proceeds or condemnation awards due to Payee
under the Mortgage; (x) impair the right of Payee to enforce
the provisions of sub-paragraphs 36(g) through 36(j),
inclusive and paragraphs 34 and 35 of the Mortgage against
the Maker (excluding the general and limited partners of
Maker); or (xi) impair the right of Payee to recover any part
of the Debt from the Maker (excluding the general and limited
partners of Maker) following the breach of any covenant
contained in paragraphs 9 or 56 of the Mortgage.
K. [LOCAL LAW PROVISIONS]
1. In the event of any inconsistencies between this
paragraph K and any other provisions of this Note, the terms
and conditions of this paragraph K shall control and be
binding.
[ADD LOCAL PROVISIONS, IF ANY]
[NO FURTHER TEXT ON THIS PAGE]
IN WITNESS WHEREOF, Maker has duly executed this
Note the day and year first above written.
Witnesses: _______________________________
________________, a _______
limited partnership
______________________ By: ___________________________,
Name: ___________________________
a ___________ corporation,
its general partner
______________________ By:_______________________,
Name: Name:
Title:
This instrument prepared by:
Jeffrey J. Temple, Esq.
White & Case
1155 Avenue of the Americas
New York, New York 10036
______________________________________,
a ________ limited partnership
(Mortgagor)
to
SECORE FINANCIAL CORPORATION,
a ____________ corporation
(Mortgagee)
______________________
FIRST MORTGAGE AND
SECURITY AGREEMENT
______________________
Dated: As of December __, 1995
Location:
County:
PREPARED BY AND UPON
RECORDATION RETURN TO:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Attention: Jeffrey J. Temple, Esq.
THIS FIRST MORTGAGE AND SECURITY AGREEMENT (the
"Mortgage"), is made as of the ____ day of December, 1995,
by ______________________________________________________, a
_______ limited partnership having its principal place of
business at ________________________________________________
_________________________________________________, as
mortgagor ("Mortgagor"), and SECORE FINANCIAL CORPORATION, a
________ corporation, having its principal place of business
at ____ __________________________________________________,
as mortgagee ("Mortgagee").
W I T N E S S E T H:
To secure the payment of an indebtedness in the
principal sum of _________________________________ AND 00/100
DOLLARS ($_____________), lawful money of the United States
of America, to be paid with interest according to a certain
note dated the date hereof made by Mortgagor to Mortgagee
(the note, together with all extensions, renewals or
modifications thereof being hereinafter collectively called
the "Note") (said indebtedness, interest and all other
amounts evidenced and/or secured by the Note, this Mortgage
and the Other Security Documents being collectively called
the "Debt"), Mortgagor has mortgaged, given, granted,
bargained, sold, aliened, enfeoffed, conveyed, confirmed,
pledged, assigned, set over and hypothecated and by these
presents does mortgage, give, grant, bargain, sell, alien,
enfeoff, convey, confirm, pledge, assign, set over and
hypothecate unto Mortgagee, its successors and assigns, the
real property described in Exhibit A attached hereto (the
"Premises") and the buildings, structures, fixtures,
additions, enlargements, extensions, modifications, repairs,
replacements and improvements now or hereafter located
thereon (the "Improvements");
TOGETHER WITH: all right, title, interest and
estate of Mortgagor now owned, or hereafter acquired, in and
to the following property, rights, interests and estates (the
Premises, the Improvements together with the following
property, rights, interests and estates being hereinafter
collectively referred to as the "Mortgaged Property"):
(a) all easements, rights-of-way, strips and gores
of land, streets, ways, alleys, passages, sewer rights,
water, water courses, water rights and powers, and
rights and development rights, and all estates, rights,
titles, interests, privileges, liberties, tenements,
hereditaments and appurtenances of any nature
whatsoever, in any way belonging, relating or pertaining
to the Premises and the Improvements and the reversion
and reversions, remainder and remainders, and all land
lying in the bed of any street, road or avenue, opened
or proposed, in front of or adjoining the Premises, to
the center line thereof and all the estates, rights,
titles, interests, dower and rights of dower, curtesy
and rights of curtesy, property, possession, claim and
demand whatsoever, both at law and in equity, of
Mortgagor of, in and to the Premises and the
Improvements and every part and parcel thereof, with the
appurtenances thereto;
(b) all machinery, equipment, fixtures (including
but not limited to all heating, air conditioning,
plumbing, lighting, communications and elevator
fixtures) and other property of every kind and nature
whatsoever owned by Mortgagor, or in which Mortgagor has
or shall have an interest, now or hereafter located upon
the Premises and the Improvements, or appurtenant
thereto, and usable in connection with the present or
future management, maintenance, operation and occupancy
of the Premises and the Improvements and all building
equipment, materials and supplies of any nature
whatsoever owned by Mortgagor, or in which Mortgagor has
or shall have an interest, now or hereafter located upon
the Premises and the Improvements, or appurtenant
thereto, or usable in connection with the present or
future management, maintenance, operation and occupancy
of the Premises and the Improvements (hereinafter
collectively called the "Equipment"), and the right,
title and interest of Mortgagor in and to any of the
Equipment which may be subject to any security
interests, as defined in the Uniform Commercial Code,
as adopted and enacted by the state or states where any
of the Mortgaged Property is located (the "Uniform
Commercial Code"), superior in lien to the lien of this
Mortgage;
(c) all awards or payments, including interest
thereon, which may heretofore and hereafter be made with
respect to the Mortgaged Property, whether from the
exercise of the right of eminent domain (including but
not limited to any transfer made in lieu of or in
anticipation of the exercise of said right), or for a
change of grade, or for any other injury to or decrease
in the value of the Mortgaged Property;
(d) all written leases and other rental agreements
(collectively, the "Written Leases"), affecting the use,
enjoyment or occupancy of the Premises and the
Improvements heretofore or hereafter entered into (the
Written Leases and all other similar agreements
hereinafter collectively referred to as the "Leases")
and all rents, revenues, issues and profits (including
all oil and gas or other mineral royalties and bonuses)
from the Premises and the Improvements (the "Rents") and
all proceeds from the sale or other disposition of the
Leases and the right to receive and apply the Rents to
the payment of the Debt;
(e) all proceeds of and any unearned premiums on
any insurance policies covering the Mortgaged Property,
including, without limitation, the right to receive and
apply the proceeds of any insurance, judgments, or
settlements made in lieu thereof, for damage to the
Mortgaged Property;
(f) the right, in the name and on behalf of
Mortgagor, to appear in and defend any action or
proceeding brought with respect to the Mortgaged
Property and to commence any action or proceeding to
protect the interest of Mortgagee in the Mortgaged
Property;
(g) all right, title and interest of Mortgagor
arising from the operation of the Property in and to all
payments for goods or property sold or leased or for
services rendered, whether or not yet earned by
performance, and not evidenced by an instrument or
chattel paper (hereinafter referred to as "Accounts
Receivable"), including, without limiting the generality
of the foregoing, all rights to payment from any
consumer credit/charge card organization or entity (such
as, or similar to, the organizations or entities which
sponsor and administer the American Express Card, the
Visa Card, the Mastercard, the Carte Blanche Card, or
the Discover Card). Accounts Receivable shall include
those now existing or hereafter created, substitutions
therefor, proceeds (whether cash or noncash, movable or
immovable, tangible or intangible) received upon the
sale, exchange, transfer, collection or other
disposition or substitution thereof and any and all of
the foregoing and proceeds therefrom;
(h) all contract rights, with respect to, or which
may in any way pertain to, the Premises or the business
of the Mortgagor, including, without limitation, all
refunds, rebates, security deposits, or other expectancy
under or from any such account or contract right;
(i) all general intangibles with respect to, or
which may in any way pertain to, the Premises or the
business of the Mortgagor, including, without
limitation, any trade names, or other names under or by
which the Premises may at any time be operated or known,
the good will of the Mortgagor in connection therewith
and the right of the Mortgagor to carry on business
under any or all such name or names and any variant or
variants thereof, insofar as the same may be
transferable by the Mortgagor without breach of any
agreement pursuant to which the Mortgagor may have
obtained its right to use such name or names, and any
and all trademarks, prints, labels, advertising concepts
and literature;
TO HAVE AND TO HOLD the above granted and described
Mortgaged Property unto and to the use and benefit of
Mortgagee, and the successors and assigns of Mortgagee,
forever;
PROVIDED, HOWEVER, these presents are upon the
express condition that, if Mortgagor shall well and truly pay
to Mortgagee the Debt at the time and in the manner provided
in the Note and this Mortgage and shall well and truly abide
by and comply with each and every covenant and condition set
forth herein and in the Note, these presents and the estate
hereby granted shall cease, terminate and be void;
AND Mortgagor represents and warrants to and
covenants and agrees with Mortgagee as follows:
PART I
PROVISIONS OF GENERAL APPLICATION
1. Payment of Debt and Incorporation of
Covenants, Conditions and Agreements. Mortgagor will pay
the Debt at the time and in the manner provided in the Note
and in this Mortgage. All the covenants, conditions and
agreements contained in (a) the Note and (b) all and any of
the documents other than the Note or this Mortgage now or
hereafter executed by Mortgagor and/or others and by or in
favor of Mortgagee, which wholly or partially secure or
guaranty payment of the Note including but not limited to the
First Assignment of Leases and Rents (the "Assignment of
Rents") between Mortgagor, as assignor and Mortgagee, as
assignee (collectively, the "Other Security Documents"), are
hereby made a part of this Mortgage to the same extent and
with the same force as if fully set forth herein.
2. Warranty of Title. Mortgagor warrants that
Mortgagor has good title to the Mortgaged Property and has
the right to mortgage, give, grant, bargain, sell, alien,
enfeoff, convey, confirm, pledge, assign and hypothecate and
grant a security interest in the same and that Mortgagor
possesses an unencumbered fee estate in the Premises and the
Improvements and that it owns the Mortgaged Property free and
clear of all liens, encumbrances and charges whatsoever
except for those exceptions shown in the title insurance
policy insuring the lien of this Mortgage. Mortgagor shall
forever warrant, defend and preserve such title and the
validity and priority of the lien of this Mortgage and shall
forever warrant and defend the same to Mortgagee against the
claims of all persons whomsoever.
3. Insurance. (a) Mortgagor will keep the
Mortgaged Property insured against loss or damage by fire,
flood and such other hazards, risks and matters, as Mortgagee
may from time to time require, including, without limitation,
rental value insurance against the abatement in rent or
business interruption insurance for at least twelve (12)
months, general public liability in an amount not less than
$1,000,000.00, including excess liability coverage and
umbrella liability insurance, boiler and machinery insurance,
and earthquake and/or hurricane insurance. Mortgagor shall
pay the premiums for such insurance (the "Insurance
Premiums") as the same become due and payable. All policies
of insurance (the "Policies") shall (i) be issued under forms
acceptable to Mortgagee (containing the standard New York
mortgagee non-contribution clause naming the Mortgagee as the
insured mortgagee and the person to which all payments made
by the Qualified Insurer (hereinafter defined) shall be
paid); (ii) provide for at least thirty (30) days prior
written notice to the Mortgagee of any cancellation,
reduction in an amount or change in insurance coverage; (iii)
contain a replacement cost endorsement for 100% of all
replacement costs relating to the Improvements (without
deduction for depreciation); (iv) contain an "enforcement" or
"Law and Ordinance" endorsement in form and substance
satisfactory to Mortgagee; and (v) be issued by insurers
qualified under the laws of the State in which the Mortgaged
Property is located, duly authorized and licensed to transact
insurance business in such State and reflecting a claims-
paying ability of A or better as determined by Standard &
Poors' Corporation ("S&P"), Duff and Phelps Credit Rating Co.
("Duff"), if rated by Duff, Fitch Investors Service, Inc.
("Fitch"), if rated by Fitch, and a claims paying ability of
A2 as determined by Moody's Investors Service, Inc.
