SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the fiscal year
ended December 31, 1994 Commission file no. 0-16108
JMB INCOME PROPERTIES, LTD. - XII
(Exact name of registrant as specified in its charter)
Illinois 36-3337796
(State of organization) (I.R.S. Employer Identification No.)
900 N. Michigan Ave., Chicago, Illinois 60611
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 312-915-1987
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- -------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of class)
Indicate by check mark whether the registrant (1) has filed all 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
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.
TABLE OF CONTENTS
Page
----
PART I
Item 1. Business. . . . . . . . . . . . . . . . . . 1
Item 2. Properties. . . . . . . . . . . . . . . . . 4
Item 3. Legal Proceedings . . . . . . . . . . . . . 6
Item 4. Submission of Matters to a
Vote of Security Holders. . . . . . . . . . 6
PART II
Item 5. Market for the Partnership's Limited Partnership
Interests and Related Security Holder Matters6
Item 6. Selected Financial Data . . . . . . . . . . 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations13
Item 8. Financial Statements and Supplementary Data 21
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure. . . 52
PART III
Item 10. Directors and Executive Officers
of the Partnership. . . . . . . . . . . . . 52
Item 11. Executive Compensation. . . . . . . . . . . 55
Item 12. Security Ownership of Certain Beneficial
Owners and Management . . . . . . . . . . . 56
Item 13. Certain Relationships and Related Transactions 57
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K . . . . . . . . . . 57
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 59
i
PART I
ITEM 1. BUSINESS
All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.
The registrant, JMB Income Properties, Ltd. - XII (the "Partnership"),
is a limited partnership formed in 1984 and currently governed under the
Revised Uniform Limited Partnership Act of the State of Illinois to invest
in improved income-producing commercial and residential real property. On
August 23, 1985, the Partnership commenced an offering to the public of
$100,000,000 (subject to increase by up to $150,000,000) in Limited
Partnership Interests (the "Interests") pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933 (Registration No.
2-96716). A total of 189,679 Interests were sold to the public at $1,000
per Interest and were issued to Investors in fiscal 1986. The offering
closed on January 17, 1986. No Investor has made any additional capital
contribution after such date. The Investors in the Partnership share in
their portion of the benefits of ownership of the Partnership's real
property investments according to the number of Interests held.
The Partnership is engaged solely in the business of the acquisition,
operation and sale and disposition of equity real estate investments. Such
equity investments are held by fee title and/or through joint venture
partnership interests. The Partnership's real estate investments are
located throughout the nation and it has no real estate investments located
outside of the United States. A presentation of information about industry
segments, geographic regions, raw materials, or seasonality is not
applicable and would not be material to an understanding of the
Partnership's business taken as a whole. Pursuant to the Partnership
agreement, the Partnership is required to terminate on or before October
31, 2035. Accordingly, the Partnership intends to hold its remaining
properties for investment purposes until such time as sale or other
disposition appears to be advantageous. Unless otherwise described, the
Partnership expects to hold its properties for long-term investment where,
due to current market conditions, it is impossible to forecast the expected
holding period. At sale of a particular property, the proceeds, if any,
are generally distributed or reinvested in existing properties rather than
invested in acquiring additional properties.
The Partnership has made the real property investments set forth in
the following table:
<TABLE>
<CAPTION>
SALE OR DISPOSITION
DATE OR IF OWNED
AT DECEMBER 31, 1994,
NAME, TYPE OF PROPERTY DATE OF ORIGINAL INVESTED
AND LOCATION (E) SIZE PURCHASE CAPITAL PERCENTAGE (A) TYPE OF OWNERSHIP
---------------------- ---------- -------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
1. Park Center
Financial Plaza
office buildings
San Jose,
California . . . . 422,000 sq.ft. 06/20/85 27% fee ownership of land and
n.r.a. improvements (through
joint venture partnership)
(c)
2. Topanga Plaza
shopping center
Los Angeles,
California . . . . 360,000 sq.ft. 12/31/85 20% fee ownership of land and
g.l.a. improvements (through
joint venture partnership)
(b)(c)(f)
3. 40 Broad Street
office building
New York, New York 247,800 sq.ft. 12/31/85 29% fee ownership of land and
n.r.a. improvements (through joint
venture partnership) (c)
4. Plaza Hermosa
Shopping Center
Hermosa Beach,
California . . . . 94,900 sq.ft. 09/03/86 8% fee ownership of land and
g.l.a. improvements (b)
5. Mid Rivers Mall
shopping center
St. Peters
(St. Louis),
Missouri . . . . . 323,100 sq.ft. 12/12/86 1/30/92 fee ownership of land and
g.l.a. improvements (through
joint venture partnership)
(c)(d)
6. First Financial
Plaza
office building
Encino,
California . . . . 216,000 sq.ft. 05/20/87 9% fee ownership of land and
n.r.a. improvements (through joint
venture partnership)
(b)(c)(f)
<FN>
---------------
(a) The computation of this percentage for properties held at
December 31, 1994 does not include amounts invested from sources other than
the original net proceeds of the public offering as described above and in
Item 7.
(b) Reference is made to Note 4 and to Schedule III filed with this
annual report for the current outstanding principal balances and a
description of the long-term mortgage indebtedness secured by the
Partnership's real property investments.
(c) Reference is made to Note 3 for a description of the joint
venture partnership through which the Partnership has made this real
property investment.
(d) The Partnership's interest in this property has been sold.
Reference is made to Note 7 for a description of the sale of this real
property investment.
(e) Reference is made to Item 8 - Schedule III filed with this
annual report for further information concerning real estate taxes and
depreciation.
(f) Reference is made to Item 6 - Selected Financial Data for
additional operating and lease expiration data concerning this investment
property.
</TABLE>
The Partnership's real property investments are subject to competition
from similar types of properties (including in certain areas properties
owned or advised by affiliates of the General Partners) in the respective
vicinities in which they are located. Such competition is generally for
the retention of existing tenants. Additionally, the Partnership is in
competition for new tenants in markets where significant vacancies are
present. Reference is made to Item 7 below for a discussion of competitive
conditions and future renovation and capital improvement plans of the
Partnership and certain of its significant investment properties.
Approximate occupancy levels for the properties are set forth in the table
in Item 2 below to which reference is hereby made. The Partnership
maintains the suitability and competitiveness of its properties in its
markets primarily on the basis of effective rents, tenant allowances and
service provided to tenants. In the opinion of the Managing General
Partner of the Partnership, all of the investment properties held at
December 31, 1994 are adequately insured. Although there is earthquake
insurance coverage for a portion of the value of the Partnership's
investment properties, the Managing General Partner does not believe that
such coverage for the entire replacement cost of the investment properties
is available on economic terms.
In January 1992, the Partnership reached agreement with the existing
mortgage lender of Topanga Plaza for funding to finance a renovation that
was funded in four stages. Reference is made to Note 4(b) for further
description of such transaction.
In January 1994, an earthquake occurred in Los Angeles, California.
The approximate 360,000 square feet of mall shops owned by the Topanga
Partnership did not suffer major structural damage. The estimated costs at
Topanga for which the joint venture is responsible is approximately $10.5
million. The majority of this cost is subject to recovery under the joint
venture's earthquake insurance policy. Reference is made to Note 3(c) for
further description of such event.
Reference is made to Note 8 for a schedule of minimum lease payments
to be received in each of the next five years, and in the aggregate
thereafter, under leases in effect at the Partnership's properties as of
December 31, 1994.
The Partnership has approximately six full-time personnel, performing
on-site duties at certain of the Partnership's properties, none of whom are
officers or directors of the Corporate General Partner of the Partnership.
The terms of transactions between the Partnership, the General
Partners and their affiliates are set forth in Item 11 below to which
reference is hereby made for a description of such terms and transactions.
ITEM 2. PROPERTIES
The Partnership owns directly or through joint venture partnerships
the properties or interests in the properties referred to under Item 1
above to which reference is hereby made for a description of said
properties.
The following is a listing of principal businesses or occupations and
approximate occupancy levels by quarter during fiscal years 1994 and 1993
for the Partnership's investment properties owned during 1994:
<TABLE>
<CAPTION>
1993 1994
--------------------------------------------------
At At At At At At At At
Principal Business 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
------------------ ---- ---- ---- ----- ---- ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. Park Center
Financial Plaza
San Jose, California. . Accounting/
Legal 89% 88% 84% 84% 83% 83% 83% 84%
2. Topanga Plaza
Los Angeles,
California. . . . . . . Retail 85% 82% 89% 94% 90% 92% 92% 95%
3. 40 Broad Street
New York, New York. . . Insurance/
Financial
Services 82% 82% 67% 79% 82% 82% 82% 80%
4. Plaza Hermosa
Shopping Center
Hermosa Beach,
California. . . . . . . Retail 95% 92% 92% 92% 81% 91% 92% 95%
5. First Financial Plaza
Encino (Los Angeles),
California. . . . . . . University/Bank/
Housing Developer 85% 88%84%(1) 85%(1)84%(1)91%(1) 89%(1)89%(1)
----------
<FN>
Reference is made to Item 6, Item 7, and Note 8 for further information
regarding property occupancy, competitive conditions and tenant leases at the Partnership's investment properties.
(1) The percentage represents physical occupancy. Mitsubishi (8,109 square feet) vacated its space in
July 1993 prior to its lease expiration of January 1997 and continues to pay rent pursuant to its lease
obligation.
</TABLE>
ITEM 3. LEGAL PROCEEDINGS
The Partnership is not subject to any material pending legal
proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of holders of Interests
during 1993 and 1994.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS
AND RELATED SECURITY HOLDER MATTERS
As of December 31, 1994, there were 16,016 record holders of Interests
of the Partnership. There is no public market for Interests and it is not
anticipated that a public market for Interests will develop. Upon request,
the Managing General Partner may provide information relating to a
prospective transfer of Interests to an investor desiring to transfer his
Interests. The price to be paid for the Interests, as well as any economic
aspects of the transaction, will be subject to negotiation by the investor.
Reference is made to Item 6 below for a discussion of cash distribu-
tions to Investors.
<TABLE>
ITEM 6. SELECTED FINANCIAL DATA
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
YEARS ENDED DECEMBER 31, 1994, 1993, 1992, 1991 AND 1990
(NOT COVERED BY INDEPENDENT AUDITORS' REPORT)
<CAPTION>
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total income . . . . . . $ 31,152,216 30,055,775 31,061,115 32,094,290 32,531,243
============ ============ =========== =========== ===========
Operating earnings (loss)$ (5,376,818) (213,393) (18,250,294) (23,790,221) 6,206,403
Partnership's share of
earnings (loss) from
operations of uncon-
solidated ventures. . . 441,700 (6,610,269) (3,123,534) (10,516,323) 185,014
Venture partners' share
of consolidated ventures'
operations before
extraordinary item. . . 2,699,777 785,684 6,090,075 7,580,977 (1,710,015)
------------ ------------ ----------- ----------- -----------
Net operating earnings
(loss) before extra-
ordinary item . . . . . (2,235,341) (6,037,978) (15,283,753) (26,725,567) 4,681,402
Partnership's share of
gain on sale of interest
in investment property. -- -- 5,655,876 -- --
Extraordinary item
(net of venture
partners share) . . . . (2,300,838) -- -- -- --
------------ ------------ ----------- ----------- -----------
Net earnings (loss). . . $ (4,536,179) (6,037,978) (9,627,877) (26,725,567) 4,681,402
============ ============ =========== =========== ===========
1994 1993 1992 1991 1990
------------- ------------- ----------- ------------ ------------
Net earnings (loss)
per Interest (b):
Net operating earnings
(loss) . . . . . . . $ (12.41) (31.79) (80.48) (140.06) 23.69
Partnership's share of
gain on sale of
interest in investment
property . . . . . . -- -- 29.52 -- --
Extraordinary item . . (11.65) -- -- -- --
------------ ------------ ----------- ----------- -----------
Net earnings (loss)
per Interest (b) . . $ (24.06) (31.79) (50.96) (140.06) 23.69
============ ============ =========== =========== ===========
Total assets . . . . . . $189,322,387 195,051,570 201,746,282 193,509,107 235,447,127
Long-term debt . . . . . $ 64,470,886 87,612,869 69,869,294 51,085,549 51,776,098
Cash distributions
per Interest (c) . . . $ 10.00 12.50 50.00 35.00 55.00
============ ============ =========== =========== ===========
<FN>
-------------
(a) The above selected financial data should be read in conjunction with the consolidated financial
statements and the related notes appearing elsewhere in this annual report.
(b) The net earnings (loss) per Interest is based upon the number of Interests outstanding at the end of
each period (189,684).
(c) Cash distributions to the Limited Partners since the inception of the Partnership have not resulted in
taxable income to such Limited Partners and have therefore represented a return of capital. Each Partner's
taxable income (or loss) from the Partnership in each year is equal to his allocable share of the taxable income
(loss) of the Partnership, without regard to the cash generated or distributed by the Partnership.
</TABLE>
<TABLE>
SIGNIFICANT PROPERTY - SELECTED RENTAL AND OPERATING DATA AS OF DECEMBER 31, 1994
<CAPTION>
Property
--------
Topanga Plaza
Shopping Center a) The GLA occupancy rate and average base rent per square foot as of December 31 for each
of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C> <C>
1990 . . . . . 99% 21.66
1991 . . . . . 96% 22.53
1992 . . . . . 87% 25.11
1993 . . . . . 94% 21.13
1994 . . . . . 95% 24.84
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C>
None - no single tenant
represents more than 10%
of the total gross leasable
area at the property.
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the Topanga Plaza Shopping Center:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 12 19,500 867,000 10.2%
1996 5 9,600 174,400 2.1%
1997 7 19,100 476,800 5.6%
1998 6 19,500 410,700 4.8%
1999 8 16,900 447,000 5.3%
2000 6 12,500 296,500 3.5%
2001 7 12,800 517,700 6.1%
2002 10 35,900 887,800 10.4%
2003 11 19,300 813,800 9.6%
2004 10 32,300 874,200 10.3%
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
<TABLE>
<CAPTION>
Property
--------
First Financial
Plaza Office
Building a) The GLA occupancy rate and average base rent per square foot as of December 31 for
each of the last five years were as follows:
GLA Avg. Base Rent Per
December 31, Occupancy Rate Square Foot (1)
------------ -------------- ------------------
<S> <C> <C> <C>
1990 . . . . . 91% 31.02
1991 . . . . . 92% 29.49
1992 . . . . . 85% 30.06
1993 . . . . . 85% 30.90
1994 . . . . . 89% 24.93
<FN>
(1) Average base rent per square foot is based on GLA occupied as of December 31
of each year.
</TABLE>
<TABLE>
<CAPTION>
Base Rent Scheduled LeaseLease
b) Significant Tenants Square Feet Per Annum Expiration DateRenewal Option(s)
------------------- ----------- --------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Pepperdine University 32,000 $928,000 12/1996 4/5 year
(University)
</TABLE>
<TABLE>
<CAPTION>
c) The following table sets forth certain information with respect to the expiration of
leases for the next ten years at the First Financial Plaza Building:
Annualized Percent of
Number of Approx. Total Base Rent Total 1994
Year Ending Expiring GLA of Expiring of Expiring Base Rent
December 31, Leases Leases (1) Leases Expiring
------------ --------- --------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1995 3 4,300 100,000 2.1%
1996 5 37,500 1,055,800 22.0%
1997 5 22,100 663,200 13.8%
1998 12 36,800 925,000 19.3%
1999 2 7,600 158,600 3.3%
2000 1 6,700 155,900 3.3%
2001 -- -- -- --
2002 -- -- -- --
2003 1 2,400 64,700 1.4%
2004 -- -- -- --
<FN>
(1) Excludes leases that expire in 1995 for which renewal leases or leases with
replacement tenants have been executed as of March 27, 1995.
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
On August 23, 1985, the Partnership commenced an offering to the
public of $100,000,000, subject to increase by up to $150,000,000, pursuant
to a Registration Statement on Form S-11 under the Securities Act of 1933.
On January 17, 1986, the initial and final closing of the offering was
consummated with the dealer manager of the public offering (an affiliate of
which is a limited partner of one of the Associate General Partners of the
Partnership), and 189,679 Interests were issued by the Partnership, from
which the Partnership received gross proceeds of $189,679,000.
After deducting selling expenses and other offering costs, the
Partnership had approximately $171,306,000 with which to make investments
in income-producing commercial real property, to pay legal fees and other
costs (including acquisition fees) related to such investments and for
working capital reserves. A portion of such proceeds was utilized to
acquire the properties described in Item 1 above.
At December 31, 1994, the Partnership had cash and cash equivalents of
approximately $8,222,000. Such funds and short-term investments of
approximately $14,177,000 are available for working capital requirements
including the funding of the Partnership's share of earthquake repair costs
at the Topanga Plaza and of releasing costs and capital improvements and
repairs at the Park Center Financial Plaza, 40 Broad Street and First
Financial Plaza as discussed below. The Partnership and its consolidated
ventures have currently budgeted in 1995 approximately $3,141,000 for
tenant improvements and other capital expenditures. Such budgeted amounts
exclude earthquake costs at Topanga Plaza (as discussed below and in Note
3(c)). The Partnership's share of such items and its share of similar
items for its unconsolidated ventures in 1995 is currently budgeted to be
approximately $3,629,000. Actual amounts expended in 1995 may vary
depending on a number of factors including actual leasing activity, results
of property operations, liquidity considerations and other market
conditions over the course of the year. Due to these commitments, the
Partnership reduced the operating distribution in 1993. Additionally, as
more fully described in Notes 5 and 9, distributions to the General
Partners have been deferred in accordance with the subordination
requirements of the Partnership agreement. The source of capital for such
items and for both short-term and long-term future liquidity and
distributions is expected to be through cash generated by the Partnership's
investment properties and through the sale of such investments. In such
regard, reference is made to the Partnership's property specific
discussions below and also to the Partnership's disclosure of certain
property lease expirations in Item 6 above. To the extent that a property
does not produce adequate amounts of cash to meet its needs, the
Partnership may withdraw funds from the working capital reserve which it
maintains. The Partnership's and its ventures' mortgage obligations are
all non-recourse. Therefore, the Partnership and its Ventures are not
obligated to pay mortgage indebtedness unless the related property produces
sufficient net cash flow from operations or sale.
On January 30, 1992, the Partnership through JMB/Mid Rivers Mall
Associates, sold its interest in Mid Rivers Mall located in St. Peters,
Missouri to an affiliate of an unaffiliated joint venture partner. The
Partnership received, in connection with the sale, after all fees,
expenses, and joint venture participation, net cash of $13,250,000. See
Note 7 for a further description of the transaction.
Overall cash flow returns at Broad Street for the next few years are
expected to be lower than in previous years. The Partnership will continue
its aggressive leasing program; however, the downtown New York City market
remains extremely competitive due to the significant amount of space
available primarily resulting from the layoffs, cutbacks and consolidations
by financial service companies and related businesses which dominated this
market. In addition to competition for tenants in the downtown market from
other buildings in the area, there is increasing competition from less
expensive alternatives to downtown. Rental rates in the downtown market
are currently at depressed levels and this can be expected to continue for
the foreseeable future while the current vacant space is gradually
absorbed. Little, if any, new construction is planned for downtown over
the next few years. It is expected that the building will continue to be
adversely affected by the lower effective rental rates achieved upon re-
leasing of existing leases which expire over the next few years. In
addition, new leases will likely require expenditures for lease commissions
and tenant improvements prior to tenant occupancy. This decline in rental
rates, the increase in re-leasing time and the costs upon re-leasing will
result in a continued decrease in cash flow from operations over the near
term. Therefore, Broad Street recorded a provision for value impairment of
$22,908,606 at December 31, 1992 to reduce the net book value of the
property to the then estimated valuation of $7,800,000. Reference is made
to Notes 1 and 3(d) for further discussion of the current status of this
investment property.
During August 1994, San Jose received notification from the
Redevelopment Agency of the City of San Jose of its offer to purchase one
of the parking garage structures in the office building complex for an
approved Agency project for $4,090,000. The price offered is deemed by the
Agency to be just compensation in compliance with applicable State and
Federal laws relating to the government's power of eminent domain. San
Jose is currently investigating its options with regard to the Agency's
offer, including the impact of any purchase on garage spaces leased to
tenants of other Partnership properties in the complex. Should the Agency
proceed to purchase the property, San Jose would recognize a gain for
financial reporting and Federal income tax purposes. However, it is
uncertain at this time whether a transfer of the garage to the Agency will
occur, when, or upon what terms.
San Jose, during the fourth quarter of 1994, finalized a loan
extension and modification with the mortgage lender on the 150 Almaden and
185 Park Avenue buildings and certain parking areas as the mortgage loan
secured by this portion of the complex matured on October 1, 1993 and was
extended to December 1, 1993. The modified and extended loan has an
interest rate of 8.4% per annum, requires monthly interest payments only
beginning December 1, 1994 through December 1, 1997 when the loan begins to
amortize until it matures November 30, 2001, when the unpaid principal and
interest balance is due. The refinancing resulted in a partial paydown of
the outstanding principal balance in the amount of $2.5 million of which
the Partnership's share was $1.25 million. (Reference is made to Note
3(b)).
San Jose notified the tenants in and invitees to the complex that some
of the buildings, particularly the 100-130 Park Center Plaza Buildings and
the garage below them, could pose a life safety hazard under certain
unusually intense earthquake conditions. While the buildings and the
garage were designed to comply with the applicable codes for the period in
which they were constructed, and there is no legal requirement to upgrade
the buildings for seismic purposes, San Jose is working with consultants to
analyze ways in which such a potential life safety hazard could be
minimized. Tenants occupying approximately 55,000 square feet
(approximately 13% of the buildings) of the Park Center Plaza investment
property have leases that expire in 1995, for which there can be no
assurance of renewals. In addition, new leases will likely require
expenditures for lease commissions and tenant improvements prior to tenant
occupancy. These anticipated costs upon re-leasing will result in a
decrease in cash flow from operations over the near term. However, since
the costs of both re-leasing space and any seismic program could be
substantial, San Jose has commenced discussions with the appropriate lender
for additional loan proceeds to pay for all or a portion of these costs.
Furthermore, should lender assistance be required to fund significant costs
at the 100-130 Park Center Plaza buildings but not be obtained, the
Partnership may decide not to commit any additional amounts to this portion
of the complex since such amounts are likely to be large in comparison to
the Partnership's current equity in this portion of the complex and the
likelihood of recovering such funds through increased capital appreciation
is remote. The result would be that the Partnership would no longer have
an ownership interest in this portion of the complex.
As a result, there is continued uncertainty about the ability to
recover the net carrying value of the property through future operations
and sale and accordingly, San Jose has made provisions for value impairment
on the 100-130 Park Center Plaza buildings and certain parking areas and
the 170 Almaden building of $944,335 in the aggregate. Such provisions at
September 30, 1994 were recorded to reduce the net carrying values of these
buildings to the then outstanding balances of the related non-recourse
financing. Furthermore, at September 30, 1993, San Jose recorded a
provision for value impairment on the 150 Almaden and 185 Park Avenue
buildings and certain parking areas of $15,549,935 to reduce the net
carrying value of these buildings to the then outstanding balance of
related non-recourse financing. Additionally, at December 31, 1992, San
Jose recorded a provision for value impairment of $8,142,152 on certain
other portions of the complex to amounts equal to the then outstanding
balances of the related non-recourse financing. In the event the lender on
the 100-130 Park Center Plaza portion of the complex exercised its remedies
as discussed above, the result would likely be that San Jose would no
longer have an ownership interest in such portion. See Note 3(b) for
further discussion of this investment property.
On January 17, 1994, an earthquake occurred in Los Angeles,
California. The epicenter was located in the town of Northridge, which is
approximately six miles from Topanga Plaza Shopping Center. Consequently,
significant portions of the mall, including the four major department
stores who own their own buildings, suffered some casualty damage. The
approximate 360,000 square feet of mall shops owned by the Topanga
Partnership did not suffer major structural damage. The estimated costs at
Topanga for which the joint venture is responsible is approximately $10.5
million, of which approximately $9.7 million is construction related. The
majority of this cost is subject to recovery under the joint venture's
earthquake insurance policy. The deductible on the earthquake casualty and
business interruption coverages is approximately $2.1 million which is
expected to be funded by Topanga from operations in 1995. As of December
31, 1994, Topanga has incurred approximately $7.5 million of the estimated
$9.7 million of costs to repair the mall. Approximately $6.6 million has
been reimbursed through insurance proceeds. The remaining amount, net of
the deductible, of approximately $853,000 has been classified as a casualty
insurance receivable in the accompanying consolidated financial statements.
As of the date of this report, all of the mall's 114 shops and the four
major department stores are open. Subsequent to the earthquake, sales at
the mall shops have increased due to the greater extent of damage at a
nearby competing mall. One department store, Robinson-May, had a portion
of their store condemned by city inspectors. One consequence of this
partial condemnation is that Robinson-May has taken back the approximately
25,000 square feet of that store which was leased to the joint venture in
1990. Pursuant to the terms of the lease agreement with the joint venture,
Robinson-May was allowed to terminate the lease in the event there was
substantial damage to its existing store (as defined). This is expected to
represent the loss of approximately $150,000 in annual net income from
subleases of the eight tenants which had subleased this space. Topanga was
insured in case of such event and received, in July 1994, insurance
proceeds in the amount of $2,500,000 for the cost of the unamortized tenant
improvements and the loss of rents related to this space. As a result of
the termination of the leasehold for this space from Robinson-May, Topanga
has written off approximately $1.2 million of unamortized leasehold
improvements discussed above. Topanga has recorded an extraordinary loss
of $2,889,000 (of which the Partnership's share is approximately
$1,676,000) which includes Topanga's share of repair cost of approximately
$2.1 million, and approximately $789,000 of other costs. The earthquake did
result in some adverse effect on the operations of the center in early
1994. Any future costs which may be subject to insurance recoveries are
not presently determinable.
The Partnership and its joint venture partner completed a renovation
at the Topanga Plaza Shopping Center during 1992 of approximately
$40,000,000. In conjunction with this renovation and remerchandising, the
Partnership secured an extension of the operating covenant for the
Nordstrom's department store to the year 2000 from an original expiration
date in 1994. In addition, the Broadway store has also committed to
operate in the center until the year 2000. The Partnership and its joint
venture partner have refinanced the existing mortgage notes with
replacement financing from the existing mortgage holder in the aggregate
amount of approximately $59,000,000 which was funded in four stages. See
Note 4(b) for further discussion of the refinancing of this loan.
During 1994, the manager of the Topanga Plaza, an affiliate of the
joint venture partner, was sold to an unaffiliated third party, who assumed
management at the property on the same terms as existed prior to the sale.
The Plaza Hermosa Shopping Center was developed with proceeds raised
through a municipal bond financing. This financing was secured by a letter
of credit facility which was ultimately secured by a deed of trust on the
property. The letter of credit facility expired December 31, 1993; at
which time, the Partnership signed an agreement with the holder of the
letter of credit to extend its expiration date to December 31, 1994. As
the bond financing was due and payable upon the expiration of the letter of
credit, the bond financing was classified as a current liability at
December 31, 1993. In December 1994, the Partnership signed an agreement
for a long-term replacement letter of credit with a new lender and in
conjunction with the new letter of credit, simultaneously retired this
original bond financing and issued new bonds to the existing bondholders in
their original aggregate amount of $6,400,000 (see note 4). The new letter
of credit expires in December 1997. The new bond financing is due and
payable upon the expiration of the letter of credit, and accordingly, has
been classified as a long-term liability at December 31, 1994. This
property did not sustain any significant damage in connection with the
January 17, 1994 Los Angeles earthquake.
In 1995, the leases of tenants occupying approximately 29,000 square
feet (approximately 31% of the property) at the Plaza Hermosa Shopping
Center expire. Although the Partnership has received indications that some
of these tenants will renew, there can be no assurance that such renewals
will take place. In addition, new leases will likely require expenditures
for lease commissions and tenant improvements prior to tenant occupancy.
These anticipated costs upon re-leasing will result in a decrease in cash
flow from operations over the near term.
At December 31, 1994, the First Financial Plaza office building is
approximately 89% occupied. In July 1993, Mitsubishi vacated its
approximate 8,100 square feet prior to its lease expiration of January 1997
and continues to pay rent pursuant to its lease obligation. Including the
Mitsubishi lease, the building is 93% leased as of the date of this report.
The Los Angeles office market in general and the Encino submarket in
particular remain extremely competitive resulting in higher rental
concessions granted to tenants. The previous decline in rental rates
appears to have stabilized in 1994. Furthermore, due to the continued
recession in southern California and concerns regarding certain tenants'
ability to perform under their current leases, the venture has granted rent
deferrals and other forms of rent relief to several tenants, including
First Financial Housing, an affiliate of the unaffiliated venture partner,
which is likely to have an adverse effect on venture cash flows in the near
term.
As previously reported, the First Financial office building appeared
to have experienced only minor cosmetic damage as a result of the January
17, 1994 Northridge earthquake in southern California. On February 22,
1995, the City Council of the City of Los Angeles passed an ordinance
requiring certain buildings (identified by building type and location) to
perform additional testing on the welded steel mount connections to
determine if the earthquake had weakened such joint weldings and to repair
such joint weldings if weakness is detected. This property qualified for
the additional testing under the ordinance, and therefore, the Partnership
had retained a structural engineer to perform the additional testing.
Results of the initial testing by the structural engineer indicate that the
building's joint weldings have suffered damage which, in accordance with
the recently enacted ordinance, must be repaired. The Partnership's
structural engineer has informed the Partnership that the damage detected
does not pose a life safety risk for the building's tenants. While a
complete determination of the requirements to comply with such ordinance is
not as yet completed, it is currently estimated that the cost of such
repairs, which has been reflected in the accompanying consolidated
financial statements as an extraordinary item will be approximately
$1,000,000 (of which the Partnership's share is approximately $625,000).
The mortgage note secured by the First Financial Plaza office building
is scheduled to mature in November 1995. Although the venture has had
preliminary discussions with the lender regarding an extension of this
loan, there can be no assurance that such an extension or any alternative
financing for all or substantially all of the mortgage loan can be obtained
at maturity. The venture is also examining a possible sale of the property
should a refinancing not take place. There can be no assurance that a sale
of the property will occur. Based upon such uncertainty, Encino joint
venture may not be able to recover the net carrying value of the investment
property through future operations or sale. Accordingly, the Encino
venture, as a matter of prudent accounting practice, has made a provision
for value impairment of approximately $6,475,000, all of which is allocable
to First Financial joint venture. Such provision was recorded at December
31, 1994 to reduce the net carrying value of the property based upon an
estimated sales price should the Encino Venture be unable to extent or
refinance the mortgage loan at maturity.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
Though the economy has recently shown signs of improvement and
financing is generally becoming more available for certain types of higher-
quality properties in healthy markets, real estate lenders are typically
requiring a lower loan-to-value ratio for mortgage financing than in the
past. This has made it difficult for owners to refinance real estate
assets at their current debt levels unless the value of the underlying
property has appreciated significantly. As a consequence, and due to the
weakness of some of the local real estate markets in which the
Partnership's properties operate, the Partnership is taking steps to
preserve its working capital.
RESULTS OF OPERATIONS
The increase in cash and cash equivalents and the decrease in short-
term investments is primarily due to none of the Partnership's U.S.
Government obligations being classified as cash and cash equivalents at
December 31, 1993, whereas approximately $4,529,000 of such U.S. Government
obligations were classified as cash equivalents at December 31, 1994.
Reference is made to Note 1.
The increase in rents and other receivables at December 31, 1994 as
compared to December 31, 1993 is primarily due to the timing of payment of
certain tenant receivables at Plaza Hermosa.
The decrease in escrow deposits at December 31, 1994 as compared to
December 31, 1993 is primarily due to the payment from escrow of tenant
improvements of approximately $416,000 related to the renewal and expansion
of a certain tenant in 1993 at 40 Broad Street and due to the refund of
certain escrowed funds of approximately $291,000 due to the letter of
credit extension at Plaza Hermosa.
The casualty insurance receivable balance at December 31, 1994
represents a portion of repair costs to be reimbursed through insurance
proceeds at Topanga Plaza. See Note 3(c).
The decrease in land and buildings and improvements at December 31,
1994 as compared to December 31, 1993 is primarily due to a provision for
value impairment of $6,475,138 recorded at First Financial Plaza. The
decrease in buildings and improvements is also due to approximately
$3,226,000 of previously incurred deferred costs at Topanga Plaza being
reclassified as deferred expenses.
The increase in investment in unconsolidated ventures at December 31,
1994 as compared to December 31, 1993 is primarily due to the Partnership's
contribution to San Jose for the partial paydown of the loan secured by the
150 Almaden and 185 Park building due to the modification and extension of
the loan. See note 3(b).
The increase in accrued rents receivable at December 31, 1994 as
compared to December 31, 1993 is primarily due to rents accrued ratably
over the term of the lease rather than as paid at Topanga Plaza and 40
Broad Street.
The increase in deferred expense at December 31, 1994 as compared to
December 31, 1993 is primarily due to deferred costs of approximately
$3,226,000 incurred at Topanga Plaza previously classified as buildings and
improvements. The increase in deferred expenses is also due to deferred
costs of approximately $552,000 incurred due to the letter of credit
extension at Plaza Hermosa (see note 2(b)) and to deferred leasing costs of
approximately $509,000 at 40 Broad Street.
The increase in current portion of long-term debt and the decrease in
long-term debt less current portion at December 31, 1994 as compared to
December 31, 1993 is primarily due to the 1995 scheduled maturity of the
loan securing First Financial Plaza partially offset by the
reclassification (due to refinancing) from current portion of long-term
debt to long-term debt less current portion of the debt securing Plaza
Hermosa.
The increase in accounts payable at December 31, 1994 as compared to
December 31, 1993 is primarily due to earthquake repair costs accrued at
Topanga Plaza and First Financial Plaza.
The decrease in construction costs payable at December 31, 1994 as
compared to December 31, 1993 is due to the timing of payment of
construction costs incurred at Topanga Plaza.
The increase in unearned rents at December 31, 1994 as compared to
December 31, 1993 is primarily due to the prepayment of rents at Plaza
Hermosa.<PAGE>
The increase in tenant security deposits at December 31, 1994 as
compared to December 31, 1993 is primarily due to the receipt of deposit of
approximately $80,000 at 40 Broad Street.
The decrease in advances from affiliates at December 31, 1994 as
compared to December 31, 1993 is due to the repayment of $300,000 in 1994
to the venture partner at Topanga Plaza.
The increase in rental income for the year ended December 31, 1994 as
compared to the year ended December 31, 1993 is primarily due to
approximately $1,326,000 of insurance proceeds related to the lost rental
income due to the space taken back by Robinson-May at Topanga Plaza. This
increase is partially offset by 40 Broad Street achieving lower effective
rental rates upon renewals or upon re-leasing of space previously occupied
by tenants paying higher rental rates. The decrease in rental income for
the year ended December 31, 1993 as compared to the year ended December 31,
1992 is primarily due to decreased effective rents at the 40 Broad Street
investment property, lower occupancy at Plaza Hermosa and First Financial
in 1993, and lower occupancy in 1992 at Topanga Plaza caused by the
renovation as discussed in Note 3(c).
The increase in interest income for the year ended December 31, 1994
as compared to the year ended December 31, 1993 is primarily due to an
increase in interest rates earned on U.S. Government obligations in 1994.
The decrease for the year ended December 31, 1993 as compared to the year
ended December 31, 1992 is primarily due to a decrease in the interest
rates earned on U.S. Government obligations in 1993.
Mortgage and other interest expense increased for the year ended
December 31, 1994 and December 31, 1993 as compared to the year ended
December 31, 1992 primarily due to the fundings by the Topanga mortgage
lender of $16,000,000 in December 1992, $18,400,000 in February 1993 and
$14,000,000 in June 1993 as more fully described in Note 4(b).
Depreciation expense increased for the year ended December 31, 1993 as
compared to the year ended December 31, 1992 primarily due to the increase
in building and improvements at 40 Broad Street, Topanga Plaza and First
Financial Plaza.
The increases in amortization of deferred expenses for the years ended
December 31, 1994 as compared to the year ended December 31, 1993 and for
the year ended December 31, 1993 as compared to the year ended December 31,
1992 are primarily due to the capitalization of certain expenses at Topanga
Plaza, 40 Broad Street and Plaza Hemosa.
The provision for value impairment for the year ended December 31,
1994 is due to the Partnership recording a provision for value impairment
of $6,475,138 at First Financial Plaza at December 31, 1994 to reduce the
net carrying value of the investment property to the then outstanding
balance of the related non-recourse debt, see Note 3(f). The provision for
value impairment for the year ended December 31, 1992 is due to the
Partnership recording a provision for value impairment of $22,908,606 at 40
Broad Street at December 31, 1992.
The increase in Partnership's share of operations of unconsolidated
ventures for the year ended December 31, 1994 as compared to the year ended
December 31, 1993 is primarily due to a provision for value impairment
recorded at the San Jose investment property at September 30, 1993 of which
the Partnership's share was approximately $7,775,000, partially offset by
the provision for value impairment recorded at the San Jose investment
property at September 30, 1994, of which the Partnership's share is
approximately $472,000. See Note 3(b).
Venture partners' share of consolidated ventures' operations before
extraordinary item increased for the year ended December 31, 1994 as
compared to the year ended December 31, 1993 primarily due to the value
impairment recorded at First Financial Plaza partially offset by the
venture partners' share of insurance proceeds related to space taken back
by Robinson-May at Topanga Plaza. See Note 3(c). The decrease for the
year ended December 31, 1993 as compared to the year ended December 31,
1992 is primarily due to decreased earnings at the Topanga Plaza as a
result of the renovation and re-merchandising as discussed above.
Partnership's share of gain on sale of interest in investment property
of $5,655,876 for the year ended December 31, 1993 as compared to the year
ended December 31, 1992 is due to the sale of the Partnership's interest in
Mid Rivers in January, 1992 (see Note 7).
The extraordinary item for the year ended December 31, 1994 is due to
the earthquake damage at Topanga Plaza and First Financial Plaza. See Note
3(c) and 3(f) respectively.
INFLATION
Due to the decrease in the level of inflation in recent years,
inflation generally has not had a material effect on rental income or
property operating expenses.
To the extent that inflation in future periods does have an adverse
impact on property operating expenses, the effect will generally be offset
by amounts recovered from tenants as many of the long-term leases at the
Partnership's commercial properties have escalation clauses covering
increases in the cost of operating and maintaining the properties as well
as real estate taxes. Therefore, there should be little effect on
operating earnings if the properties remain substantially occupied. In
addition, substantially all of the leases at the Partnership's shopping
center investments contain provisions which entitle the Partnership to
participate in gross receipts of tenants above fixed minimum amounts.
Future inflation may also cause capital appreciation of the
Partnership's investment properties over a period of time to the extent
that rental rates and replacement costs of properties increase.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
INDEX
Independent Auditors' Report
Consolidated Balance Sheets, December 31, 1994 and 1993
Consolidated Statements of Operations, years ended December 31, 1994,
1993 and 1992
Consolidated Statements of Partners' Capital Accounts, years ended
December 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows, years ended December 31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements
Schedule
--------
Consolidated Real Estate and Accumulated Depreciation III
Schedules not filed:
All schedules other than the one indicated in the index have been
omitted as the required information is inapplicable or the information is
presented in the consolidated financial statements or related notes.
INDEPENDENT AUDITORS' REPORT
The Partners
JMB INCOME PROPERTIES, LTD. - XII:
We have audited the consolidated financial statements of JMB Income
Properties, Ltd. - XII (a limited partnership) and consolidated ventures as
listed in the accompanying index. In connection with our audits of the
consolidated financial statements, we also have audited the financial
statement schedule as listed in the accompanying index. These consolidated
financial statements and financial statement schedule are the
responsibility of the General Partners of the Partnership. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by the General Partners of the
Partnership, as well as evaluating the overall 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 financial position of
JMB Income Properties, Ltd. - XII and consolidated ventures at December 31,
1994 and 1993, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 1994, 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.
KPMG PEAT MARWICK LLP
Chicago, Illinois
March 27, 1995
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
ASSETS
------
<CAPTION>
1994 1993
------------ -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents (note 1) . . . . . . . . . . . . . . . $ 8,222,359 1,470,860
Short-term investments (note 1). . . . . . . . . . . . . . . . . 14,176,812 21,966,316
Rents and other receivables, net of allowance for
doubtful accounts of $925,820 in 1994 and
$481,694 in 1993 . . . . . . . . . . . . . . . . . . . . . . . 2,162,206 2,025,743
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . 226,598 267,718
Escrow deposits. . . . . . . . . . . . . . . . . . . . . . . . . 708,332 1,393,527
Casualty insurance receivable (note 3(c)). . . . . . . . . . . . 853,000 --
------------ -----------
Total current assets . . . . . . . . . . . . . . . . . . 26,349,307 27,124,164
------------ -----------
Investment properties, at cost (notes 2, 3 and 4) - Schedule III:
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,425,036 23,074,253
Buildings and improvements . . . . . . . . . . . . . . . . . . . 170,873,378 176,419,717
------------ -----------
193,298,414 199,493,970
Less accumulated depreciation. . . . . . . . . . . . . . . . . . 46,792,110 41,724,753
------------ -----------
Total investment properties,
net of accumulated depreciation. . . . . . . . . . . . 146,506,304 157,769,217
Investment in unconsolidated ventures, at equity (notes 1, 3 and 10) 5,719,465 3,720,296
Deferred expenses. . . . . . . . . . . . . . . . . . . . . . . . . 8,340,547 4,788,858
Accrued rents receivable . . . . . . . . . . . . . . . . . . . . . 2,406,764 1,649,035
------------ -----------
$189,322,387 195,051,570
============ ===========
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS
------------------------------------------
1994 1993
------------ -----------
Current liabilities:
Current portion of long-term debt (note 4) . . . . . . . . . . . $ 29,539,123 6,972,571
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . 3,863,132 969,433
Construction costs payable . . . . . . . . . . . . . . . . . . . 342,324 537,400
Unearned rents . . . . . . . . . . . . . . . . . . . . . . . . . 64,806 17,803
------------ -----------
Total current liabilities. . . . . . . . . . . . . . . . 33,809,385 8,497,207
Tenant security deposits . . . . . . . . . . . . . . . . . . . . . 509,493 410,232
Long-term debt, less current portion (note 4). . . . . . . . . . . 64,470,886 87,612,869
Advances from affiliates (note 3(c)) . . . . . . . . . . . . . . . 435,000 735,000
------------ -----------
Commitments and contingencies (notes 3 and 8)
Total liabilities. . . . . . . . . . . . . . . . . . . . 99,224,764 97,255,308
Venture partners' subordinated equity in ventures (note 3) . . . . 21,616,287 22,872,422
Partners' capital accounts (notes 1 and 5):
General partners:
Capital contributions. . . . . . . . . . . . . . . . . . . . 11,123 11,123
Cumulative net earnings. . . . . . . . . . . . . . . . . . . 669,602 642,630
------------ -----------
680,725 653,753
------------ -----------
Limited partners (189,684 interests):
Capital contributions, net of offering costs . . . . . . . . 171,306,452 171,306,452
Cumulative net loss. . . . . . . . . . . . . . . . . . . . . (28,347,981) (23,784,830)
Cumulative cash distributions. . . . . . . . . . . . . . . . (75,157,860) (73,251,535)
------------ -----------
67,800,611 74,270,087
------------ -----------
Total partners' capital accounts . . . . . . . . . . . . 68,481,336 74,923,840
------------ -----------
$189,322,387 195,051,570
============ ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Income:
Rental income. . . . . . . . . . . . . . . . . $30,166,883 29,224,716 30,049,260
Interest income. . . . . . . . . . . . . . . . 985,333 831,059 1,011,855
----------- ----------- -----------
31,152,216 30,055,775 31,061,115
----------- ----------- -----------
Expenses:
Mortgage and other interest. . . . . . . . . . 9,075,692 9,137,379 5,922,611
Depreciation . . . . . . . . . . . . . . . . . 5,640,425 5,739,255 4,811,235
Property operating expenses. . . . . . . . . . 13,695,140 14,074,577 14,475,393
Professional services. . . . . . . . . . . . . 244,951 307,769 385,726
Amortization of deferred expenses. . . . . . . 1,117,672 787,304 456,673
General and administrative . . . . . . . . . . 280,016 222,884 351,165
Provision for value impairment (note 1). . . . 6,475,138 -- 22,908,606
----------- ----------- -----------
36,529,034 30,269,168 49,311,409
----------- ----------- -----------
Operating loss . . . . . . . . . . . . (5,376,818) (213,393) (18,250,294)
Partnership's share of earnings (loss) from
operations of unconsolidated ventures
(notes 1, 3 and 10). . . . . . . . . . . . . . 441,700 (6,610,269) (3,123,534)
Venture partners' share of consolidated ventures'
operations before extraordinary item
(notes 1 and 3). . . . . . . . . . . . . . . . 2,699,777 785,684 6,090,075
----------- ----------- -----------
Net operating loss before
extraordinary item . . . . . . . . . (2,235,341) (6,037,978) (15,283,753)
Partnership's share of gain on sale of interest
in investment property (notes 3 and 7) . . . . -- -- 5,655,876
Extraordinary item (net of venture partners
share of $1,588,537) (note 3(c)) . . . . . . . (2,300,838) -- --
----------- ----------- -----------
Net loss . . . . . . . . . . . . . . . $(4,536,179) (6,037,978) (9,627,877)
=========== =========== ===========
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
1994 1993 1992
------------ ------------ ------------
Net loss per limited partnership interest
(note 1):
Net operating loss. . . . . . . . . . . . . . $ (12.41) (31.79) (80.48)
Partnership's share of gain on sale
of interest in investment property. . . . . -- -- 29.52
Extraordinary item. . . . . . . . . . . . . . (11.65) -- --
----------- ----------- -----------
Net loss per limited partnership
interest (note 1). . . . . . . . . . $ (24.06) (31.79) (50.96)
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
GENERAL PARTNERS LIMITED PARTNERS (189,684 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------------------- ----------- ----------- ---------- ------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
December 31,
1991. . . . .$11,123 612,375 -- 623,498 171,306,452 (8,088,720) (61,337,010)101,880,722
Cash distri-
butions
($50.00 per
limited
partnership
interest) . . -- -- -- -- -- -- (9,531,620) (9,531,620)
Net earnings
(loss)
(note 5). . . -- 38,525 -- 38,525 -- (9,666,402) -- (9,666,402)
------- --------- ------- -------- ----------- ----------- -----------------------
Balance at
December 31,
1992. . . . . 11,123 650,900 -- 662,023 171,306,452 (17,755,122) (70,868,630) 82,682,700
Cash distri-
butions
($12.50 per
limited
partnership
interest) . . -- -- -- -- -- -- (2,382,905)(2,382,905)
Net loss
(note 5). . . -- (8,270) -- (8,270) -- (6,029,708) -- (6,029,708)
------- --------- ------- -------- ----------- ----------- ----------------------
Balance at
December 31,
1993. . . . .$11,123 642,630 -- 653,753 171,306,452 (23,784,830) (73,251,535)74,270,087
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL ACCOUNTS - CONTINUED
GENERAL PARTNERS LIMITED PARTNERS (189,684 INTERESTS)
-------------------------------------------------- ---------------------------------------------------
CONTRI-
BUTIONS
NET NET OF NET
CONTRI- EARNINGS CASH OFFERING EARNINGS CASH
BUTIONS (LOSS) DISTRIBUTIONS TOTAL COSTS (LOSS) DISTRIBUTIONS TOTAL
------- ----------------------- ----------- ----------- ---------- ------------------------
Cash distri-
butions
($10 per
limited
partnership
interest) . . -- -- -- -- -- -- (1,906,325)(1,906,325)
Net earnings
(loss)
(note 5). . . -- 26,972 -- 26,972 -- (4,563,151) -- (4,563,151)
------- ------- ------- ------- ----------- ----------- ----------- ----------
Balance at
December 31,
1994. . . . .$11,123 669,602 -- 680,725 171,306,452 (28,347,981) (75,157,860)67,800,611
======= ======= ======= ======= =========== =========== =========== ==========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . . . . . . $(4,536,179) (6,037,978) (9,627,877)
Items not requiring (providing) cash or
cash equivalents:
Depreciation . . . . . . . . . . . . . . . . . 5,640,425 5,739,255 4,811,235
Amortization of deferred expenses. . . . . . . 1,117,672 787,304 456,673
Partnership's share of operations and gain on
sale of interest in investment property of
unconsolidated ventures, net of distributions (441,700) 6,610,269 (746,754)
Venture partners' share of
ventures' operations and
extraordinary item . . . . . . . . . . . . . (4,288,314) (785,684) (6,090,075)
Provisions for value impairment (note 1) . . . 6,475,138 -- 22,908,606
Write-off of assets. . . . . . . . . . . . . . 1,174,125 -- --
Extraordinary item, net of insurance
recoveries of $1,174,125 . . . . . . . . . . 3,889,375 -- --
Changes in:
Rents and other receivables. . . . . . . . . . (836,355) (445,506) (716,723)
Prepaid expenses . . . . . . . . . . . . . . . 41,120 (44,925) (128,694)
Escrow deposits. . . . . . . . . . . . . . . . 685,195 (368,796) (257,704)
Casualty insurance receivable. . . . . . . . . (853,000) -- --
Accrued rents receivable . . . . . . . . . . . (757,729) (98,080) (321,480)
Accounts payable . . . . . . . . . . . . . . . (295,784) 39,427 (290,092)
Accrued interest . . . . . . . . . . . . . . . -- (160,105) 154,719
Unearned rents . . . . . . . . . . . . . . . . 47,003 (16,198) (12,569)
Tenant security deposits . . . . . . . . . . . 99,261 33,372 (76,452)
----------- ----------- -----------
Net cash provided by operating activities 7,160,253 5,252,355 10,062,813
----------- ----------- -----------
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Cash flows from investing activities:
Net sales and maturities (purchases) of short-term
investments. . . . . . . . . . . . . . . . . . 7,789,504 (2,308,024) (8,373,546)
Additions to investment properties,
net of related payables and in 1994
net of insurance recoveries of $6,647,000. . . (2,908,722) (10,071,938) (29,696,904)
Partnership's distributions from
unconsolidated ventures. . . . . . . . . . . . -- 1,000,000 13,250,000
Partnership's contributions to
unconsolidated ventures. . . . . . . . . . . . (1,557,469) -- (753,750)
Payment of deferred expenses . . . . . . . . . . (1,480,284) (1,428,355) (1,606,048)
----------- ----------- -----------
Net cash provided by (used in)
investing activities . . . . . . . . . 1,843,029 (12,808,317) (27,180,248)
----------- ----------- -----------
Cash flows from financing activities:
Principal payments on long-term debt . . . . . . (575,431) (421,223) (1,769,435)
Increase (decrease) in other long-term
liabilities. . . . . . . . . . . . . . . . . . -- (9,650,000) 6,549,513
Proceeds from refinancings of debt (note 4(b)) . -- 18,400,000 26,600,000
Advances from affiliates . . . . . . . . . . . . (300,000) 735,000 (1,490,000)
Venture partners' contributions to venture . . . 604,973 150,126 242,420
Distributions to venture partners. . . . . . . . (75,000) (135,000) (2,406,641)
Distributions to limited partners. . . . . . . . (1,906,325) (2,382,905) (9,531,620)
----------- ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . . . (2,251,783) 6,695,998 18,194,237
----------- ----------- -----------
Net increase (decrease) in cash
and cash equivalents . . . . . . . . . 6,751,499 (859,964) 1,076,802
Cash and cash equivalents,
beginning of year. . . . . . . . . . . 1,470,860 2,330,824 1,254,022
----------- ----------- -----------
Cash and cash equivalents, end of year . $ 8,222,359 1,470,860 2,330,824
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for mortgage and other interest,
net of amounts capitalized . . . . . . . . . . $ 9,053,196 9,297,484 5,965,889
=========== =========== ===========
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
1994 1993 1992
----------- ----------- -----------
Non-cash investing and financing activities:
Change in accounts payable. . . . . . . . . . . $ 3,189,483 -- --
Change in accounts receivable . . . . . . . . . 699,892 -- --
----------- ----------- -----------
Total extraordinary item-earthquake damage at
Topanga Mall and First Financial Plaza
(note 3(c) and 3(f), respectively). . . . . $ 3,889,375 -- --
=========== =========== ===========
Total proceeds from sale of investment property,
net of selling expenses. . . . . . . . . . . . $ -- -- 30,909,086
Assumption of long-term debt . . . . . . . . . . -- -- 17,659,086
----------- ----------- -----------
Cash proceeds from sale of the Partnership's
interest in investment properties,
net of selling expenses. . . . . . . . . . . . $ -- -- 13,250,000
=========== =========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(1) BASIS OF ACCOUNTING
The accompanying consolidated financial statements include the
accounts of the Partnership and its ventures, Topanga Plaza Partnership
("Topanga"), JMB-40 Broad Street Associates ("Broad Street"), JMB First
Financial Associates ("First Financial") and First Financial's venture, JMB
Encino Partnership, ("Encino") (see note 3). The effect of all
transactions between the Partnership and its ventures have been eliminated
in the consolidated financial statements. The equity method of accounting
has been applied in the accompanying consolidated financial statements with
respect to the Partnership's venture interests in JMB/San Jose Associates
("San Jose"), JMB/Mid Rivers Mall Associates ("JMB/Rivers") and JMB/Rivers'
venture, Mid Rivers Mall Associates, L.P. ("Mid Rivers"). Accordingly, the
accompanying consolidated financial statements do not include the accounts
of San Jose, JMB/Rivers and Mid Rivers. The Partnership, through
JMB/Rivers sold its interest in Mid Rivers mall in January 1992.
The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments to present the Partnership's
accounts in accordance with generally accepted accounting principles
("GAAP") and to consolidate the accounts of the ventures as described
above. Such adjustments are not recorded on the records of the
Partnership. The net effect of these items for the years ended December
31, 1994 and 1993 is summarized as follows:
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
1994 1993
-------------------------------------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Total assets . . . . . . . . . . . $189,322,387 123,709,895 195,051,570 129,228,260
Partners' capital accounts
(deficits) (note 5):
General partners . . . . . . . 680,725 (1,073,088) 653,753 (928,062)
Limited partners . . . . . . . 67,800,611 118,304,795 74,270,087 123,691,731
Net earnings (loss) (note 5):
General partners . . . . . . . 26,972 (145,025) (8,270) (170,455)
Limited partners . . . . . . . (4,563,151) (3,480,611) (6,029,708) (4,090,927)
Net loss per limited
partnership interest . . . . . . $ (24.06) (18.35) (31.79) (21.57)
============ =========== =========== ===========
</TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The net loss per limited partnership interest is based upon the number
of limited partnership interests outstanding at the end of each period
(189,684).
Statement of Financial Accounting Standards No. 95 requires the
Partnership to present a statement which classifies receipts and payments
according to whether they stem from operating, investing or financing
activities. The required information has been segregated and accumulated
according to the classifications specified in the pronouncement.
Partnership distributions from its unconsolidated ventures are considered
cash flow from operating activities to the extent of the Partnership's
cumulative share of net earnings. In addition, the Partnership records
amounts held in U.S. Government obligations at cost, which approximates
market. For the purposes of these financial statements, the Partnership's
policy is to consider all such amounts held with original maturities of
three months or less ($4,529,080 and $0 at December 31, 1994 and 1993,
respectively) as cash equivalents with any remaining amounts (generally
with original maturities of one year or less) reflected as short-term
investments being held to maturity.
Deferred expenses consist primarily of commitment fees and loan
related costs which are amortized over the term of the related mortgage
loans, and lease commissions which are amortized over the term of the
related leases, using the straight-line method.
Although certain leases of the Partnership provide for tenant
occupancy during periods for which no rent is due and/or increases in the
minimum lease payments over the term of the lease, rental income is accrued
for the full period of occupancy on a straight-line basis.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"),
"Disclosures about Fair Value of Financial Instruments", requires entities
with total assets exceeding $150 million at December 31, 1992 to disclose
the SFAS 107 value of all financial assets and liabilities for which it is
practicable to estimate. Value is defined in the Statement as the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The
Partnership believes the carrying amount of its financial instruments
classified as current assets and liabilities (excluding current portion of
long-term debt) approximates SFAS 107 value due to the relatively short
maturity of these instruments. There is no quoted market value available
for any of the Partnership's other instruments. The debt, with a carrying
balance of $94,010,009, has been calculated to have an SFAS 107 value of
$88,657,637 by discounting the scheduled loan payments to maturity. Due to
restrictions on transferability and prepayment and the inability to obtain
comparable financing due to current levels of debt, previously modified
debt terms or other property specific competitive conditions, the
Partnership would be unable to refinance these properties to obtain such
calculated debt amounts reported. (See note 4.) The Partnership has no
other significant financial instruments.
In response to the significant vacancy levels coupled with the
depressed rental rates in the downtown New York market, the Broad Street
joint venture recorded a provision for value impairment on 40 Broad Street
Office Building of $22,908,606 at December 31, 1992. Such a provision was
recorded to reduce the net basis of the investment property to $7,800,000
at December 31, 1992. Reference is made to note 3(d) for further
discussion of the current status of this investment property. This
provision is in addition to similar provisions taken in earlier years and
previously reported.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In response to the uncertainties relating to the San Jose joint
venture's ability to recover the net carrying value of certain buildings
within the Park Center Plaza investment property through future operations
or sale, the San Jose joint venture, at December 31, 1992, recorded a
provision for value impairment on certain portions of the complex of
$8,142,152. Such provision was recorded to reduce the net basis of these
portions to the then outstanding balance of the related non-recourse debt.
Additionally, a provision for value impairment on the 150 Almaden and 185
Park Avenue buildings and certain parking areas of $15,549,935 was recorded
at September 30, 1993 to reduce the net basis to the then outstanding
balance of the related non-recourse debt. Furthermore, the San Jose joint
venture, recorded a provision for value impairment at September 30, 1994 on
the 100-130 Park Center Plaza buildings and certain parking areas, and the
170 Almaden building of $944,335, in aggregate, to reduce the net carrying
values to the then outstanding balances of related non-recourse debt.
Reference is made to note 3(b) for further discussion of the current status
of this investment property.
In response to the uncertainties relating to the Encino joint
venture's ability to recover the net carrying value of the investment
property through future operations or sale, the Encino joint venture, at
December 31, 1994, recorded a provision for value impairment of
approximately $6,475,000, all of which is allocable to First Financial.
Such provision was recorded to reduce the net carrying value of the
property based upon an estimated sales price should the Encino venture be
unable to extend or refinance the mortgage loan at maturity.
No provision for State or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership. However, in certain circumstances, the Partnership has been
required under applicable law to remit directly to the tax authorities
amounts representing withholding from distributions paid to partners.
(2) INVESTMENT PROPERTIES
(a) General
The Partnership has acquired, either directly or through joint
ventures (see note 3), three shopping centers, two office buildings and an
office complex. The Partnership sold, through JMB/Rivers, its interest in
Mid Rivers Mall in January 1992. All of the remaining properties were in
operation at December 31, 1994. The cost of the investment properties
represents the total cost to the Partnership or its consolidated ventures
plus miscellaneous acquisition costs.
Depreciation on the properties has been provided over the estimated
useful lives of the various components as follows:
YEARS
-----
Building and improvements -- straight-line 30
Personal property -- straight-line . . . . 5
==
Maintenance and repairs are generally charged to operations as
incurred. Significant betterments and improvements are capitalized and
depreciated over their estimated useful lives. Provisions for value
impairment are recorded with respect to the investment properties whenever
the estimated future cash flows from a property's operations and projected
sale are less than the property's net carrying value.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Certain investment properties are pledged as security for the long-
term debt, for which there is no recourse to the Partnership, as described
in note 4.
(b) Plaza Hermosa Shopping Center
During September 1986, the Partnership acquired a multi-building
neighborhood shopping center in Hermosa Beach, California. The
Partnership's purchase price for the shopping center was $18,290,000, of
which $11,890,000 was paid in cash at closing. The balance of the purchase
price was represented by bond financing in the amount of $6,400,000 (see
note 4). This financing was secured by a letter of credit facility which
was ultimately secured by a deed of trust on the property. The letter of
credit facility expired December 31, 1993; however, the Partnership signed
an agreement with the issuer of the letter of credit to extend its
expiration date to December 31, 1994. As the bond financing was due and
payable upon the expiration of the letter of credit, the bond financing was
classified as a current liability at December 31, 1993. In December 1994,
the Partnership signed an agreement for a long-term replacement letter of
credit with a new lender and in conjunction with the new letter of credit,
simultaneously retired the original bond financing and issued new bonds to
the existing bondholders in their aggregate amount of $6,400,000. The new
letter of credit expires in December 1997. The new bond financing is due
and payable upon the new expiration date of the letter of credit, and
accordingly, has been classified as a long-term liability in the
accompanying financial statements at December 31, 1994.
The property is managed by an affiliate of the General Partners of the
Partnership for a fee calculated as 4% of gross receipts of the property.
(3) VENTURE AGREEMENTS
(a) General
The Partnership at December 31, 1994 is a party to four operating
venture agreements (the Partnership, through JMB/Rivers, sold its interest
in Mid Rivers Mall in January 1992) and has made capital contributions to
the respective ventures as discussed below. Under certain circumstances,
either pursuant to the venture agreements or due to the Partnership's
obligations as a General Partner, the Partnership may be required to make
additional cash contributions to the ventures.
There are certain risks associated with the Partnership's investments
made through joint ventures including the possibility that the
Partnership's joint venture partners in an investment might become unable
or unwilling to fulfill their financial or other obligations, or that such
joint venture partners may have economic or business interests or goals
that are inconsistent with those of the Partnership.
(b) San Jose
The Partnership has acquired, through San Jose, an interest in an
existing office building complex in San Jose, California (Park Center
Financial Plaza). San Jose acquired nine office buildings and two parking
garage structures in June 1985 for a purchase price of approximately
$32,472,000 subject to long-term indebtedness of approximately $6,347,000.
All of the properties were in operation when acquired.
In addition, in May 1986, San Jose purchased an additional office
building (150 Almaden) and a parking and retail building (185 Park Avenue)
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
in the Park Center Financial Plaza complex for a total purchase price of
approximately $47,476,000. In conjunction with the acquisitions, San Jose
reserved approximately $31,590,000 to fund debt service, leasing
commissions, and capital and tenant improvements. In 1991, all remaining
amounts originally set aside by the Partnership to fund debt service,
leasing commissions and capital and tenant improvement costs at Park Center
Financial Plaza were utilized.
In September 1986, San Jose obtained a mortgage loan in the amount of
$25,000,000 secured by the 150 Almaden and 185 Park Avenue buildings and
certain parking areas. The outstanding principal balance, which was non-
amortizable, bore interest at the rate of 9.5% per annum and had a
scheduled maturity in October 1993 and was extended to December 1, 1993.
San Jose, during the fourth quarter of 1994, finalized a loan extension and
modification with the mortgage lender. The modified and extended loan has
an interest rate of 8.4% per annum, requires monthly interest payments only
beginning December 1, 1994 through December 1, 1997 when the loan begins to
amortize until it matures November 30, 2001, when the unpaid principal and
interest balance is due. The refinancing resulted in the 1994 partial
paydown of the outstanding principal balance in the amount of $2.5 million.
The property was managed by an affiliate of the General Partners of
the Partnership for a fee calculated as 3% of gross receipts until December
1994 when the affiliated property manager sold substantially all of its
assets and assigned its interests in its management contracts to an
unaffiliated third party.
The partners of San Jose are the Partnership and JMB Income
Properties, Ltd.-XI, another partnership sponsored by the Managing General
Partner of the Partnership ("JMB-XI"). The terms of San Jose's partnership
agreement generally provide that contributions, distributions, cash flow,
sale or refinancing proceeds and profits and losses will be distributed or
allocated to the Partnership in their respective 50% ownership percentages.
During August 1994, San Jose received notification from the
Redevelopment Agency of the City of San Jose of its offer to purchase one
of the parking garage structures in the office building complex, for an
approved Agency project for $4,090,000. The price offered is deemed by the
Agency to be just compensation in compliance with applicable State and
Federal laws relating to the government's power of eminent domain. San
Jose is currently investigating its options with regard to the Agency's
offer, including the impact of any purchase on garage spaces leased to
tenants of other Partnership properties in the complex. Should the Agency
proceed to purchase the property, San Jose would recognize a gain for
financial reporting and Federal income tax purposes. Therefore, it is
uncertain at this time whether a transfer of the garage to the Agency will
occur or upon what terms.
San Jose notified the tenants in and invitees to the Park Center Plaza
complex that some of the buildings, particularly the 100-130 Park Center
Plaza Buildings and the garage below them, could pose a life safety hazard
under certain unusually intense earthquake conditions. While the buildings
and the garage were designed to comply with the applicable codes for the
period in which they were constructed, and there is no legal requirement to
upgrade the buildings for seismic purposes, San Jose is working with
consultants to analyze ways in which such a potential life safety hazard
could be minimized. In addition, tenants occupying approximately 55,000
square feet (approximately 13% of the building) of the Park Center Plaza
investment property have leases that expire in 1995, for which there can be
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
no assurance of renewals. However, since the costs of both re-leasing
space and any seismic program at the 100-130 Park Center Plaza buildings
could be substantial, San Jose has commenced discussions with the
appropriate lender for additional loan proceeds to pay for all or a portion
of these costs. Should lender assistance be required to fund significant
costs at the 100-130 Park Center Plaza buildings but not be obtained, San
Jose may decide not to commit any additional amounts to this portion of the
complex since such amounts are likely to be large in comparison to the
Partnership's current equity in this portion of the complex and the
likelihood of recovering such funds through increased capital appreciation
is remote. The result would be that San Jose would no longer have an
ownership interest in this portion of the complex.
As a result, there is uncertainty about the ability to recover the net
carrying value of the property through future operations and sale and
accordingly, San Jose has made provisions for value impairment on the 100-
130 Park Center Plaza buildings and certain parking areas and the 170
Almaden building of $944,335 in the aggregate. Such provisions at
September 30, 1994 were recorded to reduce the net carrying values of these
buildings to the then outstanding balances of the related non-recourse
financing. Additionally, at September 30, 1993, San Jose recorded a
provision for value impairment on the 150 Almaden and 185 Park Avenue
buildings and certain parking areas of $15,549,935 to reduce the net
carrying value of these buildings to the then outstanding balance of
related non-recourse financing. Additionally, at December 31, 1992, San
Jose recorded a provision for value impairment of $8,142,152 on certain
other portions of the complex to amounts equal to the then outstanding
balances of the related non-recourse financing. In the event the lender on
the 100-130 Park Center Plaza portion of the complex exercised its remedies
as discussed above, the result would likely be that San Jose would no
longer have an ownership interest in such portion.
(c) Topanga
In December 1985, the Partnership acquired, through a joint venture
partnership with an affiliate of the developer, a 58% interest in an
existing two-level enclosed mall regional shopping center known as Topanga
Plaza in the Woodland Hills area of Los Angeles, California. The aggregate
purchase price for the Partnership's interest in the venture was
approximately $25,263,000, which was paid in cash at closing. Under the
terms of the joint venture agreement, the Partnership generally will be
allocated or distributed 58% of profits and losses, cash flow from
operations and sale or refinancing proceeds.
The shopping center was subject to a long-term management agreement
with an affiliate of the joint venture partner. Under the terms of the
management agreement, the manager was entitled to receive a management fee
based on a formula which relates to direct and general overhead costs and
expenses incurred in the operation of the property. During 1994, the
manager of the Topanga Plaza, an affiliate of the joint venture partner,
was sold to an unaffiliated third party, who assumed management at the
property on the same terms as existed prior to the sale.
On January 17, 1994, an earthquake occurred in Los Angeles,
California. The epicenter was located in the town of Northridge which is
approximately six miles from Topanga Plaza Shopping Center. Consequently,
significant portions of the mall, including the four major department
stores who own their own buildings, suffered some casualty damage. The
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
approximate 360,000 square feet of mall shops owned by the Topanga
Partnership did not suffer major structural damage. The estimated costs at
Topanga for which the joint venture is responsible is approximately $10.5
million of which approximately $9.7 million is construction related. The
majority of this cost is subject to recovery under the joint venture's
earthquake insurance policy. The deductible on the earthquake casualty and
business interruption coverages is approximately $2.1 million which is
expected to be funded by Topanga from operations in 1995. As of December
31, 1994, Topanga has incurred approximately $7.5 million of the estimated
$9.7 million of costs to repair the mall. Approximately $6.6 million has
been reimbursed through insurance proceeds. The remaining amount, net of
the deductible, of approximately $853,000 has been classified as a casualty
insurance receivable in the accompanying consolidated financial statements.
As of the date of this report, all of the mall's 114 shops and the four
major department stores are open. Subsequent to the earthquake, sales at
the mall shops have increased due to the greater extent of damage at a
nearby competing mall. One department store, Robinson-May, had a portion
of their store condemned by city inspectors. One consequence of this
partial condemnation is that Robinson-May has taken back the approximately
25,000 square feet of that store which was leased to the joint venture in
1990. Pursuant to the terms of the lease agreement with the joint venture,
Robinson-May was allowed to terminate the lease in the event there was
substantial damage to its existing store (as defined). This is expected to
represent the loss of approximately $150,000 in annual net income from
subleases of the eight tenants which had subleased this space. Topanga was
insured in case of such event and received, in July 1994, insurance
proceeds in the amount of $2,500,000 for the cost of the unamortized tenant
improvements and the loss of rents related to this space. As a result of
the termination of the leasehold for this space from Robinson-May, Topanga
has written off approximately $1.2 million, of unamortized leasehold
improvements discussed above. Topanga has recorded an extraordinary loss
of $2,889,000 which includes Topanga's share of repair cost of
approximately $2.1 million and approximately $789,000 of other costs. The
earthquake did result in some adverse effects on the operations of the
center in early 1994. Any future costs which may be subject to insurance
recoveries are not presently determinable.
The Partnership and its joint venture partner completed a renovation
of the Topanga Plaza Shopping Center during 1992. In conjunction with this
renovation, the Partnership secured an extension of the operating covenant
for the Nordstrom's department store to the year 2000 from an original
expiration date in 1994. In addition, the Broadway store has also
committed to operate in the center until the year 2000. The Partnership
and its joint venture partner have refinanced the existing mortgage notes
with replacement financing from the existing mortgage holder in the amount
of approximately $59,000,000 which was funded in four stages. See Note
4(b) for a discussion of such refinancing. The joint venture partner has
agreed to advance the joint venture funds for expenses incurred for certain
redevelopment costs related to the expansion of Topanga Plaza. The balance
of these advances was $435,000 at December 31, 1994. Such advances were
repaid to the joint venture partner in early 1995. Construction period
interest of approximately $0, $130,620 and $1,035,000, had been capitalized
for the years ended December 31, 1994, 1993 and 1992, respectively.
The shopping center is subject to fire, life and safety code and
ordinance requirements, which have changed since the property's original
construction. Accordingly, the Partnership intends to comply with such
revised regulations and fund such retrofit costs. In conjunction with the
renovation, a substantial portion of such retrofit costs have been
completed. The Partnership will fund any remaining costs from operations
over the next several years, as tenant leases expire, until the entire
building conforms to such requirements.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(d) Broad Street
During December 1985, the Partnership acquired, through Broad Street,
a joint venture with JMB Income Properties, Ltd.-X, a partnership sponsored
by an affiliate of the Managing General Partner, a 68.56% interest in an
existing 24-story office building located at 40 Broad Street in New York,
New York. Broad Street's purchase price for the building, which was paid
in cash at closing, was approximately $65,100,000 of which the Partnership
provided approximately $44,630,000.
The Partnership will be allocated or distributed profits and losses,
cash flow from operations and sale or refinancing proceeds in the ratio of
its capital contributions to Broad Street which is 68.56%.
The downtown New York City market remains extremely competitive due to
the significant amount of space available primarily resulting from the
layoffs, cutbacks and consolidations by financial service companies and
related businesses which dominate this market. Rental rates in the
downtown market are currently at depressed levels and this can be expected
to continue for the foreseeable future while the current vacant space is
gradually absorbed. Little, if any, new construction is planned for
downtown over the next few years and it is expected that the building will
continue to be adversely affected by the lower effective rental rates now
achieved upon releasing of existing leases which expire over the next few
years. In addition, new leases will likely require expenditures for lease
commissions and tenant improvements prior to tenant occupancy. This
decline in rental rates, the increase in re-leasing time and the costs upon
re-leasing will result in a continued decrease in cash flow from operations
over the near-term. Therefore, due to the uncertainty of Broad Street's
ability to recover the net carrying value of the investment property
through future operations or sale, the Broad Street joint venture recorded
a provision for value impairment of $22,908,606 at December 31, 1992 to
further reduce the net book value of the property to the then estimated
valuation of $7,800,000.
Until December 1994, the property was managed by an affiliate of the
General Partners of the Partnership for a fee calculated as 2% of gross
receipts of the property (see note 6).
(e) JMB/Rivers
In December 1986, the Partnership and JMB Income Properties, Ltd.-XIII
(a partnership sponsored by an affiliate of the Managing General Partner,
"JMB-XIII") formed JMB/Rivers, which entered into a joint venture ("Mid
Rivers") with an affiliate of the developer ("Venture Partner") and
acquired an interest in an enclosed regional shopping center then under
construction in St. Peters, Missouri, known as Mid Rivers Mall. Under the
terms of the venture agreement, JMB/Rivers contributed approximately
$39,400,000, of which the Partnership's share was approximately
$19,700,000. During January 1992, JMB/Rivers sold its interest in Mid
Rivers Mall (See note 7).
The ultimate ownership percentages for JMB/Rivers and Venture Partner
were established as 80% and 20%, respectively. Operating profits and
losses were generally allocated in proportion to and to the extent of
distributions as described above and, to the extent profits and losses
exceeded such distributions, to the Partners in accordance with their
respective ownership percentages. The terms of the JMB/Rivers agreement
generally provided that the Partnership was allocated or distributed, as
the case may be, profits and losses, cash flow from operations, and sale or
refinancing proceeds in the ratio of its respective capital contributions
to JMB/Rivers.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
The shopping center was managed by an affiliate of the Venture Partner
for a fee calculated as 4% of gross receipts of the property through the
date of sale.
(f) First Financial
On May 20, 1987, the Partnership, through First Financial, a joint
venture with JMB-XIII, acquired an interest in a general partnership
("Encino") with an affiliate of the developer ("Venture Partner") which
owns an office building in Encino (Los Angeles), California. First
Financial is obligated to make an initial investment in the aggregate
amount of $49,850,000 of which approximately $49,812,000 of such
contributions have been made to Encino. The Partnership's share of the
remaining amounts, approximately $24,000, will be contributed when the
Venture Partner complies with certain requirements.
In November 1987, First Financial caused Encino to obtain a third
party first mortgage loan in the amount of $30,000,000. The proceeds of
such loan were distributed to First Financial to reduce its contribution
and to the Venture Partner who subsequently repaid a $15,500,000 loan from
First Financial. Thus, the total cash investment of First Financial for
its interest in the office building, after consideration of the funding of
the $30,000,000 permanent financing, is approximately $20,000,000, of which
the Partnership's share is approximately $12,500,000. The outstanding
principal balance of the third party first mortgage loan as of December 31,
1994 is $29,161,144. The third party first mortgage loan matures in
November, 1995. First Financial, on Encino's behalf, is currently
discussing the terms of a possible extension or renegotiation of the
mortgage loan with the existing lender upon such maturity. There can be no
assurance that a satisfactory arrangement for the extension or refinancing
of all or substantially all of the loan can be reached with this or any
other lender. Based upon such uncertainty, Encino may not be able to
recover the net carrying value of the investment property through future
operations or sale. Accordingly, the Encino venture, as a matter of
prudent accounting practice, has made a provision for value impairment of
approximately $6,475,000, all of which is allocable to First Financial.
Such provision was recorded at December 31, 1994 to reduce the net carrying
value of the property based upon an estimated sales price should the Encino
venture be unable to extend or refinance the mortgage loan at maturity.
The First Financial Plaza office building incurred minimal damage as a
result of the earthquake in southern California on January 17, 1994. On
February 22, 1995, the City Council of the City of Los Angeles passed an
ordinance relating to the repair of welded steel mounted frame buildings in
an area of the city that includes First Financial Plaza. While a complete
determination of the requirements to comply with such ordinance is not as
yet completed, it is currently estimated that the cost of such repairs,
which has been reflected as an extraordinary item in the accompanying
consolidated financial statements, will be approximately $1 million.
The Encino partnership agreement generally provides that First
Financial is entitled to receive (after any participating amounts due to
Pepperdine University pursuant to its tenant lease) from cash flow from
operations (as defined) an annual cumulative preferred return equal to
9.05% through April 30, 1995 (and 8.9% thereafter) of its capital contri-
butions. Any remaining cash flow is to be split equally between First
Financial and the Venture Partner. Pepperdine University, under its tenant
lease, is entitled to an amount based on 6.6% of the Venture Partner's
share of the office building's net operating profit and net sale profit (as
defined).
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
All of Encino's operating profits and losses before depreciation have
been allocated to First Financial in 1994, 1993 and 1992.
The Encino partnership agreement also generally provides that net sale
proceeds and net refinancing proceeds (as defined), after any amounts due
to Pepperdine University pursuant to its tenant lease, are to be
distributed: first, to First Financial in an amount equal to its
deficiency, if any, in its cumulative preferred return as described above;
next, to First Financial in the amount of its capital contributions; next,
to the Venture Partner in an amount equal to $600,000; any remaining
proceeds are to be split equally between First Financial and the Venture
Partner.
The terms of the First Financial partnership agreement provide that
annual cash flow, net sale or refinancing proceeds, and tax items will be
distributed or allocated, as the case may be, to the Partnership in
proportion to its 62.5% share of capital contributions.
The office building is managed by an affiliate of the Venture Partner
for a fee based upon a percentage of rental receipts (as defined) of the
property.
(4) LONG-TERM DEBT
(a) Long-term debt consists of the following at December 31, 1994 and
1993:
1994 1993
----------- -----------
10-1/8% mortgage note secured by
the Topanga Plaza shopping center
in Los Angeles, California; payable
in monthly installments of principal
and interest of $523,225 through
January 2002 when the remaining
balance is due and payable,
see note 4(b) . . . . . . . . . $58,448,865 58,790,592
Floating rate bond financing
(certificates), secured by the
Plaza Hermosa Shopping Center in
Hermosa Beach, California; the
certificates bore interest
based on a floating rate
adjustable monthly (as
defined), with a maximum
interest rate of 13.5%,
interest only was payable
monthly through December 2013
when the entire outstanding
balance was due and payable,
the bonds were retired in
December 1994 by the bond
financing described below,
note 2(b) . . . . . . . . . . . -- 6,400,000
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
1994 1993
----------- -----------
Floating rate bond financing
(certificates), secured by the
Plaza Hermosa Shopping Center
in Hermosa Beach, California;
the certificates bear interest
based on a floating rate which is
adjustable weekly (as defined),
with a maximum interest rate of
12%, interest only is payable
monthly through December 2023
when the entire outstanding balance
is due and payable, note 2(b) . 6,400,000 --
9-7/8% mortgage note, secured by the
First Financial Plaza Office
Building; payable in monthly
installments of principal and
interest of $260,505 through
November 1995 when the remaining
balance is due and payable. . . 29,161,144 29,394,848
----------- -----------
Total debt . . . . . . 94,010,009 94,585,440
Less current portion
of long-term debt. . 29,539,123 6,972,571
----------- -----------
Total long-term debt . $64,470,886 87,612,869
=========== ===========
(b) Debt Refinancing
In January 1992, the Partnership and its joint venture partner
finalized the refinancing of the existing mortgage notes at Topanga Plaza
with replacement financing from the existing mortgage holder in the
aggregate amount of $59,000,000 which was funded in four stages. Included
in the initial funding was the $1,600,000 repayment of advances by an
affiliate of the venture partner, the $1,500,000 refinancing of a portion
of the existing mortgage and $2,300,000 representing a return to the
Partnership of prior contributions used to fund previous costs incurred
relating to fire, life and safety regulations and certain releasing costs.
