SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of The Securities Exchange Act of 1934
For the Quarter Ended: September 30, 1996
Commission file number: 0-19838
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
(Exact Name of Small Business Issuer as Specified in its Charter)
State of Minnesota 41-1677062
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1300 Minnesota World Trade Center, St. Paul, Minnesota 55101
(Address of Principal Executive Offices)
(612) 227-7333
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) 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
Transitional Small Business Disclosure Format:
Yes No [X]
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
INDEX
PART I. Financial Information
Item 1. Balance Sheet as of September 30, 1996 and December 31, 1995
Statements for the Periods ended September 30, 1996 and 1995:
Income
Cash Flows
Changes in Partners' Capital
Notes to Financial Statements
Item 2. Management's Discussion and Analysis
PART II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
BALANCE SHEET
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
ASSETS
1996 1995
CURRENT ASSETS:
Cash and Cash Equivalents $ 1,660,008 $ 4,702,376
Receivables 126,484 240,611
Current Portion of Long-Term Note Receivable 28,797 26,614
----------- -----------
Total Current Assets 1,815,289 4,969,601
----------- -----------
INVESTMENTS IN REAL ESTATE:
Land 6,184,989 5,025,530
Buildings and Equipment 12,628,526 10,210,833
Property Acquisition Costs 25,546 56,182
Accumulated Depreciation (1,024,890) (736,227)
----------- -----------
Net Investments in Real Estate 17,814,171 14,556,318
----------- -----------
OTHER ASSETS:
Long-Term Note Receivable - Net of Current Portion 1,500,524 1,522,211
----------- -----------
Total Assets $21,129,984 $21,048,130
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Payable to AEI Fund Management, Inc. $ 23,898 $ 102,248
Distributions Payable 420,940 499,106
Unearned Rent 41,299 0
----------- -----------
Total Current Liabilities 486,137 601,354
----------- -----------
MINORITY INTEREST 3,724,715 3,357,202
PARTNERS' CAPITAL (DEFICIT):
General Partners (11,231) (9,526)
Limited Partners, $1,000 Unit value;
30,000 Units authorized; 21,152
Units issued, 21,121 Units outstanding 16,930,363 17,099,100
----------- -----------
Total Partners' Capital 16,919,132 17,089,574
----------- -----------
Total Liabilities and Partners' Capital $21,129,984 $21,048,130
=========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
STATEMENT OF INCOME
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Three Months Ended Nine Months Ended
9/30/96 9/30/95 9/30/96 9/30/95
INCOME:
Rent $ 571,430 $ 373,143 $ 1,611,338 $ 1,505,355
Investment Income 58,943 107,801 213,950 196,533
---------- ---------- ----------- -----------
Total Income 630,373 480,944 1,825,288 1,701,888
---------- ---------- ----------- -----------
EXPENSES:
Partnership Administration -
Affiliates 60,617 63,185 175,301 194,174
Partnership Administration
and Property Management -
Unrelated Parties 19,823 10,377 52,879 35,045
Depreciation 111,502 77,900 314,345 277,208
---------- ---------- ----------- -----------
Total Expenses 191,942 151,462 542,525 506,427
---------- ---------- ----------- -----------
OPERATING INCOME 438,431 329,482 1,282,763 1,195,461
GAIN ON SALE OF REAL ESTATE 0 112,050 171,013 825,510
MINORITY INTEREST IN
NET INCOME (107,472) (77,028) (304,199) (234,479)
---------- ---------- ----------- -----------
NET INCOME $ 330,959 $ 364,504 $ 1,149,577 $ 1,786,492
========== ========== =========== ===========
NET INCOME ALLOCATED:
General Partners $ 3,309 $ 3,645 $ 11,495 $ 17,865
Limited Partners 327,650 360,859 1,138,082 1,768,627
---------- ---------- ----------- -----------
$ 330,959 $ 364,504 $ 1,149,577 $ 1,786,492
========== ========== =========== ===========
NET INCOME PER
LIMITED PARTNERSHIP UNIT
(21,121 and 21,152 weighted average
Units outstanding in 1996 and 1995,
respectively) $ 15.51 $ 17.07 $ 53.88 $ 83.62
========== ========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,149,577 $ 1,786,492
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation 314,345 277,208
Gain on Sale of Real Estate (171,013) (825,510)
(Increase) Decrease in Receivables 114,127 (250,151)
Decrease in Payable to
AEI Fund Management, Inc. (78,350) (8,405)
Increase in Unearned Rent 41,299 11,860
Minority Interest (78,908) 10,465
----------- -----------
Total Adjustments 141,500 (784,533)
----------- -----------
Net Cash Provided By
Operating Activities 1,291,077 1,001,959
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in Real Estate (3,546,516) (68,071)
Proceeds from Sale of Real Estate
Net of Minority Interest 591,752 4,850,088
Payments Received on Long-Term Note Receivable 19,504 1,801
----------- -----------
Net Cash Provided By (Used For)
Investing Activities (2,935,260) 4,783,818
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Distributions Payable (78,166) 0
Distributions to Partners (1,320,019) (1,562,374)
----------- -----------
Net Cash Used For
Financing Activities (1,398,185) (1,562,374)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (3,042,368) 4,223,403
CASH AND CASH EQUIVALENTS, beginning of period 4,702,376 1,399,581
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,660,008 $ 5,622,984
=========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING ACTVITIES:
Note Receivable Acquired in Sale
of Property (Note 3) $ 1,556,982
===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
<PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
FOR THE PERIODS ENDED SEPTEMBER 30
(Unaudited)
Limited
Partnership
General Limited Units
Partners Partners Total Outstanding
BALANCE, December 31, 1994 $ (11,223) $16,931,123 $16,919,900 21,151.93
Distributions (15,624) (1,546,750) (1,562,374)
Net Income 17,865 1,768,627 1,786,492
--------- ----------- ----------- -----------
BALANCE, September 30, 1995 $ (8,982) $17,153,000 $17,144,018 21,151.93
========= =========== =========== ===========
BALANCE, December 31, 1995 $ (9,526) $17,099,100 $17,089,574 21,121.43
Distributions (13,200) (1,306,819) (1,320,019)
Net Income 11,495 1,138,082 1,149,577
--------- ----------- ----------- -----------
BALANCE, September 30, 1996 $ (11,231) $16,930,363 $16,919,132 21,121.43
========= =========== =========== ===========
The accompanying Notes to Financial Statements are an integral
part of this statement.
</PAGE>
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
(1) The condensed statements included herein have been prepared
by the Partnership, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission,
pursuant to the rules and regulations of the Securities and
Exchange Commission, and reflect all adjustments which are,
in the opinion of management, necessary to a fair statement
of the results of operations for the interim period, on a
basis consistent with the annual audited statements. The
adjustments made to these condensed statements consist only
of normal recurring adjustments. Certain information,
accounting policies, and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although
the Partnership believes that the disclosures are adequate to
make the information presented not misleading. It is
suggested that these condensed financial statements be read
in conjunction with the financial statements and the summary
of significant accounting policies and notes thereto included
in the Partnership's latest annual report on Form 10-KSB.
(2) Organization -
AEI Net Lease Income & Growth Fund XIX Limited Partnership
(Partnership) was formed to acquire and lease commercial
properties to operating tenants. The Partnership's
operations are managed by AEI Fund Management XIX, Inc.
(AFM), the Managing General Partner of the Partnership.
Robert P. Johnson, the President and sole shareholder of
AFM, serves as the Individual General Partner of the
Partnership. An affiliate of AFM, AEI Fund Management, Inc.
(AEI) performs the administrative and operating functions
for the Partnership.
The terms of the Partnership offering call for a
subscription price of $1,000 per Limited Partnership Unit,
payable on acceptance of the offer. The Partnership
commenced operations on May 31, 1991 when minimum
subscriptions of 1,500 Limited Partnership Units
($1,500,000) were accepted. The Partnership's offering
terminated February 5, 1993 when the extended offering
period expired. The Partnership received subscriptions for
21,151.928 Limited Partnership Units ($21,151,928).
Under the terms of the Limited Partnership Agreement, the
Limited Partners and General Partners contributed funds of
$21,151,928, and $1,000, respectively. During the operation
of the Partnership, any Net Cash Flow, as defined, which the
General Partners determine to distribute will be distributed
90% to the Limited Partners and 10% to the General Partners;
provided, however, that such distributions to the General
Partners will be subordinated to the Limited Partners first
receiving an annual, noncumulative distribution of Net Cash
Flow equal to 10% of their Adjusted Capital Contribution, as
defined, and, provided further, that in no event will the
General Partners receive less than 1% of such Net Cash Flow
per annum. Distributions to Limited Partners will be made
pro rata by Units.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(2) Organization - (Continued)
Any Net Proceeds of Sale, as defined, from the sale or
financing of the Partnership's properties which the General
Partners determine to distribute will, after provisions for
debts and reserves, be paid in the following manner: (i)
first, 99% to the Limited Partners and 1% to the General
Partners until the Limited Partners receive an amount equal
to: (a) their Adjusted Capital Contribution plus (b) an
amount equal to 12% of their Adjusted Capital Contribution
per annum, cumulative but not compounded, to the extent not
previously distributed from Net Cash Flow; (ii) any
remaining balance will be distributed 90% to the Limited
Partners and 10% to the General Partners. Distributions to
the Limited Partners will be made pro rata by Units.