("Moody's"), if rated by Moody's (each such insurer
hereinafter referred to as a "Qualified Insurer",
collectively "Qualified Insurers"). Such insurance shall not
be invalidated due to the use or occupancy of the Property
for purposes more hazardous than are permitted by the policy.
The maximum amount deductible permitted under each insurance
policy shall be such as is customarily carried by owners or
managing agents operating first class multi-family residences
of similar type and size of the Mortgaged Property.
Mortgagor shall deliver the Policies, or duplicate originals
of the same, to Mortgagee. Not later than sixty (60) days
prior to the expiration date of each of the Policies,
Mortgagor will deliver evidence satisfactory to Mortgagee of
the renewal of each of the Policies. The Mortgagor shall not
insure the Mortgaged Property under any insurance policy
other than as expressly set forth herein.
(a) If the Mortgaged Property shall be damaged or
destroyed, in whole or in part, by fire or other casualty,
Mortgagor shall give prompt notice thereof to Mortgagee. The
net amount of all insurance proceeds received by Mortgagee
with respect to such damage or destruction, shall be held in
a segregated account (the "Net Proceeds Account") and
invested in an Eligible Investment (hereinafter defined).
Mortgagee shall be entitled to deduct from such insurance
proceeds all of its administrative costs and expenses
reasonably incurred in connection with the investing and
collection of such insurance proceeds, and the balance if any
(the "Net Proceeds") shall be disbursed by Mortgagee in
accordance with the terms and conditions set forth herein to
pay for the costs and expenses of the Restoration
(hereinafter defined) provided (i) no Event of Default has
occurred and remains uncured under this Mortgage, the Note or
any of the Other Security Documents, (ii) Mortgagor proceeds
promptly after the insurance claims are settled with the
restoration, replacement, rebuilding or repair of the
Mortgaged Property as nearly as possible to the condition the
Mortgaged Property was in immediately prior to such fire or
other casualty (the "Restoration"), (iii) the Restoration
shall be done in compliance with all applicable laws, rules
and regulations, and, following the Restoration, the
Mortgaged Property shall be permitted under all applicable
zoning laws to be used for, and shall continue to be used
for, all purposes associated with multi-family residences,
(iv) a set of the plans and specifications in connection with
the Restoration shall be submitted to Mortgagee and shall be
acceptable to Mortgagee in all respects, (v) all costs and
expenses incurred by Mortgagee in connection with making the
Net Proceeds available for the Restoration of the Mortgaged
Property including, without limitation, counsel fees and
inspecting engineer fees incurred by Mortgagee, shall be paid
by Mortgagor, (vi) rental loss insurance is available to
offset fully any abatement of rent to which any tenant of the
Mortgaged Property may be entitled or any rent loss arising
out of the cancellation of any Lease as a result of the
casualty, throughout the Restoration and a reasonable-lease-
up period following the Restoration, and (vii) in Mortgagee's
judgment, the Restoration must be able to be completed within
one (1) year after the loss and at least one (1) year prior
to the Maturity Date of the Note. The term "Eligible
Investment" shall mean any investment approved by Mortgagee
in its sole discretion.
(b) The Net Proceeds shall be held in trust in the
Net Proceeds Account. The Net Proceeds shall be paid by
Mortgagee (or by a disbursing agent ("Depository") selected
by Mortgagee), to, or as directed by, Mortgagor from time to
time during the course of the Restoration, upon receipt of
evidence, and certification from Mortgagor, satisfactory to
Mortgagee, that (i) all materials installed and work and
labor performed (except to the extent they are to be paid for
out of the requested payment) in connection with the
Restoration have been paid for in full, (ii) no notices of
intention, mechanics' or other liens or encumbrances on the
Mortgaged Property arising out of the Restoration exist, and
(iii) the balance of the Net Proceeds plus the balance of any
deficiency deposits given by Mortgagor to Mortgagee or
Depository pursuant to the provisions of this paragraph
hereinafter set forth shall be sufficient to pay in full the
balance of the cost of the Restoration. Mortgagor shall pay
all fees and expenses of the Depository in connection with
the above.
(c) Notwithstanding anything to the contrary
contained herein, if the Net Proceeds shall be less than
$50,000.00, only one disbursement shall be required upon the
completion of the Restoration to the satisfaction of
Mortgagee. If the Net Proceeds shall be $50,000.00 or more,
Mortgagee shall disburse the Net Proceeds as provided above,
however, in no event shall Mortgagee be required to disburse
such Net Proceeds, or any portion thereof, more often than
once every thirty (30) days. If at any time the Net
Proceeds, or the undisbursed balance thereof, shall not be
sufficient to pay in full the balance of the cost of the
Restoration, Mortgagor shall deposit the deficiency with
Mortgagee or Depositary before any further disbursement of
the Net Proceeds shall be made.
(d) Any amount of the Net Proceeds received by
Mortgagee and not required to be disbursed for the
Restoration pursuant to the provisions of this paragraph
hereinabove set forth shall be retained and applied by
Mortgagee toward the payment of the Debt whether or not then
due and payable in such priority and proportions as Mortgagee
in its discretion shall deem proper. Upon the receipt and
retention by Mortgagee of such insurance proceeds, the lien
of this Mortgage shall be reduced only by the amount thereof
received and retained by Mortgagee and actually applied by
Mortgagee in reduction of the Debt.
(e) Notwithstanding anything to the contrary
contained herein, Mortgagee shall not be obligated to make
the Net Proceeds available for Restoration of the Mortgaged
Property unless the principal balance of the Note following
the completion of the Restoration (assuming the amount of Net
Proceeds received by Mortgagee in excess of the cost of the
Restoration (as estimated by Mortgagee) is applied to the
prepayment of the Note) will be in an amount sufficient to
cause (i) the Debt Service Coverage Ratio (hereinafter
defined) applicable to the Mortgaged Property immediately
following the Restoration to be not less than 1.3 to 1.0 and
(ii) in the event of any Restoration involving Net Proceeds
of more than $250,000.00, the ratio of (a) the appraised
value of the Mortgaged Property after completion of the
Restoration (as determined by an independent third-party
appraiser holding an MAI designation and having a national
practice and at least ten (10) years real estate experience
appraising properties of a similar nature and type as the
Mortgaged Property) to (b) the then outstanding principal
balance of the Note to be equal to or greater than the
Minimum Loan to Value Ratio (hereinafter defined). The term
"Minimum Loan to Value Ratio" means a ratio equal to the
lesser of (i) 1.33 to 1.0 or (ii) the ratio of (a) the
appraised value of the Mortgaged Property on the date hereof
to (b) the then outstanding principal balance of the Note.
The fee for such appraisal shall be paid for by the
Mortgagor.
4. Payment of Taxes, etc. Mortgagor shall pay
all taxes, assessments, water rates and sewer rents, now or
hereafter levied or assessed or imposed against the Mortgaged
Property or any part thereof (the "Taxes") and all ground
rents, maintenance charges, other governmental impositions,
and other charges, including, without limitation, vault
charges and license fees for the use of vaults, chutes and
similar areas adjoining the Premises, now or hereafter levied
or assessed or imposed against the Mortgaged Property or any
part thereof (the "Other Charges") as same become due and
payable. Upon written request from Mortgagee, Mortgagor will
deliver to Mortgagee evidence satisfactory to Mortgagee that
the Taxes and Other Charges have been so paid or are not then
delinquent. Mortgagor shall not suffer and shall promptly
cause to be paid and discharged any lien or charge whatsoever
which may be or become a lien or charge against the Mortgaged
Property, and shall promptly pay for all utility services
provided to the Mortgaged Property. Mortgagor shall furnish
to Mortgagee receipts for the payment of the Taxes, Other
Charges and said utility services prior to the date the same
shall become delinquent.
Notwithstanding the above, after prior written
notice to Mortgagee, Mortgagor, at its own expense, may
contest by appropriate legal proceeding, promptly initiated
and conducted in good faith and with due diligence, the
amount or validity or application in whole or in part of any
of the Taxes, provided that (i) no Event of Default under the
Note or this Mortgage shall have occurred and be continuing,
(ii) such proceeding shall suspend the collection of the
Taxes from Mortgagor and from the Mortgaged Property, (iii)
such proceeding shall be permitted under and be conducted in
accordance with the provisions of any other instrument to
which Mortgagor is subject and shall not constitute a default
thereunder, (iv) neither the Mortgaged Property nor any part
thereof or interest therein will be in danger of being sold,
forfeited, terminated, canceled or lost, (v) Mortgagor shall
have set aside adequate reserves for the payment of the
Taxes, together with all interest and penalties thereon, and
(vi) Mortgagor shall have furnished such security as may be
reasonably required in the proceeding, or as may be requested
by Mortgagee to insure the payment of any such Taxes,
together with all interest and penalties thereon.
1. Escrow Fund. Mortgagor will comply with any
requirement imposed by any Rating Agency (as hereinafter
defined) as a condition of its initial rating, the Federal
National Mortgage Association ("FNMA") or the Federal Home
Loan Mortgage Corporation ("Freddie Mac"), with respect to
the establishment of an escrow for Taxes and Insurance.
2. Condemnation. (a) Mortgagor shall give
Mortgagee prompt notice of the actual or threatened
commencement of any condemnation or eminent domain proceeding
and shall deliver to Mortgagee copies of any and all papers
served in connection with such proceedings. If less than 25%
of the land constituting the Mortgaged Property is taken,
then the net amount of all awards and payments received by
Mortgagee with respect to such taking shall be held in a
segregated account (the "Net Awards Account") and invested in
an Eligible Investment. Mortgagee shall be entitled to
deduct from the condemnation award all of its administrative
costs and expenses incurred in connection with investing and
collecting such condemnation award and the balance, if any
(hereinafter referred to as the "Net Award"), will be
disbursed by Mortgagee to pay for the costs and expenses of
the Condemnation Restoration (hereinafter defined), provided
(i) Mortgagor is not in default under this Mortgage, the Note
or any of the Other Security Documents, (ii) Mortgagor
proceeds promptly after the making of any award of payment
for such taking with the restoration, replacement, rebuilding
or repair of the Mortgaged Property as nearly as possible to
the condition the Mortgaged Property was in immediately prior
to such taking (the "Condemnation Restoration"), (iii) the
Condemnation Restoration shall be done in compliance with all
applicable laws, rules and regulations, and, following the
Condemnation Restoration, the Mortgaged Property shall be
permitted under all applicable zoning laws to be used for,
and shall continue to be used for, all purposes associated
with multi-family residences, (iv) a set of plans and
specifications in connection with the Condemnation
Restoration shall be submitted to Mortgagee and shall be
satisfactory to Mortgagee in all respects, (v) Mortgagor
shall have reimbursed Mortgagee for all costs and expenses
incurred by Mortgagee in connection with making the Net Award
available for the Condemnation Restoration of the Mortgaged
Property, including, without limitation, counsel fees,
inspecting engineer fees and appraisal fees incurred by
Mortgagee, (vi) rental loss proceeds are available to offset
in full any loss in rents throughout the Condemnation
Restoration and a reasonable lease-up period following the
completion of the Condemnation Restoration and (vii) in the
opinion of Mortgagee the Condemnation Restoration of the
Mortgaged Property can be completed within one (1) year after
the taking and at least one (1) year prior to the maturity
date of the Note.
(a) The Net Award shall be held in trust by
Mortgagee in the Net Awards Account and shall be paid by
Mortgagee or a Depository designated by Mortgagee to, or as
directed by, Mortgagor from time to time during the course
of the Condemnation Restoration, upon receipt of evidence
satisfactory to Mortgagee, that (i) all materials installed
and work and labor performed (except to the extent they are
to be paid for out of the requested payment) in connection
with the Condemnation Restoration have been paid for in full,
(ii) there exist no notices of intention, mechanics' or other
liens or encumbrances on the Mortgaged Property arising out
of the Condemnation Restoration, and (iii) the balance of the
Net Award plus the balance of any deficiency deposits given
by Mortgagor to Mortgagee or Depositary pursuant to the
provisions of this paragraph hereinafter set forth shall be
sufficient to pay in full the balance of the cost of the
Condemnation Restoration.