The second funding occurred on December 2, 1992 in the amount of
$16,000,000, which was used to paydown interim lines of credit used for
certain renovation costs and operational capital expenditures as described
below. The third funding of $18,400,000 occurred on February 1, 1993, a
portion of which was used to paydown interim lines of credit used for
certain renovation costs and the remainder to fund additional renovation
costs. The fourth stage refinanced the remaining portion of the existing
mortgage of $14,000,000 upon its maturity in June 1993. The loan,
aggregating $59,000,000, represents the new loan of $43,500,000 and the
refinancing of the existing loans of $15,500,000. The term of the new loan
began June 1, 1993 with monthly principal and interest payments and matures
January 31, 2002. It carries an interest rate of 10.125%. The Topanga
joint venture had funded certain renovation costs through a line of credit
bearing interest at 10.125% with various maturity dates. The line of
credit had a balance of $9,650,000 at December 31, 1992 and was paid by the
additional loan funding discussed above.
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(c) Five year maturities of long-term debt are summarized as follows:
1995 . . . . . . . . . $29,539,123
1996 . . . . . . . . . 418,075
1997 . . . . . . . . . 462,426
1998 . . . . . . . . . 511,482
1999 . . . . . . . . . 565,741
===========
(5) PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, net profits or
losses of the Partnership from operations are allocated 96% to the Limited
Partners and 4% to the General Partners. Profits from the sale or
refinancing of investment properties will be allocated to the General
Partners: (i) in an amount equal to the greater of 1% of such profits or
the amount of cash distributable to the General Partners from any such sale
or refinancing (as described below); and (ii) in order to reduce deficits,
if any, in the General Partners' capital accounts to a level consistent
with the gain anticipated to be realized from the sale of properties.
Losses from the sale or refinancing of investment properties will be
allocated 1% to the General Partners. The remaining sale or refinancing
profits and losses will be allocated to the Limited Partners.
The General Partners are not required to make any capital contri-
butions except under certain limited circumstances upon termination of the
Partnership. In general, distributions of cash from operations will be
made 90% to the Limited Partners and 10% to the General Partners. However,
a portion of such distributions to the General Partners is subordinated to
the Limited Partners' receipt of a stipulated return on capital.
The Partnership Agreement provides that the General Partners shall
receive as a distribution from the sale of a real property by the
Partnership amounts equal to the cumulative deferrals of any portion of
their 10% cash distribution and 2-1/2% of the selling price, and that the
remaining proceeds (net after expenses and retained working capital) be
distributed 85% to the Limited Partners and 15% to the General Partners.
However, the Limited Partners shall receive 100% of such net sale proceeds
until the Limited Partners (i) have received cash distributions of sale or
refinancing proceeds in an amount equal to the Limited Partners' aggregate
initial capital investment in the Partnership, (ii) have received
cumulative cash distributions from the Partnership's operations which, when
combined with sale or refinancing proceeds previously distributed, equal a
6% annual return on the Limited Partners' average capital investment for
each year (their initial capital investment as reduced by sale or
refinancing proceeds previously distributed) commencing with the second
fiscal quarter of 1986 and (iii) have received cash distributions of sale
and refinancing proceeds and of the Partnership's operations, in an amount
equal to the Limited Partners' initial capital investment in the
Partnership plus a 10% annual return on the Limited Partners' average
capital investment. Accordingly, approximately $773,000 of sale proceeds
from the sale of the Partnership's interest in Mid Rivers Mall has been
deferred by the General Partners (see note 7).
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
(6) MANAGEMENT AGREEMENTS
Certain of the Partnership's properties are managed by affiliates of
the General Partners or their assignees for fees computed as a percentage
of certain rents received by the properties. In December 1994, one of the
affiliated property managers sold substantially all of its assets and
assigned its interest in its management contracts to an unaffiliated third
party. In addition, certain of the management personnel of the property
manager became management personnel of the purchaser and its affiliates.
The successor to the affiliated property manager's assets is the property
manager of the 40 Broad Street property after the sale on the same terms
that existed prior to the sale.
(7) SALE OF INTEREST IN INVESTMENT PROPERTY
On January 30, 1992, the Partnership through JMB/Rivers sold its
interest in Mid Rivers Mall located in St. Peters, Missouri to an affiliate
of an unaffiliated joint venture partner. The sale price of the interest
was $26,500,000 (before closing costs and prorations) plus the outstanding
balance of the mortgages of which JMB/Rivers share was $35,318,171 as of
the date of closing. The Partnership received, in connection with the
sale, after all fees, expenses, and joint venture partner's participation,
net cash of $13,250,000. For financial reporting purposes, JMB/Rivers has
recognized a gain of approximately $12,022,000 in 1992, of which, the
Partnership's share was approximately $5,656,000.
(8) LEASES
At December 31, 1994, the Partnership and its consolidated ventures'
principal assets are two shopping centers and two office buildings. The
Partnership has determined that all leases relating to these properties are
properly classified as operating leases; therefore, rental income is
reported when earned and the cost of the properties, excluding the cost of
the land, is depreciated over the estimated useful lives. Leases with
tenants range in term from month-to-month to twenty-five years and provide
for fixed minimum rent and partial reimbursement of operating costs. In
addition, leases with shopping center tenants provide for additional rent
based upon percentages of tenants' sales volumes. With respect to the
Partnership's shopping center investments, a substantial portion of the
ability of retail tenants to honor their leases is dependent on the retail
economic sector.
Cost and accumulated depreciation of the leased assets are summarized
as follows at December 31, 1994:
Office Buildings:
Cost . . . . . . . . . . . . . . . $ 67,508,582
Accumulated depreciation . . . . . 23,203,535
------------
44,305,047
------------
Shopping Centers:
Cost . . . . . . . . . . . . . . . 125,789,832
Accumulated depreciation . . . . . 23,588,575
------------
102,201,257
------------
$146,506,304
============
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
Minimum lease payments, including amounts representing executory costs
(e.g. taxes, maintenance, insurance) and any related profit, to be received
in the future under the operating leases are as follows:
1995 . . . . . . . . . . . . . . . . $ 18,448,821
1996 . . . . . . . . . . . . . . . . 17,943,508
1997 . . . . . . . . . . . . . . . . 15,925,935
1998 . . . . . . . . . . . . . . . . 15,189,909
1999 . . . . . . . . . . . . . . . . 14,146,018
Thereafter . . . . . . . . . . . . . 64,717,387
------------
Total. . . . . . . . . . . . . . $146,371,578
============
Contingent rent (based on sales by property tenants) included in
rental income was as follows:
1992 . . . . . . . . . . . . . . . . $309,934
1993 . . . . . . . . . . . . . . . . 427,809
1994 . . . . . . . . . . . . . . . . 662,271
========
(9) TRANSACTIONS WITH AFFILIATES
Fees, commissions and other expenses required to be paid by the
Partnership to the General Partners and their affiliates as of December 31,
1994 and for the years ended December 31, 1994, 1993 and 1992 are as
follows:
<TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
<CAPTION>
UNPAID AT
DECEMBER 31,
1994 1993 1992 1994
-------- -------- -------- --------------
<S> <C> <C> <C> <C>
Property management and
leasing fees . . . . . . . . . . . $184,881 221,843 238,648 --
Insurance commissions. . . . . . . . 74,228 84,976 119,867 --
Reimbursement (at cost) for
out-of-pocket expenses
and salaries . . . . . . . . . . . 120,374 92,243 110,263 5,043
-------- -------- -------- -----
$379,483 399,062 468,778 5,043
======== ======== ======== =====
</TABLE>
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
In accordance with the subordination requirements of the Partnership
Agreement, the General Partners have deferred receipt of their distri-
butions (see note 5) of net cash flow from the Partnership. The cumulative
amount of such deferred distributions aggregated $7,466,578 at December 31,
1994. These amounts or amounts currently payable do not bear interest and
may be paid in future periods.
The Topanga venture has incurred approximately $61,000, $131,000 and
$1,035,000 of interest costs relating to affiliated venture partner
advances (note 3(c)) in 1994, 1993 and 1992, respectively, all of which was
paid to an affiliate of the venture partner as of December 31, 1994.
(10) INVESTMENT IN UNCONSOLIDATED VENTURE
Summary of financial information for San Jose as of and for the years
ended December 31, 1994 and 1993 is as follows:
1994 1993
------------ ------------
Current assets . . . . . . . . . $ 5,966,024 1,094,449
Current liabilities. . . . . . . (996,677) (25,841,373)
------------ ------------
Working capital (deficit). 4,969,347 (24,746,924)
Investment property, net . . . . 31,913,782 33,218,816
Other assets, net. . . . . . . . 866,256 3,180,985
Long-term debt . . . . . . . . . (25,880,881) (3,784,508)
Other liabilities. . . . . . . . (72,093) (70,297)
Venture partners' equity . . . . (6,076,946) (4,077,776)
------------ ------------
Partnership's capital. . . $ 5,719,465 3,720,296
============ ============
Represented by:
Invested capital . . . . . . . $ 47,534,243 45,976,774
Cumulative distributions . . . (20,652,500) (20,652,500)
Cumulative loss. . . . . . . . (21,162,278) (21,603,978)
------------ ------------
$ 5,719,465 3,720,296
============ ============
Total income . . . . . . . . . . $ 9,270,819 10,369,335
============ ============
Expenses applicable to operating
loss . . . . . . . . . . . . . $ 8,387,418 23,589,873
============ ============
Net earnings (loss). . . . . . . $ 883,401 (13,220,538)
============ ============
Reference is made to note 3(b) regarding the provision for value
impairments of $944,335, $15,549,935 and $8,142,152 which were recorded in
1994, 1993 and 1992, respectively, by the San Jose joint venture.
Total income, expenses related to operating earnings, and net loss for
the above-mentioned venture for the year ended December 31, 1992 were
$10,850,899, $12,191,635 and $6,285,057, respectively.
(11) SUBSEQUENT EVENT
In February 1995, the Partnership paid a distribution of $476,581
($2.50 per Interest) to the Limited Partners.
<TABLE>
SCHEDULE III
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
COSTS
CAPITALIZED
INITIAL COST TO SUBSEQUENT GROSS AMOUNT AT WHICH CARRIED
PARTNERSHIP (A) TO ACQUISITION AT CLOSE OF PERIOD (B)
------------------------- -------------- ------------------------------------
BUILDINGS BUILDINGS BUILDINGS
AND AND AND
ENCUMBRANCE LAND IMPROVEMENTSIMPROVEMENTS(D) LAND IMPROVEMENTS TOTAL (E)
----------- ----------- --------------------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
SHOPPING
CENTERS:
Los Angeles,
California
(C) . . . . $58,448,865 8,506,014 54,714,281 44,106,513 8,506,014 98,820,794 107,326,808
Hermosa
Beach,
California. 6,400,000 5,106,570 13,131,181 225,273 5,106,570 13,356,454 18,463,024
OFFICE
BUILDINGS:
New York,
New York
(C) . . . . -- 13,201,780 55,095,008 (33,388,464) 1,765,194 21,706,544 23,471,738
Encino,
California
(C) . . . . 29,161,144 7,696,474 38,089,122 (1,099,536) 7,047,258 36,989,586 44,036,844
----------- ---------- ----------- ----------- ---------- ----------- -----------
Total. . $94,010,009 34,510,838 161,029,592 9,843,786 22,425,036 170,873,378 193,298,414
=========== ========== =========== =========== ========== =========== ===========
</TABLE>
<TABLE>
SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
<CAPTION>
LIFE ON WHICH
DEPRECIATION
IN LATEST
STATEMENT OF 1994
ACCUMULATED DATE OF DATE OPERATIONS REAL ESTATE
DEPRECIATION(F) CONSTRUCTION ACQUIRED IS COMPUTED TAXES
---------------- ---------------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
SHOPPING CENTERS:
Los Angeles,
California (C) . . . . . . . . . $19,933,283 1964 12/31/85 5-30 years 690,217
Hermosa Beach,
California. . . . . . . . . . . 3,655,292 1985 09/03/86 5-30 years 270,097
OFFICE BUILDINGS:
New York,
New York (C) . . . . . . . . . . 13,509,813 1983 12/31/85 5-30 years 1,914,572
Encino,
California (C) . . . . . . . . . 9,693,722 1986 05/20/87 5-30 years 485,665
----------- ----------
Total. . . . . . . . . . . . . $46,792,110 3,360,551
=========== ==========
<FN>
------------------
Notes:
(A) The initial cost to the Partnership represents the original purchase price of the properties, including
amounts incurred subsequent to acquisition which were contemplated at the time the property was acquired.
(B) The aggregate cost of real estate owned at December 31, 1994 for Federal income tax purposes was
$216,608,080.
(C) Properties owned and operated by joint venture; see Note 3.
(D) In 1994, 1993 and 1992, the affiliated joint venture recorded provisions for value impairment totaling
$6,475,138, $0, and $22,908,606, respectively, (which included a reduction in deferred costs of $37,299, $0, and
$30,000, respectively); see Note 3(d).
</TABLE>
<TABLE> SCHEDULE III - CONTINUED
JMB INCOME PROPERTIES, LTD. - XII
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES
CONSOLIDATED REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1994
(E) Reconciliation of real estate owned:
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period . . . . . . . $199,493,970 196,088,700 183,399,224
Additions during period. . . . . . . . . . . 2,401,281 3,608,394 35,682,188
Sale and disposal during period. . . . . . . (4,401,376) (203,124) (84,106)
Provision for value impairment (D) . . . . . (4,195,461) -- (22,908,606)
------------ ----------- -----------
Balance at end of period . . . . . . . . . . $193,298,414 199,493,970 196,088,700
============ =========== ===========
(F) Reconciliation of accumulated depreciation:
Balance at beginning of period . . . . . . . $ 41,724,753 36,188,622 31,461,493
Depreciation expense . . . . . . . . . . . . 5,640,425 5,739,255 4,811,235
Sale and disposal during period. . . . . . . (313,240) (203,124) (84,106)
Provision for value impairment (D) . . . . . (259,828) -- --
------------ ----------- -----------
Balance at end of period . . . . . . . . . . $ 46,792,110 41,724,753 36,188,622
============ =========== ===========
</TABLE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There were no changes of or disagreements with accountants during 1993
and 1994.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
The Managing General Partner of the Partnership is JMB Realty
Corporation ("JMB"), a Delaware corporation. JMB has responsibility for
all aspects of the Partnership's operations, subject to the requirement
that sales of real property must be approved by the Associate General
Partner of the Partnership, Income Associates-XII, L.P., an Illinois
limited partnership with JMB as the sole general partner. The Associate
General Partner shall be directed by a majority in interest of its limited
partners (who are generally officers, directors and affiliates of JMB or
its affiliates) as to whether to provide its approval of any sale of real
property (or any interest therein) of the Partnership.
The Partnership is subject to certain conflicts of interest arising out
of its relationships with the General Partners and their affiliates as well
as the fact that the General Partners and their affiliates are engaged in a
range of real estate activities. Certain services have been and may in the
future be provided to the Partnership or its investment properties by
affiliates of the General Partners, including property management services
and insurance brokerage services. In general, such services are to be
provided on terms no less favorable to the Partnership than could be
obtained from independent third parties and are otherwise subject to
conditions and restrictions contained in the Partnership Agreement. The
Partnership Agreement permits the General Partners and their affiliates to
provide services to, and otherwise deal and do business with, persons who
may be engaged in transactions with the Partnership, and permits the
Partnership to borrow from, purchase goods and services from, and otherwise
to do business with, persons doing business with the General Partners or
their affiliates. The General Partners and their affiliates may be in
competition with the Partnership under certain circumstances, including, in
certain geographical markets, for tenants for properties and/or for the
sale of properties. Because the timing and amount of cash distributions
and profits and losses of the Partnership may be affected by various
determinations by the General Partners under the Partnership Agreement,
including whether and when to sell or refinance a property, the
establishment and maintenance of reasonable reserves, the timing of
expenditures and the allocation of certain tax items under the Partnership
Agreement, the General Partners may have a conflict of interest with
respect to such determinations.
The names, positions held and length of service therein of each
director and executive officer and certain officers of the Managing General
Partner of the Partnership are as follows:
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
Judd D. Malkin Chairman 5/03/71
Director 5/03/71
Neil G. Bluhm President 5/03/71
Director 5/03/71
Burton E. Glazov Director 7/01/71
Stuart C. Nathan Executive Vice President 5/08/79
Director 3/14/73
A. Lee Sacks Director 5/09/88
John G. Schreiber Director 3/14/73
SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------
H. Rigel Barber Executive Vice President 1/02/87
Chief Executive Officer 8/01/93
Glenn E. Emig Executive Vice President 1/01/93
Chief Operating Officer 1/01/95
Jeffrey R. Rosenthal Managing Director-Corporate 4/22/91
Chief Financial Officer 8/01/93
Douglas H. Cameron Executive Vice President 1/01/95
Gary Nickele Executive Vice President 1/01/92
General Counsel 2/27/84
Ira J. Schulman Executive Vice President 6/01/88
Gailen J. Hull Senior Vice President 6/01/88
Howard Kogen Senior Vice President 1/02/86
Treasurer 1/01/91
There is no family relationship among any of the foregoing directors
or officers. The foregoing directors have been elected to serve a one-year
term until the annual meeting of the Managing General Partner to be held on
June 7, 1995. All of the foregoing officers have been elected to serve
one-year terms until the first meeting of the Board of Directors held after
the annual meeting of the Managing General Partner to be held on June 7,
1995. There are no arrangements or understandings between or among any of
said directors or officers and any other person pursuant to which any
director or officer was elected as such.
JMB is the corporate general partner of Carlyle Real Estate Limited
Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited Partnership-IX
("Carlyle-IX"), Carlyle Real Estate Limited Partnership-X ("Carlyle-X"),
Carlyle Real Estate Limited Partnership-XI ("Carlyle-XI"), Carlyle Real
Estate Limited Partnership-XII ("Carlyle-XII"), Carlyle Real Estate Limited
Partnership-XIII ("Carlyle-XIII"), Carlyle Real Estate Limited
Partnership-XIV ("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV
("Carlyle-XV"), Carlyle Real Estate Limited Partnership-XVI ("Carlyle-
XVI"), Carlyle Real Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB
Mortgage Partners, Ltd. ("Mortgage Partners"), JMB Mortgage Partners,
Ltd.-II ("Mortgage Partners-II") and JMB Mortgage Partners, Ltd.-III
("Mortgage Partners-III"), JMB Mortgage Partners, Ltd.-IV ("Mortgage
Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus") and
Carlyle Income Plus, Ltd.-II ("Carlyle Income Plus-II"), and the managing
general partner of JMB Income Properties, Ltd.-IV ("JMB Income-IV"), JMB
Income Properties, Ltd.-V ("JMB Income-V"), JMB Income Properties, Ltd.-VI
("JMB Income-VI"), JMB Income Properties, Ltd.-VII ("JMB Income-VII"), JMB
Income Properties, Ltd.-VIII ("JMB Income-VIII"), JMB Income Properties,
Ltd.-IX ("JMB Income-IX"), JMB Income Properties, Ltd.-X ("JMB Income-X"),
JMB Income Properties, Ltd.-XI ("JMB Income-XI") and JMB Income Properties,
Ltd.-XIII ("JMB Income-XIII"). Most of the foregoing directors and
officers are also officer and/or directors of various affiliated companies
of Arvida/JMB Managers, Inc. (the general partner Arvida/JMB Partners, L.P.
("Arvida")), Arvida/JMB Managers-II, Inc. (the general partner Arvida/JMB
Partners, L.P.-II ("Arvida-II")) and Income Growth Managers, Inc. (the
corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")). Most of such directors and officers are also partners of
certain partnerships which are associate general partners in the following
real estate limited partnerships: Carlyle-VII, Carlyle-IX, Carlyle-X,
Carlyle-XI, Carlyle-XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV,
Carlyle-XVI, Carlyle-XVII, JMB Income-VI, JMB Income-VII, JMB Income-VIII,
JMB Income-IX, JMB Income-X, JMB Income-XI, JMB Income-XIII, Mortgage
Partners, Mortgage Partners-II, Mortgage Partners-III, Mortgage
Partners-IV, Carlyle Income Plus, Carlyle Income Plus-II and IDS/BIG.
The business experience during the past five years of each such
director and officer of the Managing General Partner of the Partnership in
addition to that described above is as follows:
Judd D. Malkin (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Malkin has been associated with JMB since
October, 1969. Mr. Malkin is a director of Urban Shopping Centers, Inc.,
an affiliate of JMB that is a real estate investment trust in the business
of owning, managing and developing shopping centers, and a director of
Catellus Development Corporation, a major diversified real estate
development company. He is a Certified Public Accountant.
Neil G. Bluhm (age 57) is an individual general partner of JMB
Income-IV and JMB Income-V. Mr. Bluhm has been associated with JMB since
August, 1970. Mr. Bluhm is a director of Urban Shopping Centers, Inc., an
affiliate of JMB that is a real estate investment trust in the business of
owning, managing and developing shopping centers. He is a member of the
Bar of the State of Illinois and a Certified Public Accountant.
Burton E. Glazov (age 56) has been associated with JMB since June,
1971 and served as an Executive Vice President of JMB until December 1990.
He is a member of the Bar of the State of Illinois and a Certified Public
Accountant.
Stuart C. Nathan (age 53) has been associated with JMB since July,
1972. Mr. Nathan is also a director of Sportmart Inc., a retailer of
sporting goods. He is a member of the Bar of the State of Illinois.
A. Lee Sacks (age 61) (President and Director of JMB Insurance Agency,
Inc.) has been associated with JMB since December, 1972.
John G. Schreiber (age 48) has been associated with JMB since
December, 1970 and served as an Executive Vice President of JMB until
December 1990. Mr. Schreiber is President of Schreiber Investments, Inc.,
a company which is engaged in the real estate investing business. He is
also a senior advisor and partner of Blackstone Real Estate Partners, an
affiliate of the Blackstone Group, L.P. Since 1994, Mr. Schreiber has also
served as a trustee of Amli Residential Property Trust, a publicly-traded
real estate investment trust that invests in multi-family properties. Mr.
Schreiber is also a director of Urban Shopping Centers, Inc., an affiliate
of JMB that is a real estate investment trust in the business of owning,
managing and developing shopping centers. He is also a director of a
number of investment companies advised or managed by T. Rowe Price
Associates and its affiliates. He holds a Masters degree in Business
Administration from Harvard University Graduate School of Business.
H. Rigel Barber (age 45) has been associated with JMB since March,
1982. He holds a J.D. degree from the Northwestern Law School and is a
member of the Bar of the State of Illinois.
Glenn E. Emig (age 47) has been associated with JMB since December,
1979. Prior to becoming Vice President of JMB in 1993, Mr. Emig was
Executive Vice President and Treasurer of JMB Institutional Realty
Corporation. He holds a Masters Degree in Business Administration from the
Harvard University Graduate School of Business and is a Certified Public
Accountant.
Jeffrey R. Rosenthal (age 43) has been associated with JMB since
December, 1987. He is a Certified Public Accountant.
Douglas H. Cameron (age 45) is Executive Vice President of JMB. Mr.
Cameron has been associated with JMB since April, 1977. Prior to becoming
Executive Vice President of JMB in 1995, Mr. Cameron was Managing Director
of Capital Markets -- Property Sales from June 1990. He holds a Masters
Degree in Business Administration from the University of Southern
California.
Gary Nickele (age 42) has been associated with JMB since February,
1984. He holds a J.D. degree from the University of Michigan Law School
and is a member of the Bar of the State of Illinois.
Ira J. Schulman (age 43) has been associated with JMB since February,
1983. He holds a Masters degree in Business Administration from the
University of Pittsburgh.
Gailen J. Hull (age 46) has been associated with JMB since March,
1982. He holds a Masters degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.
Howard Kogen (age 59) has been associated with JMB since March, 1973.
He is a Certified Public Accountant.
ITEM 11. EXECUTIVE COMPENSATION
The Partnership has no officers or directors. The General Partners of
the Partnership are entitled to receive a share of cash distributions, when
and as cash distributions are made to the Investors, and a share of profits
or losses. Reference is also made to Notes 5 and 9 for a description of
such transactions, distributions and allocations. No such cash
distributions were paid to the General Partners in 1994, 1993 and 1992.
An affiliate of the Managing General Partner provided property
management services to the Partnership for 1994 for the Plaza Hermosa
Shopping Center in Hermosa Beach, California at a fee calculated at 4% of
the gross receipts of the property and to the 40 Broad Street office
building in New York, New York until December 1994 (see Note 6) at a fee
calculated at 2% of the gross receipts of the property. In 1994, such
affiliate earned property management and leasing fees amounting to $184,881
all of which were paid at December 31, 1994. As set forth in the
Prospectus of the Partnership, the Managing General Partner must negotiate
such agreements on terms no less favorable to the Partnership than those
customarily charged for similar services in the relevant geographical area
and such agreements must be terminable by either party thereto, without
penalty, upon 60 days' notice.
The General Partners of the Partnership may be reimbursed for their
direct expenses relating to the administration of the Partnership and the
operation of the Partnership's real property investments. In 1994, the
Managing General Partner received reimbursement for such expenses and
salaries in the amount of $120,374 of which $5,043 was unpaid at December
31, 1994. The Managing General Partner received no disbursement agent and
data processing fees in 1994.
JMB Insurance Agency, Inc., an affiliate of the Managing General
Partner of the Partnership, earned and received insurance brokerage
commissions in 1994 aggregating $74,228 in connection with the providing of
insurance coverage for the real property investments of the Partnership.
Such commissions are at rates set by insurance companies for the classes of
coverage involved.
The Partnership is permitted to engage in various transactions
involving affiliates of the Managing General Partner of the Partnership.
The relationship of the Managing General Partner (and its directors and
officers) to its affiliates is set forth above in Item 10 above and Exhibit
21 hereto.
<TABLE>
<CAPTION>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) No person or group is known by the Partnership to own beneficially more than 5% of the outstanding
Interests of the Partnership.
(b) The Managing General Partner and its officers and directors own the following Interests of the
Partnership:
NAME OF AMOUNT AND NATURE
BENEFICIAL OF BENEFICIAL PERCENT
TITLE OF CLASS OWNER OWNERSHIP OF CLASS
-------------- ---------- ----------------- --------
<S> <C> <C> <C>
Limited Partnership
Interests JMB Realty Corporation 5 Interests (1) Less than 1%
indirectly
Limited Partnership
Interests Managing General Partner 5 Interests (1) Less than 1%
and its officers and indirectly
directors as a group
<FN>
(1) Includes 5 interests owned by the initial limited partner of the Partnership for which JMB Realty
Corporation, as the indirect majority shareholder of the initial limited partner, is deemed to have the voting and
investment power.
No officer or director of the Managing General Partner of the Partnership possesses a right to acquire
beneficial ownership of Interests of the Partnership.
(c) There exists no arrangement, known to the Partnership, the operation of which may at a subsequent date
result in a change in control of the Partnership.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the General
Partners, the executive officers and directors of the Managing General Partner and persons who own more than ten
percent of the Interests to file an initial report of ownership or changes in ownership of Interests on Form 3, 4
or 5 with the Securities and Exchange Commission (the "SEC"). Such persons are also required by SEC rules to
furnish the Partnership with copies of all Section 16(a) forms they file. Timely filing of an initial report of
ownership on Form 3 or Form 5 was not made on behalf of Glenn Emig.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no significant transactions or business relationships with
the Managing General Partner, affiliates or their management other than
those described in Items 10 and 11 above.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements (See Index to Financial Statements
filed with this annual report).
2. Exhibits.
3-A. The Prospectus of the Partnership dated August
23, 1985 as supplemented December 9, 1985 and January 10, pursuant to Rules
424 (b) and 424 (c), as filed with the Commission is hereby incorporated
herein by reference. Copies of pages 8-12, 61-64 and A-8 to A-12 are
hereby incorporated herein by reference to Exhibit 3-A to the Partnership's
Report on Form 10-K for December 31, 1992 (File No. 0-16108) dated March
19, 1993.
3-B. Amended and Restated Agreement of Limited
Partnership set forth as Exhibit A to the Prospectus, which agreement is
hereby incorporated herein by reference to Exhibit 3-B to the Partnership's
Report on Form 10-K for December 31, 1992 (File No. 0-16108) dated March
19, 1993.
4-A. Mortgage loan agreement between Topanga and
Connecticut General Life Insurance Company dated January 31, 1992 relating
to Topanga Plaza in Los Angeles, California is hereby incorporated herein
by reference to Exhibit 4-A to the Partnership's Report on Form 10-K for
December 31, 1992 (File No. 0-16108) dated March 19, 1993.
4-B. Mortgage loan agreement between First Financial
and The Prudential Insurance Company of America dated November 2, 1987
relating to First Financial Plaza in Encino, California is hereby
incorporated herein by reference to Exhibit 4-B to the Partnership's Report
on Form 10-K for December 31, 1992 (File No. 0-16108) dated March 19, 1993.
4-C. Mortgage loan modification agreement between
Topanga and Connecticut General Life Insurance dated January 31, 1993
relating to Topanga Plaza in Los Angeles, California is hereby incorporated
herein by reference to Exhibit 4 of the Partnership's Report on Form 10-Q
(File No. 0-16108) dated November 11, 1993.
4-D. Letter of credit agreement between JMB Income
Properties, Ltd-XII and Dresdner Bank AG dated November 15, 1994 relating
to the letter of credit extension at Plaza Hermosa is filed herewith.
4-E. Mortgage loan agreement, Amended and Restated
Deed of Trust, Security Agreement with assignment of Rents and Fixture
Filing and Real Estate tax escrow and Security Agreement between San Jose
and Connecticut General Life Insurance Co. dated November 30, 1994 is filed
herewith.
10-A.Acquisition documents including the venture
agreement relating to the purchase by the Partnership of Topanga Plaza in
Los Angeles, California, are hereby incorporated by reference to the
Partnership's Report on Form 8-K (File No. 0-16108) dated December 31,
1985.
10-B.Acquisition documents including the venture
agreement relating to the purchase by the Partnership of First Financial
Plaza in Encino, California are hereby incorporated by reference to the
Partnership's Report on Form 8-K (File No. 0-16108) dated June 3, 1987.
10-C.Acquisition documents including the venture
agreement relating to the purchase by the Partnership of 40 Broad Street in
New York, New York, are hereby incorporated by reference to the
Partnership's Report on Form 8-K (File No. 0-16108) dated December 31,
1985.
10-D.Sale documents and exhibits thereto relating to
the sale of the Partnership's interest in Mid Rivers Mall in St. Peters
(St. Louis), Missouri are hereby incorporated by reference to the
Partnership's Report on Form 8-K (File No. 0-16108) dated February 18,
1992.
21. List of Subsidiaries
24. Powers of Attorney
27. Financial Data Schedule
----------------
Although certain additional long-term debt instruments of the
Registrant have been excluded from Exhibit 4 above, pursuant to Rule
601(b)(4)(iii), the Registrant commits to provide copies of such agreements
to the Securities and Exchange Commissions upon request.
(b) No Reports on Form 8-K were required or filed since the
beginning of the last quarter of the period covered by this report.
No annual report or proxy material for 1994 has been sent to the
Partners of the Partnership. An annual report will be sent to the Partners
subsequent to this filing.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Partnership has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JMB INCOME PROPERTIES, LTD. - XII
By: JMB Realty Corporation
Managing General Partner
GAILEN J. HULL
By: Gailen J. Hull
Senior Vice President
Date: March 27, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: JMB Realty Corporation
Managing General Partner
JUDD D. MALKIN*
By: Judd D. Malkin, Chairman and Director
Date: March 27, 1995
NEIL G. BLUHM*
By: Neil G. Bluhm, President and Director
Date: March 27, 1995
H. RIGEL BARBER*
By: H. Rigel Barber, Chief Executive Officer
Date: March 27, 1995
GLENN E. EMIG*
By: Glenn E. Emig, Chief Operating Officer
Date: March 27, 1995
JEFFREY R. ROSENTHAL*
By: Jeffrey R. Rosenthal, Chief Financial Officer
Principal Financial Officer
Date: March 27, 1995
GAILEN J. HULL
By: Gailen J. Hull, Senior Vice President
Principal Accounting Officer
Date: March 27, 1995
A. LEE SACKS*
By: A. Lee Sacks, Director
Date: March 27, 1995
By: STUART C. NATHAN*
Stuart C. Nathan, Executive Vice President
and Director
Date: March 27, 1995
*By: GAILEN J. HULL, Pursuant to a Power of Attorney
GAILEN J. HULL
By: Gailen J. Hull, Attorney-in-Fact
Date: March 27, 1995
JMB INCOME PROPERTIES, LTD. - XII
EXHIBIT INDEX
DOCUMENT
INCORPORATED
BY REFERENCE PAGE
------------- ----
3-A. Pages 8-12, 61-64 and A-8 to A-12 of
the Prospectus of the Partnership
dated August 23, 1985, as supple-
mented on December 9, 1985 and
January 10, 1986 Yes
3-B. Amended and Restated Agreement of
Limited Partnership Yes
4-A. Mortgage loan agreement related to
Topanga Plaza Yes
4-B. Mortgage loan agreement related to
First Financial Plaza Yes
4-C. Mortgage loan modification agreement
related to Topanga Plaza Yes
4-D. Letter of credit agreement related to
Plaza Hermosa No
4-E. Mortgage loan agreement related to
Park Center Plaza No
10-A. Acquisition documents related to
Topanga Plaza Yes
10-B. Acquisition documents related to
First Financial Plaza Yes
10-C. Acquisition documents related to
40 Broad Street Yes
10-D. Sale documents related to
Mid Rivers Mall Yes
21. List of Subsidiaries No
24. Powers of Attorney No
27. Financial Data Schedule No
=================================================================
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT
Dated as of November 15, 1994
By and Between
JMB INCOME PROPERTIES, LTD.-XII
and
DRESDNER BANK AG
Relating to
$6,400,000 Floating Rate Weekly Demand Refunding
Certificates of Participation
(Hermosa Beach Parking Facilities Project - 1994 Series)
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
This Letter of Credit and Reimbursement Agreement is entered into as of
November 15, 1994, by and between JMB INCOME PROPERTIES, LTD.-XII, an Illinois
limited partnership ("Company"), and DRESDNER BANK AG, a German banking
corporation acting through its Los Angeles Agency ("Bank").
1. Definitions And Accounting Terms.
1.1 Defined Terms. As used in this Letter of Credit and
Reimbursement Agreement, the following terms shall have the meanings set forth
respectively after each:
(a) "Agreement" means this Letter of Credit and Reimbursement
Agreement, either as originally executed or as it may from time to time be
supplemented, modified or amended.
(b) "ALTA Policy" means the policy of title insurance covering
the Property required pursuant to Section 5.1.6 of this Agreement.
(c) "Applicable law," when used in Sections 7.12, 8.4, or
12.5.1(a), shall mean all the statutes, ordinances, regulations and
requirements described in Section 12.5.2, together with all common law
applicable to any Hazardous Substance.
(d) "Applicable Rate" shall have the meaning given to that term
in Section 3.3(b).
(e) "Assignment of Leases" shall mean that certain Assignment of
Rents, Leases, Income and Profits made by Company as of the date hereof.
(f) "Authority" means The Parking Authority of the City of
Hermosa Beach, a parking authority and public body, corporate and politic,
organized and existing pursuant to the laws of the State of California.
(g) "Bank Reimbursement Obligations" means, as of any date, all
indebtedness and other obligations of Company to Bank and to the other
Indemnitees due and owing under any of the Loan Documents (including without
limitation Article XII of this Agreement).
(h) "Certificate Documents" means all of the instruments,
documents and agreements which may be executed from time to time by the
Authority, the Trustee and/or Company in connection with the Certificates,
including without limitation the following, each of which were executed as of
the date hereof, unless otherwise indicated and in each case either as
originally executed or as the same may from time to time be supplemented,
modified or amended:
(1) First Installment Sale Agreement between Company and
Authority (the "Amended and Restated First Sale Agreement");
(2) Second Installment Sale Agreement between Authority
and Company (the "Amended and Restated Second Sale Agreement");
(3) Trust Agreement among Authority, Trustee and Company
(the "Trust Agreement");
(4) Assignment Agreement between Authority and Company;
(5) Second Assignment Agreement between Company and
Trustee;
(6) Assignment of Deed of Trust between Authority and
Company;
(7) Second Assignment Deed of Trust between Company and
Trustee;
(8) Certificate Purchase Agreement among Authority,
Underwriter and Company (the "Certificate Purchase Agreement");
and
(9) Consent between Bank and Trustee with the consent of
Authority (the "Consent").
(i) "Certificate Interest Rate" shall have the meaning given to
that term in Section 3.2.
(j) "Certificate Proceeds" means the proceeds of the
Certificates, including without limitation the amounts held from time to time
by Trustee in the funds established under Section 3.2 of the Trust Agreement,
and any other reserve or other fund, as well as any insurance or condemnation
proceeds or other assets held by the Trustee in special funds established
pursuant to the Certificate Documents or otherwise.
(k) "Certificates" means the $6,400,000 Floating Rate Weekly
Demand Refunding Certificates of Participation (Hermosa Beach Parking
Facilities Project - 1994 Series) executed and delivered by Trustee pursuant
to the Trust Agreement.
(l) "Closing Date" means the date the Letter of Credit is
initially issued by Bank.
(m) "Corporate Base Rate" means the rate of interest announced
by the Bank from time to time at its New York Branch as its prime commercial
loan rate, which rate shall change as and when such prime commercial loan rate
changes.
(n) "D Drawing" shall have the meaning given to that term in
Section 3.3.
(o) "Deed of Trust" means the deed of trust covering the
Property required pursuant to Section 4.2(a) of this Agreement, either as
originally executed or as it may from time to time be supplemented, modified
or amended.
(p) "Default Rate" means the Corporate Base Rate plus three
percent (3%).
(q) "Designated Representative" means a Person authorized by
Company, with the approval of Bank, to deliver certificates and other
documents and material to Bank pursuant to this Agreement.
(r) "Determination of Taxability" shall have the meaning given
to that term in Section 8.21.
(s) "Event of Default" means each of those events so designated
in Article 11 of this Agreement.
(t) "Financing Statement" means the UCC-l financing statement
required pursuant to Section 4.2(c) of this Agreement, either as originally
executed or as it may from time to time be supplemented, modified or amended.
(u) "Fiscal Year" means Company's fiscal year, which shall be a
calendar year.
(v) "General Partner" means JMB Realty Corporation, a Delaware
corporation, the managing general partner of Company.
(w) "Hazardous Substance" shall have the meaning given to that
term in Section 12.5.2.
(x) "Improvements" means the improvements constructed on the
Property.
(y) "Includes" or "including" means, respectively, "includes,
without limitation" or "including, without limitation."
(z) "Indemnitee" shall have the meaning given to that term in
Section 12.5.1.
(aa) "Letter of Credit" means the irrevocable letter of credit,
in the form attached hereto as Exhibit "A", to be issued by Bank pursuant to
this Agreement, either as originally executed or as it may from time to time
be supplemented, modified or amended.
(bb) "Loan Documents" means, collectively, this Agreement, the
Notes, the Security Documents and the Project Consents, in each case either as
originally executed or as the same may from time to time be supplemented,
modified or amended.
(cc) "Notes" means the promissory note or notes required pursuant
to Section 4.1 of this Agreement, either as originally executed or as from
time to time supplemented, modified or amended.
(dd) "Parking Facility" shall mean the 191,000 square foot
"Project" as that term is defined in the First Sale Agreement.
(ee) "Participation" shall have the meaning given to that term in
Section 12.7.
(ff) "Payment Due Date" shall have the meaning given to that term
in Section 3.2.
(gg) "Permitted Encumbrances" shall have the meaning given to
that term in Section 5.1.6.
(hh) "Person" means any person or entity, whether an individual,
trustee, corporation, partnership, trust, unincorporated organization or
otherwise.
(ii) "Personal Property" means all of Company's right, title,
interest in and to all furniture, furnishings, fixtures, machinery, equipment,
inventory and personal property of every kind and nature whether tangible or
intangible, now or hereafter located at, upon or about the Property, or used
or to be used in connection with or relating to or arising with respect to the
Property.
(jj) "Pledge Agreement" means the Pledge and Security Agreement,
dated as of the date hereof, among Company, Bank, Trustee and Paying Agent in
the form attached as Exhibit D.
(kk) "Pledged Certificate" means any Certificate subject to the
Pledge Agreement during the period from and including the date of its purchase
with amounts realized under the Letter of Credit to but excluding the date on
which such Certificate is purchased by any Person other than Bank and payment
therefor is received by Bank or on its behalf.
(ll) "Project" means the Property, the Improvements and the
Personal Property.
(mm) "Project Agreements" means, collectively, the agreements,
documents, instruments and materials described in Section 4.5 of this
Agreement, either as originally executed or prepared or as any of them may
from time to time be supplemented, modified or amended.
(nn) Intentionally Omitted.
(oo) "Property" means the real property described in Exhibit "C"
attached hereto.
(pp) "Remarketing Agent" means Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
(qq) "Retail," when used in Sections 7.12 or 8.4 shall include
dry cleaning as currently conducted at the Project.
(rr) "Second Reserve Account" shall have the meaning given to
that term in Section 10.1.
(ss) "Security" shall have the meaning given to that term in
Section 12.22.
(tt) "Security Agreement" means the security agreement covering
the Personal Property required pursuant to Section 4.2(b) of this Agreement,
either as originally executed or as it may from time to time be supplemented,
modified or amended.
(uu) "Security Documents" means, collectively, the Deed of Trust,
the Assignment of Leases, the Security Agreement, the Pledge Agreement(s), the
Financing Statement, and any other mortgage, deed of trust, security
agreement, financing statement or assignment now, heretofore or hereafter
executed to secure the Notes or the obligations of Company under this
Agreement in each case either as originally executed or as the same may from
time to time be supplemented, modified or amended.
(vv) "Stated Amount" shall have the meaning given to that term in
the Letter of Credit.
(ww) "Stated Expiration Date" means December 5, 1997, or such
later date to which the Stated Expiration Date may be extended from time to
time pursuant to Section 6.5.
(xx) "Taxes" shall have the meaning given to that term in
Section 6.3.
(yy) "Tender Draw" shall have the meaning given to that term in
Section 3.3(a).
(zz) "Tender Due Date" shall have the meaning given to that term
in Section 3.3(a).
(aaa)"Termination Notice" shall have the meaning given to that
term in Section 11.2(c).
(bbb)"Trustee" means First Trust of California, National
Association, or its successors as trustee of any of the trusts established
under the Trust Agreement.
1.2 Use of Defined Terms. Any defined term used in the plural
shall refer to all members of the relevant class, and any defined term used in
the singular shall refer to any number of the members of the relevant class.
Terms not otherwise defined in this Agreement shall have the meanings given to
them in the Trust Agreement. Unless otherwise provided, defined terms for
agreements and documents shall include all amendments and supplements to those
agreements and documents, respectively, hereafter entered into. All times
used in this Agreement shall refer to New York, New York time unless otherwise
stated.
1.3 Accounting Terms. All accounting terms not specifically
defined in this Agreement shall be construed in conformity with, and all
financial data required to be submitted by this Agreement shall be prepared in
conformity with, generally accepted accounting principles applied on a
consistent basis.
1.4 Exhibits. All Exhibits to this Agreement, either as now
existing or as the same may from time to time be supplemented, modified or
amended, are incorporated herein by this reference.
1.5 Sections. Unless otherwise provided, the term "Section" or
subsection refers to a section or subsection of this Agreement.
2. Certificates; Letter of Credit.
2.1 Certificates. Company entered into the Certificate
Documents in order to cause the issuance of the Certificates, and the
Certificate Proceeds were used to finance the refunding of the Prior
Certificates. The Prior Certificates were used to finance (a) the acquisition
of the portion of the Property upon which the Parking Facility was
constructed, and (b) the construction thereon of the Parking Facility.
2.2 Letter of Credit. In order to enhance the marketability of
the Certificates, Company has requested Bank to issue the Letter of Credit in
an aggregate amount not exceeding $6,479,957.00, of which an amount not
exceeding $6,400,000.00 shall be available to pay the principal amount or
purchase price of the Certificates, and an amount not exceeding $79,957.00
shall be available in accordance with the terms of the Letter of Credit to pay
for interest accrued on the Certificates. Bank is willing to issue the Letter
of Credit on the terms and conditions contained in this Agreement and the
other Loan Documents.
3. Reimbursement of Draws.
3.1 Immediate Reimbursement for Certain Draws. Company agrees
to reimburse Bank immediately, or cause Bank to be reimbursed immediately, for
the amount of (a) any draft drawn under the Letter of Credit other than under
Section 3.3 hereof on the date of such drawing, and (b) notwithstanding any
terms hereof to the contrary, all drafts drawn under the Letter of Credit for
whatever purpose on the occurrence of an Event of Default. Each amount for
which Company has agreed to reimburse Bank pursuant to this Section 3.1 shall
bear interest until paid, from the date on which Bank honors a drawing under
the Letter of Credit in such amount at a rate per annum equal to the Default
Rate, as it may change from time to time. Interest at the Default Rate shall
be paid on demand and, if any such interest is then due, on the Expiration
Date.
3.2 Payment of Scheduled Reimbursement Obligations.
(a) Company agrees to pay to Bank, one (1) Business Day prior to
the scheduled date of maturity or redemption of all or a part of the
Certificates an amount equal to the sum of the drawing fee plus any and all
principal amounts to be drawn under the Letter of Credit upon such maturity or
redemption of the Certificates, together with unpaid interest thereon accrued
to such maturity or redemption at the applicable interest rate on the
Certificates under the Certificate Documents ("the Certificate Interest
Rate").
(b) Company agrees to pay to Bank, monthly on each Interest
Payment Date (a "Payment Due Date"), an amount equal to the sum of the drawing
fee required under Section 6.2(c) plus the interest accrued from the date of
the last payment to such Interest Payment Date on any and all principal
amounts remaining unpaid under the Certificates. Such interest shall be paid
at the Certificate Interest Rate, in effect from time to time, in consecutive
monthly installments to and including the date on which all of the unpaid
principal amount of the Certificates shall be paid in full. Except as
otherwise provided in this Agreement, all computations of interest shall be
made on the basis provided therefor in the Trust Agreement. Absent manifest
error, or notice from Bank, the determination by the Remarketing Agent of the
Certificate Interest Rate in effect from time to time under the Trust
Agreement shall constitute notice to Company by Bank of the Certificate
Interest Rate applicable hereunder in computing the payments to be made on the
Payment Due Dates. Changes in the Certificate Interest Rate shall be made on
the effective date of each change thereof and shall remain in effect until
changed in accordance with the provisions of the Trust Agreement; provided
however that if Company underpays or overpays the amount actually drawn under
the Letter of Credit, there shall be a reconciliation pursuant to which (x) in
the event the Company underpays the amount of a draw made on an Interest
Payment Date, Company shall pay to Bank, without notice and on the Business
Day next following such Interest Payment Date, the amount underpaid, or (y) in
the event Company overpays the amount of a draw made on an Interest Payment
Date, Bank shall pay to Company, without notice from Company and on the
Business Day next following such Interest Payment Date, the excess of the
amount overpaid over any costs, fees or other amounts due and owing hereunder
to Bank from the Company.
3.3 Reimbursement for Tender Draws.
(a) Company further agrees to reimburse Bank, or cause Bank to
be reimbursed on or before the Tender Due Date for the amount of any "D
Drawing" under, and as defined in, the Letter of Credit for payment of the
principal amount of the purchase price of Certificates tendered pursuant to an
optional tender under Section 13.2 of the Trust Agreement (a "Tender Draw").
The "Tender Due Date" for each Tender Draw shall be the first to occur of
(i) the Expiration Date, (ii) the occurrence of an Event of Default, (iii) the
day on which the related Pledged Certificates are (A) redeemed, or
(B) purchased by any Person other than Company and payment therefor is
received by Bank or on its behalf, or (iv) the day which is one hundred and
eighty (180) days following the date such Tender Draw is honored by Bank.
(b) In addition to any interest to be paid to Bank under the
Pledge Agreement as the beneficial owner of the Pledged Certificates, Company
shall also pay to Bank, from the date on which Bank honors a Tender Draw until
such draw is repaid in full, an amount equal to the difference between (i) the
interest on the then outstanding principal balance of such Tender Draw
calculated at a rate per annum equal to the Applicable Rates and (ii) the
interest payments actually received by Bank with respect to the Pledged
Certificates, if any. Interest pursuant to clause (i) of this subsection
shall be calculated on the basis of the actual number of days elapsed since
the purchase of the Certificates and their pledge to Bank, or the last payment
date, as applicable. The "Applicable Rate" shall be a rate per annum equal
to: (x) prior to the occurrence of an Event of Default hereunder, the
Corporate Base Rate plus one and one half percent (1.5%), and (y) following
the occurrence of an Event of Default hereunder, or Company's failure to pay
any amount of principal or interest owing under the Notes or any other Bank
Reimbursement Obligations on the date due, the Default Rate, in either case,
as such interest rate may change from time to time. The amounts due under
this Section 3.3(b) shall be paid, prior to the occurrence of an Event of
Default, monthly in arrears on the first day of each month and upon
reimbursement of the respective Tender Draw or on the Tender Due Date (as
applicable), and, following the occurrence of an Event of Default, on demand
and on the Tender Due Date if not already paid.
(c) Proceeds from the remarketing of Pledged Certificates shall
be paid to Bank, and, when received by Bank, shall be applied first to the
payment of principal due under this Section, and any balance may be applied by
Bank to the payment of any other Bank Reimbursement Obligations, including
interest due hereunder, then due and payable hereunder (in such order of
priority as determined by Bank in its sole and absolute discretion); provided
however, that the receipt and application by Bank of any such proceeds
following the occurrence of any Event of Default hereunder shall not be deemed
to cure any defaults unless otherwise expressly provided in this Agreement.
Any unpaid interest due under Section 3.3(b) with respect to such remarketed
Pledged Certificates shall be due and payable by Company immediately upon such
remarketing; provided however, that any amount paid by the buyers of such
remarketed Pledged Certificates on account of interest shall be credited when
received by Bank against the interest owed hereunder by Company.
(d) Any reimbursement of principal prior to the Tender Due Date
by Company to Bank may be made by Company at its election without penalty and
shall be (i) made upon at least two (2) Business Days' notice from Company to
Bank, followed by payment of the principal amount to be so reimbursed together
with accrued interest on such amount to the date of reimbursement,
(ii) applied in the manner provided in Section 3.3(c), and (iii) in principal
components equal to Authorized Denominations.
3.4 Making of Payments. All payments to Bank shall be made in
immediately available funds of the United States of America by wire transfer
as follows (or to such other office of Bank located in the United States of
America as Bank may designate in writing from time to time):
Payment to: Chase Manhattan Bank, New York
ABA#: 021-000-021
For Account of:Dresdner Bank New York
Account Number:920-1-059079
For further Credit to:Dresdner Bank Los Angeles, Account No.
4100669/15
Ref: Plaza Hermosa Letter of Credit #875-94
not later than 2:00 p.m. on the date due; and funds received after that hour
shall be deemed to have been received by Bank on the next following Business
Day. If the date for making any payment or the last date for performance of
any act or the exercising of any right provided in this Agreement is not a
Business Day, such payment shall be made or act performed or right exercised
on the next succeeding Business Day with the same force and effect as if done
on the date provided therefor in this Agreement, and appropriate additional
interest or fees shall accrue and be payable for the period of such extension.
3.5 Calculation and Payment of Interest. A determination of the
Corporate Base Rate and the Default Rate from time to time in effect under
this Agreement shall be made on the effective date of each change in the
Corporate Base Rate and shall remain in effect until the effective date of the
next determination, and all interest calculated under this Agreement shall be
on the basis of a year of 365/366 days for actual days elapsed.
4. Loan Documents.
4.1 Notes. The obligation of Company to make payment to Bank of
its obligations pursuant to this Agreement and the other Loan Documents shall
be evidenced by one or more promissory notes of Company which shall be
executed by Company and delivered by Company to Bank in such form and content,
and at such times, as Bank may from time to time require by notice to Company.
The promissory note to be executed by Company and delivered pursuant to
Section 5.1.1(a), shall be in the form attached hereto as Exhibit "B". Such
promissory note(s), together with any and all other promissory notes required
by Bank pursuant to this Section 4.1 shall be modified or amended by Company
from time to time as required by Bank in order to more accurately evidence the
obligation of Company to Bank hereunder. Without limitation upon the
generality of the foregoing, in the event that the obligations of Company
under this Agreement or any of the other Loan Documents exceeds or may exceed
the face amount of the promissory note delivered pursuant to Section 5.1.1(a),
Company shall execute and deliver to Bank, at Bank's request, an additional
note or notes in substitution for, or in addition to, the promissory note
delivered pursuant to Section 5.1.1(a). The interest rate under any such
promissory notes or amendments thereto shall be consistent with the interest
rate provided herein. All of the promissory notes required pursuant to this
Section 4.1 are referred to collectively in this Agreement as the "Notes."
All such notes or amendments shall be secured by the Security Documents
without preference or priority over the security granted to Trustee pursuant
to the Security Documents. Upon demand by Bank, Company shall execute,
acknowledge and deliver to Bank and the Trustee such amendments of the
Security Documents as may be required by Bank in order to reflect any such
amendments of, or substitutions for, the Notes, and shall obtain and deliver
to Bank and the Trustee such endorsements and binders to the ALTA Policy as
Bank may from time to time reasonably require to protect the lien of the Deed
of Trust.
4.2 Security Documents. In consideration of Bank's entry into
this Agreement and the other Loan Documents, and as security for the prompt
payment when due of all sums of principal and interest advanced by Bank
pursuant to the Letter of Credit as well as for payment of any other sums
owing pursuant to this Agreement, the Notes or any of the other Loan Documents
and for payment of the principal of, premium (if any) and interest on the
Certificates, together with any and all extensions, renewals, modifications
and amendments thereof and as security for the performance and observance of
all of the covenants, agreements and conditions contained in the Letter of
Credit, this Agreement and all of the other Loan Documents, Company shall, at
its sole expense, deliver or cause to be delivered as directed by Bank, and
record or cause to be recorded, if appropriate, the following documents, each
of which shall be in such form and content, and executed by such persons
and/or entities, as Bank and Trustee shall reasonably require so as to be
valid and binding documents, and all of which are included within the col-
lective reference to Security Documents:
(a) A deed of trust covering the fee interest of Company in the
Property (the "Deed of Trust"), together with the Assignment of Leases.
(b) A security agreement covering the Personal Property and a
pledge agreement pledging to Bank the interest of Company in Certificates
tendered and not remarketed pursuant to the Trust Agreement (collectively, the
"Security Agreement").
(c) A financing statement covering the Personal Property (the
"Financing Statement").
The obligations of Company under this Agreement and all of the other Loan
Documents are and shall be secured by the Security Documents without
preference or priority over the security granted to the Trustee pursuant to
the terms of the Security Documents, subject however to the Consent.
4.3 Intentionally Omitted.
4.4 Other Documents and Actions. Company agrees to execute,
acknowledge and/or deliver or cause to be executed, acknowledged and/or
delivered to Bank such other instruments, agreements and other documents, and
to take such actions, upon request by Bank, as Bank may reasonably request in
order to carry out the purposes of this Agreement and the other Loan Documents
and the transactions contemplated thereby and to protect and/or further the
validity, priority and/or enforceability of the Security Documents or subject
to the Security Documents any property, together with any renewals, additions,
substitutions, replacements or betterments thereto, intended by the terms of
this Agreement or the other Loan Documents to be covered by the Security
Documents.
4.5 Assignment of Project Agreements. Company hereby transfers
and assigns to Bank all of Company's right, title and interest, if any, in and
to all agreements, documents, instruments and materials of whatever nature now
or hereafter existing which relate to development of the Project, other than
the Certificate Documents (collectively, the "Project Agreements"), including
without limitation (i) such plans and specifications concerning the Project
now or hereafter existing, and (ii) any and all contracts or agreements with
any contractor, any architect, any engineer, and any subcontractor, laborer or
supplier of materials or services. The remainder of this paragraph shall
apply only to improvements, which individually or in the aggregate, exceed
$250,000. Company represents and warrants that it is the true owner of the
Project Agreements, that it has not assigned or granted a security interest in
any of the Project Agreements to any person other than Bank, and that its
interest in the Project Agreements, and each of them, is not subject to any
claim, setoff or deduction. Notwithstanding such assignment, Company shall
retain the benefit of, and the right to possession and control of, all of the
Project Agreements unless and until there is a default under any of the Loan
Documents which is not cured by Company after the giving of any required
notice or the expiration of any required cure period. Such assignment shall
become void and of no further force or effect upon payment in full of the
indebtedness secured by the Security Documents and faithful performance by
Company of all obligations the performance of which is secured thereby.
Company hereby agrees to faithfully perform any and all obligations it may
have under the Project Agreements, and not to amend in a material manner or
terminate (except as expressly provided in this Agreement), whether or not
such termination is for cause, any of the Project Agreements without the
express prior written consent of Bank (not to be unreasonably withheld or
delayed), until such indebtedness has been paid in full and such obligations
have been performed. Bank shall not be obligated to perform or discharge any
obligation of Company under the Project Agreements, but may at its option do
so at Company's expense in the event that Company should fail to do so as
herein provided. Company hereby irrevocably constitutes and appoints Bank to
act as its attorney in fact after the occurrence of an Event of Default to
enforce in Company's name or in Bank's name all of Company's rights under the
Project Agreements, and hereby agrees to deliver to Bank, upon Bank's written
demand following any default under the Loan Documents, all of the Project
Agreements and such other instruments and documents as Bank may reasonably
require in order to permit Bank's succession to the right, title and interest
of Company in and to the Project Agreements. Bank shall incur no liability in
connection with any actions it takes in connection with such enforcement,
provided that such actions are taken in good faith and do not constitute gross
negligence or willful misconduct. The Trustee shall have rights pari passu
with Bank in the assignments made pursuant to this Section 4.5 for so long as
the Trustee has an interest under the Security Documents, subject however to
the Consent.
4.6 Evidence of Debt. Bank shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of
Company resulting from each drawing under the Letter of Credit. The failure
to make any such notation shall not, however, impair Company's obligations
hereunder. In any legal action or proceeding in respect of this Agreement or
the Note, the entries made in such account or accounts shall, in the absence
of manifest error, be conclusive evidence of the existence and amounts of the
obligations of the Company therein recorded.
5. Conditions to Issuance.
5.1 Conditions to Issuance. The obligation of Bank to issue the
Letter of Credit is subject to the following conditions precedent:
5.1.1 Bank shall have received all of the following, each
of which shall be in form and substance satisfactory to Bank:
(a) the original promissory note to be delivered pursuant to
Section 4.1;
(b) a copy of the partnership agreement and certificate of
limited partnership of Company, and copies of any and all amendments to such
documents, all certified as true and correct by General Partner;
(c) all of the opinions, certificates, letters and other
documents specified in, or requested by Underwriter, Remarketing Agent or Bank
pursuant to Section 4 of the Certificate Purchase Agreement;
(d) a written opinion of Company's counsel, in form and
substance satisfactory to Bank, covering such matters relating to Company and
the Loan Documents as may be required by Bank;
(e) the certificate required pursuant to Section 7.2.1; and
(f) such other documents and evidence determined in Bank's
discretion, including without limitation those items identified on the Closing
Checklist dated September 20, 1994, as revised, but excluding the "Soil
Report" and the "ACM Report" therefrom.
5.1.2Bank shall have received confirmation to its
satisfaction that the Security Agreement has been duly executed, acknowledged
and delivered to Authority and duly assigned to Trustee.
5.1.3Bank shall have received, in form and substance
satisfactory to Bank, the Certificate Documents required for the transaction
contemplated hereby, and such certificates, documents, consents or opinions as
Bank may reasonably request in connection therewith (including without
limitation an opinion of counsel to the Authority).
5.1.4Bank shall have received, in form and substance
satisfactory to Bank, such certificates, documents, consents or opinions as
Bank may reasonably request (including without limitation a certificate of
compliance with governmental and quasi-governmental requirements.
5.1.5The Deed of Trust shall have been recorded in the
Official Records of Los Angeles County, California, and the beneficial
interest of Authority thereunder shall have been assigned by a recorded
document to Trustee, such beneficial interest of Trustee to be held jointly
and concurrently with Bank.
5.1.6Company shall, at its sole expense, have delivered or
caused to be delivered to Bank and Trustee duplicate originals of an ALTA form
extended coverage lender's policy of title insurance (the "ALTA Policy"), or
evidence of a commitment therefor satisfactory to Bank, in form and substance
and issued by First American Title Company of Los Angeles, together with such
endorsements and binders thereto as may from time to time be required by Bank,
naming Bank and Trustee as insured, in a policy amount of not less than
$6,479,957.00, insuring the Deed of Trust to be a valid first lien upon the
Property, and showing the Property to be owned by Company in fee simple,
subject only to the Deed of Trust and the permitted title exceptions listed on
Exhibit "E" attached hereto (the "Permitted Encumbrances").
5.1.7Company shall deliver or cause to be delivered to Bank
a copy of the ALTA survey prepared in connection with issuance of the ALTA
Policy, which survey shall be satisfactory to Bank and shall (i) show
compliance of the Project with any and all "setbacks" and other restrictions
applicable to the Property pursuant to the requirements of any governmental
agencies or any applicable covenants, conditions or other private
restrictions, (ii) show all easements, licenses and other rights of way,
(iii) show no encroachments onto the Property or from the Property onto
adjoining property (except as permitted by the reciprocal easement agreement
approved by Bank for the Project), and (iv) certify the legal description of
the Property as insured in the ALTA Policy.
5.1.8The Financing Statement shall have been filed with the
California Secretary of State, and Bank shall have received a certificate of
the California Secretary of State, in form and substance satisfactory to Bank,
showing the Financing Statement to be subject to no prior filings.
6. Reimbursement and Other Payments; Extension.
6.1 Reimbursement. Company hereby agrees to pay to Bank, in
cash or by such other means as may be satisfactory to Bank in its sole
discretion, the following:
(a) all reasonable actual out-of-pocket amounts expended,
advanced or incurred by Bank in connection with any obligation of Company
under this Agreement or any of the Loan Documents or to collect the Notes or
to enforce the rights of Bank under this Agreement or any other Loan Document
(including without limitation any costs incurred by Bank in connection with
any insolvency or bankruptcy proceeding affecting Company or any other Person
involved in the Project), which amounts will include all actual out-of-pocket
court costs, reasonable attorneys' fees, fees of auditors and accountants and
investigation expenses reasonably incurred by Bank in connection with any such
matters, of which $30,000 has been paid to Bank prior to the date hereof;
(b) interest on any and all amounts remaining unpaid by Company
when due under this Agreement or any of the Loan Documents at any time from
the date such amounts become due at the interest rate provided herein;
(c) the entire amount of any and all funds disbursed by Bank
under the Letter of Credit; and
(d) all other amounts owing to Bank by Company under this
Agreement or any of the other Loan Documents.
Except as otherwise provided herein, all sums owing hereunder shall be deemed
to be evidenced by the Notes, and shall be payable with interest from the date
due at the Corporate Base Rate. After the occurrence of an Event of Default
or Company's failure to pay any amount of principal or interest owing under
the Notes or any other Bank Reimbursement Obligations on the date due, all
sums owing hereunder or under the Notes shall be payable with interest at the
Default Rate.
6.2 Fees. Company hereby agrees to pay to Bank, in cash or by
such other means as may be satisfactory to Bank in its sole discretion,
amounts as follows:
(a) on or before the Closing Date (i) as an origination fee for
the Letter of Credit, an amount equal to one percent (1%) of the Stated
Amount; (ii) as a fee for the Letter of Credit for the period commencing on
its issuance and ending on December 31, 1994, an amount equal to the pro rata
portion of the fee required under subsection (b) hereof based on the Stated
Amount for the actual number of days in such period; and (iii) all reasonable
attorneys' fees, appraisal fees and out-of-pocket expenses incurred by Bank in
connection with the negotiation, preparation and execution of this Agreement,
the Letter of Credit and any and all of the other Loan Documents and the
transactions contemplated thereby (including any amendments hereto or thereto
or consents or waivers hereunder or thereunder), and all fees, charges or
taxes for the recording or filing of Security Documents;
for each quarter that the Letter of Credit remains in effect
until the expiration of its term, Company will pay to Bank, in advance, on or
before the first Business Day of every January, April, July and October, an
amount equal to thirty seven and one-half/one hundredths of a percent (.375%)
of the undrawn amount available to be drawn under the Letter of Credit as of
the preceding day (which amount will take into account principal reductions of
the Certificates); provided however that such fee shall be prorated (i) to and
including the date on which the Letter of Credit is cancelled by Bank and the
Letter of Credit is surrendered by Trustee for cancellation, and (ii) to and
including the Expiration Date, as appropriate; and that in no event shall Bank
have any obligation to make reimbursement or to otherwise account to Company
in respect of fees paid by Company as a result of any reduction in the undrawn
amount under the Letter of Credit;
(c) a drawing fee of $250 each time there is a draw on the
Letter of Credit, regardless of the amount of such draw, a transfer fee of
$1,000 upon the transfer of the Letter of Credit to a successor Trustee under
the Trust Agreement, and an amendment fee of $250 for each amendment to the
Letter of Credit; and
(d) an extension fee equal to twenty-five/one hundredths of a
percent (.25%) of the Stated Amount if Bank agrees to the extension provided
in Section 6.5(a).
6.3 Increased Costs.
6.3.1Due to Change in Law. If any change in any law or
regulation or in the interpretation thereof by any court or administrative
agency shall either (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued by Bank, or
(ii) impose on Bank any other condition regarding this Agreement or the Letter
of Credit (other than changes in the rates of income taxation generally
applicable to Bank), and the result of any such event shall be to increase the
cost to Bank of issuing or maintaining the Letter of Credit (which increase in
cost shall be determined by Bank's reasonable allocation of the aggregate of
such cost increases resulting from such events), and such requirement or cost
shall remain in effect after notice thereof from Bank to Company, then
(a) Bank shall so notify Company, and (b) upon receipt of such notice from
Bank, Company shall promptly pay to Bank, from time to time as specified by
Bank, additional amounts which shall be sufficient to compensate Bank for such
increased costs, together with interest on each such amount from the date of
such notice until payment in full thereof at the rate contained in the Notes.
A certificate as to such increased cost incurred by Bank as a result of any
such event, submitted by Bank to Company, shall be conclusive as to the amount
thereof.
6.3.2Taxes on Payments.
(a) All payments made by Company under this Agreement shall be
made free and clear of, and without deduction or withholding for or on account
of, any present and future income, stamp or other taxes, levies, imposts,
deductions, charges or withholdings imposed, assessed, levied or collected by
any country or any political subdivision or taxing authority thereof or
therein,but excluding (i) taxes, levies, imposts, deductions, charges or
withholdings imposed on the net income of Bank, or (ii) any taxes imposed on
Bank by (A) the country under the laws of which Bank is organized or managed
and controlled, (B) any country in which Bank is subject to tax as a result of
transactions or activities unrelated to those contemplated by this Agreement
or any of the other Loan Documents or Certificate Documents, or (C) any
political subdivision or taxing authority of or in any such country (all
non-excluded taxes, levies, imposts, deduction, charges or withholdings being
hereinafter called "Taxes"). If any Taxes are required to be withheld from
any amounts payable to Bank hereunder, the amounts so payable to Bank shall be
increased to the extent necessary to yield to Bank (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement. Whenever any Taxes are paid by
Company, as promptly as possible thereafter, Company shall send to Bank a
certified copy of any original official receipt(s) received by Company showing
payment thereof. If Company fails to pay any Taxes when due to the
appropriate taxing authority, Company shall indemnify Bank for any incremental
taxes, interest or penalties that may become payable by Bank as a result of
any such failure.
(b) Notwithstanding Section 6.3.2, Company shall have no
liability under this Section 6.3.2 to any person or entity which is a
transferee of an interest of Bank in this Agreement or in any other Loan
Document for any Taxes or any additional amounts payable pursuant to the
second sentence of Section 6.3.2, to the extent such Taxes or additional
amounts exceed the Taxes or additional amounts which would have been payable
had such interest not been transferred to a person or entity which is not a
"United States person" within the meaning of Section 7701(a)(30) of the
Internal Revenue Code of 1986, as presently in effect.
(c) If any claim shall be made against Bank for any Taxes for
which Company may be liable under this Section 6.3.2, Bank shall notify
Company of such claim (such notice to set forth in reasonable detail the
particulars of such claim) and shall consult in good faith with Company as to
whether such claim should be contested and the manner in which any such
contest will be conducted; provided however, that the failure of Bank to
provide such notice shall not relieve Company of its obligations, and provided
further, that Bank shall be under no obligation to disclose to Company any tax
returns of Bank or any other related confidential information.
6.4 Obligations Absolute. Subject to the non-recourse
provisions contained in Section 12.22, the obligations of Company under this
Agreement and the Notes shall be absolute, unconditional and irrevocable, and
shall be paid strictly in accordance with the terms of this Agreement and the
Notes, under all circumstances whatsoever, including, without limitation, the
following circumstances:
(a) any lack of validity or enforceability of the Letter of
Credit, or any of the Loan Documents or the Certificate Documents or any other
agreement or instrument related thereto;
(b) any amendment or waiver of or any consent to departure from
the terms of the Letter of Credit or any of the Loan Documents or the
Certificate Documents or any other agreement or instrument related thereto;
(c) the existence of any claim, set-off, defense or other right
which Company or Authority may have at any time against Trustee, any
beneficiary or any transferee of the Letter of Credit (or any Person for whom
Trustee, any such beneficiary or any such transferee may be acting), Bank or
any other Person, whether in connection with this Agreement, the Letter of
Credit, any of the other Loan Documents, the Certificates or any other
agreement or instrument related thereto, or in connection with the Project or
any unrelated transaction;
(d) any statement, draft or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect, or any statement therein being untrue or inaccurate in any
respect whatsoever (except to the extent Bank is grossly negligent or acts
with willful misconduct in accepting or relying upon any such statement, draft
or other document);
(e) the surrender or impairment of any security for the
performance or observance of the terms of this Agreement, any of the other
Loan Documents or any other agreement related thereto; or
(f) any other circumstance, happening or omission whatsoever,
whether or not similar to any of the foregoing.
6.5 Term of the Letter of Credit.
(a) The initial term of the Letter of Credit and the Notes shall
be extended by two (2) years if Bank, in its sole and absolute discretion
following the request of Company delivered to Bank, agrees to such extension
and notifies Authority, Company, and Trustee in writing on or before
November 30, 1996 that the Letter of Credit and the Notes will be so extended.
In the event of such an extension, Bank shall extend the term of the Letter of
Credit by delivering to Trustee and Company the Extension Certificate
substantially in the form of Exhibit M to the Letter of Credit and, if
required by Bank, Company shall cause a replacement Note or Notes reflecting
the extended term to be delivered to Bank.
(b) The Letter of Credit shall expire at 4 p.m. on the earliest
to occur of: (i) the Stated Expiration Date, unless the Stated Expiration
Date has been extended pursuant to subsection (a) hereof; (ii) the date
specified in the Termination Notice; (iii) the date on which all Certificates
are paid in full and the Trust Agreement is discharged in accordance with its
terms; (iv) the date on which the Certificates become secured by an Alternate
Credit Facility; or (v) five (5) days after the Conversion Date. The
foregoing shall be interpreted in accordance with Section X of the Letter of
Credit and shall be referred to as the "Expiration Date."
6.6 Additional Terms. The Letter of Credit is incorporated as
if set forth fully herein. Without limitation, no draws under the Letter of
Credit shall be honored for the payment of any premiums of any kind arising
under the Certificates. Bank may grant or withhold consents provided in the
Letter of Credit in its sole and absolute discretion.
7. Representations and Warranties by Company. As a material
inducement to Bank's entry into this Agreement and the transactions
contemplated hereby, Company represents and warrants and agrees to Bank that:
7.1 Formation of Company. Company (a) is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Illinois, (b) has all requisite power and authority to conduct its
business and to own and lease its properties, (c) is duly qualified to do
business in, and is in good standing in, every jurisdiction in which the
nature of business conducted by it makes such qualification necessary or where
failure to so qualify would have a material and adverse effect on its business
or financial condition or Company's ability to perform its obligations under
this Agreement or on any Loan or Certificate Document, and (d) is governed by
the Amended and Restated Agreement of Limited Partnership dated August 22,
1985 as amended on December 31, 1991, true and correct copies of which have
been delivered to Bank.
7.2 Execution, Delivery and Performance of Loan Documents and
Certificate Documents.
7.2.1Company has all requisite power and authority to
execute and deliver, and to perform all of its obligations under, the Loan
Documents and the Certificate Documents, and shall execute and deliver to
Bank, prior to the issuance of the Letter of Credit and as a condition
thereto, the partnership authorization of Company and the corporate resolution
of General Partner evidencing the due authorization and consent of the
partners in Company to the execution of the Loan Documents and Certificate
Documents and the entry by Company into the transaction contemplated thereby.
7.2.2The execution and delivery by Company of, and the
performance by Company of all of its obligations under, each Loan Document and
Certificate Document have been duly authorized by all necessary action and do
not and will not:
(a) require any consent or approval not heretofore obtained of
any Person having any interest in Company;
(b) violate any provision of, or require any consent under the
partnership agreement of Company;
(c) result in or require the creation or imposition of any
mortgage, deed of trust, pledge, lien, security interest, claim, charge, right
of others, or other encumbrance of any nature (other than as contemplated
under the Loan Documents and the Certificate Documents) upon or with respect
to any property now owned or leased or hereafter acquired by Company;
(d) violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently in effect
having applicability to Company known to Company after reasonable inquiry; or
(e) result in a breach of or constitute a default under, or
cause or permit the acceleration of any obligation owed under, any indenture
or loan or credit agreement or any other agreement, lease, or instrument
concerning the Project to which Company is a party or by which the Project is
bound or affected.
7.2.3At the time of execution of this Agreement, Company is
not in default in any material respect: (a) under its partnership agreement;
or (b) that is adverse to the interests of the holders of the Loan Documents
or the Certificate Documents or that would have any material and adverse
effect on the Company's ability to perform its obligations under this
Agreement or on any Loan or Certificate Document under any law, rule,
regulation, order, writ, judgment, injunction, decree, determination, award,
indenture, agreement, lease or instrument described in Section 7.2.2(d) or
(e).
7.2.4 No material authorization, consent, approval, order,
license, exemption from, or filing or registration or qualification with, any
court or governmental department, public body, authority, commission, board,
bureau, agency, or instrumentality, is or will be required to authorize, or is
otherwise required in connection with the following:
(a) the execution and delivery by Company of, and the
performance by Company of all of its obligations under, the Loan Documents and
the Certificate Documents, or
(b) the creation of the liens, security interests, or other
charges or encumbrances described in the Loan Documents and the Certificate
Documents.
7.2.5General Partner or the Designated Representatives are
fully authorized to execute the Loan Documents and the Certificate Documents.
7.2.6Each of the Loan Documents and the Certificate
Documents, when executed and delivered, will constitute the legal, valid, and
binding obligations of Company (to the extent Company is a party thereto or
obligated thereunder), enforceable against Company in accordance with its
terms except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or limiting creditors'
rights generally.
Financial Statements. The financial statements and reports
submitted by Company to Bank reflect the financial position of the parties to
which they relate as of the date thereof.
7.4 No Material Adverse Change. As of the date hereof, there
has been no change in the condition, financial or otherwise, of the parties to
which the financial statements described in Section 7.3 relate, since their
respective dates, which would materially adversely affect Company's ability to
perform its obligations under this Agreement or any other Loan or Certificate
Document.
7.5 Tax Liability. Company has filed all tax returns (federal,
state and local) required to be filed and has paid all taxes shown thereon to
be due and all property taxes due, including interest and penalties, if any;
provided, however, that Company shall not be required to pay and discharge any
such tax so long as the legality thereof shall be promptly and actively
contested in good faith and by appropriate proceedings and shall be disclosed
in writing to Bank.
7.6 Compliance with Laws. Company is and shall remain in
compliance in all material respects with all laws, regulations and
requirements applicable to the Project (including without limitations
respecting Hazardous Substances) and has obtained all authorizations,
consents, approvals, orders, licenses, exemptions from, and has accomplished
all filings or registrations or qualifications with, any court or governmental
department, public body, authority, commission, board, bureau, agency or
instrumentality, that is necessary for the transaction of its business with
respect to the Project.
7.7 Completion. The improvements and all related aspects of the
Project have been completed, in all material respects, in accordance with all
applicable permits, laws, ordinances, regulations and other requirements of
all governmental and quasi-governmental authorities and public utility
companies (including without limitations respecting Hazardous Substances); all
work requiring inspection or certification by municipal or other governmental
authorities has been completed and all requisite certificates and other
necessary approvals (including without limitation any required certificates of
occupancy and any of the foregoing respecting Hazardous Substances) have been
duly issued and remain in full force and effect, and streets and offsite
utilities have been installed and completed to the satisfaction of said
authorities.
7.8 Litigation. There are no actions, suits or proceedings
pending or, to the best of Company's knowledge after reasonable inquiry,
threatened against or affecting the Company, the General Partner, or the
Project before any court or governmental department, public body, authority,
commission, board, bureau, agency or instrumentality, which would materially
and adversely affect (a) the transactions contemplated by or the validity or
enforceability of this Agreement, the Certificate Documents, the Loan
Documents or any agreement or instrument in connection therewith to which the
Company is a party or by which it is bound, (b) the Company's ability to
perform its obligations under this Agreement, the Loan Documents or the
Certificate Documents or (c) the exemption from federal income taxation of
interest paid on the Certificates, except as expressly disclosed to Bank in
writing by Company prior to the execution of this Agreement and listed on a
schedule to this Agreement.
7.9 Intentionally Omitted.
7.10 Official Statement. Neither the Official Statement nor the
Preliminary Official Statement provided in connection with the issuance,
remarketing or refunding of the Certificates or issuance of the Letter of
Credit under the captions "The Project and the Shopping Center" or "The
Company", nor any certificate or statement or any data furnished in writing by
Company to Bank or to Trustee or any other person or entity in connection with
the negotiation of this Agreement or any of the other Loan Documents or the
Certificate Documents or the transactions contemplated thereby (other than
statements contained in the Preliminary Official Statement which were revised
or corrected in the Official Statement) contains as of the date of the making
or furnishing of the same any untrue statement of a material fact or omits a
material fact necessary to make the statements contained herein or therein, in
the light of the circumstances under which they were made, not misleading.