For tax purposes, profits from operations, other than
profits attributable to the sale, exchange, financing,
refinancing or other disposition of the Partnership's
property, will be allocated first in the same ratio in
which, and to the extent, Net Cash Flow is distributed to
the Partners for such year. Any additional profits will be
allocated in the same ratio as the last dollar of Net Cash
Flow is distributed. Net losses from operations will be
allocated 98% to the Limited Partners and 2% to the General
Partners.
For tax purposes, profits arising from the sale, financing,
or other disposition of the Partnership's property will be
allocated in accordance with the Partnership Agreement as
follows: (i) first, to those partners with deficit balances
in their capital accounts in an amount equal to the sum of
such deficit balances; (ii) second, 99% to the Limited
Partners and 1% to the General Partners until the aggregate
balance in the Limited Partners' capital accounts equals the
sum of the Limited Partners' Adjusted Capital Contributions
plus an amount equal to 12% of their Adjusted Capital
Contributions per annum, cumulative but not compounded, to
the extent not previously allocated; (iii) third, the
balance of any remaining gain will then be allocated 90% to
the Limited Partners and 10% to the General Partners.
Losses will be allocated 98% to the Limited Partners and 2%
to the General Partners.
The General Partners are not required to currently fund a
deficit capital balance. Upon liquidation of the
Partnership or withdrawal by a General Partner, the General
Partners will contribute to the Partnership an amount equal
to the lesser of the deficit balances in their capital
accounts or 1% of total Limited Partners' and General
Partners' capital contributions.
(3) Investments in Real Estate -
In 1995, the Partnership elected early adoption of the
Statement of Financial Accounting Standards No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of." This standard requires the
Partnership to compare the carrying amount of its properties
to the estimated future cash flows expected to result from
the property and its eventual disposition. If the sum of
the expected future cash flows is less than the carrying
amount of the property, the Statement requires the
Partnership to recognize an impairment loss by the amount by
which the carrying amount of the property exceeds the fair
value of the property. Adoption of this Statement is not
expected to have a material effect on the Partnership's
financial statements.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
The Partnership's properties are all commercial, single-
tenant buildings. For those properties in the table below
which do not have land costs, the lessee has entered into
long-term land leases with unrelated third parties. The
cost of the properties and related accumulated depreciation
at September 30, 1996 are as follows:
Buildings and Accumulated
Property Land Equipment Total Depreciation
Taco Cabana, Houston, TX $ 334,414 $ 212,908 $ 547,322 $ 36,668
Taco Cabana, San Antonio, TX 598,533 548,741 1,147,274 86,443
Taco Cabana, Waco, TX 323,707 496,012 819,719 43,495
Applebee's, Aurora, CO 425,212 767,193 1,192,405 62,858
Red Line Burger, Houston, TX 0 299,531 299,531 42,770
Red Line Burger, Houston, TX 0 303,629 303,629 43,304
Red Line Burger, Corpus Christi, TX 0 280,378 280,378 38,609
Applebee's, Crestwood, MO 0 803,418 803,418 97,854
Applebee's, Crestview Hills, KY 406,317 863,740 1,270,057 48,077
HomeTown Buffet, Tucson, AZ 417,651 357,356 775,007 32,057
Applebee's, Covington, LA 358,521 740,564 1,099,085 89,143
Rally's, Brownsville, TX 0 281,713 281,713 35,617
Rally's, Edinburg, TX 0 281,762 281,762 35,623
Applebee's, Temple Terrace, FL 489,971 568,281 1,058,252 45,296
Applebee's, Beaverton, OR 636,972 1,123,107 1,760,079 112,654
Denny's, Apple Valley, CA 461,013 716,642 1,177,655 60,792
Taco Cabana, Round Rock, TX 157,826 591,884 749,710 46,860
Media Play, Apple Valley, MN 415,393 973,974 1,389,367 26,475
Garden Ridge, Pineville, NC 1,159,459 2,417,693 3,577,152 40,295
---------- ---------- ---------- ----------
$ 6,184,989 $12,628,526 $18,813,515 $1,024,890
========== ========== ========== ==========
On March 28, 1996, the Partnership purchased a 40.75%
interest in a Garden Ridge store in Pineville, North
Carolina for $3,577,152. The property is leased to Garden
Ridge, Inc. under a Lease Agreement with a primary term of
20 years and annual rental payments of $383,973. The
remaining interest in the property was purchased by AEI Net
Lease Income & Growth Fund XX Limited Partnership and AEI
Income & Growth Fund XXI Limited Partnership, affiliates of
the Partnership.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
Through September 30, 1996, the Partnership sold 87.2636% of
its interest in the Applebee's restaurant in Aurora,
Colorado in seven separate transactions to unrelated third
parties. The Partnership received total net sale proceeds
of $1,414,458 which resulted in a total net gain of
$307,871. The total cost and related accumulated
depreciation of the interests sold was $1,147,622 and
$41,035, respectively. For the nine months ended September
30, 1995, the net gain was $166,392.
Through September 30, 1996, the Partnership sold 97.5942% of
the Taco Cabana restaurant in Waco, Texas, in five separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $1,105,332 which
resulted in a total net gain of $337,012. The total cost
and related accumulated depreciation of the interests sold
was $799,998 and $31,678, respectively. For the nine months
ended September 30, 1995, the net gain was $92,219.
Through September 30, 1996, the Partnership sold 64.9351% of
the Applebee's restaurant in Temple Terrace, Florida, in
five separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $904,489
which resulted in a total net gain of $235,298. The total
cost and related accumulated depreciation of the interests
sold was $687,179 and $17,988, respectively. For the nine
months ended September 30, 1996 and 1995, the net gain was
$29,884 and $58,183, respectively.
Through September 30, 1996, the Partnership sold 85.3437% of
the Applebee's restaurant in Crestview Hills, Kentucky, in
eight separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,403,503
which resulted in a total net gain of $370,946. The total
cost and related accumulated depreciation of the interests
sold was $1,083,913 and $51,356, respectively. For the nine
months ended September 30, 1996 and 1995, the net gain was
$96,870 and $62,441, respectively.
On April 5, 1996, the Partnership sold a 12.7585% interest
in the HomeTown Buffet restaurant in Tucson, Arizona to an
unrelated third party. The Partnership received net sale
proceeds of $201,357 which resulted in a net gain of
$44,259. The total cost and related accumulated
depreciation of the interest sold was $164,251 and $7,153,
respectively.
On October 17, 1996, the Partnership sold an additional
13.5509% interest in the Applebee's restaurant in Crestview
Hills, Kentucky to an unrelated third party. The
Partnership received net sale proceeds of approximately
$228,000 which resulted in a net gain of approximately
$70,000.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
The Partnership owns the above properties as tenants-in-
common with the unrelated third parties. The management of
the properties is governed by co-tenancy agreements between
the Partnership and the unrelated third parties, which grant
the Partnership the authority to control the management of
the properties. For properties owned as tenants-in-common
with third parties, other than affiliated partnerships, the
Partnership accounts for its interest under the full
consolidation method whereby the unrelated third parties'
interests in the properties are reflected in the
Partnership's financial statements as a minority interest.
For purposes of financial reporting, the Partnership
consolidates properties in which it is the controlling
tenant-in-common despite having only a minority equity
interest in the property.
On May 19, 1994, the Partnership acquired a 92.74194%
interest in a SportsTown retail sporting goods megastore in
Greensboro, North Carolina. The remaining interest in the
property was purchased by AEI Fund Management XIX, Inc., the
Partnership's Managing General Partner and an officer of the
Managing General Partner. The property was leased to
SportsTown, Inc. under a Lease Agreement with a primary term
of 20 years and annual rental payments of $377,890. The
parties owned the property as tenants-in-common under a co-
tenancy agreement. On November 30, 1994, the Partnership
entered into a written contract to sell this property. The
sale was completed in April, 1995. As a condition to the
sale, the Partnership, and its affiliates, guaranteed and
escrowed the next twelve months of rent ($377,890), in the
event that the lessee failed to make the monthly rental
payments. The lessee made the monthly rental payments, and
the escrowed rent was released to the Partnership and its
affiliates.
The parties received net sale proceeds of $3,541,409, which
resulted in a net gain of $454,849. At the time of sale,
the cost and related accumulated depreciation was $3,143,311
and $56,751, respectively. The Partnership's share of the
net sale proceeds and net gain was $3,284,233 and $419,619,
respectively.