(b) Notwithstanding anything to the contrary
contained herein, Mortgagee shall not be obligated to make
the Net Award available for the Condemnation Restoration of
the Mortgaged Property unless the principal balance of the
Note after the completion of the Condemnation Restoration
(assuming the amount of the Net Award received by Mortgagee
in excess of the cost of the Condemnation Restoration as
estimated by Mortgagee is applied to the prepayment of the
Note) will be sufficient to cause (i) the Debt Service
Coverage Ratio applicable to the Mortgaged Property
immediately following the Condemnation Restoration to be not
less than 1.3 to 1.0 and (ii) in the event of any
Condemnation Restoration involving Net Award of more than
$250,000.00, the ratio of (a) the appraised value of the
Mortgaged Property after completion of the Condemnation
Restoration (as determined by an independent third-party
appraiser holding an MAI designation and having a national
practice and at least ten (10) years real estate experience
appraising properties of a similar nature and type as the
Mortgaged Property) to (b) the then outstanding principal
balance of the Note to be equal to or greater than the
Minimum Loan to Value Ratio.
(c) Notwithstanding anything to the contrary
contained herein, if the Net Award shall be less than
$50,000.00, only one such disbursement shall be required upon
the completion of the Condemnation Restoration to the
satisfaction of Mortgagee. If the Net Award shall be
$50,000.00 or more, Mortgagee shall disburse the Net Award
as provided above, however, in no event shall Mortgagee be
required to disburse such Net Award, or any portion thereof,
more often than once every thirty (30) days. If at any time
the Net Award, or the undisbursed balance thereof, shall not
in the opinion of Mortgagee be sufficient to pay in full the
balance of the cost of Condemnation Restoration, Mortgagor
shall deposit such deficiency with Mortgagee or Depository
before any further disbursement of the Net Award shall be
made.
(d) Notwithstanding anything to the contrary
contained herein, and notwithstanding any taking by any
public or quasi-public authority through eminent domain or
otherwise (including but not limited to any transfer made in
lieu of or in anticipation of the exercise of such taking),
Mortgagor shall continue to pay the Debt at the time and in
the manner provided for in the Note and in this Mortgage and
the Debt shall not be reduced until any award or payment
therefor shall have been actually received and applied in
accordance with this paragraph 6. Mortgagee shall not be
limited to the interest paid on the award by the condemning
authority but shall be entitled to receive out of the award
interest at the rate or rates provided herein and in the
Note.
(e) Any amount of the Net Award received by
Mortgagee and not required to be disbursed for the
Condemnation Restoration pursuant to the provisions of this
paragraph hereinabove set forth may be retained and applied
by Mortgagee to the discharge of the Debt, whether or not
then due and payable, in such priority and proportions as
Mortgagee in its discretion shall deem proper. If the
Mortgaged Property is sold through foreclosure or otherwise
prior to the receipt by Mortgagee of such award or payment,
Mortgagee shall have the right, whether or not a deficiency
judgment on the Note shall have been sought, recovered or
denied, to receive such award or payment or a portion thereof
sufficient to pay the Debt, whichever is less. Mortgagor
shall file and prosecute its claim or claims for any such
award or payment in good faith and with due diligence and
cause the same to be collected and paid over to Mortgagee,
and Mortgagor hereby irrevocably authorizes and empowers
Mortgagee, in the name of Mortgagor or otherwise, to collect
and receipt for any such award or payment and to file and
prosecute such claim or claims, and although it is hereby
expressly agreed that the same shall not be necessary in any
event, Mortgagor shall upon demand of Mortgagee make, execute
and deliver any and all assignments and other instruments
sufficient for the purpose of assigning any such award or
payment to Mortgagee, free and clear of any encumbrances of
any kind or nature whatsoever.
3. Leases and Rents. (a) Mortgagee is hereby
granted and assigned by Mortgagor the right to enter the
Mortgaged Property for the purpose of enforcing its interest
in the Leases and the Rents, this Mortgage constituting a
present, absolute assignment of the Leases and the Rents.
Nevertheless, subject to the terms of this paragraph 7,
Mortgagee grants to Mortgagor a revocable license to operate
and manage the Mortgaged Property and to collect the Rents.
Mortgagor shall hold the Rents, or a portion thereof
sufficient to discharge all current sums due on the Debt, for
use in the payment of such sums. Upon or at any time after
an Event of Default, the license granted to Mortgagor herein
may be revoked by Mortgagee, and Mortgagee may enter upon the
Mortgaged Property, and collect, retain and apply the Rents
toward payment of the Debt in such priority and proportions
as Mortgagee in its discretion shall deem proper.
(a) All Written Leases shall be written on the
standard form of lease which has been approved by Mortgagee.
Upon written request from Mortgagee, Mortgagor shall furnish
Mortgagee with executed copies of all Leases and all
modifications thereto as soon as may be practicable. No
material changes may be made to the Mortgagee-approved
standard forms except as may be required by applicable law.
In addition, all renewals of Leases and all proposed leases
shall provide for rental rates comparable to existing local
market rates and shall be arms-length transactions.
Mortgagor shall not enter into any lease having a term of
more than three (3) years. All Leases must be Written Leases
unless such Leases create periodic tenancies on a month to
month basis or for a shorter period and are terminable upon
not more than thirty (30) days' notice. [All Leases shall
provide that they are subordinate to this Mortgage and that
the lessee agrees to attorn to Mortgagee.] Mortgagor (i)
shall observe and perform all the obligations imposed upon
the lessor under the Leases and shall not do or permit to be
done anything to impair the value of the Leases as security
for the Debt; (ii) shall enforce all of the terms, covenants
and conditions contained in the Leases upon the part of the
lessee thereunder to be observed or performed; (iii) shall
not collect any of the Rents more than one (1) month in
advance; (iv) shall not execute any other assignment of
lessor's interest in the Leases or the Rents; (v) shall not
materially alter, modify or change the terms of the Leases,
or cancel or terminate the Leases or accept a surrender
thereof or convey or transfer or suffer or permit a
conveyance or transfer of the Premises or of any interest
therein so as to effect a merger of the estates and rights
of, or a termination or diminution of the obligations of,
lessees thereunder, except that Mortgagor may terminate any
Lease in exercising its rights as landlord thereunder upon a
default by the tenant under said Lease; (vi) shall not alter,
modify or change the terms of any guaranty of the Leases or
cancel or terminate such guaranty; (vii) shall not consent to
any assignment of or subletting under the Leases not in
accordance with their terms; and (viii) shall execute and
deliver all such further assurances, confirmations and
assignments in connection with the Mortgaged Property as
Mortgagee shall from time to time require.
4. Maintenance of Mortgaged Property. (a)
Mortgagor shall cause the Mortgaged Property to be maintained
in a good and safe condition and repair. The Improvements
and the Equipment shall not be removed, demolished or
materially altered (except for normal replacement of the
Equipment). Mortgagor shall promptly comply with all laws,
orders and ordinances affecting the Mortgaged Property, or
the use thereof. Mortgagor shall promptly repair, replace or
rebuild any part of the Mortgaged Property which may be
destroyed by any casualty, or become damaged, worn or
dilapidated or which may be affected by any proceeding of the
character referred to in paragraph 6 hereof and shall
complete and pay for any structure at any time in the process
of construction or repair on the Premises. Mortgagor shall
not initiate, join in, acquiesce in, or consent to any change
in any private restrictive covenant, zoning law or other
public or private restriction, limiting or otherwise changing
the uses which may be made of the Mortgaged Property or any
part thereof. If under applicable zoning provisions the use
of all or any portion of the Mortgaged Property is or shall
become a nonconforming use, Mortgagor will not cause or
permit such nonconforming use to be discontinued or abandoned
without the express written consent of Mortgagee.
(a) Mortgagor hereby represents that all
inspections, licenses and certificates required to be made
or issued with respect to all occupied portions of the
Mortgaged Property and with respect to the use and occupancy
of the same, including but not limited to, certificates of
occupancy and fire underwriter certificates, have been made
by or obtained from the appropriate governmental authorities.
Mortgagor hereby represents, warrants and covenants that it
has obtained and will maintain all permits and licenses
required to operate the Mortgaged Property as a multi-family
residential development. Mortgagor has and shall continue to
comply in all material respects with and make all payments
required under all laws, ordinances, regulations, covenants,
conditions and restrictions now or hereafter affecting the
Mortgaged Property or any part thereof or the business or the
activity conducted thereon. Mortgagor will not commit,
suffer, permit or allow any act to be done in or upon the
Mortgaged Property in violation of any law, ordinance or
regulation. Mortgagor is in material compliance and shall
continue to comply in all material respects with all existing
and future requirements of all governmental authorities
having jurisdiction over the Mortgaged Property.
5. Transfer or Encumbrance of the Mortgaged
Property. (a) Mortgagor acknowledges that Mortgagee has
examined and relied on the creditworthiness of Mortgagor and
the experience of Mortgagor in owning properties such as the
Mortgaged Property in agreeing to make the loan secured
hereby, and that Mortgagee will continue to rely on
Mortgagor's ownership of the Mortgaged Property as a means
of maintaining the value of the Mortgaged Property as
security for repayment of the Debt. Mortgagor acknowledges
that Mortgagee has a valid interest in maintaining the value
of the Mortgaged Property so as to ensure that, should
Mortgagor default in the repayment of the Debt, Mortgagee can
recover the Debt by a sale of the Mortgaged Property. Except
as otherwise provided in subparagraph 9(c) hereof, Mortgagor
shall not sell, convey, alien, mortgage, encumber, pledge or
otherwise transfer the Mortgaged Property or any part
thereof, or permit the Mortgaged Property or any part thereof
to be sold, conveyed, aliened, mortgaged, encumbered, pledged
or otherwise transferred.
(a) A sale, conveyance, alienation, mortgage,
encumbrance, pledge or transfer within the meaning of this
paragraph 9 shall be deemed to include (i) an installment
sales agreement wherein Mortgagor agrees to sell the
Mortgaged Property or any part thereof for a price to be paid
in installments; (ii) an agreement by Mortgagor leasing all
or a substantial part of the Mortgaged Property for other
than actual occupancy by a space tenant thereunder or a sale,
assignment or other transfer of, or the grant of a security
interest in, Mortgagor's right, title and interest in and to
any Leases or any Rents; (iii) if Mortgagor or any general
partner of Mortgagor is a corporation, the voluntary or
involuntary sale, conveyance or transfer of such
corporation's stock or the creation or issuance of new stock
by which an aggregate of more than 49% of such corporation's
stock shall be vested in a party or parties who are not now
stockholders, except for any sale, conveyance or transfer of
such corporation's stock to an Affiliate provided Mortgagee
shall have received prior written notice of such transfer;
(iv) if Mortgagor or any general partner of Mortgagor is a
limited or general partnership or joint venture, the change,
removal or resignation of a general partner or managing
partner or the transfer of the partnership interest of any
general partner or managing partner, except for any transfer
of such partnership interest to an Affiliate, and excluding
the removal or resignation of any non-Affiliate or non-
managing general partner where the managing general partner
shall remain following such removal or resignation, provided,
in either case, Mortgagee shall have received prior written
notice of such transfer resignation or removal; (v) any
transfer of any interest by the Manager (hereinafter defined)
other than as permitted under paragraph 54; and (vi) any
transfer of the beneficial interest of any Mortgagor in any
trust holding legal title to the Mortgaged Property.