7.11 Compliance with Requirements. Company has obtained and
examined all conditions, covenants, restrictions, easements, reservations,
rights, and rights of way of record, and the Project does not materially
violate any of the same nor any applicable laws, ordinances, regulations, use
permits, occupancy permits, building permits and other requirements affecting
or relating to the Property or the Project.
7.12 No Hazardous Substance. Except as may be identified in the
Phase I Environmental Site Assessment Report prepared by Fugro-McClelland
(West), Inc. and the Phase II Site Assessment Report prepared by Fugro West,
Inc. dated November, 1993 and August, 1994, respectively, each of which have
been provided to Bank, as of the date of this Agreement: (a) neither Company,
nor any of its affiliates, has ever caused or permitted any Hazardous
Substance to be placed, held, located or disposed of on, under or at the
Project or any part thereof, or used the Project permanently or temporarily as
a dump site or storage site for any Hazardous Substance in violation of
applicable law, (b) to the Company's actual knowledge, no other person or
entity has ever caused or permitted any Hazardous Substance to be placed,
held, located or disposed of on, under or at the Project, or any part thereof,
or used the Project permanently or temporarily as a dump site or storage site
for any Hazardous Substances, except as to clauses (a) and (b), for
commercially reasonable quantities of standard supplies for ordinary office,
retail, janitorial and maintenance purposes in compliance with applicable
laws, and (c) to the best of Company's knowledge after reasonable inquiry, the
Project is in compliance with all applicable law, and with all provisions of
any leases, relating in any way to Hazardous Substances. To the greatest
extent permitted by law, the representations and warranties in this subsection
shall survive in perpetuity for the benefit of Bank and all the other
Indemnitees, notwithstanding the payment in full or the performance of all
other obligations under this Agreement.
8. Affirmative Covenants. For the term provided in Section 12.12,
Company shall unless Bank otherwise consents in writing:
8.1 Protection of Lien on Property. Maintain the lien created
by the Deed of Trust as a first lien upon the Project and the Property and
take such actions and execute and deliver to Bank such instruments and
documents as Bank may reasonably require from time to time in connection
therewith.
8.2 Protection of Security Interest in Personal Property.
Maintain the lien created by the Security Agreement as a first lien upon the
Personal Property, and take such actions and execute and deliver to Bank and
Trustee such instruments and documents as Bank may reasonably require from
time to time in connection therewith, including without limitation any
supplemental security agreements, form UCC-1 or UCC-2 financing statements or
other instruments and documents extending or perfecting the security interest
of Bank and Trustee in and to the Personal Property as it may exist from time
to time.
8.3 Payment of Taxes, Assessments and Charges. Pay all taxes,
assessments, charges and levies imposed by any public authority or utility
company which are or may become a lien affecting the Property or any part
thereof, including without limitation assessments on any appurtenant water
stock; provided, however, that Company shall not be required to pay and
discharge any such tax, assessment, charge or levy so long as (a) the legality
thereof shall be promptly and actively contested in good faith and by
appropriate proceedings disclosed in writing to Bank, and (b) at Bank's
reasonable request, Company posts reasonable security therefor.
8.4 Hazardous Substance. (a) Keep, and use its reasonable
efforts to cause all tenants to keep, the Project free of any potentially
harmful Hazardous Substance contamination, (b) comply, and use its best
efforts to cause all tenants to comply, with applicable laws relating thereto,
(c) pay or cause to be paid immediately when due the costs of removal or
remediation of any such Hazardous Substance as required by applicable laws,
and (d) keep the Project free of any lien imposed pursuant to such laws.
Notwithstanding the foregoing, nothing herein shall be construed to prohibit
Company or any tenant under any lease from using commercially reasonable
quantities of standard supplies for ordinary office, retail, janitorial and
maintenance purposes in compliance with applicable laws. If Company shall
default in the performance or observance of any of the foregoing provisions of
this subsection after notice to Company and expiration of the later of (i) the
applicable cure periods hereunder or (ii) the cure period permitted under
applicable law, Bank may declare an Event of Default under this Agreement
and/or cause the Event of Default to be cured and, if such cure requires the
clean-up of any Hazardous Substance contamination, the cost thereof shall be
added to the indebtedness evidenced by the Note and secured by the Deed of
Trust. Company further agrees not to release or dispose, or allow the release
or disposal by others, of any Hazardous Substance at the Project, except for
the release or disposal in the ordinary course of business which is not
required to be reported to any governmental authority under applicable laws.
Nothing herein shall be construed to require Borrower to remove from the
Project any routine or ordinary amounts of Hazardous Substance commonly known
to be lawfully present in or about similar improvements used in a similar
manner, unless in any such case its removal is required by applicable law.
8.5 Insurance. Provide or cause to be provided the following
policies of insurance of a company which shall have a Best Insurance Reports
(1990) rating of "A" or better and which shall be qualified to do business in
the State of California:
(a) workers' compensation insurance, builder's risk-all risk
insurance, and such other insurance as may be required by applicable law;
(b) insurance covering 100% of the replacement cost of the
Improvements in the event of fire, lightning, windstorm, vandalism, malicious
mischief and such other hazards, casualties and contingencies as are normally
and usually covered by extended coverage policies in effect in the locality
where the Property is situated (including insurance against loss by
earthquake, and by flood if the Property is now or hereafter located in an
area designated as being subject to the danger of flood), provided that
earthquake coverage shall be no less than $5,000,000, with a deductible level
of no greater than 10%;
(c) public liability insurance in an amount deemed necessary
from time to time by Bank, but in no event less than $5,000,000.00 for "single
occurrence";
(d) property damage insurance in an amount deemed necessary from
time to time by Bank, but in no event less than $2,500,000.00;
(e) such business interruption insurance with respect to
business uses of the Property and Improvements other than the Parking Facility
as Bank may require (including insurance against rental or income loss during
a period of repair or restoration of damage for a period of one year);
(f) insurance complying with the terms of the Commercial
Encroachment Permit Agreement, recorded as document No., 88-916487 on June 9,
1988, as long as it affects the Property; and
(g) such other customary and commercially reasonable policies of
insurance as Bank may reasonably require from time to time.
All such insurance coverages (i) shall be maintained at Company's sole cost
and expense as long as any obligation of Company in connection with this
Agreement, the Letter of Credit or any of the other Loan Documents remains
outstanding, (ii) shall be with insurers of recognized responsibility which
are approved in writing by Bank, (iii) shall be in form and substance
satisfactory to Bank, (iv) shall include a "lender's loss payable endorsement"
in form and substance satisfactory to Bank, assuring Bank that all proceeds
are to be payable to Bank and the Trustee as their interests may appear,
(v) shall contain a provision to the effect that the insurer shall not cancel
the policy without first giving at least thirty (30) days' prior written
notice thereof, and (vi) shall be in such deductible amounts as Bank and
Company shall agree upon (and in the absence of materially increased risk or a
material change in the value of the Project after the date hereof, the Bank
shall agree to the current level of deductibles). Certificates of insurance
for all of the above insurance policies, showing the same to be in full force
and effect, shall be delivered to Bank prior to the Closing Date, and
thereafter, upon demand by Bank therefor at any time while any obligation of
Company in connection with the Certificates, this Agreement, the Letter of
Credit or any of the Loan Documents remains outstanding. All policies
insuring against damage to the Improvements shall contain an agreed value
clause sufficient to eliminate any risk of co-insurance. Company agrees it
shall not modify any policy of insurance in a manner material and adverse to
the interests of Bank or the Trustee, as their interests appear, without the
prior written consent of Bank not to be unreasonably withheld or delayed.
Notwithstanding any terms to the contrary in the Deed of Trust or
herein, provided that no Event of Default exists at the time of a fire or
other casualty and at the time insurance proceeds are to be disbursed, Company
alone shall have the right to settle and receive claims of $100,000 or less,
individually or in the aggregate, and shall exclusively use same to rebuild
the Project, provided that Bank shall have the right to settle any such claim
that Company has not settled on or before one hundred eighty (180) days after
the date of such loss.
8.6 Intentionally Omitted.
8.7 Governmental Approvals. Deliver to Bank, from time to time
at Bank's request, based upon a reasonable belief that such a request is
necessary, in reasonable form and substance satisfactory to Bank, evidence
that Company and the Authority have complied with all applicable laws,
ordinances, regulations and other requirements relating to the Project, and
that all necessary consents or approvals of any court or governmental
department, public body, public utility, authority, commission, board, bureau,
agency or instrumentality having jurisdiction over the Project have been
regularly and finally received with respect to the Project (provided however,
that Company shall not be required to use more than its best efforts,
reasonably determined, to provide such evidence with respect to the
Authority's compliance), including without limitation each of the following as
applicable:
(a) all zoning, land use and planning requirements, including
without limitation any applicable general plan requirement and any requirement
relating to the adoption or amendment of a general plan;
(b) all subdivision and/or parcel map requirements, including
without limitation requirements of the California Subdivision Map Act;
(c) all requirements relating to Hazardous Substances;
(d) all requirements imposed by any public utility in connection
with the use of the Property or the supply of utilities thereto; and
(e) all requirements imposed in connection with any use permit,
occupancy permit, building permit or other permit or approval required by any
governmental or quasi-governmental authority in connection with the Project.
8.8 Compliance with Requirements. Comply with all conditions,
covenants, restrictions, easements, reservations, rights, rights of way and
all applicable laws, ordinances, regulations, use permits, encroachment
permits, occupancy permits, building permits and other governmental
requirements affecting or relating to the Property or Company's operations
thereon.
8.9 Continued Existence. Maintain its existence, and continue
to be a limited partnership in good standing in the State of Illinois. In
connection with, but not in limitation of, the covenant given pursuant to this
Section 8.9, Company agrees that the General Partner will not sell or
otherwise transfer or convey its interests in Company without the express
prior written approval of Bank, other than to another partner in Company.
Notwithstanding the foregoing, Bank shall provide its written consent to a
transfer of all of General Partner's interests in Company to an entity under
common control with General Partner, which entity has financial strength and
characteristics at least equal to that of General Partner on the date hereof
and provided that such entity is organized in such a manner, and the transfer
is accomplished by documents, which do not materially prejudice or diminish
Bank's rights hereunder, all as determined by Bank in its sole discretion
exercised in good faith. Company and such transferee entity shall pay all of
Bank's expenses in connection therewith, including reasonable attorneys' fees
and actual out-of-pocket costs.
8.10 Books and Records. Maintain full and complete books of
account and other records reflecting the results of its operations relating to
the Property or the Project and provide to Bank, promptly after request by
Bank therefor, such financial statements and other information pertaining to
the Property or the Project as Bank may from time to time reasonably request.
8.11 Maintenance of Project. Maintain the Project, and each
portion thereof (including without limitation equipment, machinery and fixed
assets), in good condition and repair, said condition and repair to be in line
with that of comparable shopping centers; and not permit any waste or damage
with respect thereto.
8.12 Statement of Replacement Cost. Deliver to Bank within
thirty (30) days of demand by Bank therefor a statement showing the
replacement cost of the Project for insurance purposes, all in such detail as
Bank may reasonably require.
8.13 Annual Operating Statements. Deliver to Bank the following:
(a) Promptly and in any event within ninety (90) days after the
end of each Fiscal Year, a balance sheet and statement of income for Company's
operations for such Fiscal Year, accompanied with all supporting schedules and
a certificate of General Partner that the statements are true and correct.
(b) Upon request, copies of all such regular or periodic
financial statements or financial reports as Company shall send to its
partners.
(c) Upon request, copies of all such regular or periodic reports
which are available for public inspection which Company may be required to
file with any federal or state department, bureau, commission or agency,
including without limitation tax returns.
8.14 Monthly Operating Statements. Deliver to Bank, within
thirty (30) days after the end of each calendar month, an income statement
reflecting the operation of the Project during such month. Such statement
shall contain such information as Bank may reasonably require, and shall
include, without limitation, figures setting forth a rental summary for the
Project during such month.
8.15 List of Personal Property. Deliver to Bank, from time to
time, within thirty (30) days of Bank's request therefor, a list of all of the
Personal Property then in existence.
8.16 Notice of Litigation. Give notice to Bank, within fifteen
(15) days of Company's learning thereof, of any of the following:
(a) any litigation materially and adversely affecting or
relating to the Project;
(b) any dispute between Company and any municipal or other
governmental authority relating to the Project the adverse determination of
which might materially affect the Project;
(c) any threat or commencement of proceedings in condemnation or
eminent domain relating to the Property; and
(d) any enforcement, cleanup, regulatory actions or
investigations, or any material claims by third parties, against the Project,
or against Company with respect to the Project, relating in any respect to
Hazardous Substances.
8.17 Notice of Certain Events. Promptly notify Bank if
(a) Company learns of the occurrence of any event which constitutes an Event
of Default under this Agreement, or an Event of Default or Default, as
applicable, under any of the other Loan Documents or any of the Certificate
Documents, together with a detailed statement by a responsible officer of
Company specifying the nature thereof and what action Company is taking or
proposes to take with respect thereto, or (b) Company learns of the existence
of any legal, judicial or regulatory proceedings affecting Company and having
an adverse effect on Company's ability to perform its obligations under this
Agreement or on any Loan or Certificate Document in which the amount of
liability involved, if any, is material and is not covered by insurance, or
(c) there shall occur or exist any other event or condition causing a material
adverse change in Company's ability to perform its obligations under this
Agreement or on any Loan or Certificate Document
8.18 Intentionally Omitted.
8.19 Intentionally Omitted.
8.20 Security of Property. Take such measures to protect the
physical security of the Property and the Personal Property as Bank may
reasonably deem advisable.
8.21 Tax Appeals. Bring, maintain and diligently prosecute any
and all actions, appeals and proceedings which are available to Company in
order to challenge, reverse or set aside a "Determination of Taxability," as
that term is defined in the Certificate Documents.
8.22 Copies of Leases. Give written notice to Bank of the entry
by Company into any lease or other agreement pursuant to which any Person is
given any right to occupy or use any portion of the Project, together with
true and correct copies of each such lease or other agreement.
9. Negative Covenants. For the term provided in Section 12.12,
Company shall not, unless Bank otherwise consents in writing:
9.1 Liens on Property. Create or cause or suffer to become
effective any mortgage, deed of trust or like lien or encumbrance affecting
the Property or any portion of the same, except for the lien of the Deed of
Trust, the lien of the Trust Agreement, and those matters listed in
Exhibit "E" hereto, taxes not delinquent and claims of lien contested by
Company in good faith, with due diligence and, at Bank's reasonable request,
upon the posting of reasonable security therefor. In connection with the
covenant contained in this Section 9.1, Company acknowledges that Bank has
relied on the equity remaining after subjecting the Property to the liens
referenced above. Under these circumstances, the prohibition against junior
liens contained above is commercially reasonable and consented to by Company.
The terms of this Section 9.1 shall control over any inconsistent terms of the
Certificate Documents, including, without limitation, Section 3.11(c) of the
First Sale Agreement.
9.2 Liens on Personal Property. Install in or otherwise use in
connection with the Property any Personal Property under any security
agreements or similar agreements however denominated whereby the right is
reserved or accrues to anyone to remove or repossess any such items or whereby
any Person other than Bank (and Trustee, so long as Trustee retains an
interest in the Project as trustee under the Certificate Documents), reserves
or acquires a lien upon such items.
9.3 Changes in Management Company. Terminate or replace the
existing property management company of the Project without the express prior
written consent of Bank, which consent will not be unreasonably withheld or
delayed; and Bank hereby approves the current property management company,
JMB Retail Properties Company.
9.4 Amendments to Certificate Documents. Not amend, modify,
terminate or grant any waiver under, or consent to, permit or suffer to occur
any action or omission which results in, or is equivalent to, an amendment,
modification or grant of a waiver under any of the Certificate Documents
without Bank's prior consent, which consent may be granted or withheld in its
sole discretion.
9.5 Transfers of Project or Certificate Document Obligations.
Assign or delegate any of Company's rights or obligations under the
Certificates, the Letter of Credit, this Agreement or any of the other Loan
Documents or Certificate Documents, or sell, lease or otherwise transfer the
Property, the Improvements, the Personal Property, or any interest therein
(except for dispositions of personal property permitted pursuant to
Section 9.6), other than with the express prior written consent of Bank, which
consent may be granted or withheld in its sole discretion, and in compliance
with the provisions of the First and Second Sale Agreements and other
Certificate Documents. In connection with the foregoing, Company acknowledges
that Bank has entered into the transaction contemplated by this Agreement in
reliance upon the reputation and management expertise of Company and the
partners in Company, and would not have entered into such transaction but for
such reliance. Notwithstanding the foregoing, Bank shall provide its written
consent to a transfer of all of Company's rights and obligations specified
above to an entity under common control with Company, which entity has
financial strength and characteristics and property ownership expertise at
least equal to that of Company on the date hereof and provided that such
entity is organized in such a manner, and the transfer is accomplished by
documents, which do not materially prejudice or diminish Bank's rights
hereunder, all as determined by Bank in its sole discretion exercised in good
faith. Company and such transferee entity shall pay all of Bank's expenses in
connection therewith, including reasonable attorneys' fees and actual out-of-
pocket costs.
9.6 Removal of Personal Property. Remove or permit the removal
from the Property of any items of Personal Property other than in accordance
with the provisions of both the Security Agreement and the First and Second
Sale Agreements. Company shall keep detailed records of each such removal,
substitution, sale or other disposition and make such records available to
Bank upon its request from time to time, and shall execute and deliver to Bank
and Trustee such instruments and documents as Bank may require in connection
with the attachment and perfection of the security interest of Bank and
Trustee in and to any new or replacement items of Personal Property on or
about the Property.
9.7 Nature of Business. Change its principal business from the
business of investing in commercial and residential real estate.
9.8 Leases. Enter into any leases or other agreements pursuant
to which any Person is given any right to occupy any building area within the
Project in excess of five thousand (5,000) square feet or any free-standing
structure in the Project without the express prior written consent of Bank,
which consent shall not be unreasonably withheld or delayed.
9.9 Easements. Grant, convey or cause to be effective any
easement, license, right of way, or title restriction or limitation affecting
the Property or any portion of the same without the express prior written
consent of Bank (which consent shall not be unreasonably withheld or delayed);
provided, however, that Company may grant routine easements which are
reasonably necessary and required by governmental or quasi-governmental
entities or utility companies for the furnishing of utilities or services to
the Project without the requirement of such consent by Bank, so long as such
easements shall not materially weaken, diminish or impair the security of the
Deed of Trust or interfere with the intended use of the Property.
Alterations. Remodel, renovate or otherwise alter the
Improvements or any substantial portion thereof, excepting however reasonable
and customary tenant improvements provided under the leases referred to in
Section 9.8, in such a way as may reasonably be expected to materially alter
the use, function or appearance thereof, without first furnishing to Bank a
description of the alterations (and, if reasonably requested by Bank, plans
and specifications for such alterations) and obtaining the express prior
written approval of such alterations by Bank, which approval shall not be
unreasonably withheld or delayed.
10. Second Reserve Account
10.1 Establishment and Pledge of Second Reserve Account. Company
shall establish and maintain the Second Reserve Account for the sole and
exclusive benefit of Company and Bank on the terms hereinafter provided. The
"Second Reserve Account" shall be a deposit account in Company's name
maintained at a banking institution and pursuant to such documents and
arrangements, in each case as are reasonably acceptable to Bank. Company
hereby pledges, assigns, conveys and transfers to Bank a security interest in
all of Company's right, title and interest in the Second Reserve Account,
including all sums therein whether existing on the date hereof or deposited
at any time hereafter, and the proceeds thereof. Company agrees to file such
financing statements and take such additional actions with respect thereto as
Bank may request in its reasonable discretion to perfect Bank's rights
therein, including the identification of the Second Reserve Account, which
shall be attached hereto as Exhibit "F". In all instances, the Second Reserve
Account shall be separate and distinct from the Reserve Fund and the Reserve
Requirement under the Trust Agreement, and the funding by Company of the
Reserve Fund or the Second Reserve Account, respectively, shall not be deemed
to satisfy or affect in any manner Company's obligations with respect to the
other reserve account.
10.2 Amount of Second Reserve Account. In no instance shall
Company be required to maintain more than One Million Four Hundred Dollars
($1,400,000) in the Second Reserve Account at any time and any amount in
excess thereof shall be promptly be paid to Company, or released by Bank, as
applicable. Company shall deposit on the Closing Date, and quarterly
thereafter on the dates specified in Section 6.2(b), the amounts shown in or
interpolated, if necessary, from the Amortization Schedule attached hereto as
Exhibit "G" (based on level debt service payments calculated using a 20-year
amortization schedule and an annual rate of interest of 10%).
10.3 Limitation. Interest on all amounts in the Second Reserve
Account shall accrue therein to be held in accordance herewith. In no
instance shall the income received on the amounts in the Second Reserve
Account or the types of investments permitted for such amounts adversely
affect the exemption of interest on the Certificates from federal income
taxation. To this end, Company shall cause investments therein to be yield
restricted in accordance with the Tax Certificate executed by Company in
connection with the execution and delivery of the Certificates. Bank agrees
to provide Company, Trustee and any representative of Company retained for the
purpose of computing sums required under Section 5.5 of the Trust Agreement
with such information with respect to the Second Reserve Account and the
investment thereof as they or each of them will reasonably request. Upon the
occurrence of an Event of Default, Bank shall be entitled to exercise its
rights and remedies with respect to the Second Reserve Account in accordance
with Section 11.2.
11. Events of Default and Remedies Upon Default.
11.1 Events of Default. The occurrence of any one or more of the
following, whatever the reason therefor, shall constitute an Event of Default
hereunder:
(a) Company shall fail to pay any amount of principal or
interest owing under the Notes or any other Bank Reimbursement Obligations, in
each case within three (3) days of the date due; or
(b) Company shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement or any of the other Loan
Documents on its part to be performed or observed, provided however, that if
such failure cannot be remedied within such period, it shall not constitute an
Event of Default hereunder if the failure is correctable without material
adverse effect on the Certificates and if corrective action is instituted by
Company within such period and diligently pursued until the failure is
corrected but, in any event, such failure must be corrected within 90 days
after Company first had notice of such failure from any source; or
(c) Intentionally Omitted.
(d) (1) Trustee declares any default in connection with the
Certificates or the Certificate Documents, or (2) the obligation to make
payment on the Certificates is accelerated for any other reason; provided
however that it shall not be an Event of Default under this Section 11.1(d)(2)
if such acceleration of payments on the Certificates results from actions of
Bank; or
(e) The occurrence of a Default or Event of Default under the
Trust Agreement; or
(f) Any representation or warranty in any of the Loan Documents
or Certificate Documents or in any certificate, agreement, instrument or other
document made or delivered by Company, General Partner or any of their
respective directors, officers, agents or employees, pursuant to or in
connection with any of the Loan Documents or Certificate Documents proves, to
have been materially false as of the date on which made and shall continue to
be materially false and shall not be remedied within 30 days after Bank gives
Company notice thereof; provided however, that if such breach cannot be
remedied within such period, it shall not constitute an Event of Default
hereunder if the breach is correctable without material adverse effect on the
Certificates and if corrective action is instituted by Company within such
period and diligently pursued until the breach is corrected but, in any event,
such breach must be corrected within 90 days after Company first had notice of
such breach from any source; or
(g) Intentionally Omitted.
(h) The Project is destroyed by fire or other casualty or
damaged thereby unless: (1) (A) Company deposits with Bank, or in other such
manner as required under the Certificate Documents, an amount which, when
added to available insurance proceeds, will be sufficient to allow for
reconstruction and completion of the Project, and (B) Company thereafter
diligently reconstructs the Project subject to the provisions of this
Agreement and the Certificate Documents, within a reasonable time period to be
approved by Bank; or (2) the Letter of Credit has been cancelled and all Bank
Reimbursement Obligations have been paid in full; or
(i) All or a substantial portion of the Property is condemned,
seized or appropriated by a governmental authority; or
(j) Intentionally Omitted.
(k) The dissolution or liquidation of Company or
failure by Company promptly to lift any execution, garnishment or attachment
of such consequence as will materially impair its ability to make any payments
under this Agreement, or the entry of an order for relief by a court of
competent jurisdiction in any proceeding for the liquidation or reorganization
of Company or any general partner thereof, or the filing of a petition by or
against Company or any general partner thereof under the provisions of any
bankruptcy act or under any similar act which may be hereafter enacted, or an
assignment by Company or any general partner thereof for the benefit of its
creditors, or the entry by Company or any general partner thereof into an
agreement of composition with its creditors or the appointment of a receiver,
trustee, custodian, liquidator or similar officer for Company or any general
partner thereof; or
(l) Intentionally Omitted.
(m) Intentionally Omitted.
(n) Cessation of operation by Company of the Project (except as
a result of damage, destruction or condemnation of the Property if Company
thereafter complies with the provisions of the Certificate Documents and Loan
Documents pertaining thereto); or
(o) The occurrence of any default (after the expiration of any
applicable cure periods) in the performance of any obligation secured by, or
the commencement of any foreclosure or other enforcement proceeding or
procedure under, any deed of trust, mortgage, security agreement or like
encumbrance upon the Project or any portion thereof.
11.2 Remedies Upon Default. Upon the occurrence of any Event of
Default, Bank may, at its option, do any or all of the following:
(a) Bank may deem that the Trustee has drawn the full amount
remaining for all draws under the Letter of Credit and such amount shall be
deemed conclusively to be included in the Bank Reimbursement Obligations;
(b) The Bank Reimbursement Obligations shall become immediately
due and payable in full, without demand, presentment, protest or notice of any
kind, all of which are hereby expressly waived;
(c) Bank may give notice (the "Termination Notice") to the
Trustee of the occurrence of an Event of Default, which notice shall provide
that the Letter of Credit shall terminate on the day specified in such notice
and shall require either a redemption in full of the Certificates pursuant to
Section 6.2(d) of the Trust Agreement, or mandatory tender all of the
Certificates pursuant to Section 13.1(b) of the Trust Agreement;
(d) Implement any other remedies available to Bank under or in
connection with the Certificate Documents, including without limitation fully
or partially funding the Letter of Credit (whether or not any amounts have
previously been funded under the Letter of Credit), taking an assignment from
the Trustee of the Security Documents, and exercising all of the rights and
remedies available to Bank in connection therewith;
(e) If the Event of Default may be cured by Bank by taking
actions or making payments of money, Bank shall have the right (but not the
obligation) to take such actions (including without limitation the retention
of attorneys and the commencement or prosecution of actions on its own behalf
or on behalf of Company), make such payments and pay for the costs of such
actions (including without limitation attorneys' fees and court costs) from
its own funds; provided, that the taking of such actions at Bank's expense or
the making of such payments by Bank out of Bank's own funds shall not be
deemed to cure such Event of Default, and the same shall not be so cured
unless and until Company shall have reimbursed Bank for such payment, together
with interest at the rate provided for in the Notes, from the date of such
payment until the date of reimbursement. If Bank advances its own funds for
such purposes, such funds shall be considered advances under the Notes and
shall be secured by the Security Documents, notwithstanding that such advances
may cause the total amount advanced hereunder to exceed the face amount of the
Notes or the amount committed to be advanced pursuant to this Agreement, and
Company shall immediately upon demand reimburse Bank therefor with interest at
the rate provided for in the Notes, from the date of such advance until the
date of reimbursement; and
(f) Exercise any and all of its rights under the Loan Documents
or the Certificate Documents including, without limitation, foreclosing on any
security, and exercising any other rights with respect to any security,
whether under the Security Documents or any other agreement or as provided by
law, or taking possession of the Property, all in such order and in such
manner as Bank in its sole discretion may determine.
11.3 Cumulative Remedies; No Waiver. All remedies of Bank
provided for herein are cumulative and shall be in addition to any and all
other rights and remedies provided in the Letter of Credit, the Notes, the
Security Documents, the Certificate Documents or any of the Loan Documents, or
provided by law or equity from time to time. The exercise of any right or
remedy by Bank hereunder shall not in any way constitute a cure or waiver of
default hereunder or under the Letter of Credit, the Notes, the Security
Documents, the Certificate Documents or any of the Loan Documents, nor
invalidate any notice of default or any act done pursuant to any such notice,
nor prejudice Bank in the exercise of any rights hereunder or under the Letter
of Credit, the Notes, the Security Documents, the Certificate Documents or the
Loan Documents, unless in the exercise of said rights, Bank realizes all
amounts owed to it under the Letter of Credit, this Agreement, the Notes, the
Security Documents, the Trustee Agreement, the Certificate Documents and the
Loan Documents and all Events of Default are cured. No waiver by Bank of any
default or breach by Company hereunder shall be implied from any omission by
Bank to take action on account of such default if such default persists or is
repeated, and no express waiver shall affect any default other than the
default expressly made the subject of the waiver. Any such express waiver
shall be operative only for the time and to the extent therein stated. Any
waiver of any covenant, term or condition contained herein shall not be
construed as a waiver of any subsequent breach of the same covenant, term or
condition. The consent or approval by Bank to or of any act by Company
requiring further consent or approval shall not be deemed to waive or render
unnecessary consent or approval to or of any subsequent act.
12. Miscellaneous.
12.1 Actions. Bank shall have the right to commence, appear in
and defend any action or proceeding purporting to affect the rights or duties
of the parties hereunder or the payment of any funds, and in connection
therewith Bank may pay necessary expenses, employ counsel and pay reasonable
attorneys' fees, provided, however, that this right shall arise only after an
Event of Default, or shall arise only prior to an Event of Default if Company
fails after written notice from Bank to defend Bank in any action or
proceeding purporting to affect the rights or duties of the parties. Company
agrees to pay to Bank, on demand, all reasonable out-of-pocket costs and
expenses incurred by Bank in connection therewith, including without
limitation reasonable attorneys' fees, together with interest from the date of
expenditure at the rate provided in the Notes. Company's obligation to repay
such expenses shall be secured by the Security Documents. In the event that
either Bank or Company shall bring an action against the other to interpret or
enforce the terms or provisions of the Letter of Credit, the Notes, this
Agreement or any of the other Loan Documents, the prevailing party in such
action shall be entitled to recover its attorneys' fees and costs as awarded
by a court of competent jurisdiction whether or not such action is prosecuted
to final judgment.
12.2 Nonliability of Bank. Company acknowledges and agrees that:
(a) any inspections of the Improvements made by or through Bank
are for purposes of administration of the Loan Documents only and Company is
not entitled to rely upon the same.
(b) the relationship between Company and Bank is, and shall at
all times remain, solely that of borrower and lender, and, without limitation,
Bank neither undertakes nor assumes any responsibility or duty to Company to
select, review, inspect, supervise, pass judgment upon or inform Company of
any matter in connection with the Project, including without limitation
matters relating to the adequacy or legal sufficiency of any of the documents,
agreements or arrangements pertaining to the Certificates, the Certificate
Documents or the rights or obligations of any Person in connection therewith;
and Company shall rely entirely upon its own judgment with respect to such
matters, and any review, inspection, supervision, exercise of judgment or
information supplied to Company by Bank in connection with such matters is for
the protection of Bank only and neither Company nor any other Person is
entitled to rely thereon;
(c) Bank shall not be responsible or liable to Company for use
which may be made of the Letter of Credit or for any acts or omissions of
Trustee and any beneficiary or transferee in connection therewith;
(d) Bank shall not be responsible or liable to Company for the
validity, sufficiency or genuineness of documents (except as to Bank's
signatures thereon), or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent, or forged (except to the extent Bank is grossly
negligent or acts with willful misconduct in accepting or relying upon such
documents);
(e) Bank shall not be responsible or liable to Company as a
result of any circumstances in any way related to the making or failure to
make payment under the Letter of Credit, other than as a result of the gross
negligence or willful misconduct of Bank.
12.3 No Representations by Bank. By accepting or approving
anything required to be observed, performed or fulfilled, or to be given to
Bank pursuant to this Agreement or any of the other Loan Documents or
Certificate Documents, including any certificate, statement of profit and loss
or other financial statement, survey, appraisal or insurance policy, Bank
shall not be deemed to have warranted or represented the sufficiency,
legality, effectiveness or legal effect of the same, or of any term, provision
or condition thereof, and such acceptance or approval thereof shall not be or
constitute any warranty or representation to anyone with respect thereto by
Bank. Bank may accept documents in connection with the Letter of Credit or
any of the other Loan Documents or Certificate Documents which appear on their
face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
12.4 No Third Parties Benefited. This Agreement is made for the
purpose of defining and setting forth certain obligations, rights and duties
of Company and Bank in connection with the Letter of Credit. It shall be
deemed a supplement to the Notes and the Security Documents. It is made for
the sole protection of Company and Bank, and Bank's successors and assigns.
No other Person shall have any rights of any nature hereunder or by reason
hereof, except to the extent that Trustee is expressly granted rights
hereunder.
12.5 Indemnity of Company.
12.5.1 Company hereby indemnifies and holds harmless
Bank and its directors, officers, agents and employees (collectively the
"Indemnitees") from and against:
(a) any and all claims, demands, actions or causes of
action that are asserted against any Indemnitee by any Person relating to:
(i) a claim, demand, action or cause of action that the Person has or asserts
against Company, in connection with the Letter of Credit, the Certificates,
any of the Certificate Documents; (ii) the execution, delivery or transfer of
the Letter of Credit, or payment or failure to pay thereunder; (iii) the use,
generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence of a Hazardous Substance on, under or from the
Property or the Project in violation of applicable law, including all costs of
any remediation, cleanup or detoxification of the Property and the Project and
the preparation and implementation of any closure, remedial or other required
plans, whether or not any of the costs of, or such remediation, cleanup,
detoxification or plans, shall be deemed foreseeable or "consequential
damages"; provided however, that such remediation, cleanup, detoxification or
plans are required by any applicable law; or (iv) any other action or failure
to act (including enforcement actions of any kind or manner) taken by Bank in
accordance with the Loan Documents and the Certificate Documents;
(b) any and all claims, demands, actions or causes of action
that are asserted against any Indemnitee by any Person and arising from or in
connection with (i) any statement or omission, actual or alleged, in the
Certificate Documents, or (ii) any breach or default, actual or alleged, of
the representations, warranties, covenants or agreements made by any party
(other than Bank) contained in any of the Certificate Documents, or made by
Company contained in this Agreement or any of the other Loan Documents; and
(c) any and all liabilities, actual out-of-pocket losses, costs
or expenses (including court costs and reasonable attorneys' fees) that any
Indemnitee suffers or incurs as a result of the assertion of any claim,
demand, action or cause of action specified in Section 12.5.1(a) and
Section 12.5.1(b).
Any obligation or liability of Company to any Indemnitee as provided in this
Section 12.5.1 shall be secured by the Security Documents. The indemnity
contained in this Section 12.5.1 shall not extend to any punitive damages, or
any consequential damages (except for the costs of remediation, cleanup,
detoxification or plans as specifically provided in clause 12.5.1(a)(iii) and
only to the extent specifically provided therein), or any claims, demands,
actions, causes of action, liabilities, losses, costs or expenses which result
from the gross negligence or willful misconduct of any Indemnitee.
12.5.2 As used herein, "Hazardous Substance" means
gasoline, petroleum and other petroleum by-products, asbestos, flammable
materials, explosives, polychlorinated biphenyls (PCBs), radioactive materials
or hazardous or toxic material, substance or waste which is: (i) defined as a
"toxic pollutant" under Section 307(a) of the Water Pollution Control Act, 33
U.S.C. Section 1317(a); (ii) defined as a "hazardous substance" under Section
311 of the Water Pollution Control Act (33 U.S.C. Section 1321), as amended;
(iii) defined as a "hazardous waste" under Section 1004(5) of the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. Section 6903(5), as amended;
(iv) defined as a "hazardous substance" under Section 101(14) of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended by the Superfund Amendment and Reauthorization Act of 1986, 42
U.S.C. Section 9601(14); (v) defined as a "pollutant" or "contaminant" under 42
U.S.C.A. Section 9601(33); (vi) defined as "hazardous waste" under 40 C.F.R.
Part 260; (vii) defined as a "hazardous chemical" under 29 C.F.R. Part 1910;
(viii) listed in the United States Department of Transportation Table (49
C.F.R. 172.101 and amendments thereto) or by the Environmental Protection
Agency (or any successor agency) as hazardous substances (40 C.F.R. Part 302
and amendments thereto); (ix) defined as a "hazardous waste," "extremely
hazardous waste" or "restricted hazardous waste" under Sections 25117, 25115,
or 25122.7, or listed pursuant to Section 25140, of the California Health and
Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Act); (x) defined as "used oil" under
Section 25249.110 of the California Health and Safety Code, Division 20,
Chapter 6.5; (xi) defined as a "hazardous substance" under Section 25316 of
the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter
Presley Tanner Hazardous Substance Account Act); (xii) defined as a "hazardous
material," "hazardous substance" or "hazardous waste" under Section 25501 of
the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory); (xiii) defined as a
"hazardous substance" under Section 25281 of the California Health and Safety
Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances
Act); (xiv) contains more than 0.1 percent asbestos by weight that when dry,
may be crumbled, pulverized or reduced to powder by hand pressure; or
(xv) subject to any other law, statute, ordinance, regulation or requirement
of any governmental authority having jurisdiction over the Project or any
portion thereof in substitution, modification, replacement or amendment for,
or enacted pursuant to, the foregoing.
12.6 Commissions.
(a) Company and Bank hereby indemnify and hold each other
harmless from any responsibility, cost and/or liability, including any
reasonable attorneys' fees incurred, in connection with any claim by any
Person based upon actions of the indemnifying party for the payment of any
commission, charge or brokerage fee in connection with the Certificates or any
of the other transactions contemplated in connection with this Agreement.
(b) Company acknowledges that it will pay Garvin Guy Butler
Corporation 1% of the principal amount of the Certificates out of money on
deposit in the Cost of Issuance Fund, and shall indemnify and hold Bank
harmless therefrom.
12.7 Binding Effect.
(a) This Agreement shall be binding upon and inure to the
benefit of Company and Bank and their respective successors and assigns,
subject to the provisions of Section 9.5.
(b) Bank may sell participations to any financial institution
all or any part of, or any interest (undivided or divided) in, Bank's rights
and benefits under the Loan Documents and the Certificates Documents (a
"Participation"), and to the extent of that assignment, the assignee of a
Participation shall have the same rights and benefits against Company
hereunder as it would have had if such assignee were the bank issuing or
paying under the Letter of Credit hereunder; provided however, that Company
shall not and shall not be required to deal directly with any such participant
and such Participation shall not release Bank from liability or any
obligations under the Letter of Credit or under Section 12.24 hereof.
12.8 Execution in Counterparts. This Agreement and any other
Loan Document (except the Notes) may be executed in any number of counterparts
and any party hereto or thereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
counterparts of this Agreement or any other Loan Document, as the case may be,
taken together will be deemed to be but one and the same instrument. The
execution of this Agreement or any other Loan Document by any party hereto or
thereto will not become effective until counterparts hereof or thereof, as the
case may be, have been executed by all the parties hereto or thereto.
12.9 Prior Agreements; Amendments; Consents. This Agreement
contains the entire agreement between Bank and Company with respect to the
Letter of Credit, and all prior negotiations, understandings and agreements
with respect to the Letter of Credit are superseded by this Agreement. No
amendment, modification, supplement, termination or waiver of any provision of
this Agreement or any of the other Loan Documents, and no consent to any
departure by Company therefrom, may in any event be effective unless in
writing signed by Bank, and then only in the specific instance and for the
specific purpose given.
12.10Cumulative Remedies; No Waiver. The rights, powers and
remedies of Bank under the Loan Documents are cumulative and not exclusive of
any right, power or remedy provided by law or equity or otherwise. No failure
or delay on the part of Bank in exercising any right, power or remedy may be,
or may be deemed to be, a waiver thereof; nor may any single or partial
exercise of any right, power or remedy preclude any other or further exercise
of any other right, power or remedy.
12.11Inclusion of Expenditures in Loans. All sums paid or
expended by Bank under the terms of this Agreement shall bear interest at the
rate specified in the Notes, as provided herein, from the date Company
receives written demand from Bank for payment thereof (except as herein
otherwise provided), shall be secured by the Security Documents and shall be
immediately due and payable by Company upon demand (except as herein otherwise
provided).
12.12Survival of Representations and Warranties. All
representations and warranties of Company contained herein or in any other
Loan Document will survive the delivery of the Letter of Credit and the
execution and delivery of the Notes, and are material and have been or will be
relied upon by Bank, notwithstanding any investigation made by Bank or on
behalf of Bank. For the purpose of the foregoing, all statements contained in
any certificate, agreement or other writing delivered by or on behalf of
Company pursuant hereto or pursuant to any other Loan Document or in
connection with the transactions contemplated hereby or thereby shall be
deemed to be representations and warranties of Company contained herein or in
the other Loan Documents, as the case may be. This Agreement shall terminate
when the Letter of Credit has been cancelled and all Bank Reimbursement
Obligations have been paid in full.
12.13Notices. All notices, requests, demands, directions and
other communications provided for in this Agreement and under any of the other
Loan Documents must be in writing and must be mailed, delivered by hand or
sent by reputable overnight carrier to the appropriate party at its address as
follows:
If to Company:
c/o JMB Realty Corporation
900 N. Michigan Avenue
Chicago, Illinois 60611
Attention: Stephen A. Lovelette
with a copy to:
Pircher, Nichols & Mesks
1999 Avenue of the Stars, Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (SCS)
and
Katten Muchin & Zavis
525 West Monroe
Chicago, Illinois 60606
Attention: Robert Star, Esq.
If to Bank:
725 S. Figueroa Street, Suite 3950
Los Angeles, CA 90017
Attention: Sidney Jordan, Vice President
with a copy to:
Sonnenschein, Nath & Rosenthal
685 Market Street, Suite 1000
San Francisco, California 94105
Attention: Arnold P. Schuster, Esq.
Addresses for purposes of notice may be changed from time to time by written
notice sent to the other parties in accordance with this Section 12.13. If
any notice, request, demand, direction or other communication is given by mail
it will be effective upon the earlier of (a) 96 hours after deposit in the
U.S. Mail, certified or registered mail, return receipt requested postage
prepaid or (b) actual receipt, as indicated by the return receipt; if
delivered by hand, when delivered; if given by overnight courier 24 hours
after delivery to such courier within its service hours for guaranteed
overnight delivery.
12.14Advertising. Company agrees that Bank, after obtaining the
prior written consent of Company, may use the name of Company in advertising
that Bank may wish to publish concerning Bank's role in the transactions
contemplated in this Agreement or in the Loan Documents.
12.15Further Assurances. Company shall, at its expense and
without expense to Bank, do, execute and deliver such further acts and
documents as Bank from time to time as Bank reasonably requires for the
purpose of assuring and confirming unto Bank the rights hereby created or
intended now or hereafter go to be, or for carrying out the intention or
facilitating the performance of the terms of any Loan Document, or for
assuring the validity of any security interest or lien under any Security
Document.
12.16Governing Law. All of the Loan Documents shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Illinois applicable to contracts to be performed wholly within such state,
except for those provisions of the Deed of Trust as set forth more fully
therein.
12.17Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable or invalid shall be
inoperative, unenforceable or invalid without affecting the remaining
provisions, and to this end the provisions of all Loan Documents are declared
to be severable.
12.18Inconsistency With Security Documents. In the event that
any of the provisions of the Security Documents are inconsistent with the
provisions of this Agreement, the provisions of this Agreement shall prevail.
12.19Headings. Article and section headings in this Agreement
are included for convenience of reference only and are not part of this
Agreement for any other purpose.
12.20Time of the Essence. Time is of the essence.
12.21Bank Consent to Fixed Rate Conversion. Pursuant to
Section 2.4 of the Trust Agreement, Company may not elect to cause a
conversion of the interest on the Certificates to the Fixed Interest Rate
without the express prior written consent of Bank. Bank hereby agrees that it
will not withhold or delay such consent if Company furnishes evidence
reasonably satisfactory to Bank either (a) that Company has sufficient
available funds on hand to repurchase all of the Certificates then
outstanding, and has deposited or agreed to deposit such funds with Trustee or
Bank, or (b) that Company has obtained from third parties of sufficient
financial strength firm written commitments to purchase all of the
Certificates then outstanding upon the occurrence of such a conversion of
interest rate, and Section 3.2(a) shall not be applicable thereto.
12.22Limited Nature of Certain of Company's Obligations.
Anything in this Agreement or any other Loan Document to the contrary
notwithstanding, it is expressly understood and agreed that:
12.22.1 With the exception of the provisions of
Sections 7.6 or 7.7 (but only to the extent the same relates to Hazardous
Substances), and Sections 7.12, 8.4 or 12.5.1.(a)(iii), nothing herein or in
the Note, the Deed of Trust, this Agreement or otherwise shall be construed as
creating any liability payable from any source other than the Security (as
defined below), and (i) Bank shall not seek any monetary, personal, or
deficiency judgment against Company (or any judgment whatsoever against any
present or future, direct or indirect partner or principal thereof or any of
their Negative Capital Accounts) or its successors or assigns, in connection
with any action under the Loan Documents (including any action to foreclose
the lien of the Deed of Trust) or any other document or instrument giving any
security for any obligations accruing hereunder or under the other Loan
Documents, and (ii) any judgment obtained in any suit permitted to Bank hereby
will by its terms constitute a lien on, and will be enforced only against, the
Security and not against any other assets or property of the Company (or any
present or future, indirect or direct partner or principal thereof or any of
their Negative Capital Accounts) or its successors or assigns; and
(iii) neither the negative capital account of any present or future, indirect
or direct, partner or principal of Company, or of the General Partner, nor of
any present or future general partner of any partnership which is now or may
hereafter become a general partner of Company (or constituent partners of such
general partner), nor any obligation of any such partner to restore a capital
account or to contribute capital to lend or to otherwise make any payment to
Company or to any direct or indirect partner (collectively, the foregoing is
referred to as a "Negative Capital Account") shall at any time be deemed to be
the property or asset of the Company or any such partner and neither Bank nor
any of its successors and assigns shall have any right to collect, enforce or
proceed against or with respect to any such Negative Capital Account;
12.22.2 Bank and its successors and assigns shall look
solely to any one or more of the following (in such order as Bank shall
determine in its sole discretion) for satisfaction of Company's obligations
under this Agreement and under the other Loan Documents: (a) the Property,
the Personal Property and the rents, incomes, issues, profits and avails
thereof (including without limitation, insurance and condemnation proceeds,
and escrow and security deposits), by the enforcement of the lien created by
the Deed of Trust, the Assignment of Leases and the Security Agreement in the
manner therein provided; (b) the Pledged Certificates; (c) the Second Reserve
Account; (d) any funds held by the Trustee pursuant to the Trust Agreement;
(e) any other security given to secure the obligations hereunder or under the
other Loan Documents; or (f) any guaranty or indemnity agreement hereafter
given reciting it is not subject hereto (collectively, the foregoing is
referred to as the "Security"); and
12.22.3 Notwithstanding the foregoing
subsections 12.22.1 and 12.22.2, nothing herein shall be construed to prevent
Bank from exercising any remedy allowed by law or by the terms of this
Agreement, the Deed of Trust, the Note or the other Loan Documents which does
not relate to or result in an obligation to pay money by Company (except to
the extent such obligation or enforcement is against the Security).
Notwithstanding the foregoing subsections 12.22.1 and 12.22.2, nothing herein
shall be construed: to (a) limit the liability of Company and all of its
assets and properties for (i) fraud or intentional misrepresentation, (ii)
application of revenues from the Project, insurance proceeds or condemnation
awards in contravention of the provisions of this Agreement, the Deed of Trust
or any other Loan Document, to the extent of such misapplication or
misappropriation, or (iii) liability pertaining to Hazardous Substances under
Sections 7.6, 7.7, 7.12, 8.4 and 12.5.1(a)(iii); provided, however, that
nothing in this Agreement (including Sections 12.22.1, 12.22.2 and 12.22.3)
shall create any personal liability whatsoever in any circumstances on any
present or future, direct or indirect partner or principal of Company or their
Negative Capital Accounts, all such liability, if any, being expressly waived
by Bank and by every person now or hereafter claiming any right or security
hereunder.
12.22.4 Each representation, warranty, covenant,
condition and agreement of Company contained in this Agreement with respect to
Hazardous Substances shall be limited to apply only to Hazardous Substances
that, on or at any time prior to the Foreclosure Date, were present at, in, or
under, or were emanating from, the Project. The "Foreclosure Date" shall be
the earlier to occur of (a) full and final repayment of all Bank Reimbursement
Obligations, or (b) the completion of a foreclosure sale under the Deed of
Trust, or (c) the acquisition of the Project or any part thereof by Bank, any
affiliate of Bank or any other parties by any conveyance in lieu of
foreclosure.
12.23Waiver of Conditions by Bank. Bank may waive the
requirement of compliance by Company with any of the obligations, conditions
or requirements contained in this Agreement, the other Loan Documents, or the
Letter of Credit provided that no such waiver shall be effective unless
contained in a written instrument signed by an authorized officer of Bank.
12.24Annual Bank Statements. While the Letter of Credit is
outstanding, Bank shall Deliver to Company and Remarketing Agent Bank's annual
report which is available for public inspection in Germany, when such annual
report is regularly translated into English. At the time Bank delivers each
such annual report to Company, it shall also deliver such report to the
Remarketing Agent, and it is hereby agreed that the Remarketing Agent is a
third-party beneficiary with respect to such obligation.
12.25Maximum Rate of Interest. All agreements by which Company
may be required to pay to Bank amounts deemed to be for the use or forbearance
of money are hereby expressly limited so that in no contingency or event
whatever shall the amount paid or agreed to be paid to Bank for the use or
forbearance of the money to be advanced under the Letter of Credit or this
Agreement exceed the maximum permissible under applicable law as finally
determined by a court of competent jurisdiction. If, from any circumstance
whatsoever, fulfillment of any provision thereof, at the time performance of
such provision shall be due, shall be prohibited by law as finally determined
by a court of competent jurisdiction, the obligation to be fulfilled shall be
reduced to the maximum not so prohibited, and if from any circumstance Bank
should ever receive as interest an amount which would exceed such highest
lawful rate, such amount as would be excessive interest shall be applied to
the reduction of the principal of the obligations evidenced hereby (and if
such principal shall be reduced to zero, such amount shall be treated as a
deposit account of Company) and in no event to the payment of interest. This
provision shall control every other provision of all
[End of page 38]
agreements by which Company may be required to pay interest, fees, costs,
expenses or other amounts of any kind to Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first above written.
"Company":
JMB INCOME PROPERTIES, LTD.-XII, an Illinois
limited partnership
By: JMB Realty Corporation, a Delaware
corporation, its Managing General Partner
By:
Printed Name; Vice President
"Bank":
DRESDNER BANK AG
(LOS ANGELES AGENCY)
By
Its Authorized Signatory
By __________________________________
Its Authorized Signatory
<PAGE>
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
Page
1. Definitions And Accounting Terms. . . . . . . . . . . . . 1
1.1 Defined Terms. . . . . . . . . . . . . . . . . . . 1
1.2 Use of Defined Terms . . . . . . . . . . . . . . . 5
1.3 Accounting Terms . . . . . . . . . . . . . . . . . 5
1.4 Exhibits . . . . . . . . . . . . . . . . . . . . . 5
1.5 Sections . . . . . . . . . . . . . . . . . . . . . 6
2. Certificates; Letter of Credit. . . . . . . . . . . . . . 6
2.1 Certificates . . . . . . . . . . . . . . . . . . . 6
2.2 Letter of Credit . . . . . . . . . . . . . . . . . 6
3. Reimbursement of Draws. . . . . . . . . . . . . . . . . . 6
3.1 Immediate Reimbursement for Certain Draws. . . . . 6
3.2 Payment of Scheduled Reimbursement Obligations . . 6
3.3 Reimbursement for Tender Draws.. . . . . . . . . . 7
3.4 Making of Payments . . . . . . . . . . . . . . . . 8
3.5 Calculation and Payment of Interest. . . . . . . . 8
4. Loan Documents. . . . . . . . . . . . . . . . . . . . . . .9
4.1 Notes. . . . . . . . . . . . . . . . . . . . . . . 9
4.2 Security Documents . . . . . . . . . . . . . . . . 9
4.3 Intentionally Omitted. . . . . . . . . . . . . . . 10
4.4 Other Documents and Actions. . . . . . . . . . . . 10
4.5 Assignment of Project Agreements . . . . . . . . . 10
4.6 Evidence of Debt.. . . . . . . . . . . . . . . . . 11
5. Conditions to Issuance. . . . . . . . . . . . . . . . . . 11
5.1 Conditions to Issuance . . . . . . . . . . . . . . 11
6. Reimbursement and Other Payments; Extension . . . . . . . 12
6.1 Reimbursement. . . . . . . . . . . . . . . . . . . 12
6.2 Fees 15. . . . . . . . . . . . . . . . . . . . . . 13
6.3 Increased Costs. . . . . . . . . . . . . . . . . . 14
6.4 Obligations Absolute . . . . . . . . . . . . . . . 15
6.5 Term of the Letter of Credit.. . . . . . . . . . . 16
6.6 Additional Terms . . . . . . . . . . . . . . . . . 16
7. Representations and Warranties by Company . . . . . . . . 16
7.1 Formation of Company . . . . . . . . . . . . . . . 16
7.2 Execution, Delivery and Performance of
Loan Documents and Certificate Documents . . . . . 16
7.3 Financial Statements . . . . . . . . . . . . . . . 18
7.4 No Material Adverse Change . . . . . . . . . . . . 18
7.5 Tax Liability. . . . . . . . . . . . . . . . . . . 18
7.6 Compliance with Laws . . . . . . . . . . . . . . . 18
7.7 Completion . . . . . . . . . . . . . . . . . . . . 18
7.8 Litigation . . . . . . . . . . . . . . . . . . . . 18
7.9 Intentionally Omitted. . . . . . . . . . . . . . . 19
7.10 Official Statement . . . . . . . . . . . . . . . . 19
7.11 Compliance with Requirements . . . . . . . . . . . 19
7.12 No Hazardous Substance . . . . . . . . . . . . . . 19
8. Affirmative Covenants . . . . . . . . . . . . . . . . . . 20
8.1 Protection of Lien on Property . . . . . . . . . . 20
8.2 Protection of Security Interest in
Personal Property. . . . . . . . . . . . . . . . . 20
8.3 Payment of Taxes, Assessments and Charges . . . . 20
8.4 Hazardous Substances . . . . . . . . . . . . . . . 20
8.5 Insurance. . . . . . . . . . . . . . . . . . . . . 21
8.6 Intentionally Omitted. . . . . . . . . . . . . . . 22
8.7 Governmental Approvals . . . . . . . . . . . . . . 22
8.8 Compliance with Requirements . . . . . . . . . . . 22
8.9 Continued Existence. . . . . . . . . . . . . . . . 22
8.10 Books and Records. . . . . . . . . . . . . . . . . 23
8.11 Maintenance of Project . . . . . . . . . . . . . . 23
8.12 Statement of Replacement Cost. . . . . . . . . . . 23
8.13 Annual Operating Statements. . . . . . . . . . . . 23
8.14 Monthly Operating Statements . . . . . . . . . . . 23
8.15 List of Personal Property. . . . . . . . . . . . . 24
8.16 Notice of Litigation . . . . . . . . . . . . . . . 24
8.17 Notice of Certain Events . . . . . . . . . . . . . 24
8.18 Intentionally Omitted. . . . . . . . . . . . . . . 24
8.19 Intentionally Omitted. . . . . . . . . . . . . . . 24
8.20 Security of Property . . . . . . . . . . . . . . . 24
8.21 Tax Appeals. . . . . . . . . . . . . . . . . . . . 24
8.22 Copies of Leases . . . . . . . . . . . . . . . . . 24
9. Negative Covenants. . . . . . . . . . . . . . . . . . . . 25
9.1 Liens on Property. . . . . . . . . . . . . . . . . 25
9.2 Liens on Personal Property . . . . . . . . . . . . 25
9.3 Changes in Management Company. . . . . . . . . . . 25
9.4 Amendments to Certificate Documents. . . . . . . . 25
9.5 Transfers of Project or Certificate
Document Obligations . . . . . . . . . . . . . . . 25
9.6 Removal of Personal Property . . . . . . . . . . . 26
9.7 Nature of Business . . . . . . . . . . . . . . . . 26
9.8 Leases . . . . . . . . . . . . . . . . . . . . . . 26
9.9 Easements. . . . . . . . . . . . . . . . . . . . . 26
9.10 Alterations. . . . . . . . . . . . . . . . . . . . 26
10. Second Reserve Account. . . . . . . . . . . . . . . . . . 26
10.1 Establishment and Pledge of Second
Reserve Account. . . . . . . . . . . . . . . . . . 26
10.2 Amount of Second Reserve Account.. . . . . . . . . 27
10.3 Limitation.. . . . . . . . . . . . . . . . . . . . 27
11. Events of Default and Remedies Upon Default . . . . . . . 27
11.1 Events of Default. . . . . . . . . . . . . . . . . 27
11.2 Remedies Upon Default. . . . . . . . . . . . . . . 29
11.3 Cumulative Remedies; No Waiver . . . . . . . . . . 30
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 30
12.1 Actions. . . . . . . . . . . . . . . . . . . . . . 30
12.2 Nonliability of Bank . . . . . . . . . . . . . . . 31
12.3 No Representations by Bank . . . . . . . . . . . . 31
12.4 No Third Parties Benefited . . . . . . . . . . . . 31
12.5 Indemnity of Company . . . . . . . . . . . . . . . 32
12.6 Commissions. . . . . . . . . . . . . . . . . . . . 33
12.7 Binding Effect . . . . . . . . . . . . . . . . . . 33
12.8 Execution in Counterparts. . . . . . . . . . . . . 34
12.9 Prior Agreements; Amendments; Consents . . . . . . 34
12.10 Cumulative Remedies; No Waiver . . . . . . . . . . 34
12.11 Inclusion of Expenditures in Loans . . . . . . . . 34
12.12 Survival of Representations and Warranties . . . . 34
12.13 Notices. . . . . . . . . . . . . . . . . . . . . . 35
12.14 Advertising. . . . . . . . . . . . . . . . . . . . 36
12.15 Further Assurances . . . . . . . . . . . . . . . . 36
12.16 Governing Law. . . . . . . . . . . . . . . . . . . 36
12.17 Severability of Provisions . . . . . . . . . . . . 36
12.18 Inconsistency With Security Documents. . . . . . . 36
12.19 Headings . . . . . . . . . . . . . . . . . . . . . 36
12.20 Time of the Essence. . . . . . . . . . . . . . . . 36
12.21 Bank Consent to Fixed Rate Conversion. . . . . . . 36
12.22 Limited Nature of Certain of Company's
Obligations. . . . . . . . . . . . . . . . . . . . 36
12.23 Waiver of Conditions by Bank . . . . . . . . . . . 38
12.24 Annual Bank Statements . . . . . . . . . . . . . . 38
12.25 Maximum Rate of Interest.. . . . . . . . . . . . . 38
Exhibits
A Irrevocable Letter of Credit
B Note
C Deed of Trust with Description of Real Property
D Pledge and Security Agreement
E Permitted Encumbrances
F Second Reserve Account Description
G Amortization Schedule of Second Reserve Account
AMENDED AND RESTATED PROMISSORY NOTE
(150 Almaden/185 Park)
$22,500,000 November __, 1994
FOR VALUE RECEIVED, JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership (hereinafter referred to as "Maker"), promises
to pay to the order of Connecticut General Life Insurance Company,
a Connecticut corporation having its principal address at 900
Cottage Grove Road, Hartford, Connecticut 06152-2215 (the
"Payee"), at such principal address or at such other place as the
Holder hereof may designate in writing (the legal holder from time
to time of this Note, including Payee as the initial holder,
hereinafter referred to as "Holder"), the principal sum of Twenty-
Two Million Five Hundred Thousand and No/100 Dollars
($22,500,000), or so much thereof as may be advanced to Maker by
Holder (hereinafter referred to as "Principal Indebtedness"),
together with interest thereon at an annual rate of eight and
four-tenths percent (8.4%) (the "Interest Rate"), in accordance
with the provisions hereinafter set forth.
1. Terms of Payment. During the first three (3) Loan
Years (as hereinafter defined) Maker shall pay to Holder on the
first day of each calendar month commencing on the first calendar
day of the second month following the date hereof (such payment
dates being hereinafter referred to as "monthly payment dates" or
singularly as a "monthly payment date") interest on the Principal
Indebtedness from time to time outstanding, at the Interest Rate,
for the immediately preceding calendar month. Interest shall be
calculated and applied on the basis of a 360-day year consisting
of twelve 30-day months, except that interest for any partial
month shall be calculated and applied on the basis of a 365-day
year and the actual number of days in such partial month during
which the Principal Indebtedness is outstanding. Thereafter, on
each monthly payment date, commencing on the first calendar day of
the fourth Loan Year, through and including the Maturity Date
(hereinafter defined), Maker shall pay to Holder the sum of
$179,662.36, to be applied first to interest on the Principal
Indebtedness from time to time outstanding at the Interest Rate
and the balance to be applied in reduction of the Principal
Indebtedness. The interest component of the monthly payments
shall be calculated and applied on the basis of a 360-day year
consisting of twelve 30-day months. On November , 2001 (the
"Maturity Date") Maker shall pay to Holder the entire Principal
Indebtedness then remaining unpaid, together with accrued and
unpaid interest thereon at the Interest Rate and any other charges
due under this Note, the Deed of Trust (hereinafter defined), and
any other documents evidencing or securing or pertaining to the
advancement or disbursement of the Principal Indebtedness,
including, without limitation, the Environmental Indemnification
Agreement of even date herewith (the "Environmental Indemnity")
from Maker, among others, to Payee (collectively, the "Loan
Documents"). The period from and including the date hereof to the
Maturity Date will be referred to hereinafter as the "Term".
MAKER HEREBY ACKNOWLEDGES AND UNDERSTANDS THAT THE
FOREGOING INSTALLMENTS WILL NOT BE SUFFICIENT TO REPAY THE
PRINCIPAL AMOUNT OF THIS NOTE AS OF THE MATURITY DATE BECAUSE THE
COMBINED PRINCIPAL AND INTEREST PAYMENTS HEREUNDER REFLECT FULL
AMORTIZATION OVER A PERIOD OF TWENTY FIVE (25) YEARS AND THE TERM
OVER WHICH SUCH COMBINED PRINCIPAL AND INTEREST PAYMENTS ARE DUE
UNDER THIS NOTE IS APPROXIMATELY FOUR (4) YEARS AND, THEREFORE, A
SIGNIFICANT PORTION OF THE PRINCIPAL BALANCE OF THIS NOTE SHALL BE
UNPAID AND DUE AND PAYABLE ON THE MATURITY DATE.
2. Prepayment. Except as specifically provided herein or
in the Deed of Trust, no prepayment of the Principal Indebtedness
shall be allowed during the first two (2) Loan Years (the "Closed
Period"). "Loan Year" (or collectively, "Loan Years") shall mean
each consecutive 12-month period measured from the first day of
the first calendar month after the date hereof. Maker, whether or
not a debtor in a proceeding under Title 11, United States Code,
may prepay the Principal Indebtedness in full, but not in part, on
any monthly payment date after the Closed Period, provided Maker
gives Holder sixty (60) days prior written notice and pays, along
with all accrued, unpaid interest and all other sums due under any
of the Loan Documents, a prepayment fee as described below.
After the Closed Period the prepayment fee shall be
the greater of:
(a) one percent (1%) of the then-existing Principal
Indebtedness, or
(b) Yield Maintenance as defined below.
The foregoing prepayment fee will be due when the loan
is prepaid after the Closed Period and prior to the date which is
ninety (90) days prior to the Maturity Date, whether such
prepayment is voluntary or results from default, acceleration or
any other cause. Accordingly, the Principal Indebtedness may be
prepaid at par during the last ninety (90) days of the Term.
Except as otherwise expressly provided herein or in
any other Loan Document, in the event of a prepayment during the
Closed Period resulting from a default, acceleration or any other
reason, Maker shall pay to Holder a default prepayment fee
calculated as follows:
(c) three percent (3%) of the then existing
Principal Indebtedness, plus
(d) Yield Maintenance as defined below:
Yield Maintenance: Yield Maintenance is defined as
the sum of the present values on the date of prepayment of each
Monthly Interest Shortfall for the remaining Term of the loan,
discounted at the monthly Treasury Yield.
The "Monthly Interest Shortfall" for any monthly
payment date is the product of (i) the positive difference, if
any, of the Semi-Annual Equivalent Rate less the Treasury Yield,
divided by 12, times (ii) the outstanding Principal Indebtedness,
on the monthly payment date for which the calculation is made for
each full and partial month remaining in the Term.
The present value is then determined by discounting
each Monthly Interest Shortfall at the Treasury Yield divided by
twelve.
The "Semi-Annual Equivalent Rate" for this loan is
8.548%.
The "Treasury Yield" will be determined by reference
to the Federal Reserve Statistical Release H.15 (519) of Selected
Interest Rates (or any similar successor publication of the
Federal Reserve) for the first week ending not less than two full
weeks prior to the prepayment date. If the remaining Term is less
than one year, the Treasury Yield will equal the yield for 1-Year
Treasury Constant Maturities. If the remaining Term is equal to
one of the maturities of the Treasury Constant Maturities (e.g.,
1-year, 2-year, etc.), then the Treasury Yield will equal the
yield for the Treasury Constant Maturity with a maturity equalling
the remaining Term. If the remaining Term is longer than one
year, but does not equal one of the maturities of the Treasury
Constant Maturities, then the Treasury Yield will equal the yield
for the Treasury Constant Maturity closest to, but not exceeding,
the remaining Term.
MAKER HEREBY EXPRESSLY (A) WAIVES ANY RIGHTS IT MAY
HAVE UNDER CALIFORNIA CIVIL CODE SECTION 2954.10 TO PREPAY THIS
NOTE, IN WHOLE OR IN PART, WITHOUT PENALTY, UPON ACCELERATION OF
THE MATURITY DATE OF THIS NOTE AND (B) AGREES THAT IF A PREPAYMENT
OF ANY OR ALL OF THIS NOTE IS MADE, UPON OR FOLLOWING ANY
ACCELERATION OF THE MATURITY DATE OF THIS NOTE BY HOLDER ON
ACCOUNT OF ANY DEFAULT BY MAKER, THEN MAKER SHALL BE OBLIGATED TO
PAY CONCURRENTLY THEREWITH, AS A PREPAYMENT FEE, THE APPLICABLE
SUM SPECIFIED IN THIS SECTION. BY INITIALLING THIS PROVISION IN
THE SPACE PROVIDED BELOW, MAKER HEREBY DECLARES THAT PAYEE'S
AGREEMENT TO MAKE THE LOAN EVIDENCED BY THIS NOTE AT THE INTEREST
RATE AND FOR THE TERM SET FORTH IN THIS NOTE CONSTITUTES ADEQUATE
CONSIDERATION, GIVEN INDIVIDUAL WEIGHT BY MAKER, FOR THIS WAIVER
AND AGREEMENT.
Initials: Maker __________.
The aforesaid prepayment fees do not constitute a
penalty, but rather represent the reasonable estimate, agreed to
between Maker and Holder, of a fair compensation for the loss that
may be sustained by Holder due to prepayment of the Loan prior to
the Maturity Date. Any prepayment fee required pursuant to the
preceding paragraphs shall be paid without prejudice to the right
of Holder to collect any of the amounts owing under this Note or
the Deed of Trust or otherwise to enforce any of its rights or
remedies arising out of an Event of Default hereunder.
3. Security. This Note is secured by, among other
things, a Deed of Trust, Security Agreement with Assignment of
Rents and Fixture Filing (hereinafter referred to as the "Deed of
Trust") given by Maker to Payee, of even date herewith,
constituting a first lien on Maker's fee interest in certain real
estate located in the City of San Jose, County of Santa Clara,
State of California, and a first priority security interest in
Maker's personal property and an assignment of rents and leases,
each with respect to said real estate, and such other security
described in the Loan Documents (hereinafter referred to as the
"Security").
4. Location and Medium of Payments. The sums payable
under this Note or under the Deed of Trust shall be paid to Holder
at its principal address hereinabove set forth, or at such other
place as Holder may from time to time hereafter designate to Maker
in writing, in legal tender of the United States of America.
5. Acceleration of Maturity. At the option of Holder,
which may be exercised at any time after one or more of the
following events (each being an "Event of Default") shall have
occurred, the whole of the Principal Indebtedness, together with
all accrued, unpaid interest, applicable prepayment fees, if any,
and other charges due under any of the Loan Documents, shall
immediately become due and payable ("Acceleration of Maturity"):
(a) if any payment of any installment of the Principal
Indebtedness, interest and/or any other sum due hereunder is not
received by Holder within five (5) business days following the
date when such payment was due; or (b) if an Event of Default
shall occur under the Deed of Trust or any other of the Loan
Documents which is not cured within any applicable grace period
afforded therein, if any.
6. Late Charges; Interest Following Event of Default. If
any principal, interest or escrow payment due under this Note, the
Deed of Trust, or any other Loan Document, is not paid within five
(5) business days after the date when such payment is due, without
regard to any cure or grace period, Maker shall pay and Holder
shall be entitled to collect a late payment charge for each month
or fraction thereof during which such payment is not made within
five (5) business days after the date when such payment is due and
for each month thereafter that such sum remains unpaid, equal to
the lesser of four percent (4%) of such late payment or the
maximum amount that the parties may contract for under applicable
law, as the reasonable estimate by Holder and Maker of a fair
average compensation for the loss that may be sustained by Holder
due to the failure of Maker to make timely payments, and such
amount shall be secured by the Deed of Trust and the other Loan
Documents. Such late charge shall be paid without prejudice to
the right of Holder to collect any other amounts provided to be
paid or to declare an Event of Default under this Note or the Deed
of Trust.
In addition to any late payment charge which may be
due under this Note, Maker shall pay interest on all sums due
hereunder at a rate (the "Default Rate") equal to the lesser of
(i) the Interest Rate plus four percent (4%) per annum, or (ii)
the maximum rate that the parties may contract for under
applicable law, from and after the first to occur of the following
events: if Holder elects to cause the Acceleration of Maturity; if
an Event of Default occurs under Section 22(d) or 22(e) of the
Deed of Trust (which is not cured within any applicable grace
period afforded therein); or if all sums due hereunder are not
paid on the Maturity Date.
7. Collection and Enforcement Costs. Maker, within five
(5) business days of demand, shall pay Holder for all reasonable
out of pocket costs and expenses, including without limitation
attorneys' fees, paid or incurred by Holder in connection with the
collection of any sum due hereunder, or in connection with
enforcement of any of Holder's rights or Maker's obligations under
this Note, the Deed of Trust, or any of the other Loan Documents.
8. Continuing Liability. The obligation of Maker to pay
the Principal Indebtedness, interest and all other sums due
hereunder shall continue in full force and effect and in no way be
impaired, until the actual payment thereof to Holder, and in case
of a sale or transfer of all or any part of the Security, or in
case of any further agreement given to secure the payment of this
Note, or in case of any agreement or stipulation extending the
time or modifying the terms of payment above recited, Maker shall
nevertheless continue to be liable on this Note, as extended or
modified by any such agreement or stipulation, unless released and
discharged in writing by Holder.
9. Joint and Several Liability. If more than one person,
corporation, partnership or other entity shall have liability
under this Note, then each person and entity shall be fully liable
for all obligations of Maker hereunder, and such obligations shall
be joint and several, all subject to the provisions of
Paragraph 15 below.
10. No Oral Changes; Waivers. This Note may not be
changed orally, but only by an agreement in writing signed by the
party against whom enforcement of a change is sought. The
provisions of this Note shall extend and be applicable to all
renewals, amendments, extensions, consolidations, and
modifications of the other Loan Documents, and any and all
references herein to the Loan Documents shall be deemed to include
any such renewals, amendments, extensions, consolidations, or
modifications thereof.
Maker and any future indorsers, sureties, and
guarantors hereof, jointly and severally, waive presentment for
payment, demand, notice of nonpayment, notice of dishonor, protest
of any dishonor, notice of protest, and protest of this Note, and
all other notices in connection with the delivery, acceptance,
performance, default (except notice of default required hereby, if
any), or enforcement of the payment of this Note, and they agree
that the liability of each of them shall be unconditional without
regard to the liability of any other party and shall not be in any
manner affected by an indulgence, extension of time, renewal,
waiver, or modification granted or consented to by the Holder; and
Maker and all future indorsers, sureties and guarantors hereof
consent to any and all extensions of time, renewals, waivers, or
modifications that may be granted by the Holder hereof with
respect to the payment or other provisions of this Note, and to
the release of the collateral, or any part thereof, with or
without substitution, and agree that additional makers, indorsers,
guarantors, or sureties may become parties hereto without notice
to them or affecting their liability hereunder.
Holder shall not by any act of omission or commission
be deemed to waive any of its rights or remedies hereunder unless
such waiver be in writing and signed by Holder, and then only to
the extent specifically set forth therein; a waiver on one event
shall not be construed as continuing or as a bar to or waiver of
such right or remedy on a subsequent event. The acceptance by
Holder of payment hereunder that is less than payment in full of
all amounts due at the time of such payment shall not without the
express written consent of Holder: (i) constitute a waiver of the
right to exercise any of Holder's remedies at that time or at any
subsequent time, (ii) constitute an accord and satisfaction, or
(iii) nullify any prior exercise of any remedy.
No failure to cause an acceleration of the Maturity
Date hereof by reason of an Event of Default hereunder, acceptance
of a past due installment, or indulgences granted from time to
time shall be construed (i) as a novation of this Note or as a
reinstatement of the indebtedness evidenced hereby or as a waiver
of such right of acceleration or of the right of Holder thereafter
to insist upon strict compliance with the terms of this Note, or
(ii) to prevent the exercise of such right of acceleration or any
other right granted hereunder or by the laws of the State of
California; and, to the maximum extent permitted by law, Maker
hereby expressly waives the benefit of any statute or rule of law
or equity now provided, or which may hereafter be provided, which
would produce a result contrary to or in conflict with the
foregoing.
To the maximum extent permitted by law, Maker hereby
waives and renounces for itself, its heirs, successors and
assigns, all rights to the benefits of any statute of limitations
and any moratorium, reinstatement, marshalling, forbearance,
valuation, stay, extension, redemption and appraisement now
provided, or which may hereafter be provided, by the Constitution
and laws of the United States of America and of any state thereof,
both as to itself and in and to all of its property, real and
personal, against the enforcement and collection of the
obligations evidenced by this Note.
11. Bind and Inure. This Note shall bind and inure to the
benefit of the parties hereto and their respective legal
representatives, heirs, successors and assigns.
12. Applicable Law. The provisions of this Note shall be
construed and enforceable in accordance with the laws of the State
of California.
If any provision of this Note or the application
hereof to any person or circumstance shall, for any reason and to
any extent, be invalid or unenforceable, neither the remainder of
this Note nor the application of such provision to any other
person or circumstance shall be affected thereby, but rather the
same shall be enforced to the greatest extent permitted by law.
13. Usury. It is hereby expressly agreed that if from any
circumstances whatsoever fulfillment of any provision of this
Note, at the time performance of such provision shall be due,
shall involve transcending the limit of validity presently
prescribed by any applicable usury statute or any other law, with
regard to obligations of like character and amount, then ipso
facto the obligation to be fulfilled shall be reduced to the limit
of such validity, so that in no event shall any exaction be
possible under this Note that is in excess of the limit of such
validity. In no event shall Maker be bound to pay for the use,
forbearance or detention of the money loaned pursuant hereto,
interest of more than the current legal limit; the right to demand
any such excess being hereby expressly waived by Holder.
14. Notice. Any notice, request, demand, statement or
consent made hereunder shall be in writing signed by the party
giving such notice, request, demand, statement or consent, and
shall be delivered personally, or delivered to a reputable
overnight delivery service providing a receipt, or deposited in
the United States Mail, postage prepaid and registered or
certified mail, return receipt requested, addressed as set forth
below or to such other address within the continental United
States of America as may have theretofore been designated in
writing. The effective date of any notice given as aforesaid
shall be the date of personal service, one (1) business day after
delivery to such overnight delivery service, or three (3) business
days after being deposited in the United States Mail, whichever is
applicable. For purposes hereof, the addresses are as follows:
If to Holder: Connecticut General Life Insurance Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Investment Services, S-319
With a copy to: CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Real Estate Division, S-215A
If to Maker: JMB/San Jose Associates
c/o JMB Realty Corporation
900 N. Michigan Avenue
Chicago, Illinois 60611
Attn: Director of Finance
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, CA 90067
Attn: Real Estate Notices (DSB)
15. Nonrecourse. Notwithstanding any provision herein
or in any other Loan Document to the contrary, Maker's liability
for repayment of the Principal Indebtedness, interest and all
other sums due under this Note or any of the other Loan Documents
or the performance of any obligation hereunder or under any other
Loan Document shall be limited to the Security, except as provided
in this Section 15. Accordingly, no judgment for the repayment of
the Principal Indebtedness or the performance of any other
obligation, or to collect any amount payable under any of the Loan
Documents shall be enforced against Maker or any other party
personally in any action to foreclose the Deed of Trust or to
otherwise realize upon the Security or to collect any amount
payable under any Loan Document. Nothing herein contained shall
be construed as prohibiting Holder from exercising any and all
remedies which the Loan Documents permit, including the right to
bring actions or proceedings (including an action or suit for
judicial foreclosure) against Maker and to enter a judgment
against Maker, so long as the exercise of any remedy does not
extend to obtaining a judgment in the nature of a deficiency
judgment or to the execution against or recovery out of any
property of Maker or any direct or indirect partner in Maker other
than the Security and other security furnished under the Loan
Documents on account of a judgment in the nature of a deficiency
judgment. Notwithstanding the foregoing limitations, Maker and
its general partners (but not any other sub-tier entities) shall
be liable for the following acts or omissions, to the extent
described:
(a) (i) misapplying (i.e. using in a manner other
than as permitted under the Loan Documents) any condemnation
awards or insurance proceeds attributable to the Security, to the
full extent of such awards or proceeds so misapplied; (ii) at the
time of foreclosure or conveyance in lieu thereof, failing to turn
over any unapplied security deposits attributable to the Security
and required to be held by Maker under the terms of any and all
leases, to the full extent of such failure; (iii) collecting any
rents in advance in violation of any covenant contained in the
Loan Documents, to the full extent of such rents so collected in
advance; (iv) committing fraud, intentional misrepresentation or
waste in connection with the operation of the Security or the
making of the loan evidenced hereby, to the full extent of any
remedies available at law or in equity; (v) failing to pay when
due any debt service on any indebtedness related to the Security,
operating and maintenance charges, insurance premiums, deposits
into a reserve for replacements or any other sums due under the
Loan Documents (the existence of which are known to Maker), but
only to the extent that gross revenues from the Security during
the six (6) months prior to a notice of acceleration to Maker
through the date of foreclosure or conveyance in lieu thereof were
otherwise sufficient to pay such expenses but were not so used;
and
(b) Under any separate guaranty, master lease or
indemnity agreement from Maker or its general partners including,
but not limited to, the Environmental Indemnity, provided that
such agreement expressly states that recourse thereunder is an
exception to the limitation on liability provided herein.