On July 26, 1995, the Partnership sold the Black-Eyed Pea
restaurant in Davie, Florida to Jackson Shaw Partners No. 51
Ltd., an affiliate of the lessee. The Partnership
recognized net sale proceeds of $1,741,953 which resulted in
a net loss of $8,574. At the time of sale, the cost and
related accumulated depreciation was $1,781,075 and $30,548,
respectively. As part of the sale proceeds, the Partnership
received a Promissory Note from the buyer in the amount of
$1,556,982.
On November 6, 1996, the Partnership sold the Taco Cabana
restaurant in Round Rock, Texas to an unrelated third party.
The Partnership recognized net sale proceeds of
approximately $975,000, which resulted in a net gain of
approximately $275,000. As part of the net sale proceeds,
the Partnership received a Promissory Note for $660,000.
The purchaser will attempt to use their best efforts to
obtain third party financing to satisfy the Note by May 1,
1997. If not paid sooner, the entire unpaid principal and
interest is due October 1, 2005. The Note bears interest at
a 9% rate until May 1, 1997, then the rate increases to 12%.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(3) Investments in Real Estate - (Continued)
During the first nine months of 1996 and the year 1995, the
Partnership distributed net sale proceeds of $121,458 and
$419,246 to the Limited and General Partners as part of
their regular quarterly distributions which represented a
return of capital of $5.69 and $19.63 per Limited
Partnership Unit, respectively. The remaining net sale
proceeds will either be re-invested in additional properties
or distributed to the Partners in the future.
In August, 1995, the lessee of the three Red Line Burger and
two Rally's properties filed for reorganization. After
reviewing the operating results of the lessee, the
Partnership agreed to amend the Leases of the two Rally's
properties and one of the Red Line Burger properties.
Effective December 1, 1995, the Partnership amended the
Leases to reduce the base rent from the current annual rent
of $43,742 to $15,000 for each property. The Partnership
could receive additional rent in the future equal to 6.5% of
the amount by which gross receipts exceed $275,000. The
lessee has agreed to pay all post-petition rents due and the
Partnership's related administrative and legal expenses in
nine monthly installments. At September 30, 1996, the
balance due to the Partnership is $51,374. The Partnership
is owed $47,152 of pre-petition rent related to these three
properties, which was not accrued for financial reporting
purposes due to the uncertainty of collection.
The Partnership has tentatively agreed to amended Lease
terms for the two Red Line Burger properties in Houston,
Texas. The tentative agreement requires annual base rental
payments of $15,000 and $21,000, effective March 1, 1996,
and requires the lessee to pay 6.5% of the amount by which
gross receipts exceed $275,000. As of September 30, 1996,
the Partnership is owed $82,563 of pre-petition and post-
petition rent related to the two Houston properties, which
was not accrued for financial reporting purposes due to the
uncertainty of collection. The Partnership is continuing to
negotiate with the lessee regarding the collection of rents
and other matters related to the properties.
The Partnership has incurred net costs of $485,421 relating
to the review of potential property acquisitions. Of these
costs, $459,875 have been capitalized and allocated to land,
building and equipment. The remaining costs of $25,546 have
been capitalized and will be allocated to properties
acquired subsequent to September 30, 1996.
AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
(Continued)
(4) Long-Term Note Receivable -
The Partnership received a Promissory Note from Jackson Shaw
Partners No. 51 Ltd. from the sale of the Black-Eyed Pea
restaurant as discussed in Note 3. The Note requires forty-
eight monthly principal and interest payments of $15,025
with a balloon payment for the outstanding principal and
interest due September 1, 1999. Interest is being charged
on the Note at the rate of 10% on the outstanding principal
balance. The Note is secured by the land, building and
equipment. As of September 30, 1996, the outstanding
principal due on the note was $1,529,321.
Scheduled maturities of the long-term note receivable are as
follows:
1996 $ 7,110
1997 29,416
1998 32,497
1999 1,460,298
-----------
$ 1,529,321
===========
(5) Payable to AEI Fund Management, Inc. -
AEI Fund Management, Inc. performs the administrative and
operating functions for the Partnership. The payable to AEI
Fund Management represents the balance due for those
services. This balance is non-interest bearing and
unsecured and is to be paid in the normal course of
business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Results of Operations
For the nine months ended September 30, 1996 and 1995,
total rental income, which includes the minority interests' share
of rental income, was $1,611,338 and $1,505,355, respectively.
The Partnership's share of this rental income was $1,247,153 and
$1,265,293, respectively. During the same periods, the
Partnership earned investment income of $213,950 and $196,533,
respectively. In 1996, the Partnership's share of rental income
decreased mainly as a result of the property sales and the
Rally's situation discussed below. The decrease in rental income
was partially offset by rent received on two subsequent property
acquisitions, rent increases on fifteen properties and additional
investment income earned on the net proceeds from the property
sales.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
In August, 1995, the lessee of the three Red Line Burger
and two Rally's properties filed for reorganization. After
reviewing the operating results of the lessee, the Partnership
agreed to amend the Leases of the two Rally's properties and one
of the Red Line Burger properties. Effective December 1, 1995,
the Partnership amended the Leases to reduce the base rent from
the current annual rent of $43,742 to $15,000 for each property.
The Partnership could receive additional rent in the future equal
to 6.5% of the amount by which gross receipts exceed $275,000.
The lessee has agreed to pay all post-petition rents due and the
Partnership's related administrative and legal expenses. The
Partnership is owed $47,152 of pre-petition rent related to these
three properties, which was not accrued for financial reporting
purposes due to the uncertainty of collection.
The Partnership has tentatively agreed to amended Lease
terms for the two Red Line Burger properties in Houston, Texas.
The tentative agreement requires annual base rental payments of
$15,000 and $21,000, effective March 1, 1996, and requires the
lessee to pay 6.5% of the amount by which gross receipts exceed
$275,000. As of September 30, 1996, the Partnership is owed
$82,563 of pre-petition and post-petition rent related to the two
Houston properties, which was not accrued for financial reporting
purposes due to the uncertainty of collection. The Partnership
is continuing to negotiate with the lessee regarding the
collection of rents and other matters related to the properties.
During the nine months ended September 30, 1996 and 1995,
the Partnership paid Partnership administration expenses to
affiliated parties of $175,301 and $194,174, respectively. These
administration expenses include costs associated with the
management of the properties, processing distributions, reporting
requirements and correspondence to the Limited Partners. During
the same periods, the Partnership incurred Partnership
administration and property management expenses from unrelated
parties of $52,879 and $35,045, respectively. These expenses
represent direct payments to third parties for legal and filing
fees, direct administrative costs, outside audit and accounting
costs, taxes, insurance and other property costs.
As of September 30, 1996, the Partnership's annualized
cash distribution rate was 8.50%, based on the Adjusted Capital
Contribution. Distributions of Net Cash Flow to the General
Partners are subordinated to the Limited Partners as required in
the Partnership Agreement. As a result, 99% of distributions and
income were allocated to Limited Partners and 1% to the General
Partners.
Inflation has had a minimal effect on income from
operations. It is expected that increases in sales volumes of
the tenants due to inflation and real sales growth, will result
in an increase in rental income over the term of the leases.
Inflation also may cause the Partnership's real estate to
appreciate in value. However, inflation and changing prices may
also have an adverse impact on the operating margins of the
properties' tenants which could impair their ability to pay rent
and subsequently reduce the Partnership's Net Cash Flow available
for distributions.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Liquidity and Capital Resources
During the first nine months of 1996, the Partnership's cash
balances decreased $3,042,368 mainly as a result of reinvesting
net sale proceeds in an additional property as discussed below.
For the nine months ended September 30, net cash provided by
operating activities increased from $1,001,959 in 1995 to
$1,291,077 in 1996. During the same periods, net income before
depreciation and gain on sale of real estate increased from
$1,238,190 in 1995 to $1,292,909 mainly as the result of rent
received on two subsequent property acquisitions, rent increases
on fifteen properties and additional investment income earned on
the net proceeds from property sales. Timing differences in the
collection of payments from the lessees and the payment of
expenses resulted in an increase in net cash provided by
operating activities from 1995 to 1996.
The major components of the Partnership's cash flow from
investing activities are investments in real estate and proceeds
from the sale of real estate. In the nine months ended September
30, 1996 and 1995, the Partnership generated cash flow from the
sale of real estate, as discussed below, of $591,752 and
$4,850,088, respectively. During the same periods, the
Partnership expended $3,546,516 and $68,071, respectively, to
invest in real properties (inclusive of acquisition expenses), as
the Partnership continued to reinvest the cash generated from the
property sales.
On March 28, 1996, the Partnership purchased a 40.75%
interest in a Garden Ridge store in Pineville, North Carolina for
$3,577,152. The property is leased to Garden Ridge, Inc. under a
Lease Agreement with a primary term of 20 years and annual rental
payments of $383,973. The remaining interest in the property was
purchased by AEI Net Lease Income & Growth Fund XX Limited
Partnership and AEI Income & Growth Fund XXI Limited Partnership,
affiliates of the Partnership.