(b) Notwithstanding anything to the contrary
contained herein:
(i) Upon sixty (60) days prior written notice to
Mortgagee, Mortgagor shall have the limited right
to transfer legal title to the Mortgaged Property
to a Single Purpose Entity Transferee (hereinafter
defined) provided (a) such Single Purpose Entity
Transferee assumes all of the obligations of the
Mortgagor under this Mortgage, the Note and the
Other Security Documents in a manner satisfactory
to Mortgagee in all respects, including, without
limitation, by entering into an assumption
agreement with Mortgagor and Mortgagee in form and
substance reasonably satisfactory to Mortgagee (an
"Assumption Agreement"), (b) the Single Purpose
Entity Transferee shall have been newly formed
exclusively and solely for the purpose of owning
and operating the Mortgaged Property and shall
have been engaged in no other business activities
prior to the transfer of title to such Single
Purpose Entity Transferee and must be a "United
States person" as defined by Section 7701(a)(30)
of the United States Internal Revenue Code of
1986, as amended, (c) the Single Purpose Entity
Transferee or the management agent it employs to
manage the Mortgaged Property shall have Adequate
Real Estate Experience (hereinafter defined), (d)
the Single Purpose Entity Transferee shall deliver
to Mortgagee evidence of the fulfillment of the
requirements of subsection (b) above, (e) the
Single Purpose Entity Transferee shall deliver any
and all organizational documentation requested by
Mortgagee, which documentation shall be reasonably
satisfactory to Mortgagee in all respects, and
shall deliver an opinion of counsel of the Single
Purpose Entity Transferee covering the Assumption
Agreement in form and substance similar to the due
execution, delivery and enforcement opinions
delivered by counsel to Mortgagor in connection
with the execution of this Mortgage, (f) the
Single Purpose Entity Transferee shall deliver any
certificates and opinions of counsel, enter into
agreements and covenants, or cause each of its
general partners (or any other principal thereof)
to deliver certificates, enter into agreements and
covenants, which certificates, agreements,
opinions of counsel and covenants shall be similar
in nature to those delivered, executed and made by
Mortgagor or any general partner of Mortgagor in
connection with the execution of this Mortgage or
the Securitization (hereinafter defined) relating
to the single purpose nature of the Single Purpose
Entity Transferee or otherwise, and (g) Mortgagor
shall deliver, at its sole cost and expense, an
endorsement to the existing title policy insuring
the Mortgage as modified by the Assumption
Agreement as a valid first lien on the Mortgaged
Property, naming the Single Purpose Entity
Transferee as owner of the fee estate of the
Mortgaged Property, which endorsement shall insure
that, as of the date of the recording of the
Assumption Agreement, the Mortgaged Property shall
not be subject to any additional exceptions or
liens other than those contained in the original
title policy insuring the lien of this Mortgage
and delivered in connection with the execution of
this Mortgage. Any and all costs incurred in
connection with the above (including Mortgagee's
counsel's fees and disbursements and expenses and
all recording fees, mortgage or intangible taxes,
and title insurance premiums), shall be paid by
Mortgagor. Mortgagee shall respond to Mortgagor's
request to transfer legal title to the Mortgaged
Property within forty-five (45) days of delivery
of all of the information required by subsections
(a)-(g) above. The failure of Mortgagee to
respond to such request shall not be deemed
consent to the transfer.
For purposes of this Mortgage, the term "Adequate Real
Estate Experience" shall mean an entity which manages
first class multi-family residential complexes of a type
and size similar to the Mortgaged Property, and which
manages in the aggregate no less than 1,000 residential
units at the time of such transfer.
For purposes of this Mortgage, the term "Single Purpose
Entity Transferee" shall mean an entity that:
A. shall not own any asset other than the
Mortgaged Property;
B. shall not engage in any business other
than those necessary for the ownership,
management or operation of the Mortgaged
Property and any such business transactions
with any general partner, principal or
Affiliate of the Single Purpose Entity
Transferee or any affiliate of the general
partner of the Single Purpose Entity
Transferee shall be entered into upon terms
and conditions that are intrinsically fair
and substantially similar to those that would
be available on an arms-length basis with
third parties other than an Affiliate of the
Single Purpose Entity Transferee or the
general partner or an Affiliate of the
general partner of the Single Purpose Entity
Transferee;
C. shall not incur any debt, secured or
unsecured, direct or contingent
(including guaranteeing any obligation),
other than the Debt;
D. shall not make any loans or advances to
any third party (including any
Affiliates of such Single Purpose Entity
Transferee or the general partner or an
Affiliate of the general partner of such
Single Purpose Entity Transferee);
E. shall be solvent and pay its debts from
its assets as the same become due;
F. shall do or cause to be done all things
necessary to preserve its existence, and
shall not amend, modify or otherwise change
its partnership certificate, partnership
agreement, articles of incorporation or by-
laws in a manner which adversely affects such
Single Purpose Entity Transferee's existence
as a single purpose entity;
G. shall maintain books and records and
bank accounts separate from those of its
Affiliates, including its general partners;
H. shall be, and at all times shall hold
itself out to the public as, a legal entity
separate and distinct from any other entity
(including any affiliate thereof, including
the general partner or any affiliate of the
general partner of such Single Purpose Entity
Transferee);
I. shall file its own tax returns;
J. shall maintain adequate capital for the
normal obligations reasonably foreseeable in
a business of its size and character and in
light of its contemplated business
operations;
K. shall not seek the dissolution or
winding up, in whole or in part, of the
Single Purpose Entity Transferee or
voluntarily file, or consent to the filing
of, a petition for bankruptcy,
reorganization, assignment for the benefit of
creditors or similar proceeding;
L. shall not commingle its funds or other
assets with any other person or entity, and
M. shall have at least one member of its
board of directors (if a corporation) that is
not affiliated with or employed by National
Property Investors, Inc. or any of its
Affiliates.
For purposes of this Mortgage, the term
"Affiliate" shall mean a corporation or other
entity which shall (i) control, (ii) be
controlled by, or (iii) be under common
control with either Mortgagor, any general
partner of Mortgagor, or National Property
Investors, Inc.
(ii) The consummation of the transactions contemplated
pursuant to that certain Partnership Units Purchase
Agreement, dated August 17, 1995, among National
Property Investors, Inc. and related entities and
Insignia Financial Group, Inc. and related entities, and
certain other agreements relating thereto shall not be
deemed to be a transfer in violation of the provisions
of this paragraph 9
(iii) Mortgagor may sell, convey or transfer stock or
partnership interest as described in subsections
9(b)(iii) and (iv) hereof by Mortgagor or the general
partner of Mortgagor, provided that:
1. No Event of Default shall have occurred
and be continuing;
2. The transferee shall be a person, firm
or corporation whose character,
financial strength, stability and
experience shall be similar to the
existing Mortgagor and any general
partner of Mortgagor as of the date
hereof and otherwise reasonably
satisfactory to Mortgagee;
3. The transferee shall deliver such
organizational documentation and other
material necessary to establish the
transfer; and
4. The transferee shall pay the costs and
expenses of Mortgagee and Mortgagee's
counsel incurred in connection with the
review and approval of such stock or
partnership transfer.
(a) Mortgagee shall not be required to demonstrate
any actual impairment of its security or any increased risk
of default hereunder in order to declare the Debt immediately
due and payable upon Mortgagor's sale, conveyance,
alienation, mortgage, encumbrance, pledge or transfer of the
Mortgaged Property without Mortgagee's consent. This
provision shall apply to every sale, conveyance, alienation,
mortgage, encumbrance, pledge or transfer of the Mortgaged
Property regardless of whether voluntary or not, or whether
or not Mortgagee has consented to any previous sale,
conveyance, alienation, mortgage, encumbrance, pledge or
transfer of the Mortgaged Property.
1. Estoppel Certificates. (a) After request by
Mortgagee, Mortgagor, within ten (10) days, shall furnish
Mortgagee with a statement, duly acknowledged and certified,
setting forth (i) the amount of the original principal amount
of the Note, (ii) the unpaid principal amount of the Note,
(iii) the rate of interest of the Note, (iv) the date
installments of interest and/or principal were last paid, (v)
any offsets or defenses to the payment of the Debt, if any,
and (vi) that the Note and this Mortgage are valid, legal and
binding obligations and have not been modified or if
modified, giving particulars of such modification.
2. Changes in the Laws Regarding Taxation. If
any law is enacted or adopted or amended after the date of
this Mortgage which deducts the Debt from the value of the
Mortgaged Property for the purpose of taxation or which
imposes a tax, either directly or indirectly, on the Debt or
Mortgagee's interest in the Mortgaged Property, Mortgagor
will pay such tax, with interest and penalties thereon, if
any. In the event Mortgagee is advised by counsel chosen by
it that the payment of such tax or interest and penalties by
Mortgagor would be unlawful or taxable to Mortgagee or
unenforceable or provide the basis for a defense of usury,
then in any such event, Mortgagee shall have the option, by
written notice of not less than ninety (90) days, to declare
the Debt immediately due and payable.
3. No Credits on Account of the Debt. Mortgagor
will not claim or demand or be entitled to any credit or
credits on account of the Debt for any part of the Taxes or
Other Charges assessed against the Mortgaged Property, or any
part thereof, and no deduction shall otherwise be made or
claimed from the assessed value of the Mortgaged Property, or
any part thereof, for real estate tax purposes by reason of
this Mortgage or the Debt. In the event such claim, credit
or deduction shall be required by law, Mortgagee shall have
the option, by written notice of not less than ninety (90)
days, to declare the Debt immediately due and payable.
4. Documentary Stamps. If at any time the United
States of America, any State thereof or any subdivision of
any such State shall require revenue or other stamps to be
affixed to the Note or this Mortgage, or impose any other tax
or charge on the same, Mortgagor will pay for the same, with
interest and penalties thereon, if any.
5. Usury Laws. This Mortgage and the Note are
subject to the express condition that at no time shall
Mortgagor be obligated or required to pay interest on the
Debt at a rate which could subject the holder of the Note to
either civil or criminal liability as a result of being in
excess of the maximum interest rate which Mortgagor is
permitted by applicable law to contract or agree to pay. If
by the terms of this Mortgage or the Note, Mortgagor is at
any time required or obligated to pay interest on the Debt
at a rate in excess of such maximum rate, the rate of
interest under the same shall be deemed to be immediately
reduced to such maximum rate and the interest payable shall
be computed at such maximum rate and all prior interest
payments in excess of such maximum rate shall be applied and
shall be deemed to have been payments in reduction of the
principal balance of the Note.
6. Books and Records. Mortgagor shall keep
adequate books and records of account which accurately
reflect the operations of, and income and expenses
attributable to, the Mortgaged Property and furnish to
Mortgagee the following statements, all of which shall be in
form and substance acceptable to Mortgagee:
(i) monthly and an annual occupancy
statement listing each and every
Lease, identifying the leased premises,
names of all tenants, monthly rental and
all other charges payable under the
Lease, date to which paid, date of
occupancy, date of expiration, any and
every special provision, concession or
inducement granted to tenants and such
other information as is reasonably
requested by Mortgagee, signed, dated
and certified as true and accurate by
the general partner of Mortgagor and
Mortgagor;
(ii) monthly and an annual operating
statement of the operation of the
Mortgaged Property in a form pre-
approved by Mortgagee and otherwise
satisfactory to Mortgagee, showing in
reasonable detail total revenues
received and total expenses, prepared
and certified by the general partner of
Mortgagor and Mortgagor;
(iii) an annual balance sheet and profit
and loss statement of Mortgagor,
prepared and certified by the general
partner of Mortgagor and Mortgagor
within ninety (90) days after the close
of each fiscal year; and
(iv) such annual and monthly balance
sheets and profit and loss
statements and other financial
statements as may, from time to time, be
required by Mortgagee.
7. Performance of Other Agreements. Mortgagor
shall observe and perform each and every term to be observed
or performed by Mortgagor pursuant to the terms of any
agreement or recorded instrument affecting or pertaining to
the Mortgaged Property.