Notwithstanding any provision hereof to the contrary,
Holder shall be permitted to bring an action against Maker and its
general partners personally but not against any sub-tier entities
and to execute against and recover out of any property of Maker or
its general partners (but not against or out of any property of
any other sub-tier entities), for all sums due pursuant to the
Loan Documents to the extent permitted by the terms of Section
726.5 of the California Code of Civil Procedure as it may be
amended from time to time ("Section 726.5"), and to have the
rights and remedies of an unsecured lender to the extent permitted
thereunder. If Holder exercises the rights and remedies of an
unsecured creditor in accordance with this grammatical paragraph,
Maker and its general partners (but not any other sub-tier
entities) promise to pay Holder, on demand by Holder, following
such exercise, all amounts owed to Holder under the Loan
Documents, and Maker and its general partners (but not any other
sub-tier entity) agree that Maker and its general partners (but
not any other sub-tier entities) will be personally liable for the
payment of all such sums.
Notwithstanding anything herein or in any other Loan
Document to the contrary, no present or future constituent partner
in or agent of the general partners of Maker or their respective
successors or assigns, nor any shareholder, officer, director,
employee, trustee, beneficiary or agent of any corporation or
trust of agent of Maker or of any constituent partner in Maker
shall be personally liable, directly or indirectly under or in
connection with this Note or any other Loan Document, or any
instrument or certificate securing or otherwise executed in
connection with this Note, the Deed of Trust, or any other Loan
Document or any amendments or modifications thereto made at any
times heretofore or hereafter and Holder and Holder's successors
and assigns hereby waive such personal liability. Accordingly,
with respect to the foregoing exceptions to the non-recourse
provisions contained in Section 15(a) and (b) of this Note, and
the Environmental Indemnity, Holder's recourse shall be limited
solely to the assets of Maker and its general partners (but of no
other sub-tier entity).
For the purposes of this Note, the Deed of Trust, each
of the other Loan Documents and any such instruments and
certificates and any amendments or modifications thereto, neither
a negative capital account of any constituent partner in Maker nor
any obligation to restore a negative capital account of Maker or
of any constituent partner in Maker shall at any time be deemed to
be the property or asset of Maker or any such other constituent
partner and neither Holder nor its successors and assigns shall
have the right to collect, enforce or proceed against or with
respect to any such negative capital account or a partner's
obligation to restore or contribute. As used in this paragraph,
"constituent partner" means a partner in Maker or in a partnership
that has a direct or indirect interest (through one or more
partnerships) in Maker.
16. Amendment and Restatement. This Amended and Restated
Promissory Note amends, modifies and restates, in its entirety,
that certain Promissory Note dated September 29, 1986 from Maker
to Holder in the original principal amount of $25,000,000, as well
as any and all amendments, restatements, modifications and
allonges thereto (the "Original Note"). All references to this
Note contained herein or in any of the other Loan Documents shall
be deemed to mean the Original Note as restated hereby. Maker
covenants and agrees that there are no defenses or off-sets with
respect to this Note, the indebtedness evidenced in connection
with same, or with respect to the enforcement or collection
thereof. Maker further covenants and agrees that each and every
provision of this Note is in full force and effect and is the
lawful and binding obligation of Maker, enforceable in accordance
with its terms. Maker and Payee do not intend that this Note be
construed as a novation of the Original Note or any other Loan
Document.
17. Time of the Essence. Time is of the essence in this
Note and the other Loan Documents.
18. Attorneys' Fees. Any reference to "attorney fees",
"attorney's fees", or "attorneys' fees" in this document means
both the reasonable out of pocket fees, charges and costs incurred
by Holder through its retention of outside legal counsel,
paralegals and legal assistants and the reasonable allocable fees,
costs and charges for services rendered by Holder's in-house
counsel, paralegals and legal assistants. Any reference to
"attorney fees", "attorney's fees", or "attorneys' fees" shall
also include but not be limited to those reasonable out of pocket
attorneys or legal fees, costs and charges incurred by Holder in
the collection of any Principal Indebtedness, the enforcement of
any obligations hereunder or under any other Loan Document, the
protection of the Security, the foreclosure of the Deed of Trust,
the sale of the Security by power of sale under the Loan
Documents, the defense of actions arising hereunder or under any
other Loan Document and the collection, protection or setoff of
any claim the Holder may have in a proceeding under Title 11,
United States Code. Attorneys' fees provided for hereunder shall
accrue whether or not Holder has provided notice of an Event of
Default or of an intention to exercise its remedies for such Event
of Default. Furthermore, any reference contained in this Note or
in any other Loan Document to "out of pocket" costs, fees, charges
or expenses shall include attorney's fees as described herein,
including, without limitation, any reasonable allocable fees,
costs, charges and expenses for services rendered by Holder's in-
house counsel, paralegals and legal assistants.
19. Waiver of Trial by Jury. Maker hereby waives its
rights to a trial by jury as to any matter arising out of or
concerning the subject matter of this Note.
IN WITNESS WHEREOF, Maker has duly executed this Note
as of the day and year first above written.
MAKER: JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership
MAKER TO By: JMB Income Properties, Ltd.-XI,
INITIAL PAGE 3 an Illinois limited partnership,
General Partner
By: JMB Realty Corporation,
a Delaware corporation,
General Partner
By:
Name:
Its:
By: JMB Income Properties, Ltd.-XII,
an Illinois limited partnership,
General Partner
By: JMB Realty Corporation,
a Delaware corporation,
General Partner
By:
Name:
Its:
Recording Requested By and
When Recorded Mail To:
Morrison & Foerster
345 California Street
San Francisco, CA 94104-1250
Attn: Caryl B. Welborn, Esq.
AMENDED AND RESTATED
DEED OF TRUST, SECURITY AGREEMENT WITH ASSIGNMENT OF RENTS
AND FIXTURE FILING
(150 Almaden/185 Park)
THIS AMENDED AND RESTATED DEED OF TRUST is made as of
the ______ day of November, 1994, by JMB/SAN JOSE ASSOCIATES, an
Illinois general partnership, whose sole general partners are JMB
Income Properties, Ltd.-XI, an Illinois limited partnership and
JMB Income Properties, Ltd.-XII, an Illinois limited partnership,
having its principal place of business at 900 N. Michigan Avenue,
Chicago, Illinois 60611 (herein referred to as "Trustor") to
COMMONWEALTH LAND TITLE COMPANY, subject to substitution as
provided in Section 44 (herein referred to as "Trustee") in favor
of CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut
corporation having its principal place of business at 900 Cottage
Grove Road, Hartford, Connecticut 06152-2215 (hereinafter
referred to as "Beneficiary").
W I T N E S S E T H:
THAT, to secure (i) payment to Beneficiary of the
principal indebtedness of Twenty-Two Million Five Hundred Thousand
and No/100 Dollars ($22,500,000.00), together with interest
thereon, as evidenced by that certain Amended and Restated
Promissory Note (hereinafter referred to as the "Note") of even
date herewith, and any renewals, extensions or modifications
thereof, given by Trustor to Beneficiary and made payable to the
order of Beneficiary in and by which Note the Trustor promises to
pay the said principal indebtedness and interest at the rate and
in installments as provided in the Note, (ii) the performance of
the covenants herein contained and the payment of any monies
expended by the Beneficiary in connection therewith, (iii) the
payment of all obligations and the performance of all covenants of
Trustor under any other loan documents, agreements or instruments
between Trustor and Beneficiary given in connection with or
related to this Deed of Trust or the Note, including, without
limitation, the Environmental Indemnification Agreement (the
"Environmental Indemnity") of even date from Trustor, among
others, in favor of Beneficiary, and (iv) any and all additional
advances made by Beneficiary to protect or preserve the Security
or the security interest created hereby on the Security, or for
taxes, assessments, or insurance premiums as hereinafter provided
or for performance of any of Trustor's obligations hereunder or
for any other purpose provided herein (whether or not the original
Trustor remains the owner of the Security at the time of such
advances) (all of the aforesaid indebtedness and obligations of
Trustor being herein called the "Indebtedness", and all of the
documents, agreements and instruments between Trustor and
Beneficiary now or hereafter evidencing or securing the repayment
of, or otherwise pertaining to, the Indebtedness, being herein
collectively called the "Loan Documents"); the Trustor does hereby
mortgage, grant, bargain, sell, assign, pledge, transfer, and
convey unto Trustee and to Trustee's successors and assigns, in
trust, with power of sale and right of entry and possession, all
of the following described land, improvements, real and personal
property and rents and leases and all of Trustor's estate, right,
title and interest therein (hereinafter collectively called the
"Security"):
The land described in Exhibit A attached hereto and
made a part hereof situate, lying and being in the City of San
Jose, County of Santa Clara, and State of California (the "Land");
TOGETHER with all buildings and other improvements now
or hereafter located on said Land or any part thereof, including
but not limited to, all extensions, betterments, renewals,
renovations, substitutes and replacements of, and all additions
and appurtenances to the Security (the "Improvements");
TOGETHER with all of the right, title and interest of
Trustor in and to the land lying in the bed of any street, road,
highway or avenue in front of or adjoining the Land to the center
lines thereof;
TOGETHER with the right to use, in perpetuity, in
connection with the operation of the Security any trademarks owned
by Trustor, service marks or tradenames, and good will of Trustor
associated therewith, used in connection with the Security;
TOGETHER with all easements now or hereafter located
on or appurtenant to the Land and/or the Improvements or under or
above the same or any part thereof, rights-of-way, licenses,
permits, approvals, and privileges, belonging or in any way
appertaining to the Land and/or Improvements including without
limitation (i) any drainage ponds or other like drainage areas not
located on the Land which may be required for water run-off, (ii)
any easements necessary to obtain access from the Land to such
drainage areas, or to any other location to which Trustor has a
right to drain water or sewage,(iii) any land required to be
maintained as undeveloped land by the zoning rules and regulations
applicable to the Land, and (iv) any easements and agreements
which are or may be established to allow satisfactory ingress to,
egress from and operation of the Land and/or the Improvements,
including utility easements;
TOGETHER with any and all awards heretofore made and
hereafter to be made by any governmental, municipal or state
authorities to the present and all subsequent owners of the
Security for the taking of all or any portion of the Security by
power of eminent domain, including, without limitation, awards for
damage to the remainder of the Security and any awards for any
change or changes of grade of streets affecting the Security,
which said awards are hereby assigned to Beneficiary, and
Beneficiary, at its option, is hereby authorized, directed and
empowered to collect and receive the proceeds of any such awards
from the authorities making the same and to give proper receipts
and acquittances therefor, and to apply the same, subject to the
provisions of this Deed of Trust, toward the payment of the
Indebtedness, notwithstanding the fact that such amount may not
then be due and payable; and Trustor hereby covenants and agrees
to and with Beneficiary, upon request by Beneficiary, to make,
execute and deliver, at Trustor's expense, any and all assignments
and other instruments reasonably sufficient for the purpose of
assigning the aforesaid awards to Beneficiary, free, clear and
discharged of any and all encumbrances of any kind or nature
whatsoever, subject to the provisions of this Deed of Trust; (all
of the foregoing Land, Improvements, rights, easements, rights-of-
way, licenses, privileges, and awards, collectively, the "Real
Property").
TOGETHER with all proceeds, insurance or otherwise,
paid for the damage done to any of the Security and all proceeds
of the conversion, voluntarily or involuntarily, of any of the
Security into cash or liquidated claims;
TOGETHER with all fixtures, machinery, equipment,
goods, and every other article of personal property, tangible or
intangible, now or hereafter attached to or used in connection
with the Real Property, or placed on any part thereof and whether
or not attached thereto, appertaining or adapted to the use,
management, operation or improvement of the Real Property, insofar
as the same and any reversionary right thereto may now or
hereafter be owned or acquired by Trustor, including, but without
limitation: all partitions; screens; awnings; shades; blinds;
floor coverings; hall and lobby equipment; heating, lighting,
plumbing, ventilating, refrigerating, incinerating, elevator,
escalator, air conditioning and communication plants or systems
with appurtenant fixtures; vacuum cleaning systems; call systems;
sprinkler systems and other fire prevention and extinguishing
apparatus and materials; all equipment, manual, mechanical and
motorized, for the construction, maintenance, repair and cleaning
of, and removal of snow from, parking areas, walks, underground
ways, truck ways, driveways, common areas, roadways, highways and
streets; all equipment, manual, mechanical and motorized, for the
transportation of customers or employees to and from the store
facilities on the Real Property; all telephone, computer and other
electronic equipment and appurtenances thereto, including
software; and all other machinery, pipes, poles, appliances,
equipment, wiring, fittings, panels and fixtures; and any proceeds
therefrom, any replacements thereof or additions or accessions
thereto; and all building materials, supplies and other property
delivered to the Real Property for incorporation into the
Improvements thereon, all of which are declared to be a part of
the realty and covered by the lien hereof, but said lien shall not
cover any fixture, machinery, equipment or article of personal
property which is owned by any party other than Trustor, provided
said fixture, machinery, equipment or article of personal property
is not permanently affixed to the realty and may be removed
without material damage thereto and is not a replacement of any
item which shall have been subject to the lien hereof, but said
lien shall include any other fixture, machinery, equipment or
article of personal property so incorporated into the Improvements
so as to constitute realty under applicable law, whether or not
owned by the Trustor;
TOGETHER with all of Trustor's books of account and
records relating to the Security;
TOGETHER with all proceeds and revenue arising from or
out of the Real Property or any part thereof; all bank accounts of
Trustor used in connection with operation of the Security or for
holding security deposits under leases thereof; any sums of
Trustor on deposit with Beneficiary hereunder; any refunds and
rebates of taxes and assessments of every kind and nature imposed
upon the Security, including all sums held in escrow pursuant to a
certain Real Estate Tax Escrow and Security Agreement of even date
herewith among Trustor, Beneficiary, and Bank of America, NT & SA
Global Escrow Depository Services 8010, all licenses, permits,
franchises, governmental approvals and all sanitary sewer,
drainage, water, utility service and other service agreements
benefiting the Real Property or any part thereof, together with
all accounts, accounts receivable, credit card receipts, contract
rights, reserve accounts required to be established hereunder,
general intangibles, documents, instruments and chattel paper and
proceeds of any of the foregoing owned by Trustor arising from or
in connection with the Real Property, including all books and
records in connection therewith; all rights of Trustor under any
leases, covenants, agreements, easements, restrictions or
declarations recorded with respect to, or as an appurtenance to,
the Real Property or any part thereof; and, Trustor's interest, as
lessee, under any lease of property included within the
description of Personal Property above (all of the tangible and
intangible personal property described in this and the previous
two paragraphs, collectively, the "Personal Property");
TOGETHER with all of Trustor's right, title and
interest, as the owner of the Real Property, in, to and under the
following instruments: (i) that certain Parking Agreement dated as
of June 18, 1985, between Trustor and New Almaden Associates, a
California general partnership, (ii) that certain Supplemental
Parking Agreement dated as of June 18, 1985, between Trustor and
New Almaden Associates, (iii) that certain Parcel 2 Public Parking
Covenant and Easement from New Almaden to the Redevelopment Agency
of the City of San Jose (the "Agency") and recorded in the
Official Records of Santa Clara County, California, as Instrument
No. 8566697; and (iv) that certain Parcels 1, 3, and 4 Public
Parking Covenant and Easement from Borrower to the Agency and
recorded in the Official Records of Santa Clara County, California
as Instrument No. 8566696 (such documents are sometimes
collectively referred to herein as the "Parking Agreements");
TOGETHER with all of the right, title and interest of
Trustor in and to all and singular the tenements, hereditaments
and appurtenances thereunto belonging to or in any way pertaining
to the Security; all the estate, right, title and claim whatsoever
of Trustor, either at law or in equity, in and to the Security;
and any and all other, further or additional title, estate,
interest or right which may at any time be acquired by Trustor in
or to the Security, and if Trustor shall at any time acquire any
further estate or interest in or to Security, the lien of this
Deed of Trust shall attach, extend to, cover and be a lien upon
such further estate or interest automatically without further
instrument or instruments, and Trustor, upon request of
Beneficiary, shall execute such instrument or instruments as shall
reasonably be requested by Beneficiary to confirm such lien, and
Trustor hereby irrevocably appoints Beneficiary as Trustor's
attorney-in-fact (which appointment is coupled with an interest)
to execute all such instruments if Trustor shall fail to do so
within ten (10) days after demand, provided, however, that Trustor
shall not incur any additional recourse liability as a result of
such appointment;
TO HAVE AND TO HOLD the Security, and each and every
part thereof, unto the Trustee and its successors and assigns in
trust, for the purposes and uses herein set forth.
AND, Trustor hereby further covenants, agrees and
warrants as follows:
1. Payment of Indebtedness. Trustor will pay the
Indebtedness and interest thereon in accordance with the
provisions of the Note and all prepayment charges, late charges
and fees required thereunder, and all extensions, renewals,
modifications, amendments and replacements thereof, and will keep
and perform all the covenants, promises and agreements and pay all
sums provided in (i) each of the Note or any other promissory note
or notes at any time hereafter issued to evidence the
Indebtedness, (ii) this Deed of Trust and (iii) any and all other
Loan Documents, all in the manner herein or therein set forth.
Subject to the provisions of Section 36 below, each of the persons
and/or entities constituting Trustor hereunder shall be fully
liable for such payment and performance, and such liability shall
be joint and several.
2. Covenants of Title. Trustor has good and indefeasible
title to the entire Real Property in fee simple, has absolute
unencumbered title to the Personal Property, and has good right
and full power to sell, mortgage and convey the same; the Security
is free and clear of easements, restrictions, liens, leases and
encumbrances, except those easements, restrictions, liens, leases
and encumbrances stated in Schedule B, Part 1, of the policy or
policies of title insurance delivered to Beneficiary as of the
recordation of this Deed of Trust (the "Permitted Encumbrances"),
to which this Deed of Trust is expressly subject, or which may
hereafter be created in accordance with the terms hereof and to
which this Deed of Trust may be subordinated; and Trustor will
warrant and defend title to the Security against all claims and
demands whatsoever except the Permitted Encumbrances. Beneficiary
shall have the right, at its option and at such time or times as
it, in its sole discretion, shall deem necessary, to take whatever
action it may deem necessary to defend or uphold the lien of this
Deed of Trust or otherwise enforce any of the rights of
Beneficiary hereunder or any obligation secured hereby, including
without limitation, the right to institute appropriate legal
proceedings for such purposes.
3. Usury. It is hereby expressly agreed that if from any
circumstances whatsoever fulfillment of any provision of the Note,
this Deed of Trust, or any other Loan Documents at the time
performance of such provision shall be due, shall involve
transcending the limit of validity presently prescribed by any
applicable usury statute or any other law, with regard to
obligations of like character and amount, then ipso facto the
obligation to be fulfilled shall be reduced to the limit of such
validity, so that in no event shall any exaction be possible under
the Loan Documents that is in excess of the limit of such
validity. In no event shall Trustor be bound to pay for the use,
forbearance or detention of the money loaned pursuant to the Loan
Documents, interest of more than the current legal limit, the
right to demand any such excess being hereby expressly waived by
Beneficiary.
4. Impositions. Trustor will pay, not later than thirty
(30) days before the last day on which the same may be paid
without penalty or interest, all real estate taxes, sewer rents,
water charges and all other municipal and governmental
assessments, rates, charges, impositions and liens (hereinafter
referred to as "Impositions") which now or hereafter are imposed
by law upon the Security. If any Imposition is not paid within
the time hereinabove specified, Beneficiary shall have the right
to pay the same, together with any penalty and interest thereon,
and the amount or amounts so paid or advanced shall forthwith be
payable by Trustor to Beneficiary and shall be secured by the lien
of this Deed of Trust; but Trustor may in good faith contest, at
Trustor's own cost and expense, by proper legal proceedings, the
validity or amount of any Imposition, on the condition that
Trustor first shall deposit with Beneficiary, as security for the
payment of such contested item, an amount equal to the contested
item plus all penalties and interest which would be payable if
Trustor is ultimately required to pay such contested item, or if
Trustor shall first post an appropriate bond reasonably
satisfactory to Beneficiary from a surety company reasonably
acceptable to Beneficiary for the full contested amount, and on
the further condition that no amount so contested may remain
unpaid for such length of time as shall permit the Security, or
the lien thereon created by the item being contested, to be sold
for the nonpayment thereof, or as shall permit an action, either
of foreclosure or otherwise, to be commenced by the holder of any
such lien. Trustor will not claim any credit on, or make any
deduction from the Indebtedness by reason of the payment of any
Imposition.
Trustor hereby assigns to Beneficiary all rights of
Trustor now or hereafter arising in and to the refund of any
Imposition and any interest thereon; provided that so long as
there exists no default hereunder or under of the other Loan
Documents, without regard to any applicable notice and cure
periods, Trustor shall be entitled to collect any such refund. If
following receipt of any such refund by Beneficiary, there exists
an Event of Default (as hereafter defined) or any default under
this Deed of Trust or any of the other Loan Documents, or any
condition which with the passage of time or the giving of notice
or both, shall constitute a default hereunder or thereunder, then
Beneficiary may apply said refund in reduction of the Indebtedness
in whatever order Beneficiary may elect. Notwithstanding the
foregoing to the contrary, Beneficiary shall not be entitled to
apply in reduction of the Principal Indebtedness the portion of
any such refund which Trustor is required to refund to a tenant
under a tenant lease. If following receipt of any such refund by
Beneficiary no such default or Event of Default then exists, then
Beneficiary shall pay over the same to Trustor promptly after
demand.
5. Tax Deposits. Trustor shall deposit with Beneficiary
or with an escrow agent selected by Trustor and reasonably
approved by Beneficiary, on the first day of the second calendar
month immediately following the date of this Deed of Trust and on
the first day of each calendar month thereafter (each of which
dates is hereinafter called the "monthly tax deposit date") until
the payment in full of the Indebtedness, a sum equal to one-
twelfth of the Impositions to be levied, charged, assessed or
imposed upon or for the Security within one year after said
monthly tax deposit date. If on any monthly tax deposit date the
amount of Impositions to be levied, charged, assessed or imposed
within the ensuing one year period shall not be fixed, such amount
for the purpose of computing the deposit to be made by Trustor
hereunder, shall be reasonably estimated by Beneficiary, with
appropriate adjustment when the amount of such Impositions is
fixed.
If the sums deposited by Trustor under this Section
shall be held in an interest-bearing account, such interest shall
be retained by Beneficiary and free of trust except to the extent,
if any, that applicable law shall otherwise require, and all such
sums and interest shall be applied in payment of such Impositions
when due. Trustor shall give thirty (30) days prior written
notice to Beneficiary in each instance when an Imposition is due,
specifying the Imposition to be paid and the amount thereof, the
place of payment and the last day on which the same may be paid in
order to be within the time limit specified in Section 4 hereof
entitled "Impositions".
Notwithstanding the foregoing provision and so long as
Trustor holds title to and controls the Security, Impositions are
paid in full when due and there has been no default, or any state
of facts which, with the passage of time or giving of notice, or
both, would constitute a default under the Loan Documents, the
interest (if any) earned by such escrows, less reasonable escrow
costs, will be paid to Trustor on each real estate tax payment
date.
If for any reason the sums on deposit with Beneficiary
or escrow agent under this Section shall not be sufficient to pay
an Imposition within the time specified in Section 4 hereof, then
Trustor shall, within fifteen (15) days after written demand by
Beneficiary, deposit sufficient sums so that Beneficiary may pay
such Imposition in full, together with any penalty and interest
thereon. Beneficiary may change its estimate of Impositions for
any period, on the basis of a change in an assessment or tax rate
or equalization factor or on the basis of a prior miscalculation
or for any other reason, in which event Trustor shall deposit with
Beneficiary or escrow agent within fifteen (15) days after demand
the amount of any excess of the deposits which would theretofore
have been payable under the revised estimate over the sums
actually deposited.
If any Imposition shall be levied, charged, assessed
or imposed upon or for the Security, or any portion thereof, and
if such Imposition shall also be a levy, charge, assessment or
imposition upon or for any other premises not covered by the lien
of this Deed of Trust, then the computation of the amounts to be
deposited under this Section shall be based upon the entire amount
of such Imposition and Trustor shall not have the right to
apportion any deposit with respect to such Imposition.
Upon an assignment of this Deed of Trust by
Beneficiary, Beneficiary shall transfer all amounts deposited and
still in its possession to the assignee and Beneficiary shall
thereupon be completely released from all liability with respect
to such deposit arising after such assignment and Trustor or owner
of the Security shall look solely to the assignee or transferee in
reference thereto.
Upon the payment in full by Trustor of the entire
Indebtedness, any sums then held by Beneficiary under this Section
shall be refunded promptly to Trustor.
All amounts deposited shall be held by Beneficiary as
additional security for the sums secured by this Deed of Trust,
and Trustor hereby grants to Beneficiary a security interest in
such sums, and upon the occurrence and continued existence of an
Event of Default hereunder Beneficiary may, in its sole and
absolute discretion, apply said amounts to the payment of the
Indebtedness in whatever order Beneficiary may elect.
Immediately upon receipt of such by Trustor, Trustor
shall deliver to Beneficiary copies of all notices, demands,
claims, bills, and receipts in relation to the Impositions.
Notwithstanding the foregoing provisions, Beneficiary
will waive the requirement for deposits as to that portion of
Impositions payable directly to the governmental or other
authority by tenants under the terms of leases approved by
Beneficiary, provided satisfactory proof of payment is promptly
furnished to Beneficiary.
6. Change in Taxes. In the event any tax shall be due or
become due and payable to the United States of America, any state
or any political subdivision thereof with respect to the execution
and delivery or recordation of this Deed of Trust or any other
Loan Document or the interest of Beneficiary in the Security,
Trustor shall pay such tax at the time and in the manner required
by applicable law and Trustor shall hold Beneficiary harmless and
shall indemnify Beneficiary against any liability of any nature
whatsoever as a result of the imposition of any such tax. In the
event of the enactment, after the date of this instrument, of any
law changing in any way the present law as to the taxation of
notes or debts secured by mortgages, for Federal, State, or local
purposes, or the manner of collection of any Impositions, so as to
affect this Deed of Trust or the Note secured hereby, then Trustor
shall upon demand make such payments to Beneficiary and take such
other steps, as may be necessary in Beneficiary's reasonable
judgment, to place Beneficiary in the same financial position as
it was prior to any such enactment, failing which, or if Trustor
is not permitted by law to make such payments, the Indebtedness
shall, at the option of Beneficiary, become due and payable one
hundred twenty (120) days after Beneficiary's demand.
7. Insurance.
(a) Trustor will at all times, unless otherwise
indicated, provide, maintain and keep in force:
(i) policies of insurance insuring the
Security against loss or damage by fire and lightning; against
loss or damage by other risks embraced by coverage of the type now
known as All Risk Replacement Cost Insurance with agreed amount
endorsement, including but not limited to riot and civil
commotion, vandalism, and malicious mischief; and against such
other risks or hazards as Beneficiary from time to time reasonably
may designate in an amount sufficient to prevent Beneficiary or
Trustor from becoming a co-insurer under the terms of the
applicable policies, but in any event in an amount not less than
100% of the then full replacement cost of the Improvements
(exclusive of the cost of excavations, foundations and footings
below the lowest basement floor) without deduction for physical
depreciation;
(ii) comprehensive general liability insurance
in a minimum amount of $1,000,000, and excess or umbrella
liability of at least $10,000,000. Any proceeds of such liability
insurance shall not be included in the term "Insurance Proceeds"
as defined in Section 8;
(iii) policies of insurance insuring the
Security against the loss of "rental value" of the buildings which
constitute a part of the Improvements on a "rented or vacant
basis" arising out of the perils insured against pursuant to
subparagraph (i) above in an amount equal to not less than one
year's gross "rental value" of the improvements. "Rental value"
as used herein is defined as the sum of (A) the total anticipated
gross rental income from tenant occupancy of such buildings as
furnished and equipped by Trustor and (B) the amount of all
charges which are the legal obligation of tenants and which would
otherwise be the obligation of Trustor and (C) the fair rental
value of any portion of such buildings which is occupied by
Trustor. Trustor hereby assigns the proceeds of such insurance to
Beneficiary, to be applied in payment of the interest and
principal on the Note secured by this Deed of Trust, insurance
premiums, taxes, assessments and private impositions until such
time as such buildings shall have been restored and placed in full
operation, at which time, provided there then exists no default
under this Deed of Trust, the balance of such insurance proceeds,
if any, held by Beneficiary shall be returned to Trustor. Such
insurance proceeds shall not be included in the term "Insurance
Proceeds" as defined in Section 8;
(iv) flood insurance upon the Security in the
event that such insurance is commercially available pursuant to
the provisions of the Flood Disaster Protection Act of 1973 or
other applicable legislation (Beneficiary reserves the right to
require that Trustor secure flood insurance in excess of the
amount provided by the Flood Disaster Protection Act of 1973 if
such insurance is commercially available up to the amount provided
in subparagraph (i) above);
(v) boiler and pressure vessel insurance,
including air tanks, pressure piping and major air conditioning
equipment, provided any building which constitutes a part of the
Security contains equipment of the nature ordinarily covered by
such insurance, in such an amount as Beneficiary may require;
(vi) war risk insurance upon the Security as
and when such insurance is obtainable from the United States of
America or any agency or instrumentality thereof at a reasonable
premium, in any amount not less than 100% of the then full
replacement cost of the Improvements (exclusive of the cost of
excavations, foundations, and footings below the lowest basement
floor) without deduction for physical depreciation, to the extent
obtainable, and if not so obtainable, in the maximum amount
obtainable;
(vii) during any period of restoration under
this Section 7 or Sections 8 or 9, a policy or policies of
builder's "all risk" insurance in an amount not less than the full
insurable value of the Improvements against such risks (including,
without limitation, fire and extended coverage, collapse of the
Improvements and earthquake coverage to agreed limits) as
Beneficiary may request, in form and substance acceptable to
Beneficiary; and
(viii) such other insurance (including, but not
limited to, earthquake insurance), and in such amounts, if any, as
may from time to time be reasonably required by Beneficiary
against the same or other insurable hazards which at the time are
commonly insured against in the case of premises similarly
situated, due regard being given to the height and type of
buildings thereon and their construction, use and occupancy.
(b) All policies of insurance required under this
Section 7 shall be issued by companies approved by Beneficiary
which shall have Best's ratings of not less than A:XII, shall be
subject to the reasonable approval of Beneficiary as to amount,
content, form and expiration date, shall contain a Non-
Contributory Standard Mortgagee Clause and the Lender's Loss
Payable Endorsement (Form 438 BFU NS), or their equivalents, in
favor of Beneficiary, shall name Beneficiary as an additional
insured, and shall provide that the proceeds thereof shall be
payable to Beneficiary (to the extent of its interest).
Beneficiary shall be furnished with the original insurance
certificates evidencing each policy required to be provided by
Trustor hereunder, which certificates shall provide that such
policies shall not be modified or cancelled without thirty (30)
days written notice to Beneficiary. At least thirty (30) days
prior to expiration of any policy required to be provided by
Trustor hereunder, Trustor shall furnish Beneficiary appropriate
proof of issuance of a policy continuing in force the insurance
covered by the policy so expiring. Trustor shall furnish
Beneficiary receipts for the payment of premiums on such insurance
policies or other evidence of such payment reasonably satisfactory
to Beneficiary. In the event that Trustor does not deposit with
Beneficiary a new policy of insurance with evidence of payment of
premiums thereon at least thirty (30) days prior to the expiration
of any expiring policy, then Beneficiary may, but shall not be
obligated to, procure such insurance and pay the premiums therefor
and Trustor agrees to repay to Beneficiary the premiums thereon
promptly on demand, together with interest thereon at the Default
Rate.
(c) Trustor hereby assigns to Beneficiary all
proceeds of any insurance which Trustor may be entitled to receive
for loss or damage to the Security. In the event of any loss or
damage to the Security, all insurance proceeds shall be payable to
Beneficiary, and Trustor hereby authorizes and directs any
affected insurance company to make payment of the insurance
proceeds directly to Beneficiary. In the event that any such
insurance proceeds or condemnation awards are paid directly to
Trustor, Trustor shall make such proceeds or awards available to
Beneficiary within ten (10) days of Trustor's receipt thereof.
Trustor hereby authorizes and empowers Beneficiary to settle,
adjust or compromise any claims for loss, damage or destruction to
the Security in excess of $500,000, regardless of whether or not
there are insurance proceeds available or whether any such
insurance proceeds are sufficient in amount to fully compensate
for such loss or damage, and Trustor hereby authorizes the
application or release by Beneficiary of any such insurance
proceeds under any policy or policies of insurance. The
application or release by Beneficiary of any such insurance
proceeds shall not cure or waive any default or notice of default
hereunder or invalidate any act done pursuant to such notice. In
the case of loss or damage to the Security in an amount not more
than Five Hundred Thousand Dollars ($500,000), Trustor shall have
the right, without Beneficiary's consent but subject to the
requirements on application or use thereof set forth herein,
provided that there then exists no default, or condition which
with the passage of time or giving of notice, would constitute a
default hereunder or under any of the Loan Documents, to (i)
receive all such insurance proceeds, and (ii) settle, adjust or
compromise such claim.
(d) In the event of the foreclosure of this Deed of
Trust or other transfer of the title to the Security in
extinguishment, in whole or in part, of the Indebtedness, all
right, title and interest of Trustor in and to any insurance
policy, or premiums or payments in satisfaction of claims or any
other rights thereunder then in force, shall pass to the purchaser
or grantee notwithstanding the amount of any bid at such
foreclosure sale. Nothing contained herein shall prevent the
accrual of interest as provided in the Note on any portion of the
principal balance due under the Note until such time as the
Insurance Proceeds are actually received and applied to reduce the
principal balance outstanding.
8. Casualty.
(a) Occurrence of Casualty. After the happening of
any casualty to the Security, whether or not required to be
insured against under the policies to be provided by Trustor
hereunder, Trustor shall give prompt written notice thereof to
Beneficiary generally describing the nature and cause of such
casualty and the extent of the damage or destruction to the
Security.
(b) Application of Insurance Proceeds. As used
herein, "Insurance Proceeds" means all proceeds of any insurance
which Trustor may be entitled to receive for loss or damage to the
Security, other than insurance proceeds under Section 7(a)(ii) and
Section 7(a)(iii). In the case of loss or damage to the Security
in an amount not more than Five Hundred Thousand Dollars
($500,000), Trustor shall have the right, without Beneficiary's
consent but subject to the requirements on application or use
thereof set forth herein, provided that there then exists no
default, or condition which with the passage of time or giving of
notice, would constitute a default hereunder or under the Loan
Documents, to (i) receive all Insurance Proceeds, and (ii) settle,
adjust or compromise such claim. If within one hundred twenty
(120) days after the casualty Beneficiary receives Trustor's
request to release the Insurance Proceeds to pay for restoration
of the Deed or Trust Property, Beneficiary shall release the
Insurance Proceeds (less Beneficiary's reasonable out of pocket
expenses for collecting and disbursing the Insurance Proceeds, or
otherwise incurred in connection with said casualty) provided:
(i) there is no existing default under the Loan Documents; (ii)
not more than 30% of the Improvements are damaged; (iii) Trustor
can demonstrate to Beneficiary's reasonable satisfaction that
Trustor has the financial ability to pay the scheduled debt
service and other amounts which may become due, if any, under the
Loan Documents, during reconstruction from the proceeds of rent
insurance or otherwise; (iv) such damage or destruction occurs
prior to the last Loan Year (as defined in the Note) (v) Insurance
Proceeds are released held in escrow and released under funding
arrangements reasonably satisfactory to Beneficiary, including,
without limitation, those set forth in Section 8(e) hereof; (vi)
the excess of annual income from leases then in effect and
approved by Beneficiary that will survive the Restoration, or
otherwise satisfying the requirements of the Loan Documents such
that Beneficiary's approval is not required, over all operating
expenses and real estate taxes incurred with respect to the
Security during the year prior to the damage, is at least 1.20
times the annual debt service payments required under the Note.
The Insurance Proceeds, and any other amounts which are
contributed to the Restoration, if any, are called the
"Restoration Funds". In the event that the Insurance Proceeds are
released by Beneficiary as provided under this grammatical
paragraph, and provided that Trustor meets and is otherwise in
compliance with the requirements of this Deed of Trust, Trustor
shall not be required to contribute any additional amounts to the
Insurance Proceeds for the purposes of increasing Restoration
Funds or effectuating the Restoration. However, in the event that
Beneficiary is not obligated to release funds under this Deed of
Trust, but may elect to release such funds, Beneficiary may
require that additional funds be contributed by Trustor as a
condition to such release.
Upon release of the Restoration Funds, Trustor shall
commence and diligently pursue to completion in accordance with
this Section 8 repairs to the portion of the Security that has
been partially damaged or destroyed, in compliance with all legal
requirements and to the same condition, character and at least
equal value and general utility as nearly as possible to that
existing prior to such damage or destruction (the "Restoration").
In the event that Beneficiary is not obligated to release the
Insurance Proceeds for Restoration under the preceding grammatical
paragraph, Beneficiary may, at its option, elect to apply the
Insurance Proceeds to the reduction of the indebtedness secured by
this Deed of Trust in such order as Beneficiary may determine, or
to the cost of Restoration, and at Beneficiary's option and in its
sole discretion, Beneficiary may, within one hundred twenty (120)
days of such damage or destruction, declare the entire
Indebtedness secured hereby immediately due and payable without
any prepayment premium.
(c) Requirements for Restoration. In the event the
Restoration Funds are to be used for the Restoration, Trustor
shall, prior to the commencement of any construction work on the
Security in connection with the Restoration (the "Work"), deliver
to Beneficiary (i) complete plans and specifications for the Work
which (A) have been approved by all governmental authorities whose
approval is then required, (B) bear the signed approval of an
architect satisfactory to Beneficiary ("Architect") and (C) are
accompanied by Architect's signed estimate of the total estimated
cost of the Restoration which shall provide that upon completion
of the Work, the Improvements shall be at least equal in value and
general utility to their value and general utility immediately
prior to the damage or destruction or condemnation (such plans and
specifications shall be subject to Beneficiary's approval, which
approval shall not be unreasonably withheld (the "Approved
Plans")); (ii) copies of all permits and approvals (temporary or
permanent) required by law in connection with the commencement and
conduct of the Restoration; (iii) a contract for construction
executed by Trustor and a contractor reasonably satisfactory to
Beneficiary ("Contractor") in form, scope and substance
satisfactory to Beneficiary (including the customary retention)
for performance of the Work; and (iv) if the estimated cost of the
Restoration exceeds Five Hundred Thousand Dollars ($500,000), a
surety bond for and/or guarantee satisfactory to Beneficiary of
payment for and completion of, the Restoration, which bond or
guarantee shall be (A) in form, scope and substance satisfactory
to Beneficiary, (B) signed by a surety or sureties, or guarantor
or guarantors, as the case may be, who are acceptable to
Beneficiary, and (C) in an amount not less than Architect's total
estimated cost of completing the Restoration less the amount of
the net Insurance Proceeds, if any, then held by Beneficiary.
(d) Performance of Restoration. Trustor shall not
commence any portion of the Work, other than temporary work to
protect the Improvements or prevent interference with business,
until Trustor shall have complied with the requirements of Section
8(c). After commencing the Work, Trustor shall perform or cause
Contractor to perform the Work diligently and in good faith in
accordance with the Approved Plans.
(e) Disbursement of Restoration Funds. Beneficiary
shall disburse the Restoration Funds in increments to Trustor or
to parties to whom payments for work are then due, as Beneficiary
shall elect from time to time as the Work progresses, to pay (or
reimburse Trustor for) the costs of the Restoration, but subject
to the following conditions, any of which Beneficiary may waive in
its sole discretion:
(i) The Work shall be in the charge of an
experienced construction manager reasonably satisfactory to
Beneficiary (which may be an employee of Trustor or its
affiliates) with the consultation of Architect;
(ii) Beneficiary shall make such payments not
more often than at thirty (30) day intervals and only upon not
less than ten (10) days' prior written notice from Trustor to
Beneficiary and Trustor's delivery to Beneficiary of (A) Trustor's
written request for payment (a "Request for Payment") accompanied
by a certificate by Architect in form, scope and substance
reasonably satisfactory to Beneficiary which states that all of
the Work completed to that date has been done in compliance with
the Approved Plans and in accordance with applicable law, that the
amount requested has been paid or is then due and payable and is
properly a part of the cost of the Restoration and that when added
to all sums, if any, previously paid out by Beneficiary, the
requested amount does not exceed the value of the Work done to the
date of such certificate; (B) evidence reasonably satisfactory to
Beneficiary that there are no mechanic's or similar liens for
labor or material supplied in connection with the Work to date or
that any such liens have been adequately provided for to
Beneficiary's reasonable satisfaction; and (C) evidence reasonably
satisfactory to Beneficiary that the balance of the Restoration
Funds remaining after making the payments will be sufficient to
pay for the Restoration not then completed (giving in such
reasonable detail as Beneficiary may require an estimate of the
cost of such completion). Each Request for Payment shall be
accompanied by waivers of liens reasonably satisfactory to
Beneficiary covering that part of the Work previously paid for, if
any, and by a search prepared by a title company or by other
evidence reasonably satisfactory to Beneficiary that no mechanic's
liens or other liens or instruments for the retention of title in
respect of any part of the Work have been filed against the
Security and not discharged of record or otherwise bonded over or
insured over to Beneficiary's reasonable satisfaction and that,
except as otherwise expressly permitted herein, no encumbrance
exists on or affecting the Security other than encumbrances, if
any, which are set forth in the title policy issued to Beneficiary
insuring the lien of this Deed of Trust;
(iii) There shall then exist no Event of Default
by Trustor under the Note or under any other Loan Documents, or
any state of facts existing which, with the giving of notice or
the passage of time or both, would constitute an Event of Default;
and
(iv) Any final Request for Payment after the
Restoration has been completed shall be accompanied by a copy of
any permanent or temporary certificate or certificates required by
law (the "Certificate of Occupancy"), if any, to render occupancy
of the Improvements legal.
Upon Beneficiary's receipt of the Certificate of
Occupancy for the Improvements and final lien waivers evidencing
that the Restoration has been completed and the costs thereof paid
in full, and satisfactory evidence that no mechanic's or similar
liens for labor or material supplied in connection with the
Restoration are outstanding against the Security and provided that
Trustor is not then in default under any of the Loan Documents,
Beneficiary shall pay any remaining Restoration Funds then held by
Beneficiary to Trustor; provided, however, nothing contained
herein shall prevent Beneficiary from applying at any time the
whole or any part of the Restoration Funds to the curing of any
Event of Default under the Loan Documents.
(f) Application of Restoration Funds to
Indebtedness. If, within sixty (60) days after the occurrence of
any damage or destruction to the Security requiring Restoration,
Trustor fails to request that the Insurance Proceeds be disbursed
as above permitted; or if, within one hundred twenty (120) days
after the occurrence of such damage or destruction to the Security
(unless, in the event that Beneficiary is not obligated to permit
Trustor to restore the Security under subparagraph (b) above, but
nevertheless elects to do so, then one hundred twenty (120) days
from such election), Trustor (i) fails to submit to Beneficiary
and receive Beneficiary's approval of plans and specifications or
(ii) fails to deposit with Beneficiary any additional amounts
which may be required by Beneficiary in accordance with this Deed
of Trust to accomplish the Restoration, or (iii) Trustor fails to
commence promptly or diligently continue to completion the
Restoration after such plans and specifications are approved by
all such governmental authorities and Beneficiary, or (iv) Trustor
becomes delinquent in payment to mechanics, materialmen or others
for the costs incurred in connection with the Restoration; then,
in addition to all of the rights herein set forth and after thirty
(30) days' written notice of the nonfulfillment of one or more of
the foregoing conditions, Beneficiary, or any lawfully appointed
receiver of the Security, may at their respective options, (A)
perform or cause the Work to be performed, and may take such other
steps as they deem advisable to perform the Work, and may enter
upon the Security for the foregoing purposes and/or (B) apply the
Restoration Funds then or thereafter held by Beneficiary to reduce
the unpaid Indebtedness in such order as Beneficiary may elect
without prepayment premium. Any application of such proceeds to
the Indebtedness shall be at par and shall cause a pro rata
reduction in payments of interest and, if applicable, principal,
under the Note (based on a reamortization, as applicable),
provided, however, that if there exists an Event of Default, the
prepayment fee (prorated based upon the amount being prepaid) as
provided in the Note shall also be due.
(g) Payment of Restoration Funds to Trustor. In the
event that Beneficiary applies all or any portion of the
Restoration Funds to reduce the unpaid Indebtedness as provided in
this Section 8, after payment in full of all sums secured by the
Loan Documents, any remaining Restoration Funds shall be paid to
Trustor.
9. Condemnation. Should the Security or any part thereof
be taken or damaged by reason of any public improvement or
condemnation proceeding, or in any other manner, Beneficiary shall
be entitled to all compensation, awards and other payments or
relief therefor, and may, at its option, commence, appear in and
prosecute in its own name any action or proceeding or make any
compromise or settlement in connection with such taking or damage.
In no event shall Trustor commence, appear in and prosecute any
action or proceeding or make any compromise or settlement in
connection with such taking or damage without the prior written
consent of Beneficiary. All such compensation, awards, damages,
rights of action and proceeds (the "Condemnation Proceeds") are
hereby assigned to Beneficiary, who shall, after deducting
therefrom all its reasonable expenses, including attorneys' fees,
and so long as there is no default hereunder or under the Loan
Documents or any condition which, with the passage of time or the
giving of notice or both, would constitute a default hereunder or
thereunder, apply or release the Condemnation Proceeds to repair
any damage to the Improvements remaining on the portion of the
Security not subject to the taking, as provided in Section 8 above
with respect to disposition of Insurance Proceeds; provided,
however, that if the taking results in a loss of the Security to
an extent which, in Beneficiary's sole and absolute opinion,
renders or will render the Security not economically viable, or
otherwise impairs or will impair Beneficiary's security under the
Loan Documents, Beneficiary may apply all or any part of the
Condemnation Proceeds to reduce the unpaid Indebtedness in such
order as Beneficiary may elect. Any application of such proceeds
to the principal indebtedness shall be at par and shall cause a
pro rata reduction in payments of interest and, if applicable,
principal, under the Note (based on a reamortization, if
applicable); provided, however, that if there exists an Event of
Default, the prepayment fee (prorated on the basis of the amount
being prepaid) as provided in the Note shall also be due.
Beneficiary may require a contribution of additional funds for the
repair or restoration of the Security as a condition to releasing
Condemnation Proceeds for such purpose.
Nothing contained herein shall prevent the accrual of
interest as provided in the Note on any portion of the principal
balance due under the Note until such time as the Condemnation
Proceeds are actually received and applied to reduce the principal
balance outstanding.
10. Repair; Alterations; Waste. Trustor shall keep all of
the Security in good repair, and expressly agrees that it will
neither permit nor commit any waste upon the Security nor do any
other act or suffer or permit any act to be done, whereby the
Security or the lien hereof may be impaired, and shall comply with
all zoning laws, building codes, subdivision laws, and other laws,
ordinances, rules and regulations made or promulgated by any
government or municipality, or by any agency thereof or by any
other lawful authority, which are now or may hereafter become
applicable to the Security, provided that compliance with
environmental laws shall be governed by Section 11 hereof.
Subject to the provisions of Sections 8 and 9 hereof, Trustor
shall repair or restore any building now or hereafter under
construction on the Security and complete the same within a
reasonable period of time. Trustor agrees not to initiate or
acquiesce in any material zoning variance or reclassification
which materially affects the Security, without Beneficiary's prior
written consent, which consent shall not be unreasonably withheld.
Trustor shall not construct any additional building or buildings
or make any other improvements on the Land nor alter, remove or
demolish any building or other Improvements on the Land, without
the prior written consent of Beneficiary.
In furtherance but not in limitation of Trustor's
obligations hereunder, Trustor shall implement the ADA compliance
requirements described as items to be addressed in the "ADA
Worksheets" (8 pages) for the Security prepared in 1991 and
transmitted to Beneficiary by letter dated September 7, 1994.
If Trustor fails to observe any of the provisions of
this Section or suffers or permits any Event of Default to exist
under this Section, Beneficiary or a lawfully appointed receiver
of the Security at their respective options, from time to time,
may perform, or cause to be performed, any and all repairs and
such other work as they deem necessary to bring the Security into
compliance with the provisions of this Section and may enter upon
the Security for any of the foregoing purposes, and, except for
Beneficiary's gross negligence and willful misconduct, Trustor
hereby waives any claim against Beneficiary and/or such receiver,
arising out of such entry or out of any other act carried out
pursuant to this Section. Trustor shall within ten (10) days of
written demand repay to Beneficiary and such receiver, with
interest at the Default Rate, all amounts expended or incurred by
them, respectively, in connection with any action taken pursuant
to this Section, and such repayment shall be secured by the lien
of this Deed of Trust.
Trustor represents and warrants that there are and at
all times will be at least 689 parking spaces on and as part of
the Security.
11. Environmental.
(a) Except as disclosed in that certain
environmental audit dated August, 1994 and prepared by Blasland,
Bouck & Lee, Inc., a copy of which has been furnished to
Beneficiary (the "Environmental Audit"), or in that certain
Borrower's Certificate by Trustor of even date herewith (the
"Borrower's Certificate"), Trustor represents and warrants that,
Trustor has not used and will not use, in violation of any of the
Environmental Laws (hereinafter defined) and, to the best of
Trustor's knowledge, no prior owner or current or prior tenant,
subtenant, or other occupant of all or any part of the Security
has used or is using Hazardous Materials (hereinafter defined) on,
from or affecting the Security in any manner that violates
federal, state or local laws, ordinances, rules, regulations or
policies governing the use, storage, treatment, transportation,
manufacture, refinement, handling, production, or disposal of
Hazardous Materials, and that, to the best of Trustor's knowledge,
no Hazardous Materials have been disposed of on or within the
Security in violation of any of the Environmental Laws,
intentionally or unintentionally, directly or indirectly, by any
person whether related or unrelated to Trustor nor have any
Hazardous Materials migrated onto or from the Security in
violation of any Environmental Laws (hereinafter defined).
Trustor covenants that it will use reasonable efforts to not
permit or suffer any violation of any Environmental Laws
(hereinafter defined).
(b) For purposes of this Deed of Trust, "Hazardous
Materials" shall mean and include all products or substances which
are or contain petroleum, natural gas, natural gas liquids,
asbestos or polychlorinated biphenyls or any chemicals known to
cause cancer or reproductive toxicity and published pursuant to
California Health and Safety Code Sub-Section 25249.5 et. seq and those
elements, compounds, materials, mixtures and substances which are
now or hereafter are contained in any list of hazardous substances
adopted by the United States Environmental Protection Agency (the
"EPA") or any list of toxic pollutants designated by Congress or
the EPA or which are defined as hazardous, toxic, pollutant,
infectious, flammable or radioactive by any other Federal, State,
or local statute, law, ordinance, code, rule, regulation, order,
or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic, or
dangerous waste, substance, element, compound, mixture or
material, as now or at any time hereafter in effect, including,
without limitation, the Federal Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sub-Section 9601 et seq., the Federal Hazardous Materials
Transportation Act, the Federal Resource Conservation and Recovery
Act, as amended, 42 U.S.C. Sub-Section 6901 et seq., the Federal Toxic
Substance Control Act, 15 U.S.C. Sub-Section 2601 et seq., the Federal
Clean Air Act, the Federal Water Pollution Control Act, the
California Health & Safety Code (including without limitation
those chemicals known to cause cancer or reproductive toxicity,
Sub-Section 25249.5, et seq.,) or rules and regulations of the EPA, the
California Department of Health Services or any other agency or
governmental board or entity having jurisdiction over the Security
(collectively, the "Environmental Laws").
(c) Except as may be disclosed in the Environmental
Audit or in the Borrower's Certificate, Trustor represents and
warrants that, to its actual knowledge, as of the date hereof, no
use, generation, manufacture, production, treatment, storage or
disposal of any Hazardous Materials has occurred or is occurring
on or within the Security in violation of any of the Environmental
Laws and that Trustor will use reasonable efforts to not permit or
suffer any such use, generation, manufacture, production,
treatment, storage or disposal of Hazardous Materials on, under,
about or within the Security in violation of any of the
Environmental Laws or permit any lien or designation regarding
environmental matters under any California or Federal law, rule,
or regulation to attach to the Security or any portion thereof or
any interest therein. Trustor represents and warrants that, to
its actual knowledge, as of the date hereof, it has not received
any notice from any governmental agency or any tenant of the
Security with regard to such Hazardous Materials, and has received
no notice that the environmental condition of the Security is in
violation of any Environmental Law.
(d) Except as may be disclosed in the Environmental
Audit or in the Borrower's Certificate, Trustor represents and
warrants that Trustor has not installed on or in the Security any
asbestos containing material and, to Trustor's actual knowledge as
of the date hereof, the Security does not contain, and has not in
the past contained, any asbestos containing material in friable
form, and there is no current or potential airborne contamination
of the Security by asbestos fiber, including any potential
contamination that would be caused by maintenance or tenant finish
activities in the building(s).
(e) Trustor represents and warrants that, to its
actual knowledge, as of the date hereof, it has not received any
notice that the soil, surface water, and ground water of or on the
Security are not free from any spills of oil or other solid or
liquid waste, toxic or hazardous substance or contaminate, and
Trustor has no actual knowledge of any such spill.
(f) In the event that any investigation, site
monitoring, containment, clean-up, removal, restoration or other
remedial work of any kind or nature (the "Remedial Work") is
required under any applicable local, state or federal law or
regulation, any judicial order, or by any governmental entity or
person because of, or in connection with, the current or future
presence, suspected presence, release or suspected release of a
Hazardous Material in or about the air, soil, ground water,
surface water or soil vapor at, on, about, under or within the
Security (or any portion thereof), Trustor shall within forty-five
(45) days after written demand for performance thereof by
Beneficiary (or such shorter period of time as may be required
under any applicable law, regulation, order or agreement),
commence and thereafter diligently prosecute to completion, all
such Remedial Work. All Remedial Work shall be performed by
contractors reasonably approved in advance by Beneficiary, and
under the supervision of a consulting engineer reasonably approved
by Beneficiary. All costs and expenses of such Remedial Work
shall be paid by Trustor including, without limitation,
Beneficiary's reasonable attorneys' fees and out of pocket costs
incurred in connection with monitoring or review of such Remedial
Work. In the event Trustor shall fail to timely prosecute to
completion such Remedial Work, after the expiration of any
applicable notice and cure periods, Beneficiary may, but shall not
be required to, cause such Remedial Work to be performed and all
reasonable costs and expenses thereof, or incurred in connection
therewith, shall be payable by Trustor within ten (10 days after
written demand.
Trustor shall have the right to contest, at Trustor's
sole cost and expense, Trustor's requirement of any Remedial Work
provided that: (i) as a condition to any such contest, Trustor
shall deliver to Beneficiary, at Trustor's sole cost and expense,
such test results, consultants' reports and other information
regarding the then current environmental condition of the Security
and the effect that any additional delay that may result from any
such contest would have on such environmental condition, as
Beneficiary may reasonably require; (ii) Trustor shall have no
right to contest if the delay that might result from any such
contest would result in any deterioration in the environmental
condition of the Security or any portion thereof or in any
deterioration in the environmental condition of any other
property; (iii) Trustor shall have no such right to contest if, as
a result of such contest, any governmental agency would have the
right to claim a lien on all or any portion of the Security; and
(iv) Trustor shall give prior written notice to Beneficiary of
Trustor's intention to exercise such right of contest and, upon
written request of Beneficiary, shall deliver to Beneficiary a
good and sufficient bond or other security reasonably satisfactory
to Beneficiary for the costs which would be incurred in complying
with such requirement of Remedial Work.
(g) Trustor shall provide Beneficiary with prompt
written notice (a) upon Trustor's becoming aware of any release or
threat of release of any Hazardous Materials upon, under or from
the Security in violation of any of the Environmental Laws; (b)
upon Trustor's receipt of any notice from any federal, state,
municipal or other governmental agency or authority in connection
with any Hazardous Materials located upon or under or emanating
from the Security; and (c) upon Trustor's obtaining knowledge of
any incurrence of expense by any governmental agency or authority
in connection with the assessment, containment or removal of any
Hazardous Materials located upon or under or emanating from the
Security.
(h) In the event that (1) there exists an Event of
Default hereunder or under any of the Loan Documents or (2)
Beneficiary reasonably believes that there may be a violation or
threatened violation by Trustor of any requirements of
Environmental Law or a violation or threatened violation by
Trustor of any covenant under this Section 11, Beneficiary is
authorized by itself, its agents, employees or workmen to enter at
any reasonable time upon any part of the Real Property for the
purposes of inspecting the same for Hazardous Materials and
Trustor's compliance with this Section 11 and such inspections may
include, without limitation, soil borings. Beneficiary's rights
hereunder include its rights under California Civil Code Section
2929.5, as such Section may be amended from time to time. Trustor
acknowledges that, pursuant to California Code of Civil Procedure
Section 564(c), as such Section may be amended from time to time,
Beneficiary may be entitled to the appointment of a receiver to
enforce its rights under California Civil Code Section 2929.5.
Trustor agrees to pay to Beneficiary, upon Beneficiary's demand,
all out of pocket expenses, costs or other amounts incurred by
Beneficiary in performing any inspection and/or testing for the
purposes set forth in this clause (i), including, without
limitation, all out of pocket expenses, costs or other amounts
incurred by Beneficiary in obtaining the appointment of a receiver
as aforesaid. Beneficiary is under no duty, however, to visit or
observe the Real Property or to conduct tests, and any such acts
by Beneficiary shall be for the sole purpose of protecting
Beneficiary's security and preserving Beneficiary's and Trustee's
rights under the Loan Documents. In no event shall any site
visit, observation or testing by Beneficiary be a representation
that Hazardous Materials are or are not present in, on, or under
the Real Property, or that the construction is free from defective
materials or workmanship, or that there has been or shall be
compliance with any Loan Document or any applicable governmental
law. Neither Trustor nor any other party is entitled to rely on
any site visit, observation or testing by Beneficiary.
Beneficiary owes no duty of care to protect Trustor or any other
party against any Hazardous Materials, any negligent or defective
design or construction of the Improvements, or any other adverse
condition affecting the Real Property.
(i) The foregoing provisions of this Section 11 do
not apply to any ordinary use and incidental storage of small and
insignificant amounts of substances reasonably necessary for the
regular and ordinary maintenance of the Real Property, or consumed
in the regular and ordinary use of common office business
machines, nor to gasoline, oil, and other ordinary automotive
fluids to the extent that they are contained in the common and
ordinary manner in motor vehicles visiting the Real Property, in
each case provided that the same does not constitute a violation
of any of the Environmental Laws.
12. Independence of Security. Trustor shall not hereafter
by act or omission permit any building or other improvement on
premises not subject to the lien of this Deed of Trust to rely on
the Security or any part thereof or any interest therein to
fulfill any municipal or governmental requirement, and Trustor
hereby assigns to Beneficiary any and all rights to give consent
for all or any portion of the Security or any interest therein to
be so used. Similarly, except as provided in the Parking
Agreements, no part of the Security shall rely on any premises not
subject to the lien of this Deed of Trust or any interest therein
to fulfill any governmental or municipal requirement. Trustor
shall not hereafter by act or omission impair the integrity of the
Security as a single zoning lot, and as one or more complete tax
parcels, separate and apart from all other premises. Any act or
omission by Trustor which would result in a violation of any of
the provisions of this Section shall be void.
13. No Other Liens. Trustor shall not consent, agree to,
or permit any mortgage, lien, or security interest upon or
affecting the Security or any part thereof except for the
Permitted Encumbrances (as defined in Section 2 hereof), and as
granted or permitted in this Deed of Trust and any other lien or
security interest granted to Beneficiary.
Trustor will promptly pay and discharge any and all
amounts which are now or hereafter become liens against the
Security whether or not superior to the lien hereof or to any
assignment of rents and leases given to Beneficiary, subject to
Trustor's right to contest taxes and mechanic's liens in
accordance with this Deed of Trust.
14. Management. Trustor shall at all times retain an
entity which is owned by, controlled by or under common control
with JMB Realty Corporation or JMB Properties Co. to operate and
manage the Security, and no change in such management shall be
made without the prior written approval of Beneficiary, except to
Heitman Properties, Ltd., and any such attempted change in
management without such consent shall be void. The management
agreement with JMB Properties Company dated January 1, 1987 may
not be modified or amended and any successor agreement may not be
entered into or any other management company appointed without
Beneficiary's prior written approval. The management agreement,
including payment of any fees thereunder or lien to which the
manager shall be entitled, must be subordinate to the lien of this
Deed of Trust.
15. Ground Lease. Trustor hereby represents and warrants
to Beneficiary that there exist no ground leases relating to or
executed in connection with the Security.
16. Sidewalks, Municipal Charges. Trustor will promptly
pay and discharge any and all license fees and similar charges,
with penalties and interest thereon, which may be imposed by the
municipality in which the Security is situated, for the use of
vaults, chutes, areas and other space beyond the lot line and
under or abutting the public sidewalks in front of or adjoining
the Security, and Trustor will promptly cure any violation of law
and comply with any order of such municipality respecting the
repair, replacement or condition of the sidewalk or curb in front
of or adjoining the Security, and if Trustor fails to do same
within any applicable time periods permitted by such law or order,
Beneficiary may, upon ten (10) days written notice to Trustor, pay
any and all such license fees or similar charges, with penalties
and interest thereon, and the charges of the municipality for such
repair or replacement, and any amount so paid or advanced by
Beneficiary and all reasonable out of pocket costs and expenses
incurred in connection therewith (including, without limitation,
reasonable attorneys' fees), with interest thereon at the default
rate specified in the Note, shall be a demand obligation of
Trustor to Beneficiary, and, to the extent permitted by law, shall
be added to the Indebtedness and shall be secured by the lien of
this Deed of Trust.
17. Assignment of Rents and Leases. Trustor hereby
presently, irrevocably, absolutely, and unconditionally grants,
transfers, assigns and sets over unto Beneficiary all of its
right, title and interest in and to all present and future leases,
license agreements, concession agreements, lease termination
agreements and other occupancy agreements of any nature, oral or
written, of the Land and of space in the Improvements together
with all modifications, supplements, extensions, renewals and
replacements thereof now existing or hereafter made, and also
together with the rights to sue for, collect and receive all
rents, prepaid rents, additional rents, royalties, security
deposits, damages payable upon default by tenant, or other sums in
any of said leases provided to the lessor thereunder, profits,
income, license fees, concession fees, lease termination fees and
issues of the Security (collectively, the "Rents"), to be applied
by Beneficiary in payment of the Indebtedness, and also together
with any and all guaranties of the obligations of the tenants
thereunder and the rights of Trustor to receive, hold and apply
all bonds and security in all of said leases provided to be
furnished to the lessor thereunder, and also together with the
rights of Trustor to enforce any and all of the agreements, terms,
covenants and conditions in all of said leases provided and to
give notices thereunder. Beneficiary grants to Trustor a
revocable license to collect the Rents as they become due and to
enforce such leases, so long as no Event of Default exists
hereunder. Beneficiary may receive and collect the Rents
personally or through a receiver upon the occurrence of an Event
of Default so long as any such Event of Default shall exist and
during the pendency of any foreclosure proceeding and during any
redemption period. Trustor agrees to consent to a receiver if
this is believed necessary or desirable by Beneficiary to enforce
its rights under this Section.
Trustor shall not otherwise assign or pledge, or
contract, expressly or by implication, to assign or pledge, any
lease of the Land or space in the Improvements or the rights to
sue for, collect and receive any Rents, or the rights to receive,
hold and apply any bonds and security in any of said leases
provided to be furnished to the lessor thereunder, or the rights
to enforce any of the agreements, terms, covenants or conditions
of said leases or to give notices thereunder, unless in each
instance the written consent thereto of Beneficiary be first
obtained.
Nothing in this Deed of Trust shall be construed to
obligate Beneficiary, expressly or by implication, to perform any
of the covenants of Trustor as lessor under any of the leases
hereinabove assigned or to pay any sum of money or damages therein
provided to be paid by the lessor.
If Beneficiary shall from time to time suffer or
permit Trustor to sue for, collect or receive any Rents, or to
receive, hold or apply any bonds or security under said leases, or
to enforce any of the agreements, terms, covenants or conditions
thereunder or to give notices thereunder, neither such sufferance
nor permission shall constitute a waiver or relinquishment by
Beneficiary of the rights hereunder and hereby assigned to
Beneficiary with respect to any subsequent Rents, or with respect
to any subsequent receipt, holding or application of bonds or
security or any subsequent enforcement of such agreements, terms,
covenants or conditions or any subsequent notices.
18. Future Leases. Trustor will not hereafter make any
lease to any tenant, or amend, modify, terminate, renew or extend
any lease (other than a renewal to which a tenant is entitled
under the terms of an existing lease or contained in a lease that
is subsequently approved by Beneficiary), affecting the Security
unless Beneficiary shall first consent in writing to the form and
substance of said lease or amendment, modification, renewal or
extension, which consent shall not be unreasonably withheld.
Leases (or amendments, modifications, renewals or extensions of
then existing Leases) submitted for Beneficiary's review and
approval shall be deemed approved if Beneficiary fails to respond
(e.g. approve, reject, comment about, request more information or
other reasonable response) within thirty (30) days from
Beneficiary's receipt of the submitted request for approval.
Trustor may, however, if the particular circumstances require,
request an expedited review, in which case the lease shall be
deemed approved if Beneficiary fails to respond within ten (10)
business days of receipt. Notwithstanding the foregoing, a lease
shall only be deemed approved if (i) the cover letter accompanying
the lease submission clearly and conspicuously states that such
lease will be automatically deemed approved under the Loan
Documents if no response is forthcoming from Beneficiary, along
with the date that such automatic approval would be effective,
(ii) such lease will not be used to qualify for the reduction,
release or earnout on any letter of credit, escrow, guarantee,
indemnification or other form of additional collateral for the
loan, nor will such lease be used to qualify for any right or
privilege of Trustor under the Loan Documents which is triggered
by, among other things, a debt service coverage test (however,
leases expressly approved by Beneficiary may be used for such
purposes), (iii) the lease submission date commences when
Beneficiary actually receives a complete and final draft of the
lease at the address for its Investment Services department set
forth in the notice provision of this Deed of Trust, (iv) there is
not Event of Default under the Loan Documents which remains
uncured at the time such lease would be deemed approved, and (v)
in the case of "expedited review" requests, the circumstances
which require such expedited review are not caused solely by the
Trustor, and such circumstances are clearly and fully explained in
the cover letter accompanying the lease submission.
All leases must be subordinate to the lien of this
Deed of Trust unless Beneficiary otherwise specifies. Each lease
must contain a provision that, upon notice to tenant by
Beneficiary, the lease shall become superior, in whole or in part,
to the lien of this Deed of Trust. Without limiting the
foregoing, Beneficiary hereby reserves the right to subordinate
this Deed of Trust to any lease subsequently made by recording in
the Official Records of Santa Clara County in which this Deed of
Trust is recorded a declaration to that effect, executed by
Beneficiary, which declaration once so recorded shall be binding
upon the tenant under such lease and such tenant's successors and
assigns.
To the extent any tenant estoppel certificate or
agreement from a tenant relating to subordination and attornment
for any Lease is required under this Deed of Trust or any other
Loan Document, the forms attached hereto as Exhibit B and Exhibit
C, respectively, shall be acceptable to Beneficiary for such
purposes.
Trustor will furnish to Beneficiary a true and
complete copy of each lease, amendment, modification, extension,
or renewal of lease, hereafter made by Trustor with respect to
space in the Security within ten (10) days after execution and
delivery of each such lease, amendment, modification, extension,
or renewal by the parties thereto. Trustor shall also furnish to
Beneficiary an original mortgagee subordination and attornment
agreement executed by each tenant and an original estoppel,
addressed to Beneficiary, from each tenant in form and substance
satisfactory to Beneficiary.
Trustor will from time to time upon demand of
Beneficiary, confirm in writing the assignment to Beneficiary of
any or all leases of the Land and space in the Improvements, and
such written confirmation shall be in such form as Beneficiary
shall require and as shall be necessary to make the same
recordable.
19. Trustor's Obligations as Lessor.
(a) Trustor shall, at Trustor's cost and expense,
promptly and fully perform each and every covenant, condition,
promise and obligation on the part of the lessor to be performed
pursuant to the terms of each and every lease or letting, written
or oral, now or hereafter made with respect to the Security or any
part or parts thereof, and shall not suffer or permit there to
exist any default in such performance on the part of such lessor
or permit any event to occur which would give the tenant under any
such lease the right to terminate the same or to offset rent.
(b) Trustor shall give Beneficiary prompt written
notice of any default under any lease or of the receipt by Trustor
of any written notice of default from the lessee or its successors
or assigns under a lease, and Trustor shall furnish to Beneficiary
promptly any and all information which Beneficiary may reasonably
request concerning the performance and observance of all
covenants, agreements and conditions contained in the leases by
the lessor thereunder to be kept, observed and performed and
concerning the compliance with all terms and conditions of the
leases.
(c) In the event of any failure by Trustor to keep,
observe or perform any covenant, agreement or condition contained
in the leases or to comply with the terms and conditions of the
leases, any performance, observance or compliance by Beneficiary
pursuant to this Deed of Trust on behalf of Trustor shall not
remove or waive, as between Trustor and Beneficiary, the
corresponding Event of Default under the terms of this Deed of
Trust.
20. Leases; Foreclosure. Any proceedings or other steps
taken by Beneficiary to foreclose this Deed of Trust, or otherwise
to protect the interests of Beneficiary hereunder, shall not
operate to terminate the rights of any present or future tenant of
space in the Improvements, notwithstanding that said rights may be
subject and subordinate to the lien of this Deed of Trust, unless
Beneficiary specifically elects otherwise in the case of any
particular tenant. The failure to make any such tenant a
defendant in any such foreclosure proceeding and to foreclose such
tenant's rights will not be asserted by Trustor or any other
defendant in such foreclosure proceeding instituted by Beneficiary
to foreclose this Deed of Trust or otherwise protect the interests
of Beneficiary hereunder.
21. Operating Agreements. Trustor will perform its
obligations under all agreements relating to or executed in
connection with the Security that require or provide for the
operation of the Security in any manner and will not enter into
any such agreements which would bind Beneficiary if Beneficiary
becomes the owner of the Security, except for the Permitted
Exceptions and Parking Agreements.
22. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder and shall entitle the
Beneficiary to exercise its remedies hereunder and under any of
the other Loan Documents or as otherwise provided by law:
(a) Any payment of any installment of principal or
interest due under the Note, or any escrow payment due under any
of the Loan Documents, is not received by Beneficiary within five
(5) business days following the date when such payment was due, or
any other payment of money or indebtedness as required by this
Deed of Trust or by any other Loan Document is not made within ten
(10) days of when due and payable;
(b) Failure of Trustor in the observance or
performance of any covenant, promise or agreement provided in this
Deed of Trust or in any other Loan Document other than relating to
the payment of indebtedness or money ("failure to perform") for
thirty (30) days after written notice to Trustor specifying the
nature of the failure to perform; provided, however, that if the
nature of such failure to perform is such that the same cannot be
cured within such thirty (30) day period, such failure to perform
shall not be deemed an Event of Default if Trustor shall within
such period commence to cure that failure to perform and
thereafter diligently prosecute the cure to completion, but in no
event more than one hundred twenty (120) days in the aggregate.
Notwithstanding anything contained herein to the contrary, the
notice and cure period provided under this clause (b) shall not be
applicable to and shall not be in addition to any specific notice
and cure or performance period provided under any other provision
of this Deed of Trust, and the specific notice and cure or
performance period provided for in such provision shall control,
except and to the extent that such provision expressly states that
such notice or cure period is in addition to notice and cure
periods provided elsewhere, and a failure by Trustor to cure a
default under such provision within the applicable cure period
shall be an Event of Default under this Deed of Trust;
(c) Any representation, warranty, or statement of
Trustor or the managing general partner of Trustor contained
herein or in any of the Loan Documents proves to be untrue in any
material respect as of the date when made;
(d) Trustor or the managing general partner of
Trustor shall (i) have an order for relief entered in a proceeding
under Title 11, United States Code, whether such order shall
result from a voluntary or involuntary petition, provided that, in
the case of an involuntary filing, Trustor shall have also failed
to obtain a dismissal within ninety (90) days of the petition
date, (ii) seek or consent to the appointment of a receiver or
trustee for itself or for any of the Security, (iii) file a
petition or initiate a proceeding under the bankruptcy,
insolvency, receivership, or similar laws of the United States,
any state or any jurisdiction, or (iv) make a general assignment
for the benefit of creditors;
(e) A court shall enter an order, judgment or decree
appointing, without the consent of Trustor or the managing general
partner of Trustor, a receiver or trustee for it or for any of the
Security or approving a petition filed against Trustor which seeks
relief under the bankruptcy or other similar laws of the United
States, any state or any jurisdiction, and such order, judgment or
decree shall remain in force, undischarged or unstayed, ninety
days after it is entered;
(f) Without the prior written consent of the
Beneficiary, which may be given or withheld in Beneficiary's sole
and absolute discretion, whether voluntary or involuntary, by
operation of law or otherwise, (i) the Security or any portion
thereof, or interest therein, shall be mortgaged, encumbered,
sold, assigned or otherwise transferred by the Trustor or by
operation of law, including without limitation, the sale or
execution of a contract to sell or option to purchase, assignment,
pledge, grant of a security interest in, conditional sale,
execution of a title retention agreement, lease for space within
the Security containing an option to purchase, or other alienation
of a property interest in the Security, or (ii) JMB Income
Properties, Ltd.-XI or JMB Income Properties, Ltd.-XII, both
Illinois general partnerships, transfer all or any portion of
their respective interests in Trustor or cease to be the co-
managing general partners of Trustor, responsible for and in
control of the management and affairs of Trustor, or (iii) JMB
Realty Corporation, a Delaware corporations, transfers all or any
portion of its interest in or ceases to be the managing general
partners of JMB Income Properties, Ltd.-XI or JMB Income
Properties, Ltd.-XII, or (iv) the partnership agreement of Trustor
or of such general partners is cancelled or materially amended or
modified. Notwithstanding the foregoing to the contrary:
(i) Provided that Beneficiary is notified at
least thirty (30) days prior to such transfer, transfers of the
partnership interests in Trustor or the partners of Trustor shall
be permitted, provided that, immediately following such transfer,
JMB Realty Corporation, an Illinois corporation ("JMB") or one or
more majority-owned direct or indirect subsidiaries of JMB, or the
shareholders of JMB, shall beneficially own and control, directly
or indirectly, and in the aggregate, more than fifty percent (50%)
of the interests in Trustor and the Security. Without limiting
the foregoing, no transfer by a limited partner of its interest in
JMB Income Properties, Ltd.-XI or in JMB Income Properties, Ltd.-
XII shall constitute an Event of Default under the Loan Documents.
(ii) Trustor shall have the right to a one-time
sale, transfer or assignment in whole or in part of its interest
in the Security to any party of equal qualification and
creditworthiness, provided:
(A) there then is no default under the
Loan Documents;
(B) a property inspection by Beneficiary
or Beneficiary's designee shows that all reasonably necessary
maintenance on or damage or destruction to the Security has been
completed or repaired;
(C) the proposed transferee shall be a
Qualified Real Estate Investor (hereinafter defined);
(D) the aggregate annual debt service
coverage (based on Annual Net Income, as hereinafter defined) on
the Indebtedness and any applicable secondary financing exceeds
1.3 times;
(E) the proposed transferee has specific
related real estate experience in the Metropolitan Statistical
Area where the Security is located;
(F) the proposed transferee must own or
manage a minimum of 5,000,000 square feet of office space;
(G) At least 90 days prior to such a
transfer, Trustor must provide Beneficiary with all of the
material provisions of such transfer including without limitation
the proposed date of transfer, and the name, net worth, background
and address of the proposed transferee and the purchase price;
(H) Trustor shall provide Beneficiary
with such evidence as Beneficiary may require that the proposed
transferee shall fulfill each and every obligation of Trustor
under the Loan Documents and that such transfer shall not affect
or impair Beneficiary's security and rights under the Loan
Documents;
(I) such transfer may only occur during
the first five Loan Years (as defined in the Note);
(J) such notice received under (vii)
above shall be accompanied by the payment to Beneficiary of a non-
refundable fee in the amount of $168,750 in cash or certified
check to be retained by Beneficiary in order to induce Beneficiary
to allow the proposed transferee to assume the obligations of
Trustor under the Loan Documents, and such fee shall be returned
to Trustor if Beneficiary disapproves of such transfer;
(K) the loan-to-value ratio based on a
then current appraisal obtained at Trustor's expense and
acceptable to Beneficiary must not exceed 75%; and
(L) Trustor shall pay for all of
Beneficiary's costs and expenses associated with the transfer,
including without limitation, attorneys' fees charged by
Beneficiary's staff counsel or special counsel.
As used herein, the term "Qualified Real Estate
Investor" as any reputable corporation, partnership, joint
venture, joint-stock company, trust or individual with a minimum
net worth of $50,000,000, real estate assets of $250,000,000, a
minimum current cash position of $5,000,000, based in the United
States and free from any bankruptcy, reorganization or insolvency
proceedings or any criminal charges or proceedings and shall not
have been, at the time of transfer or in the past, a litigant,
plaintiff or defendant in any suit brought against or by
Beneficiary. Beneficiary agrees to be reasonable in the review of
such qualifications and agrees that if the prospective purchaser
is a partnership, the net worth of the general partners thereof
shall be included for the purposes of the foregoing net worth
calculation.
As used herein, the term "Annual Net Income" is
defined as actual rental income (adjusted as set forth below),
parking income and regular recurring charges paid by current
tenants in occupancy of the Security for the preceding six (6)
months, multiplied by two (2), less actual operating expenses
(adjusted as set forth below) and real estate taxes and
assessments relating to the preceding six (6) month period,
multiplied by two (2). Rental income shall be reduced by the
amount of any outstanding monetary obligations to any tenants
(such as free rent, above standard improvements, moving allowances
or other monetary tenant inducement for which the landlord has an
outstanding responsibility) and shall exclude any extraordinary
payment from a tenant which exceeds the regular amounts due
throughout its lease term. Operating expenses, if not already
included, shall be increased to include any customary annual costs
at market rates (such as market rate management fees, repair and
maintenance costs, janitorial costs and insurance costs) which an
institutional owner would incur as an expense of owning the
Security. Operating expenses shall exclude any extraordinary non-
recurring expenses.