Through September 30, 1996, the Partnership sold 87.2636%
of its interest in the Applebee's restaurant in Aurora, Colorado
in seven separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,414,458 which
resulted in a total net gain of $307,871. The total cost and
related accumulated depreciation of the interests sold was
$1,147,622 and $41,035, respectively. For the nine months ended
September 30, 1995, the net gain was $166,392.
Through September 30, 1996, the Partnership sold 97.5942%
of the Taco Cabana restaurant in Waco, Texas, in five separate
transactions to unrelated third parties. The Partnership
received total net sale proceeds of $1,105,332 which resulted in
a total net gain of $337,012. The total cost and related
accumulated depreciation of the interests sold was $799,998 and
$31,678, respectively. For the nine months ended September 30,
1995, the net gain was $92,219.
Through September 30, 1996, the Partnership sold 64.9351%
of the Applebee's restaurant in Temple Terrace, Florida, in five
separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $904,489 which
resulted in a total net gain of $235,298. The total cost and
related accumulated depreciation of the interests sold was
$687,179 and $17,988, respectively. For the nine months ended
September 30, 1996 and 1995, the net gain was $29,884 and
$58,183, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
Through September 30, 1996, the Partnership sold 85.3437%
of the Applebee's restaurant in Crestview Hills, Kentucky, in
eight separate transactions to unrelated third parties. The
Partnership received total net sale proceeds of $1,403,503 which
resulted in a total net gain of $370,946. The total cost and
related accumulated depreciation of the interests sold was
$1,083,913 and $51,356, respectively. For the nine months ended
September 30, 1996 and 1995, the net gain was $96,870 and
$62,441, respectively.
On April 5, 1996, the Partnership sold a 12.7585% interest
in the HomeTown Buffet restaurant in Tucson, Arizona to an
unrelated third party. The Partnership received net sale
proceeds of $201,357 which resulted in a net gain of $44,259.
The total cost and related accumulated depreciation of the
interest sold was $164,251 and $7,153, respectively.
On October 17, 1996, the Partnership sold an additional
13.5509% interest in the Applebee's restaurant in Crestview
Hills, Kentucky to an unrelated third party. The Partnership
received net sale proceeds of approximately $228,000 which
resulted in a net gain of approximately $70,000.
The Partnership owns the above properties as tenants-in-
common with the unrelated third parties. The management of the
properties is governed by co-tenancy agreements between the
Partnership and the unrelated third parties, which grant the
Partnership the authority to control the management of the
properties. For all properties owned as tenants-in-common with
third parties, other than affiliated partnerships, the
Partnership accounts for its interest under the full
consolidation method whereby the unrelated third parties'
interests in the properties are reflected in the Partnership's
financial statements as a minority interest.
On May 19, 1994, the Partnership acquired a 92.74194%
interest in a SportsTown retail sporting goods megastore in
Greensboro, North Carolina. The remaining interest in the
property was purchased by AEI Fund Management XIX, Inc., the
Partnership's Managing General Partner and an officer of the
Managing General Partner. The property was leased to SportsTown,
Inc. under a Lease Agreement with a primary term of 20 years and
annual rental payments of $377,890. The parties owned the
property as tenants-in-common under a co-tenancy agreement. The
Partnership accounts for its interest using the full
consolidation method. On November 30, 1994, the Partnership
entered into a written contract to sell this property. The sale
was completed in April, 1995. As a condition to the sale, the
Partnership, and its affiliates, guaranteed and escrowed the next
twelve months of rent ($377,890), in the event that the lessee
failed to make the monthly rental payments. The lessee made the
monthly rental payments, and the escrowed rent was released to
the Partnership and its affiliates.
The parties received net sale proceeds of $3,541,409,
which resulted in a net gain of $454,849. At the time of sale,
the cost and related accumulated depreciation was $3,143,311 and
$56,751, respectively. The Partnership's share of the net sale
proceeds and net gain was $3,284,233 and $419,619, respectively.
On July 26, 1995, the Partnership sold the Black-Eyed Pea
restaurant in Davie, Florida to Jackson Shaw Partners No. 51
Ltd., an affiliate of the lessee. The Partnership recognized net
sale proceeds of $1,741,953 which resulted in a net loss of
$8,574. At the time of sale, the cost and related accumulated
depreciation was $1,781,075 and $30,548, respectively. As part
of the sale proceeds, the Partnership received a Promissory Note
from the buyer in the amount of $1,556,982.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS (Continued)
On November 6, 1996, the Partnership sold the Taco Cabana
restaurant in Round Rock, Texas to an unrelated third party. The
Partnership recognized net sale proceeds of approximately
$975,000, which resulted in a net gain of approximately $275,000.
As part of the net sale proceeds, the Partnership received a
Promissory Note for $660,000. The purchaser will attempt to use
their best efforts to obtain third party financing to satisfy the
Note by May 1, 1997. If not paid sooner, the entire unpaid
principal and interest is due October 1, 2005. The Note bears
interest at a 9% rate until May 1, 1997, then the rate increases
to 12%.
During the first nine months of 1996 and the year 1995,
the Partnership distributed net sale proceeds of $121,458 and
$419,246 to the Limited and General Partners as part of their
regular quarterly distributions which represented a return of
capital of $5.69 and $19.63 per Limited Partnership Unit,
respectively. The remaining net sale proceeds will either be re-
invested in additional properties or distributed to the Partners
in the future.
The Partnership's primary use of cash flow is distribution
and redemption payments to Partners. The Partnership declares
its regular quarterly distributions before the end of each
quarter and pays the distribution in the first week after the end
of each quarter. The Partnership attempts to maintain a stable
distribution rate from quarter to quarter. Redemption payments
are paid to redeeming Partners in the fourth quarter of each
year. In the first nine months of 1995, the Partnership made
distributions at an 9.75% rate which resulted in distributions to
the Partners of $1,562,374. Effective January 1, 1996, the
distribution rate was reduced to 8.50% which resulted in
distributions of $1,320,019 to the Partners for the first nine
months of 1996.
The Partnership may acquire Units from Limited Partners
who have tendered their Units to the Partnership. Such Units may
be acquired at a discount. The Partnership is not obligated to
purchase in any year more than 5% of the number of Units
outstanding at the beginning of the year. In no event shall the
Partnership be obligated to purchase Units if, in the sole
discretion of the Managing General Partner, such purchase would
impair the capital or operation of the Partnership.
On October 1, 1996, seven Limited Partners redeemed a
total of 106.2 Partnership Units for $83,145 in accordance with
the Partnership Agreement. The Partnership acquired these Units
using Net Cash Flow from operations. In prior years, three
Limited Partners redeemed a total of 30.5 Partnership Units for
$25,466. The redemptions increase the remaining Limited
Partners' ownership interest in the Partnership.
The continuing rent payments from the properties, together
with cash generated from the property sales, should be adequate
to fund continuing distributions and meet other Partnership
obligations on both a short-term and long-term basis.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which
the Partnership is a party or of which the Partnership's
property is subject.
ITEM 2. CHANGES IN SECURITIES
None.
PART II - OTHER INFORMATION
(Continued)
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits -
Description
10.1 Purchase Agreement dated
October 8, 1996 between the Partnership
and the Mark A. Benson Living Trust
relating to the property at 30 Crestview
Hills Mall Road, Crestview Hills,
Kentucky.
10.2 Property Co-Tenancy
Ownership Agreement dated October 17,
1996 between the Partnership and Mark A.
Benson Living Trust relating to the
property at 30 Crestview Hills Mall Road,
Crestview Hills, Kentucky.
10.3 Promissory Note dated
November 6, 1996 between the Partnership,
John Schulz and Tom Bibleheimer relating
to the property at 2101 S. IH-35, Round
Rock, Texas.
10.4 Assignment and Assumption
of Lease dated November 6, 1996 between
the Partnership, John Schulz and Tom
Bibleheimer relating to the property at
2101 S. IH-35, Round Rock, Texas.
10.5 Deed of Trust and Security
Agreement and Fixture Financing Statement
and Assignment of Rent and Leases dated
November 6, 1996 between the Partnership,
John Schulz and Tom Bibleheimer relating
to the property at 2101 S. IH-35, Round
Rock, Texas.
10.6 Subordination Non-
Disturbance and Attornment Agreement
dated November 6, 1996 between the
Partnership, John Schulz and Tom
Bibleheimer relating to the property at
2101 S. IH-35, Round Rock, Texas.
27 Financial Data Schedule for period
ended September 30, 1996.
b. Reports filed on Form 8-K - None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: November 14, 1996 AEI Net Lease Income & Growth Fund XIX
Limited Partnership
By: AEI Fund Management XIX, Inc.
Its: Managing General Partner
By: /s/ Robert P. Johnson
Robert P. Johnson
President
(Principal Executive Officer)
By: /s/ Mark E. Larson
Mark E. Larson
Chief Financial Officer
(Principal Accounting Officer)
PURCHASE AGREEMENT
Applebee's, Crestview Hills, KY
This AGREEMENT, entered into effective as of the 8th of October,
1996 .
l. Parties. Seller is AEI Net Lease Income & Growth Fund XIX
Limited Partnership ("Seller"), Seller presently holds an
undivided 14.6563% interest in the fee title to that certain real
property legally described in the attached Exhibit "A". (the
"Entire Property") Buyer is the Mark A. Benson Living Trust
("Buyer"). Seller wishes to sell and Buyer wishes to buy a
portion as Tenant in Common of Seller's interest in the Entire
Property.