8. Further Acts, etc. Mortgagor will, at the
cost of Mortgagor, and without expense to Mortgagee, do,
execute, acknowledge and deliver all and every such further
acts, deeds, conveyances, mortgages, assignments, notices of
assignments, transfers and assurances as Mortgagee shall,
from time to time, require, for the better assuring,
conveying, assigning, transferring, and confirming unto
Mortgagee the property and rights hereby mortgaged, given,
granted, bargained, sold, aliened, enfeoffed, conveyed,
confirmed, pledged, assigned and hypothecated or intended now
or hereafter so to be, or which Mortgagor may be or may
hereafter become bound to convey or assign to Mortgagee, or
for carrying out the intention or facilitating the
performance of the terms of this Mortgage or for filing,
registering or recording this Mortgage. Mortgagor on demand,
will execute and deliver and hereby authorizes Mortgagee to
execute in the name of Mortgagor or without the signature of
Mortgagor to the extent Mortgagee may lawfully do so, one or
more financing statements, chattel mortgages or other
instruments, to evidence more effectively the security
interest of Mortgagee in the Mortgaged Property. Mortgagor
grants to Mortgagee an irrevocable power of attorney coupled
with an interest for the purpose of perfecting any and all
rights and remedies available to Mortgagee at law and in
equity pursuant to the terms of the Note, this Mortgage or
the Other Security Documents, including without limitation
such rights and remedies available to Mortgagee pursuant to
this paragraph 17.
9. Recording of Mortgage, etc. Mortgagor
forthwith upon the execution and delivery of this Mortgage
and thereafter, from time to time, will cause this Mortgage,
and any security instrument creating a lien or security
interest or evidencing the lien hereof upon the Mortgaged
Property and each instrument of further assurance to be
filed, registered or recorded in such manner and in such
places as may be required by any present or future law in
order to publish notice of and fully to protect the lien or
security interest hereof upon, and the interest of Mortgagee
in, the Mortgaged Property. Mortgagor will pay all filing,
registration or recording fees, and all expenses incident to
the preparation, execution and acknowledgment of this
Mortgage, any mortgage supplemental hereto, any security
instrument with respect to the Mortgaged Property and any
instrument of further assurance, and all federal, state,
county and municipal, taxes, duties, imposts, assessments and
charges arising out of or in connection with the execution
and delivery of this Mortgage, any mortgage supplemental
hereto, any security instrument with respect to the Mortgaged
Property or any instrument of further assurance, except where
prohibited by law so to do. Mortgagor shall hold harmless
and indemnify Mortgagee, its successors and assigns, against
any liability incurred by reason of the imposition of any tax
on the making and recording of this Mortgage.
10. Prepayment. If permitted by the Note, the
Debt may be prepaid in accordance with the terms thereof.
11. Events of Default. The Mortgagee may declare
the Debt immediately due and payable upon any one or more of
the following events ("Event of Default"):
(a) if any portion of the Debt is not paid within
ten (10) days after written notice is delivered by the
Mortgagee notifying Mortgagor that the same is overdue;
(b) except as otherwise provided in paragraph 4
hereof, if any of the Taxes or Other Charges is not paid
when the same is due and payable;
(c) if the Policies are not kept in full force and
effect, or if the Policies (or duplicate originals
thereof) are not delivered to Mortgagee upon request;
(d) if Mortgagor violates or does not comply with
any of the provisions of paragraphs 7, 9, 34, 35 or 56
hereof;
(e) if any representation or warranty of Mortgagor
made herein or in any certificate, report, financial
statement or other instrument or document furnished to
Mortgagee shall have been false or misleading in any
material respect when made;
(f) if Mortgagor shall make an assignment for the
benefit of creditors or if Mortgagor shall generally not
be paying its debts as they become due;
(g) if a receiver, liquidator or trustee of
Mortgagor shall be appointed or if Mortgagor shall be
adjudicated a bankrupt or insolvent, or if any petition
for bankruptcy, reorganization or arrangement pursuant
to federal bankruptcy law, or any similar federal or
state law, shall be filed by or against, consented to,
or acquiesced in by, Mortgagor or if any proceeding for
the dissolution or liquidation of Mortgagor shall be
instituted; however, if such appointment, adjudication,
petition or proceeding was involuntary and not consented
to by Mortgagor, upon the same not being discharged,
stayed or dismissed within ninety (90) days;
(h) if Mortgagor shall be in default under any
other mortgage or security agreement covering any part
of the Mortgaged Property whether it be superior or
junior in lien to this Mortgage;
(i) the Mortgaged Property becomes subject to any
mechanic's, materialman's or other lien other than a
lien for local real estate taxes and assessments not
then due and payable and such lien shall remain
undischarged of record (by payment, bonding or
otherwise) on the earlier of (i) thirty (30) days after
Mortgagor shall have notice (written or oral) of such
lien or (ii) following a judgment in favor of the holder
of such lien, one week prior to the date on which such
lien may be foreclosed;
(j) if Mortgagor fails to cure promptly any
violations of laws or ordinances affecting or which may
be interpreted to affect the Mortgaged Property;
provided, however, after prior written notice to
Mortgagee, Mortgagor, at its own expense, may contest
by appropriate legal proceeding, promptly initiated and
conducted in good faith and with due diligence, the
validity or application of any building, fire or zoning
law or ordinance affecting the Mortgaged Property
provided that (i) no other Event of Default exists under
the Note, this Mortgage, or the Other Security
Documents, (ii) such proceeding shall be permitted under
and be conducted in accordance with the provisions of
any other instrument to which Mortgagor is subject and
shall not constitute a default thereunder, (iii) neither
the Mortgaged Property nor any part thereof or interest
therein will be in danger of being sold, forfeited,
terminated, canceled or lost, and (iv) if by the terms
of such law or ordinance, compliance therewith pending
the prosecution of any such proceeding may legally be
delayed without incurring any lien, charge or liability
of any kind against the Mortgaged Property, or any part
thereof, and without subjecting the Mortgagor or the
Mortgagee to any liability, civil or criminal, for
failure to comply therewith; or
(k) if Mortgagor shall continue to be in default
under any of the other terms, covenants or conditions
of the Note, this Mortgage or the Other Security
Documents for five (5) days after notice from Mortgagee
in the case of any default which can be cured by the
payment of a sum of money or for thirty (30) days after
notice from Mortgagee in the case of any other default,
provided that if such default cannot reasonably be cured
within such thirty (30) day period and Mortgagor shall
have commenced to cure such default within such thirty
(30) day period and thereafter diligently and
expeditiously proceeds to cure the same, such thirty
(30) day period shall be extended for so long as it
shall require Mortgagor in the exercise of due diligence
to cure such default, it being agreed that no such
extension shall be for a period in excess of ninety (90)
days.
12. Remedies of Mortgagee. Upon the occurrence
of an Event of Default, (a) Mortgagor will pay, from the date
of that Event of Default, interest on the unpaid principal
balance of the Note at the rate of (i) four percent (4%) over
the Applicable Interest Rate (as defined in the Note) due
under the Note or (ii) the maximum interest rate which
Mortgagor may by law pay, whichever is lower (the "Default
Rate"), and (b) Mortgagee shall have the right to exercise
any and all rights and remedies available at law and in
equity.
13. Sale of Mortgaged Property. If this Mortgage
is foreclosed or if the Mortgaged Property is sold pursuant
to the exercise of a power of sale, the Mortgaged Property,
or any interest therein, may at the discretion of Mortgagee,
be sold in one or more parcels or in several interests or
portions and in any order or manner.
14. Right to Cure Defaults. Upon the occurrence
of any Event of Default, if Mortgagor fails to make any
payment or perform any act as herein provided Mortgagee may,
but without any obligation to do so and without notice to or
demand on Mortgagor and without releasing Mortgagor from any
obligation hereunder, make or do the same in such manner and
to such extent as Mortgagee may deem necessary to protect the
security hereof. Mortgagee is authorized to enter upon the
Mortgaged Property for such purposes, or appear in, defend,
or bring any action or proceeding to protect its interest in
the Mortgaged Property or to foreclose this Mortgage or
collect the Debt, and the cost and expense thereof (including
reasonable attorneys' fees to the extent permitted by law),
with interest as provided in this paragraph 23, shall
constitute a portion of the Debt and shall be due and payable
to Mortgagee upon demand. All such costs and expenses
incurred by Mortgagee in remedying such Event of Default or
in appearing in, defending, or bringing any such action or
proceeding shall bear interest at the Default Rate, for the
period after notice from Mortgagee that such cost or expense
was incurred to the date of payment to Mortgagee. All such
costs and expenses incurred by Mortgagee together with
interest thereon calculated at the Default Rate shall be
deemed to constitute a portion of the Debt and be secured by
this Mortgage and the Other Security Documents and shall be
immediately due and payable upon demand by Mortgagee
therefor.
15. Late Payment Charge. If any portion of the
Debt is not paid on or before the date on which it is due
without taking into account any applicable notice or grace
period, Mortgagor shall pay to Mortgagee upon demand an
amount equal to the lesser of five percent (5%) of such
unpaid portion of the Debt or the maximum amount permitted
by applicable law, to defray the expense incurred by
Mortgagee in handling and processing such delinquent payment
and to compensate Mortgagee for the loss of the use of such
delinquent payment, and such amount shall be secured by this
Mortgage and the Other Security Documents.
16. Prepayment After Event of Default. If
following the occurrence of any Event of Default, Mortgagor
shall tender payment of an amount sufficient to satisfy the
Debt in whole or in part at any time prior to a foreclosure
sale of the Mortgaged Property, or a sale of the Mortgaged
Property pursuant to the exercise of a power of sale, such
tender shall be deemed to be a voluntary prepayment of the
principal balance of the Note and Mortgagor shall, in
addition to the entire Debt, also pay to Mortgagee a sum
equal to the interest which would have accrued on the
principal balance of the Note at the Applicable Interest Rate
as defined in the Note from the date of such tender to the
earlier of (i) the Maturity Date as defined in the Note or to
(ii) the first day of the period during which prepayment of
the principal balance of the Note would have been permitted
together with a Premium (as defined in the Note) equal to the
prepayment consideration which would have been payable as of
the first day of the period during which prepayment would
have been permitted. If at the time of such tender
prepayment of the principal balance of the Note is permitted,
such tender by Mortgagor shall be deemed to be a voluntary
prepayment of the principal balance of the Note, and
Mortgagor shall, in addition to the entire Debt, also pay to
Mortgagee the applicable Premium specified in the Note and
this Mortgage, if any.
17. Right of Entry. Mortgagee and its agents
shall have the right to enter and inspect the Mortgaged
Property at all reasonable times.
18. Appointment of Receiver. The holder of this
Mortgage, upon the occurrence of an Event of Default or in
any action to foreclose this Mortgage or upon the actual or
threatened waste to any part of the Mortgaged Property, shall
be entitled to the appointment of a receiver without notice
and without regard to the value of the Mortgaged Property as
security for the Debt, or the solvency or insolvency of any
person liable for the payment of the Debt.
19. Reasonable Use and Occupancy. In addition to
the rights which Mortgagee may have herein, upon the
occurrence of any Event of Default, Mortgagee, at its option,
may require Mortgagor to pay monthly in advance to Mortgagee,
or any receiver appointed to collect the Rents, the fair and
reasonable rental value for the use and occupation of such
part of the Mortgaged Property as may be occupied by
Mortgagor or may require Mortgagor to vacate and surrender
possession of the Mortgaged Property to Mortgagee or to such
receiver and, in default thereof, Mortgagor may be evicted by
summary proceedings or otherwise.
20. Security Agreement. This Mortgage is both a
real property mortgage and a "security agreement" within the
meaning of the Uniform Commercial Code. The Mortgaged
Property includes both real and personal property and all
other rights and interests, whether tangible or intangible
in nature, of Mortgagor in the Mortgaged Property. Mortgagor
by executing and delivering this Mortgage has granted and
hereby grants to Mortgagee, as security for the Debt, a
security interest in the Mortgaged Property to the full
extent that the Mortgaged Property may be subject to the
Uniform Commercial Code (said portion of the Mortgaged
Property so subject to the Uniform Commercial Code being
called in this paragraph 29 the "Collateral"). If an Event
of Default shall occur, Mortgagee, in addition to any other
rights and remedies which it may have, shall have and may
exercise immediately and without demand, any and all rights
and remedies granted to a secured party upon default under
the Uniform Commercial Code, including, without limiting the
generality of the foregoing, the right to take possession of
the Collateral or any part thereof, and to take such other
measures as Mortgagee may deem necessary for the care,
protection and preservation of the Collateral. Upon request
or demand of Mortgagee, Mortgagor shall at its expense
assemble the Collateral and make it available to Mortgagee
at a convenient place acceptable to Mortgagee. Mortgagor
shall pay to Mortgagee on demand any and all reasonable
expenses, including legal expenses and attorneys' fees,
incurred or paid by Mortgagee in protecting its interest in
the Collateral and in enforcing its rights hereunder with
respect to the Collateral. Any notice of sale, disposition
or other intended action by Mortgagee with respect to the
Collateral sent to Mortgagor in accordance with the
provisions hereof at least five (5) days prior to such
action, shall constitute commercially reasonable notice to
Mortgagor unless otherwise required by law. The proceeds of
any disposition of the Collateral, or any part thereof, may
be applied by Mortgagee to the payment of the Debt in such
priority and proportions as Mortgagee in its discretion shall
deem proper.