With respect to any direct or indirect transfer of
interests in the Security or in Trustor permitted under the Loan
Documents, Beneficiary may require, as applicable, (i) that the
transferee enter into an assumption agreement or other reasonably
necessary amendments to any of the Loan Documents, (ii) new UCC
financing statements, (iii) copies of organizational documents of
any entities directly or indirectly assuming any obligations under
the Loan Documents, (iv) an appropriate endorsement to
Beneficiary's title insurance policy, (v) an attorney's opinion
(as to due organization and authorization of assignee, as well as
enforceability of assumption and related transfer documents, but
not enforceability of existing Loan Documents) and (v) payment by
Trustor of all reasonable costs of Beneficiary (including without
limitation, staff and local attorneys' fees) incurred in
connection with such transfer; or
(g) A default occurs under the Environmental
Indemnity.
23. Remedies Upon Default. Immediately upon the
occurrence of any Event of Default, the Trustee and Beneficiary
shall have the option, in addition to and not in lieu of or
substitution for all other rights and remedies provided in this
Deed of Trust or any other Loan Document or provided by law or in
equity, and is hereby authorized and empowered by Trustor, to do
any or all of the following:
(a) Declare without notice the entire unpaid amount
of the Indebtedness immediately due and payable, by commencing an
action to foreclose this Deed of Trust as a mortgage, and/or by
delivery to Trustee of a written declaration of default and demand
for sale and of written notice of default and of election to cause
to be sold the Security, which notice Trustee shall cause to be
duly filed for record in case of foreclosure by exercise of the
power of sale herein.
(i) Beneficiary may elect to cause the
Security or any part thereof to be sold under power of sale herein
granted in any manner permitted by applicable law. In connection
with any sale or sales hereunder, Beneficiary may elect to treat
any of the Security which consists of a right in action or which
is property that can be severed from the real property covered
hereby or any improvements thereon without causing structural
damage thereto as if the same were personal property, and dispose
of same in accordance with applicable law, separate and apart from
the sale of the real property. Any sale of any personal property
hereunder shall be conducted in a manner permitted by Section 9501
or any other applicable section of the California Commercial Code.
Where the Security consists of real and personal property or
fixtures, whether or not such personal property is located on or
within the real property, Beneficiary may elect in its discretion
to exercise its rights and remedies against any or all of the real
property, personal property, and fixtures in such order and manner
as is now or hereafter permitted by applicable law.
(ii) Without limiting the generality of the
foregoing, Beneficiary may, in its sole and absolute discretion
and without regard to the adequacy of its security, elect to
proceed against any or all of the real property, personal property
and fixtures in any manner permitted under Section 9501(4)(a) of
the California Commercial Code; and if the Beneficiary elects to
proceed in a manner permitted under Section 9501(4)(a) 9 (ii) of
the California Commercial Code, the power of sale granted herein
shall be exercisable with respect to all or any of the real
property, personal property and fixtures covered hereby, as
designated by Beneficiary, and the Trustee is hereby authorized
and empowered to conduct any such sale of any real property,
personal property and fixtures in accordance with the procedures
applicable to real property.
(iii) Where the Security consists of real
property and personal property, any reinstatement of the
obligation secured hereby, following an Event of Default and an
election by Beneficiary to accelerate the maturity of said
obligation, which is made by Trustor or any other person or entity
permitted to exercise the right of reinstatement under Section
2924c of the California Civil Code or any successor statute,
shall, in accordance with the terms of California Commercial Code
Section 9501(4)(c)(iii), not prohibit the Beneficiary from
conducting a sale or other disposition of any personal property or
fixtures or from otherwise proceeding against or continuing to
proceed against any personal property or fixtures in any manner
permitted by the California Commercial Code; nor shall any such
reinstatement invalidate, rescind or otherwise affect any sale,
disposition or other proceeding held, conducted or instituted with
respect to any personal property or fixtures prior to such
reinstatement or pending at the time of such reinstatement. Any
sums paid to Beneficiary in effecting any reinstatement pursuant
to Section 2924c of the California Civil Code shall be applied to
the secured obligation and to Beneficiary's and Trustee's
reasonable out of pocket costs and expenses in the manner required
by said Section 2924c.
(iv) Should Beneficiary elect to sell any
portion of the Security which is real property or which is
personal property or fixtures that Beneficiary has elected under
Section 9501(4)(a)(ii) of the California Commercial Code to sell
together with real property in accordance with the laws governing
a sale of real property, Beneficiary and Trustee shall give such
notice of sale as may then be required by law. Thereafter, upon
the expiration of such time and the giving of such notice as may
then be required by law, and without the necessity of any demand
on Trustor, Trustee, at the time and place specified in such
notice of sale, shall sell such real property or part thereof at
public auction to the highest bidder for cash in lawful money of
the United States. Trustee may, and upon request of Beneficiary
shall, from time to time, postpone any sale hereunder by public
announcement thereof at the time and place noticed therefor.
(v) If the Security consists of several lots,
parcels or items of property, Beneficiary may: (i) designate the
order in which such lots, parcels or items of property shall be
offered for sale or sold, or (ii) elect to offer such lots,
parcels or items through a single sale, or through two or more
successive sales, or in any other manner Beneficiary deems in its
best interest. Any person, including Trustor, Trustee or
Beneficiary, may purchase at any sale hereunder, and Beneficiary
shall have the right to purchase at any sale hereunder by
crediting upon the bid price the amount of all,or any part of the
indebtedness hereby secured. Should Beneficiary decide that more
than one sale or other disposition of the Security be conducted,
Beneficiary may, at its option, cause the same to be conducted
simultaneously, or successively, on the same day, or at such
different days or times and in such order as Beneficiary may deem
to be in its best interests, and no such sale shall terminate or
otherwise affect the lien of this Deed of Trust or any other Loan
Document on any part of the Security not sold until all
indebtedness secured hereby has been fully paid. In the event
that the Beneficiary elects to dispose of the Security through
more than one sale, Trustor agrees to pay the costs of each such
sale and of any judicial proceedings wherein the same may be made,
including reasonable compensation to Trustee, its agents and
counsel, and to pay all out of pocket expenses, liabilities and
advances made or incurred by Trustee and Beneficiary in connection
with such sale or sales, together with interest on all such
advances made by Trustee at the Default Rate.
(vi) Should Beneficiary elect to foreclose by
exercise of the power of sale herein, Beneficiary shall also
deposit with Trustee this Deed of Trust and the Note and such
receipts and evidence of expenditures made and secured hereby as
Trustee may require, and notice of sale having been given as then
required by law and after lapse of such time as may then be
required by law after recordation of such notice of default,
Trustee, without demand on Trustor, shall sell the Security at the
time and place of sale fixed by it in such notice of sale as
Beneficiary may direct, either as a whole or in separate parcels,
as Beneficiary may determine, at public auction to the highest
bidder for cash in lawful money of the United States, payable at
time of sale. Beneficiary shall have the right to direct the
order in which separate parcels shall be sold and Trustor shall
have no right to direct the order in which separate parcels are
sold. Trustee may postpone sale of all or any portion of the
Security by public announcement at such time and place of sale,
and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement.
Trustee shall deliver to such purchaser its deed conveying the
Security, or any portion thereof, so sold, but without any
covenant or warranty, express or implied. The recitals in such
deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including Trustor, Trustee or
Beneficiary, may purchase at such sale.
(b) Proceed against the Personal Property in
accordance with Beneficiary's rights and remedies with respect to
the Personal Property, including the right to sell the Personal
Property together with the Real Property, separately, and without
regard to the remainder of the Security in accordance with
Beneficiary's rights and remedies provided by the California
Uniform Commercial Code as well as other rights and remedies
available at law or in equity.
(c) Beneficiary may, at Trustor's expense, cause to
be brought down to date a title examination and tax histories of
the Security, procure title insurance or title reports or, if
necessary, procure new abstracts and tax histories.
(d) Procure an updated or entirely new environmental
audit of the Security including building, soil, ground water and
subsurface investigations; have the Improvements inspected by an
engineer or other qualified inspector and procure a building
inspection report; procure an MAI or other appraisal of the
Security or any portion thereof; enter upon the Security at any
time and from time to time to accomplish the foregoing and to show
the Security to potential purchasers and potential bidders at
foreclosure sale; make available to potential purchasers and
potential bidders all information obtained pursuant to the
foregoing and any other information in the possession of
Beneficiary regarding the Security.
Either by itself or by its agent to be appointed
by it for that purpose or by a receiver appointed by a court of
competent jurisdiction, as a matter of strict right, without
notice and without regard to the adequacy or value of any security
for the Indebtedness or the solvency of any party bound for its
payment, to take possession of the Security and, whether or not
Beneficiary has taken possession of the Security, to operate the
Security, Trustor hereby waiving any right Trustor might have to
object to or oppose any such possession, and to collect and apply
the Rents, including those past due and unpaid, in such order and
manner as Beneficiary or such receiver in its sole discretion
shall consider advisable, to or upon the following, in such order
and amounts as Beneficiary shall elect: the expenses of
receivership, if any; the proper costs of upkeep, maintenance,
repair and/or operation of the Security; the repayment of any sums
theretofore or thereafter advanced pursuant to the terms of this
Deed of Trust; the interest then due or next to become due upon
the Indebtedness; the taxes and assessments upon the Security then
due or next to become due; and/or the unpaid principal of such
Indebtedness. The collection and/or receipt of Rents from the
Security by Beneficiary, its agent or receiver, after declaration
of default and election to cause the Security to be sold under and
pursuant to the terms of this Deed of Trust, shall not affect or
impair such default or declaration of default or election to cause
the Security to be sold or any sale proceedings predicated
thereon, but such proceedings may be conducted and sale effected
notwithstanding the receipt and/or collection of any such Rents.
Any such Rents in the possession of Beneficiary, its agent or
receiver, at the time of sale and not theretofore applied as
herein provided, shall be applied in the same manner and for the
same purposes as the proceeds of the sale. Beneficiary's rights
hereunder include its rights under California Code of Civil
Procedure Section 564, as such Section may be amended from time to
time. Except for damage caused by Beneficiary's or Beneficiary's
agents', employees', contractors', successors' and assigns'
willful misconduct or gross negligence, Trustor hereby waives any
claim Trustor may have against Beneficiary for mismanagement of
the Security during Beneficiary's operation of the Security under
this subparagraph or as mortgagee in actual possession under
applicable statutes.
(f) Beneficiary may, at its option, pay, perform or
observe any defaulted term, covenant or condition contained herein
or in any lease, the Management Agreement, the Parking Agreements
or any other Loan Document, and all payments made or out of pocket
costs or expenses incurred by Beneficiary in connection therewith
shall be secured hereby and shall be, within ten (10) days after
written demand, repaid by Trustor to Beneficiary with interest
thereon at the default rate provided in the Note. Beneficiary
shall be the sole judge of the necessity for any such actions and
of the amounts to be paid. Beneficiary is hereby empowered to
enter and to authorize others to enter upon the Security or any
part thereof for the purpose of performing or observing any such
defaulted term, covenant or condition without hereby becoming
liable to Trustor or any person in possession holding under
Trustor.
(g) Apply against the Indebtedness in such order as
Beneficiary shall determine any funds held for the benefit of
Trustor in escrow by Beneficiary or by any third-party escrow
agent under any of the Loan Documents, including without
limitation any funds held under the escrow established by Section
5 of this Deed of Trust.
(h) In the event of any sale of the Security
pursuant to Section 23(a), the proceeds of any such sale which are
applied in accordance with this Deed of Trust shall be applied in
the order following to: (i) all out of pocket expenses incurred
for the collection of the Indebtedness and the foreclosure of this
Deed of Trust, including reasonable compensation to Trustee and
Beneficiary, Trustee's and Beneficiary's agents and attorneys;
(ii) all out of pocket sums expended or incurred by Beneficiary
and Trustee directly or indirectly in carrying out the terms,
covenants and agreements of the Note or notes evidencing the
Indebtedness, of this Deed of Trust and any other Loan Documents,
together with interest thereon as therein provided; (iii) all late
payment charges, prepayment fees, advances and other amounts due
under any of the Loan Documents; (iv) all accrued and unpaid
interest upon the Indebtedness; (v) the unpaid principal amount of
the Indebtedness; and (vi) the surplus, if any, to the person or
persons legally entitled thereto.
In the event of any acceleration of the Indebtedness
pursuant to paragraph (a) of this Section, Trustor shall pay to
Beneficiary together with the principal indebtedness and interest
thereon an amount equal to the prepayment fee provided for in the
Note, and such fee shall be included as part of the Indebtedness,
provided, however, that in the event that Trustor reinstates the
loan evidenced by the Note, Trustor shall not be obligated to pay
any prepayment fee or premium on account of such acceleration.
(i) As described in Section 36 of this Deed of
Trust, Beneficiary may, to the extent permitted under California
Code of Civil Procedure Section 726.5, as such Section may be
amended from time to time ("Section 726.5"), exercise the rights
and remedies of an unsecured creditor to the extent permitted by
law thereunder. In the event Beneficiary so elects, pursuant to
Section 726.5 and this Deed of Trust, the valuation of the real
property, the determination of the environmentally impaired status
of such security and any cause of action for a money judgement
shall, at the request of Beneficiary, be referred to a referee in
accordance with California Code of Civil Procedure Sections 638 et
seq. Such referee shall be an M.A.I. appraiser selected by
Beneficiary and approved by Trustor, which approval shall not be
unreasonably withheld or delayed. The decision of such referee
shall be binding upon both Trustor and Beneficiary, and judgment
upon the award rendered by such referee shall be entered in the
court in which such proceeding was commenced in accordance with
California Code of Civil Procedure Sections 644 and 645.
(j) Subject to the provisions of Section 36 of this
Deed of Trust, Beneficiary may, in accordance with Section 736, as
such section may be amended from time to time, bring an action
against Trustor for breach of any "environmental provision" (as
such term in defined in Civil Code Section 736) made by Trustor
herein or in any other Loan Document, for the recovery of damages
and/or the enforcement of any such "environmental provision".
Neither Trustee nor Beneficiary shall be under any
obligation to make any of the payments or do any of the acts
referred to in this Section and any of the actions referred to in
this Section may be taken by Beneficiary irrespective of whether
any notice of default or election to sell has been given hereunder
and without regard to the adequacy of the security for the
indebtedness evidenced by the Note.
Failure to exercise any right, power or remedy
hereunder shall not constitute a waiver of the Event of Default or
of the right to exercise such option at a later time, or a waiver
of the right to exercise such option, right, power or remedy in
the event of any other Event of Default or circumstance specified
above.
24. Acceleration Interest. In addition to any late
payment charge which may be due under the Note, Trustor shall pay
interest on all sums due hereunder at a rate (the "Default Rate")
equal to the lesser of (i) the interest rate set forth in the Note
plus four percent (4%) per annum, or (ii) the maximum rate that
the parties may contract for under applicable law, from and after
the first to occur of the following events: if Beneficiary elects
to cause the acceleration of the Indebtedness; if an Event of
Default occurs under Section 22(d) or 22(e) of this Deed of Trust
(which is not cured within any applicable grace period afforded
therein); or if all sums due hereunder are not paid on the
Maturity Date as set forth in the Note.
25. Late Charge. In the event any sums principal,
interest or escrow payments due under the Note, this Deed of Trust
or any other Loan Document are not paid by Trustor within five (5)
business days of when due, without regard to any cure or grace
period, Trustor shall pay to Beneficiary a late charge for the
month during which such payment is not made when due and for each
month or fraction thereof that such sum remains unpaid, equal to
the lesser of four percent (4%) of such installment or the maximum
rate that the parties may contract for under applicable law, as
the reasonable estimate by Beneficiary and Trustor of a fair
average compensation for the loss that may be sustained by
Beneficiary due to the failure of Trustor to make timely payments,
and such amount shall be secured hereby. Such late charge shall
be paid without prejudice to the right of Beneficiary to collect
any other amounts provided to be paid or to declare an Event of
Default under this Deed of Trust or any other Loan Document.
26. Waiver of Statutory Rights. Trustor agrees, to the
full extent permitted by law, that in an Event of Default on the
part of Trustor hereunder, neither Trustor nor anyone claiming
through or under Trustor will set up, claim, or seek to take
advantage of any moratorium, reinstatement, forbearance,
appraisement, valuation, stay, homestead, extension, exemption or
redemption laws now or hereafter in force, in order to prevent or
hinder the enforcement or foreclosure of this Deed of Trust, or
the sale of the Security, or the delivery of possession thereof
immediately after such sale to the purchaser at such sale, and
Trustor, for itself and all who may at any time claim through or
under it, hereby waives to the full extent that it may lawfully do
so, the benefit of all such laws, and any and all rights to have
the assets subject to the security interest of this Deed of Trust
marshalled upon any foreclosure or sale under the power granted
herein.
27. Security Interest. This Deed of Trust shall, as to
any equipment and other Personal Property covered hereby and all
additions thereto, substitutions therefore and proceeds thereof,
be deemed to constitute a security agreement, and Trustor, as
debtor, hereby grants to Beneficiary, as secured party, a security
interest therein pursuant to the California Uniform Commercial
Code. Trustor agrees, upon request of Beneficiary, to furnish an
inventory of Personal Property owned by Trustor and subject to
this Deed of Trust and, upon request by Beneficiary, to execute
and file and/or record all at Trustor's expense any supplements to
this Deed of Trust, any separate security agreement and any
financing statements and continuation statements in order to
include specifically said inventory of Personal Property or
otherwise to perfect the security interest granted hereby.
Without the prior written consent of Beneficiary, Trustor shall
not create or suffer to be created any other security interest in
said property, including replacements and additions thereto.
Except as previously disclosed to and approved by Beneficiary in
writing, Trustor warrants and agrees that there is no existing
financing statement covering such property, or any part thereof,
on file in any public office (other than those in favor of
Beneficiary, as secured party) and agrees that all or such portion
of any such property now or hereafter subject to this Deed of
Trust is, and shall be, kept (except with the written consent of
Beneficiary) free and clear from any other lien, security interest
or encumbrance. Upon any Event of Default, Beneficiary shall have
all of the rights and remedies provided in said Code or otherwise
provided by law or by this Deed of Trust, including but not
limited to the right to require Trustor to assemble such Personal
Property and make it available to Beneficiary at a place to be
designated by Beneficiary which is reasonably convenient to both
parties, the right to take possession of such Personal Property
with or without demand and with or without process of law and the
right to sell and dispose of the same and distribute the proceeds
according to law. The parties hereto agree that any requirement
of reasonable notice shall be met if Beneficiary sends such notice
to Trustor at least ten (10) days prior to the date of sale,
disposition or other event giving rise to the required notice, and
that the proceeds of any disposition of any such Personal Property
may be applied by Beneficiary first to the reasonable expenses in
connection therewith, including reasonable attorneys' fees and
legal expenses incurred, and then to payment of the Indebtedness
in such order and amounts as Beneficiary shall elect. With
respect to the Personal Property that has become so attached to
the Real Property that an interest therein arises under the real
property law of the State, this Deed of Trust shall also
constitute a financing statement and a fixture filing under the
California Uniform Commercial Code.
28. Right of Entry. Subject to the rights of tenants
under the tenant leases, Beneficiary and Beneficiary's
representatives may at all times upon five (5) days prior notice
to Trustor (except in the case of an emergency, in which case no
notice shall be required) enter upon the Security and inspect the
same, or cause it to be inspected by agents, employees, or
independent contractors of Beneficiary, and show the same to
others, but Beneficiary shall not be obligated to make any such
entry or inspection. Beneficiary's rights hereunder shall include
its rights under California Civil Code Section 2929.5 as such
Section may be amended from time to time.
29. Estoppel Certificate. Both Trustor and Beneficiary,
within fifteen (15) days after written request from the other
party, will furnish a signed statement in writing, duly
acknowledged, of the amount then due or outstanding hereunder and
whether or not any offsets or defenses exist against the
Indebtedness, and if so, specifying such offsets and defenses.
Upon request by Beneficiary, Trustor shall exercise any right it
may have to request an estoppel certificate from any or all of the
tenants on the Security within fifteen (15) days following
Beneficiary's request.
30. Annual Statements. Trustor shall, within ninety (90)
days after the end of each fiscal year of Trustor, deliver to
Beneficiary a balance sheet, statement of sources and uses, rent
roll acceptable to Beneficiary, and a statement of operating cash
flow and accounts receivable in reasonable detail. These annual
reports are to be certified by a managing general partner of
Trustor, confirming that they have been prepared in accordance
with generally accepted accounting principles together with any
"Notes to Financial Statements". In addition, Trustor agrees to
upon request provide Beneficiary with unaudited quarterly cash
flow reports and current rent roll and Trustor agrees to provide a
proforma income statement and current expense statement for the
current and prior year by January 15 of the current year.
Beneficiary may, at any time, require that the annual reports be
accompanied by an unqualified opinion of independent certified
public accountants who are satisfactory to Beneficiary, the cost
of which shall be paid by Trustor, provided however, that in no
event shall Trustor be required to deliver the same prior to the
date which is the later of (i) 90 days after Beneficiary's request
or (ii) 90 days after the end of Trustor's fiscal year.
If Trustor omits to prepare and deliver promptly any
report required by this Section, Beneficiary shall have the right,
but not the obligation, in addition to exercising any remedy for
an Event of Default as provided for in this Deed of Trust, to make
an audit of all books and records of Trustor and its
beneficiaries, including without limitation their bank accounts,
which in any way pertain to the Security, and to prepare the
statement or statements which Trustor failed to procure and
deliver. Such audit shall be made and such statements shall be
prepared by an independent Certified Public Accountant to be
selected by Beneficiary. Trustor shall pay all expenses of the
audit and other services, which expenses shall be secured hereby
as part of the Indebtedness and shall be immediately due and
payable with interest thereon at the Default Rate set forth
herein.
Beneficiary shall use reasonable care to maintain the
confidentiality of any information received pursuant to this
Section and all other non-public information about Trustor or any
indemnitor or guarantor or the physical condition of the Security;
provided, however, that Beneficiary may disclose such information
to its officers, employees, directors, agents, loan
correspondents, independent auditors, engineering consultants,
counsel or similar professionals, and to any prospective
transferee (or agent or broker of such transferee) of all or any
portion of Beneficiary's investment in connection with a
contemplated sale of the loan evidenced by the Note, or as
Beneficiary may deem necessary to allow for a fair sale of the
Security in any foreclosure sale, and may disclose to such other
persons or entities such information (i) as may become generally
available to the public, (ii) as shall be required or appropriate
in any report, statement or testimony submitted to, or made
available in any audit conducted by, any municipal, state or
federal regulatory body, the National Association of Insurance
Commissioners or similar organizations or their successors, or any
other regulatory or rating agency or company, (iii) as shall be
required or appropriate in response to any summons or subpoena or
in connection with any litigation, or (iv) to the extent
Beneficiary shall believe it appropriate to protect Beneficiary's
investment, or in order to comply with any law, order, regulation
or ruling applicable to Beneficiary.
31. Rights Cumulative. Each right and remedy of
Beneficiary under this Deed of Trust, the Note and any other Loan
Documents, shall be in addition to every other right and remedy of
Beneficiary and such rights and remedies may be enforced
separately or in any combination.
32. Subrogation. To the extent that proceeds of the
Indebtedness are used to pay any outstanding lien, charge or
encumbrance affecting the Security, such proceeds have been
advanced by Beneficiary at Trustor's request, and Beneficiary
shall be subrogated to all rights, interest and liens owned or
held by any owner or holder of such outstanding liens, charges and
encumbrances, irrespective of whether such liens, charges or
encumbrances are released of record; provided, however, that the
terms and provisions hereof shall govern the rights and remedies
of Beneficiary and shall supersede the terms, provisions, rights,
and remedies under the lien or liens to which Beneficiary is
subrogated hereunder.
33. No Waiver. Any failure by Beneficiary or Trustee to
insist upon the strict performance by Trustor of any of the terms
and provisions hereof shall not be deemed to be a waiver of any of
the terms and provisions hereof, and Beneficiary, notwithstanding
any such failure, shall have the right thereafter to insist upon
the strict performance by Trustor of any and all of the terms and
provisions hereof to be performed by Trustor.
34. Deed of Trust Extension. The lien hereof shall remain
in full force and effect during any postponement or extension of
the time of payment of the Indebtedness, or of any part thereof,
and any number of extensions or modifications hereof, or any
additional notes taken by Beneficiary, shall not affect the lien
hereof or the liability of Trustor or of any subsequent obligor to
pay the Indebtedness unless and until such lien or liability be
expressly released in writing by Beneficiary.
35. Indemnification. Trustor shall indemnify and hold
Beneficiary harmless from and against all obligations,
liabilities, losses, costs, expenses, fines, penalties or damages
(including reasonable attorneys' fees) which Beneficiary may incur
by reason of this Deed of Trust or with regard to the Security
prior to the exercise of any remedies under this Deed of Trust.
Trustor shall defend Beneficiary against any claim or litigation
involving Beneficiary for the same, and shall have the right to
select counsel reasonably acceptable to Beneficiary. In the event
that Beneficiary incurs such obligation, liability, loss, cost,
expense, fine, penalty or damage, then Trustor shall reimburse
Beneficiary within ten (10) days of demand. Any amount owed
Beneficiary under this provision shall bear interest at the
Default Rate set forth herein and shall be secured hereby.
36. Nonrecourse. Notwithstanding any provision herein or
in any other Loan Document to the contrary, Trustor's liability
for repayment of the Indebtedness or the performance of any
obligation hereunder or under any Loan Document shall be limited
to the Security, except as provided in this Section 36.
Accordingly, no judgment for the repayment of the Indebtedness or
the performance of any obligation, or to collect any amount
payable under any of the Loan Documents shall be enforced against
Trustor or any other party personally in any action to foreclose
this Deed of Trust or to otherwise realize upon the Security or
to collect any amount payable under any Loan Document.
Nothing herein contained shall be construed as
prohibiting Beneficiary from exercising any and all remedies which
the Loan Documents permit, including the right to bring actions or
proceedings (including an action or suit for judicial foreclosure)
against Trustor and to enter a judgment against Trustor, so long
as the exercise of any remedy does not extend to obtaining a
judgment in the nature of a deficiency judgment or to the or the
execution against or recovery out of any property of Trustor or
any direct or indirect partner in Trustor other than the Security
or other security furnished under the Loan Documents on account of
a judgment in the nature of a deficiency judgment.
Notwithstanding the foregoing limitations, Trustor and its general
partners (but not any other sub-tier entities) shall be liable for
the following acts or omissions, to the extent described:
(a) (i) misapplying (i.e. using in a manner other
than as permitted under the Loan Documents) any condemnation
awards or insurance proceeds attributable to the Security, to the
full extent of such awards or proceeds so misapplied; (ii) at the
time of foreclosure or conveyance in lieu thereof, failing to turn
over any unapplied security deposits attributable to the Security
and required to be held by Trustor under the terms of any and all
leases, to the full extent of such failure; (iii) collecting any
rents in advance in violation of any covenant contained in the
Loan Documents, to the full extent of such rents so collected in
advance; (iv) committing fraud, intentional misrepresentation or
waste in connection with the operation of the Security or the
making of the loan secured hereby, to the full extent of any
remedies available at law or in equity; (v) failing to pay when
due any debt service on any indebtedness related to the Security,
operating and maintenance charges, insurance premiums, deposits
into a reserve for replacements or any other sums due under the
Loan Documents (the existence of which are known to Trustor), but
only to the extent that gross revenues from the Security during
the six (6) months prior to a notice of acceleration to Trustor
through the date of foreclosure or conveyance in lieu thereof were
otherwise sufficient to pay such expenses but were not so used;
and
(b) Under any separate guaranty, master lease or
indemnity agreement from Trustor or its general partners
including, but not limited to, the Environmental Indemnity,
provided that such agreement expressly states that recourse
thereunder is an exception to the limitation on liability provided
herein.
Notwithstanding any provision hereof to the contrary,
Beneficiary shall be permitted to bring an action against Trustor
and its general partners personally (but not against any sub-tier
entities) and to execute against and recover out of any property
of Trustor or its general partners (but not against or out of
property of any other sub-tier entity), for all sums due pursuant
to the Loan Documents to the extent permitted by the terms of
Section 726.5, and to have the rights and remedies of an unsecured
lender to the extent permitted thereunder. If Beneficiary
exercises the rights and remedies of an unsecured creditor in
accordance with this grammatical paragraph, Trustor and its
general partners (but not any other sub-tier entities) promise to
pay Beneficiary, on demand by Beneficiary, following the exercise,
all amounts owed to Beneficiary under the Loan Documents, and
Trustor and its general partners (but not any other sub-tier
entity) agree that Trustor and its general partners (but not any
other sub-tier entity) will be personally liable for the payment
of all such sums.
Notwithstanding anything herein or in any other Loan
Document to the contrary, no present or future constituent partner
in or agent of the general partners of Trustor or their respective
successors or assigns, nor any shareholder, officer, director,
employee, trustee, beneficiary or agent of any corporation or
trust of agent of Trustor or of any constituent partner in Trustor
shall be personally liable, directly or indirectly under or in
connection with the Note, this Deed of Trust or any other Loan
Document, or any instrument or certificate securing or otherwise
executed in connection with the Note, this Deed of Trust, or any
other Loan Document or any amendments or modifications thereto
made at any times heretofore or hereafter and Beneficiary and
Beneficiary's successors and assigns hereby waive such personal
liability. Accordingly, with respect to the foregoing exceptions
to the non-recourse provisions contained in Sections 36(a) and
36(b) of this Deed of Trust, and the Environmental Indemnity,
Beneficiary's recourse shall be limited solely to the assets of
Trustor and its general partners (but of no other sub-tier
entity).
For the purposes of the Note, this Deed of Trust, each
of the other Loan Documents and any such instruments or
certificates and any amendments and modifications thereto, neither
a negative capital account of any constituent partner in Trustor
nor any obligation to restore any negative capital account of
Trustor or of any constituent partner in Trustor shall at all
times be deemed to be the property or asset of Trustor or any
other constituent partner and neither Beneficiary nor its
successors and assigns shall have the right to collect, enforce or
proceed against or with respect to any such negative capital
account or a partner's obligation to restore or contribute. As
used in this paragraph, "constituent partner" means a partner in
Trustor or in a partnership that has a direct or indirect interest
(through one or more partnerships) in Trustor.
37. Attorneys' Fees. Any reference to "attorney fees",
"attorneys' fees" or attorney's fees" in this document means both
the reasonable out of pocket fees, charges and costs incurred by
Beneficiary or Trustee through Beneficiary's or Trustee's
retention of outside legal counsel, paralegals or legal
assistants, and the reasonable allocable fees, costs and charges
for services rendered by Beneficiary's in-house counsel,
paralegals and legal assistants. Any reference to "attorney
fees", "attorneys' fees" or attorney's fees" in this document
shall also include but not be limited to those reasonable out of
pocket attorneys or legal fees, costs and charges incurred by
Beneficiary or Trustee in the collection of any Indebtedness, the
enforcement of obligations hereunder, the protection of the
Security, the appointment of a receiver as permitted hereunder,
the foreclosure of this Deed of Trust, the sale of the Security by
power of sale under the Loan Documents , any action by Beneficiary
pursuant to Section 726.5, the defense of actions arising
hereunder and the collection, protection or setoff of any claim
Beneficiary may have in a proceeding under Title 11, United States
Code, or any state bankruptcy or insolvency statute. Attorneys'
fees provided for hereunder shall accrue whether or not
Beneficiary has provided notice of default or of an intention to
exercise its remedies for such default. Furthermore, any
reference in this Deed of Trust or any other Loan Document to "out
of pocket" fees, costs, charges or expenses shall include
attorneys' fees as described herein, including, without
limitation, any reasonable allocable fees, costs, charges and
expenses for services rendered by Beneficiary's in-house counsel,
paralegals or legal assistants.
38. Trustee's Costs and Expenses; Governmental Charges.
Trustor shall pay all costs, fees and expenses of Trustee, its
agents and counsel in connection with the performance of its
duties hereunder, including without limitation the cost of any
trustee's sale guaranty or other title insurance coverage ordered
in connection with any foreclosure proceedings hereunder, and
shall pay all taxes (except federal and state income taxes) or
other governmental charges or impositions imposed by any
governmental authority on Trustee or Beneficiary by reason of
their interest in the Loan Documents.
39. Protection of Security; Costs and Expenses. Trustor
shall appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary
or Trustee, and shall pay all costs and expenses, including
without limitation cost of evidence of title and reasonable
attorneys' fees, in any such action or proceeding in which
Beneficiary or Trustee may appear, and in any suit brought by
Beneficiary to foreclose this Deed of Trust or to enforce or
establish any other rights or remedies of Beneficiary hereunder
(including, without limitation, any action pursuant to Section
726.5). If Trustor fails to perform any of the covenants or
agreements contained in this Deed of Trust within applicable
notice or cure periods, if any, or if any action or proceeding is
commenced which affects Beneficiary's or Trustee's interest in the
Security or any part thereof, including, but not limited to,
eminent domain, code enforcement, or proceedings of any nature
whatsoever under any federal or state law, whether now existing or
hereafter enacted or amended, relating to bankruptcy, insolvency,
arrangement, reorganization or other form of debtor relief, or to
a decedent, then Beneficiary or Trustee may, but without
obligation to do so and without notice to or demand upon Trustor
and without releasing Trustor from any obligation hereunder, make
such appearances, disburse such sums and take such action as
Beneficiary or Trustee deems necessary or appropriate to protect
Beneficiary's or Trustee's interest, including, but not limited
to, disbursement of reasonable attorneys' fees, entry upon the
Security to make repairs or take other action to protect the
security hereof, and pay, purchase, contest or compromise any
encumbrance, charge or lien which in the judgment of either
Beneficiary or Trustee appears to be prior or superior hereto.
Trustor further agrees to pay all reasonable expenses of
Beneficiary or Trustee (including without limitation fees and
disbursements of counsel) incident to the protection of the rights
of Beneficiary hereunder, or to enforcement or collection of
payment of the Indebtedness, whether by judicial or non-judicial
proceedings, or in connection with any bankruptcy, insolvency,
arrangement, reorganization or other debtor relief proceeding of
Trustor, or otherwise. Any amounts disbursed by Beneficiary or
Trustee pursuant to this Section shall be additional indebtedness
of Trustor secured by the Loan Documents as of the date of
disbursement and shall bear interest at the Default Rate. All
such amounts shall be payable by Trustor within ten (10) days of
demand. Nothing contained in this Section shall be construed to
require Beneficiary or Trustee to incur any expense, make any
appearance, or take any other action.
40. Notices. Any notice, demand, request, statement or
consent made hereunder shall be in writing, signed by the party
giving such notice, request, demand, statement, or consent, and
shall be delivered personally, or delivered to a reputable
overnight delivery service providing a receipt, or deposited in
the United States mail, postage prepaid and registered or
certified mail, return receipt requested, addressed as set forth
below or to such other address within the continental United
States of America as may have theretofore have been designed in
writing. The effective date of any notice given as aforesaid
shall be the date of personal service, one (1) business day after
delivery to such overnight delivery service, or three (3) business
days after being deposited in the United States mail, whichever is
applicable. For purposes hereof, the addresses are as follows:
If to Beneficiary: Connecticut General Life Insurance
Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Investment Services, S-319
with a copy to: CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, Connecticut 06152-2215
Attn: Real Estate Division, S-215A
If to Trustor: JMB/San Jose Associates
c/o JMB Realty Corporation
900 N. Michigan Avenue
Chicago, Illinois 60611
Attn: Director of Finance
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, CA 90067
Attn: Real Estate Notices (DSB)
41. Reconveyance. Upon the payment in full of all sums
secured by this Deed of Trust, Beneficiary shall request Trustee
to reconvey the Security and shall surrender this Deed of Trust
and all notes evidencing indebtedness secured by this Deed of
Trust to Trustee. Upon payment of its fees and any other sums
owing to it under this Deed of Trust, Trustee shall reconvey the
Security without warranty to the person or persons legally
entitled thereto. Such person or persons shall pay all costs or
recordation, if any. The recitals in such reconveyance of any
matters or facts shall be conclusive proof of the truthfulness
thereof. The grantee in such reconveyance may be described as
"the person or persons legally entitled thereto." Five (5) years
after issuance of such full reconveyance, Trustee may destroy said
notes and this Deed of Trust unless otherwise directed by
Beneficiary.
42. Applicable Law. The provisions hereof shall be
construed in accordance with the laws of the State of California.
43. Substitution of Trustee. Beneficiary may remove
Trustee at any time or from time to time for any reason (with or
without cause) and appoint a successor trustee, and upon such
appointment, all powers, rights, duties and authority of Trustee,
as aforesaid, shall thereupon become vested in such successor.
Such substitute trustee shall be appointed by written instrument
duly recorded in the county or counties where the Security covered
hereby is located, which appointment may be executed by any
authorized agent of Beneficiary or in any other manner permitted
by applicable law.
44. Invalidity. If any provision of this Deed of Trust
shall be held invalid or unenforceable, the same shall not affect
in any respect whatsoever the validity of the remainder of this
Deed of Trust.
45. Captions. The captions in this instrument are
inserted only as a matter of convenience and for reference, and
are not and shall not be deemed to be any part hereof.
46. Modifications. This Deed of Trust may not be changed
or terminated except in writing by both Trustor and Beneficiary.
The provisions of this Deed of Trust shall extend and be
applicable to all renewals, amendments, extensions,
consolidations, and modifications of the other Loan Documents, and
any and all references herein to the Loan Documents shall be
deemed to include any such renewals, extensions, amendments,
consolidations, or modifications thereof.
47. Bind and Inure. The provisions of this Deed of Trust
shall be binding on Trustor and its heirs, successors and assigns,
and any subsequent owners of the Security. The covenants of
Trustor herein shall run with the land, and this Deed of Trust and
all of the covenants herein contained shall inure to the benefit
of Beneficiary, its successors and assigns.
48. Replacement of Note. Upon receipt of evidence
reasonably satisfactory to Trustor of the loss, theft, destruction
or mutilation of the Note, Trustor will execute and deliver, in
lieu thereof, a replacement Note,identical in form and substance
to the Note and dated as of the date of the Note, and upon such
execution and delivery all references in this Deed of Trust to the
Note shall be deemed to refer to such replacement Note.
49. Time of the Essence. Time is of the essence with
respect to each and every covenant, agreement and obligation of
Trustor under this Deed of Trust, the Note and any of the other
Loan Documents.
Amendment and Restatement. This Deed of Trust amends,
modifies and restates in its entirety that certain Deed of Trust,
Assignment of Rents, Security Agreement and Fixture Filing dated
September 29, 1986 from Trustor in favor of Beneficiary and
recorded in the Official Records of Santa Clara County as
Instrument No. 8963704, together with any and all extensions,
modifications and amendments thereto (the "Original Deed of
Trust"). All references to the "Deed of Trust" contained herein
or in any of the other Loan Documents shall mean the Original Deed
of Trust as restated hereby. Trustor covenants and agrees that
there are no defenses or set-offs with respect to this Deed of
Trust, the indebtedness secured by same, or with respect to the
collection or enforcement thereof. Trustor further covenants that
each and every provision of this Deed of Trust are in full force
and effect and are lawful and binding obligations of the Trustor
and are enforceable in accordance with their terms. Nothing
herein contained shall be construed to impair the lien created by
the Original Deed of Trust or the priority thereof. The parties
do not intend this agreement to be construed as a novation of the
Note or any other Loan Document.
REQUEST FOR NOTICE
Trustor hereby requests that a copy of any Notice of Default and
Notice of Sale as may be required by law be mailed to Trustor at
its address above stated.
IN WITNESS WHEREOF, Trustor has duly executed this
Deed of Trust as of the day and year first above written.
TRUSTOR: JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership
By: JMB Income Properties, Ltd.-XI,
an Illinois limited partnership,
General Partner
By: JMB Realty Corporation,
a Delaware corporation,
General Partner
By:
Name:
Its:
By: JMB Income Properties, Ltd.-XII,
an Illinois limited partnership,
General Partner
By: JMB Realty Corporation,
a Delaware corporation,
General Partner
By:
Name:
Its:
AMENDED AND RESTATED
DEED OF TRUST, SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS AND FIXTURE FILING
DEED OF TRUST, SECURITY AGREEMENT
WITH ASSIGNMENT OF RENTS AND FIXTURE FILING
TABLE OF CONTENTS
Page
1. Payment of Indebtedness. . . . . . . . . . . . . . . . . 4
2. Covenants of Title . . . . . . . . . . . . . . . . . . . 4
3. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Impositions. . . . . . . . . . . . . . . . . . . . . . . 5
5. Tax Deposits . . . . . . . . . . . . . . . . . . . . . . 6
6. Change in Taxes. . . . . . . . . . . . . . . . . . . . . 7
7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 7
8. Casualty . . . . . . . . . . . . . . . . . . . . . . . . 10
9. Condemnation . . . . . . . . . . . . . . . . . . . . . . 13
10. Repair; Alterations; Waste . . . . . . . . . . . . . . . 14
11. Environmental. . . . . . . . . . . . . . . . . . . . . . 15
12. Independence of Security . . . . . . . . . . . . . . . . 18
13. No Other Liens . . . . . . . . . . . . . . . . . . . . . 18
14. Management . . . . . . . . . . . . . . . . . . . . . . . 18
15. Ground Lease . . . . . . . . . . . . . . . . . . . . . . 19
16. Sidewalks, Municipal Charges . . . . . . . . . . . . . . 19
17. Assignment of Rents and Leases . . . . . . . . . . . . . 19
18. Future Leases. . . . . . . . . . . . . . . . . . . . . . 20
19. Trustor's Obligations as Lessor. . . . . . . . . . . . . 21
20. Leases; Foreclosure. . . . . . . . . . . . . . . . . . . 21
21. Operating Agreements . . . . . . . . . . . . . . . . . . 22
22. Events of Default. . . . . . . . . . . . . . . . . . . . 22
23. Remedies Upon Default. . . . . . . . . . . . . . . . . . 25
24. Acceleration Interest. . . . . . . . . . . . . . . . . . 29
25. Late Charge. . . . . . . . . . . . . . . . . . . . . . . 30
26. Waiver of Statutory Rights . . . . . . . . . . . . . . . 30
27. Security Interest. . . . . . . . . . . . . . . . . . . . 30
28. Right of Entry . . . . . . . . . . . . . . . . . . . . . 31
29. Estoppel Certificate . . . . . . . . . . . . . . . . . . 31
30. Annual Statements. . . . . . . . . . . . . . . . . . . . 31
31. Rights Cumulative. . . . . . . . . . . . . . . . . . . . 32
32. Subrogation. . . . . . . . . . . . . . . . . . . . . . . 32
33. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . 32
34. Deed of Trust Extension. . . . . . . . . . . . . . . . . 33
35. Indemnification. . . . . . . . . . . . . . . . . . . . . 33
36. Nonrecourse. . . . . . . . . . . . . . . . . . . . . . . 33
37. Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . 35
38. Trustee's Costs and Expenses; Governmental Charges . . . 35
39. Protection of Security; Costs and Expenses . . . . . . . 35
40. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 36
41. Reconveyance . . . . . . . . . . . . . . . . . . . . . . 36
42. Applicable Law . . . . . . . . . . . . . . . . . . . . . 37
43. Substitution of Trustee. . . . . . . . . . . . . . . . . 37
44. Invalidity . . . . . . . . . . . . . . . . . . . . . . . 37
45. Captions . . . . . . . . . . . . . . . . . . . . . . . . 37
46. Modifications. . . . . . . . . . . . . . . . . . . . . . 37
47. Bind and Inure . . . . . . . . . . . . . . . . . . . . . 37
48. Replacement of Note. . . . . . . . . . . . . . . . . . . 37
49. Time of the Essence. . . . . . . . . . . . . . . . . . . 37
50. Amendment and Restatement. . . . . . . . . . . . . . . . 37
Exhibit A - Legal Description
Exhibit B - Estoppel Certificate Form
Exhibit C - Subordination, Non-Disturbance and Attornment Agreemente Form
EXHIBIT A
Legal Description
EXHIBIT B
Estoppel Certificate Form
This form has been separately furnished
by Beneficiary to Trustor.
EXHIBIT C
Subordination, Non-Disturbance
and Attornment Agreement Form
This form has been separately furnished
by Beneficiary to Trustor.
REAL ESTATE TAX
ESCROW AND SECURITY AGREEMENT
(150 Almaden/185 Park)
This Real Estate Tax Escrow and Security Agreement (this
"Agreement") is entered into as of the _____ day of November, 1994
by and among JMB/SAN JOSE ASSOCIATES, an Illinois general
partnership ("Borrower"), CONNECTICUT GENERAL LIFE INSURANCE
COMPANY, a Connecticut corporation ("Lender"), and BANK OF AMERICA
NT&SA, GLOBAL ESCROW DEPOSITORY SERVICES 8010 ("Escrow Holder").
RECITALS
A. Lender has loaned to Borrower a sum of money evidenced
by an Amended and Restated Promissory Note (the "Note") in the
face principal sum of Twenty-Two Million Five Hundred Thousand
Dollars ($22,500,000) of even date herewith, given by Borrower to
Lender, which Note is secured by, inter alia, an Amended and
Restated Deed of Trust, Security Agreement With Assignment of
Rents and Fixture Filing (the "Deed of Trust") of even date
herewith on a fee simple interest in certain real property located
in the City of San Jose, County of Santa Clara, State of
California, together with the improvements and collateral as
described in the Deed of Trust, and as more particularly described
in the Deed of Trust (collectively, the "Property") (collectively,
the Note, the Deed of Trust, and any other documents evidencing,
securing or otherwise relating to the loan evidenced by the Note
are referred to herein as the "Loan Documents").
B. Under the provisions of the Deed of Trust, Borrower
must make monthly deposits to an escrow account with a bank
selected by Lender, such deposits to be of sufficient funds (as
reasonably estimated by Lender from time to time) to permit the
payment in full of the next maturing real property taxes and
assessments before any penalty or interest for the nonpayment
thereof attaches or accrues (collectively, "taxes") on the
Property.
C. Lender and Borrower desire to enter into an escrow
agreement with Escrow Holder to provide for said deposits for
taxes, and Escrow Holder is willing to act as holder of the
deposits so made by Borrower on the terms and conditions
hereinafter set forth.
AGREEMENT
1. Recitals: The foregoing recitals are true and correct
and are incorporated herein by this reference.
2. Escrow Holder: Lender and Borrower hereby appoint and
designate the above-named Escrow Holder for the purposes set forth
herein. Lender hereby appoints Escrow Holder as its agent for the
purpose of possessing, segregating and holding the Escrow Account
(as hereinafter defined) and all contents, money, rights and
proceeds therein and thereof. Escrow Holder hereby accepts such
appointments subject to the terms of this Agreement, and
acknowledges that it shall hold the Escrow Account subject to the
terms of this Agreement.
3. Deposits into Escrow: On the date hereof, Borrower
has deposited with Escrow Holder the sum of $29,658.70. Said
deposit shall be deposited by Escrow Holder in a separate
interest-bearing escrow account in the name of "Connecticut
General Life Insurance Company, as secured party of JMB/San Jose
Associates Real Estate Tax Escrow Account" (the "Escrow Account").
The Escrow Account number is ___________. Thereafter, on the
first day of each succeeding month, commencing December 1, 1994,
Borrower shall make monthly deposits to Escrow Holder, in an
amount to be determined by Lender, in its reasonable discretion,
to be equal to one-twelfth (1/12) of the annual estimated taxes,
to be deposited by Escrow Holder in the Escrow Account. Lender
hereby informs Borrower and Escrow Holder that the initial monthly
deposit shall be $29,658.70. All funds so deposited by Escrow
Holder in the Escrow Account shall be disbursed in accordance with
the terms of this Agreement. If Lender determines that the amount
of the monthly deposit must increase or decrease, Lender shall
notify Borrower and Escrow Holder in writing of the new amount of
such monthly deposit and provide Borrower with information
substantiating the redetermination of the calculation. Commencing
on the later of the first day of the month next succeeding said
written notification or ten (10) days after written notice to
Borrower, Borrower shall deposit with Escrow Holder an amount
equal to the new amount for such monthly deposit set forth in such
written notification. If Borrower receives notification from the
tax collector of a change in the amount of the taxes, Borrower
shall promptly notify Lender and Escrow Holder in writing.
4. Withdrawal Terms:
(a) Payment of Taxes: Not more than thirty (30)
days before the date when any penalty or interest for the
nonpayment of an installment of taxes would attach or accrue,
Escrow Holder shall immediately issue a check against the funds in
the Escrow Account for the amount of said installment, to the
extent there exist such funds in the Escrow Account, and made
payable to the appropriate governmental authority, and notify
Borrower if the funds available are not sufficient to pay said
installment of taxes. Immediately upon said notification and
prior to the time said payment of taxes becomes delinquent,
Borrower shall deliver to Escrow Holder a check drawn on the
Borrower's account which is payable to the appropriate
governmental authority and in an amount equal to the difference
between the amount of the check delivered to Escrow Holder and the
amount of the installment of taxes then due. Upon receipt of
sufficient funds, Escrow Holder shall promptly pay said taxes, and
certify to Lender, in the form attached hereto as Schedule 1, that
such taxes have been paid.
(b) No Other Disbursements: Except for the payment
of interest as provided in the paragraph entitled "Interest
Payments" below, and except upon termination of this Agreement as
contemplated by the paragraph entitled "Termination of Escrow"
also below, Escrow Holder shall not disburse or otherwise pay any
funds from the Escrow Account other than in accordance with this
paragraph entitled "Withdrawal Terms". Payments from said
deposits for such purposes may be made even though subsequent
owners of the Property or holders of Borrower's fee simple
interest therein may thereby benefit.
5. Interest Payments: So long as (i) Borrower holds
title to and controls the Property, (ii) tax payments are paid in
full prior to the date when any penalty or interest attaches or
accrues, (iii) there then exists no default, by Borrower, or any
state of facts which, with the passage of time or giving of
notice, or both, would constitute a default hereunder or under any
of the Loan Documents, and (iv) Escrow Holder has not received
written notice from Lender of default by Borrower, or any state of
facts which, with the passage of time or giving of notice, or
both, would constitute a default hereunder or under any of the
Loan Documents, Escrow Holder shall pay directly to Borrower all
interest earned on the funds in the Escrow Account, less
reasonable escrow costs charged by the Escrow Holder, on each date
when tax payment withdrawals are made from the Escrow Account, and
upon termination of this Agreement pursuant to the paragraph
entitled "Termination of Escrow" below. Other than for gross
negligence or willful misconduct on the part of Lender, it is
specifically agreed that under no circumstances shall Lender be
liable or accountable to Borrower for interest or any other return
on or benefit accruing to funds delivered on deposit pursuant to
this Agreement.
6. Default Provisions: Upon receipt by Escrow Holder of
notice from Lender of a default by Borrower, or any state of facts
which, with the passage of time or giving of notice, or both,
would constitute a default hereunder or under any of the Loan
Documents, Escrow Holder shall provide Borrower with a copy of
such notice and immediately stop paying to Borrower the interest
earned on the funds in the Escrow Account. At the written request
of Lender, Escrow Holder shall forthwith pay over to Lender all
funds, including principal and interest, then in the Escrow
Account. Lender and Borrower agree that Lender shall be entitled
to apply such funds in accordance with the terms of the paragraph
entitled "Tax Deposits" in the Deed of Trust, and upon such
payment by Escrow Holder to Lender, this Agreement shall
terminate.
7. Security Interest:
(a) This Agreement is intended to provide additional
security for the payment of all amounts now and in the future
payable under any of the Loan Documents. To that end, Borrower
hereby grants, pledges, transfers and assigns to Lender a
continuing security interest in and right of set-off against the
following, whether now existing or hereafter acquired or arising:
all of Borrower's right, title and interest, in, to and under (i)
the Escrow Account, and all instruments, securities, documents,
accounts, general intangibles, money, and other property and
contents therein and thereof, and all rights relating thereto and
proceeds therefrom and thereof, including, without limitation, the
deposits made into the Escrow Account from time to time and all
earnings thereon at any time or from time to time in the
possession or control of Escrow Holder, (ii) all books and records
relating to the types and items of property described in the
foregoing clause (i), and (iii) all proceeds (whether cash or non-
cash, and including, without limitation, insurance proceeds) and
products of the property described in the foregoing clause (i),
and all replacements and substitutions therefor and all additions
and accessions thereto (hereinafter collectively called the
"Collateral").
(b) In addition to all rights and remedies given to
Lender by this Agreement, Lender shall have the rights and
remedies of a secured party under the California Commercial Code
and any other applicable law. Upon notice from Lender, Borrower
will promptly execute such financing statements, continuation
statements and other documents as may be necessary or convenient
to perfect, continue or otherwise evidence said security interest
and pay all reasonable out of pocket expenses and fees for the
preparation and filing thereof.
(c) Escrow Holder acknowledges receipt of notice of
Lender's security interest in the Collateral.
8. Warranties: Borrower does hereby warrant and
represent to Lender that, as of the date hereof, Borrower is the
owner of all of the Collateral, and (i) Borrower has not
heretofore made any assignment or pledge of, granted a security
interest in, or otherwise transferred or encumbered all or any
part of its interest in all or any part of the Collateral, and
(ii) the Collateral is free and clear of any security interest,
pledge, assignment or other encumbrance other than the security
interest created hereby. Escrow Holder does hereby warrant and
represent to Lender that Escrow Holder has not received notice
from any individual or entity, except Lender, claiming an interest
in the Collateral.
9. Termination of Escrow: Provided this Agreement has
not been terminated pursuant to the paragraph entitled "Default
Provisions" hereof, this Agreement, and the escrow provided for
herein, shall automatically terminate when Escrow Holder receives
written notification from Lender that all amounts due from
Borrower to Lender have been paid in full, the Note has been
cancelled, and the Deed of Trust discharged. Upon termination of
this Agreement as provided in this paragraph, Escrow Holder shall
deliver the remaining funds, including interest, then in the
Escrow Account to Borrower.
10. Investment of Funds in Escrow Account: Any monies
held as a part of the Escrow Account shall be invested or
reinvested by Escrow Holder in Permitted Investments, as
hereinafter defined, in the name of Escrow Holder.
(a) Borrower's Right to Direct Investments: Until
Escrow Holder shall have received written notice from Lender of a
default by Borrower continuing beyond expiration of any applicable
cure periods, if any, Lender grants to Borrower the privilege of
selecting among the Permitted Investments, by written direction
from Borrower to Escrow Holder. Lender and Borrower acknowledge
and agree that Escrow Holder shall have no obligation to honor any
such written direction until the expiration of one business day
after the Escrow Holder's receipt of the same, or such later
period as is consistent with both the nature of the Permitted
Investment utilized or committed to be utilized prior to receipt
of such notice and the nature of the Permitted Investment
specified by such written notice. Such investments shall have
maturities consonant with the need for funds as provided
hereinabove in the paragraph entitled "Withdrawal Terms."
Consistent with the need for funds as aforesaid, Escrow Holder may
sell any such investments at any time, and the proceeds of such
sale, and of all payments at maturity and upon redemption of such
investments, shall be credited to the Escrow Account. Escrow
Holder shall not be responsible for any loss of interest or
penalties incurred as a result of the redemption of investments
prior to their stated maturities if such redemption is required to
comply with this Agreement. All payments of money and of other
property received in respect of the Escrow Account, including,
without limitation, all interest, dividends, profits and other
income or proceeds received on monies or securities or other
investments in the Escrow Account, shall be credited to the Escrow
Account and shall be deemed to become, and shall be treated as
part of, the escrowed funds for purposes of this Agreement, and
shall be disbursed by Escrow Holder as provided in this Agreement.
(b) Permitted Investments: The term "Permitted
Investments" as used herein shall mean:
(i) short term obligations of the United
States Treasury;
(ii) short term obligations of an agency of the
United States Government;
(iii) any certificate of deposit up to $100,000
issued by or savings account with any of the fifty federally-
chartered banks with the greatest total assets ("Qualifying
Banks");
(iv) any commercial paper issued by an issuer
rated Prime-1 by Moody's or A-1 by S&P;
(v) any repurchase agreement with a Qualifying
Bank (provided it is issued by an agency of the United States
Government, is 102% collateralized, and possession is given to the
Escrow Holder);
(vi) any banker's acceptance of which a
Qualifying Bank is the accepting bank;
(vii) any certificate of deposit up to
$5,000,000 with any bank on Lender's approved list;
(viii) Variable Rate Master Notes (Trust Demand
Notes) rated A-1 and P-1 by Standard & Poor's or Moody's,
respectively;
(ix) any AAA or AA rated corporate securities
on Lender's approved list; and
(x) FNMA or FHLMC mortgage pool securities.
Notwithstanding the foregoing, Lender's approval of
any investment of funds held in the Escrow Account in any of the
foregoing shall be conditioned on Lender's receiving such
assurances as it requires that its security interest in any such
instrument, account, or investment is perfected and shall remain
perfected. Lender may limit or change the aforementioned list of
Permitted Investments in order to assure its ability to perfect
its security interest therein; provided that any change in the
type of investment shall be subject also to Borrower's approval.
In addition, at any time as any Permitted Investment
is with a depository that does not satisfy Lender's financial and
solvency requirements, Lender may require that such investment be
terminated with such depository and re-invested with another
depository reasonably approved by Lender.
11. Responsibilities of Escrow Holder:
(a) Books, Records, and Statements: Escrow Holder
shall at all times during the term of this Agreement keep and
maintain accurate, complete, and up to date books and records with
respect to the Escrow Account, and all investments thereof,
earnings thereon, and disbursements therefrom. Escrow Holder
shall provide monthly statements to Lender and Borrower showing
the balance of the Escrow Account, the earnings thereof and the
disposition of said earnings.
(b) Notice of Default: In the event that Borrower
shall fail to make any such required monthly deposit, Escrow
Holder shall notify both Lender and Borrower, in accordance with
the paragraph entitled "Notices" herein (or such other party as
Lender or Borrower may designate in writing from time to time), no
later than the 5th day of the month for which such payment was
required.
(c) Escrow Holder's Right to Resign: Escrow Holder
reserves the right to resign hereunder by sixty (60) days written
notice to Lender and Borrower. At or before ten (10) days prior
to the effective date of such resignation, Escrow Holder shall pay
over to Lender all funds and deliver all evidence of investment in
the Escrow Account to be held pursuant to the terms of the Deed of
Trust, in the same manner as though Lender were a substitute
escrow holder hereunder. However, if prior to the time such funds
are paid over or such evidence of investment delivered to Lender,
Lender requests in writing that such funds be paid over to another
party, (i) Escrow Holder shall forthwith pay over to such party
all such funds, (ii) this Agreement shall terminate, and (iii)
Escrow Holder shall not have any further liability under this
Agreement, except rights of Lender, Borrower or both against
Escrow Holder for its willful misconduct or gross negligence.
12. Expenses: Borrower shall pay all charges of Escrow
Holder in accordance with Schedule 2 attached hereto, and such
reasonable out-of-pocket attorneys' fees, expenses and other costs
as may be incurred by Escrow Holder in connection with the
administration of this Agreement. Said charges, attorneys' fees,
expenses and other costs are collectively referred to hereinafter
as the "Expenses." Any Expenses may be offset against interest
earned, and only against such interest, on the Escrow Account.
13. Liability of Parties: Borrower shall have sole
liability for the taxes and shall be responsible for seeing that
sufficient funds are made available to Escrow Holder or Lender in
adequate time for payment of the taxes before same become
delinquent. Lender or Escrow Holder shall be liable severally and
not jointly, and only for accounting for funds received by it, and
for its gross negligence or willful misconduct in performing any
act required of it hereunder.
14. Hold Harmless: Borrower hereby agrees to indemnify,
protect, save and hold harmless Escrow Holder, and its successors
and assigns and agents pursuant to this Agreement, from any and
all liabilities, obligations, losses, damages, claims, actions,
suits, and out of pocket costs or expenses (including, without
limitation, reasonable attorneys' fees) of whatsoever kind or
nature imposed on, incurred by or asserted against Escrow Holder
which in any way relate to or arise out of the execution and
delivery of this Agreement and any action taken hereunder;
provided, however, that Borrower shall have no such obligation to
indemnify, save and hold harmless Escrow Holder for any liability
incurred by, imposed upon or established against Escrow Holder, as
the case may be, for its willful misconduct or gross negligence.
15. Waiver of Offset: Except for fees due Escrow Holder
as provided in the paragraph entitled "Expenses" above, Escrow
Holder specifically and irrevocably waives any and all rights
Escrow Holder now has or may in the future have to offset any
amounts due from Lender or Borrower to Escrow Holder against the
funds in the Escrow Account. Except to the extent expressly
provided for in the paragraph entitled "Expenses" hereof, Escrow
Holder further agrees not to pay or attempt to pay to itself any
funds in the Escrow Account to satisfy any claims Escrow Holder
may have against Borrower or Lender.
16. Notices: Any notice, demand, request, statement or
consent made hereunder shall be in writing, signed by the party
giving such notice, request, demand, statement, or consent, and
shall be deemed to have been properly given when either delivered
personally, delivered to a reputable overnight delivery service
providing a receipt or deposited in the United States mail,
postage prepaid and registered or certified return receipt
requested, at the address set forth below, or at such other
address within the continental United States of America as may
have theretofore have been designated in writing. The effective
date of any notice given as aforesaid shall be the date of
personal service, one (1) business day after delivery to such
overnight delivery service, or three (3) business days after being
deposited in the United States mail, whichever is applicable. For
purposes hereof, the addresses are as follows:
If to Borrower: JMB/San Jose Associates
c/o JMB Realty Corporation
900 North Michigan Avenue
Chicago, IL 60611
With a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars
Los Angeles, CA 90067
Attn: Real Estate Notices (DSB)
and if to Lender: Connecticut General Life Insurance Company
c/o CIGNA Investments, Inc.
900 Cottage Grove Road
Hartford, CT 06152
Attn: Investment Services, S-319
with a copy to: CIGNA Corporation
Investment Law Department
900 Cottage Grove Road
Hartford, CT 06152
Attn: Real Estate Division, S-215A
and if to
Escrow Holder: Bank of America
Global Escrow Depository Services 8010
333 South Beaudry Avenue, 25th Floor
Los Angeles, California 90017
Attention: Katherine L. Veith
Telephone: (213) 345-0670
17. Applicable Law: This Agreement shall be governed by
and interpreted in accordance with the laws of the State of
California.
18. Headings: The paragraph headings used herein are for
convenience only and are not to be used in interpreting this
Agreement.
19. Amendments: This Agreement may only be amended or
revoked by a written amendment executed by all the parties hereto.
20. Attorneys' Fees and Expenses: Borrower shall pay all
reasonable out of pocket charges of Lender, and such reasonable
attorneys' fees (whether charged by staff counsel or outside
counsel), expenses and other costs as may be incurred by Lender in
connection with the enforcement of this Agreement.
Notwithstanding the foregoing, if any action is instituted to
enforce the terms hereof, only the prevailing party shall be
entitled to reasonable attorneys' fees, costs and expenses (in the
case of Lender, whether charged by staff counsel or outside
counsel); provided, however, the provisions of the paragraph
entitled "Hold Harmless" hereof shall control as to any claim
against Escrow Holder. Any reference in this Agreement to "out of
pocket" costs, fees, charges and expenses of Lender shall include,
without limitation, any reasonable allocable fees, costs, charges
and expenses for services rendered by Lender's in-house counsel,
paralegals and legal assistants.
21. Assignment: This Agreement may not be assigned by
Borrower or Escrow Holder without the written consent of Lender.
Should an assignment be permitted hereunder, this Agreement shall
inure to the benefit of and bind the successors and assigns of the
parties hereto.
22. Execution in Counterparts: This Agreement may be
executed in any number of counterparts, each of which may be
executed by any one or more of the parties hereto, but all of
which shall constitute one instrument, and shall be binding and
effective when all parties hereto have executed at least one
counterpart.
23. No Personal Liability: The provisions set forth in
Section 15 of the Note and Section 36 of the Deed of Trust are
incorporated herein by this reference.
IN WITNESS WHEREOF, the parties have executed this
Agreement under seal effective as of the day and year first above
written.
BORROWER: JMB/SAN JOSE ASSOCIATES, an Illinois
general partnership
By: JMB Income Properties, Ltd.- XI,
an Illinois limited partnership,
General Partner
By: JMB Realty Corporation,
a Delaware corporation,
General Partner
By:
Name:
Its:
By: JMB Income Properties, Ltd.-XII,
an Illinois limited partnership,
General Partner
By: JMB Realty Corporation,
a Delaware corporation,
General Partner
By:
Name:
Its:
LENDER: CONNECTICUT GENERAL LIFE INSURANCE
COMPANY, a Connecticut corporation
By: CIGNA Investments, Inc.,
a Delaware corporation,
its authorized signatory
By:
Name:
Its:
ESCROW HOLDER: BANK OF AMERICA, NT&SA
GLOBAL ESCROW DEPOSITORY SERVICES
8010
By:
Name:
Its:
REAL ESTATE TAX
ESCROW AND SECURITY AGREEMENT
(150 Almaden/185 Park)
<PAGE>
TABLE OF CONTENTS
TO
REAL ESTATE TAX ESCROW AND SECURITY AGREEMENT
Page
1. Recitals . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Escrow Holder. . . . . . . . . . . . . . . . . . . . . . 1
3. Deposits into Escrow . . . . . . . . . . . . . . . . . . 1
4. Withdrawal Terms . . . . . . . . . . . . . . . . . . . . 2
5. Interest Payments. . . . . . . . . . . . . . . . . . . . 2
6. Default Provisions . . . . . . . . . . . . . . . . . . . 3
7. Security Interest. . . . . . . . . . . . . . . . . . . . 3
8. Warranties . . . . . . . . . . . . . . . . . . . . . . . 3
9. Termination of Escrow. . . . . . . . . . . . . . . . . . 4
10. Investment of Funds in Escrow Account. . . . . . . . . . 4
11. Responsibilities of Escrow Holder. . . . . . . . . . . . 5
12. Expenses . . . . . . . . . . . . . . . . . . . . . . . . 6
13. Liability of Parties . . . . . . . . . . . . . . . . . . 6
14. Hold Harmless. . . . . . . . . . . . . . . . . . . . . . 6
15. Waiver of Offset . . . . . . . . . . . . . . . . . . . . 6
16. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 6
17. Applicable Law . . . . . . . . . . . . . . . . . . . . . 7
18. Headings . . . . . . . . . . . . . . . . . . . . . . . . 7
19. Amendments . . . . . . . . . . . . . . . . . . . . . . . 7
20. Attorneys' Fees and Expenses . . . . . . . . . . . . . . 7
21. Assignment . . . . . . . . . . . . . . . . . . . . . . . 7
22. Execution in Counterparts. . . . . . . . . . . . . . . . 7
23. No Personal Liability. . . . . . . . . . . . . . . . . . 8
TRUST AGREEMENT
by and among
PARKING AUTHORITY OF THE CITY OF HERMOSA BEACH
and
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION
as Trustee
and
JMB INCOME PROPERTIES, LTD. XII
Dated as of November 15, 1994
Authorizing
Floating Rate Weekly Demand
Refunding Certificates of Participation
(Hermosa Beach Parking Facilities Project - 1994 Series)
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . 4
ARTICLE II
THE CERTIFICATES
Section 2.1. Authorized Amount of Certificates . . . . . . 14
Section 2.2. Execution and Delivery of Certificates. . . . 14
Section 2.3. Determination of Weekly Rate. . . . . . . . . 16
Section 2.4. Establishment of Fixed Rate . . . . . . . . . 16
Section 2.5. Execution of Certificates . . . . . . . . . . 18
Section 2.6. Pledge Under the Trust Agreement; Limits on
Authority's Obligations and Powers . . . . . . . . 18
Section 2.7. Delivery of Certificates. . . . . . . . . . . 19
Section 2.8. Lost, Destroyed or Improperly Cancelled
Certificates . . . . . . . . . . . . . . . . . . . . 19
Section 2.9. Transfer, Registration and Exchange of
Certificates . . . . . . . . . . . . . . . . . . . . 20
Section 2.10.Reserved. . . . . . . . . . . . . . . . . . . 21
Section 2.11.Temporary Certificates. . . . . . . . . . . . 21
Section 2.12.Cancellation of Certificates. . . . . . . . . 21
Section 2.13.Use of Depository . . . . . . . . . . . . . . 21
ARTICLE III
REVENUES AND FUNDS
Section 3.1. Source of Payment of Certificates . . . . . . 23
Section 3.2. Creation of Funds and Accounts. . . . . . . . 24
Section 3.3. Initial Deposits. . . . . . . . . . . . . . . 24
Section 3.4. Proceeds Fund; Reserve Fund . . . . . . . . . 25
Section 3.5. Cost of Issuance Fund . . . . . . . . . . . . 26
Section 3.6. Revenue Fund. . . . . . . . . . . . . . . . . 26
Section 3.7. Debt Service Fund . . . . . . . . . . . . . . 27
Section 3.8. General Fund. . . . . . . . . . . . . . . . . 28
Section 3.9. The Bank Letter of Credit . . . . . . . . . . 29
Section 3.10.Custody Account . . . . . . . . . . . . . . . 31
Section 3.11.Final Balances. . . . . . . . . . . . . . . . 32
Section 3.12.Reserved. . . . . . . . . . . . . . . . . . . 32
Section 3.13.Non-presentment of Certificates . . . . . . . 32
Section 3.14.Moneys To Be Held In Trust. . . . . . . . . . 33
<PAGE>
ARTICLE IV
PURCHASE PAYMENTS AND APPLICATION
Section 4.1. Purchase Payments To Be Paid Over To
Trustee. . . . . . . . . . . . . . . . . . . . . . . 33
Section 4.2. Payments of Principal, Premium and Interest . 33
Section 4.3. Amounts To Be Held For All
Certificateholders; Certain Exceptions. . . . 33
ARTICLE V
INVESTMENT OF MONEYS
Section 5.1. Investment of Moneys. . . . . . . . . . . . . 34
Section 5.2. Earnings and Losses . . . . . . . . . . . . . 35
Section 5.3. No Arbitrage. . . . . . . . . . . . . . . . . 35
Section 5.4. Investment Limit. . . . . . . . . . . . . . . 35
Section 5.5. Rebate To United States . . . . . . . . . . . 35
Section 5.6. Investments . . . . . . . . . . . . . . . . . 37
ARTICLE VI
REDEMPTION OF CERTIFICATES BEFORE MATURITY
Section 6.1. Limitation on Redemption. . . . . . . . . . . 37
Section 6.2. Redemption Dates, Amounts and Prices. . . . . 37
Section 6.3. Partial Redemption. . . . . . . . . . . . . . 39
Section 6.4. Notice of Redemption. . . . . . . . . . . . . 40
Section 6.5. Payment Upon Redemption . . . . . . . . . . . 40
Section 6.6. Effect of Redemption. . . . . . . . . . . . . 40
Section 6.7. No Partial Redemption After Default . . . . . 41
ARTICLE VII
[RESERVED]
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1. Defaults; Events of Default . . . . . . . . . 41
Section 8.2. Acceleration of Maturities. . . . . . . . . . 42
Section 8.3. Application of Moneys . . . . . . . . . . . . 43
Section 8.4. Trustee to Represent Certificateholders . . . 43
Section 8.5. Certificateholders' Direction of
Proceedings. . . . . . . . . . . . . . . . . . . . . 44
Section 8.6. Limitation on Certificateholders' Right to
Sue. . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.7. Limited Obligation of Authority . . . . . . . 45
Section 8.8. Termination of Proceedings. . . . . . . . . . 45
Section 8.9. Remedies Not Exclusive. . . . . . . . . . . . 45
Section 8.10.No Waiver of Default. . . . . . . . . . . . . 45
Section 8.11.Waivers of Events of Default. . . . . . . . . 46
ARTICLE IX
THE TRUSTEE AND THE PAYING AGENT
Section 9.1. Appointment, Duties, Immunities and
Liabilities of Trustee and Paying Agent . . . 46
Section 9.2. Fees, Charges and Expenses of Trustee,
Tender Agent and Paying Agent . . . . . . . . 49
Section 9.3. Liability of Trustee. . . . . . . . . . . . . 50
Section 9.4. Right of Trustee to Rely on Documents . . . . 50
Section 9.5. Intervention By Trustee . . . . . . . . . . . 51
Section 9.6. Designation and Successor of Paying Agent;
Agreement with Paying Agent . . . . . . . . . 51
Section 9.7. Foreclosure on Deed of Trust. . . . . . . . . 51
ARTICLE X
MODIFICATION OF THIS TRUST AGREEMENT AND THE AGREEMENT
Section 10.1.Limitations . . . . . . . . . . . . . . . . . 52
Section 10.2.Supplemental Trust Agreement without
Consent of Registered Owners. . . . . . . . . 52
Section 10.3.Supplemental Trust Agreement With Consent
of Registered Owners and the Bank . . . . . . 53
Section 10.4.Effect of Supplemental Trust Agreement. . . . 54
Section 10.5.Consent of Bank and Company Required. . . . . 55
Section 10.6.Amendments to Agreements not Requiring
Consent of Registered Owners. . . . . . . . . 55
Section 10.7.Amendments to the Amended and Restated
First and Second Installment Sale
Agreements Requiring Consent of Registered
Owners. . . . . . . . . . . . . . . . . . . . 55
ARTICLE XI
GENERAL COVENANTS
Section 11.1.Payment of Principal, Premium, if any, and
Interest . . . . . . . . . . . . . . . . . . . . . . 56
Section 11.2.Performance of Covenants; Trustee and
Authority. . . . . . . . . . . . . . . . . . . . . . 56
Section 11.3.Instruments of Further Assurance. . . . . . . 57
Section 11.4.Recording and Filing. . . . . . . . . . . . . 57
Section 11.5.Inspection of Project Books . . . . . . . . . 57
Section 11.6.List of Registered Owners . . . . . . . . . . 57
Section 11.7.Rights Under Agreements . . . . . . . . . . . 57
Section 11.8.Limited Nature of the Company's Obligations . 58
ARTICLE XII
DEFEASANCE
Section 12.1.Defeasance. . . . . . . . . . . . . . . . . . 58
ARTICLE XIII
PURCHASE AND REMARKETING OF CERTIFICATES
Section 13.1.Certificateholders' Obligation to Tender
Certificates Upon Conversion and
Reimbursement Agreement Event of Default. . . 60
Section 13.2.Mandatory and Demand Purchase of
Certificates . . . . . . . . . . . . . . . . . . . . 61
Section 13.3.Remarketing Agent . . . . . . . . . . . . . . 61
Section 13.4.Qualifications of Remarketing Agent . . . . . 62
Section 13.5.Remarketing of Certificates . . . . . . . . . 62
Section 13.6.Purchase of Certificates Delivered to
Tender Agent . . . . . . . . . . . . . . . . . . . . 63
Section 13.7.Delivery of Certificates. . . . . . . . . . . 64
Section 13.8.Delivery of Remarketing Proceeds. . . . . . . 64
Section 13.9.Tender Agent. . . . . . . . . . . . . . . . . 64
Section 13.10. Qualifications of Tender Agent . . . . 66
ARTICLE XIV
MISCELLANEOUS
Section 14.1.Consents of Registered Owners . . . . . . . . 66
Section 14.2.Successors of the Authority and the Company . 67
Section 14.3.Parties in Interest; Consent of Bank. . . . . 67
Section 14.4.Severability. . . . . . . . . . . . . . . . . 67
Section 14.5.No Personal Liability of Authority or
Trustee Officials. . . . . . . . . . . . . . . . . . 67
Section 14.6.Certificates Owned by the Authority or the
Company. . . . . . . . . . . . . . . . . . . . . . . 68
Section 14.7.Counterparts. . . . . . . . . . . . . . . . . 68
Section 14.8.Governing Law . . . . . . . . . . . . . . . . 68
Section 14.9.Notices . . . . . . . . . . . . . . . . . . . 68
Section 14.10. Holidays . . . . . . . . . . . . . . . 69
Section 14.11. Immunities and Limitations of
Responsibility of Authority and
Trustee. . . . . . . . . . . . . . . . 70
EXHIBIT A FORM OF VARIABLE INTEREST RATE CERTIFICATE
EXHIBIT B FORM OF FIXED INTEREST RATE CERTIFICATE
EXHIBIT C FORM OF NOTICE OF EXERCISE OF OPTION TO SELL CERTIFICATES
EXHIBIT D AGREEMENT REGARDING REFUNDING OF PRIOR CERTIFICATES
<PAGE>
TRUST AGREEMENT
This TRUST AGREEMENT, made and entered into as of November 15,
1994, by and among the PARKING AUTHORITY OF THE CITY OF HERMOSA BEACH, a
parking authority and public body, corporate and politic, organized and
existing pursuant to the laws of the State of California and having its
principal office in the City of Hermosa Beach (the "Authority"), FIRST
TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, a national banking
association duly organized and existing under and by virtue of the laws
of the United States, and being qualified to accept and administer the
trusts hereby created (the "Trustee"), and JMB INCOME PROPERTIES,
LTD. XII, an Illinois limited partnership (the "Company").