2. Property. The Property to be sold to Buyer in this transaction
consists of an undivided 13.5509 percentage interest
(hereinafter, simply the "Property") as Tenant in Common and in
all improvements located on the Entire Property.
3. Purchase Price . The purchase price for this percentage
interest in the Property is $243,750, all cash.
4. Terms. The purchase price for the Property will be paid by
Buyer as follows:
(a) When this agreement is executed, Buyer will pay $5,000
to Seller (the "First Payment"). The First Payment will be
credited against the purchase price when and if escrow
closes and the sale is completed.
(b) Buyer will deposit the balance of the purchase price,
$238,750 (the "Second Payment") into escrow in sufficient
time to allow escrow to close on the closing date.
5 Closing Date. Escrow shall close on or before September 15,
1996.
6 . Due Diligence. Buyer will have until the expiration of the
fifth business day after delivery of each of following items, to
be supplied by Seller, to conduct all of its inspections and due
diligence and satisfy itself regarding each item, the Property,
and this transaction.
(a) The original and one copy of a title insurance
commitment for an Owner's Title insurance policy (see
paragraph 8 below).
(b) Copies of a Certificate of Occupancy or other such
document certifying completion and granting permission to
permanently occupy the improvements on the Entire Property
as are in Seller's possession.
(c) Copies of an "as built" survey of the Property done
concurrent with Seller's acquisition of the Property.
(d) Lease of the Entire Property showing occupancy date,
lease expiration date, rent, and Guarantys, if any,
accompanied by such tenant financial statements as may have
been provided most recently to Seller by the Tenant and/or
Guarantors.
It is a contingency upon Seller's obligations hereunder that
two (2) copies of Co-Tenancy Agreement in the form attached
hereto duly executed by Buyer and Seller and dated on escrow
closing date be delivered to the Seller on the Closing date.
Buyer Initial: M
Purchase Agreement for Applebee's, Crestview Hills, KY
Buyer may cancel this agreement for ANY REASON in its sole
discretion by delivering a cancellation notice, return receipt
requested, to Seller and escrow holder before the expiration of
any review period or inspection period. Such notice shall be
deemed effective only upon receipt by Seller.
If Buyer cancels this Agreement as permitted under this
Section, except for any escrow cancellation fees and any
liabilities under sections 15(a) of this agreement (which will
survive), Buyer (after execution of such documents reasonably
requested by Seller to evidence the termination hereof) shall be
returned its First Payment, and Buyer will have absolutely no
rights, claims or interest of any type in connection with the
Property or this transaction, regardless of any alleged conduct
by Seller or anyone else.
Buyer irrevocably will be deemed to have canceled this
Agreement and relinquish all rights in and to the Property unless
Buyer makes the Second Payment when required. If this Agreement
is not canceled and the Second Payment is made when required, all
of Buyer's conditions and contingencies will be deemed satisfied.
7. Escrow. Escrow shall be opened by Seller and funds deposited
in escrow upon acceptance of this agreement by both parties.. The
escrow holder will be a nationally-recognized escrow company
selected by Seller. A copy of this Agreement will be delivered to
the escrow holder and will serve as escrow instructions together
with the escrow holder's standard instructions and any additional
instructions required by the escrow holder to clarify its rights
and duties (and the parties agree to sign these additional
instructions). If there is any conflict between these other
instructions and this Agreement, this Agreement will control.
8. Title. Closing will be conditioned on the agreement of a
title company selected by Seller to issue an Owner's policy of
title insurance, dated as of the close of escrow, in an amount
equal to the purchase price, insuring that Buyer will own
insurable title to the Property subject only to: the title
company's standard exceptions; current real property taxes and
assessments; survey exceptions; and other items of record
disclosed to Buyer during the contingency period.
Buyer shall be allowed five (5) days after receipt of said
commitment for examination and the making of any objections to
marketability thereto, said objections to be made in writing or
deemed waived. If any objections are so made, the Seller shall
be allowed eighty (80) days to make such title marketable or in
the alternative to obtain a commitment for insurable title
insuring over Buyer's objections. If Seller shall decide to make
no efforts to make title marketable, or is unable to make title
marketable or obtain insurable title, (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof) Buyer's First Payment shall be returned and
this Agreement shall be null and void and of no further force and
effect.
Pending correction of title, the payments hereunder required
shall be postponed, but upon correction of title and within ten
(10) days after written notice of correction to the Buyer, the
parties shall perform this Agreement according to its terms.
9. Closing Costs. Seller will pay the deed stamp taxes and
one-half of escrow fees, and any brokerage commissions payable.
Seller shall pay for the cost of issuing the title commitment.
Buyer will pay all recording fees, one-half of the escrow fees,
the costs of an update to the Survey in Seller's possession (if
an update is required by Buyer) and the title insurance premium
for an Owner's policy if Buyer wishes to purchase one. Each party
will pay its own attorneys' fees and costs to document and close
this transaction.
Buyer Initial: M
Purchase Agreement for Applebee's, Crestview Hills, KY
10. Real Estate Taxes, Special Assessments and Prorations.
(a) Because the Entire Property (of which the Property is a
part) is subject to a triple net lease (as further set forth
in paragraph 11(a)(i), the parties acknowledge that there
shall be no need for a real estate tax proration. However,
Seller represents that to the best of its knowledge, all
real estate taxes and installments of special assessments
due and payable in all years prior to the year of Closing
have been paid in full. Unpaid levied and pending special
assessments existing on the date of Closing the
responsibility of Buyer and Seller in proportion to their
respective Tenant in Common interests. Seller and Buyer
shall likewise pay all taxes due and payable in the year
after Closing and any unpaid installments of special
assessments payable therewith and therafter, if such unpaid
levied and pending special assessments and real estate taxes
are not paid by any tenant of the Entire Property.
(b) All income and all operating expenses from the Entire
Property shall be prorated between the parties and adjusted
by them as of the date of Closing. Seller shall be entitled
to all income earned and shall be responsible for all
expenses incurred prior to the date of Closing, and Buyer
shall be entitled to its proportionate share of all income
earned and shall be responsible for its proportionate shall
of all operating expenses of the Property incurred on and
after the date of closing.
11. Seller's Representation and Agreements.
(a) Seller represents and warrants as of this date that:
(i) Except for the lease in existence between Seller and
Thomas & King, Inc. dated June 15, 1993, Seller is not aware
of any leases of the Property.
(ii) It is not aware of any pending litigation or
condemnation proceedings against the Property or Seller's
interest in the Property.
(iii) Except as previously disclosed to Buyer and as set
forth in paragraph (c) below, Seller is not aware of any
contracts Seller has executed that would be binding on Buyer
after the closing date.
(b) Provided that Buyer performs its obligations when
required, Seller agrees that it will not enter into any new
contracts that would materially affect the Property and be
binding on Buyer after the closing date without Buyer's
prior consent, which will not be unreasonably withheld.
However, Buyer acknowledges that Seller retains the right
both prior to and after the Closing Date to freely transfer
all or a portion of Seller's remaining undivided interest in
the Entire Property provided such sale shall not encumber
the Property being purchased by Buyer in violation of the
terms hereof or the contemplated Co-Tenancy Agreement.
12. Disclosures.
(a) To the best of Seller's knowledge: there are now, and
at the Closing there will be, no material, physical or
mechanical defects of the Property, including, without
limitation, the plumbing, heating, air conditioning,
ventilating, electrical systems, and all such items are in
good operating condition and repair and in compliance with
all applicable governmental , zoning and land use laws,
ordinances, regulations and requirements.
Buyer Initial: M
Purchase Agreement for Applebee's, Crestview Hills, KY
(b) To the best of Seller's knowledge: the use and
operation of the Property now is, and at the time of Closing
will be, in full compliance with applicable building codes,
safety, fire, zoning, and land use laws, and other
applicable local, state and federal laws, ordinances,
regulations and requirements.
(c) Seller knows of no facts nor has Seller failed to
disclose to Buyer any fact known to Seller which would
prevent Buyer from using and operating the Property after
the Closing in the manner in which the Property has been
used and operated prior to the date of this Agreement.
(d) To the best of Seller's knowledge: the Property is not,
and as of the Closing will not be, in violation of any
federal, state or local law, ordinance or regulations
relating to industrial hygiene or to the environmental
conditions on, under, or about the Property including, but
not limited to, soil and groundwater conditions. To the
best of Seller's knowledge: there is no proceeding or
inquiry by any governmental authority with respect to the
presence of Hazardous Materials on the Property or the
migration of Hazardous Materials from or to other property.
Buyer agrees that Seller will have no liability of any type
to Buyer or Buyer's successors, assigns, or affiliates in
connection with any Hazardous Materials on or in connection
with the Property either before or after the Closing Date.