21. Actions and Proceedings. Mortgagee has the
right to appear in and defend any action or proceeding
brought with respect to the Mortgaged Property and to bring
any action or proceeding, in the name and on behalf of
Mortgagor, which Mortgagee, in its discretion, decides should
be brought to protect its interest in the Mortgaged Property.
Mortgagee shall, at its option, be subrogated to the lien of
any mortgage or other security instrument discharged in whole
or in part by the Debt, and any such subrogation rights shall
constitute additional security for the payment of the Debt.
22. Waiver of Counterclaim. Mortgagor hereby
waives the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or
proceeding brought against it by Mortgagee, and waives trial
by jury in any action or proceeding brought by either party
hereto against the other or in any counterclaim asserted by
Mortgagee against Mortgagor, or in any matters whatsoever
arising out of or in any way connected with this Mortgage,
the Note, any of the Other Security Documents or the Debt.
23. Recovery of Sums Required To Be Paid.
Mortgagee shall have the right from time to time to take
action to recover any sum or sums which constitute a part of
the Debt as the same become due, without regard to whether
or not the balance of the Debt shall be due, and without
prejudice to the right of Mortgagee thereafter to bring an
action of foreclosure, or to sell the Mortgaged Property
pursuant to the exercise of a power of sale, or to bring any
other action, for a default or defaults by Mortgagor existing
at the time such earlier action was commenced.
24. Marshalling and Other Matters. Mortgagor
hereby waives, to the extent permitted by law, the benefit
of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force
and all rights of marshalling in the event of any sale
hereunder of the Mortgaged Property or any part thereof or
any interest therein. Further, Mortgagor hereby expressly
waives any and all rights of redemption from sale under any
order or decree of foreclosure of this Mortgage on behalf of
Mortgagor, and on behalf of each and every person acquiring
any interest in or title to the Mortgaged Property subsequent
to the date of this Mortgage and on behalf of all persons to
the extent permitted by applicable law.
25. Hazardous Materials. Mortgagor represents and
warrants that, except as otherwise disclosed in that certain
environmental report delivered by Mortgagor to Mortgagee in
connection with the origination of this Mortgage, to the best
of Mortgagor's knowledge, after due inquiry and
investigation, (a) there are no Hazardous Materials
(hereinafter defined) on the Mortgaged Property, except those
in compliance with all applicable federal, state and local
laws, ordinances, rules and regulations, and (b) no owner or
occupant nor, to the best of Mortgagor's knowledge, any prior
owner or occupant of the Mortgaged Property has received any
notice or advice from any governmental agency or any source
whatsoever with respect to Hazardous Materials on, from or
affecting the Mortgaged Property. Mortgagor covenants that
the Mortgaged Property shall be kept free of Hazardous
Materials, and neither Mortgagor nor any occupant of the
Mortgaged Property shall use, transport, store, dispose of or
in any manner deal with Hazardous Materials on the Mortgaged
Property, except in compliance with all applicable federal,
state and local laws, ordinances, rules and regulations.
Mortgagor shall comply with, and ensure compliance by all
occupants of the Mortgaged Property with, all applicable
federal, state and local laws, ordinances, rules and
regulations, and shall keep the Mortgaged Property free and
clear of any liens imposed pursuant to such laws, ordinances,
rules or regulations. At any time after the occurrence of an
Event of Default and the continuance thereof, Mortgagee may
enter upon the Mortgaged Property and conduct such
environmental tests and studies as Mortgagee shall require.
The cost and expense of such tests and studies shall be borne
by Mortgagor and such amounts shall be secured by this
Mortgage. In the event that Mortgagor receives any notice
or advice from any governmental agency or any source
whatsoever with respect to Hazardous Materials on, from or
affecting the Mortgaged Property, Mortgagor shall immediately
notify Mortgagee. Mortgagor shall conduct and complete all
investigations, studies, sampling, and testing, and all
remedial actions necessary to clean up and remove all
Hazardous Materials from the Mortgaged Property in accordance
with all applicable federal, state, and local laws,
ordinances, rules and regulations. The term "Hazardous
Materials" as used in this Mortgage shall include, without
limitation, gasoline, petroleum products, explosives,
radioactive materials, polychlorinated biphenyls or related
or similar materials, or any other substance or material
defined as a hazardous or toxic substance or material by any
federal, state or local law, ordinance, rule, or regulation,
but excluding Asbestos, as defined in paragraph 35 hereof.
The obligations and liabilities of Mortgagor under this
paragraph 34 shall survive any entry of a judgment of
foreclosure, the sale of the Mortgaged Property pursuant to
the exercise of a power of sale, or the delivery of a deed in
lieu of foreclosure of this Mortgage.
26. Asbestos. Mortgagor represents and warrants
that, except as otherwise disclosed in that certain asbestos
survey (the "Asbestos Survey") delivered by Mortgagor to
Mortgagee in connection with the origination of this
Mortgage, to the best of Mortgagor's knowledge, after due
inquiry and investigation, there is no asbestos or material
containing asbestos ("Asbestos") on the Mortgaged Property,
and that no owner or occupant nor to the best of Mortgagor's
knowledge, any prior owner or occupant of the Mortgaged
Property has received any notice or advice from any
governmental agency or any source whatsoever with respect to
Asbestos on, affecting or installed on the Mortgaged
Property. Mortgagor covenants that, except as otherwise
disclosed in the Asbestos Survey, the Mortgaged Property
shall be kept free of Asbestos, and neither Mortgagor nor any
occupant of the Mortgaged Property shall install, or permit
to be installed, Asbestos on the Mortgaged Property.
Mortgagor shall comply with, and ensure compliance by all
occupants of the Mortgaged Property with, all applicable
federal, state and local laws, ordinances, rules and
regulations with respect to Asbestos, and shall keep the
Mortgaged Property free and clear of any liens imposed
pursuant to such laws, ordinances, rules or regulations. In
the event that Mortgagor receives any notice or advice from
any governmental agency or any source whatsoever with respect
to Asbestos on, affecting or installed on the Mortgaged
Property, Mortgagor shall immediately notify Mortgagee.
Mortgagor shall conduct and complete all investigations,
studies, sampling, and testing, and all remedial actions
necessary to manage and remove all Asbestos from the
Mortgaged Property in accordance with all applicable federal,
state and local laws, ordinances, rules and regulations. The
obligations and liabilities of Mortgagor under this paragraph
35 shall survive any entry of a judgment of foreclosure, the
sale of the Mortgaged Property pursuant to the exercise of a
power of sale, or delivery of a deed in lieu of foreclosure
of this Mortgage.
27. Indemnification. Mortgagor shall protect,
defend, indemnify and save harmless Mortgagee from and
against all liabilities, obligations, claims, damages,
penalties, causes of action, costs and expenses (including
without limitation reasonable attorneys' fees and expenses),
imposed upon or incurred by or asserted against Mortgagee
(except any liability, obligation, claim, damage, penalty,
cause of action, cost or expense imposed upon or incurred by
Mortgagee by reason of the gross negligence or willful
misconduct of Mortgagee) by reason of (a) ownership of this
Mortgage, the Mortgaged Property or any interest therein
arising pursuant to the terms of this Mortgage or receipt of
any Rents; (b) any accident, injury to or death of persons
or loss of or damage to property occurring in, on or about
the Mortgaged Property or any part thereof or on the
adjoining sidewalks, curbs, adjacent property or adjacent
parking areas, streets or ways; (c) any use, nonuse or
condition in, on or about the Mortgaged Property or any part
thereof or on the adjoining sidewalks,curbs, adjacent
property or adjacent parking areas, streets or ways; (d) any
failure on the part of Mortgagor to perform or comply with
any of the terms of this Mortgage; (e) performance of any
labor or services or the furnishing of any materials or other
property in respect of the Mortgaged Property or any part
thereof; (f) the failure of any person to file timely with
the Internal Revenue Service an accurate Form 1099-B,
Statement for Recipients of Proceeds from Real Estate, Broker
and Barter Exchange Transactions, which may be required in
connection with this Mortgage, or to supply a copy thereof in
a timely fashion to the recipient of the proceeds of the
transaction in connection with which this Mortgage is made;
(g) the presence, disposal, escape, seepage, leakage,
spillage, discharge, emission, release, or threatened release
of any Hazardous Materials on, from, or affecting the
Mortgaged Property or any other property or the presence of
Asbestos on the Mortgaged Property; (h) any personal injury
(including wrongful death) or property damage (real or
personal) arising out of or related to such Hazardous
Materials or Asbestos; (i) any lawsuit brought or threatened,
settlement reached, or government order relating to such
Hazardous Materials or Asbestos; or (j) any violation of
laws, orders, regulations, requirements, or demands of
government authorities, which are based upon or in any way
related to such Hazardous Materials or Asbestos including,
without limitation, the costs and expenses of any remedial
action required by such governmental authorities, attorney
and consultant fees, investigation and laboratory fees, court
costs, and litigation expenses. Any amounts payable to
Mortgagee by reason of the application of this paragraph 36
shall be secured by this Mortgage and shall become
immediately due and payable upon demand and shall bear
interest at the Default Rate commencing on the fifth (5th)
day following such demand until paid. The obligations and
liabilities of Mortgagor under this paragraph 36 shall
survive any termination, satisfaction, assignment, entry of
a judgment of foreclosure or delivery of a deed in lieu of
foreclosure of this Mortgage.
28. Notices. Any notice, demand, statement,
request or consent made hereunder shall be effective and
valid only if in writing and delivered personally or by a
reputable overnight courier service and shall be deemed given
when received at the address, as set forth above, of the
party to whom such notice is to be given, or to such other
address as Mortgagor or Mortgagee, as the case may be, shall
in like manner designate in writing. In the event delivery
is not accepted, notice shall be deemed given on the date
such delivery is refused.
29. Authority. (a) Mortgagor (and the
undersigned representative of Mortgagor, if any) has full
power, authority and legal right to execute this Mortgage,
and to mortgage, give, grant, bargain, sell, alien, enfeoff,
convey, confirm, pledge, hypothecate, assign and grant a
security interest in the Mortgaged Property pursuant to the
terms hereof and to keep and observe all of the terms of this
Mortgage on Mortgagor's part to be performed.
(a) Mortgagor represents and warrants that
Mortgagor is not a "foreign person" within the meaning of
1445(f)(3) of the Internal Revenue Code of 1986, as amended
and the related Treasury Department regulations, including
temporary regulations.
30. Waiver of Notice. Mortgagor shall not be
entitled to any notices of any nature whatsoever from
Mortgagee except with respect to matters for which this
Mortgage specifically and expressly provides for the giving
of notice by Mortgagee to Mortgagor and except with respect
to matters for which Mortgagee is required by applicable law
to give notice, and Mortgagor hereby expressly waives the
right to receive any notice from Mortgagee with respect to
any matter for which this Mortgage does not specifically and
expressly provide for the giving of notice by Mortgagee to
Mortgagor.