W I T N E S S E T H :
WHEREAS, the Company and the Authority have entered into an
Amended and Restated First Installment Sale Agreement, dated as of this
date (the "Amended and Restated First Installment Sale Agreement"),
whereby the Company has sold the Project (as defined in the Amended and
Restated First Installment Sale Agreement) to the Authority, and the
Authority has purchased said Project from the Company;
WHEREAS, under the Amended and Restated First Installment Sale
Agreement, the Authority is obligated to pay to the Company or its
assigns installment purchase payments for the purchase of the Project
(the "Purchase Payments") and has by the Assignment Agreement, dated as
of this date, assigned to the Company, for the benefit of the Company
and the Trustee, as its assignee, certain of its rights and interests
under the Amended and Restated Second Installment Sale Agreement as
defined below;
WHEREAS, the Authority and the Company have entered into the
Amended and Restated Second Installment Sale Agreement, dated as of this
date (the "Amended and Restated Second Installment Sale Agreement"),
whereby the Authority has sold the Project to the Company and the
Company has purchased the Project from the Authority in exchange for
payments in specified amounts designated for and at least equal to the
Purchase Payments to be paid at the times and in the manner the
Authority is obligated to pay the Purchase Payments;
WHEREAS, the Company, pursuant to a Deed of Trust, dated as of
this date (the "Deed of Trust"), from the Company, as trustor, to First
American Title Insurance Company, as trustee, and the Authority and
Dresdner Bank AG, Los Angeles Agency, a German banking association (the
"Bank"), as co-beneficiaries, has granted a first lien on the Project to
the Authority and the Bank, which Deed of Trust also covers the adjacent
Plaza Hermosa Shopping Center, as security for the Company's obligations
under the Amended and Restated Second Installment Sale Agreement and the
Reimbursement Agreement (as hereinafter defined), respectively;
WHEREAS, the Authority has assigned its rights under the Deed of
Trust to the Company, for the benefit of the Company and the Trustee as
its assignee, pursuant to the Assignment of Deed of Trust, dated as of
this date, to secure further the Authority's obligations to make the
Purchase Payments;
WHEREAS, the Company has assigned and transferred to the Trustee
certain of its rights and interests under the Amended and Restated First
Installment Sale Agreement, including its rights to receive Purchase
Payments, and the Amended and Restated Second Installment Sale
Agreement, pursuant to a certain Second Assignment Agreement, dated the
date hereof, and under the Deed of Trust, pursuant to the Second
Assignment of Deed of Trust, dated as of this date;
WHEREAS, in consideration of such assignments and the execution
of this Trust Agreement, the Trustee has agreed to execute and deliver
refunding certificates of participation (the "Certificates"), each
evidencing a proportionate interest in the Purchase Payments under the
Amended and Restated First Installment Sale Agreement, and to hold in
trust and disburse the proceeds of the sale of the Certificates to pay
the costs of executing and delivering the Certificates and the costs of
refinancing the Project for the benefit of the Company;
WHEREAS, to support its obligations to make Purchase Payments
under the Amended and Restated First Installment Sale Agreement, and
accordingly, payment with respect to the Certificates, the Authority has
agreed to require the Company to deposit with the Trustee a letter of
credit issued by the Bank (the "Letter of Credit") and, pursuant to the
Amended and Restated Second Installment Sale Agreement, the Company has
agreed to deposit said Letter of Credit and, in connection therewith,
has entered into the Letter of Credit and Reimbursement Agreement, dated
as of this date (the "Reimbursement Agreement"), with the Bank;
WHEREAS, the Company, pursuant to a Security Agreement dated the
date hereof (the "Security Agreement") with the Authority and the Bank,
has granted a security interest in certain property to further secure
the Company's obligations under the Amended and Restated Second
Installment Sale Agreement and the Reimbursement Agreement;
WHEREAS, all acts, conditions and things required by law to
exist, happen and be performed precedent to and in connection with the
execution and entering into of this Trust Agreement have happened and
have been performed in regular and due time, form and manner as required
by law, and the parties hereto are now duly empowered to execute and
enter into this Trust Agreement;
NOW, THEREFORE, THIS TRUST AGREEMENT WITNESSETH, that the
Company, in consideration of the premises and the acceptance by the
Trustee of the trusts hereby created and of the purchase and acceptance
of the Certificates by the Registered Owners thereof, and for other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, in order to secure the payment of the principal of,
premium, if any, and interest due with respect to the Certificates
according to their tenor and effect and secure the performance and
observance by the Authority of all the covenants expressed or implied
herein, does hereby assign and grant a security interest in the
following to the Trustee, and unto its successors and assigns forever:
GRANTING CLAUSE FIRST
The Amended and Restated First Installment Sale Agreement, the
Amended and Restated Second Installment Sale Agreement, the Deed of
Trust, the Security Agreement, including all extensions and renewals of
the term thereof, if any, together with all right, title and interest of
the Company in and to the Amended and Restated First Installment Sale
Agreement, the Amended and Restated Second Installment Sale Agreement,
the Deed of Trust, and the Security Agreement, including, but not
limited to, the present and continuing right to make claim for, collect,
receive and receipt for any of the sums, amounts, income, revenues,
issues and profits and any other sums of money payable or receivable
under the Amended and Restated First Installment Sale Agreement, the
Amended and Restated Second Installment Sale Agreement (except for
amounts payable to the Authority under Sections 5.5, 5.6 and 8.5
thereof) and the Security Agreement, to bring actions and proceedings
thereunder or for the enforcement thereof, and to do any and all things
which the Company under the Amended and Restated First Installment Sale
Agreement is or may become entitled to do;
GRANTING CLAUSE SECOND
All moneys and securities from time to time held by the Trustee
under the terms of the trusts created in this Trust Agreement, except
for moneys in the Rebate Fund, the Purchase Fund and the Custody
Account, together with investment earnings thereon;
TO HAVE AND TO HOLD all and singular the Trust Estate, whether
now owned or hereafter acquired, unto the Trustee and its respective
successors in said Trust and assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trusts herein set
forth for the equal and proportionate benefit, security and protection
of all present and future owners of the Certificates, from time to time,
executed and delivered under and secured by this Trust Agreement without
privilege, priority or distinction as to the lien or otherwise of any of
the Certificates over any of the other Certificates;
PROVIDED, HOWEVER, that if the Authority, its successors or
assigns, shall well and truly pay, or cause to be paid, the Purchase
Payments at the times and in the manner set forth in the Amended and
Restated First Installment Sale Agreement according to the true intent
and meaning thereof, or shall provide, as permitted thereby, for the
payment thereof by depositing with the Trustee the entire amount due or
to become due thereunder, and shall well and truly cause to be kept,
performed and observed all of its covenants and conditions pursuant to
the terms of the Amended and Restated First Installment Sale Agreement
and this Trust Agreement, and shall pay or cause to be paid to the
Trustee all sums of money due or to become due to it in accordance with
the terms and provisions thereof and hereof, then upon the final payment
thereof, but subject to the provisions of Section 9.1 hereof, this Trust
Agreement and the rights hereby granted shall cease, determine and be
void; otherwise this Trust Agreement shall remain in full force and
effect.
THIS TRUST AGREEMENT FURTHER WITNESSETH, and it is expressly
declared, that all Certificates executed and delivered and secured
hereunder are to be executed and delivered and all said property, rights
and interests, including, without limitation, the amounts payable under
the Amended and Restated First Installment Sale Agreement and any other
amounts hereby assigned and pledged are to be dealt with and disposed of
under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes as herein expressed,
and the Authority has agreed and covenanted, and does hereby agree and
covenant with the Trustee and with the respective owners of the
Certificates as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.
(a) In addition to the terms defined elsewhere herein,
the following terms have the meanings assigned to them in this Section
unless the context otherwise requires:
"Account" means any one or more of the separate special trust
accounts created by Article III or Article XIII hereof, and shall
include any subaccount or subaccounts included in such account, as
applicable.
"Act of Bankruptcy of the Bank" means that the Bank has become
insolvent or has failed to pay its debts generally as such debts become
due or has admitted in writing its inability to pay any of its
indebtedness or has consented to or has petitioned or applied to any
authority for the appointment of a receiver, conservator, liquidator,
trustee or similar official for itself or for all or any substantial
part of its properties or assets, or that any such trustee, receiver,
conservator, liquidator or similar official has been appointed or that
insolvency, reorganization, arrangement, receivership, conservatorship
or liquidation proceedings (or similar proceedings) have been instituted
by or against the Bank.
"Alternate Rate" means, on any Interest Rate Calculation Date,
the rate per annum specified in the index (the "Index") published by the
Indexing Agent and in effect on such Interest Rate Calculation Date.
The Index shall be based upon yield evaluations at par of bonds, the
interest on which is excluded from gross income for purposes of Federal
income taxation, of not less than five "high grade" component issuers
selected by the Indexing Agent which shall include, without limitation,
issuers of general obligation bonds. The specific issuers included
among the component issuers may be changed from time to time by the
Indexing Agent in its discretion. The bonds on which the Index is based
shall not include any bonds the interest on which is subject to a
"minimum tax" or similar tax under the Code, unless all tax-exempt bonds
are subject to such tax. When Certificates are in the Weekly Mode, the
yield evaluation period for the Index shall be 30-day yield evaluations.
"Amended and Restated First Installment Sale Agreement" means
the Amended and Restated First Installment Sale Agreement dated as of
this date between the Company and the Authority, and any amendments and
supplements thereto.
"Amended and Restated Second Installment Sale Agreement" means
the Amended and Restated Second Installment Sale Agreement dated as of
this date between the Authority and the Company, and any amendments and
supplements thereto.
"Assignment of Leases" means the Assignment of Leases, Rents,
Income and Profits dated as of this date between the Bank and Authority,
and any amendments and supplements thereto.
"Authority" means the Parking Authority of the City of Hermosa
Beach, a parking authority and public body, corporate and politic,
organized and existing pursuant to the laws of the State.
"Authorized Authority Representative" means each person at the
time designated to act on behalf of the Authority by written certificate
furnished to the Company and the Trustee containing the specimen
signature of such person and signed on behalf of the Authority by it
duly authorized agent. Such certificate may designate an alternate or
alternates.
"Authorized Company Representative" means each person at the
time designated to act on behalf of the Company by written certificate
furnished to the Authority and the Trustee containing the specimen
signature of such person and signed on behalf of the Company by its
Managing General Partner. Such certificate may designate an alternate
or alternates.
"Authorized Denominations" means $100,000 and any integral
multiple thereof from the Closing Date until the Conversion Date
(provided that, with respect to and after any redemption of Certificates
during such period pursuant to Sections 6.2(c), (f) and (g) it shall
mean for one Certificate $100,000 less any amount of $5,000 or any
integral multiple thereof redeemed), and shall mean $5,000 and any
integral multiple thereof on and after the Conversion Date.
"Bank" means Dresdner Bank AG, Los Angeles Agency, a German
banking association, acting as the issuer of the Bank Letter of Credit,
or the issuer of a Substitute Letter of Credit, if one has been issued
as provided herein.
"Bank Letter of Credit" or "Letter of Credit" means the
irrevocable letter of credit issued by the Bank to the Trustee on the
Closing Date, or a Substitute Letter of Credit for the benefit of the
Trustee meeting the requirements of Section 3.9 hereof.
"Business Day" means a day which is not a Saturday or Sunday or
a day on which banking institutions are authorized or required by law to
be closed (a) in the State or the State of New York and (b) where the
Principal Office is located, for commercial banking purposes.
"Certificates" shall mean the certificates of participation
executed and delivered pursuant to this Trust Agreement.
"Certificate Year" means the period beginning on the Closing
Date and through December 1, 1995, and each consecutive twelve-month
period thereafter ending on December 1 in any year in which Certificates
are or will be Outstanding.
"Closing Date" means the date upon which the Certificates are
initially executed and delivered in exchange for the proceeds
representing the purchase price of the Certificates paid by the original
purchaser thereof, being December 5, 1994.
"Code" means the Internal Revenue Code of 1954, as amended, and,
to the extent applicable, the Internal Revenue Code of 1986, as amended,
and the United States Treasury Regulations proposed or in effect with
respect thereto.
"Collateral" shall mean those items set forth in Exhibit B of
the Security Agreement.
"Company" shall mean JMB Income Properties, Ltd. XII, a limited
partnership organized and existing under the laws of the State of
Illinois, its successors and their assigns.
"Conversion Date" means the date after which the Certificates
begin to bear interest at the Fixed Rate as provided in Section 2.4
hereof.
"Cost of Issuance Fund" shall mean the Fund created by
Section 3.2 hereof.
"Costs of Issuance" means the items specified as such in
Section 3.5 hereof.
"Custodian" means First Trust of California, National
Association, in its capacity as custodian under the Pledge and Security
Agreement.
"Custody Account" means such account created by Section 3.10
hereof.
"Debt Service" means the scheduled amount of interest and
amortization of principal, if any, due with respect to the Certificates
during the period of computation, excluding amounts scheduled during
such period which relate to principal which has been retired before the
beginning of such period.
"Debt Service Fund" means such Fund created by Section 3.2
hereof.
"Deed of Trust" shall mean the Deed of Trust, Fixture Filing and
Assignment of Leases (Completed Building) dated as of this date,
executed by the Company, as trustor, in favor of the Authority and the
Bank as co-beneficiaries, and any and all modifications, alterations,
amendments and supplements thereto.
"Default" and "Event of Default" mean with respect to any
Default or Event of Default under this Trust Agreement any occurrence or
event specified in and defined by Section 9.1 hereof.
"Demand Purchase Option" means the option of the Registered
Owners to have Certificates outstanding purchased in accordance with
Section 13.2 hereof.
"Determination of Taxability" means (1) a final judgment or
order of a court of competent jurisdiction or a final order, ruling,
regulation or decision of the United States Department of the Treasury
or the Internal Revenue Service which, (2) legislation enacted by the
United States Congress which, or (3) an event or condition arising or
existing after the Closing Date which in the opinion of Certificate
Counsel, will adversely affect the Tax-exempt status of the interest
with respect to the Certificates (other than interest on any Certificate
for any period during which such Certificate is held by a "substantial
user" of any facility financed with the proceeds of the Certificates or
a "related person," as such terms are used in Section 147(a) of the
Code). With respect to clause (1) above, a judgment or order of a court
shall be considered final only if no appeal or action for judicial
review has been filed and the time for filing such appeal or action has
expired.
"Electronic Means" means telecopy, telegraph, telex, facsimile
transmission or other similar electronic means of communication,
including a telephonic communication confirmed in writing or written
transmission.
"Extraordinary Services" and "Extraordinary Expenses" mean all
reasonable services rendered by the Trustee and all reasonable, actual
out-of-pocket expenses, including attorneys fees and expenses, incurred
by the Trustee under this Trust Agreement other than Ordinary Services
and Ordinary Expenses.
"Financial Newspaper or Journal" means The Wall Street Journal
or The Bond Buyer or any other newspaper or journal containing financial
news, printed in the English language, customarily published on each
Business Day and circulated in San Francisco, California and New York,
New York, and selected by the Trustee, whose decision shall be final and
conclusive.
"Fixed Rate" means the interest rate applicable to the
Certificates after the Conversion Date in accordance with Section 2.4
hereof.
"Fixed Rate Mode" means the mode during which the Certificates
bear interest at a Fixed Rate.
"Fund" means any one or more of the separate special trust funds
created by Article III hereof.
"General Fund" means such Fund created by Section 3.2 hereof.
"Government Obligations" means direct, non-callable, general
obligations of the United States of America, or any obligations
unconditionally guaranteed as to the full and timely payment of
principal and interest by the full faith and credit of the United States
of America.
"Indexing Agent" means Kenny Information Systems, a corporation
duly organized and existing under the laws of the State of New York, and
its successors and assigns, except that if such corporation shall be
dissolved or liquidated or shall no longer publish the indices referred
to in the definition of Alternate Rate, then the term "Indexing Agent"
shall be deemed to refer to any other entity selected by the Authority
publishing similar indices and approved by the Bank and the Remarketing
Agent (neither of whom shall be under any liability by reason of such
approval).
"Information Services" means Financial Information, Inc.'s
"Daily Called Bond Service," 30 Montgomery Street, 10th Floor, Jersey
City, New Jersey 07302, Attention: Editor; Kenny Information Services'
"Called Certificate Service," 65 Broadway, 16th Floor, New York, New
York 10006; Moody's "Municipal and Government," 99 Church Street, 8th
Floor, New York, New York 10007, Attention; Municipal News Report; and
Standard and Poor's "Called Bond Record," 25 Broadway, 3rd Floor, New
York, New York 10004; or, in accordance with then-current guidelines of
the Securities and Exchange Commission, such other addresses and/or such
other services providing information with respect to called bonds, or no
such services, as the Authority may designate in a certificate of the
Authority delivered to the Trustee.
"Initial Rate Calculation Date" means December 6, 1994.
"Installment Payments" shall have the same meaning as provided
in the Amended and Restated Second Installment Sale Agreement.
"Insurance Proceeds Account" means the account in the Revenue
Fund by that name created by Section 3.2 hereof.
"Interest Account" means the account in the Debt Service Fund by
that name created by Section 3.2 hereof.
"Interest Payment Date" means, prior to and including the
Conversion Date, the first Wednesday of each month, commencing the first
Wednesday of the month following the Initial Rate Calculation Date, and,
after the Conversion Date, June 1 and December 1 of each year, and the
final maturity of the Certificates.
"Interest Period" means the period commencing on the Wednesday
after each Interest Rate Calculation Date to and including Tuesday of
the following week.
"Interest Rate Calculation Date" means, prior to the Conversion
Date, each Tuesday or, if Tuesday is not a Business Day, the next
succeeding day or, if such day is not a Business Day, then the Business
Day next preceding such Tuesday.
"Land" means the real property described in Exhibit A to the
Security Agreement.
"Maturity Date" means December 1, 2023.
"Maximum Interest Rate" means 12 percent per year (computed on
the basis of a 365 day year, actual number of days elapsed); provided,
however, that the Maximum Interest Rate shall be a higher rate that can
be no higher than the rate stated in the Bank Letter of Credit if the
Trustee receives (i) evidence satisfactory to the Trustee that the
amount of the Bank Letter of Credit or the Substitute Letter of Credit,
as the case may be, has been increased by an amount equal to the
principal amount of the Certificates outstanding times the increase in
the interest rate, divided by 365, times 38; (ii) an opinion of Special
Counsel to the effect that the designation will neither violate any
provision of any law applicable to the Certificates nor cause the
interest due with respect to the Certificates to cease to be Tax-exempt;
and (iii) the written consent of the Company to the designation of such
higher rate. In no event shall the Maximum Interest Rate exceed the
highest rate allowable under any applicable State usury limitation.
"Moody's" means Moody's Investors Service, Inc., a corporation
organized and existing under the laws of the State of Delaware, its
successors and their assigns, and, if such corporation shall be
dissolved liquidated or shall no longer perform the functions of a
securities rating agency, "Moody's" shall be deemed to refer to any
other nationally recognized securities rating agency designated by the
Authority, with the approval of the Company, by notice to the
Remarketing Agent, the Bank and the Trustee.
"Net Proceeds" shall have the same meaning as provided in the
Amended and Restated First Installment Sale Agreement.
"Notice by Mail" or "notice" of any action or condition "by
Mail" means a written notice meeting the requirements of this Trust
Agreement mailed by first-class mail to the Registered Owners of
Certificates at the addresses shown in the registration books maintained
pursuant to Section 2.9 hereof.
"Notice Parties" means the Authority, the Trustee, the
Remarketing Agent, the Tender Agent, the Company and the Bank.
"Ordinary Services" and "Ordinary Expenses" mean those
reasonable services to be rendered and those reasonable, actual
out-of-pocket expenses, including fees of counsel, accountants and other
professional advisors, including expenses incurred pursuant to
Section 9.1(c) herein, to be incurred by the Trustee as depositary of
the Funds, as registrar of the Certificates, as Paying Agent and as
Custodian of Pledged Certificates, if any, and for its performance of
any and all other duties hereunder, for which the Trustee will be
compensated at the rates set forth in a certificate to be executed by
the Company and the Trustee in accordance with a schedule provided to
the Trustee by the Company.
"Outstanding," when used in reference to the Certificates, shall
mean, as at any particular date, the aggregate of all Certificates
delivered under this Trust Agreement except:
(i) those cancelled at or prior to such date or
delivered to or acquired by the Trustee at or prior to such date
for cancellation;
(ii) those deemed to be paid in accordance with Article
VIII of this Trust Agreement; and
(iii) those in lieu of or in exchange or substitution
for which other Certificates shall have been delivered pursuant
to this Trust Agreement.
"Paying Agent" means any commercial bank or trust company
designated pursuant to this Trust Agreement to serve as a paying agency
or place of payment for the Certificates, and, unless otherwise
designated, means the Trustee and, with respect to the Certificates
tendered for purchase pursuant to Article XIII hereof, the Tender Agent.
"Permitted Encumbrance" shall have the same meaning as provided
in the Amended and Restated Second Installment Sale Agreement.
"Permitted Investments" means any of the following, other than
those issued by the Authority or the Company, which at the time are
legal investments under the laws of the State, and to the extent
provided by law (provided the Trustee has no duty to investigate the
law), for the moneys held hereunder then proposed to be invested
therein: (i) Government Obligations; (ii) time or demand deposits in
any United States bank or trust company whose obligations are rated in
the highest rating category by a nationally recognized rating agency,
having aggregate capital and surplus of at least $50,000,000 (including
the Trustee and its affiliates and the Bank), which are secured at all
times by bonds or other obligations which are authorized by law as
security for public deposits; (iii) obligations, participations or other
instruments of, or issued by the Federal National Mortgage Association,
or issued by a United States agency or a United States government
enterprise; (iv) evidence of indebtedness of corporations authorized by
the provisions of Section 1364 of the California Financial Code provided
such indebtedness is rated, or is on a parity with obligations that are
rated "P-1" or "A-1" or better by a nationally recognized rating agency;
(v) repurchase agreements secured by any of the obligations referred to
in (i) or (iii) above or bonds or obligations which are authorized by
law as security for public deposits, provided that no proceeding under
any applicable insolvency or reorganization law has been commenced by or
against the issuer of such bonds or obligations and provided further
that such bonds or other obligations and the debt of the issuer of the
repurchase agreement bear the highest rating assigned by a nationally
recognized rating agency; (vi) obligations of state and local
governments or political subdivisions or instrumentalities thereof, the
interest on which is Tax-exempt, rated by Moody's (or other Rating
Agency then rating the Certificates) at a rating not lower than the
rating on the Certificates; (vii) a promissory note (and the investment
agreement, if any) of a bank holding company whose obligations are rated
AA+ or Aa1, or higher, by a nationally recognized rating agency;
(viii) money market funds of the Trustee and its affiliates; and (ix)
any other investment approved in writing by the Bank, acceptable to the
Trustee, and otherwise in accordance with the requirements of this Trust
Agreement.
"Pledge and Security Agreement" or "Pledge Agreement" means that
agreement dated as of the date hereof, by and among the Company, the
Trustee and the Bank with respect to the holding of Pledged Certificates
by the Custodian.
"Pledged Certificates" means any Certificates during the period
from and including the date of its purchase with amounts realized under
the Bank Letter of Credit, while such Certificate is pledged to the
Bank, to but excluding the date on which such Certificate is purchased
by any person or entity of any kind other than the Bank and payment
therefor is received by the Bank or on its behalf.
"Principal Account" means the Account in the Debt Service Fund
by that name created pursuant to Section 3.2 hereof.
"Principal Office" means, with respect to the Trustee, the
Paying Agent and the Tender Agent, the corporate trust office of the
Trustee, the Paying Agent and the Tender Agent (if the Trustee is the
Paying Agent and Tender Agent), located at the address set forth in
Section 14.9 hereof (except for exchanges and surrenders of, and
payments on, the Certificates which shall be c/o First Trust of
California, National Association, 180 East Fifth Street, St. Paul,
Minnesota 55101, Attention: Corporate Trust Department), and such other
offices as the Trustee shall designate from time to time, and with
respect to the Bank, located at the address indicated in Section 14.9
hereof, and such other offices as the Bank may designate from time to
time.
"Prior Certificates" means the Parking Authority of the City of
Hermosa Beach $6,400,000 Floating Rate Monthly Demand Certificates of
Participation (Hermosa Beach Parking Facilities Project - 1983 Series).
"Proceeds Fund" means such Fund created by Section 3.2 hereof.
"Project" shall have the same meaning as provided in the Amended
and Restated First Installment Sale Agreement.
"Project Costs" shall have the same meaning as provided in the
Amended and Restated First Installment Sale Agreement.
"Purchase Fund" means the Fund by that name created pursuant to
Section 3.2 hereof.
"Purchase Payments" shall have the same meaning as provided in
the Amended and Restated First Installment Sale Agreement.
"Rating Agency" means Moody's Investors Service, Standard &
Poor's Ratings Group, Fitch Investors Service or any other nationally
recognized rating agency.
"Rebate Fund" means the Fund by that name created pursuant to
Section 5.5.
"Record Date" means, with respect to any Interest Payment Date
on the Certificates occurring on or before the Conversion Date, except a
payment of defaulted interest, the day next preceding such Interest
Payment Date (whether or not a Business Day), and after the Conversion
Date, the fifteenth day of the month preceding an Interest Payment Date.
With respect to any payment of defaulted interest, "Record Date" means a
special record date established in accordance with the provisions of
Section 2.2 hereof.
"Redemption Account" means the Account in the Debt Service Fund
by that name created pursuant to Section 3.2 hereof.
"Registered Owner" means the person or persons in whose name or
names a Certificate shall be registered on books of the Trustee kept for
that purpose in accordance with the terms of this Trust Agreement.
"Registrar" means the Trustee acting as registrar of the
Certificates.
"Regulations" means the Income Tax Regulations promulgated or
proposed by the Department of Treasury pursuant to the Code from time to
time.
"Reimbursement Agreement" means (i) the Letter of Credit and
Reimbursement Agreement dated as of this date between the Company and
the Bank pursuant to which the Letter of Credit is issued by the Bank
and delivered to the Trustee, (ii) any comparable agreement between the
Company and the issuer of any Substitute Letter of Credit, and (iii) any
and all modifications, alterations, amendments and supplements thereto.
"Remarketing Agent" means the remarketing agent appointed by the
Company in accordance with the provisions of Section 13.3.
"Remarketing Agreement" means that certain Remarketing
Agreement, dated as of the date hereof, between the Remarketing Agent,
the Authority and the Company.
"Reserve Fund" means the Fund established by the Trustee
pursuant to Section 3.2 hereof.
"Reserve Requirement" means at any particular time (i) from the
date of original delivery of the Certificates to the Conversion Date to
a Fixed Rate pursuant to Section 2.4 hereof, an amount equal to the
greater of (a) the amount of interest payable for six months with
respect to all Certificates Outstanding at an assumed interest rate
equal to the Maximum Interest Rate or (b) $432,000, and (ii) thereafter,
an amount equal to the amount of interest payable for six months with
respect to all Certificates Outstanding at a rate of interest equal to
the Fixed Rate.
"Responsible Officer" means any officer of the Trustee
specifically assigned to administer its duties hereunder.
"Revenues" means the amounts pledged hereunder to the payment of
principal represented by, premium, if any, and interest due with respect
to the Certificates, consisting of the following: (i) all moneys drawn
by the Trustee under the Bank Letter of Credit; (ii) all income,
revenues, proceeds and other amounts, to which the Authority is
entitled, derived from or in connection with the Project and the Amended
and Restated First and Second Installment Sale Agreements, including all
scheduled payments of Purchase Payments and all prepayments which do not
represent draws under the Bank Letter of Credit, including amounts
obtained through the exercise of the remedies provided in the Amended
and Restated First and Second Installment Sale Agreements upon the
occurrence of events of default thereunder and all receipts of the
Trustee credited under the provisions of this Trust Agreement against
said amounts payable, and excluding payments made by the Company to the
Rebate Fund; and (iii) moneys held in the Funds and Accounts (exclusive
of moneys held in the Rebate Fund and the Purchase Fund), together with
investment earnings thereon.
"Seasoned Funds" means moneys paid by the Company to the Trustee
and so designated at the time of such payment, which moneys have been
held by the Trustee (other than in the Rebate Fund, the Purchase Fund or
the Custody Account) for a period of at least 370 days and not
commingled with any moneys so held for less than said period and during
which period no petition in bankruptcy was filed by or against, and no
receivership, insolvency, assignment for the benefit of creditors or
other similar proceeding has been commenced by or against, the Authority
or the Company or general partner or guarantor thereof, unless such
petition or proceeding was dismissed and all applicable appeal periods
have expired without an appeal having been filed. If neither the Bank
Letter of Credit nor any Substitute Letter of Credit is in effect,
"Seasoned Funds" means any moneys.
"Seasoned Funds Account" means the Account by that name created
in the Debt Service Fund pursuant to Section 3.2 hereof.
"Securities Depository" means The Depository Trust Company and
its successors and assigns, or any other securities depository selected
as set forth in Section 2.13 hereof.
"Security Agreement" means that certain Security Agreement dated
the date hereof among the Company, the Bank, and the Authority, executed
by the Company in favor of the Bank and the Authority, granting a
security interest in, without limitation, all Collateral in which the
Company has an interest in, and any amendments or supplements thereto.
"Special Counsel" means an attorney or firm of attorneys of
recognized national standing in the field of municipal finance
acceptable to the Authority and the Trustee.
"State" means the State of California.
"Substitute Letter of Credit" means a letter of credit, surety
bond, insurance policy, stand-by funding or bond purchase agreement or
other credit facility which satisfies the criteria of Section 3.9(e)
hereof and Section 5.3 of the Amended and Restated Second Installment
Sale Agreement delivered by the Company to the Trustee to replace the
theretofore outstanding Bank Letter of Credit.
"Supplemental Trust Agreement" means any agreement hereafter
authorized and entered into between the Authority and the Trustee which
amends, modifies or supplements and forms a part of this Trust
Agreement.
"Tax Certificate" means a certificate executed and delivered by
the Authority on the Closing Date, or any functionally similar
replacement certificate subsequently executed and delivered by the
Authority with respect to the requirements of the Code.
"Tax-exempt" means, with respect to interest on any obligations
of a state or local government, including the Certificates, that such
interest is excluded from gross income for federal income tax purposes;
provided, however, that such interest may be includable as an item of
tax preference or otherwise includable directly or indirectly for
purposes of calculating other tax liabilities, including any alternative
minimum tax or environmental tax, under the Code.
"Tender Agent" means First Trust of California, National
Association, or another Tender Agent appointed pursuant to Section 13.9
and acting in the capacity of tender agent under this Trust Agreement,
which Tender Agent shall also be a Paying Agent hereunder.
"Term of Agreement" means the term of the Amended and Restated
Second Installment Sale Agreement as specified in Section 10.1 of the
Amended and Restated Second Installment Sale Agreement.
"Trust Agreement" means this Trust Agreement, dated as of this
date, among the Authority, the Trustee, and the Company, and any and all
modifications, alterations, amendments and supplements thereto.
"Trust Estate" means the property conveyed to the Trustee
pursuant to the Granting Clauses hereof.
"Trustee" means First Trust of California, National Association,
a national banking association organized and existing under the laws of
the United States, as trustee of the trusts under this Trust Agreement,
its successors in trust and their assigns.
"Weekly Mode" means the mode during which the Weekly Rate is in
effect.
"Weekly Rate" means the per annum interest rate on any
Certificate in the Weekly Mode determined pursuant to Section 2.3 hereof
which, initially shall be from and including the first day the
Certificates become subject to the Weekly Mode to and including the
following Tuesday and, thereafter, commencing on each Wednesday to and
including the following Tuesday.
Such terms as are not defined herein shall have the meanings
assigned to them in the Amended and Restated First Installment Sale
Agreement and the Amended and Restated Second Installment Sale
Agreement.
(b) Covenants. Words of agreement and promise herein
shall also be construed as covenants.
(c) Number and Gender, Connectives and Disjunctives.
Wherever appropriate (1) the singular and plural forms of words, (2)
words of different gender and (3) the words "and" and "or" shall, within
those respective classifications, be deemed interchangeable.
(d) Use of Examples. When a condition, class,
category, circumstance or other concept is described in general terms
herein and a list of possible examples or components of what has been
described generally is associated with that description, and regardless
of whether the words "include" or "including" or the like are also used,
the listing shall be deemed illustrative only and shall not be construed
as excluding other possible examples or components or otherwise limiting
the generality of the description in any way.
ARTICLE II
THE CERTIFICATES
Section 2.1. Authorized Amount of Certificates. No
Certificates may be executed and delivered under the provisions of this
Trust Agreement except in accordance with this Article. The total
principal amount of Certificates that may be executed and delivered is
hereby expressly limited to $6,400,000, except for replaced or exchanged
Certificates as provided in Sections 2.8 and 2.9 hereof.
Section 2.2. Execution and Delivery of Certificates. The
Authority may execute and deliver the Certificates following the
execution of this Trust Agreement; and the Trustee shall, at the
Authority's written request, authenticate such Certificates and deliver
them as specified in the request. Any Certificates delivered prior to
the Conversion Date shall be in substantially the form set forth in
Exhibit A hereto and any Certificates delivered on or after the
Conversion Date shall be in substantially the form set forth in
Exhibit B hereto and shall be designated "Parking Authority of the City
of Hermosa Beach, Floating Rate Weekly Demand Refunding Certificates of
Participation (Hermosa Beach Parking Facilities Project - 1994 Series),"
in each case with necessary or appropriate variations, omissions and
insertions as permitted or required by this Trust Agreement, including
any Supplemental Trust Agreement. The Certificates shall be deliverable
only as fully registered Certificates without coupons in Authorized
Denominations. Unless the Authority shall otherwise direct, the
Certificates shall be numbered as determined by the Trustee. The
Certificates shall be registered initially in the name of "Cede & Co.,"
as nominee of the Securities Depository, and shall be evidenced by one
Certificate in the principal amount of the Certificates. Registered
ownership of the Certificates, or any portion thereof, may not
thereafter be transferred except as set forth in Section 2.13.
The Certificates shall be dated as of the Closing Date, and
shall mature on the Maturity Date. The Certificates shall bear interest
for the period from the Closing Date to and including the Initial Rate
Calculation Date, at the rate specified in writing to the Trustee by the
Remarketing Agent on the Closing Date. Thereafter, the Certificates
shall bear interest at the Weekly Rate, as the same shall be determined
from time to time, unless and until such time as the Fixed Rate is
established pursuant to Section 2.4 hereof. The amount of interest to
be paid on any Interest Payment Date for each minimum Authorized
Denomination of Certificates prior to the establishing of the Fixed Rate
shall be determined by (i) multiplying the minimum Authorized
Denomination of each Certificate times each different Weekly Rate in
effect since the last Interest Payment Date times the actual number of
days that such Weekly Rate was in effect, (ii) dividing the resulting
product by 365 or 366, as appropriate, and (iii) totaling the amounts
computed for each Weekly Rate and rounding the resulting figure to the
nearest cent (half cents being rounded upward). Neither the Authority,
the Company, the Remarketing Agent, the Bank nor the Trustee shall have
any liability to any Certificateholder as a result of any error in
calculation of the Weekly Rate.
The amount of interest payable with respect to the Certificates
from and after the Conversion Date shall be calculated at the Fixed Rate
on the basis of a 360-day year comprised of twelve 30-day months.
Interest due with respect to the Certificates shall be payable
on the first Wednesday of each month commencing on the first Wednesday
of the month following the Initial Rate Calculation Date; provided,
however, that, subsequent to the Conversion Date, interest on the
Certificates shall be payable semiannually on June 1 and December 1 of
each year. Each Certificate will bear interest from the Interest
Payment Date next preceding the date of authentication thereof to which
interest has been duly paid or provided for, unless a Certificate is
authenticated before the Record Date for the first Interest Payment
Date, in which case interest will accrue from the Closing Date. The
Trustee shall insert the date of authentication of each Certificate in
the place provided for such purpose in the form of Trustee's certificate
of authentication to be printed on each Certificate. Each Certificate
shall bear interest on overdue principal at the rate then in effect on
the Certificates.
The principal of and premium, if any, and interest on the
Certificates shall be payable by check in lawful money of the United
States of America, being any coin or currency of the United States of
America which, at the respective dates of payment thereof, is legal
tender for the payment of public and private debts. Interest due with
respect to each Certificate shall be paid to the Registered Owner
thereof at the close of business on the Record Date with respect to such
interest payment and shall be paid (i) in the case of Certificates in
Weekly Mode, by wire transfer of immediately available funds to an
account in the United States specified by the Owner in a writing
delivered to the Paying Agent and (ii) in the case of Certificates in
the Fixed Rate Mode by check mailed to such Registered Owner on the
Interest Payment Date at its address as it appears on the registration
books of the Trustee or, upon the request of a Registered Owner of at
least $1,000,000 in principal amount of Certificates by wire transfer in
immediately available funds to an account in the United States
designated by such Registered Owner, irrespective of the cancellation of
such Certificate upon any transfer or exchange thereof subsequent to
such Record Date and prior to such Interest Payment Date, unless the
Authority shall default in the payment of the interest due with respect
to such Interest Payment Date. Payment of principal or premium due with
respect to any Certificate shall be paid only upon surrender of such
Certificate at the Principal Office of the Trustee, or its successor in
trust or, in the event of purchase pursuant to Sections 13.1 or 13.2
hereof, at the Principal Office of the Tender Agent, or successor Tender
Agent. In the event of any default in the payment of interest, such
defaulted interest shall be payable to the Registered Owner of such
Certificate (or its respective predecessor Certificate) on a special
Record Date for the payment of such defaulted interest, which date shall
be established by notice mailed by or on behalf of the Authority to the
Registered Owners of Certificates not less than fifteen (15) days
preceding such special Record Date.
Section 2.3. Determination of Weekly Rate. The Weekly Rate to
be borne by the Certificates from time to time prior to the Conversion
Date shall be the rate described herein.
(a) For each Interest Period commencing after the
Initial Rate Calculation Date, the Weekly Rate shall be the rate
determined by the Remarketing Agent by 4:00 p.m. New York time on the
applicable Interest Rate Calculation Date, having due regard for
prevailing financial market conditions, to be the rate (but not higher
than the rate) which it would be necessary for the Certificates to bear
in order to enable the Remarketing Agent to remarket Certificates at 100
percent of the principal amount thereof if Certificates were tendered to
the Remarketing Agent for remarketing. The Remarketing Agent shall make
the Weekly Rate available (i) after 4:00 p.m. on the Interest Rate
Calculation Date by telephone to any Owner or Notice Party requesting
such rate and (ii) by Electronic Means to the Paying Agent not later
than the second Business Day immediately succeeding the Interest Rate
Calculation Date. The Paying Agent shall give notice of such interest
rates to the Trustee by Electronic Means not later than 4:00 p.m. on the
second Business Day immediately succeeding the Interest Rate Calculation
Date. If the Remarketing Agent shall at any time fail to determine the
Weekly Rate, then the Weekly Rate shall be the Alternate Rate.
(b) The determination of the Weekly Rate by the
Remarketing Agent shall be conclusive and binding upon the Authority,
the Company, the Trustee, the Tender Agent, the Bank, the Remarketing
Agent and the Registered Owners of the Certificates.
Section 2.4. Establishment of Fixed Rate. The interest rate to
be borne by the Certificates may be converted to the Fixed Rate as
follows:
(a) The Company may elect, with the prior consent of
the Authority and the Bank (as hereinafter described), at any time (so
long as no Event of Default shall have occurred and is continuing) that
Certificates are Outstanding to have the Certificates bear interest at
the Fixed Rate by giving written notice to the Trustee of such election
at least 35 and not more than 45 days prior to the Conversion Date, and
by sending a copy of such notice to the Authority, the Bank, the Paying
Agent, the Tender Agent and the Remarketing Agent. An election by the
Company shall not be effective unless the Bank consents in writing and
the Company delivers to the Bank written evidence acceptable to the Bank
of (i) a Substitute Letter of Credit expected to be in effect on and
after the Conversion Date or (ii) an investment letter or binding
commitment for the purchase of the Certificates upon mandatory tender
pursuant to Section 13.5(c) and which in either case, unless otherwise
waived by the Bank in the exercise of its sole discretion, must provide
for the purchase of any Pledged Certificates upon the Conversion Date.
An election by the Company shall not be effective unless the notice of
election states the proposed Conversion Date, which shall be an Interest
Payment Date, and the Company furnishes to the Trustee, concurrently
with the notice of election (i) an opinion of Special Counsel to the
effect that the establishment of the Fixed Rate in accordance with the
procedure described in subsection (d) below, is lawful under applicable
law, is permitted by this Trust Agreement, and will not adversely affect
the Tax-exempt status of interest due with respect to the Certificates,
(ii) payment to the Trustee of such amount as the Trustee reasonably
determines may be required in connection with the establishment of the
Fixed Rate, including but not limited to its own fees and expenses and
the cost of printing new Certificates; and (iii) evidence from Moody's
(or another Rating Agency) specifying the rating, if any, on the
Certificates expected to be in effect on and after the Conversion Date.
(b) The Company may cancel such election by causing
the Trustee, the Tender Agent, the Bank, the Authority and the
Remarketing Agent to receive written notice of such cancellation not
later than the last Business Day which is at least 35 days prior to the
proposed Conversion Date.
(c) Unless the Trustee, the Paying Agent, the Tender
Agent and the Remarketing Agent have received a notice of cancellation
as provided for in subsection (b) hereof by the date specified by said
subsection the Trustee shall send a notice not less than 30 days prior
to the Conversion Date to the Remarketing Agent, the Company, the Bank,
Moody's and each Registered Owner by first class mail, postage prepaid,
stating (i) the Conversion Date, (ii) the Fixed Rate estimated to be
borne by the Certificates on and after the Conversion Date, (iii) that
subsequent to such Conversion Date the Registered Owners will no longer
have the right to require the purchase of Certificates pursuant to
Section 13.2 hereof, (iv) the redemption provisions applicable to the
Certificates after the Conversion Date, (v) the rating, if any, on the
Certificates expected to be in effect on the Conversion Date, (vi) that
after the Conversion Date interest due with respect to the Certificates
will be payable on June 1 and December 1 of each year, (vii) the
provider of the Substitute Letter of Credit or that there will be no
Substitute Letter of Credit and (viii) such other information as is
deemed necessary by the Trustee, the Bank, the Authority or the Company,
and further stating that each Registered Owner must deliver its
Certificates to the Trustee or the Tender Agent ten days prior to the
Conversion Date for purchase at 100% of the principal amount thereof.
Any Certificate not so delivered by such date will nonetheless be deemed
to have been delivered by and purchased from the Registered Owner at
such price on the Conversion Date; provided, however, that payment of
principal due on any such Certificate shall only be paid upon surrender
thereof at either the Principal Office of the Trustee or its successor
in trust, or the Principal Office of the Tender Agent or successor
Tender Agent.
(d) The Remarketing Agent shall compute the Fixed Rate
not later than the Business Day prior to the Conversion Date not later
than 4:00 p.m. New York time on that date, and the Remarketing Agent
shall make the Fixed Rate available by telephone to any Notice Party
requesting such rate. The Fixed Rate shall be determined by the
Remarketing Agent, having due regard for prevailing market conditions,
as that rate which, if borne by the Certificates from the Conversion
Date to maturity, would be the interest rate, but would not exceed the
interest rate, which would result in the market value (disregarding
accrued interest) of the Certificates on the date of such computation
being 100 percent of the principal amount thereof.
(e) Certificates delivered or deemed to have been
delivered to the Trustee or the Tender Agent pursuant to the provisions
of subsection (c) hereof shall be purchased and paid for in accordance
with Article XIII hereof; and payment, or provision for payment, having
been made, such Certificates shall cease to bear interest and shall not
be deemed to be Outstanding for the purposes of this Trust Agreement,
from and after the Conversion Date; and the Trustee shall cause new
Certificates, in the form set forth in Exhibit B hereto and reflecting
the Fixed Rate, to be printed at the expense of the Company and
distributed to the respective purchasers thereof.
(f) The determination of the Fixed Rate by the
Remarketing Agent in accordance with the provisions of this Section is
hereby approved by the Authority, and such determination shall be
conclusive and binding upon the owners of the Certificates, the
Authority, the Bank, the Remarketing Agent, the Company and the Trustee.
Section 2.5. Execution of Certificates. The Certificates shall
be executed by and in the name of the Trustee, acting in its capacity as
Trustee hereunder (and not as an obligor on the Certificates), with the
manual or facsimile signature of an authorized officer of the Trustee.
Section 2.6. Pledge Under the Trust Agreement; Limits on
Authority's Obligations and Powers. The Certificates shall be payable
solely from the amounts payable under the Amended and Restated First and
Second Installment Sale Agreements, the Deed of Trust and the Assignment
of Leases, the Security Agreement, and the Letter of Credit (except to
the extent paid out of moneys attributable to the proceeds derived from
the sale of the Certificates or to income from either the temporary
investment thereof and, under certain circumstances, to proceeds from
insurance and condemnation awards) and shall be a valid claim of the
respective Registered Owners thereof only against the Certificate Fund
and other moneys held by or for the Trustee and the amounts payable
under the Amended and Restated First and Second Installment Sale
Agreements, the Deed of Trust and the Assignment of Leases, the Security
Agreement, and the Letter of Credit, which amounts are hereby pledged,
assigned and otherwise secured for the equal and ratable payment of the
Certificates and shall be used for no other purpose than to pay the
principal of, premium, if any, and interest on the Certificates, except
as may be otherwise expressly authorized in this Trust Agreement.
Neither the Trustee, the Authority, the State nor any other political
subdivision of the State shall be obligated to pay the Purchase Payments
or the principal of such Certificates or the interest thereon or other
costs incident thereto except from the moneys pledged therefor. Neither
the faith and credit nor the taxing power of the Authority, the State or
any political subdivision of the State is pledged to the payment of the
Purchase Payments or the principal of the Certificates or the interest
thereon or other costs incident thereto. The Certificates and the
Purchase Payments shall not be general obligations of the Trustee or the
Authority, nor a charge upon the tax revenues of the Authority, nor a
charge upon any other revenues or property of the Authority not
specifically pledged thereto.
Section 2.7. Delivery of Certificates. Upon the execution and
delivery of this Trust Agreement, the Trustee shall execute and deliver
the Certificates to the initial purchasers thereof as hereinafter in
this Section provided.
Prior to the delivery by the Trustee of the Certificates there
shall be filed with the Trustee:
(a) A copy, duly certified by the Secretary or other
appropriate officer of the Authority, of the resolution adopted
by the Authority authorizing the execution and delivery of this
Trust Agreement, the Amended and Restated First Installment Sale
Agreement and the Amended and Restated Second Installment Sale
Agreement.
(b) Original executed counterparts of the Amended and
Restated First Installment Sale Agreement, the Amended and
Restated Second Installment Sale Agreement, this Trust
Agreement, the Deed of Trust and the Assignment of Leases, the
Security Agreement, the Letter of Credit and the Reimbursement
Agreement.
(c) A request to the Trustee on behalf of the
Authority and signed by its Chairman to deliver the Certificates
to the purchasers therein identified upon payment to the Trustee
of a sum specified in such request and authorization plus
accrued interest thereon, if any, to the date of delivery. The
proceeds of such payment shall be paid over to the Trustee and
thereupon deposited in the Funds and Accounts established by the
Trustee pursuant to Article III hereof and pursuant to
instructions delivered by the Authority on the date of delivery
of the Certificates regarding deposits to the various Funds and
Accounts.
(d) Written title evidence that the Deed of Trust will
constitute a valid first lien upon the Project subject only to
Permitted Encumbrances and the Assignment of Leases. Such title
evidence shall consist of an American Land Title Association
form of loan policy of title insurance in usual and customary
form, naming the Trustee as an additional insured, without
exception for matters of survey and mechanic's and materialmen's
liens, and in the face amount of at least $6,400,000 issued by a
title company selected by the Company and approved by the
Trustee and the Bank.
(e) An opinion of Special Counsel approving the
validity of the Amended and Restated First Installment Sale
Agreement and the Tax-exempt status of the interest payable
thereunder and with respect to the Certificates.
Section 2.8. Lost, Destroyed or Improperly Cancelled
Certificates. If any Certificate, whether in temporary or definitive
form, is lost (whether by reason of theft or otherwise), destroyed
(whether by mutilation, damage, in whole or in part, or otherwise) or
improperly cancelled, the Trustee may execute and deliver a new
Certificate of like date and denomination and bearing a number not
contemporaneously outstanding; provided that (a) in the case of any
mutilated Certificate, such mutilated Certificate shall first be
surrendered to the Trustee, (b) in the case of any lost Certificate or
Certificate destroyed in whole, there shall be first furnished to the
Trustee evidence of such loss or destruction, together with indemnity,
satisfactory to it. In the event any lost, destroyed or improperly
cancelled Certificate shall have matured or is about to mature, or has
been called for redemption, instead of executing and delivering a
duplicate Certificate the Trustee shall, pay the same without surrender
thereof if there shall be first furnished to the Trustee evidence of
such loss, destruction or cancellation, together with indemnity,
satisfactory to it. Upon the execution and delivery of any substitute
Certificate, the Trustee may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
relation thereto. The Trustee may charge the Registered Owner of any
such Certificate with the Trustee's reasonable fees and expenses in
connection with any transaction described in this Section 2.8.
Section 2.9. Transfer, Registration and Exchange of
Certificates. The Trustee shall cause books for the registration of the
transfer of the Certificates as provided in this Trust Agreement to be
kept at its Principal Office. The books shall at all times be open to
inspection by a duly authorized employee or agent of the Authority
during normal business hours and upon reasonable notice. Upon surrender
for registration of transfer of any Certificate at the Principal Office
of the Trustee, duly endorsed for transfer or accompanied by an
assignment duly executed by the Registered Owner or his attorney duly
authorized in writing, the Authority shall cause to be executed and the
Trustee shall authenticate and deliver in the name of the transferee or
transferees a new Certificate or Certificates, of the same maturity and
for a like aggregate principal amount.
Certificates may be exchanged at the Principal Office of the
Trustee for a like aggregate principal amount of Certificates of the
same maturity of other Authorized Denominations. The Authority shall
cause to be executed and the Trustee shall authenticate and deliver
Certificates which the Certificateholder making the exchange is entitled
to receive, bearing numbers not then outstanding. The execution by the
Chairman of the Authority of any Certificate of any Authorized
Denomination shall constitute full and due authorization of such
denomination, and the Trustee shall thereby be authorized to
authenticate and deliver such Certificate. The Trustee shall not be
required to register the transfer of or exchange any Certificate after
the mailing of notice calling such Certificate for redemption has been
given as herein provided during the period of fifteen (15) days next
preceding the giving of such notice of redemption nor between the
Conversion Date and the date on which notice thereof has been given nor
between the Record Date and the related Interest Payment Date.
As to any Certificate other than a Pledged Certificate, the
Registered Owner shall be deemed and regarded as the absolute owner
thereof for all purposes, and payment of either principal or interest on
any Certificate shall be made only to or upon the order of the
Registered Owner thereof on the Record Date for such payment or of his
attorney duly authorized in writing, but such registration may be
changed as hereinabove provided. As to a Pledged Certificate, the
Trustee shall make payments due, if any, to the Custodian as the
Registered Owner of such Pledged Certificate. All such payments made
with respect to a Certificate or a Pledged Certificate shall be valid
and effectual to satisfy and discharge the liability upon such
Certificate to the extent of the sum or sums so paid.
The Authority and the Trustee shall not charge
Certificateholders for any exchange or registration of transfer of
Certificates, except that in each case the Trustee shall require the
payment by the Certificateholder requesting exchange or registration of
transfer of any tax or other governmental charge required to be paid
with respect thereto. The cost of printing any additional Certificates
and any services reasonably rendered or other reasonable, actual out-of-
pocket expenses incurred by the Trustee in connection with any exchange
or transfer provided for in this Section 2.5 is required to be paid by
the Company pursuant to the Amended and Restated Second Installment Sale
Agreement.
Section 2.10.Reserved.
Section 2.11.Temporary Certificates. Pending the preparation
of definitive Certificates, the Trustee may execute and deliver
temporary Certificates. Temporary Certificates shall be issuable as
registered Certificates without coupons, of any Authorized Denomination,
and substantially in the form of the definitive Certificates but with
such omissions, insertions and variations as may be appropriate for
temporary Certificates all as may be determined by the Trustee.
Temporary Certificates may contain such reference to any provisions of
this Trust Agreement as may be appropriate. Every temporary Certificate
shall be executed by the Trustee upon the same conditions and in
substantially the same manner, and with like effect, as the definitive
Certificates. As promptly as practicable the Trustee shall execute and
shall furnish definitive registered Certificates without coupons and
thereupon temporary Certificates may be surrendered in exchange therefor
without charge at the Principal Office of the Trustee, and the Trustee
shall execute and deliver in exchange for such temporary Certificates a
like aggregate principal amount of definitive Certificates of Authorized
Denominations. Until so exchanged the temporary Certificates shall be
entitled to the same benefits under this Trust Agreement as definitive
Certificates.
Section 2.12.Cancellation of Certificates. Whenever any
Outstanding Certificate shall be delivered to the Trustee for
cancellation pursuant to this Trust Agreement, for payment of the
principal amount represented thereby, or for replacement pursuant to
Section 2.9 hereof, such Certificate shall be promptly cancelled and
cremated or otherwise destroyed by the Trustee, and counterparts of a
certificate of destruction evidencing such cremation or other
destruction shall be furnished by the Trustee to the Authority and the
Company upon written request to the Trustee.
Section 2.13.Use of Depository. Notwithstanding any provision
of this Trust Agreement to the contrary:
(a) The Certificates shall be initially executed and
delivered as provided in Section 2.2. Registered ownership of the
Certificates, or any portion thereof, may not thereafter be transferred
except:
(i) To any successor of the Securities
Depository or its nominee, or to any substitute depository
designated pursuant to clause (ii) of this
subsection (a) ("substitute depository"); provided that any
successor of the Securities Depository or substitute depository
shall be qualified under any applicable laws to provide the
service proposed to be provided by it;
(ii) To any substitute depository designated by
the Authority and not objected to by the Trustee, upon (1) the
resignation of the Securities Depository or its successor (or
any substitute depository or its successor) from its functions
as depository or (2) a determination by the Company and the Bank
that the Securities Depository or its successor (or any
substitute depository or its successor) is no longer able to
carry out its functions as depository; provided that any such
substitute depository shall be qualified under any applicable
laws to provide the services proposed to be provided by it; or
(iii) To any person as provided below, upon
(1) the resignation of the Securities Depository or its
successor (or substitute depository or its successor) from its
functions as depository; provided that no substitute depository
which is not objected to by the Trustee can be obtained or (2) a
determination by the Company and the Bank that it is in the best
interests of the Company and the Bank to remove the Securities
Depository or its successor (or any substitute depository or its
successor) from its functions as depository.
(b) In the case of any transfer pursuant to clause (i)
or clause (ii) of subsection (a) hereof, upon receipt of the Outstanding
Certificates by the Trustee, together with a certificate of the
Authority to the Trustee, a single new Certificate shall be executed and
delivered in the aggregate principal amount of the Certificates then
Outstanding, registered in the name of such successor or such substitute
depository, or their nominees, as the case may be, all as specified in
such certificate of the Authority. The Trustee shall have three
Business Days to deliver the new Certificate in case of any transfer
pursuant to clause (i) or (ii) of subsection (a) hereof. In the case of
any transfer pursuant to clause (iii) of subsection (a) hereof, upon
receipt of the Outstanding Certificates by the Trustee together with a
certificate of the Authority to the Trustee, new Certificates shall be
executed and delivered in such denominations numbered in consecutive
order from R1 up and registered in the names of such persons as are
requested in such certificate of the Authority, subject to the
limitations of Section 2.2 hereof, provided the Trustee shall not be
required to deliver such new Certificates within a period less than
sixty (60) days from the date of receipt of such a certificate of the
Authority.
(c) In the case of a partial redemption or an advance
refunding of the Certificates evidencing all or a portion of the
principal amount Outstanding, the Securities Depository shall make an
appropriate notation on the Certificates indicating the date and amounts
of such reduction in principal, in form acceptable to the Trustee.
(d) The Authority and the Trustee shall be entitled to
treat the person in whose name any Certificate is registered as the
Certificateholder thereof for all purposes of this Trust Agreement and
any applicable laws, notwithstanding any notice to the contrary received
by the Trustee or the Authority; and the Authority and the Trustee shall
have no responsibility for transmitting payments to, communication with,
notifying, or otherwise dealing with any beneficial owners of the
Certificates. Neither the Authority nor the Trustee will have any
responsibility or obligations, legal or otherwise, to the beneficial
owners or to any other party including the Securities Depository or its
successor (or substitute depository or its successor), except for any
Certificateholder.
(e) So long as the outstanding Certificates are
registered in the name of Cede & Co. or its registered assign, the
Authority and the Trustee shall cooperate with Cede & Co., as sole
registered Certificateholder, and its registered assigns in effecting
payment of the principal of, and redemption premium, if any, and
interest on the Certificates by arranging for payment in such manner
that funds for such payments are properly identified and are made
immediately available on the date they are due.
(f) So long as the Securities Depository is the
Registered Owner of the Certificates:
(i) selection of Certificates to be redeemed
upon partial redemption, presentation of Certificates to the
Trustee upon partial redemption, delivery of Certificates to the
Trustee in connection with an optional or mandatory tender, or
redelivery of such Certificates by the Trustee to
Certificateholders following a remarketing or failed conversion
to the Fixed Rate shall be deemed made when the right to
exercise ownership rights in such Certificates through the
Securities Depository is transferred by the Securities
Depository on its books;
(ii) notice of a demand for purchase of
Certificates pursuant to Section 13.2 hereof shall be given by
the beneficial owner of such Certificates exercising ownership
rights through the Securities Depository by telephonic notice
(confirmed in writing) or written notice;
(iii) any notices of the interest rate on the
Certificates to be provided by the Trustee shall be provided to
anyone identifying itself to the Trustee as a person entitled to
exercise ownership rights with respect to such Certificates
through the Securities Depository or its participants;
(iv) the Securities Depository may present
notices, approvals, waivers or other communications required or
permitted to be made by Certificateholders under this Trust
Agreement on a fractionalized basis on behalf of some or all of
those persons entitled to exercise ownership rights in the
Certificates through the Securities Depository; and
(v) Beneficial interests in Certificates deemed
to be held in the Custody Account will be held in the name of
the Trustee (or its participant) as collateral security for the
Bank.
ARTICLE III
REVENUES AND FUNDS
Section 3.1. Source of Payment of Certificates. The
Certificates and all payments required of the Authority hereunder are
not general obligations of the Authority but are limited obligations as
described in Section 2.6 hereof. The Trust Estate is pledged and
assigned as a first lien pledge as security for the equal and ratable
benefit of the holders of the Certificates and shall be used for no
other purpose than payment of the principal of, premium (if any) and
interest due with respect to the Certificates, except as may be
otherwise expressly authorized in this Trust Agreement.
Section 3.2. Creation of Funds and Accounts. The following
Trust Funds and Accounts are hereby created and established with the
Trustee:
(a) the Proceeds Fund;
(b) the Cost of Issuance Fund;
(c) the Reserve Fund;
(d) the Revenue Fund, which shall include the
Insurance Proceeds Account and the Revenue Fund
Letter of Credit Account;
(e) the Debt Service Fund, which shall include the
Interest Account, the Principal Account (each of
which Accounts shall include a Letter of Credit
Sub-Account) and the Redemption Account (which
shall include a Letter of Credit Sub-Account and a
Seasoned Funds Sub-Account) and the Seasoned Funds
Account;
(f) the General Fund;
(g) the Purchase Fund, which shall include the
Purchase Fund Letter of Credit Account; and
(h) the Custody Account.
To the extent that, pursuant to the instructions contained
herein, moneys received by the Trustee and deposited in, or paid by the
Trustee from, the Revenue Fund, the Purchase Fund, the Interest Account,
the Principal Account, or the Redemption Account constitute draws on the
Bank Letter of Credit, such moneys shall be deposited in or paid from
the relevant Letter of Credit Account or Sub-Account within such Fund or
Account.
Each Fund, Account and Sub-Account shall be maintained by the
Trustee as a separate and distinct trust fund or account to be held,
managed, invested, disbursed and administered as provided in this Trust
Agreement. All moneys deposited in the Funds and Accounts shall be used
solely for the purposes set forth in this Trust Agreement. The Trustee
shall keep and maintain adequate records pertaining to each Fund and
Account, and all disbursements therefrom.
Section 3.3. Initial Deposits. On the Closing Date, as shall
be more fully specified in a written request from the Authority, the
Trustee shall deposit:
(a) An amount equal to $380,000 received from the
Company into the Costs of Issuance Fund; and
(b) An amount equal to $432,000 transferred from Bank
of America National Trust and Savings Association,
as trustee for the Prior Certificates, from
existing reserves relating to the Prior
Certificates, into the Reserve Fund.
Upon the unconditional release of the proceeds of the Certificates to
Wells Fargo Bank in the amount of $6,400,000, such proceeds of the
Certificates shall be deemed to be deposited into the Proceeds Fund.
Section 3.4. Proceeds Fund; Reserve Fund.
(a) Amounts deemed to have been deposited in the
Proceeds Fund in the amount required by Section 3.3 shall be
deemed to have been applied to repay the Prior Certificates,
pursuant to an agreement among the Authority, the Company, Bank
of America National Trust and Savings Association, as trustee
for the Prior Certificates, and the Trustee attached hereto as
Exhibit D.
(b) The Trustee shall deposit in the Reserve Fund the
amount required by Section 3.3(c) hereof as the initial Reserve
Fund deposit. Moneys credited to the Reserve Fund shall
constitute a reserve for payment of interest under the Amended
and Restated First Installment Sale Agreement, and accordingly
with respect to the Certificates. Amounts on deposit in the
Reserve Fund are subject to reduction upon conversion to a Fixed
Rate pursuant to Section 2.4 hereof, with amounts resulting from
said reduction to be used to redeem Certificates. If at any
time the moneys credited to the Reserve Fund are less than the
Reserve Requirement as then in effect, the Trustee shall make
immediate demand upon the Company for the amount of such
deficiency, which shall be restored by the Company upon such
demand of the Trustee in accordance with the Amended and
Restated Second Installment Sale Agreement. If at any time and
for so long as the moneys on credit to the Reserve Fund are at
least equal to the Reserve Requirement as then in effect no
further credits shall be made to such Fund. Any earnings on
such Fund shall either (i) at the direction of the Company, be
remitted to the Bank as reimbursement for drawings under the
Bank Letter of Credit, (ii) be deposited in the Rebate Fund to
pay amounts arising under Section 5.5 hereof or (iii) be
credited to the Seasoned Funds Account of the Revenue Fund for
use and application as are all other moneys on deposit therein
except during any period during which there is a deficiency in
the Reserve Fund, in which case such earnings shall be credited
to such Fund. Any other amounts in the Reserve Fund in excess
of the Reserve Requirement as then in effect shall either (i) at
the direction of the Company, be remitted to the Bank as
reimbursement for drawings under the Bank Letter of Credit,
(ii) be deposited in the Rebate Fund to pay amounts arising
under Section 5.5 hereof or (iii) be transferred to the Seasoned
Funds Account of the Revenue Fund for use and application as are
all other moneys on deposit therein. To the extent moneys on
credit to the Reserve Fund constitute Seasoned Funds at the time
of final payment of Purchase Payments under the Amended and
Restated First Installment Sale Agreement and accordingly, on
the Certificates may be applied to the payment of the principal
of the Purchase Payments under the Amended and Restated First
Installment Sale Agreement. The Trustee shall give the
Authority, the Company and the Bank immediate notice of any
withdrawals from the Reserve Fund which reduce the amount
therein to an amount less than the Reserve Requirement.
Section 3.5. Cost of Issuance Fund. On the Closing Date, the
Trustee shall deposit into the Cost of Issuance Fund the amount required
by Section 3.3 of this Trust Agreement. Moneys on deposit in the Cost
of Issuance Fund shall be applied to pay the costs of executing and
delivering the Certificates ("Costs of Issuance"), including, but not
limited to, all printing and document preparation expenses in connection
with this Trust Agreement, the Amended and Restated First and Second
Installment Sale Agreements, the Deed of Trust and the Assignment of
Leases, the Certificates and the preliminary official statement and the
official statement pertaining to the Certificates; rating agency fees;
legal fees and expenses of Special Counsel, counsel to the Authority,
and other counsel with respect to the financing of the Project; the
initial fees and expenses of the Trustee and any Paying Agent; the
administrative expenses of the Authority; and other fees and expenses
incurred in connection with the execution and delivery of the
Certificates or the implementation of the refinancing for the Project,
all as set forth on Exhibit A to the Certificate Purchase Agreement.
Such costs shall be payable upon submission of a written request from a
duly authorized officer or agent of the Authority to the Trustee stating
that the amount indicated thereon is justly due and owing, has not been
the subject of another written request which has been paid, and is a
proper cost of executing and delivering the Certificates or implementing
the refunding of the Prior Certificates, and a copy of each such request
will be sent by the Authority to the Company; provided that any such
costs which exceed the estimates all as set forth on Exhibit A to the
Certificate Purchase Agreement shall be payable only upon approval of
the Company with written notice to the Trustee of such approval and the
amount so payable. Any moneys remaining in the Cost of Issuance Fund on
the 180th day following the Closing Date and determined by the Trustee
not to be necessary for the payment of any expenses hereunder or Costs
of Issuance of the Certificates shall be disbursed to the Company.
Section 3.6. Revenue Fund. The Trustee shall deposit into the
Revenue Fund all Revenues and any other amounts received by the Trustee
which are subject to the lien and pledge of this Trust Agreement, to the
extent not required to be deposited in other Funds and Accounts in
accordance with the terms of this Trust Agreement. The Trustee shall
immediately apply those moneys on deposit in the Revenue Fund which
represent draws on the Bank Letter of Credit, other than amounts
representing prepayments of Purchase Payments and accrued interest
related thereto, on each scheduled Interest Payment Date on the
Certificates, in the order of priority and for the purposes as follows:
(a) First, to the Interest Account, an amount
sufficient to pay the interest becoming due and
payable with respect to the Certificates on such
date; and
(b) Second, to the Principal Account, an amount
sufficient to pay the principal of the
Certificates maturing on such date, if any.
Draws on the Bank Letter of Credit deposited in the Revenue Fund
representing prepayments of Purchase Payments and related accrued
interest shall be immediately applied as follows:
(a) First, to the Interest Account, the accrued
interest received with such payment; and
(b) Second, to the Redemption Account, the balance of
the prepayment.
Moneys on deposit in the Revenue Fund which represent payments made to
the Trustee by the Company shall be immediately applied as follows:
(a) To the Seasoned Funds Account, moneys deposited by
the Company with the Trustee and designated by the
Company at the time of deposit to become Seasoned
Funds; and
(b) To the General Fund, moneys deposited by the
Company with the Trustee as payment of the amounts
owing under the agreement(s) regarding the fees
and expenses of the Trustee, the Tender Agent, the
Authority and the Paying Agent.
The Trustee shall deposit directly into the Insurance Proceeds
Account of the Revenue Fund insurance proceeds or other compensation
received by it in the event of a taking or an involuntary loss or a
substantial destruction of all or any part of the Project deposited
pursuant to the Amended and Restated First and Second Installment Sale
Agreements. Moneys on deposit in the Insurance Proceeds Account shall
be disbursed from time to time, to the Company in accordance with the
Amended and Restated First and Second Installment Sale Agreements. The
Trustee shall draw upon the Bank Letter of Credit for deposit directly
into the Letter of Credit Sub-Account of the Redemption Account an
amount equal to any amount remaining in the Insurance Proceeds Account
following the disbursements pursuant to the Amended and Restated First
and Second Installment Sale Agreements: (i) on the 61st day following
the event giving rise to the taking, loss or destruction if the Company
has not supplied the notice referred to in the Amended and Restated
First and Second Installment Sale Agreements, (ii) on the 61st day
following the Trustee's receipt of funds to be deposited in the
Insurance Proceeds Account if the Company has not commenced to
reconstruct the Project, and (iii) on the date which is 12 months from
the date of the notice from the Company referred to in clause (i) of
this paragraph. Immediately upon the receipt of the proceeds of any
such draw upon the Bank Letter of Credit, the Trustee shall reimburse
the Bank from the Insurance Proceeds Account an amount equal to the
amount of such draw, which amount shall be credited against the
Company's obligations under the Reimbursement Agreement.
Amounts deposited in the Insurance Proceeds Account and not
requisitioned pursuant to the procedures set forth in the Amended and
Restated First and Second Installment Sale Agreements shall be used to
redeem Certificates if no Bank Letter of Credit is in force or effect in
such amounts and otherwise transferred to the Bank pursuant to this
Section 3.6.
Section 3.7. Debt Service Fund. The Trustee shall deposit into
the Interest Account of the Debt Service Fund the amounts required by
Section 3.6 of this Trust Agreement. Moneys on deposit in the Interest
Account shall be applied solely to pay the interest due with respect to
the Certificates as the same becomes due and payable. On each date
fixed for redemption of Certificates and on each scheduled Interest
Payment Date on the Certificates, the Trustee shall remit to the
respective Registered Owners of such Certificates as of the Record Date
for such interest payment, an amount from the Interest Account
sufficient to pay the interest due with respect to the Certificates
becoming due and payable on such date.
The Trustee shall deposit into the Principal Account of the Debt
Service Fund the amounts required by Section 3.6 of this Trust
Agreement. Moneys on deposit in the Principal Account shall be applied
solely to pay the principal of the Certificates as the same becomes due
and payable at maturity. On the Maturity Date, the Trustee shall set
aside and hold in trust, or remit to any Paying Agent to be held in
trust, an amount from the Principal Account sufficient to pay the
principal of the Certificates becoming due and payable on such date.
The Trustee shall deposit into the Redemption Account of the
Debt Service Fund the amounts required by Section 3.6 of this Trust
Agreement. Moneys on deposit in the Redemption Account shall be applied
solely to pay the principal and premium, if any, with respect to the
Certificates as the same become due and payable by redemption. On each
date fixed for such redemption, the Trustee shall set aside and hold in
trust, or shall remit to any Paying Agent to be held in trust, an amount
from the Redemption Account sufficient to pay the principal of and
premium, if any, with respect to the Certificates becoming due and
payable on such date.
The Trustee shall deposit into the Seasoned Funds Account of the
Debt Service Fund the amounts required by Section 3.6 of this Trust
Agreement. Moneys on deposit in the Seasoned Funds Account which
represent Seasoned Funds shall be transferred to the Redemption Account
to the extent necessary to pay the principal of and interest and
premium, if any, on the Certificates as the same shall become due and
payable by redemption; provided, however, that Seasoned Funds shall
first be applied to the payment of any premium due on the Certificates
before applying Seasoned Funds to the payment of principal of or
interest due with respect to the Certificates. Such moneys shall be
paid to the Bondholders only if they constitute Seasoned Funds. Any
moneys remaining in the Seasoned Funds Account following a redemption of
Certificates shall be immediately transferred to the General Fund.
Section 3.8. General Fund. The Trustee shall deposit into the
General Fund the amounts required by Sections 3.6, 3.7 and 5.2 of this
Trust Agreement. The Trustee shall apply moneys on deposit in the
General Fund solely for the following purposes, in the following order
of priority and in accordance with the following conditions:
(a) to the Trustee, the Tender Agent and any Paying
Agent for the cost of Extraordinary Expenses incurred and
Ordinary Services rendered;
(b) to the Trustee, the Tender Agent and any Paying
Agent for the cost of Extraordinary Expenses incurred and
Extraordinary Services rendered if said Extraordinary Expenses
and Extraordinary Services are necessary and reasonable and are
not occasioned by the negligence or willful misconduct of the
Trustee, the Tender Agent or any Paying Agent; and
(c) to the Authority, out-of-pocket expenses incurred
by the Authority in enforcing the compliance of the terms of
this Trust Agreement and the Amended and Restated First and
Second Installment Sale Agreements, for which it has requested
payment from the Company in writing at least 30 days prior to
its request hereunder and for which is has not been paid, as
specified in a written request of the Authority delivered to the
Trustee;
(d) to the extent that there are excess moneys in the
General Fund not needed to pay the above-described expenses, the
Trustee shall pay such moneys to the Bank for application
pursuant to the Reimbursement Agreement; and
(e) to the Company, all other excess moneys in the
General Fund after the foregoing transfers.
Section 3.9. The Bank Letter of Credit.
(a) The Bank Letter of Credit shall be held by the
Trustee and drawn upon in accordance with its terms consistent with the
provisions of this Trust Agreement and the Amended and Restated First
and Second Installment Sale Agreements. Moneys derived from draws upon
the Bank Letter of Credit shall be deposited in the Revenue Fund, except
that moneys drawn on the Bank Letter of Credit to purchase Certificates
pursuant to Section 13.6 hereof shall be deposited in the Purchase Fund,
and applied by the Trustee to pay the principal of and interest on the
Certificates.
(b) The Trustee shall draw moneys under the Bank
Letter of Credit in accordance with the terms thereof to the extent and
at such time as may be necessary to make timely payments due with
respect to the Certificates required to be made from the Debt Service
Fund. In accordance with the preceding paragraph, the Trustee shall
draw moneys under the Bank Letter of Credit to make payments with
respect to the Certificates by presenting an appropriate draw request to
the Bank no later than 9:00 a.m., Pacific time, on the Business Day
preceding each of the dates set forth in (i) through (iii) below:
Each Interest Payment Date, in an amount
sufficient to pay the interest becoming due and payable with
respect to Certificates on such date;
(ii) The date fixed for redemption of any of the
Certificates, in an amount which, when added to any Seasoned
Funds, will be sufficient to redeem the Certificates to be
redeemed; and
(iii) The maturity date of the Certificates to
pay the principal amount thereof;
In addition, the Trustee shall draw moneys under the Bank
Letter of Credit on the Purchase Date as specified in
Section 13.5(c) hereof.
(c) When determining the amount to draw under the Bank
Letter of Credit for the payment of principal of or interest due with
respect to the Certificates, the Trustee shall not draw any amount to
pay interest or principal on any Pledged Certificates unless the Bank
requires the Trustee to make such a draw and the Bank Letter of Credit
has been reinstated to an amount at least equal to the full principal
amount of Certificates outstanding, treating Pledged Certificates as
outstanding for this purpose, plus 38 days' interest thereon at 12% per
annum.
(d) The Trustee shall send to the Company a copy of
any documents which are presented to the Bank in connection with a
drawing on the Bank Letter of Credit concurrently with its submission of
those documents to the Bank.
(e) Prior to or on the Conversion Date, the Company
shall be permitted to provide the Trustee with a Substitute Letter of
Credit in accordance with the Reimbursement Agreement and the
requirements set forth below:
(i) The Substitute Letter of Credit may be a
letter of credit, surety bond, insurance policy, stand-by
funding or bond purchase agreement or any other credit facility
issued by a credit provider which, prior to the Conversion Date,
includes provisions for payments and liquidity hereunder in
substantially the same manner as the Bank Letter of Credit (the
"Substitute Provider"); and
(ii) Contemporaneously with the issuance of any
Substitute Letter of Credit issued prior to the Conversion Date:
(A) The Trustee shall receive written
evidence satisfactory to it that no Event of Default
shall have occurred and is continuing; and
(B) The Trustee must receive an opinion
of Special Counsel in form and substance satisfactory to
the Trustee to the effect that (A) the Substitute Letter
of Credit is the valid and binding obligation of the
Substitute Provider enforceable against the Substitute
Provider in accordance with its terms, except insofar as
its enforceability may be limited by any insolvency or
similar proceedings applicable to the Substitute Provider
or by proceedings affecting generally the rights of the
Substitute Provider's creditors, and that (B) a payment
on the Certificates from the proceeds of a drawing or
payment with respect to the Substitute Letter of Credit
will not constitute a voidable preference under the
United States Bankruptcy Code in the event the Authority
or the Company becomes the debtor in a case under the
Bankruptcy Code; and
(C) The Trustee shall receive written
evidence from Moody's (if Moody's maintains a rating on
the Certificates) that said substitution will not result
in a reduction or withdrawal of the rating of the
Certificates by such Rating Agency, or from any Rating
Agency to the effect that said substitution will result
in a rating on the certificates in either of the two
highest investment grades of such Rating Agency (without
regard to subcategories of rating); and
(D) The Substitute Provider and the
Company must agree in writing not to enter into any
agreement which would adversely affect the Tax-exempt
status of interest on the Certificates;
(E) The Trustee shall receive an opinion
of Special Counsel stating that the use of the Substitute
Letter of Credit will not adversely affect the Tax-exempt
status of interest on the Certificates; and
(F) The Bank shall have provided its
prior written consent to such substitution, which consent
shall not be withheld so long as the Company complies
with the terms of the Reimbursement Agreement and
delivers to the Bank written evidence acceptable to the
Bank of (i) such Substitute Letter of Credit or (ii) an
investment letter or binding commitment of sufficient
creditworthiness for the purchase of the Certificates
upon mandatory tender pursuant to Section 13.5(c) and
which in either case, unless otherwise waived by the Bank
in the exercise of its sole discretion, must provide for
the purchase of any Pledged Certificates upon the date of
such substitution.
Upon receipt of such Substitute Letter of Credit, the Trustee shall send
written notice to the Remarketing Agent and all Certificateholders not
less than 15 days in advance of the date on which any Substitute Letter
of Credit shall take effect, which notice shall identify the Substitute
Provider and if any then existing rating on the Certificates is reduced
or withdrawn as a result of such substitution (as permitted under
subpart (c) above), the new rating to be effective with respect to the
Certificate.
Section 3.10.Custody Account.
(a) Deposit of Pledged Certificates in Custody
Account. If any Certificate is purchased by the Trustee or the Paying
Agent pursuant to Sections 13.1 or 13.2 hereof with moneys drawn under
the Bank Letter of Credit, that Certificate shall be delivered to and
held by the Trustee or the Paying Agent (and shall therefore constitute
a Pledged Certificate until released as herein provided), shall be
deposited in the Custody Account and shall be subject to the lien of the
Pledge and Security Agreement, and shall be released from the lien of
the Pledge and Security Agreement to the Authority or its order only
upon the following:
(i) written or telephonic notice to the Company
and the Bank from the Trustee, the Remarketing Agent or the
Paying Agent promptly confirmed by facsimile, that such
Certificate has been remarketed by the Remarketing Agent;
(ii) evidence that the Paying Agent or the
Trustee has received the proceeds of the remarketing of such
Certificates and holds such proceeds for the account of the
Bank; and
(iii) written notice from the Bank to the Paying
Agent that the Bank Letter of Credit has been reinstated to
cover such remarketed Certificates.
(b) Registration of Pledged Certificates.
Certificates purchased by the Paying Agent pursuant to Sections 13.1 or
13.2 hereof which, by virtue of subsection (a) of this Section 3.10,
constitute Pledged Certificates shall, immediately, upon receipt thereof
by the Trustee or the Paying Agent, be registered in the name of, or as
directed by, the Bank, subject to the provisions of Section 2.13 hereof.
(c) Deposit of Proceeds of Remarketing in Custody
Account. To the extent of amounts due and owing to the Bank under the
Reimbursement Agreement the proceeds of the remarketing of Certificates
held in the Custody Account shall be deposited into the Custody Account
and held by the Trustee for the account of, and in trust solely for, the
Bank, shall not be commingled with the Trust Estate or any other moneys
held by the Trustee, and shall be paid over immediately to the Bank.
The balance of such proceeds shall be deposited in the Principal and
Interest Account of the Debt Service Fund.
(d) Principal and Interest Payments on Pledged
Certificates. On each Interest Payment Date prior to the release of
such Pledged Certificates to the Authority or the Remarketing Agent and
reinstatement of the Bank Letter of Credit as aforesaid, the Trustee
shall apply the moneys in the Principal and Interest Account to the
payment of principal of, and interest on, such Pledged Certificates in
the manner provided in Section 3.6 hereof, but shall not draw on the
Bank Letter of Credit or use moneys in the Purchase Fund or any other
moneys in the Debt Service Fund, except moneys in the Principal and
Interest Account, for that purpose to any extent unless reimbursed; and
the Trustee shall receive for the account of the Company, subject to the
lien of the Pledge and Security Agreement, the interest and principal
paid with respect to such Certificates and immediately upon such receipt
the Trustee shall pay such interest and principal over to the Company;
provided, however, that if at such time there shall remain any
unreimbursed draw on the Bank Letter of Credit with respect to such
Certificates, such interest and principal payments shall be paid over to
the Bank until the amount of such draw plus interest thereon as provided
in the Reimbursement Agreement shall have been fully reimbursed.
(e) Cancellation of Pledged Certificates Upon
Redemption. If, on any date prior to the release of such Pledged
Certificates from the Custody Account to the Authority or the
Remarketing Agent and reinstatement of the Letter of Credit as
aforesaid, all Certificates are called for redemption pursuant to
Section 6.2 hereof, the Pledged Certificates shall be deemed to have
been paid and shall thereupon be cancelled by the Trustee.
Section 3.11.Final Balances. Upon the deposit with the Trustee
of moneys sufficient to pay all principal of, premium, if any, and
interest due with respect to the Certificates, and upon satisfaction of
all claims against the Authority hereunder, including all reasonable
fees, charges and expenses of the Trustee, the Authority, the Tender
Agent and any Paying Agent which are properly due and payable hereunder,
or upon the making of adequate provisions for the payment of such
amounts as permitted hereby, all moneys remaining in all Funds and
Accounts, except moneys in the Rebate Fund, moneys that are proceeds of
a draw on the Bank Letter of Credit, moneys held in the Purchase Fund,
and moneys necessary to pay principal of, premium, if any, and interest
on the Certificates, which moneys shall be held by the Trustee, shall be
remitted to the Bank for application under the Reimbursement Agreement.