(e) Buyer agrees that it shall be purchasing the Property
in its then present condition, as is, where is, and Seller
has no obligations to construct or repair any improvements
thereon or to perform any other act regarding the Property,
except as expressly provided herein.
(f) Buyer acknowledges that, having been given the
opportunity to inspect the Property and such financial
information on the Lessee and Guarantors of the Lease as
Buyer or its advisors shall request, Buyer is relying solely
on its own investigation of the Property and not on any
information provided by Seller or to be provided except as
set forth herein. Buyer further acknowledges that the
information provided and to be provided by Seller with
respect to the Property and to the Lessee and Guarantors of
Lease was obtained from a variety of sources and Seller
neither (a) has made independent investigation or
verification of such information, or (b) makes any
representations as to the accuracy or completeness of such
information. The sale of the Property as provided for
herein is made on an "AS IS" basis, and Buyer expressly
acknowledges that, in consideration of the agreements of
Seller herein, except as otherwise specified herein, Seller
makes no Warranty or representation, Express or Implied, or
arising by operation of law, including, but not limited to,
any warranty or condition, habitability, tenantability,
suitability for commercial purposes, merchantability, or
fitness for a particular purpose, in respect of the
Property.
13. Closing.
(a) Before the closing date, Seller will deposit into
escrow an executed warranty deed conveying insurable title
of the Property to Buyer.
(b) On or before the closing date, Buyer will deposit into
escrow: the balance of the purchase price when required
under Section 4; any additional funds required of Buyer,
(pursuant to this agreement or any other agreement executed
by Buyer) to close escrow. Both parties will sign and
deliver to the escrow holder any other documents reasonably
required by the escrow holder to close escrow.
Buyer Initial: M
Purchase Agreement for Applebee's, Crestview Hills, KY
(c) On the closing date, if escrow is in a position to
close, the escrow holder will: record the deed in the
official records of the county where the Property is
located; cause the title company to commit to issue the
title policy; immediately deliver to Seller the portion of
the purchase price deposited into escrow by cashier's check
or wire transfer (less debits and prorations, if any);
deliver to Seller and Buyer a signed counterpart of the
escrow holder's certified closing statement and take all
other actions necessary to close escrow.
14. Defaults. If Buyer defaults, Buyer will forfeit all rights
and claims and Seller will be relieved of all obligations and
will be entitled to retain all monies heretofore paid by the
Buyer. Seller shall retain all remedies available to Seller at
law or in equity.
If Seller shall default, Buyer irrevocably waives any rights
to file a lis pendens, a specific performance action or any other
claim, action or proceeding of any type in connection with the
Property or this or any other transaction involving the Property,
and will not do anything to affect title to the Property or
hinder, delay or prevent any other sale, lease or other
transaction involving the Property (any and all of which will be
null and void), unless: it has paid the First Payment, deposited
the balance of the second payment for the purchase price into
escrow, performed all of its other obligations and satisfied all
conditions under this Agreement, and unconditionally notified
Seller that it stands ready to tender full performance, purchase
the Property and close escrow as per this Agreement, regardless
of any alleged default or misconduct by Seller. Provided,
however, that in no event shall Seller be liable for any actual,
punitive, consequential or speculative damages arising out of any
default by Seller hereunder.
15. Buyer's Representations and Warranties.
a. Buyer represents and warrants to Seller as follows:
(i) In addition to the acts and deeds recited herein and
contemplated to be performed, executed, and delivered by
Buyer, Buyer shall perform, execute and deliver or cause to
be performed, executed, and delivered at the Closing or
after the Closing, any and all further acts, deeds and
assurances as Seller or the Title Company may require and be
reasonable in order to consummate the transactions
contemplated herein.
(ii) Buyer has all requisite power and authority to
consummate the transaction contemplated by this Agreement
and has by proper proceedings duly authorized the execution
and delivery of this Agreement and the consummation of the
transaction contemplated hereby.
(iii) To Buyer's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the
transaction contemplated hereby will violate or be in
conflict with (a) any applicable provisions of law, (b) any
order of any court or other agency of government having
jurisdiction hereof, or (c) any agreement or instrument to
which Buyer is a party or by which Buyer is bound.
16. Damages, Destruction and Eminent Domain.
(a) If, prior to closing, the Property or any part thereof
be destroyed or further damaged by fire, the elements, or
any cause, due to events occurring subsequent to the date of
this Agreement to the extent that the cost of repair exceeds
$10,000.00, this Agreement shall become null and void, at
Buyer's option exercised, if at all, by written notice to
Seller within ten (10) days after Buyer has received written
notice from Seller of said destruction or damage. Seller,
however, shall have the right to adjust or settle any
insured loss until (i) all contingencies set forth in
Paragraph 6 hereof have been satisfied, or waived; and (ii)
any five-day period provided for above in this
Buyer Initial: M
Purchase Agreement for Applebee's, Crestview Hills, KY
Subparagraph 16a for Buyer to elect to terminate this
Agreement has expired or Buyer has, by written notice to
Seller, waived Buyer's right to terminate this Agreement.
If Buyer elects to proceed and to consummate the purchase
despite said damage or destruction, there shall be no
reduction in or abatement of the purchase price, and Seller
shall assign to Buyer the Seller's right, title, and
interest in and to all insurance proceeds (pro-rata in
relation to the Entire Property) resulting from said damage
or destruction to the extent that the same are payable with
respect to damage to the Property, subject to rights of any
Tenant of the Entire Property.
If the cost of repair is less than $10,000.00, Buyer shall
be obligated to otherwise perform hereinunder with no
adjustment to the Purchase Price, reduction or abatement,
and Seller shall assign Seller's right, title and interest
in and to all insurance proceeds pro-rata in relation to the
Entire Property, subject to rights of any Tenant of the
Entire Property.
(b) If, prior to closing, the Property, or any part
thereof, is taken by eminent domain, this Agreement shall
become null and void, at Buyer's option. If Buyer elects to
proceed and to consummate the purchase despite said taking,
there shall be no reduction in, or abatement of, the
purchase price, and Seller shall assign to Buyer the
Seller's right, title, and interest in and to any award
made, or to be made, in the condemnation proceeding pro-rata
in relation to the Entire Property, subject to rights of any
Tenant of the Entire Property.
In the event that this Agreement is terminated by Buyer as
provided above in Subparagraph 16a or 16b, the First Payment
shall be immediately returned to Buyer (after execution by Buyer
of such documents reasonably requested by Seller to evidence the
termination hereof).
17. Buyer's 1031 Tax Free Exchange.
While Seller acknowledges that Buyer is purchasing the
Property as "replacement property" to accomplish a tax free
exchange, Buyer acknowledges that Seller has made no
representations, warranties, or agreements to Buyer or Buyer's
agents that the transaction contemplated by the Agreement will
qualify for such tax treatment, nor has there been any reliance
thereon by Buyer respecting the legal or tax implications of the
transactions contemplated hereby. Buyer further represents that
it has sought and obtained such third party advice and counsel as
it deems necessary in regards to the tax implications of this
transaction.
Buyer wishes to novate/assign the ownership rights and
interest of this Purchase Agreement to
who will act as Facilitator to
perfect the 1031 exchange by preparing an agreement of exchange
of Real Property whereby will be an
independent third party purchasing the ownership interest in
subject property from Seller and selling the ownership interest
in subject property to Buyer under the same terms and conditions
as documented in this Purchase Agreement. Buyer asks the Seller
to cooperate in the perfection of such an exchange at no
additional cost or expense or delay in time. Buyer hereby
indemnifies and holds Seller harmless from any claims and/or
actions resulting from said exchange. Pursuant to the direction
of , Seller will deed the property to
Buyer.
18. Miscellaneous.
(a) This Agreement may be amended only by written agreement
signed by both Seller and Buyer, and all waivers must be in
writing and signed by the waiving party. Time is of the
essence. This Agreement will not be construed for or
against a party whether or not that party has drafted this
Agreement. If there is any action or proceeding between the
parties relating to this Agreement the prevailing party will
be entitled to recover attorney's fees and costs. This is
an integrated agreement containing all agreements of the
parties about the Property and the
Buyer Initial: M
Purchase Agreement for Applebee's, Crestview Hills, KY
other matters described, and it supersedes any other
agreements or understandings. Exhibits attached to this
Agreement are incorporated into this Agreement.
(b) If this escrow has not closed by September 15, 1996
through no fault of Seller, Seller may either, at its
election, extend the closing date or exercise any remedy
available to it by law, including terminating this
Agreement.
(c) Funds to be deposited or paid by Buyer must be good and
clear funds in the form of cash, cashier's checks or wire
transfers.
(d) All notices from either of the parties hereto to the
other shall be in writing and shall be considered to have
been duly given or served if sent by first class certified
mail, return receipt requested, postage prepaid, or by a
nationally recognized courier service guaranteeing overnight
delivery to the party at his or its address set forth below,
or to such other address as such party may hereafter
designate by written notice to the other party.