31. Remedies of Mortgagor. In the event that a
claim or adjudication is made that Mortgagee has acted
unreasonably or unreasonably delayed acting in any case where
by law or under the Note, this Mortgage or the Other Security
Documents, it has an obligation to act reasonably or
promptly, Mortgagee shall not be liable for any monetary
damages, and Mortgagor's remedies shall be limited to
injunctive relief or declaratory judgment.
32. Sole Discretion of Mortgagee. Wherever
pursuant to this Mortgage, Mortgagee exercises any right
given to it to approve or disapprove, or any arrangement or
term is to be satisfactory to Mortgagee, the decision of
Mortgagee to approve or disapprove or to decide that
arrangements or terms are satisfactory or not satisfactory
shall be in the sole discretion of Mortgagee, except as may
be otherwise expressly and specifically provided herein.
33. Non-Waiver. The failure of Mortgagee to
insist upon strict performance of any term hereof shall not
be deemed to be a waiver of any term of this Mortgage.
Mortgagor shall not be relieved of Mortgagor's obligations
hereunder by reason of (a) the failure of Mortgagee to comply
with any request of Mortgagor to take any action to foreclose
this Mortgage or otherwise enforce any of the provisions
hereof or of the Note or the Other Security Documents, (b)
the release, regardless of consideration, of the whole or any
part of the Mortgaged Property, or of any person liable for
the Debt or any portion thereof, or (c) any agreement or
stipulation by Mortgagee extending the time of payment or
otherwise modifying or supplementing the terms of the Note,
this Mortgage or the Other Security Documents. Mortgagee may
resort for the payment of the Debt to any other security held
by Mortgagee in such order and manner as Mortgagee, in its
discretion, may elect. Mortgagee may take action to recover
the Debt, or any portion thereof, or to enforce any covenant
hereof without prejudice to the right of Mortgagee thereafter
to foreclose this Mortgage. The rights of Mortgagee under
this Mortgage shall be separate, distinct and cumulative and
none shall be given effect to the exclusion of the others.
No act of Mortgagee shall be construed as an election to
proceed under any one provision herein to the exclusion of
any other provision. Mortgagee shall not be limited
exclusively to the rights and remedies herein stated but
shall be entitled to every right and remedy now or hereafter
afforded at law or in equity.
34. No Oral Change. This Mortgage, and any
provisions hereof, may not be modified, amended, waived,
extended, changed, discharged or terminated orally or by any
act or failure to act on the part of Mortgagor or Mortgagee,
but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment,
waiver, extension, change, discharge or termination is
sought.
35. Liability. If Mortgagor consists of more than
one person, the obligations and liabilities of each such
person hereunder shall be joint and several. The foregoing
sentence, however, is not intended to affect the limited
liability of any limited partner or stockholder of Mortgagor
afforded by applicable partnership or corporate law. This
Mortgage shall be binding upon and inure to the benefit of
Mortgagor and Mortgagee and their respective successors and
assigns forever.
36. Inapplicable Provisions. If any term,
covenant or condition of the Note or this Mortgage is held
to be invalid, illegal or unenforceable in any respect, the
Note and this Mortgage shall be construed without such
provision.
37. Headings. etc. The headings and captions of
various paragraphs of this Mortgage are for convenience of
reference only and are not to be construed as defining or
limiting, in any way, the scope or intent of the provisions
hereof.
38. Duplicate Originals. This Mortgage may be
executed in any number of duplicate originals and each such
duplicate original shall be deemed to be an original.
39. Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically
provided herein, words used in this Mortgage may be used
interchangeably in singular or plural form and the word
"Mortgagor" shall mean "each Mortgagor and any subsequent
owner or owners of the Mortgaged Property or any part thereof
or any interest therein," the word "Mortgagee" shall mean
"Mortgagee and any subsequent holder of the Note," the word
"Note" shall mean "the Note and any other evidence of
indebtedness secured by this Mortgage," the word "person"
shall include an individual, corporation, partnership, trust,
unincorporated association, government, governmental
authority, and any other entity, and the words "Mortgaged
Property" shall include any portion of the Mortgaged Property
and any interest therein. Whenever the context may require,
any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice versa.
40. CHOICE OF LAW. THIS MORTGAGE SHALL BE DEEMED
TO BE A CONTRACT ENTERED INTO PURSUANT TO THE LAWS OF THE
STATE OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED,
CONSTRUED, APPLIED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK, PROVIDED HOWEVER, THAT WITH RESPECT
TO THE CREATION, ATTACHMENT, PERFECTION, PRIORITY AND
ENFORCEMENT OF THE LIEN AND SECURITY INTEREST OF THIS
MORTGAGE, THE LAWS OF THE STATE WHERE THE MORTGAGED PROPERTY
IS LOCATED SHALL APPLY.
41. Exculpation. Mortgagee shall not enforce the
liability and obligation of Mortgagor to perform and observe
the obligations contained in the Note or this Mortgage by any
action or proceeding wherein a money judgment shall be sought
against Mortgagor or any general or limited partner of
Mortgagor (hereafter collectively referred to as the
"Exculpated Parties"), except that Mortgagee may bring a
foreclosure action, action for specific performance or other
appropriate action or proceeding to enable Mortgagee to
enforce and realize upon this Mortgage, the Other Security
Documents, and the interest in the Mortgaged Property, the
Rents and any other collateral given to Mortgagee created by
this Mortgage and the Other Security Documents; provided,
however, that any judgment in any such action or proceeding
shall be enforceable against the Exculpated Parties only to
the extent of Mortgagor's interest in the Mortgaged Property,
in the Rents and in any other collateral given to Mortgagee.
Mortgagee, by accepting the Note and this Mortgage, agrees
that it shall not sue for, seek or demand any deficiency
judgment against the Exculpated Parties in any such action
or proceeding, under or by reason of or in connection with
the Note, the Other Security Documents or this Mortgage. The
provisions of this paragraph shall not, however, (i)
constitute a waiver, release or impairment of any obligation
evidenced or secured by the Note, the Other Security
Documents or this Mortgage; (ii) impair the right of
Mortgagee to name Mortgagor as a party defendant in any
action or suit for judicial foreclosure and sale under this
Mortgage; (iii) affect the validity or enforceability of any
guaranty made in connection with the Note, this Mortgage, or
the Other Security Documents; (iv) impair the right of
Mortgagee to obtain the appointment of a receiver; (v) impair
the enforcement of the Assignment of Leases and Rents
executed in connection herewith; (vi) impair the right of
Mortgagee to bring suit with respect to fraud or intentional
misrepresentation by the Exculpated Parties or any other
person or entity in connection with the Note, this Mortgage
or the Other Security Documents; (vii) impair the right of
Mortgagee to obtain the Rents received by any of the
Exculpated Parties after the occurrence of an Event of
Default; (viii) impair the right of Mortgagee to bring suit
with respect to the Exculpated Parties' misappropriation of
tenant security deposits or Rents collected in advance; (ix)
impair the right of Mortgagee to obtain insurance proceeds
or condemnation awards due to Mortgagee under this Mortgage;
(x) impair the right of Mortgagee to enforce the provisions
of sub-paragraphs 36(g) through 36(j), inclusive and
paragraphs 34 and 35 of this Mortgage against the Mortgagor
(excluding any general or limited partner thereof); or (xi)
impair the right of Mortgagee to recover any part of the Debt
from the Mortgagor (excluding the general and limited
partners of Mortgagor), following the breach of any covenant
contained in paragraph 9 or 56 hereof.
42. [TO BE LIMITED TO CERTAIN PROPERTIES] Capital
Improvements Account. Mortgagor shall establish and maintain
for the benefit of Mortgagee a reserve account (the "Capital
Improvements Account") for the purpose of creating a reserve
for certain capital improvements in connection with the
Mortgaged Property which are described on a schedule (the
"Capital Improvements Schedule") in the engineering report
for the Mortgaged Property delivered to, and approved by,
Mortgagee (collectively, the "Capital Improvements").
Mortgagor shall deposit the amount set forth on the Capital
Improvements Schedule into the Capital Improvements Account
on the date hereof. Mortgagor, on a periodic basis (but not
more often than once every thirty (30) days), may request
disbursements ("Disbursements") from the Capital Improvements
Account provided: (i) Mortgagor shall have delivered a
written request for the Disbursement to Mortgagee, which
request shall (a) specify which "line item" set forth on the
Capital Improvements Schedule Mortgagor has incurred expenses
for, (b) set forth the amount of the requested Disbursement,
(c) contain a certification from the managing general partner
of Mortgagor and Mortgagor that the work for which the
Disbursement is requested has been completed and is then due
and payable and (d) if requested by Mortgagee, such other
evidence of completion of work, including but not limited to
any and all invoices or other work orders, (ii) the
Disbursement does not exceed the amount allocated to the line
item as such amount is set forth on the Capital Improvements
Schedule, and (iii) no Event of Default shall have occurred.
Disbursements shall be made by Mortgagee to Mortgagor by wire
transfer or as otherwise directed by Mortgagor within ten
(10) days after receipt by Mortgagee of Mortgagor's written
request in the form required above. The Capital Improvements
Account shall be held by Mortgagee as additional and
collateral security for the Debt and Mortgagor hereby grants
Mortgagee a security interest in, and pledges to Mortgagee
the Capital Improvements Account. The Capital Improvements
Account shall be held by Mortgagee as additional security for
the Debt and if Mortgagor breaches any term, covenant or
provision of the Note, this Mortgage or any Other Security
Document, Mortgagee may apply the proceeds of the Capital
Improvements Account to cure such default, and following the
acceleration of the maturity of the Note, in the reduction of
the Debt. The Capital Improvements Account shall be an
interest bearing account maintained at a bank satisfactory to
Mortgagee in its sole discretion, and Mortgagee shall have no
liability for its selection of the bank, type of account,
fluctuations in interest rate or for the amount of interest
earned on the account. Interest earned on the Capital
Improvements Account shall remain in the Capital Improvements
Account until such time as the account is released to the
Mortgagor or the proceeds are applied by Mortgagee to the
payment of the Debt as provided herein. Upon the completion
of all of the Capital Improvements, Mortgagee shall release
the sums remaining in the Capital Improvements Account, if
any, to Mortgagor.
43. Reserve Account. Mortgagor will comply with
any requirements of any Rating Agency as a condition of its
initial rating, or if required by either FNMA or Freddie Mac,
with respect to the establishment of a reserve account for
necessary repairs and replacements of existing improvements
on the Mortgaged Property.
44. Operations and Maintenance Plan. [LIMIT TO
LANDINGS] Mortgagor shall, within forty-five (45) days from
the date hereof deliver to Mortgagee an operation and
maintenance plan (the "O&M Plan") with respect to the
maintenance or removal of any asbestos, hazardous and toxic
wastes and substances, PCB's and storage tanks on the
Mortgaged Property, which O&M Plan appoints an "Asbestos
Program Manager" in charge of managing all asbestos-related
activities on the Mortgaged Property. Mortgagor shall (i)
diligently perform and observe all of the terms, covenants
and conditions of the O&M Plan on the part of Mortgagor to
be performed and observed to the end that all things shall
be done which are necessary to keep unimpaired the rights of
Mortgagor under the O&M Plan and (ii) promptly notify
Mortgagee of the giving of any notice to Mortgagor of any
default by the Asbestos Program Manager in the performance
or observance of any of the terms, covenants or conditions
of the O&M Plan on the part of the Asbestos Program Manager
to be performed and observed and deliver to Mortgagee a true
copy of each such notice. Mortgagee shall have the right to
approve any O&M Plan which may affect the Mortgaged Property.
45. Management Agreements. The Improvements have
been operated under the terms and conditions of that certain
management agreement entered into between Mortgagor and the
manager (the "Manager") set forth therein delivered to, and
approved by, Mortgagee (hereinafter, together with any
renewals or replacements thereof, being referred to as the
"Management Agreement"). Mortgagor acknowledges that
Mortgagee has examined and relied on the Manager's experience
in operating properties such as the Mortgaged Property in
agreeing to make the loan secured hereby, and that Mortgagee
will continue to rely on the Manager's management of the
Mortgaged Property as a means of maintaining the value of the
Mortgaged Property as security for repayment of the Debt.