Section 3.12.Reserved.
Section 3.13.Non-presentment of Certificates. In the event any
Certificate shall not be presented for payment when the principal
thereof becomes due, either at maturity or otherwise, or at the date
fixed for redemption thereof, in which case interest shall cease to
accrue from and after such date, if moneys sufficient to pay such
Certificate shall have been deposited in the Debt Service Fund, all
liability of the Authority to the holder thereof for the payment of such
Certificate shall forthwith cease, terminate and be completely
discharged, and thereupon it shall be the duty of the Trustee to hold
such moneys, without liability for interest thereon, for the benefit of
the holder of such Certificate who shall thereafter be restricted
exclusively to such moneys, for any claim of whatever nature on his part
under this Trust Agreement or on, or with respect to, said Certificate.
Any moneys (other than proceeds of a draw on the Bank Letter of
Credit or moneys held in the Purchase Fund) so deposited with and held
by the Trustee not so applied to the payment of Certificates within two
(2) years after the date on which the same shall have become due shall
be paid by the Trustee to the Authority, free from the trusts created by
this Trust Agreement. Thereafter, Certificateholders shall be entitled
to look only to the Authority for payment, and then only to the extent
of the amount so repaid by the Trustee. The Authority shall not be
liable for any interest on the sums paid to it pursuant to this section
and shall not be regarded as a trustee of such money.
Section 3.14.Moneys To Be Held In Trust. All moneys required
to be deposited with or paid to the Trustee under any provisions of this
Trust Agreement shall be held by the Trustee in trust and shall be and
remain entitled to the benefit and shall be subject to the security of
this Trust Agreement and shall be applied for the purposes herein
specified.
ARTICLE IV
PURCHASE PAYMENTS AND APPLICATION
Section 4.1. Purchase Payments To Be Paid Over To Trustee. The
Company has agreed and covenanted in the Amended and Restated Second
Installment Sale Agreement to pay an amount equal to the Purchase
Payments to the Trustee for deposit when necessary in accordance with
the terms of this Trust Agreement to effect payment of the principal of,
premium, if any, and interest with respect to the Certificates as the
same become due.
Section 4.2. Payments of Principal, Premium and Interest. The
Trustee shall make available to the Paying Agent from the amounts paid
by the Company sufficient amounts to pay the principal of, premium, if
any, and interest with respect to the Certificates as the same become
due and payable.
Section 4.3. Amounts To Be Held For All Certificateholders;
Certain Exceptions. The amounts paid by the Company pursuant to
Section 4.1 shall, until applied as provided in this Trust Agreement, be
held by the Trustee for the benefit of the holders of all Outstanding
Certificates, the Bank and the Company as herein provided, except that
any portion of the said amounts representing principal, redemption price
or purchase price of, and interest on, earlier prepayments of the
Purchase Payments and any Certificates previously called for redemption
in accordance with Article VI of this Trust Agreement or tendered (or
deemed to have been tendered) for purchase in accordance with the
provisions of Article XIII hereof, or previously matured, shall be held
for the benefit of the holders of such Certificates only and shall not
be deposited or invested pursuant to Article V hereof, notwithstanding
any provision of Article V.
ARTICLE V
INVESTMENT OF MONEYS
Section 5.1. Investment of Moneys. Subject to Sections 4.3 and
5.3, moneys in all Funds and Accounts shall be continuously invested and
reinvested by the Trustee as provided in this Section 5.1 until such
time or times as said moneys shall be needed for the purposes for which
they were deposited. Moneys on deposit in all Funds and Accounts may be
invested only in Permitted Investments; provided that (1) amounts drawn
on the Bank Letter of Credit may not be invested and shall be held in
cash; (2) amounts in the Revenue Fund shall not be invested in any
instruments bearing a credit rating by Moody's or other Rating Agency
then rating the Certificates of lesser quality than that of the Bank;
and (3) any amounts held hereunder as Seasoned Funds, including such
amounts held in the Seasoned Funds Account of the Debt Service Fund
(including after transfer of such moneys to the Redemption Fund in
accordance with Section 3.7 hereof) and all amounts held in the Purchase
Fund shall be invested only in Government Obligations maturing on the
earlier of the date such amounts will be needed for the purchase of
Certificates or the date which is thirty (30) days after the date on
which such Government Obligations were acquired; and (3) amounts in the
Reserve Fund shall be invested only in Permitted Investments having a
maturity of three (3) years or less. All such investments shall mature
not later, nor, to the extent reasonably practicable, earlier, than the
date such moneys or investment proceeds are required for the purposes of
the respective Funds and Accounts. The Trustee and its affiliates may
act as principal, sponsor, advisor, agent or depository with respect to
investments hereunder.
The Company may provide the Trustee with written requests
regarding the investment of certain funds and the Trustee shall invest
all such moneys in accordance with any such requests received by 12:00
noon Pacific Time on the day prior to any such investment; provided,
however that all such investments by the Trustee shall be made subject
to any limitations contained in this Trust Agreement and Trustee's
fiduciary obligations. In the absence of written direction from the
Company, the Trustee shall invest all moneys in money market funds as
defined in clause (viii) of the definition of Permitted Investments
contained in Section 1.1 hereof.
The Trustee shall have no liability or responsibility for any
loss resulting from any investment made in accordance with the
provisions of this Section 5.1.
All investments shall constitute a part of the Fund or Account
from which the moneys used to acquire such investments have come. The
Trustee shall sell and reduce to cash a sufficient amount of investments
in a Fund or Account whenever the cash balance therein is insufficient
to pay the amounts required to be paid therefrom. The Trustee may
transfer investments from any Fund or Account to any other Fund or
Account in lieu of cash when any transfer is required or permitted by
the provisions of this Trust Agreement.
In computing the amount in any Fund or Account, Permitted
Investments purchased as an investment of moneys therein shall be valued
at the then market price of such obligations, excluding any accrued
interest. If the market price of such obligations is not readily
available, the Trustee shall determine the value of such obligations in
any reasonable manner. Amounts in the Reserve Fund shall be valued at
the market value thereof at least semiannually. Any other provisions of
this Section 5.1 to the contrary notwithstanding, for purposes of the
arbitrage requirements under Section 148 of the Code and the
Regulations, in computing the amount in any Fund or Account held by the
Trustee under the provisions of this Trust Agreement, investments shall
be valued at cost, except if any investment is purchased at a discount,
and if the amount of interest accruing in any period is greater than the
amount of interest in the prior period (thus reflecting the reinvestment
of interest as principal) the amount of such discount or excess interest
shall be added to the cost of the investment ratably each year over its
term.
Section 5.2. Earnings and Losses. Subject to the restrictions
hereinafter set forth in this Article V, all capital gains, profits and
interest earnings resulting from the investment of moneys in all Funds,
including any Accounts thereof, shall be deposited into the Fund or
Account from which such investments were made, and any loss of principal
value resulting from the investment of moneys in any Fund or Account and
any expenses incurred in making or disposing of investments shall be
charged, when incurred, to such Fund or Account.
Section 5.3. No Arbitrage. The Authority shall not take, nor
permit nor suffer to be taken by the Trustee or otherwise, any action
which if such action had been reasonably expected to have been taken, or
had been deliberately and intentionally taken, on the date of the
issuance of the Certificates would have caused the Certificates to be
"arbitrage bonds" within the meaning of Section 148(a) of the Code and
Regulations promulgated thereunder. To that end, the Authority will
comply with all requirements of Section 148 of the Code to the extent
applicable to the Certificates. The Authority shall require that the
Company (and any "related person" as defined in Section 147(a) of the
Code) shall not, pursuant to an arrangement, formal or informal,
purchase Certificates in an amount related to the amount of the Purchase
Payments payable pursuant to the Amended and Restated First Installment
Sale Agreement. In the event that at any time the Authority or the
Company as its agent is of the opinion that for purposes of this
Section 5.3 it is necessary to restrict or to limit the yield on the
investment of any moneys held by the Trustee under this Trust Agreement,
the Authority shall so instruct the Trustee in writing, and the Trustee
shall take such action as may be necessary in accordance with such
instructions.
Section 5.4. Investment Limit. The Authority will not allow
the amount of Gross Proceeds invested during any Certificate Year in
Nonpurpose Investments with a Yield in excess of the Yield on the
Certificates to exceed the lesser of 5% of the proceeds of the
Certificates or $100,000. The obligations of the Authority under this
Section 5.4 are more particularly set forth in the Tax Certificate. For
the purpose of this Section 5.4, capitalized terms not defined in this
Trust Agreement shall have the meanings ascribed to them in the Tax
Certificate.
Section 5.5. Rebate To United States.
(a) The Trustee shall establish and maintain a fund separate
from any other fund established and maintained hereunder designated as
the Rebate Fund. All money at any time deposited in Rebate Fund shall
be held by the Trustee in trust, for payment to the United States
Treasury.
Annual Computation. Within 55 days of the end of each
Certificate Year, the Authority shall calculate or cause to be
calculated the amount of rebatable arbitrage for the
Certificates to which this Section 5.5 is applicable (or the
amounts of yield reduction payments), in accordance with
Section 148 of the Code and Section 1.148-2, 3 and 5 of the
Regulations for this purpose treating the last day of the
applicable Certificate Year as a computation date, within the
meaning of Section 1.148-(b) of the Regulations (the "Rebatable
Arbitrage"). The Authority shall obtain expert advice as to the
amount of the Rebatable Arbitrage to comply with this Section.
Annual Transfer. Within 55 days of the end of each
Certificate Year for which Rebatable Arbitrage must be
calculated as required by the Tax Certificate for the
Certificates, upon the written direction of an Authorized
Authority Representative, an amount shall be deposited to the
Rebate Fund by the Trustee from any funds so designated by the
Authority if and to the extent required, so that the balance in
the Rebate Fund shall equal the amount of Rebatable Arbitrage so
calculated by or on behalf of the Authority in accordance with
Subsection (a). In the event that immediately following any
transfer required by the previous sentence, or the date on which
the Authority determines that no transfer is required for such
Certificate Year, the amount then on deposit to the credit of
the Rebate Fund exceeds the amount required to be on deposit
therein, upon written instructions from an Authorized Authority
Representative, the Trustee shall withdraw the excess from the
Rebate Fund and then credit the excess to the Revenue Fund.
Payment to the Treasury. The Trustee shall pay, as
directed in writing by an Authorized Authority Representative,
to the United States Treasury, out of amounts in the Rebate
Fund,
(X) Not later than 60 days after the end
of (A) the fifth Certificate Year, and (B) each applicable fifth
Certificate Year thereafter, an amount equal to at least 90% of
the Rebatable Arbitrage calculated as of the end of such
Certificate Year with respect to the Certificates; and
(Y) Not later than 60 days after the
prepayment or redemption of all of the Certificates, an amount
equal to 100% of the Rebatable Arbitrage calculated as of the
end of such applicable Certificate Year, and any income
attributable to the Rebatable Arbitrage, computed in accordance
with Section 148(f) of the Code.
In the event that, prior to the time of any payment
required to be made from the Rebate Fund, the amount in the
Rebate Fund is not sufficient to make such payment when such
payment is due, the Authority shall calculate or cause to be
calculated the amount of such deficiency and deposit an amount
received from any legally available source equal to such
deficiency prior to the time such payment is due. Each payment
required to be made pursuant to this Subsection (a)(1) shall be
made to the Internal Revenue Service Center, Philadelphia,
Pennsylvania 19255 on or before the date on which such payment
is due, and shall be accompanied by Internal Revenue Service
Form 8038-T, or shall be made in such other manner as provided
under the Code.
(b) Disposition of Unexpended Funds. Any funds remaining in
the Rebate Fund with respect to the Certificates after redemption and
payment of the Certificates and after making the payments described in
Subsection (a), may be withdrawn by the Trustee at the written direction
of the Authority and utilized in any manner by the Authority.
(c) Survival of Defeasance and Final Payment. Notwith-
standing anything in this Section or this Trust Agreement to the
contrary, the obligation to comply with the requirements of this Section
shall survive the defeasance and final payment of any Certificates.
(d) Amendment Without Consent of Owners. This Section 5.5
may be deleted or amended in any manner without the consent of the
Owners, provided that prior to such event there is delivered to the
Authority an opinion of Special Counsel to the effect that such deletion
or amendment will not adversely affect the exclusion from gross income
for federal income tax purposes of interest with respect to the
Certificates.
Section 5.6. Investments. Subject to the provisions of
Sections 5.3, 5.4 and 5.5 hereof, the Trustee may make any and all
investments permitted by the provisions of Section 5.1 hereof through
its and its affiliates own investment department whether as principal,
advisor, sponsor, depository or as an agent. As and when any amount
invested pursuant to this Article may be needed for disbursement, the
Trustee may cause a sufficient amount of such investments to be sold and
reduced to cash to the credit of the applicable Fund or Account.
ARTICLE VI
REDEMPTION OF CERTIFICATES BEFORE MATURITY
Section 6.1. Limitation on Redemption. The Certificates shall
be subject to redemption prior to maturity only as provided in this
Article VI.
Section 6.2. Redemption Dates, Amounts and Prices. The
Certificates shall be subject to redemption as follows (in each case
accrued interest to the redemption date shall be paid to the Registered
Owner of each Certificate as of the applicable Record Date):
(a) in whole, on the first day for which notice of
redemption can be timely given, at a price equal to the
principal amount of Certificates so called for redemption, after
the Trustee has accelerated the Purchase Payments or Installment
Payments, as the case may be, as a result of an Event of Default
under the Amended and Restated First Installment Sale Agreement
or the Amended and Restated Second Installment Sale Agreement;
(b) in whole, on the first day for which notice of
redemption can be timely given, and not less than 5 days prior
to the expiration of the Bank Letter of Credit in the case of a
redemption pursuant to clause II(C) of this subsection (b), at a
price equal to the principal amount of the Certificates called
for redemption, if the Bank Letter of Credit or any Substitute
Letter of Credit is then in effect, if (I) the Bank fails or
refuses to honor a draw upon the Bank Letter of Credit, or
(II)(A) within 60 days after an Act of Bankruptcy of the Bank,
(B) within 30 days after a determination by the Trustee, based
on an opinion of Counsel, that the Bank Letter of Credit is not
enforceable, or (C) prior to the Conversion Date, at least 30
days prior to the expiration date of the Bank Letter of Credit,
the Company does not cause to be delivered to the Trustee a
Substitute Letter of Credit;
(c) on the first Interest Payment Date for which
notice of redemption can be timely given, at a price equal to
the principal amount of the Certificates so called for
redemption, in the event of an involuntary loss or the
substantial destruction of the Project as a result of unforeseen
events (e.g., fire, seizure or requisition or condemnation), in
whole or in part, if and to the extent that draws on the Bank
Letter of Credit are deposited into the Redemption Account in an
amount equal to any amount remaining in the Insurance Proceeds
Account on the dates specified in Section 3.6 hereof; in whole
or in part if there were no payments of insurance or other
compensation deposited in the Insurance Proceeds Account after
the event giving rise to the involuntary loss or substantial
destruction of the Project, if and to the extent that draws on
the Bank Letter of Credit are deposited into the Redemption
Account; or, in whole, from a draw on the Letter of Credit, if
there were no such payments of insurance or other compensation
deposited in the Insurance Proceeds Account, after the event
giving rise to the total involuntary loss or total destruction
of the Project and (i) within 60 days after the event giving
rise to the event of loss, the Company (or following a total
event of loss, the Bank or the Company) has not notified the
Trustee and the Authority, in writing, that the Project can be
restored within 12 months to a condition permitting the conduct
of normal business operations; (ii) within 60 days after
receiving any amounts as a consequence of the event of loss, the
Company has not commenced to use such amounts to reconstruct the
Project pursuant to the terms of the Amended and Restated First
and Second Installment Sale Agreements and this Trust Agreement;
and (iii) such amounts are not disbursed for the restoration of
the Project within 12 months after the date of the notice from
the Company referred to in clause (i) hereof;
(d) in whole, on the first date for which notice of
redemption can be given and in any event not later than five
days before the expiration date of the Letter of Credit, at a
redemption price equal to the principal amount of the
Certificates called for redemption, after the Trustee has
received written notice from the Bank that an event of default
has occurred under the Reimbursement Agreement and the request
that the Trustee redeem the Certificates;
(e) in whole, on the first date for which notice of
redemption can be timely given, at a price equal to the
principal amount of the Certificates called for redemption,
after written notice to a Responsible Officer of the Trustee of
a Determination of Taxability;
(f) with the express written consent of the Bank, in
whole or in part, at a redemption price equal to the principal
amount of the Certificates called for redemption, on any
Interest Payment Date prior to the Conversion Date, in the event
and to the extent the Purchase Payments are caused to be prepaid
by the Company prior to the Conversion Date by the Company's act
of voluntarily prepaying the Installment Payments in amounts
sufficient to cause the prepayment of the Purchase Payments; and
(g) on or after the Conversion Date, in whole on any
date or in part on any Interest Payment Date, in the event and
to the extent the Purchase Payments are caused to be prepaid by
the Company's act of voluntarily prepaying the Installment
Payments in amounts sufficient to cause the prepayment of the
Purchase Payments on or after the Conversion Date, at a
redemption price equal to the sum of the principal amount of
Certificates to be redeemed plus a redemption premium, as
follows:
(i) If on the Conversion Date there remain at
least fifteen years until the Maturity Date, the
Certificates may be redeemed on or after the first
December 1 following the eighth anniversary of the
Conversion Date, with a redemption premium commencing at
two percent (2%) on such December 1, with such premium
declining and being reduced by one-half of one percent
(1/2 of 1%) on each anniversary of such December 1 until
it reaches zero percent (0%).
(ii) If on the Conversion Date there remain at
least ten years but less than fifteen years until the
Maturity Date, the Certificates may be redeemed on or
after the first December 1 following the sixth
anniversary of the Conversion Date, with a redemption
premium commencing at one and one-half percent (1-1/2%)
on such December 1, with such premium declining and being
reduced by one-half of one percent (1/2 of 1%) on each
anniversary of such December 1 until it reaches zero
percent (0%).
(iii) If on the Conversion Date there remain at
least five years but less than ten years until the
Maturity Date, the Certificates may be redeemed on or
after the first December 1 following the fourth
anniversary of the Conversion Date, with a redemption
premium commencing at one percent (1%) on such December
1, with such premium declining and being reduced by
one-half of one percent (1/2 of 1%) on each anniversary
of such December 1 until it reaches zero percent (0%).
If the Conversion Date is less than five years before the
Maturity Date, there shall be no premium due to voluntary
prepayment.
The Trustee is hereby authorized and directed, and hereby
agrees, to give notice of the call for redemption of Certificates on the
earliest practicable date following the event giving rise to redemption
set forth in this Section 6.2, to fix the date for any such redemption
within the periods prescribed by Section 6.4 hereof.
The Certificates are also subject to mandatory tender in the
event the Company elects to have the Certificates bear interest at the
Fixed Rate, all as more fully set forth in Section 2.4 hereof.
Section 6.3. Partial Redemption. All or a portion of any
Certificate may be redeemed, but only in Authorized Denominations except
that a redemption in part pursuant to Section 6.2(c), (f) or (g) prior
to the Conversion Date may be in an integral multiple of $5,000. If,
prior to the Conversion Date, Certificates are to be redeemed in
principal amounts less than $100,000, the Trustee shall select only one
Certificate, by lot, to be redeemed in part in a principal amount equal
to an integral multiple of $5,000. In the event that less than all of
the Certificates outstanding are to be redeemed, the Trustee shall
select the Certificates to be redeemed by lot. Upon surrender of any
Certificate for redemption in part, the Authority shall execute and the
Trustee shall authenticate and deliver to the owner thereof, at the
expense of the Company, a new Certificate or Certificates of Authorized
Denominations of the same maturity and in an aggregate principal amount
equal to the unredeemed portion of the Certificate so surrendered.
Section 6.4. Notice of Redemption. Except in the case of
redemption prior to the Conversion Date as a result of the voluntary
prepayment of the Purchase Payments, in which instance notice shall be
mailed not less than 30 days prior to the date fixed for redemption,
notice of redemption shall be given by the Trustee not less than twenty
(20) nor more than forty (40) days prior to the redemption date to
(i) the respective Registered Owners of the Certificates designated for
redemption at their addresses appearing on the bond registration books
of the Trustee by first class mail, (ii) the Securities Depository,
(iii) one or more Information Services and (iv) the Bank by first class
mail. Notice of redemption to the Securities Depository and the
Information Services shall be given by registered mail or overnight
delivery. Each notice of redemption shall state the date of such
notice, the date of delivery of the Certificates, the redemption date,
the redemption price, the place or places of redemption (including the
name and appropriate address or addresses of the Trustee), the CUSIP
number (if any) of the maturity or maturities to be redeemed, and, if
less than all of any such maturity the distinctive certificate numbers
of the Certificates of such maturity to be redeemed and, in the case of
Certificates to be redeemed in part only, the respective portions of the
principal amount thereof to be redeemed. Each such notice shall also
state that on said date there will become due and payable on each of
said Certificates the redemption price thereof or of said specified
portion of the principal amount thereof in the case of a Certificate to
be redeemed in part only, together with interest accrued thereon to the
redemption date, and that from and after such redemption date interest
thereon shall cease to accrue, and shall require that such Certificates
be then surrendered at the address or addresses of the Trustee specified
in the redemption notice.
Failure by the Trustee to give notice pursuant to this
Section 6.4 to any one or more of the Registered Owners of the
Certificates, the Bank, and the Information Services or Securities
Depository, or the insufficiency of any such notice shall not affect the
sufficiency of the proceedings for redemption.
Section 6.5. Payment Upon Redemption. Prior to each redemption
date, the Trustee shall make provisions for the payment of the
Certificates to be redeemed on such date by setting aside and holding in
trust, or depositing in trust with any Paying Agent, an amount from the
Redemption Account, or shall otherwise determine that it will have
available as a result of a draw upon the Bank Letter of Credit, an
amount sufficient to pay the principal represented by, the premium, if
any, and interest due with respect to such Certificates. Upon
presentation and surrender of any such Certificate at the Principal
Office of the Trustee or any Paying Agent, as the case may be, on or
after the date fixed for redemption, the Trustee or any Paying Agent
shall pay the principal of and premium, if any, on such Certificate from
the moneys set aside for such purpose. Interest with respect to any
Certificate called for redemption maturing prior to or on the date fixed
for redemption shall be payable by check to the Registered Owner of such
Certificate.
Section 6.6. Effect of Redemption. Notice of redemption having
been given as provided in Section 6.4 hereof, the Certificates or
portions thereof designated for redemption shall become due and payable
on the date fixed for redemption and, unless the Authority defaults in
the payment of amounts equal to the Purchase Payments to be prepaid and,
accordingly, the principal and premium, if any, due with respect to the
Certificates or portions thereof designated for redemption, such
Certificates or portions thereof shall cease to bear interest from and
after the date fixed for redemption whether or not such Certificates are
presented and surrendered for payment on such date. If any Certificate
or portion thereof called for redemption is not so paid upon
presentation and surrender thereof for redemption, such Certificate or
portion thereof shall continue to bear interest at the rate set forth
thereon until paid or until due provision is made for the payment of
same.
Section 6.7. No Partial Redemption After Default. Anything in
this Trust Agreement to the contrary notwithstanding, if there shall
have occurred and be continuing an Event of Default defined in the first
paragraph of Section 9.1 hereof, there shall be no redemption of less
than all of the Certificates at the time Outstanding.
ARTICLE VII
[RESERVED]
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1. Defaults; Events of Default. If any of the
following events occurs, it is hereby defined as and declared to be and
to constitute a Default or an Event of Default:
(a) Failure to make payment of any installment of
interest upon any Certificate when the same shall have become
due and payable;
(b) Failure to make due and punctual payment of the
principal of or premium, if any, on any Certificate, whether at
the stated maturity thereof, or upon proceedings for redemption
thereof or upon the maturity thereof by acceleration;
(c) Any material representation or warranty made in
this Trust Agreement or the Certificates shall be determined to
have been untrue when made or any failure by the Authority to
observe and perform any covenant, condition or agreement on its
part to be observed and performed under the Trust Agreement or
the Certificates, other than as referred to in subsections (a),
(b) or (d) of this Section, for a period of 60 days after
written notice specifying such breach or failure and requesting
that it be remedied, given to the Authority, the Bank, the
Company and the Certificateholders by the Trustee or by the
holders of not less than 25 percent in aggregate principal
amount of the Certificates then Outstanding, unless (i) the
Trustee shall agree in writing to an extension of such time
prior to its expiration or (ii) if the breach or failure be such
that it cannot be corrected within the applicable period,
corrective action is instituted by the Authority within the
applicable period and is being diligently pursued; and
(d) Failure to pay the purchase price for the
Certificates delivered pursuant to Sections 13.1 or 13.2 hereof.
Section 8.2. Acceleration of Maturities. Upon the occurrence
of an Event of Default (other than an Event of Default described in
subsection (c) of Section 8.1 hereof which the Trustee, based on an
opinion of Special Counsel determines will not have a material adverse
effect on the security for or the Tax-exempt status of the interest due
with respect to the Certificates), the Trustee shall, and in the case of
an Event of Default described in subsection (c) of Section 8.1 hereof of
the type described hereinabove, the Trustee shall, but only with the
prior express written consent of the Bank, declare the principal
represented by all of the Certificates then Outstanding, and the
interest accrued thereon, to be due and payable immediately, and upon
any such declaration the same shall become and shall be immediately due
and payable, anything contained in this Trust Agreement or in the
Certificates to the contrary notwithstanding.
Upon such acceleration, the Trustee shall (i) provide the
Certificateholders with a notice of such acceleration substantially in
the form of a notice of redemption, as described in Section 6.4 hereof,
(ii) if the Bank Letter of Credit or any Substitute Letter of Credit is
then in effect, draw on the Bank Letter of Credit as provided below and,
(iii) immediately after the Bank honors the draw upon the Bank Letter of
Credit, transfer all moneys then on deposit in all of the Funds (except
amounts in the Rebate Fund, the Purchase Fund, and any amounts drawn on
the Bank Letter of Credit and any amounts representing Seasoned Funds to
be applied to the payment of the principal represented by and interest
due with respect to the Certificates or to pay expenses due under
Section 3.8 hereof) to the Bank and (iv) if the Bank Letter of Credit or
any Substitute Letter of Credit is then in effect, shall take such
action as is reasonably necessary to pay the Certificates out of such
draw on the Bank Letter of Credit and amounts representing Seasoned
Funds at the earliest possible date after providing the
Certificateholders with the notice described in clause (i) of this
sentence. The amount drawn under the Bank Letter of Credit shall equal
the aggregate unpaid principal and interest due with respect to the
Outstanding Certificates to the date of acceleration fixed by the
Trustee, less the amount of any Seasoned Funds held by the Trustee
hereunder which are available to pay the principal represented and
interest due with respect to the Certificates. The Trustee, subject to
the indemnification provisions pursuant to this Trust Agreement, also
shall take whatever additional action at law or in equity may appear
reasonably necessary or desirable to collect the moneys necessary to pay
the principal represented by and interest due with respect to the
Certificates.
The above provisions hereof, however, are subject to the
conditions that if, within 15 days after the principal of all
Certificates then Outstanding shall have been so declared to be due and
payable and prior to the Trustee's draw on the Bank Letter of Credit
referred to hereinabove, all arrears of interest upon such Certificates,
and interest on overdue installments of interest (to the extent
permitted by law) at the rate of interest then in effect with respect to
the Certificates, and the principal and redemption premium, if any, on
all Certificates then Outstanding which shall have become due and
payable otherwise than by acceleration, and all other sums payable under
this Trust Agreement, except the principal represented by, and interest
with respect to, the Certificates which by such declaration shall have
become due and payable, shall have been paid by or on behalf of the
Authority, together with the reasonable fees and actual out-of-pocket
expenses of the Trustee and of the holders of such Certificates,
including reasonable attorneys' fees paid or incurred, then and in every
such case, but only upon receipt by the Trustee of the express prior
written consent of the Bank and Certificateholders of not less than a
majority in aggregate principal amount of the Certificates then
Outstanding, the Trustee may annul such declaration of maturity and its
consequences, which waiver and annulment shall be binding upon all
Certificateholders; but no such waiver, rescission and annulment shall
extend to or affect any subsequent default or impair any right or remedy
consequent thereon. In the case of any such annulment, the Company, the
Authority, the Bank, the Trustee and the Certificateholders shall be
restored to their former positions and rights under this Trust
Agreement. Notwithstanding the foregoing, the Trustee may not waive any
Event of Default which consists of a breach of a covenant set forth in
Section 5.3 or 7.11 hereof or of any other covenant with respect to the
Tax-exempt status of the Certificates.
Nothing contained in this Section, however, shall be construed
to allow the Trustee to permit its rights on behalf of the
Certificateholders under the Bank Letter of Credit to be reduced, to
lapse or otherwise be extinguished.
Section 8.3. Application of Moneys. All moneys received by the
Trustee pursuant to any right given or action taken under the provisions
of this Article shall, after payment of the costs and expenses of the
proceedings relating to the exercise of remedies hereunder and of the
expenses, liabilities and advances incurred or made by the Trustee and
its Counsel, and its outstanding fees and expenses, if any, be deposited
in the Debt Service Fund and all such moneys in the Debt Service Fund
shall be applied to the payment of the principal (and premium, if any)
and interest then due and unpaid upon the Certificates, without
preference or priority of any kind, ratably, according to the amounts
due and payable on such Certificates for principal (and premium, if any)
and interest, respectively, to the persons entitled thereto without any
discrimination or privilege. Notwithstanding the foregoing, proceeds of
a draw on the Bank Letter of Credit, Seasoned Funds and moneys being
aged to become Seasoned Funds shall be used solely to pay principal,
interest or redemption price of the Certificates.
Whenever moneys are to be applied pursuant to the provisions of
this Section, such moneys shall be applied at such times, and from time
to time, as the Trustee shall determine. Whenever the Trustee shall
apply such moneys, it shall fix the date (which shall be an Interest
Payment Date unless it shall deem another date more suitable) upon which
such application is to be made and upon such date interest on the
amounts of principal to be paid on such date shall cease to accrue. The
Trustee shall give such notice as it may deem appropriate of the deposit
with it of any such moneys and of the fixing of any such date.
Whenever all principal of, premium, if any, and interest on all
Certificates have been paid under the provisions of this Section and all
expenses and charges of the Trustee in accordance with Section 9.2 have
been paid, any balance remaining in the Debt Service Fund shall be paid
to the Bank as provided in Section 3.11 hereof, subject to the
restrictions set forth in Section 3.11.
Section 8.4. Trustee to Represent Certificateholders. The
Trustee is hereby irrevocably appointed (and the successive respective
Certificateholders, by taking and holding the same, shall be
conclusively deemed to have so appointed the Trustee) as trustee and
true and lawful attorney-in-fact of the Certificateholders for the
purpose of exercising and prosecuting on their behalf such rights and
remedies as may be available to such Certificateholders under the
provisions of the Certificates and this Trust Agreement, as well as
under the applicable provisions of any other law. Upon the occurrence
and continuance of any Event of Default or other occasion giving rise to
a right in the Trustee to represent the Certificateholders of which a
Responsible Officer has received notice, the Trustee in its discretion
may, and upon the written request of the Certificateholders of not less
than 25 percent in aggregate principal amount of the Certificates then
Outstanding, and upon being indemnified to its satisfaction therefor,
shall, proceed to protect or enforce its rights or the rights of such
Certificateholders by such appropriate suit, action, mandamus or other
proceedings as it shall deem most effectual to protect and enforce any
such right, at law or in equity, either for the specific performance of
any covenant or agreement contained herein, or in aid of the execution
of any power herein granted, or for the enforcement of any other
appropriate legal or equitable right or remedy vested in the Trustee or
in such Certificateholders under this Trust Agreement or any other law;
and upon instituting such proceeding, the Trustee shall be entitled, as
a matter of right, to the appointment of a receiver of the Revenues and
other assets pledged under this Trust Agreement, pending such
proceedings.
All rights of action under this Trust Agreement or the
Certificates or otherwise may be prosecuted and enforced by the Trustee
without the possession of any of the Certificates or the production
thereof in any proceedings relating thereto, and any such suit, action
or proceeding instituted by the Trustee shall be brought in the name of
the Trustee for the benefit and protection of all the
Certificateholders, subject to the provisions of this Trust Agreement.
In addition, the Trustee may, without the consent of the
Authority or the Company, after giving them written notice of any
intended action, exercise any and all remedies afforded the Authority
under the Company Loan Documents in its name or the name of the
Authority.
Section 8.5. Certificateholders' Direction of Proceedings.
Anything in this Trust Agreement to the contrary notwithstanding, the
Certificateholders of a majority in aggregate principal amount of the
Certificates then Outstanding shall have the right, by an instrument or
concurrent instruments in writing executed and delivered to the Trustee,
to direct the method of conducting all remedial proceedings taken by the
Trustee hereunder, provided that such direction shall not be otherwise
than in accordance with law and the provisions of this Trust Agreement,
and that the Trustee shall have the right to decline to follow any such
direction which in the opinion of the Trustee would be unjustly
prejudicial to Certificateholders not parties to such direction or
result in liability for the Trustee. In rendering such opinion, the
Trustee may rely on the opinion of Counsel.
Section 8.6. Limitation on Certificateholders' Right to Sue.
No Certificateholder shall have the right to institute any suit, action
or proceeding at law or in equity, for the protection or enforcement of
any right or remedy under this Trust Agreement or any other applicable
law with respect to such Certificate, unless (A) such Certificateholder
shall have given to the Trustee written notice of the occurrence of an
Event of Default; (B) the Certificateholders of not less than 25 percent
in aggregate principal amount of the Certificates then Outstanding shall
have made written request upon the Trustee to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in
its own name; (C) such Certificateholder or said Certificateholders
shall have tendered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such
request; and (D) the Trustee shall have refused or omitted to comply
with such request for a period of 60 days after such written request
shall have been received by, and said tender of indemnity shall have
been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or
omission are hereby declared, in every case, to be conditions precedent
to the exercise by any Certificateholder of any remedy hereunder or
under law; it being understood and intended that no one or more
Certificateholders shall have any right in any manner whatever by its or
their action to affect, disturb or prejudice the security of this Trust
Agreement or the rights of any other Certificateholders, or to enforce
any right under this Trust Agreement, or other applicable law with
respect to the Certificates, except in the manner herein provided, and
that all proceedings at law or in equity to enforce any such right shall
be instituted, had and maintained in the manner herein provided and for
the benefit and protection of all owners of Outstanding Certificates,
subject to the provisions of this Trust Agreement. Nothing in this
Trust Agreement, however, affects or impairs the right of any
Certificateholder to enforce the payment of the principal of, premium,
if any, and interest on any Certificate at or after the maturity
thereof, or the obligation of the Authority to cause to be paid the
principal of, premium, if any, and interest on each of the Certificates
issued under the Trust Agreement to the respective holders thereof at
the time and place, from the sources and in the manner expressed in the
Certificates and in the Trust Agreement.
Section 8.7. Limited Obligation of Authority. Nothing in
Section 8.6 or in any other provision of this Trust Agreement, or in the
Certificates, contained shall affect or impair the obligation of the
Authority, which is absolute and unconditional, to pay the principal or
redemption price of and interest on the Certificates to the respective
Certificateholders of the Certificates at their respective dates of
maturity, or upon call for redemption, as herein provided, but only out
of the prepayments and payments of Purchase Payments and other assets
herein pledged therefor, or affect or impair the right of such
Certificateholders, which is also absolute and unconditional, to enforce
such payment by virtue of the contract embodied in the Certificates.
Section 8.8. Termination of Proceedings. In case any
proceedings taken by the Trustee or any one or more Certificateholders
on account of any Event of Default shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the
Trustee or the Certificateholders, then in every such case the
Authority, the Trustee and the Certificateholders, subject to any
determination in such proceedings, shall be restored to their former
positions and rights hereunder, severally and respectively, and all
rights, remedies, powers and duties of the Authority, the Trustee and
the Certificateholders shall continue as though no such proceedings had
been taken.
Section 8.9. Remedies Not Exclusive. No remedy herein
conferred upon or reserved to the Trustee or to the Certificateholders
is intended to be exclusive of any other remedy or remedies, and each
and every such remedy, to the extent permitted by law, shall be
cumulative and in addition to any other remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.
Section 8.10.No Waiver of Default. No delay or omission of the
Trustee or of any Certificateholder to exercise any right or power
arising upon the occurrence of any Event of Default shall impair any
such right or power or shall be construed to be a waiver of any such
default or an acquiescence therein; and every power and remedy given by
this Trust Agreement to the Trustee or to the Certificateholders may be
exercised from time to time and as often as may be deemed expedient.
Section 8.11.Waivers of Events of Default. Except as otherwise
provided in Section 8.2, the Trustee in its discretion may or, with the
written request of the holders of not less than a majority in aggregate
principal amount of all Certificates outstanding, shall waive any Event
of Default hereunder and rescind its consequences, provided that the
Bank Letter of Credit is then in full force and effect and is fully
reinstated as to the principal amount of Certificates Outstanding and
the 38 days' of interest thereon. In the case of any such waiver and
rescission, the Authority, the Trustee, the Bank and the
Certificateholders shall be restored to their former positions and
rights hereunder, respectively, but no such waiver and rescission shall
extend to any subsequent or other default, or impair any right
consequent thereon. All waivers under this Trust Agreement shall be in
writing and a copy thereof shall be delivered to the Authority, the Bank
and to the Company.
ARTICLE IX
THE TRUSTEE AND THE PAYING AGENT
Section 9.1. Appointment, Duties, Immunities and Liabilities of
Trustee and Paying Agent.
(a) The Authority hereby appoints First Trust of
California, National Association as Trustee and principal Paying Agent
and designates the Principal Office of the Trustee as the principal
place of payment for the Certificates, such appointment and designation
to remain in effect until notice of change is filed with the Trustee.
The Trustee shall perform such duties and only such duties as are
specifically set forth in this Trust Agreement and the Amended and
Restated First and Second Installment Sale Agreements. The Trustee
shall, during the existence of any Event of Default (which has not been
cured), exercise such of the rights and powers vested in it by this
Trust Agreement, and use the same degree of care and skill in their
exercise, as a reasonable person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) With the consent of the Bank, the Authority may
remove the Trustee at any time, upon thirty (30) days prior written
notice unless an Event of Default shall have occurred and then be
continuing, and shall remove the Trustee if at any time requested to do
so by an instrument or concurrent instruments in writing signed by the
Certificateholders of not less than a majority in aggregate principal
amount of the Certificates then Outstanding (or their attorneys duly
authorized in writing) or if at any time the Trustee shall cease to be
eligible in accordance with subsection (e) of this Section, or shall
become incapable of acting, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or its property shall be
appointed, or any public officer shall take control or charge of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation; in each case by giving written notice of
such removal to the Trustee and the Bank, and thereupon shall appoint a
successor Trustee by an instrument in writing.
(c) The Trustee may at any time resign by giving
written notice of such resignation to the Authority, the Company and the
Bank, by registered or certified mail, and by giving the
Certificateholders notice of such resignation by publication at least
once in a Financial Newspaper or Journal. Upon receiving such notice of
resignation, the Authority shall promptly, following consultation with
the Company, appoint a successor Trustee by an instrument in writing.
(d) Any removal or resignation of the Trustee and
appointment of a successor Trustee shall become effective upon
acceptance of appointment by the successor Trustee and upon transfer of
the Letter of Credit to the successor Trustee in accordance with its
terms. Promptly upon such acceptance, the Authority shall give notice
thereof to the Certificateholders by publication at least once in a
Financial Newspaper or Journal and to the Company and the Bank in
writing. If no successor Trustee shall have been appointed and have
accepted appointment within thirty (30) days of giving notice of removal
or notice of resignation as aforesaid, the resigning Trustee or any
Certificateholder (on behalf of himself and all other
Certificateholders) may petition any court of competent jurisdiction for
the appointment of a successor Trustee, and such court may thereupon,
after such notice (if any) as it may deem proper, appoint such successor
Trustee. Any successor Trustee appointed under this Trust Agreement
shall signify its acceptance of such appointment by executing and
delivering to the Authority and to its predecessor Trustee a written
acceptance thereof, and thereupon such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
moneys, estates, properties, rights, powers, trusts, duties and
obligations of such predecessor Trustee, with like effect as if
originally named Trustee herein; but, nevertheless at the request of the
Authority or the request of the successor Trustee, such predecessor
Trustee shall execute and deliver any and all instruments of conveyance
or further assurance and do such other things as may reasonably be
required for more fully and certainly vesting in and confirming to such
successor Trustee all the right, title and interest of such predecessor
Trustee in and to any property held by it under this Trust Agreement and
shall pay over, transfer, assign and deliver to the successor Trustee
any money or other property subject to the trusts and conditions herein
set forth. Upon request of the successor Trustee, the Authority shall
execute and deliver any and all instruments as may be reasonably
required for more fully and certainly vesting in and confirming to such
successor Trustee all such moneys, estates, properties, rights, powers,
trusts, duties and obligations. The Trustee's rights to indemnity and
to payment of its fees and expenses shall survive the Trustee's
resignation or removal and final payment or defeasance of the
Certificates.
(e) Any Trustee appointed under the provisions of this
Section in succession to the Trustee shall be a trust company or bank or
national banking association having the powers of a trust company within
or without the State, duly authorized to accept and execute trusts of
the character herein set forth, having a combined capital and surplus of
at least fifty million dollars ($50,000,000), and subject to supervision
or examination by federal or state authority. If such bank or trust
company publishes a report of condition at least annually, pursuant to
law or to the requirements of any supervising or examining authority
above referred to, then for the purpose of this Section the combined
capital and surplus of such bank or trust company or national banking
association shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case
at any time the Trustee shall cease to be eligible in accordance with
the provisions of this subsection (e), the Trustee shall resign
immediately in the manner and with the effect specified in this Section.
(f) Any company into which the Trustee may be merged
or converted or with which it may be consolidated or any company
resulting from any merger, conversion or consolidation to which it shall
be a party or any company to which the Trustee may sell or transfer all
or substantially all of its corporate trust business, provided such
company shall be eligible under subsection (e) of this Section, shall be
the successor to such Trustee without the execution or filing of any
paper or any further act, anything herein to the contrary
notwithstanding.
(g) The Trustee may execute any of the trusts or
powers hereof and perform any of its duties by or through attorneys,
agents, receivers or employees. The Trustee shall have no liability for
its agents and attorneys appointed with due care. Neither the
Remarketing Agent nor the Bank shall be considered agents of the Trustee
for any purpose and the Trustee shall not be responsible for compliance
by either of them with their respective obligations in connection with
the transactions contemplated by this Trust Agreement. The Trustee
shall be entitled to advice of counsel in connection with all matters
concerning the trust hereof and duties of the Trustee hereunder, and in
all cases may pay and be reimbursed for such reasonable compensation to
all such attorneys, agents, receivers and employees as may reasonably be
employed in connection with the trust hereof. The Trustee may act upon
the opinion or advice of any attorneys, accountants and consultants
approved by the Trustee in the exercise of reasonable care. The Trustee
shall not be responsible for any loss or damage resulting from any
action or nonaction exercised reasonably and in good faith in reliance
on such opinion or advice.
(h) The right of the Trustee to perform any
discretionary act enumerated in this Trust Agreement or the Amended and
Restated First and Second Installment Sale Agreements shall not be
construed as a duty.
(i) At all reasonable times the Trustee and its duly
authorized agents, accountants, attorneys, and experts, shall have the
right to inspect fully all books, papers and records of the Authority
relating to the Certificates, and to take such photocopies and memoranda
therefrom and in regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond
or surety in respect to the execution of the trust created hereby or the
powers granted hereunder.
(k) Reserved.
(l) The Trustee shall not be responsible for
calculation of any interest rate with respect to any of the
Certificates, and shall be fully protected in relying upon, interest
rate calculations submitted to the Trustee by the Remarketing Agent.
(m) The Trustee shall not be required to take notice
of or be deemed to have taken notice of any Event of Default hereunder
except (i) failure by the Authority to cause to be made any payments
referred to in Section 8.1(a) or (b) hereof, or (ii) any Event of
Default of which a Responsible Officer of the Trustee has actual
knowledge, unless a Responsible Officer of the Trustee shall be
specifically notified in writing of such Event of Default by or on
behalf of the Authority or the Owners of at least 25% in aggregate
principal amount of the Certificates then Outstanding.
(n) No provision of this Trust Agreement shall require
the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights and powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(o) The Trustee makes no representations as to and
shall have no responsibility for the sufficiency of the insurance on the
Project. The Trustee shall have no responsibility for the monitoring,
renewing or receiving any insurance or document related thereto.
(p) All moneys received by the Trustee or any Paying
Agent shall, until used or applied or invested as herein provided, be
held in trust for the purposes for which they were received and shall
not be commingled with the general funds of the Trustee or any Paying
Agent.
(q) The immunities and protections from liability
granted to the Trustee hereunder shall extend to its directors, officers
and employees.
Section 9.2. Fees, Charges and Expenses of Trustee, Tender
Agent and Paying Agent. The Trustee, the Tender Agent and any Paying
Agent shall be entitled to payment and/or reimbursement from the
Authority, but only out of funds made available from the Company, for
reasonable fees for its Ordinary Services rendered hereunder and all
advances, counsel fees and other Ordinary Expenses reasonably and
necessarily made or incurred by the Trustee, the Tender Agent and any
Paying Agent, in connection with such Ordinary Services hereunder and,
in the event that it should become necessary that the Trustee, the
Tender Agent or any Paying Agent perform Extraordinary Services, it
shall be entitled to reasonable extra compensation therefor from the
Company, and to reimbursement from the Company for reasonable and
necessary Extraordinary Expenses in connection therewith; provided, that
if such Extraordinary Services or Extraordinary Expenses are occasioned
by the negligence or willful misconduct of the Trustee, the Tender Agent
or any Paying Agent, as the case may be, the responsible party shall not
be entitled to compensation or reimbursement therefor, and provided
further that such payment, compensation and reimbursement shall be made
only from the Revenues (other than draws under the Bank Letter of
Credit, Seasoned Funds, moneys being aged to become Seasoned Funds and
moneys held in the Purchase Fund) as herein provided or moneys received
from the Company. The Trustee shall be entitled to payment and
reimbursement from the Company for the reasonable fees and charges of
the Trustee as Certificate Registrar for the Certificates. The
Trustee's rights to receive compensation and reimbursement of expenses
under this Section and under applicable provisions of the Amended and
Restated First and Second Installment Sale Agreements shall be secured
by a lien on the Trust Estate (other than proceeds of a draw on the
Letter of Credit, the Rebate Fund, the Purchase Fund, Seasoned Funds and
moneys being aged to become Seasoned Funds), which lien shall be
subordinate to the lien in favor of the Certificateholders for payment
of the principal of, premium, if any, and interest with respect to the
Certificates (except after an Event of Default when such lien of Trustee
shall have the first priority). The Company agrees to indemnify and
save harmless the Trustee against any liabilities which the Trustee may
incur in the exercise and performance of its powers and duties hereunder
and under any other agreement referred to herein which are not due to
the Trustee's negligence or willful misconduct, and for any reasonable
fees and actual out-of-pocket expenses of the Trustee to the extent
exceeding funds available under this Trust Agreement for the payment
thereof. The Trustee shall be entitled to interest on all advances at
the maximum rate permitted by law.
Section 9.3. Liability of Trustee. The recitals of facts
herein and in the Certificates contained shall be taken as statements of
the Authority, and the Trustee assumes no responsibility for the
correctness of the same, and makes no representations as to the validity
or sufficiency of this Trust Agreement or of the Certificates, and shall
incur no responsibility in respect thereof, other than in connection
with the duties or obligations herein or in the Certificates assigned to
or imposed upon it. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the
Certificates. The Trustee shall not be liable in connection with the
performance of its duties hereunder except for its own negligence or
willful misconduct. The Trustee may become the owner of Certificates
with the same rights it would have if it were not Trustee, and, to the
extent permitted by law, may act as depository for and permit any of its
officers or directors to act as a member of, or in any other capacity
with respect to, any committee formed to protect the rights of
Certificateholders, whether or not such committee shall represent the
Certificateholders of a majority in principal amount of the Certificates
then Outstanding. The Trustee makes no representation or warranty with
respect to and has made no independent investigation concerning the
compliance of the Project with the Act (as defined in the Amended and
Restated First Installment Sale Agreement), the Tax-exempt status of the
interest on the Certificates, or the validity or sufficiency of the Bank
Letter of Credit. The Trustee assumes no responsibility with respect to
any information, statement, or recital in any offering memorandum or
other disclosure material prepared or distributed with respect to the
Certificates.
Section 9.4. Right of Trustee to Rely on Documents. The
Trustee shall be protected in acting upon any notice, resolution,
request, consent, order, certificate, report, opinion, bond or other
paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties. The Trustee may consult
with counsel, who may be counsel of or to the Authority, with regard to
legal questions, and the opinion of such counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered by it hereunder in good faith and in accordance therewith.
The Trustee shall not be bound to recognize any person as the
Owner of a Certificate unless and until such Certificate is submitted
for inspection, if required, and the person's title thereto
satisfactorily established, if disputed.
Whenever in the administration of the trusts imposed upon it by
this Trust Agreement the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or suffering any
action hereunder, such matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively
proved and established by a certificate of the Authority, and such
certificate shall be full warrant to the Trustee for any action taken or
suffered in good faith under the provisions of this Trust Agreement in
reliance upon such certificate, but in its discretion the Trustee may,
in lieu thereof, accept other evidence of such matter or may require
such additional evidence as it may deem reasonable.
Section 9.5. Intervention By Trustee. In any judicial
proceedings to which the Authority is a party and which in the opinion
of the Trustee and its Counsel has a substantial bearing on the interest
of owners of the Certificates, the Trustee may in its discretion
intervene on behalf of Certificateholders and, upon being indemnified to
its satisfaction therefor, shall do so if requested in writing by the
owners of a majority in aggregate principal amount of all Certificates
then Outstanding.
Section 9.6. Designation and Successor of Paying Agent;
Agreement with Paying Agent. The Trustee and the Tender Agent shall be
Paying Agents for the Certificates. The Trustee, following consultation
with the Company, may remove or replace the Tender Agent as Paying Agent
and any subsequent Paying Agent by written notice, which removal or
replacement shall not require any consents or approvals. The Trustee
shall notify all registered Certificateholders by mail of and upon
appointment, removal or replacement of the Paying Agent, such notice to
include the name and address of the then appointed Paying Agent, if any.
Any bank or trust company with or into which any Paying Agent
may be merged or consolidated, or to which the assets and business of
such Paying Agent may be sold, shall be deemed the successor of such
Paying Agent for the purposes of this Trust Agreement. If the position
of Paying Agent shall become vacant for any reason, the Authority,
following consultation with the Company, may appoint a commercial bank
or trust company located in the same city as such Paying Agent to fill
such vacancy. The Paying Agent shall enjoy the same protective
provisions in the performance of its duties hereunder as are specified
in Sections 9.2, 9.3 and 9.4 hereof with respect to the Trustee insofar
as such provisions may be applicable.
Section 9.7. Foreclosure on Deed of Trust. Notwithstanding
anything in the Trust Agreement or the Deed of Trust to the contrary,
the Trustee shall not be required to initiate foreclosure proceedings
with respect to the Project, and shall not otherwise be required to
acquire possession of, or take other action with respect to the Project
which could cause it to be, considered an "owner" or "operator" as
described below, unless:
(a) the Trustee has sought and received an opinion of
counsel rendered by counsel independent of the Company to the effect
that the Trustee would not by such initiation, acquisition or other
action be considered to hold title to, to be a "mortgagee-in-possession"
of, or to be an "owner" or "operator" of such Project within the meaning
of the Comprehensive Environmental Response Compensation and Liability
Act of 1980, as amended from time to time, or any other law dealing with
the environmental matters or hazardous substances (collectively,
"Environmental Laws"); or
(b) the Trustee has sufficient comfort, based on
previous determinations by experts on which Trustee can rely, including
an environmental report, that:
(A) the Project is in compliance with
Environmental Laws or, if not, that it would nevertheless be in
the best economic interest of the Trustee and the
Certificateholders to take such actions as are necessary for the
Project to comply therewith;
(B) there are no circumstances present
at the Project relating to the use, management or disposal of
any hazardous substances, hazardous materials, hazardous wastes,
or petroleum-based materials in violation of applicable laws for
which investigation, testing, monitoring, contaminant, clean up
or remedial action could be required under any Environmental
Laws, or that if any such materials are present for which such
action could be required, that it would be nevertheless in the
best economic interest of the Trustee and the Certificateholders
to take such actions with respect to the Project;
(C) if the Trustee has determined that
it would be in the best economic interest of the Trustee and the
Certificateholders, the Trustee must be satisfied that it will
suffer no unreimbursed liabilities and will be adequately
reimbursed for all liabilities, expenses and costs from
available funds in Trustee's possession and control; and
(D) if the Trustee has determined that
it would be in the best economic interest of the Trustee and the
Certificateholders to take any such action and its
aforementioned liabilities, expenses and costs are adequately
reimbursed, the Trustee has so notified the Certificateholders
and has not received, within thirty (30) days of such
notification, instructions from the Certificateholders of 66-
2/3% or more in principal amount of the then Outstanding
Certificates directing it not to take such action.
ARTICLE X
MODIFICATION OF THIS TRUST AGREEMENT AND THE AGREEMENT
Section 10.1.Limitations. Neither this Trust Agreement nor the
Amended and Restated First or Second Installment Sale Agreement shall be
modified or amended in any respect subsequent to the first execution and
delivery of the Certificates except as provided in and in accordance
with and subject to the provisions of this Article X.
Section 10.2.Supplemental Trust Agreement without Consent of
Registered Owners. The Authority, Trustee and Company may, from time to
time and at any time, without the consent of or notice to the Registered
Owners, but subject to the provisions of Section 10.5 hereof, enter into
Supplemental Trust Agreements as follows:
(a) to cure any formal defect, omission, inconsistency
or ambiguity in this Trust Agreement:
(b) to grant to or confer or impose upon the Trustee,
the Registrar or the Paying Agent for the benefit of the
Registered Owners any additional rights, remedies, powers,
authority, security, liabilities or duties which may lawfully be
granted, conferred or imposed and which are not contrary to or
inconsistent with this Trust Agreement as theretofore in effect,
provided that no such additional liabilities or duties shall be
imposed upon the Trustee, the Registrar or the Paying Agent
without their respective consents;
(c) to add to the covenants and agreements of, and
limitations and restrictions upon, the Authority and the Company
in this Trust Agreement other covenants, agreements, limitations
and restrictions to be observed by the Authority which are not
contrary to or inconsistent with this Trust Agreement as
theretofore in effect;
(d) to confirm, as further assurance, any pledge
under, and the subjection to any claim, lien or pledge created
or to be created by, this Trust Agreement, of payments made or
to be made under the Amended and Restated First or Second
Installment Sale Agreement or of any other moneys, securities or
funds;
(e) to authorize a different denomination or
denominations of the Certificates and to make correlative
amendments and modifications to this Trust Agreement regarding
exchangeability of Certificates of different denominations,
redemptions of portions of Certificates of particular
denominations and similar amendments and modifications of a
technical nature;
(f) to comply with the requirements of the Trust
Agreement Act of 1939, as from time to time amended; and
(g) to modify, alter, amend or supplement this Trust
Agreement in any other respect which is not materially adverse
to the Registered Owners and which does not involve a change
described in clause (i), (ii), (iii) or (iv) of Section 10.3(a)
hereof and which, in the judgment of the Trustee, is not to the
prejudice of the Trustee; and
Before the Authority, Trustee and Company shall enter into any
Supplemental Trust Agreement pursuant to this Section 10.2, there shall
have been delivered to the Trustee an opinion of Special Counsel stating
that such Supplemental Trust Agreement is authorized or permitted by
this Trust Agreement, complies with its terms, will, upon the execution
and delivery thereof, be valid and binding upon the Authority and the
Company in accordance with its terms and will not adversely affect the
exemption from federal income taxation of interest on the Certificates.
Section 10.3.Supplemental Trust Agreement With Consent of
Registered Owners and the Bank.
(a) Except for any Supplemental Trust Agreement
entered into pursuant to Section 10.2 hereof, subject to the terms and
provisions contained in this Section 10.3 and not otherwise, but subject
to the provisions of Section 10.5 hereof, the Registered Owners of not
less than 60% in aggregate principal amount of the Certificate then
Outstanding with the consent of the Bank shall have the right from time
to time to consent to and approve the execution and delivery by the
Authority, Trustee and Company of any Supplemental Trust Agreement
deemed necessary or desirable by the Authority and the Company for the
purposes of modifying, altering, amending, supplementing or rescinding,
in any particular, any of the terms or provisions contained in this
Trust Agreement; provided, however, that, unless approved in writing by
the Registered Owners of all the Certificates then Outstanding and
affected thereby nothing herein contained shall permit, or be construed
as permitting, (i) a change in the times, amount or currency of payment
of the principal of or interest on any Outstanding Certificate, a change
in the terms of the purchase thereof by the Remarketing Agent or the
Paying Agent, or a reduction in the principal amount or redemption price
of any Outstanding Certificate or the rate of interest thereon, or (ii)
the creation of a claim or lien upon, or a pledge of, the payments under
the Amended and Restated First or Second Installment Sale Agreement
ranking prior to or on a parity with the claim, lien or pledge created
by this Trust Agreement (except as referred to in Section 10.4 hereof),
or (iii) a preference or priority of any Certificate or Certificates
over any other Certificate or Certificates, or (iv) a reduction in the
aggregate principal amount of Certificates the consent of the Registered
Owners of which is required for any Supplemental Trust Agreement or
which is required, under Section 10.7 hereof, for any modification,
alteration, amendment or supplement to the Amended and Restated First or
Second Installment Sale Agreement.
(b) If at any time the Authority and the Company shall
request the Trustee to enter into any Supplemental Trust Agreement for
any of the purposes of this Section 10.3, the Trustee shall cause notice
of the proposed Supplemental Trust Agreement to be given by mail to all
Registered Owners of outstanding Certificates appearing on the list kept
on file by the registrar pursuant to Section 2.9. Such notice shall
briefly set forth the nature of the proposed Supplemental Trust
Agreement and shall state that a copy thereof is on file at the office
of the Trustee for inspection by all Registered Owners.
(c) Within two years after the date of the first
Notice by Mail, the Authority, Trustee and Company may enter into such
Supplemental Trust Agreement in substantially the form described in such
notice, but only if there shall have first been delivered to the Trustee
(i) the required consents, in writing, of Registered Owners and the
Bank, and (ii) an opinion of Special Counsel stating that such
Supplemental Trust Agreement is authorized or permitted by this Trust
Agreement, complies with its terms and, upon the execution and delivery
thereof, will be valid and binding upon the Authority and the Company in
accordance with its terms and will not adversely affect the exemption
from federal income taxation of interest of Certificates.
(d) If Registered Owners of not less than the
percentage of Certificates required by this Section 10.3 shall have
consented to and approved the execution and delivery thereof as herein
provided, no Registered Owner shall have any right to object to the
execution and delivery of such Supplemental Trust Agreement, or to
object to any of the terms and provisions contained therein or the
operation thereof, or in any manner to question the propriety of the
execution and delivery thereof, or to enjoin or restrain the Authority,
Trustee or Company from executing and delivering the same or from taking
any action pursuant to the provisions thereof.
The Trustee shall furnish written notice of any Supplemental
Trust Agreement to Moody's.
Section 10.4.Effect of Supplemental Trust Agreement. Upon the
execution and deliver of any Supplemental Agreement pursuant to the
provisions of this Article X, this Trust Agreement shall be, and be
deemed to be, modified and amended in accordance therewith, and the
respective rights, duties and obligations under this Trust Agreement of
the Authority, the Trustee, the Company and all Registered Owners of
Certificates then outstanding shall thereafter be determined, exercised
and enforced under this Trust Agreement subject in all respects to such
modifications and amendments.
Section 10.5.Consent of Bank and Company Required. Anything
herein to the contrary notwithstanding, a Supplemental Trust Agreement
under this Article X shall not become effective unless and until the
Company and the Bank shall have consented to such Supplemental Trust
Agreement.
Section 10.6.Amendments to Agreements not Requiring Consent of
Registered Owners. The Authority, the Company, and the Trustee shall
without the consent of or notice to the Registered Owners, consent to
any amendment, change or modification of the Amended and Restated First
and Second Installment Sale Agreements as may be required (i) by the
provisions of the Amended and Restated First and Second Installment Sale
Agreements and this Trust Agreement, (ii) for the purpose of curing any
ambiguity or formal defect or omission in the Amended and Restated First
and Second Installment Sale Agreements, (iii) so as to identify the
Project more precisely or to substitute or add additional improvements
or equipment to the Project or additional rights or interests in
property acquired in accordance with the provisions of said Agreements,
(iv) to enter into an agreement or agreements supplemental hereto as
provided in Section 10.2 hereof, or (v) in connection with any other
change therein which, in the judgment of the Trustee, is not to the
prejudice of the Trustee or the Registered Owners.
Before the Authority and the Company shall enter into, and the
Trustee shall consent to, any amendment change or modification pursuant
to this Section 10.6, there shall have been delivered to the Authority,
the Trustee and the Company (i) the written consent of the Bank and (ii)
an opinion of Special Counsel stating that such amendment, change or
modification is authorized or permitted by this Trust Agreement,
complies with its terms, will, upon the execution and delivery thereof,
be valid and binding upon the Authority and the Company, as the case may
be, in accordance with its terms and will not adversely affect the
exemption of interest on the Certificates from federal income taxation.
Section 10.7.Amendments to the Amended and Restated First and
Second Installment Sale Agreements Requiring Consent of Registered
Owners and the Bank. Except for the amendments, changes or
modifications as provided in Section 10.6 hereof, neither the Authority,
the Company nor the Trustee shall consent to any other amendment, change
or modification of the Amended and Restated First or Second Installment
Sale Agreements (the Agreements") without Notice by Mail and receipt of
the express written consent of the Bank and the Registered Owners of not
less than 60% in aggregate principal amount of the Certificates at the
time Outstanding given as in this Section 10.7 provided, provided that
the consent of the Registered Owners of all Certificates Outstanding is
required for any amendment, change or modification of either Agreement
that would permit the termination or cancellation of either Agreement or
a reduction in or postponement of the payments under either Agreement or
any change in the provisions relating to the payments thereunder. If at
any time the Authority and the Company shall request the consent of the
Trustee to any such proposed amendment, change or modification of said
Agreements, the Trustee shall, upon being satisfactorily indemnified
with respect to expenses, cause notice to be given of such proposed
amendment, change or modification in the same manner as provided by
Section 10.3 hereof with respect to Supplemental Trust Agreements. Such
notice shall briefly set forth the nature of such proposed amendment,
change or modification, and shall state that copies of the instrument
embodying the same are on file at the Principal Office of the Trustee
for inspection by all Registered Owners. The Authority and the Company
may enter into, and the Trustee may consent to, any such proposed
amendment, change or modification subject to the same conditions and
with the same effect as provided in Section 10.3 hereof with respect to
Supplemental Trust Agreements. The Trustee shall furnish written notice
of any amendment to either Agreement to Moody's.
ARTICLE XI
GENERAL COVENANTS
Section 11.1.Payment of Principal, Premium, if any, and
Interest. The Trustee, in its capacity as Trustee hereunder, covenants
that it will promptly pay the principal of, premium, if any, and
interest with respect to every Certificate executed and delivered under
this Trust Agreement at the place, on the dates and in the manner
provided herein and in said Certificates according to the true intent
and meaning thereof, but solely from the amounts pledged therefor which
are from time to time held by the Trustee under Article III hereof in
the Revenue Fund. The principal represented by, premium, if any, and
interest due with respect to the Certificates are payable by the Trustee
solely from the amounts to be paid to it under the Amended and Restated
First Installment Sale Agreement and otherwise as provided herein and in
the Amended and Restated First Installment Sale Agreement, which amounts
are hereby specifically pledged to the payment thereof in the manner and
to the extent herein specified, and nothing in the Certificates or in
this Trust Agreement shall be construed as pledging any other funds or
assets of the Trustee or the Authority. The Authority covenants to
perform all obligations and duties imposed on it under the Amended and
Restated First Installment Sale Agreement and to cooperate with the
Trustee in enforcing the Amended and Restated Second Installment Sale
Agreement against the Company in accordance with its terms. Neither the
State nor the Authority nor any political subdivision of the State shall
in any event be liable for the payment of the Purchase Payments or the
principal represented by, premium, if any, or interest due with respect
to any of the Certificates or for the performance of any pledge,
obligation or agreement undertaken by the Authority or the Trustee
except to the extent that moneys pledged herein are sufficient therefor.
Neither the faith and credit nor the taxing power of the
Authority is pledged to the payment of the principal represented by,
premium, if any, or interest due with respect to Purchase Payments or
the Certificates, nor is the Authority in any manner obligated to make
any appropriation for payment of the Certificates.
No member or officer of the Authority or the Trustee or any
persons executing the Certificates shall, in any event, be subject to
any personal liability or accountability by reason of the execution and
delivery of the Certificates.
Section 11.2.Performance of Covenants; Trustee and Authority.
The Authority and the Trustee covenant that they will faithfully perform
at all times any and all covenants, undertakings, stipulations and
provisions on their part contained in this Trust Agreement and in the
Amended and Restated First Installment Sale Agreement, in any and every
Certificate executed and delivered hereunder and in all of the
proceedings pertaining hereto. The Authority covenants that it is duly
authorized under the Constitution and laws of the State to execute the
Amended and Restated First Installment Sale Agreement and to execute
this Trust Agreement, to assign the Amended and Restated Second
Installment Sale Agreement and the Deed of Trust and the Assignment of
Leases and to pledge the amounts to be paid under the Amended and
Restated Second Installment Sale Agreement and other amounts hereby
pledged in the manner and to the extent herein set forth, that all
action on its part in connection therewith and the execution and
delivery of this Trust Agreement has been duly and effectively taken.
Section 11.3.Instruments of Further Assurance. The Authority
and the Company will do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged and delivered, such resolutions
supplemental hereto and such further acts, instruments and transfers as
the Trustee may reasonably require for the better assuring,
transferring, conveying, pledging, assigning and confirming unto the
Trustee all and singular the amounts pledged hereby to the payment of
the Purchase Payments and the principal of, premium, if any and interest
on the Certificates. The Authority, except as herein and in the Amended
and Restated Second Installment Sale Agreement provided, will not sell,
convey, mortgage, encumber or otherwise dispose of any part of the
Project, the amounts, revenues and receipts payable under the Amended
and Restated Second Installment Sale Agreement or its rights under the
Amended and Restated Second Installment Sale Agreement.
Section 11.4.Recording and Filing. The Company covenants that
it will cause all financing statements related to this Trust Agreement
and all supplements thereto and the Amended and Restated First and
Second Installment Sale Agreements and all supplements thereto, as well
as such other security agreements, assignments, financing statements and
all supplements thereto and other instruments as may be required from
time to time to be kept, to be recorded and filed in such manner and in
such places as may from time to time be required by law in order to
preserve and protect fully the security of the Registered Owners of the
Certificates and the rights of the Trustee hereunder, and to take or
cause to be taken any and all other action necessary to perfect the
security interest and lien created by this Trust Agreement.
Section 11.5.Inspection of Project Books. All books and
records in the Authority's possession relating to the Project and the
amounts derived from the Project shall at all reasonable times be open
to inspection by such accountants or other agencies as the Trustee may
from time to time designate.
Section 11.6.List of Registered Owners. The Trustee will keep
on file a list of the names and addresses of all Registered Owners of
all Certificates as from time to time registered on the registration
books maintained by the Trustee as Registrar, together with the
principal amount and numbers of such Certificates. The Trustee shall be
under no responsibility with regard to the accuracy of said list. At
reasonable times and under reasonable regulations established by the
Trustee, said list may be inspected and copied by the Company or by
Registered Owners (or a designated representative thereof) of
twenty-five percent (25%) or more in principal amount of Certificates
then Outstanding, such ownership and the authority of such designated
representative to be evidenced to the satisfaction of Trustee.
Section 11.7.Rights Under Agreements. The Amended and Restated
First and Second Installment Sale Agreements, duly executed counterparts
of which have been filed with the Trustee, set forth the covenants and
obligations of the Authority and the Company, including provisions that
subsequent to the execution, sale and delivery of Certificates and prior
to their payment in full or provision for payment thereof in accordance
with the provisions hereof said Agreements may not be effectively
amended, changed, modified, altered or terminated without the written
consent of the Trustee and the Bank, and reference is hereby made to
said Agreements for a detailed statement of said covenants and
obligations of the Company and the Authority thereunder, and the
Authority agrees that, except as expressly set forth in the Amended and
Restated First and Second Installment Sale Agreements, the Trustee in
its name or in the name of the Authority may enforce all rights of the
Authority and all obligations of the Company under and pursuant to the
Amended and Restated Second Installment Sale Agreement for and on behalf
of the Registered Owners, whether or not the Authority is in Default
hereunder or under the Amended and Restated First Installment Sale
Agreement.
Section 11.8.Limited Nature of the Company's Obligations.
Notwithstanding anything to the contrary herein, the Company's payment
obligations under the Amended and Restated Second Installment Sale
Agreement shall be limited as and in the manner set forth in
Section 5.4(b) of such Agreement and in Section 4.20 of the Deed of
Trust.
ARTICLE XII
DEFEASANCE
Section (a) Defeasance. If there shall be paid or provisions
made for payment to or for the holders and owners of the Certificates in
accordance with the provisions of this Trust Agreement, the principal,
premium, if any, and interest due or to become due thereon at the time
and in the manner stipulated therein, and if the Authority shall keep,
perform and observe all and singular the covenants and promises in the
Certificates and in this Trust Agreement expressed as to be kept,
performed and observed by it or on its part, and shall pay or cause to
be paid to the Trustee, the Tender Agent, any Paying Agent and the Bank
all sums of money due or to become due to them according to the
provisions hereof, then this Trust Agreement and the lien, rights and
interest created hereby shall cease, determine and become null and void
(except as to any surviving rights of registration, transfer or exchange
of Certificates herein provided for), whereupon the Trustee shall cancel
and discharge this Trust Agreement, and execute and deliver to the
Authority such instruments in writing as shall be requested by the
Authority and requisite to discharge this Trust Agreement, and release,
assign and deliver unto the Bank, if there are obligations then due
under the Reimbursement Agreement, and if not, to the Company, any and
all the estate, right, title and interest in and to any and all rights
assigned or pledged to the Trustee or otherwise subject to this Trust
Agreement, except moneys or securities held by the Trustee for the
payment of the principal of, premium, if any, and interest on the
Certificates, proceeds of draws on the Bank Letter of Credit, and moneys
held in the Purchase Fund.
Any Certificate or portion thereof in Authorized Denominations
shall, prior to the maturity or redemption date thereof, be deemed to be
paid and defeased within the meaning of this Trust Agreement when
payment of the principal of and the applicable redemption premium, if
any, on such Certificate or portion thereof, plus interest thereon to
the due date thereof (whether such due date be by reason of maturity or
upon redemption as provided in this Trust Agreement, or otherwise),
either:
(i) shall have been made or caused to be made
in accordance with the terms hereof and thereof, or
(ii) shall have been provided for by irrevocably
depositing with the Trustee, in trust and irrevocably setting
aside exclusively for such payment:
(1) moneys which shall be
sufficient to make such payment when due, or
(2) moneys and/or non-callable
Government Obligations maturing as to principal and
interest in such amounts and at such times as will be
such as to insure the availability of sufficient moneys
to make such payment, and all necessary and proper fees,
compensation and expenses of the Trustee and any Paying
Agent pertaining to the Certificates with respect to
which such deposit is made shall have been paid or the
payment thereof provided for to the satisfaction of the
Trustee and any Paying Agent.
Moneys or Government Obligations deposited with the Trustee by
the Company under this Section shall be used to pay and defease
Certificates only if they constitute Seasoned Funds or proceeds of a
drawing under the Bank Letter of Credit.
Prior to the Conversion Date, no Certificates may be defeased
under this Section unless the Trustee receives written confirmation from
each rating agency then rating the Certificates that the defeasance will
not result in the withdrawal or reduction of the rating on the
Certificates.
Notwithstanding the foregoing, no deposit under clause (ii) of
the immediately preceding paragraph shall be deemed a payment of such
Certificates or portion thereof as aforesaid until:
(A) proper notice of redemption of such
Certificates or portions thereof shall have been previously
given in accordance with Article VI hereof to the owners of the
Certificates or portions thereof, that the deposit required by
(ii) above has been made with the Trustee and that said
Certificates or portions thereof are deemed to have been paid
and stating such maturity or redemption date or dates upon which
moneys are to be available for the payment of the principal or
redemption price, if applicable, on said Certificates; or
(B) the maturity of such Certificates.
At such time as a Certificate or portion thereof shall be deemed
to be paid hereunder, as aforesaid, it shall no longer be
secured by or entitled to the benefits of this Trust Agreement
except for the purposes of Sections 2.8 and 2.9 hereof and of
any such payment from such moneys or Government Obligations.
Any moneys so deposited with the Trustee as provided in this
Article may at the written direction of the Company also be invested and
reinvested in non-callable Government Obligations maturing in the
amounts and times as hereinbefore set forth, and all income from all
such Government Obligations in the hands of the Trustee pursuant to this
Article which is not required for the payment of the Certificates and
interest and premium, if any, thereon with respect to which such moneys
shall have been so deposited, shall be deposited in the fund or account
in which such moneys so deposited are held.
Notwithstanding any provisions of any other Article of this
Trust Agreement which may be contrary to the provisions of this Article,
all such moneys or Government Obligations set aside and held in trust
pursuant to the provisions of this Article and for the payment of
Certificates (including interest and premium thereon, if any) shall be
applied to and used solely for the payment of the particular
Certificates (including interest and premium thereon, if any) with
respect to which such moneys and Government Obligations have been so set
aside in trust.
Anything in Article X hereof to the contrary notwithstanding, if
such moneys or Government Obligations have been deposited or set aside
with the Trustee pursuant to this Article for the payment of
Certificates and interest and premium thereon, if any, and such
Certificates shall not have in fact been actually paid in full, no
amendment to the provisions of this Article XII shall be made without
the consent of the holder of each Certificate affected thereby.
ARTICLE XIII
PURCHASE AND REMARKETING OF CERTIFICATES
Section 13.1.Certificateholders' Obligation to Tender
Certificates Upon Conversion and Reimbursement Agreement Event of
Default.
(a) (i) Upon receipt of a notice of conversion to the
Fixed Rate pursuant to Section 2.4 hereof or (ii) unless notice has been
received stating that there has not been a reduction or withdrawal of
the rating on the Certificates under 3.9(e)(ii)(C) as a result of the
delivery of a Substitute Letter of Credit, together with the Bank's
express written consent to such Substitution, each Certificateholder
shall tender its Certificates for purchase on or before the Conversion
Date with respect to (i) above, or, with respect to (ii) above, on a
special mandatory tender date established relative to the substitution
of the Letter of Credit, which shall be a date not less than 5 days
before the expiration or termination of the Letter of Credit, in
accordance with Section 13.2. All Certificates which are not tendered
for purchase prior to the Conversion Date or the special mandatory
tender date, as the case may be, shall be deemed tendered and shall be
purchased on the Conversion Date or the special mandatory tender date,
as the case may be, at a price of 100 percent of the principal amount
thereof plus accrued interest to such date. The Trustee shall deem
Certificates not tendered by Certificateholders to be no longer
outstanding and shall deliver a revised form of Certificate, prepared
with the advice of Special Counsel and consistent with the terms of this
Trust Agreement.
(b) Upon receipt of a notice from the Bank that an
event of default has occurred under the Reimbursement Agreement and the
express written consent of the Bank to the Trustee's exercise of the
remedy provided in this Section 13.1(b), each Certificateholder shall
tender its Certificate for purchase to the Trustee on or before the date
set forth in the notice delivered to the Trustee in accordance with
Section 11.2(c) of the Reimbursement Agreement and in any event not
later than 5 days prior to the expiration of the Letter of Credit. All
Certificates which are not tendered for purchase on or before the date
set forth in the notice from the Bank shall be deemed tendered and shall
be purchased on said date at a price of one hundred percent (100%) of
the principal amount thereof plus accrued interest to said date. The
Trustee shall deem Certificates not tendered by Certificateholders to be
no longer outstanding and shall deliver a revised form of Certificate,
prepared with the advice of Special Counsel and consistent with the
terms of this Trust Agreement.
Section 13.2.Mandatory and Demand Purchase of Certificates.
Subject to the provisions of Section 13.9, any Certificate shall be
purchased, at the option of the owner thereof or as required by
Section 13.1 hereof, on any Business Day on or before the Conversion
Date, at a purchase price equal to 100 percent of the principal amount
thereof plus accrued interest to the Purchase Date (as defined below),
with such payment to be made in immediately available funds, upon:
(a) delivery of an irrevocable written notice of
tender or an irrevocable telephonic notice of tender to the
Remarketing Agent, promptly confirmed in writing to the Tender
Agent, not later than 4:00 p.m. New York time not less than
seven days prior to the date on which the Certificates are to be
purchased (the "Purchase Date") of a notice of exercise of
option to sell Certificates in substantially the form set forth
in Exhibit C hereto duly completed and executed by the
Registered Owner of the Certificate or Certificates to be
purchased (which notice shall be effective upon receipt); and
(b) delivery to the Principal Office of the Tender
Agent not later than 12:00 noon New York time on the Purchase
Date specified in the aforesaid notice, of the Certificates to
be purchased.
Any Certificates purchased pursuant to a draw on the Bank Letter
of Credit and delivered to or on behalf of the Trustee or the Tender
Agent (including any Certificate executed and delivered in replacement
thereof) shall be held in the name of the Bank (or its participants) on
the records of the Securities Depository and held by the Trustee or the
Tender Agent, under the security interest of the Bank pursuant to the
provisions of the Reimbursement Agreement and the Pledge and Security
Agreement, pending written instructions from the Bank.
Section 13.3.Remarketing Agent. The Company will appoint the
Remarketing Agent for the Certificates, subject to the conditions set
forth in Section 13.4 hereof. The Remarketing Agent has designated to
the Trustee its principal office and signified its acceptance of the
duties and obligations imposed on it hereunder by its execution and
delivery of the Remarketing Agreement concurrently herewith, and
satisfactory in form and substance to the Authority, under which the
Remarketing Agent agrees to perform the obligations of the Remarketing
Agent set forth in Section 13.5 hereof.
The Authority shall cooperate with the Trustee and the Company
to cause the necessary arrangements to be made and to be thereafter
continued whereby funds from the sources specified herein will be made
available for the purchase of Certificates and whereby Certificates
executed by the Authority and authenticated by the Trustee shall be made
available to the Remarketing Agent to the extent necessary for delivery
pursuant to Section 13.7 hereof.
If at any time the Remarketing Agent is not performing under
this Trust Agreement, upon written notice from the Company to the
Trustee of said nonperformance, the Trustee shall accept notices and
tenders of Certificates hereunder.