If to Seller:
Attention: Robert P. Johnson
AEI Net Lease Income & Growth Fund XIX Limited Partnership
1300 Minnesota World Trade Center, 30 E. 7th St.
St. Paul, MN 55101
If to Buyer:
Mark A. Benson, Trustee
Mark A. Benson Living Trust
745 Bowhill Rd.
Hillsborough, CA 94010
When accepted, this offer will be a binding agreement for
valid and sufficient consideration which will bind and benefit
Buyer, Seller and their respective successors and assigns. Buyer
is submitting this offer by signing a copy of this offer and
delivering it to Seller along with the $5,000 First Payment,
which, if accepted, will be deposited in to escrow by Seller.
Seller has five (5) business days from receipt within which to
accept this offer.
IN WITNESS WHEREOF, the Seller and Buyer have executed this
Agreement effective as of the day and year above first written.
BUYER: Mark A. Benson Living Trust
By: /s/ Mark A. Benson, Trustee
Mark A. Benson, Trustee
SELLER: AEI NET LEASE INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP,
a Minnesota limited partnership.
By: AEI Fund Management XIX, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, President
Buyer Initial:
Purchase Agreement for Applebee's, Crestview Hills, KY
EXHIBIT A
A certain tract or parcel of land situated in the County of
Kenton, in the Commonwealth of Kentucky, and in the City of
Crestview Hills, commencing at a corner formed by the
intersection of the northwesterly right-of-way of Turkeyfoot
Road, also known as the State Route 1303, with the southerly
right-of-way of Interstate Route 275; thence from said
corner South 34 42'34" West, along the Northwesterly right-
of-way of Turkeyfoot Road 372.64 feet to an iron pin; thence
leaving said right-of-way, North 41 57' 00" West 309.17 feet
to a point; said point being the TRUE POINT OF BEGINNING;
thence along a new division line, south 48 03' 00" West,
160.11 feet; thence North 83 42' 30" West 21.31 feet to a
point on the Northeasterly right-of-way of Crestview Hills
Mall; thence along said right-of-way, North 35 28' 00" West,
169.31 feet; thence along a curve to the left, having a
radius of 454..41 feet, chord bearing of North 45 17' 42"
West 155.13 feet, and a total arc length of 155.89 feet, to
an iron p in; thence leaving said right-of-way and with the
East line of the City of Crestview Hills Property, Deed Book
855, Page 45, North 34 52' 37" East, 128.49 feet to an iron
pin; thence leaving the East line of said City of Crestview
Hills Property, and with the South right-of-way of
Interstate 275 Eastbound Ramp "D," south 61 22' 45" East
99.39 feet to an iron pin; thence continuing with said right-
of-way, south 72 52' 01" East, 108.09 feet to an iron pin;
thence North 84 20' 21" East, 90.33 feet to an iron pin;
thence leaving said right-of-way and with the West line of
J. Thomas Gallenstein et al. Property, Deed Book 952, Page
314, south 48 03' 00" West 122.28 feet to an iron pin;
thence along the South line of said J. Thomas Gallenstein et
al., South 41 57' 00" East 128.34 feet to the TRUE POINT OF
BEGINNING.
The parcel contains 1.4205 acres of land and is subject to
all legal easements and rights-of-way of record.
The above description was prepared by Jay F. Bayer, Kentucky
Land Surveyor #2916.
Being the same property conveyed to Thomas and King, Inc., a
South Carolina corporation, by West Shell, Inc., a Kentucky
corporation, by deed dated December 15,1 992, and of record
in Deed Book 1089, Page 346, in the Kenton County Clerk's
Office.
Provided, however, that the Grantor retains a fifteen foot
(15') storm sewer easement upon the above-described 1.4205-
acre parcel, the centerline of said easement being described
as follows:
Situated in the city of Crestview Hills, Count of Kenton,
commonwealth of Kentucky, and being a 15-foot wide strip of
land extending 7.5 feet on each side of the following
described centerline:
Beginning at a point in the grantor's Southeast boundary
line found by measuring from the intersection of the South
right-of-way line of Interstate 275 and the south right-of-
way line of State Route 1303 (Turkeyfoot Road), south 34
42'34" West, 372.64 feet along said right-of-way of State
Route 1303, North 41 57' 00" West, 309.17 feet, thence South
48 03' 00" West, 54.00 feet along the grantor's southeast
boundary line, said point being the TRUE POINT OF BEGINNING;
thence North 12 57' 00" West, 60.00 feet;
The above description was prepared by Jay F. Bayer,
Registered Land Surveyor #2916 in the Commonwealth of
Kentucky.
TOGETHER WITH a certain License Agreement between West
Shell, Inc. as Licensor and Thomas King, Inc. d/b/a
Applebee's Restaurant as Licensee, dated December 1, 1992
and recorded December 18, 1992, in Book 105, Page 59 of the
Clerk's Office of Kenton County, Kentucky.
PROPERTY CO-TENANCY
OWNERSHIP AGREEMENT
(Applebee's Restaurant, Crestview Hills, KY)
THIS CO-TENANCY AGREEMENT,
Made and entered into as of the 17th day of Oct, 1996, by and
between the Mark A. Benson Living Trust (hereinafter called
"Benson"), and AEI Net Lease Income & Growth Fund XIX Limited
Partnership (hereinafter called "Fund XIX") (Benson, Fund XIX
(and any other Owner in Fee where the context so indicates) being
hereinafter sometimes collectively called "Co-Tenants" and
referred to in the neuter gender).
WITNESSETH:
WHEREAS, Fund XIX presently owns an undivided 1.1054% interest in
and to, and Benson presently owns and undivided 13.5509% interest
in and to, and Marshall Kilduff presently owns an undivided
12.4668% (also referred to herein as Co-Tenant) interest in and
to, and The Gummerscheimer Living Trust presently owns an
undivided 4.9867% (also referred to herein as Co-Tenant")
interest in and to, and The Nicoletta Trust presently owns an
undivided 10.5969% (also referred to herein as "Co-Tenant")
interest in and to, and The Joan Koller Trust presently owns an
undivided 10.5969% (also referred to herein as "Co-Tenant") in
and to, and Menzel Polzin Partners presently owns an undivided
14.5707% (also referred to herein as "Co-Tenant"),interest in and
to and Dorothy and Andrew Potloff presently own an undivided
13.7097% (also referred to herein as "Co-Tenant"),interest in and
to, and Richard Bagot presently owns an undivided 12.1741% (also
referred to herein as "Co-Tenant") interest in and to, and the
Tilson Trust presently owns an undivided 6.2419% (also referred
to herein as "Co-Tenant") interest in and to, the land, situated
in the City of Crestview Hills, County of Kenton, and State of
Kentucky, (legally described upon Exhibit A attached hereto and
hereby made a part hereof) and in and to the improvements located
thereon (hereinafter called "Premises");
WHEREAS, The parties hereto wish to provide for the orderly
operation and management of the Premises and Benson's interest by
Fund XIX; the continued leasing of space within the Premises; for
the distribution of income from and the pro-rata sharing in
expenses of the Premises.
NOW THEREFORE, in consideration of the purchase by Benson of an
undivided interest in and to the Premises, for at least One
Dollar ($1.00) and other good and valuable consideration by the
parties hereto to one another in hand paid, the receipt and
sufficiency of which are hereby acknowledged, and of the mutual
covenants and agreements herein contained, it is hereby agreed by
and between the parties hereto, as follows:
1. The operation and management of the Premises shall be
delegated to Fund XIX, or its designated agent, successors or
assigns. Provided, however, if Fund XIX shall sell all of its
interest in the Premises, the duties and obligations of Fund XIX
respecting management of the Premises as set forth herein,
including but not limited to paragraphs 2, 3, and 4 hereof, shall
be exercised by the holder or holders of a majority undivided co-
tenancy interest in the Premises. Except as hereinafter expressly
provided to the contrary, each of the parties hereto agrees to be
bound by the decisions of Fund XIX with respect to all
administrative, operational and management matters of the
property comprising the Premises, including but not limited to
the management of the net lease agreement for the Premises. The
parties hereto hereby designate Fund XIX as their sole and
exclusive agent to deal with any property agent and to execute
leases of space within the Premises, including but not limited to
any amendments, consents to assignment, sublet, releases or
Co-Tenant Initial: M
Co-Tenancy Agreement for Applebee's, Crestview Hills, KY
modifications to leases or guarantees of lease or easements
affecting the Premises, on behalf of all present or future Co-
Tenants. Only Fund XIX may obligate any Co-Tenant with respect to
any expense for the Premises.
As further set forth in paragraph 2 hereof, Fund XIX agrees to
require any lessee of the Premises to name Benson as an insured
or additional insured in all insurance policies provided for, or
contemplated by, any lease on the Premises. Fund XIX shall use
its best efforts to obtain endorsements adding Co-Tenants to said
policies from lessee within 30 days of commencement of this
agreement. In any event, Fund XIX shall distribute any insurance
proceeds it may receive, to the extent consistent with any lease
on the Premises, to the Co-Tenants in proportion to their
respective ownership of the Premises.