Mortgagor shall (i) diligently perform and observe all of the
terms, covenants and conditions of the Management Agreement
on the part of Mortgagor to be performed and observed to the
end that all things shall be done which are necessary to keep
unimpaired the rights of Mortgagor under the Management
Agreement and (ii) promptly notify Mortgagee of the giving of
any notice to Mortgagor of any default by Mortgagor in the
performance or observance of any of the terms, covenants or
conditions of the Management Agreement on the part of
Mortgagor to be performed and observed and deliver to
Mortgagee a true copy of each such notice. Mortgagor shall
not surrender the Management Agreement, consent to the
assignment by the Manager of its interest under the
Management Agreement, or terminate or cancel the Management
Agreement or modify, change, supplement, alter or amend the
Management Agreement, in any respect, either orally or in
writing, and Mortgagor hereby assigns to Mortgagee as further
security for the payment of the Debt and for the performance
and observance of the terms, covenants and conditions of this
Mortgage, all the rights, privileges and prerogatives of
Mortgagor to surrender the Management Agreement or to
terminate, cancel, modify, change, supplement, alter or amend
the Management Agreement in any respect, and any such
surrender of the Management Agreement or termination,
cancellation, modification, change, supplement, alteration or
amendment of the Management Agreement without the prior
consent of Mortgagee shall be void and of no force and
effect. If Mortgagor shall default in the performance or
observance of any material term, covenant or condition of the
Management Agreement on the part of Mortgagor to be performed
or observed, then, without limiting the generality of the
other provisions of this Mortgage, and without waiving or
releasing Mortgagor from any of its obligations hereunder,
Mortgagee shall have the right, but shall be under no
obligation, to pay any sums and to perform any act or take
any action as may be appropriate to cause all the terms,
covenants and conditions of the Management Agreement on the
part of Mortgagor to be performed or observed to be promptly
performed or observed on behalf of Mortgagor, to the end that
the rights of Mortgagor in, to and under the Management
Agreement shall be kept unimpaired and free from default.
Mortgagee and any person designated by Mortgagee shall have,
and are hereby granted, the right to enter upon the Mortgaged
Property at any time and from time to time for the purpose of
taking any such action. If the Manager under the Management
Agreement shall deliver to Mortgagee a copy of any notice
sent to Mortgagor of default under the Management Agreement,
such notice shall constitute full protection to Mortgagee for
any action taken or omitted to be taken by Mortgagee in good
faith, in reliance thereon. Mortgagor shall, from time to
time, use its best efforts to obtain from the Manager under
the Management Agreement such certificates of estoppel with
respect to compliance by Mortgagor with the terms of the
Management Agreement as may be requested by Mortgagee.
Mortgagor shall exercise each individual option, if any, to
extend or renew the term of the Management Agreement upon
demand by Mortgagee made at any time within one (1) year of
the last day upon which any such option may be exercised, and
Mortgagor hereby expressly authorizes and appoints Mortgagee
its attorney-in-fact to exercise any such option in the name
of and upon behalf of Mortgagor, which power of attorney
shall be irrevocable and shall be deemed to be coupled with
an interest.
Notwithstanding anything to the contrary contained
herein, Mortgagor may replace the Manager or accept the
resignation of the Manager or consent to a transfer by the
Manager, provided:
(1) No Event of Default shall have occurred and
be continuing;
(2) the new manager or holder of the stock or
partnership interest shall be a person, firm or
corporation whose character, financial strength,
stability and experience shall be similar to the
existing Manager and otherwise have Adequate Real Estate
Experience (it being understood that Insigna Financial
Group, Inc. or any Affiliate thereof shall be deemed an
acceptable replacement);
(3) the new manager shall deliver all
organizational documentation and other materials
evidencing its Adequate Real Estate Experience and
otherwise be acceptable to Mortgagee;
(4) the Mortgagor shall pay the reasonable costs
and expenses of Mortgagee and Mortgagee's counsel
incurred in connection with the review and approval of
such new manager; and
(5) the terms of any new management agreement
affecting the Mortgaged Property must be acceptable to
Mortgagee in all respects, provided, however, if the
terms and conditions of the new management agreement
shall be substantially similar to the Management
Agreement and the management fee due thereunder is no
greater than the fee provided in the Management
Agreement, such new management agreement shall be deemed
acceptable to Mortgagee.
1. Rating Agencies. The terms "Rating Agency"
or "Rating Agencies" shall mean any nationally recognized
rating agency(s) sought by Mortgagee to obtain ratings with
respect to this Mortgage or the Securitization (hereinafter
defined). Mortgagee intends to, but is not required to,
either (i) deposit this Mortgage, the Note and the Other
Security Documents in a trust in exchange for the issuance,
to or at the direction of the Mortgagee, of multiple classes
of mortgage pass-through certificates evidencing the entire
beneficial ownership interest in such trust or (ii) issue
multiple classes of bonds (also, "Securities") representing
non-recourse obligations secured by this Mortgage, the Note
and the Other Security Documents (the "Securities"). An
election will be made under the federal tax code to treat
this Mortgage, the Note and the Other Security Documents and
the related assets as one or more real estate mortgage
investment conduits. The Securities may be sold either in a
public offering or a private placement. The foregoing events
and all matters incidental thereto are herein referred to as
the "Securitization". Anything in paragraphs 5, 52 or 58 of
this Mortgage contained to the contrary notwithstanding: (i)
the provisions of paragraphs 5, 52 and 58 of this Mortgage
which require a Mortgagor to comply with certain requirements
("Requirements") which may be imposed by any Rating Agency,
FNMA or Freddie Mac shall be of no force or effect unless
Mortgagee notifies Mortgagor prior to the 270th day (the
"Deadline") following the Date hereof that it will be
required to comply with any such Requirements; and (ii) in
the event that Mortgagee so notifies Mortgagor prior to the
Deadline, (a) Mortgagee shall not prevent Mortgagor from
contacting the entity imposing such Requirements to discuss
the necessity of and/or details relating to such
Requirements, and (b) Mortgagor will not pursue such
discussion in a manner which materially delays the completion
of any related Securitization, and in any event Mortgagor
will either comply with the Requirements in question or cause
the Debt to be prepaid in full at par on or prior to the
Deadline.
2. Single Purpose Entity. Mortgagor hereby
represents and warrants to, and covenants with, Mortgagee
that, as of the date hereof and until such time as the Debt
shall be paid in full, Mortgagor:
(a) does not own and shall not own any encumbered
asset other than (i) the Mortgaged Property, (ii) and
(ii) such incidental personal property necessary for the
operation of the Mortgaged Property;
(b) is not engaged and shall not engage in any
business other than those necessary for the ownership,
management or operation of the Mortgaged Property and
any business transactions with any general partner,
principal or affiliate of Mortgagor or any affiliate of
the general partner of Mortgagor shall be entered into
upon terms and conditions that are intrinsically fair
and substantially similar to those that would be
available on an arms-length basis with third parties
other than an Affiliate;
(c) has not incurred and shall not incur any debt,
secured or unsecured, direct or contingent (including
guaranteeing any obligation), other than the Debt and
the type of indebtedness permitted pursuant to Paragraph
57 hereof;
(d) has not made and shall not make any loans or
advances to any third party (including any Affiliate);
(e) is and shall be solvent and pay its debt from
its assets as the same shall become due;
(f) has done or caused to be done and shall do all
things necessary to preserve its existence, and shall
not, nor shall any partner, limited or general, or
shareholder thereof, amend, modify or otherwise change
its partnership certificate, partnership agreement,
articles of incorporation or by-laws in a manner which
adversely affects Mortgagor's existence as a single
purpose entity;
(g) shall conduct and operate its business as
presently conducted and operated;
(h) shall maintain books and records and bank
accounts separate from those of its affiliates,
including its general partners;
(i) shall be, and at all times shall hold itself
out to the public as, a legal entity separate and
distinct from any other entity (including any affiliate
thereof, including the general partner or any affiliate
of the general partner of the Mortgagor);
(j) shall file its own tax returns;
(k) shall maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated
business operations;
(l) shall not seek the dissolution or winding up,
in whole or in part, of the Mortgagor or voluntarily
file, or consent to the filing of, a petition for
bankruptcy, reorganization, assignment for the benefit
of creditors or similar proceeding;
(m) shall not commingle the funds and other assets
of the Mortgagor with those of any general partner, any
Affiliate or any other person; and
(n) shall have at least one member of its board
of directors that is not affiliated with or employed by
National Property Investors, Inc. or any of its
Affiliates.
3. No Other Indebtedness. During the term of the
Note and prior to the satisfaction or discharge of this
Mortgage, Mortgagor shall not create, incur, assume, or
suffer to exist any Indebtedness (hereinafter defined). For
purposes of the foregoing, the term "Indebtedness" shall mean
with respect to Mortgagor on a particular date (a) all
indebtedness of Mortgagor for borrowed money or for the
deferred purchase price of property or which is evidenced by
a note, bond, debenture, trust deed, bankers' acceptance or
similar instrument, (b) all obligations of Mortgagor under
any lease of real property (excluding Leases under which
Mortgagor is the landlord), (c) all obligations of Mortgagor
in respect of letters of credit, acceptances, or similar
obligations issued or created for the account of Mortgagor,
and (d) all liabilities secured by any lien or any property
owned by Mortgagor even though Mortgagor has not assumed or
otherwise become liable for the payment thereof.
Notwithstanding the foregoing, Indebtedness shall not include
(x) account payables to trade creditors of up to
[$__________] (which may include Affiliates of Mortgagor and
its partners and their employees) for goods and services
which are not aged more than sixty (60) days from the billing
date and current operating liabilities (other than for
borrowed monies) not more than sixty (60) days past due in
each case incurred in the ordinary course of business as
presently conducted and paid within the specified times,
unless contested in good faith and by appropriate proceeds
and (y) the indebtedness evidenced by the Note and secured
by this Mortgage.
4. Lockbox. Mortgagor will comply with any
requirement imposed by any Rating Agency as a condition of
its initial rating, FNMA or Freddie Mac with respect to the
establishment of lockbox arrangements with respect to the
operation of the Mortgaged Property.
PART II
[LOCAL LAW PROVISIONS]
1. In the event of any inconsistencies between
the terms and conditions of PART I of this Mortgage and PART
II, the terms and conditions of PART II shall control and be
binding.
[ADD LOCAL PROVISIONS, IF ANY]
IN WITNESS WHEREOF, this Mortgage has been executed
by Mortgagor the day and year first above written.
Witnesses: ___________________________________
________________, a _______ limited
partnership
_______________________ By: ____________________________,
Name: a ________ corporation, its
general partner
_______________________ By: ____________________________
Name: Name:
Title:
This instrument prepared by:
Jeffrey J. Temple, Esq.
White & Case
1155 Avenue of the Americas
New York, New York 10036
ACKNOWLEDGEMENT
[TO BE PROVIDED]
[Sketch of Subject Property
(This is not a survey)]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Century Properties Growth Fund
XXII and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 5,217,000 <F1>
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 128,394,000
<DEPRECIATION> (44,342,000)
<TOTAL-ASSETS> 91,348,000
<CURRENT-LIABILITIES> 0
<BONDS> 74,111,000
<COMMON> 0
0
0
<OTHER-SE> 15,772,000
<TOTAL-LIABILITY-AND-EQUITY> 91,348,000
<SALES> 0
<TOTAL-REVENUES> 22,156,000 <F2>
<CGS> 0
<TOTAL-COSTS> 14,569,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,192,000
<INCOME-PRETAX> 286,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 286,000
<DISCONTINUED> 0
<EXTRAORDINARY> (711,000)
<CHANGES> 0
<NET-INCOME> (425,000)
<EPS-PRIMARY> (5.13)
<EPS-DILUTED> (5.13)
<FN>
<F1> Includes restricted cash of $500,000.
<F2> Revenues include gain on sale of property of $2,033,000.
</FN>
</TABLE>