Section 13.4.Qualifications of Remarketing Agent. The
Remarketing Agent shall be a member of the National Association of
Securities Dealers, Inc. or a banking corporation having a
capitalization of at least $15,000,000 and which is authorized by law to
perform all the duties imposed upon it by this Trust Agreement. The
Remarketing Agent may be removed from, and may resign and be discharged
of, the duties and obligations created by this Trust Agreement, under
the circumstances and in the manner described in the Remarketing
Agreement.
Section 13.5.Remarketing of Certificates.
(a) Upon the Tender Agent or the Trustee determining
that a Certificate should be deemed tendered pursuant to Section 13.2
hereof, the Trustee or the Tender Agent shall immediately give the
Remarketing Agent, the Bank and the Company telephonic notice, promptly
confirmed in writing, and the Remarketing Agent shall use its best
efforts to remarket the Certificates to which such notice relates. Any
such sale shall be made at a price equal to the principal amount of the
Certificates sold plus interest accrued to the Purchase Date (as defined
in Section 13.2 hereof).
(b) On each Purchase Date:
(i) Unless the Remarketing Agent has notified
the Tender Agent otherwise, the Remarketing Agent shall notify
the Tender Agent by Electronic Means not later than 12:30 p.m.
New York time of the amount of tendered Certificates which were
successfully remarketed, the names of the tendering Owners and
the registration instructions (i.e., the names, addresses and
taxpayer identification numbers of the purchasers and the
desired Authorized Denominations) with respect thereto; and
(ii) the Tender Agent shall authenticate new
Certificates for the respective purchasers thereof which shall
be available for pick-up by the Remarketing Agent not later than
2:30 p.m. New York time.
(c) On each Purchase Date:
(i) the Remarketing Agent shall give notice to
the Tender Agent of receipt of the purchase price of remarketed
Certificates by 12:30 p.m. New York time; and
(ii) the Tender Agent shall direct the Trustee
to draw on the Letter of Credit by 1:00 p.m. New York time in an
amount equal to the purchase price of all Certificates tendered
or deemed tendered less the aggregate amount of remarketing
proceeds notice of the receipt of which was given to the Tender
Agent by the Remarketing Agent pursuant to clause (i) of this
Section 13.5(c) or in the failure of such notice, the Trustee
shall draw on the Letter of Credit by 1:00 p.m. New York time in
an amount equal to the purchase price of all Certificates
tendered or deemed tendered.
(d) Any Certificates tendered for purchase under
Section 13.2 after the date notice of conversion to the Fixed Rate is
given shall not be remarketed except to a buyer who agrees, in writing
delivered to the Trustee concurrently with the written notice of sale
described in subparagraph (b), at the time of such purchase to tender
the Certificates for repurchase at par plus accrued interest on the
Conversion Date. No Certificate tendered for purchase under
Section 13.2 after the date of notice of redemption with respect thereto
has been given shall be remarketed.
(e) Certificates tendered for purchase within 7 days
prior to the Conversion Date shall not be remarketed except in
connection with the Remarketing Agent's efforts to remarket bonds as
Fixed Rate Certificates pursuant to Section 13.5(a) hereof.
(f) Certificates shall not be remarketed to the
Authority, the Company or a general partner or any insider of the
Company. The Authority hereby agrees not to purchase Certificates from
the Remarketing Agent.
(g) Anything in this Trust Agreement to the contrary
notwithstanding, if there shall have occurred and be continuing an Event
of Default described in subsection (a) or (b) of Section 8.1, the
Remarketing Agent shall not remarket any Certificates.
Section 13.6.Purchase of Certificates Delivered to Tender
Agent.
There shall be deposited into the Purchase Fund
the following amounts:
(i) all moneys received from the remarketing of
Certificates pursuant to Section 13.5 hereof; and
(ii) a sum drawn by the Trustee under the Bank
Letter of Credit pursuant to Section 13.5 which, when added to
the moneys described in clause (i), will be sufficient to permit
purchase of Certificates as required under Sections 13.1 and
13.2 hereof.
(b) Funds for the purchase of Certificates at the
principal amount thereof plus interest accrued to the Purchase Date
shall be paid out of the Purchase Fund in the order of priority
indicated:
(i) proceeds from the remarketing of
Certificates pursuant to Section 13.5 hereof; and
(ii) moneys representing proceeds of a drawing
by the Trustee under the Bank Letter of Credit.
(c) The Tender Agent and the Trustee shall
(i) hold all Certificates delivered to it
pursuant to Section 13.2 hereof in trust for the benefit of the
respective owners which shall have so delivered such
Certificates until moneys representing the purchase price of
such Certificates shall have been delivered to or for the
account of or to the order of such owners; and
(ii) deliver to the Company, the Remarketing
Agent and the Bank a copy of each notice delivered to it in
accordance with Section 13.2 hereof and, immediately upon the
delivery to it of Certificates in accordance with said
Section 13.2, give telephonic or telegraphic notice to the
Company and the Bank specifying the principal amount of the
Certificates so delivered.
(d) The Trustee, the Tender Agent and the Remarketing
Agent shall hold all moneys delivered to it pursuant to Section 13.8 in
trust for the benefit of the respective purchasers until the
Certificates purchased with such moneys can be delivered to such
purchasers. Neither the Authority nor the Company shall have any right,
title or interest in any moneys held in the Purchase Fund or by the
Remarketing Agent or the Tender Agent.
Section 13.7.Delivery of Certificates. Upon the purchase of
Certificates with funds described in Section 13.6(b)(i) hereof,
transfer of the ownership thereof shall be registered by the Trustee,
and replacement Certificates shall be delivered by the Trustee, or by
the Tender Agent at the direction of the Trustee, in the manner
requested by the Remarketing Agent. Certificates paid by the Trustee
with moneys described in subsection (b)(iii) of Section 13.6 shall be
registered by the Trustee in the name of the Trustee, and shall be held
by the Custodian for the Bank in the manner described in the Custody
Agreement. The Trustee agrees to cooperate with the parties to arrange
the transfer of the Pledged Certificates to new custody or ownership as
may be required by the issuer of a Substitute Letter of Credit.
Section 13.8.Delivery of Remarketing Proceeds. The remarketing
proceeds of Certificates remarketed by the Remarketing Agent shall be
deposited in the Purchase Fund and used as provided in Section 13.6.
The Trustee shall thereupon register such Certificates in such names and
deliver them to such new owners as shall have been specified to the
Trustee by the Remarketing Agent or the Bank.
Section 13.9.Tender Agent. The Trustee, with the consent of
the Company and the Bank, which shall not be unreasonably withheld,
shall appoint the Tender Agent for the Certificates, subject to the
conditions set forth in Section 13.10 hereof. The Tender Agent
initially appointed hereunder shall be First Trust of California,
National Association. The Tender Agent shall designate to the Trustee
its principal office and signify its acceptance of the duties and
obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Authority, the Trustee and the Remarketing
Agent under which the Tender Agent acknowledges its qualifications and
authority to act as Tender Agent under this Trust Agreement and agrees,
particularly, as follows:
(A) The Tender Agent shall, upon receipt
of a notice from any Certificateholder in accordance with
Section 13.2 hereof or upon the failure of any Certificateholder
to deliver a notice in accordance with Section 2.4 hereof, give
immediate telephonic notice thereof to the Trustee, specifying
the amount of Certificates to be purchased and the Purchase
Date, and shall, not later than the following Business Day,
confirm such telephonic notice in writing and deliver to the
Bank and the Company a copy of such notice.
(B) Not later than 12:30 p.m. New York
time on each Purchase Date the Tender Agent shall give the
Trustee and the Company telephonic notice, confirmed in writing
by the following Business Day, of the amount of Certificates
delivered or deemed delivered pursuant to Sections 2.4 and 13.2.
(C) The Tender Agent shall deliver to
the Remarketing Agent, immediately upon receipt thereof, any
Certificates specified in the notice given by the Remarketing
Agent to the Tender Agent pursuant to Section 13.5(b) which have
been remarketed by the Remarketing Agent.
(D) The Tender Agent shall deliver to
the Trustee all Certificates not delivered to the Remarketing
Agent pursuant to paragraph (3) above, immediately upon receipt
of such Certificates from the holders thereof.
(E) The Tender Agent shall deliver
Certificates to purchasers thereof at the direction of the
Trustee in accordance with Section 13.7 hereof.
(F) The Tender Agent shall hold all
Certificates delivered to it pursuant to Sections 2.4 and 13.2
hereof in trust for the benefit of the respective
Certificateholders which shall have so delivered such
Certificates until such Certificates are required to be
delivered to the Remarketing Agent or the Trustee.
(G) The Tender Agent shall keep such
books and records as shall be consistent with prudent industry
practice and shall make such books and records available for
inspection by the Authority, the Trustee, the Bank and the
Company at all reasonable times.
(H) The Tender Agent shall hold all
moneys delivered to it by the Remarketing Agent for the purchase
of Certificates in trust for the benefit of the person which
shall have delivered such moneys to the Remarketing Agent until
the Certificates purchased with such moneys shall have been
delivered to or for the account of such person, and shall not
invest such moneys or commingle such moneys with other funds of
the Tender Agent.
(I) The Tender Agent shall cancel all
Certificates for which it has received written notice of
remarketing from the Remarketing Agent and shall authenticate
new Certificates in a like aggregate principal amount in the
names and in the denominations set forth in the written notice
given to the Tender Agent by the Remarketing Agent pursuant to
Section 13.5 hereof.
Insofar as such provisions may be applicable, the Tender Agent
shall enjoy the same protective provisions in the performance of its
duties hereunder as are specified in Article IX with respect to the
Trustee.
Section 13.10. Qualifications of Tender Agent. The Tender
Agent shall be a commercial bank or trust company having a
capitalization of at least $1,000,000 and authorized by law to perform
all the duties imposed upon it by this Trust Agreement.
The Tender Agent may at any time resign and be discharged by
giving at least sixty (60) days written notice to the Trustee, the
Authority, the Company and the Bank. The Tender Agent may be removed at
any time, upon 60 days written notice, upon consultation with the
Company, by an instrument signed by the Trustee and filed with the
Tender Agent, the Remarketing Agent, the Bank and the Authority. Upon
the resignation or removal of the Tender Agent the Trustee shall
promptly appoint a successor Tender Agent.
In the event of the resignation or removal of the Tender Agent,
the Tender Agent shall pay over, assign and deliver any moneys and
Certificates held by it in such capacity, and shall deliver all books
and records relating thereto, to its successor or, if there be no
successor, to the Trustee.
In the event that the Trustee shall fail to appoint a Tender
Agent hereunder, or in the event that the Tender Agent shall resign or
be removed, or be dissolved, or if the property or affairs of the Tender
Agent shall be taken under the control of any state or federal court or
administrative body because of bankruptcy or insolvency, or for any
other reason, and the Trustee shall not have appointed its successor as
Tender Agent, the Trustee, notwithstanding the provisions of the first
paragraph of this Section 13.10, shall be deemed to be the Tender Agent
for all purposes of this Trust Agreement until the appointment by the
Trustee of the Tender Agent or a successor Tender Agent, as the case may
be, which shall be done with all due dispatch.
ARTICLE XIV
MISCELLANEOUS
Section 14.1.Consents of Registered Owners. Any consent,
request, direction, approval, objection or other instrument required by
this Trust Agreement to be signed and executed by the Registered Owners
may be in any number of concurrent documents and may be executed by such
Registered Owners in person or by agent appointed in writing. Proof of
the execution of any such consent, request, direction, approval,
objection or other instrument or of the written appointment of any such
agent or of the ownership of Certificates, if made in the following
manner, shall be sufficient for any of the purposes of this Trust
Agreement, and shall be conclusive in favor of the Trustee with regard
to any action taken by it under such request or other instrument,
namely:
(a) The fact and date of the execution by any person
of any such writing may be proved by the certificate of any officer in
any jurisdiction who by law has power to take acknowledgments within
such jurisdiction that the person signing such writing acknowledged
before him the execution thereof, or by an affidavit of any witness to
such execution.
(b) The fact of ownership of Certificates and the
amount or amounts, numbers and other identification of such
Certificates, and the date of holding the same shall be proved by the
registration books maintained by the Trustee pursuant to Section 2.9
hereof.
For all purposes of this Trust Agreement and of the proceedings
for the enforcement hereof, such person shall be deemed to continue to
be the Registered Owner of such Certificate until the Trustee shall have
received notice in writing to the contrary.
Section 14.2.Successors of the Authority and the Company. In
the event of the dissolution of the Authority or the Company, all the
covenants, stipulations, promises and agreements in this Trust Agreement
contained, by or on behalf of, or for the benefit of, the Authority or
the Company, shall bind or inure to the benefit of their respective
successors from time to time and any entity, officer, board, commission,
agency or instrumentality to whom or to which any power or duty of the
Authority or Company, as the case may be, shall be transferred.
Section 14.3.Parties in Interest; Consent of Bank.
(a) Except as herein otherwise specifically provided,
nothing in this Trust Agreement expressed or implied is intended or
shall be construed to confer upon any person, firm or corporation other
than the Authority, the Company, the Bank, the Trustee and the
Registered Owners any right, remedy or claim under or by reason of this
Trust Agreement, this Trust Agreement being intended to be for the sole
and exclusive benefit of the Authority, the Company, the Bank and the
Trustee and the Registered Owners.
(b) Whenever the consent or the approval of the Bank
is required under any provision of this Trust Agreement, such consent or
approval shall be required only for so long as the Letter of Credit
shall be in effect or there shall remain unsatisfied any obligations of
the Company under the Reimbursement Agreement and then only if the Bank
shall not be in default under the Letter of Credit.
(c) It shall be the Bank's option, exercised in its
sole, absolute and exclusive discretion whether to exercise its remedy
under Section 3.6(d) or Section 13.1(b) following the occurrence of an
event of default under the Reimbursement Agreement.
Section 14.4.Severability. In case any one or more of the
provisions of this Trust Agreement or of the Amended and Restated First
or Second Installment Sale Agreement or of the Certificates issued
hereunder shall, for any reason, be held to be illegal or invalid, such
illegality or invalidity shall not affect any other provisions of this
Trust Agreement or of such Agreements or of such Certificates, and this
Trust Agreement and such Agreements and such Certificates shall be
construed and enforced as if such illegal or invalid provisions had not
been contained herein or therein.
Section 14.5.No Personal Liability of Authority or Trustee
Officials. No covenant or agreement contained in the Certificates or in
this Trust Agreement shall be deemed to be the covenant or agreement of
any official, officer, agent or employee of the Authority or the Trustee
in his individual capacity, and no such individual person shall be
liable personally on the Certificates or be subject to any personal
liability or accountability by reason of the issuance thereof.
Section 14.6.Certificates Owned by the Authority or the
Company. In determining whether Registered Owners of the requisite
aggregate principal amount of the Certificates have concurred in any
direction, consent or waiver under this Trust Agreement, Certificates
which are owned by the Authority or the Company or by any person
directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company (unless the Authority, the
Company or such person owns all Certificates which are then Outstanding,
determined without regard to this Section 14.6) shall be disregarded and
deemed not to be Outstanding for the purpose of any such determination,
except that, for the purpose of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only
Certificates which the Trustee knows are so owned shall be so
disregarded. Certificates so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect
to such Certificates and that the pledgee is not the Authority or the
Company or any person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company. In case
of a dispute as to such right, any decision by the Trustee taken upon
the advice of counsel shall be full protection to the Trustee.
Section 14.7.Counterparts. This Trust Agreement may be
executed in any number of counterparts, each of which, when so executed
and delivered, shall be deemed to be an original; but such counterparts
shall together constitute but one and the same Trust Agreement.
Section 14.8.Governing Law. The laws of the State shall govern
the construction of this Trust Agreement and of all Certificates issued
hereunder.
Section 14.9.Notices. All notices, certificates or other
communications shall be in writing (unless specifically provided
otherwise herein) and sufficiently given and shall be deemed given on
the second day following the date on which the same have been personally
delivered or mailed by certified mail, return receipt requested, postage
prepaid, addressed as follows:
To the Authority: City of Hermosa Beach
1315 Valley Drive
Hermosa Beach, California 90254
Attention: City Manager
To the Company: JMB Income Properties, Ltd. - XII
c/o JMB Realty Corporation
900 North Michigan Avenue, 19th
Floor
Chicago, Illinois 60611
Attention: Stephen Lovelette
To the Trustee and First Trust of California, National
Association
Paying Agent: 333 South Grand Avenue, Suite 3020
Los Angeles, California 90071
Attention: Melonee Young
To the Tender First Trust of California, National
Association
Agent: c/o First Trust of New York
100 Wall Street, Suite 1600
New York, New York 10005
Attention: Patsy Poole
To the Bank: Dresdner Bank AG
Los Angeles Agency
725 South Figueroa Street, Suite
3950
Los Angeles, California 90017
Attention: Mr. Sidney Jordan, Vice
President
To the Remarketing Merrill Lynch, Pierce, Fenner &
Smith
Agent: Two California Plaza
350 South Grand Avenue, Suite 2630
Los Angeles, California 90071
Attention: Managing Director
A duplicate copy of each notice, certificate or other communication
given hereunder by either the Authority or the Company to the other
shall also be given to the Trustee and the Bank. All other documents
required to be submitted to any of the foregoing parties shall also be
submitted to such party at its address set forth above. Any of the
foregoing parties may, by notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates,
documents or other communications shall be sent.
In addition to all other notices required by this Trust
Agreement, the Trustee and the Authority covenant to provide Moody's at
Moody's Investors Service, Public Finance Department, 99 Church Street,
New York, New York 10007, Attn: Structured Finance Group, notice of the
following events: (1) any change in the Trustee or the Remarketing
Agent, (2) provision of a Substitute Letter of Credit by the Company,
(3) any amendment to this Trust Agreement, the Reimbursement Agreement
or any other documents relating to the Certificates or the Bank Letter
of Credit, (4) any redemption of Certificates pursuant to Section 6.2,
(5) the extension, termination or expiration of any Letter of Credit,
(6) the conversion of the interest rate on the Certificates to the Fixed
Rate, (7) any defeasance of the Certificates under Article XII
hereunder, or (8) any material change actually known to the Authority or
a Responsible Officer of the Trustee in the Amended and Restated First
and Second Installment Sale Agreements or the Pledge and Security
Agreement.
Section 14.10. Holidays. If the date for making any
payment or the last date for performance of any act or the exercising of
any right, as provided in this Trust Agreement, shall be a legal holiday
or a day on which banking institutions in the city in which is located
the Principal Office of the Trustee or the Paying Agent are authorized
by law to remain closed, such payment may be made or act performed or
right exercised on the next succeeding day not a legal holiday or a day
on which such banking institutions are authorized by law to remain
closed, with the same force and effect as if done on the nominal date
provided in this Trust Agreement, and no interest shall accrue for the
period after such nominal date.
Section 14.11. Immunities and Limitations of
Responsibility of Authority and Trustee. Except as to particular
circumstances specifically indicated in this Section 13.11, the
immunities and limits of responsibility conferred by this Section 13.11
shall be applicable to the Authority, the Trustee and the Company
individually as well as together, and the use of the words "they",
"them" and "their" in this Section 13.11 shall not be construed to
require joint action not required by provisions hereof. They shall be
entitled to the advice of counsel of their own choice, and they shall be
wholly protected as to action taken or omitted in good faith in reliance
on such advice. They may rely conclusively on any communication or
other document furnished to them hereunder and reasonably believed by
them to be genuine. They shall not be liable for any action (a) taken
by them in good faith and reasonably believed by them to be within their
discretion or powers hereunder, or (b) in good faith omitted to be taken
by them because reasonably believed to be beyond their discretion or
powers hereunder, or (c) taken by them pursuant to any direction or
instruction by which they are governed hereunder, or (d) omitted to be
taken by them by reason of the lack of any direction or instruction
required hereby for such action; nor shall they be responsible for the
consequences of any error of judgment reasonably made by them. They
shall in no event be liable for the application or misapplication of
funds or for other acts or defaults by any person, except their own
officers and employees. When any payment or consent or other action by
them is called for hereby, they may defer such action pending receipt of
such evidence (if any) as they may require in support thereof. They
shall not be required to take any remedial action (other than the giving
of notice) unless reasonable indemnity is furnished for any expense or
liability to be incurred therein, other than liability for failure to
meet the standards set forth in this Section 13.11. No permissive right
or power to act which they may have shall be construed as a requirement
to act; and no delay in the exercise of a right or power shall affect
their subsequent exercise of that right or power. No recourse shall be
had by any Registered Owner for any claim based on this Trust Agreement
or the Certificates against any member, officer, employee or agent of
the Authority or the Company alleging personal liability on the part of
such person, unless such claim is based upon the bad faith, fraud or
deceit of such person. Neither the Authority nor the Company shall be
required to take notice of any breach or default by the other, or to
give a default notice to the other, unless directed by the Trustee.
Upon receipt of indemnity as provided above and after making such
investigation, if any, as it deems appropriate to verify the occurrence
of any default of which it is notified by the Registered Owners, the
Trustee shall promptly pursue such remedies hereunder as it deems
appropriate for the protection of the Registered Owners; and in its
actions under this sentence, the Trustee shall be required to act for
the protection of the Registered Owners with the same promptness and
prudence as would be expected of a prudent man in the conduct of his own
affairs.
<PAGE>
IN WITNESS WHEREOF, the Parking Authority of the City of Hermosa
Beach, First Trust of California, National Association, as Trustee, and
JMB Income Properties, Ltd. XII, have caused this Trust Agreement to be
duly executed by authorized officers, all as of the day and year first
above written.
PARKING AUTHORITY OF THE CITY OF
HERMOSA BEACH
By:
Chairman
By:
Secretary
Approved as to Form:
General Counsel
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as Trustee
By:
Its:
JMB INCOME PROPERTIES, LTD. XII,
an Illinois limited partnership
By: JMB REALTY CORPORATION,
a Delaware corporation
Managing General Partner
By:
Vice President
<PAGE>
EXHIBIT A
FORM OF VARIABLE INTEREST RATE CERTIFICATE
No. 1 $
PARKING AUTHORITY OF THE CITY OF HERMOSA BEACH
FLOATING RATE WEEKLY DEMAND
REFUNDING CERTIFICATE OF PARTICIPATION
(HERMOSA BEACH PARKING FACILITIES PROJECT-1994 SERIES)
THIS CERTIFICATE IS SUBJECT TO MANDATORY TENDER UNDER THE
CIRCUMSTANCES HEREINAFTER DESCRIBED, AND IT MUST BE SO
TENDERED OR IT WILL BE DEEMED TO HAVE BEEN SO TENDERED AND
INTEREST WITH RESPECT THERETO WILL CEASE TO ACCRUE AND THIS
CERTIFICATE WILL NO LONGER BE ENTITLED TO THE BENEFITS OF
THE TRUST AGREEMENT (AS HEREINAFTER DEFINED).
Interest Rate<PAGE>
Maturity Date Dated Date CUSIP Number Variable December 1, 2023
December 5, 1994
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The Registered Owner named above, or registered assigns, is
entitled to receive, subject to the terms of the Amended and Restated
First Installment Sale Agreement (as hereinafter defined), the principal
amount set forth above on the Maturity Date specified above (subject to
any right of prior redemption hereinafter mentioned), and interest on
the balance of said principal amount from time to time remaining unpaid
(but only out of the sources hereinafter mentioned) at the rates and at
the times as hereinafter provided. The principal or redemption price
hereof is payable by check only upon presentation and surrender hereof
at the Principal Office (as defined in the Trust Agreement) of First
Trust of California, National Association (the "Trustee"), and interest
shall be paid by check mailed, first class mail, postage prepaid, on
each Interest Payment Date (as hereinafter defined), to the person in
whose name this Certificate is registered on the applicable Record Date
(as hereinafter defined), at the address of such registered owner shown
on the books of the Trustee, except that such interest payments may be
made by wire transfer to any registered owner of $1,000,000 or more in
aggregate principal amount of the Certificates who shall have designated
to the Trustee an account within the United States for such payments at
least fifteen days before the applicable Interest Payment Date.
The Registered Owner is the owner of an undivided
proportionate interest in the right to receive certain purchase payments
(the "Purchase Payments") to be made under that certain Amended and
Restated First Installment Sale Agreement dated as of November 15, 1994
(the "Amended and Restated First Installment Sale Agreement"), by and
between JMB Income Properties, Ltd. - XII, an Illinois limited
partnership organized and existing under the laws of the State of
Illinois (the "Company"), and the Parking Authority of the City of
Hermosa Beach, a parking authority and public body, corporate and
politic, organized and existing under the laws of the State of
California (the "Authority"), for title to certain public parking
facilities and related facilities described therein (the "Project"),
such Amended and Restated First Installment Sale Agreement, including
the right to receive Purchase Payments, having been assigned to the
Trustee. The Authority has agreed to convey title to the Project to the
Company pursuant to an Amended and Restated Second Installment Sale
Agreement, dated as of November 15, 1994 (the "Amended and Restated
Second Installment Sale Agreement"), under which the Company is
obligated to make installment payments (the "Installment Payments")
sufficient to permit the Authority to make Purchase Payments under the
Amended and Restated First Installment Sale Agreement. The Trustee has
received an assignment of the Authority's rights to the Installment
Payments under the Amended and Restated Second Installment Sale
Agreement. The obligations of the Company to make payments under the
Amended and Restated Second Installment Sale Agreement are secured by,
among other things, a Deed of Trust, Fixture Filing and Assignment of
Rents (Completed Building) (the "Deed of Trust"), constituting a first
lien on the Project, an Assignment of Rents, Leases, Income and Profits
dated as of November 15, 1994 (the "Assignment of Leases") executed by
the Company in favor of the Bank and the Authority and a Security
Agreement dated as of November 15, 1994 (the "Security Agreement") among
the Company, the Bank and the Authority, which have been assigned to the
Trustee. Payment of the Certificates is additionally secured by a
letter of credit, hereinafter described, issued initially by Dresdner
Bank AG, Los Angeles Agency (the "Bank"). The lien of the Deed of Trust
is shared by the Trustee co-equally with the Bank in order to secure the
Company's obligations to reimburse the Bank for drawings made under such
Letter of Credit, pursuant to a Letter of Credit and Reimbursement
Agreement dated as of November 15, 1994 between the Company and the
Bank.
This Certificate is one of an authorized issue of
certificates of the Authority designated as the "Parking Authority of
the City of Hermosa Beach Floating Rate Weekly Demand Refunding
Certificates of Participation (Hermosa Beach Parking Facilities
Project - 1994 Series)", limited in aggregate principal amount to
$6,400,000 (the "Certificates") executed and delivered pursuant to the
terms of the Trust Agreement, dated November 15, 1994, by and among the
Authority, the Trustee and the Company (the "Trust Agreement").
Interest with respect to this Certificate and not yet paid
is payable from the date to which interest has been paid next preceding
the date of registration of this Certificate (unless this Certificate is
registered as of an Interest Payment Date for which interest has been
paid, or after the Record Date in respect thereof, in which event it
shall bear interest from such Interest Payment Date, or unless it is
registered on or before the Record Date for the first Interest Payment
Date, in which event it shall bear interest from the date of the first
authentication and delivery of the Certificates), at the rate per annum
set forth in the Trust Agreement. The term "Interest Payment Date"
means the first Wednesday of each month, commencing the first Wednesday
of January, 1995, until the rate of interest due with respect to the
Certificates is established at a Fixed Rate (as defined in the Trust
Agreement), in which case "Interest Payment Date" thereafter means
December 1 and June 1 of each year. The term "Record Date" means the
day before an Interest Payment Date (whether or not such date is a
Business Day).
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
STATE OF CALIFORNIA, ANY POLITICAL SUBDIVISION THEREOF OR THE CITY OF
HERMOSA BEACH IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL, PREMIUM, IF
ANY, OR INTEREST REPRESENTED BY ANY CERTIFICATE, NOR IS THE STATE, ANY
POLITICAL SUBDIVISION THEREOF, THE AUTHORITY OR THE CITY OF HERMOSA
BEACH IN ANY MANNER OBLIGATED TO MAKE ANY APPROPRIATION THEREFOR. THE
AUTHORITY HAS NO TAXING POWER.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all
conditions and acts required to exist, to have happened and to have been
performed precedent to and in the execution and delivery of the Trust
Agreement and the execution and delivery of this Certificate do exist,
have happened and have been performed in due time, form and manner as
required by law; and that the execution and delivery of this Certificate
does not exceed or violate any constitutional or statutory limitation.
THE TERMS AND PROVISIONS OF THIS CERTIFICATE ARE CONTINUED
AFTER THIS PAGE AND SUCH CONTINUED TERMS AND PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Certificate shall not be valid or become obligatory for
any purpose or be entitled to any security or benefit under the Trust
Agreement unless and until the certificate of authentication hereon
shall have been duly executed by the Trustee.
IN WITNESS WHEREOF, this Certificate has been executed by
the manual signature of an authorized officer of the Trustee solely in
its capacity as trustee under the Trust Agreement.
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as Trustee
Dated:____________________ By
Authorized Officer
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
This Certificate is one of the Certificates described in the
within-mentioned Trust Agreement.
Date of registration and authentication:
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION, as Trustee
By:
Authorized Officer
<PAGE>
The Certificates are limited obligations of the Authority
and, as and to the extent set forth in the Trust Agreement, are payable
solely from and secured by a pledge of and lien on the revenues to be
received in connection with the sale of the Project pursuant to the
Amended and Restated First and Second Installment Sale Agreements and
any other moneys made available to the Authority or the Trustee,
including amounts drawn under an irrevocable direct-pay letter of credit
issued by the Bank, for the account of the Company in favor of the
Trustee, concurrently with the execution and delivery of the
Certificates, or any qualified letter of credit issued in substitution
therefor (such letter of credit or substitute letter of credit being
referred to herein as the "Bank Letter of Credit"). The Certificates
are executed and delivered for the purpose of refinancing of the
acquisition and construction of the Project. The Amended and Restated
First Installment Sale Agreement, the Amended and Restated Second
Installment Sale Agreement, the Deed of Trust, the Assignment of Leases,
the Security Agreement, the Bank Letter of Credit and the other related
documents are hereinafter collectively referred to as the "Company
Documents".
Reference is hereby made to the Trust Agreement and the
Company Documents, copies of which are on file with the Trustee at its
Principal Office, for the provisions, among others, with respect to the
nature and extent of the rights, duties and obligations of the
Authority, the Trustee, the Company, the Bank and the owners of the
Certificates, the terms upon which the Certificates are executed and
delivered and secured, the collection and disposition of revenues, a
description of the Project and interests pledged, the modification or
amendment of the Trust Agreement and the Company Documents, and other
matters, to all of which the owner of this Certificate assents by the
acceptance of this Certificate.
For the period commencing on the date of first delivery of
fully executed and authenticated Certificates to and including the
Initial Rate Calculation Date (as defined in the Trust Agreement) the
interest rate on the Certificates shall be the rate specified by the
Remarketing Agent (as defined in the Trust Agreement) on said date of
first delivery. On said Tuesday and on Tuesday of each week thereafter
prior to the Conversion Date, or if any such Tuesday is not a Business
Day on the next succeeding day (each such date being referred to herein
as an "Interest Rate Calculation Date"), the interest rate on the
Certificates for the period commencing the Wednesday next following such
Interest Rate Calculation Date to and including Tuesday of the following
week (the "Interest Period") shall be set by the Remarketing Agent. The
interest rate on the Certificates for each such Interest Period shall be
the rate determined by the Remarketing Agent, having due regard for
prevailing financial market conditions, to be the rate (but not higher
than the rate) which it would be necessary for the Certificates to bear
in order to enable the Remarketing Agent to remarket Certificates at
100% of the principal amount thereof if any Certificates were tendered
to the Remarketing Agent for remarketing (the "Weekly Rate").
If the Remarketing Agent shall fail to determine the Weekly
Rate on an Interest Rate Calculation Date as provided above, then the
Weekly Rate shall be the Alternate Rate.
Notwithstanding the foregoing, the Weekly Rate in effect as
of the Record Date next preceding any Interest Payment Date shall be the
rate deemed to be in effect from such Record Date through such Interest
Payment Date, and the Weekly Rate shall not exceed 12% per annum (the
"Maximum Interest Rate").
The determination of the Weekly Rate by the Remarketing
Agent in accordance with the provisions of the Trust Agreement shall be
conclusive and binding on the registered owners of the Certificates, the
Authority, the Company, the Trustee, the Tender Agent, the Bank and the
Remarketing Agent.
If the Company, with the consent of the Authority and the
Bank, so elects, the interest rate on the Certificates shall be
converted to the Fixed Rate (as defined in, and determined pursuant to
the provisions of the Trust Agreement) at any time that Certificates are
outstanding on any Interest Payment Date selected by the Company
following compliance with certain provisions of the Trust Agreement (the
"Conversion Date") and following the mailing of notice to the registered
owners of the Certificates by the Trustee, which mailing shall occur not
less than 20 days prior to the Conversion Date. Upon receipt of a
notice from the Trustee that the Company has elected to convert the
interest rate on the Certificates to the Fixed Rate, each
Certificateholder is required, and the owner hereof specifically agrees,
to tender his Certificates for purchase at a price of 100% of the
principal amount thereof in accordance with the Trust Agreement. Any
Certificate which is not so tendered prior to the Conversion Date shall
nonetheless be deemed to have been tendered and shall be purchased from
the owner thereof on the Conversion Date at said price plus accrued
interest thereon to the Conversion Date. Interest with respect to such
Certificate shall thereafter cease to accrue and may be cancelled by the
Trustee, and the Trustee may execute and deliver a revised form of
Certificate in substitution therefor; provided, however, payment of the
principal and interest due with respect to any such Certificate will be
made only upon surrender thereof at the Principal Office of the Trustee
or the Tender Agent.
The transfer of this Certificate by the registered owner
hereof in person or by its attorney duly authorized in writing is
registrable at the aforesaid principal corporate trust office of the
Trustee but only in the manner, subject to the limitations and upon
payment of the charges provided in the Trust Agreement, and upon
surrender and cancellation of this Certificate at such Principal Office.
The Trustee shall not be required to register the transfer of or
exchange any Certificate after the mailing of notice calling such
Certificate for redemption has been given as provided in the Trust
Agreement, nor during the period of fifteen days next preceding the
giving of such notice of redemption, nor between the Conversion Date and
the date on which notice thereof has been given, nor between the Record
Date and the related Interest Payment Date. Upon registration of such
transfer, a new registered Certificate or Certificates of authorized
denomination or denominations, for the same aggregate principal amount,
will be executed and delivered to the transferee in exchange herefor.
The Certificates are deliverable as registered Certificates
without coupons in the denomination of $100,000 and any integral
multiple thereof, provided that, with respect to and after certain
redemptions of Certificates one Certificate may be in the amount of
$100,000 less any amount of $5,000 or any integral multiple thereof, and
provided that after the Conversion Date the Certificates shall be
delivered in denominations of $5,000 and any integral multiple thereof
(the "Authorized Denominations"). Subject to the limitations and upon
payment of the charges provided in the Trust Agreement, Certificates may
be exchanged for a like aggregate principal amount of Certificates of
Authorized Denominations.
<PAGE>
Subject to certain exceptions set forth in the Trust
Agreement, at the option of the registered owner hereof, this
Certificate shall be purchased on or before the Conversion Date, as
provided in the Trust Agreement, on any Business Day, at a purchase
price equal to 100% of the principal amount hereof plus accrued interest
to the date of purchase, with such payment to be made in immediately
available funds, upon: (a) delivery of an irrevocable written notice of
tender or an irrevocable telephonic notice of tender to the Remarketing
Agent promptly confirmed in writing to the Tender Agent, not less than
seven days prior to the date on which the Certificates are to be
purchased, of a notice of exercise of option to sell Certificates
substantially in the form provided in the Trust Agreement, a copy of
which may be obtained from the Trustee upon request (said notice
effective upon receipt); and (b) delivery to the Principal Office of the
Tender Agent, not later than 12:00 noon New York time on the purchase
date specified in said notice, of the Certificates to be purchased, such
Certificates to be in negotiable form.
The Certificates are subject to mandatory tender in
accordance with the Trust Agreement in the event of (i) conversion to
the Fixed Rate, (ii) reduction or withdrawal of the rating on the
Certificates as a result of the delivery of a Substitute Letter of
Credit, or (iii) an Event of Default under the Reimbursement Agreement,
and otherwise at the time and in the manner more fully described in the
Trust Agreement.
The Certificates are subject to mandatory redemption prior
to their maturity as follows, at a redemption price equal to the
principal amount thereof without premium, plus accrued interest to the
date of redemption, as follows:
(1) in whole, on the first day for which notice of
redemption can be timely given, after the Trustee has accelerated the
Purchase Payments or Installment Payments, as the case may be, as a
result of an Event of Default under the Amended and Restated First
Installment Sale Agreement or the Amended and Restated Second
Installment Sale Agreement;
(2) in whole, on the first day for which notice of
redemption can be timely given (and not less than five days prior to the
expiration of the Letter of Credit in the case of a redemption pursuant
to clause (B)(iii) below), if the Letter of Credit or any Substitute
Letter of Credit is then in effect, if (A) the Bank fails or refuses to
honor any draw on the Letter of Credit; or (B) (i) within 60 days after
an Act of Bankruptcy of the Bank, or (ii) within 30 days after a
determination by the Trustee, based on an opinion of counsel, that the
Letter of Credit is unenforceable, or (iii) prior to the Conversion
Date, at least 30 days prior to any expiration date of the Letter of
Credit, the Company does not cause a Substitute Letter of Credit to be
delivered to the Trustee;
(3) in whole, on the first day for which notice of
redemption can be timely given and in any event not later than five days
before the expiration date of the Letter of Credit, after the Trustee
has received written notice from the Bank that an event of default has
occurred under the Reimbursement Agreement and the Bank requests that
the Trustee redeem the Certificates;
(4) in whole, on the first day for which notice of
redemption can be timely given, after written notice to a Responsible
Officer of the Trustee of a Determination of Taxability; or
(5) on the first Interest Payment Date for which notice of
redemption can be timely given, in the event of an involuntary loss or
the substantial destruction of the Project as a result of unforeseen
events (e.g., fire, seizure, requisition or condemnation) (A) in whole
or in part, if and to the extent that draws on the Letter of Credit are
deposited into the Redemption Account in an amount equal to any amount
remaining in the Insurance Proceeds Account on the dates specified in
the Trust Agreement; (B) in whole or in part if there were no payments
of insurance or other compensation deposited in the Insurance Proceeds
Account after the event giving rise to the involuntary loss or
substantial destruction of the Project, if and to the extent that draws
on the Letter of Credit are deposited into the Redemption Account; or
(C) in whole, from a draw on the Letter of Credit, if there were no such
payments of insurance or other compensation deposited in the Insurance
Proceeds Account after the event giving rise to the total involuntary
loss or total destruction of the Project and (i) within 60 days after
the event giving rise to the event of loss, the Company (or following a
total event of loss, the Bank or the Company) has not notified the
Trustee and the Authority, in writing, that the Project can be restored
within 12 months to a condition permitting the conduct of normal
business operations; (ii) within 60 days after receiving any amounts as
a consequence of the event of loss, the Company has not commenced to use
such amounts to reconstruct the Project pursuant to the terms of the
First and Second Installment Sale Agreements and the Trust Agreement;
and (iii) such amounts are not disbursed for the restoration of the
Project within 12 months after the date of the notice from the Company
referred to in clause (i) above.
The Certificates shall also be subject to optional
redemption, with the prior consent of the Bank, in whole or in part in
Authorized Denominations, at a redemption price equal to the principal
amount of the Certificates called for redemption plus accrued interest
to the date fixed for redemption, on any Interest Payment Date prior to
the Conversion Date, in the event and to the extent that the Purchase
Payments are caused to be prepaid by the Company prior to the Conversion
Date plus accrued interest to the date fixed for redemption.
The Certificate shall also be subject to redemption on or
after the Conversion Date, at the times and in the amounts specified in
the Trust Agreement.
If less than all of the Certificates are to be redeemed, the
principal amount of Certificates redeemed shall be an integral multiple
of $100,000 prior to the Conversion Date (with the exception of a
partial redemption pursuant to the Trust Agreement, in which case one
Certificate, selected by lot may be redeemed in integral multiples of
$5,000) or of $5,000 on or after the Conversion Date, and the particular
Certificates to be redeemed shall be selected as provided in the Trust
Agreement.
Except in the case of a redemption prior to the Conversion
Date as a result of a voluntary prepayment of Purchase Payments, in
which instance notice shall be mailed to the registered owner of each
Certificate to be redeemed at least 30 days prior to the date fixed for
redemption, notice of each such redemption shall be given by sending
such notice, by first class mail, postage prepaid, not less than 20 nor
more than 40 days prior to the date fixed for redemption. All notices
of redemption shall be mailed to the registered owner of each
Certificate to be redeemed in whole or in part at the address shown on
the registration books maintained by the Trustee. Failure by the
Trustee to so mail notice of redemption to any one or more of the
respective owners of any Certificates designated for redemption shall
not affect the sufficiency of the proceedings for redemption. All
Certificates or portions thereof so called for redemption will cease to
bear interest on the specified redemption date provided funds for their
redemption are on deposit at the principal place of payment at that time
whether or not such Certificates are presented and surrendered for
payment on such date.
The owner of this Certificate shall have no right to enforce
the provisions of the Trust Agreement or to institute action to enforce
the covenants therein, or to take any action with respect to any event
of default under the Trust Agreement, or to institute, appear in or
defend any suit or other proceedings with respect thereto, except as
provided in the Trust Agreement. If an Event of Default as defined in
the Trust Agreement occurs, the principal of all Certificates then
outstanding executed and delivered under the Trust Agreement may be
declared due and payable upon the conditions and in the manner and with
the effect provided in the Trust Agreement.
The Authority, the Trustee, the Tender Agent, the Paying
Agent and any agent of the Authority, the Trustee, the Tender Agent or
the Paying Agent may treat the person in whose name this Certificate is
registered as the owner hereof for the purpose of receiving payment as
herein provided and for all other purposes, whether or not this
Certificate be overdue, and neither the Authority, the Trustee, the
Tender Agent, the Paying Agent nor any other such agent shall be
affected by notice to the contrary.
Modifications or alterations of the Trust Agreement, or of
any supplements thereto, may be made only to the extent and in the
circumstances permitted by the Trust Agreement.
<PAGE>
[FORM OF ASSIGNMENT]
For Value Received, the undersigned hereby sells, assigns
and transfers unto
(Please insert Social Security or
taxpayer identification number
of assignee)
(Please print or typewrite name and address of assignee)
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint ___________________________ agent to
transfer the within Certificate on the books kept for the registration
thereof, with full power of substitution in the premises.
Dated:
(Signature guaranty) NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Certificate in every
particular, without alteration or
enlargement or any change whatever.
Signature guaranteed by eligible guarantor
institution (being banks, stock brokers, savings
and loan institutions and credit unions with
membership in an approved signature guarantee
medallion program) pursuant to Securities and
Exchange Commission Rule 17A(d)15.
<PAGE>
EXHIBIT B
FORM OF FIXED INTEREST RATE CERTIFICATE
No. ________ $_________
PARKING AUTHORITY OF THE CITY OF HERMOSA BEACH
FLOATING RATE WEEKLY DEMAND
REFUNDING CERTIFICATE OF PARTICIPATION
(HERMOSA BEACH PARKING FACILITIES PROJECT-1994 SERIES)
THIS CERTIFICATE IS SUBJECT TO MANDATORY TENDER UNDER THE CIRCUMSTANCES
HEREINAFTER DESCRIBED, AND IT MUST BE SO TENDERED OR IT WILL BE DEEMED TO
HAVE BEEN SO TENDERED AND INTEREST WITH RESPECT THERETO WILL CEASE TO
ACCRUE AND THIS CERTIFICATE WILL NO LONGER BE ENTITLED TO THE BENEFITS OF
THE TRUST AGREEMENT (AS HEREINAFTER DEFINED).
Interest Rate<PAGE>
Maturity Date Original Date CUSIP Number December 1, 2023 <PAGE>
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The Registered Owner named above, or registered assigns, is
entitled to receive, subject to the terms of the Amended and Restated First
Installment Sale Agreement (as hereinafter defined), the principal amount set
forth above on the Maturity Date specified above (subject to any right of
prior redemption hereinafter mentioned), and interest on the balance of said
principal amount from time to time remaining unpaid (but only out of the
sources hereinafter mentioned) at the Interest Rate specified above, on
December 1 and June 1 of each year (any such date being referred to herein as
an "Interest Payment Date"). The principal or redemption price hereof is
payable by check only upon presentation and surrender hereof at the Principal
Office (as defined in the Trust Agreement) of First Trust of California,
National Association (the "Trustee"), and interest shall be paid by check
mailed, first class mail, postage prepaid, on each Interest Payment Date (as
hereinafter defined), to the person in whose name this Certificate is
registered on the applicable Record Date (as hereinafter defined), at the
address of such registered owner shown on the books of the Trustee, except
that such interest payments may be made by wire transfer to any registered
owner of $1,000,000 or more in aggregate principal amount of the Certificates
who shall have designated to the Trustee an account within the United States
for such payments at least fifteen days before the applicable Interest Payment
Date.
The Registered Owner is the owner of an undivided proportionate
interest in the right to receive certain purchase payments (the "Purchase
Payments") to be made under that certain Amended and Restated First
Installment Sale Agreement dated as of November 15, 1994 (the "Amended and
Restated First Installment Sale Agreement"), by and between JMB Income
Properties, Ltd. - XII, an Illinois limited partnership organized and existing
under the laws of the State of Illinois (the "Company"), and the Parking
Authority of the City of Hermosa Beach, a parking authority and public body,
corporate and politic, organized and existing under the laws of the State of
California (the "Authority"), for title to certain public parking facilities
and related facilities described therein (the "Project"), such Amended and
Restated First Installment Sale Agreement, including the right to receive
Purchase Payments, having been assigned to the Trustee. The Authority has
agreed to convey title to the Project to the Company pursuant to an Amended
and Restated Second Installment Sale Agreement, dated as of November 15, 1994
(the "Amended and Restated Second Installment Sale Agreement"), under which
the Company is obligated to make installment payments (the "Installment
Payments") sufficient to permit the Authority to make Purchase Payments under
the Amended and Restated First Installment Sale Agreement. The Trustee has
received an assignment of the Authority's rights to the Installment Payments
under the Amended and Restated Second Installment Sale Agreement. The
obligations of the Company to make payments under the Amended and Restated
Second Installment Sale Agreement are secured by, among other things, a Deed
of Trust, Fixture Filing and Assignment of Rents (Completed Building) (the
"Deed of Trust"), constituting a first lien on the Project, an Assignment of
Rents, Leases, Income and Profits dated as of November 15, 1994 (the
"Assignment of Leases") executed by the Company in favor of the Bank and the
Authority and a Security Agreement dated as of November 15, 1994 (the
"Security Agreement") among the Company, the Bank and the Authority, which
have been assigned to the Trustee. Payment of the Certificates is
additionally secured by a letter of credit, hereinafter described, issued
initially by Dresdner Bank AG, Los Angeles Agency (the "Bank"). The lien of
the Deed of Trust is shared by the Trustee co-equally with the Bank in order
to secure the Company's obligations to reimburse the Bank for drawings made
under such Letter of Credit, pursuant to a Letter of Credit and Reimbursement
Agreement dated as of November 15, 1994 between the Company and the Bank.
This Certificate is one of an authorized issue of certificates of
the Authority designated as the "Parking Authority of the City of Hermosa
Beach Floating Rate Weekly Demand Refunding Certificates of Participation
(Hermosa Beach Parking Facilities Project - 1994 Series)", limited in
aggregate principal amount to $6,400,000 (the "Certificates") executed and
delivered pursuant to the terms of the Trust Agreement, dated November 15,
1994, by and among the Authority, the Trustee and the Company (the "Trust
Agreement").
Interest with respect to this Certificate and not yet paid is
payable from the date to which interest has been paid next preceding the date
of registration of this Certificate (unless this Certificate is registered as
of an Interest Payment Date for which interest has been paid, or after the
Record Date in respect thereof, in which event it shall bear interest from
such Interest Payment Date, or unless it is registered on or before the Record
Date for the first Interest Payment Date, in which event it shall bear
interest from the date of the first authentication and delivery of the
Certificates). The term "Record Date" means the fifteenth day of the month
before an Interest Payment Date (whether or not such date is a Business Day).
NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF
CALIFORNIA, ANY POLITICAL SUBDIVISION THEREOF OR THE CITY OF HERMOSA BEACH IS
PLEDGED TO THE PAYMENT OF THE PRINCIPAL, PREMIUM, IF ANY, OR INTEREST
REPRESENTED BY ANY CERTIFICATE, NOR IS THE STATE, ANY POLITICAL SUBDIVISION
THEREOF, THE AUTHORITY OR THE CITY OF HERMOSA BEACH IN ANY MANNER OBLIGATED TO
MAKE ANY APPROPRIATION THEREFOR. THE AUTHORITY HAS NO TAXING POWER.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all conditions
and acts required to exist, to have happened and to have been performed
precedent to and in the execution and delivery of the Trust Agreement and the
execution and delivery of this Certificate do exist, have happened and have
been performed in due time, form and manner as required by law; and that the
execution and delivery of this Certificate does not exceed or violate any
constitutional or statutory limitation.
THE TERMS AND PROVISIONS OF THIS CERTIFICATE ARE CONTINUED AFTER
THIS PAGE AND SUCH CONTINUED TERMS AND PROVISIONS SHALL FOR ALL PURPOSES HAVE
THE SAME EFFECT AS THOUGH FULLY SET FORTH AT THIS PLACE.
This Certificate shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the Trust Agreement
unless and until the certificate of authentication hereon shall have been duly
executed by the Trustee.
IN WITNESS WHEREOF, this Certificate has been executed by the
manual signature of an authorized officer of the Trustee solely in its
capacity as trustee under the Trust Agreement.
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as Trustee
Dated:____________________ By
Authorized Officer
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
This Certificate is one of the Certificates described in the
within-mentioned Trust Agreement.
Date of registration and authentication: _______________
FIRST TRUST OF CALIFORNIA,
NATIONAL ASSOCIATION, as Trustee
By:
Authorized Officer
<PAGE>
[FORM OF REVERSE OF CERTIFICATE]
The Certificates are limited obligations of the Authority and, as
and to the extent set forth in the Trust Agreement, are payable solely from
and secured by a pledge of and lien on the revenues to be received in
connection with the sale of the Project pursuant to the Amended and Restated
First and Second Installment Sale Agreements and any other moneys made
available to the Authority or the Trustee, including amounts drawn under an
irrevocable direct-pay letter of credit issued by the Bank, for the account of
the Company in favor of the Trustee, concurrently with the execution and
delivery of the Certificates, or any qualified letter of credit issued in
substitution therefor (such letter of credit or substitute letter of credit
being referred to herein as the "Bank Letter of Credit"). The Certificates
are executed and delivered for the purpose of refinancing of the acquisition
and construction of the Project. The Amended and Restated First Installment
Sale Agreement, the Amended and Restated Second Installment Sale Agreement,
the Deed of Trust, the Assignment of Leases, the Security Agreement, the Bank
Letter of Credit and the other related documents are hereinafter collectively
referred to as the "Company Documents".
Reference is hereby made to the Trust Agreement and the Company
Documents, copies of which are on file with the Trustee at its Principal
Office, for the provisions, among others, with respect to the nature and
extent of the rights, duties and obligations of the Authority, the Trustee,
the Company, the Bank and the owners of the Certificates, the terms upon which
the Certificates are executed and delivered and secured, the collection and
disposition of revenues, a description of the Project and interests pledged,
the modification or amendment of the Trust Agreement and the Company
Documents, and other matters, to all of which the owner of this Certificate
assents by the acceptance of this Certificate.
The transfer of this Certificate by the registered owner hereof in
person or by its attorney duly authorized in writing is registrable at the
aforesaid principal corporate trust office of the Trustee but only in the
manner, subject to the limitations and upon payment of the charges provided in
the Trust Agreement, and upon surrender and cancellation of this Certificate
at such Principal Office. The Trustee shall not be required to register the
transfer of or exchange any Certificate after the mailing of notice calling
such Certificate for redemption has been given as provided in the Trust
Agreement, nor during the period of fifteen days next preceding the giving of
such notice of redemption, nor between the Conversion Date and the date on
which notice thereof has been given, nor between the Record Date and the
related Interest Payment Date. Upon registration of such transfer, a new
registered Certificate or Certificates of authorized denomination or
denominations, for the same aggregate principal amount, will be executed and
delivered to the transferee in exchange herefor.
The Certificates are deliverable as registered Certificates
without coupons in the denomination of $5,000 and any integral multiple
thereof (the "Authorized Denominations"). Subject to the limitations and upon
payment of the charges provided in the Trust Agreement, Certificates may be
exchanged for a like aggregate principal amount of Certificates of Authorized
Denominations.
The Certificates are subject to mandatory tender in accordance
with the Trust Agreement in the event of (i) reduction or withdrawal of the
rating on the Certificates as a result of the delivery of a Substitute Letter
of Credit, or (ii) an Event of Default under the Reimbursement Agreement, and
otherwise at the time and in the manner more fully described in the Trust
Agreement.
The Certificates are subject to mandatory redemption prior to
their maturity as follows, at a redemption price equal to the principal amount
thereof without premium, plus accrued interest to the date of redemption, as
follows:
(1) in whole, on the first day for which notice of redemption
can be timely given, after the Trustee has accelerated the Purchase Payments
or Installment Payments, as the case may be, as a result of an Event of
Default under the Amended and Restated First Installment Sale Agreement or the
Amended and Restated Second Installment Sale Agreement;
(2) in whole, on the first day for which notice of redemption
can be timely given (and not less than five days prior to the expiration of
the Letter of Credit in the case of a redemption pursuant to clause (B)(iii)
below), if the Letter of Credit or any Substitute Letter of Credit is then in
effect, if (A) the Bank fails or refuses to honor any draw on the Letter of
Credit; or (B) (i) within 60 days after an Act of Bankruptcy of the Bank, or
(ii) within 30 days after a determination by the Trustee, based on an opinion
of counsel, that the Letter of Credit is unenforceable;
(3) in whole, on the first day for which notice of redemption
can be timely given and in any event not later than five days before the
expiration date of the Letter of Credit, after the Trustee has received
written notice from the Bank that an event of default has occurred under the
Reimbursement Agreement and the Bank requests that the Trustee redeem the
Certificates;
(4) in whole, on the first day for which notice of redemption
can be timely given, after written notice to a Responsible Officer of the
Trustee of a Determination of Taxability; or
(5) on the first Interest Payment Date for which notice of
redemption can be timely given, in the event of an involuntary loss or the
substantial destruction of the Project as a result of unforeseen events (e.g.,
fire, seizure, requisition or condemnation) (A) in whole or in part, if and to
the extent that draws on the Letter of Credit are deposited into the
Redemption Account in an amount equal to any amount remaining in the Insurance
Proceeds Account on the dates specified in the Trust Agreement; (B) in whole
or in part if there were no payments of insurance or other compensation
deposited in the Insurance Proceeds Account after the event giving rise to the
involuntary loss or substantial destruction of the Project, if and to the
extent that draws on the Letter of Credit are deposited into the Redemption
Account; or (C) in whole, from a draw on the Letter of Credit, if there were
no such payments of insurance or other compensation deposited in the Insurance
Proceeds Account after the event giving rise to the total involuntary loss or
total destruction of the Project and (i) within 60 days after the event giving
rise to the event of loss, the Company (or following a total event of loss,
the Bank or the Company) has not notified the Trustee and the Authority, in
writing, that the Project can be restored within 12 months to a condition
permitting the conduct of normal business operations; (ii) within 60 days
after receiving any amounts as a consequence of the event of loss, the Company
has not commenced to use such amounts to reconstruct the Project pursuant to
the terms of the First and Second Installment Sale Agreements and the Trust
Agreement; and (iii) such amounts are not disbursed for the restoration of the
Project within 12 months after the date of the notice from the Company
referred to in clause (i) above.
The Certificates shall also be subject to redemption in whole on
any date or in part on any Interest Payment Date, in the event and to the
extent the Purchase Payments are caused to be prepaid by the Company's act of
voluntarily prepaying the Installment Payments in amounts sufficient to cause
the prepayment of the Purchase Payments, at a redemption price equal to the
sum of the principal amount of Certificates to bed redeemed plus a redemption
premium as follows:
Redemption Date Redemption
(dated inclusive) Premiums
If less than all of the Certificates are to be redeemed, the
principal amount of Certificates redeemed shall be an integral multiple of
$5,000, and the particular Certificates to be redeemed shall be selected as
provided in the Trust Agreement.
Notice of each such redemption shall be given by sending such
notice, by first class mail, postage prepaid, not less than 20 nor more than
40 days prior to the date fixed for redemption. All notices of redemption
shall be mailed to the registered owner of each Certificate to be redeemed in
whole or in part at the address shown on the registration books maintained by
the Trustee. Failure by the Trustee to so mail notice of redemption to any
one or more of the respective owners of any Certificates designated for
redemption shall not affect the sufficiency of the proceedings for redemption.
All Certificates or portions thereof so called for redemption will cease to
bear interest on the specified redemption date provided funds for their
redemption are on deposit at the principal place of payment at that time.
The owner of this Certificate shall have no right to enforce the
provisions of the Trust Agreement or to institute action to enforce the
covenants therein, or to take any action with respect to any event of default
under the Trust Agreement, or to institute, appear in or defend any suit or
other proceedings with respect thereto, except as provided in the Trust
Agreement. If an Event of Default as defined in the Trust Agreement occurs,
the principal of all Certificates then outstanding executed and delivered
under the Trust Agreement may be declared due and payable upon the conditions
and in the manner and with the effect provided in the Trust Agreement.
The Authority, the Trustee, the Tender Agent, the Paying Agent and
any agent of the Authority, the Trustee, the Tender Agent or the Paying Agent
may treat the person in whose name this Certificate is registered as the owner
hereof for the purpose of receiving payment as herein provided and for all
other purposes, whether or not this Certificate be overdue, and neither the
Authority, the Trustee, the Tender Agent, the Paying Agent nor any other such
agent shall be affected by notice to the contrary.
Modifications or alterations of the Trust Agreement, or of any
supplements thereto, may be made only to the extent and in the circumstances
permitted by the Trust Agreement.
<PAGE>
[FORM OF ASSIGNMENT]
For Value Received, the undersigned hereby sells, assigns and
transfers unto
(Please insert Social Security or
taxpayer identification number
of assignee)
(Please print or typewrite name and address of assignee)
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint ___________________________ agent to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty) NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Certificate in every particular, without
alteration or enlargement or any change
whatever.
Signature guaranteed by eligible guarantor
institution (being banks, stock brokers, savings
and loan institutions and credit unions with
membership in an approved signature guarantee
medallion program) pursuant to Securities and
Exchange Commission Rule 17A(d)15.
<PAGE>
EXHIBIT C
FORM OF NOTICE OF EXERCISE OF OPTION TO SELL CERTIFICATES
Merrill Lynch & Co., Remarketing Agent
Two California Plaza
350 S. Grand Avenue, Suite 2630
Los Angeles, California 90071
The undersigned is the registered owner of the Parking Authority
of the City of Hermosa Beach, Floating Rate Weekly Demand Refunding
Certificates of Participation (Hermosa Beach Parking Facilities Project - 1994
Series) (the "Certificates"). The undersigned hereby irrevocably demands
payment of $_______ aggregate principal amount of the Certificates (which
amount is an integral multiple of an Authorized Denomination) and accrued
interest thereon to the date of payment (the "Purchase Price").
Payment of the Purchase Price shall be made in the following
manner:
[check and complete (a) or (b)]
(a) By check mailed to the undersigned at the following address:
____________________________________________________________; or
(b) By wire transfer of immediately available funds to Account
No. ______ at the following bank:
___________________________________________.
Payment shall occur on ___________, _____ (the "Purchase Date"), which shall
be not prior to the seventh (7th) calendar day after (but not including) the
date of receipt of this notice by the addressee hereof, or if such seventh
calendar day is not a Business Day (as defined in the Trust Agreement pursuant
to which the Certificates were delivered), the Business Day next succeeding
such day. Delivery hereof shall be made in person or by registered mail,
return receipt requested, to the address set forth above and shall occur upon
receipt hereof by the Remarketing Agent on a Business Day. The Certificates
shall be tendered to the Principal Office of the Tender Agent, at the address
set forth below, with a duly executed instrument of transfer in the form set
forth on the Certificates, with signature guaranteed in a manner satisfactory
to the Tender Agent, at or prior to 12:00 noon New York time, on the Purchase
Date, and if the Certificates are not delivered by such time, the undersigned
shall not be entitled to payment of the Purchase Price therefor. The
Certificates shall conform in all respects to the description thereof in this
Notice.
The undersigned hereby authorizes and directs Merrill Lynch,
Pierce, Fenner & Smith, as Remarketing Agent, to arrange for the sale of all
or any part of the Certificates at not less than par plus accrued interest to
the Purchase Date. In the event of such a sale, payment of the Purchase Price
of the Certificates shall be made on the Purchase Date as hereinabove
provided.
This notice shall not be effective unless, simultaneously with the
delivery hereof to the Remarketing Agent, a copy hereof is sent by the
Remarketing Agent to the Tender Agent at the address set forth below.
(Name of Beneficial Owner)
Date: _________________
Authorized Signature
Signature guaranteed by: _________________
Note:The signature to the assignment and the notice of exercise of option
must correspond with the name of the registered owner as it appears on
the face of the within certificate in every particular, without
alteration, enlargement or any change whatsoever; and such signature
must be guaranteed by a member of the New York Stock Exchange or a
commercial bank or trust company.
cc: First Trust of California, N.A., Tender Agent
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department
<PAGE>
EXHIBIT D
AGREEMENT REGARDING REFUNDING OF PRIOR CERTIFICATES
THIS AGREEMENT REGARDING REFUNDING OF PRIOR CERTIFICATES, dated
as of December 1, 1994 (the "Agreement"), by and among BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, successor to Security Pacific National
Bank, as trustee (the "Prior Trustee") under that certain Trust Agreement,
dated as of December 1, 1983, among the Parking Authority of the City of
Hermosa Beach (the "Authority") PCH-Pier Hermosa Partnership (the "Prior
Owner") and the Prior Trustee (the "Prior Trust Agreement"), the AUTHORITY,
FIRST TRUST OF CALIFORNIA, NATIONAL ASSOCIATION, as trustee (the "Trustee")
under the Trust Agreement hereinafter defined, and JMB INCOME PROPERTIES, LTD.
- XII, an Illinois limited partnership (the "Company") as successor in
interest and assignee of the Prior Owner.
W I T N E S S E T H:
WHEREAS, simultaneously with the execution of this Agreement, the
Authority is issuing its Floating Rate Weekly Demand Refunding Certificates of
Participation (Hermosa Beach Parking Facilities Project-1994 Series) (the
"Certificates"), in the aggregate principal amount of $6,400,000 pursuant to a
Trust Agreement dated as of November 15, 1994, by and among the Authority, the
Company and the Trustee (the "Trust Agreement"); and
WHEREAS, the Authority has applied the proceeds of the
Certificates for the benefit of the Company for the purpose of effecting the
payment of amounts denominated as principal and interest due and payable under
that certain Second Installment Sale Agreement, dated as of December 1, 1983,
by and among the Authority, the Prior Trustee and the Prior Owner (the "1983
Installment Payment Obligation") in order to refund and defease the
outstanding Floating Rate Monthly Demand Certificates of Participation
(Hermosa Beach Parking Facilities Project - 1983 Series) (the "1983
Certificates") in accordance with Article VIII of the Prior Trust Agreement;
and
WHEREAS, Wells Fargo Bank (the "Bank") delivered a letter of
credit securing the 1983 Certificates (the "1983 Letter of Credit") which
remains outstanding; and
WHEREAS, the Prior Trustee has determined that a drawing under
the 1983 Letter of Credit in the amount of $6,400,000.00 together with
available moneys in the Certificate Fund is sufficient in the aggregate to
effect the payment of the principal of and interest on the 1983 Certificates
upon mandatory repurchase in whole on December 1, 1994 (the "Repurchase
Date"), pursuant to Section 2.01(e)(ii) of the Prior Trust Agreement, as
amended herein; and
WHEREAS, upon the execution and delivery of the Certificates on
December 5, 1994 (the "Redemption Date"), and the transfer of the proceeds of
the Certificates to the Bank. together with a transfer of other monies held by
the Prior Trustee to the Bank in an amount sufficient to pay all sums owing to
the Bank pursuant to the Reimbursement Agreement (as defined in the Prior
Trust Agreement), the Certificates shall be deemed paid and redeemed in full
pursuant to Section 2.01(e)(ii) of the Prior Trust Agreement, as amended in
Section 2 hereof; and
WHEREAS, the Authority and the Company are desirous of
undertaking the actions required by the Prior Trust Agreement as amended
herein in order to refund and defease the 1983 Certificates, discharge the
lien of the Prior Trust Agreement and release all of the Prior Trustee's
right, title and interest in and to the rights and property assigned and
pledged to the Prior Trustee under the terms of the Prior Trust Agreement,
except for the right of the Prior Trustee and its counsel to receive all
necessary and proper fees, expenses and indemnities pertaining to the 1983
Certificates; and
WHEREAS, the Authority and the Company wish to amend the Trust
Agreement to provide that the payment to the Bank of all amounts owing
pursuant to the Reimbursement Agreement (as defined in the Prior Trust
Agreement) following the mandatory repurchase of Certificates on December 1,
1994 pursuant to Section 2.01(e)(ii) of the Prior Trust Agreement shall be
treated for all purposes as a mandatory redemption of certificates on the
Redemption Date without regard to the notice or other requirements for such
redemption, upon the execution and delivery of the Certificates;
NOW THEREFORE, in consideration of the premises and in order to
provide for the coordination of the aforesaid arrangements, the parties hereby
agree as follows:
Section 1. In order to apply the proceeds of the Certificates to
the payment at early call for redemption of the 1983 Certificates, the
following actions are being taken simultaneously with or prior to the
execution and delivery of the Certificates:
(a) The Prior Trustee has drawn upon the 1983 Letter of
Credit pursuant to the provisions thereof, such that amounts were
received by the Prior Trustee on December 1, 1994, in an amount equal to
the principal ($6,400,000) of the Prior Certificates to be repurchased
on such date, and deposited such amount in the certificate fund
established by the Prior Trustee under the Prior Trust Agreement (the
"Certificate Fund") for the purpose of causing the purchase on the
Repurchase Date of the 1983 Certificates; such amount being at least
equal to the payment of principal upon mandatory repurchase of the 1983
Certificates, being 100% of the $6,400,000 principal amount of 1983
Certificates outstanding to be repurchased. Such amount, plus interest
accrued thereon to the Repurchase Date which was funded from amounts in
the Certificate Fund which were available therefor, paid the entire
purchase price of the Prior Certificates on such date, and the Prior
Certificates have been and remain registered in the name of the Company
and pledged to the Bank in accordance with the Prior Trust Agreement.
(b) The Prior Trustee acknowledges it established
December 1, 1994 as the date on which the above amounts deposited and
held in the Certificate Fund were applied to effect the mandatory
repurchase of $6,400,000 in aggregate principal amount of the 1983
Certificates and interest accrued thereon in accordance with
Section 2.01(e)(ii) of the Prior Trust Agreement.
(c) Upon written confirmation by the Bank of the receipt
of a federal fund wire in the amount of $6,400,000 (the "Wire") and the
transfer described in (d) below, the Trustee shall be deemed to have
received $6,400,000, as the purchase price of the Certificates from
Merrill Lynch, Pierce, Fenner & Smith, Incorporated, the Trustee shall
be deemed to have transferred to the Prior Trustee the entire proceeds
of the Wire which shall be further deemed to have been applied to the
reimbursement of the Bank for a drawing made under the 1983 Letter of
Credit, the proceeds of which drawing were applied to the payment of the
1983 Certificates on the Repurchase Date.
(d) The Company acknowledges it has transferred to the
Bank $11,646.17 to be applied to the payment to amounts owing pursuant
to the Reimbursement Agreement (as defined in the Prior Trust
Agreement).
(e) The Prior Trustee holds in the Certificate Fund
$291,156.32 received from the Company representing advance payment of
Installment Payments with respect to the 1983 Certificates. The
Authority and the Company hereby irrevocably instructs the Prior Trustee
to transfer on December 5, 1994, any amounts remaining on deposit in the
Reserve Account established under the Prior Trust Agreement to the
Trustee for deposit in the Reserve Fund created under the Trust
Agreement, and to transfer all other amounts remaining in the funds and
accounts established under the Prior Trust Agreement to or at the
written direction of the Company, except for an amount equal to
$10,750.00 to be retained by the Prior Trustee for application to its
fees and expenses payable under the Prior Trust Agreement.
With respect to the transfers set forth in paragraphs (c) and (d) above:
(1) The Trustee acknowledges that the Bank's written
receipt of the Wire constitutes the receipt of the Certificate proceeds,
and the Authority hereby acknowledges that the transfer of the proceeds
of the Wire to the Bank pursuant to Section 1(c) above, together with
the application of the amounts in the Certificate Fund as set forth in
Section 1(b) above, constitutes payment of the 1983 Installment Sale
Obligation and the parties acknowledge such payment constitutes payment
of the Authority's Purchase Payment obligation under the First
Installment Sale Agreement (as defined in the Prior Trust Agreement).
(2) The Company acknowledges that the Prior Trustee's
deemed deposit of the amounts in the Certificate Fund as set forth in
Section 1(c) and (d) above, constitutes (a) payment of the 1983
Installment Sale Obligation and a discharge of all obligations of the
Prior Trustee and the Authority under the Prior Trust Agreement, except
as otherwise set forth in the Prior Trust Agreement, and (b)
satisfaction of an obligation of the Authority to make a deposit under
the Trust Agreement and the Amended and Restated Second Installment Sale
Agreement described herein with respect to the proceeds of the
Certificates.
Section 2. The Authority, the Prior Trustee and the Company
hereby amend Section 2.01(e)(ii) of the Prior Trust Agreement by adding at the
end thereof, a new sentence to read, as follows:
Notwithstanding any other provision of this Trust Agreement to
the contrary, upon (i) the mandatory repurchase of Certificates on December 1,
1994 pursuant to Section 2.01(e)(ii) hereof, (ii) the execution and delivery
on December 5, 1994 (the "Redemption Date") of refunding Certificates of
Participation described as the Certificates in that certain Agreement
Regarding Refunding of Prior Certificates dated as of December 1, 1994, (the
"Refunding Agreement") and (iii) the application of moneys in accordance with
Section 1(c) and (d) of the Refunding Agreement, such events shall be treated
for all purposes of this Trust Agreement as a mandatory redemption of
Certificates on the Redemption Date and such Certificates shall be cancelled
by the Trustee and deemed fully paid, discharged and defeased without regard
to any notice or other provisions of this Trust Agreement;
Section 3. The Prior Trustee acknowledges that, upon completion
of the transfers described in paragraph (a)-(e) of Section 1 above, pursuant
to Section 2 hereof, it will be deemed to have paid the 1983 Certificates in
full and to satisfy all other amounts to be paid pursuant to the Prior Trust
Agreement in accordance with the requirements of the Prior Trust Agreement.
Accordingly, the Prior Trustee agrees, at the request of the Authority and at
the expense of the Company (such reimbursement to be for actual out-of-pocket
expenses only), to execute all required reconveyances or releases of any Deeds
of Trust, mortgage or other security interests in order to relinquish and
release the Prior Trustee's rights in the real and personal property
constituting a part of the property pledged under the Prior Trust Agreement
and to evidence the payment of the 1983 Certificates and the discharge of the
lien of the Prior Trust Agreement. The Prior Trustee shall execute and
deliver such other documents, and take such further actions, reasonably
required by the Authority in order to carry out the purposes of this
paragraph; provided, however, that the Prior Trustee shall not be obligated to
expend any of its own funds in connection with the execution of such documents
or the undertaking of such actions.
Section 4. The Prior Trustee shall not be liable or responsible
because of the failure of any of the other parties to this Agreement to
perform any act required of each of them hereunder or because of the loss of
any moneys arising through the insolvency or the act or default or omission of
any depository, other than itself, in which such moneys shall have been
deposited. The liability of the Prior Trustee hereunder to make payments due
and payable with respect to the 1983 Certificates as provided herein is
limited to the availability of amounts on deposit in the Certificate Fund.
Section 5. The Prior Trustee shall be entitled to all rights,
privileges, indemnities and immunities under the Prior Trust Agreement, as
amended by Section 2 herein, in executing and performing its duties under this
Agreement. In the event there is any conflict between the terms of this
Agreement and the Prior Trust Agreement, the Prior Trust Agreement, as amended
herein shall control.
Section 6. The Company represents that the Prior Owner has
assigned its interest in and the Company has assumed all rights, duties and
obligations of the Prior Owner under the Prior Trust Agreement and all related
documents, including the Second Installment Sale Agreement.
Section 7. This Agreement may be executed in any number of
counterparts, each of which shall constitute but one and the same instrument.
Section 8. This Agreement shall be governed by the applicable
laws of the State of California.
Section 9. Upon redemption of the 1983 Certificates pursuant to
Section 2 above and payment of all of the fees and expenses of the Prior
Trustee and transfer on December 5, 1994 of amounts held in the funds and
accounts established under the 1983 Trust Agreement as described above, all
obligations of the Prior Trustee under this Agreement and the Prior Trust
Agreement shall cease and terminate.
Section 10. The Trustee is entering into this Agreement
solely in its capacity as Trustee under the Trust Agreement and shall be
entitled to the protections, immunities, indemnities and limitations from
liability afforded it thereunder which are incorporated herein by reference.
The Trustee is not responsible for the accuracy of the recitals hereto.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
Regarding Refunding of 1983 Certificates to be duly executed and delivered by
their respective officers thereunto duly authorized as of the date hereof.
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Prior Trustee
By:
Authorized Officer
THE PARKING AUTHORITY OF THE CITY OF
HERMOSA BEACH
By:
General Manager
JMB INCOME PROPERTIES, LTD. - XII,
an Illinois Limited Partnership
By: JMB Realty Corporation, a Delaware
corporation, Its Managing General
Partner
By:
Vice President
FIRST TRUST OF CALIFORNIA, NATIONAL
ASSOCIATION, as Trustee
By:
Authorized Officer
The undersigned hereby consents to the amendment to the Prior Trust
Agreement described in Section 2 hereof and to the application of funds
described in Section 1 hereof.
WELLS FARGO BANK, N.A.
By:
Authorized Officer
EXHIBIT 21
LIST OF SUBSIDIARIES
The Partnership is a general partner in JMB/San Jose Associates, an
Illinois general partnership which holds title to Park Center Financial
Plaza. The Partnership is a general partner in Topanga Plaza Partnership,
a California general partnership which holds title to Topanga Plaza. The
Partnership is a general partner in JMB-40 Broad Street Associates, an
Illinois general partnership which holds title to the 40 Broad Street
Building. The Partnership is a general partner in JMB First Financial
Associates, an Illinois general partnership. JMB First Financial
Associates is a general partner in JMB Encino Partnership, a California
general partnership, which holds title to the First Financial Plaza.
Reference is made to Note 3 for a summary description of the terms of such
partnership agreements. The Partnership's interest in the foregoing joint
venture partnerships, and the results of their operations are included in
the consolidated financial statements of the Partnership filed with this
annual report.
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of JMB
INCOME PROPERTIES, LTD. - XII, do hereby nominate, constitute and appoint
GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officer or directors a Report on Form 10-K
of said partnership for the fiscal year ended December 31, 1994, and any
and all amendments thereto, hereby ratifying and confirming all that said
attorneys and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
JUDD D. MALKIN
-----------------------
Judd D. Malkin Chairman and Director
NEIL G. BLUHM
-----------------------
Neil G. Bluhm President and Director
H. RIGEL BARBER
-----------------------
H. Rigel Barber Chief Executive Officer
JEFFREY R. ROSENTHAL
-----------------------
Jeffrey R. Rosenthal Chief Financial Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officers and
directors of JMB Realty Corporation, the corporate general partner of JMB
INCOME PROPERTIES, LTD. - XII, do hereby nominate, constitute and appoint
GARY NICKELE, GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and
agents of the undersigned with full power of authority to sign in the name
and on behalf of the undersigned officer or directors a Report on Form 10-K
of said partnership for the fiscal year ended December 31, 1994, and any
and all amendments thereto, hereby ratifying and confirming all that said
attorneys and agents and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 31st day of January, 1995.
STUART C. NATHAN
-----------------------
Stuart C. Nathan Executive Vice President,
Director of General Partner
A. LEE SACKS
-----------------------
A. Lee Sacks Director of General Partner
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer and
directors, a Report on Form 10-K of said partnership for the fiscal year
ended December 31, 1994, and any and all amendments thereto, the 31st day
of January, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of JMB
Realty Corporation, the corporate general partner of JMB INCOME PROPERTIES,
LTD. - XII, does hereby nominate, constitute and appoint GARY NICKELE,
GAILEN J. HULL, DENNIS M. QUINN or any of them, attorneys and agents of the
undersigned with full power of authority to sign in the name and on behalf
of the undersigned officer, a Report on Form 10-K of said partnership for
the fiscal year ended December 31, 1994, and any and all amendments
thereto, hereby ratifying and confirming all that said attorneys and agents
and any of them may do by virtue hereof.
IN WITNESS WHEREOF, the undersigned have executed this Power of
Attorney the 20th day of February, 1995.
GLENN E. EMIG
-----------------------
Glenn E. Emig Chief Operating Officer
The undersigned hereby acknowledge and accept such power of authority
to sign, in the name and on behalf of the above named officer, a Report on
Form 10-K of said partnership for the fiscal year ended December 31, 1994,
and any and all amendments thereto, the 20th day of February, 1995.
GARY NICKELE
-----------------------
Gary Nickele
GAILEN J. HULL
-----------------------
Gailen J. Hull
DENNIS M. QUINN
-----------------------
Dennis M. Quinn
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE REGISTRANT'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1994
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS INCLUDED IN SUCH REPORT.
</LEGEND>
<CIK> 0000765813
<NAME> JMB INCOME PROPERTIES, LTD. - XII
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 8,222,359
<SECURITIES> 14,176,812
<RECEIVABLES> 3,950,136
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,349,307
<PP&E> 193,298,414
<DEPRECIATION> 46,792,110
<TOTAL-ASSETS> 189,322,387
<CURRENT-LIABILITIES> 33,809,385
<BONDS> 64,470,886
<COMMON> 0
0
0
<OTHER-SE> 68,481,336
<TOTAL-LIABILITY-AND-EQUITY> 189,322,387
<SALES> 30,166,883
<TOTAL-REVENUES> 31,152,216
<CGS> 0
<TOTAL-COSTS> 20,453,237
<OTHER-EXPENSES> 7,000,105
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,075,692
<INCOME-PRETAX> (5,376,818)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,235,341)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,300,838)
<CHANGES> 0
<NET-INCOME> (4,536,179)
<EPS-PRIMARY> (24.06)
<EPS-DILUTED> 0
</TABLE>