2. Income, expenses and any net proceeds from a sale of the
Premises shall be allocated among the Co-Tenants in proportion to
their respective share(s) of ownership. Shares of net income
shall be pro-rated for any partial calendar years included within
the term of this Agreement. Fund XIX may offset against, pay to
itself and deduct from any payment due to Benson under this
Agreement, and may pay to itself the amount of Benson's share of
any legitimate expenses of the Premises which are not paid by
Benson to Fund XIX or its assigns, within ten (10) days after
demand by Fund XIX. In the event there is insufficient operating
income from which to deduct Benson's unpaid share of operating
expenses, Fund XIX may pursue any and all legal remedies for
collection.
Operating Expenses shall include all normal operating expense,
including but not limited to: maintenance, utilities, supplies,
labor, management, advertising and promotional expenses, salaries
and wages of rental and management personnel, leasing commissions
to third parties, a monthly accrual to pay insurance premiums,
real estate taxes, installments of special assessments and for
structural repairs and replacements, management fees, legal fees
and accounting fees, but excluding all operating expenses paid by
Lessee under terms of any triple net lease agreement initiated
concurrently with, or subsequent to, this agreement.
Benson has elected to retain, and agrees to annually reimburse,
Fund XIX in the amount of $700 for the expenses, direct and
indirect, incurred by Fund XIX in providing quarterly accounting
and distributions of Benson's share of net income and for
tracking, reporting and assessing the calculation of Benson's
share of operating expenses incurred from the Premises. This
invoice amount shall be pro-rated for partial years and Benson
authorizes Fund XIX to deduct such amount from Benson's share of
revenue. Benson may terminate this agreement at any time and
collect it's share of rental stream directly from the tenant.
3. Full, accurate and complete books of account shall be kept
in accordance with generally accepted accounting principles at
Fund XIX's principal office, and each Co-Tenant shall have access
to such books and may inspect and copy any part thereof during
normal business hours. Within ninety (90) days after the end of
each calendar year during the term hereof, Fund XIX shall prepare
an accurate income statement for the ownership of the Premises
for said calendar year and shall furnish copies of the same to
all Co-Tenants. Quarterly, as its share, Benson shall be entitled
to receive 13.5509% of all items of income and expense generated
by the Premises, and Fund XIX shall be entitled to receive
1.1054% as its share. Upon receipt of said accounting, if the
payments received by each Co-Tenant pursuant to this Paragraph 3
do not equal, in the aggregate, the amounts which each are
entitled to receive with respect to said calendar year pursuant
to Paragraph 2 hereof, an appropriate adjustment shall be made so
that each Co-Tenant receives the amount to which it is entitled.
4. If Net Income from the Premises is less than $0.00 (i.e.,
the Premises operates at a loss), or if capital improvements,
repairs, and/or replacements, for which adequate reserves do not
exist, need to be made to the Premises, the Co-Tenants, upon
receipt of a written request therefor from Fund XIX, shall,
Co-Tenant Initial: M
Co-Tenancy Agreement for Applebee's, Crestview Hills, KY
within fifteen (15) business days after receipt of notice, make
payment to Fund XIX sufficient to pay said net operating losses
and to provide necessary operating capital for the premises and
to pay for said capital improvements, repairs and/or
replacements, all in proportion to their undivided interests in
and to the Premises.
5. Co-Tenants may, at any time, sell, finance, or otherwise
create a lien upon their interest in the Premises but only upon
their interest and not upon any part of the interest held, or
owned, by any other Co-Tenant. All Co-Tenants reserve the right
to escrow proceeds from a sale of their interests in the Premises
to obtain tax deferral by the purchase of replacement property.
6. If any Co-Tenant (including Co-Tenant Tilson Trust which
owns an undivided 6.2419 percent interest in the Premises,
subject to a Co-Tenancy Agreement with Fund XIX dated May 25,
1994, and including Co-Tenant Richard Bagot which owns an
undivided 12.1741% interest in the Premises, subject to a Co-
Tenancy Agreement with Fund XIX dated July 15, 1994 and including
Co-Tenant Potloff Living Trust which owns an undivided 13.7097%
interest in the Premises, subject to a Co-Tenancy Agreement with
Fund XIX dated September 9, 1994 and including Co-Tenant Menzel
Polzin Partners which owns and undivided 14.5707% interest in the
Premises, subject to a Co-Tenancy Agreement with Fund XIX dated
July 14, 1995 and including Co-Tenant Joan Koller Trust which
owns an undivided 10.5969% interest in the Premises, subject to a
Co-Tenancy Agreement with Fund XIX dated December 4, 1995 and
including Co-Tenant The Nicoletta Trust which owns an undivided
10.5969% interest in the Premises, subject to a Co-Tenancy
Agreement with Fund XIX dated December 4, 1995 and including Co-
Tenant The Gummerscheimer Living Trust which owns an undivided
4.9867% interest in the Premises, subject to a Co-Tenancy
Agreement with Fund XIX dated April 26, 1996 and including Co-
Tenant Marshall Kilduff which owns an undivided 12.4668% interest
in the Premises, subject to a Co-Tenancy Agreement with Fund XIX
dated May 15, 1996) shall be in default with respect to any of
its obligations hereunder, and if said default is not corrected
within thirty (30) days after receipt by said defaulting Co-
Tenant of written notice of said default, or within a reasonable
period if said default does not consist solely of a failure to
pay money, the remaining Co-Tenant(s) may resort to any available
remedy to cure said default at law, in equity, or by statute.
7. This property management agreement shall continue in full
force and effect and shall bind and inure to the benefit of the
Co-Tenant and their respective heirs, executors, administrators,
personal representatives, successors and permitted assigns until
the expiration date plus extensions of the net lease agreement
or upon the sale of the entire Premises in accordance with the
terms hereof and proper disbursement of the proceeds thereof,
whichever shall first occur. Unless specifically identified as a
personal contract right or obligation herein, this agreement
shall run with any interest in the Premises and with the title
thereto. Once any person, party or entity has ceased to have an
interest in fee in the Premises, it shall not be bound by,
subject to or benefit from the terms hereof; but its heirs,
executors, administrators, personal representatives, successors
or assigns, as the case may be, shall be substituted for it
hereunder.
8. Any notice or election required or permitted to be given or
served by any party hereto to, or upon any other, shall be deemed
given or served in accordance with the provisions of this
Agreement, if said notice or elections addressed as follows;
If to Fund XIX:
AEI Net Lease Income & Growth Fund XIX Limited Partnership
1300 Minnesota World Trade Center
30 E. Seventh Street
St. Paul, Minnesota 55101
Co-Tenant Initial: M
Co-Tenancy Agreement for Applebee's, Crestview Hills, KY
If to Benson:
Mark A. Benson, Trustee
745 Bowhill Rd.
Hillsborough, CA 94010
If to Gummerscheimer
Archibald and Diane Gummersheimer, Trustees
600 N. main Street
Dupo, IL 62239-1127
If to Kilduff:
321 Lake Street
San Francisco, CA 94118-1320
If to Nicoletta:
Joe Nicoletta, Trustee
5727 Camellia
North Hollywood, CA 91601
If to Koller:
Joan Koller, Trustee
16001 Ballantine Lane
Huntington Beach, CA 92647
If to Tilson:
Joseph and Mary Jane Tilson, Trustees
of the Tilson Trust
605 W. Sunset Drive
Redlands, CA 92373
If to Bagot:
Richard Bagot
1518 S. Beverly
Amarillo, TX 79106
If to Potloff:
Andrew and Dorothy Potloff
747 Oxidental Avenue
San Mateo, CA 94402-1056
Co-Tenant Initial: M
Co-Tenancy Agreement for Applebee's, Crestview Hills, KY
If to Menzel Polzin Partners:
Robert Menzel, Partner
121 E. Main St., Suite #308
Mankato, MN 56001
Each mailed notice or election shall be deemed to have been given
to, or served upon, the party to which addressed on the date the
same is deposited in the United States certified mail, return
receipt requested, postage prepaid, or given to a nationally
recognized courier service guaranteeing overnight delivery as
properly addressed in the manner above provided. Any party hereto
may change its address for the service of notice hereunder by
delivering written notice of said change to the other parties
hereunder, in the manner above specified, at least ten (10) days
prior to the effective date of said change.
10. This Agreement shall not create any partnership or joint
venture among or between the Co-Tenants or any of them, and the
only relationship among and between the Co-Tenants hereunder
shall be that of owners of the premises as tenants in common
subject to the terms hereof.
11. The unenforceability or invalidity of any provision or
provisions of this Agreement as to any person or circumstances
shall not render that provision, nor any other provision hereof,
unenforceable or invalid as to any other person or circumstances,
and all provisions hereof, in all other respects, shall remain
valid and enforceable.
12. In the event any litigation arises between the parties
hereto relating to this Agreement, or any of the provisions
hereof, the party prevailing in such action shall be entitled to
receive from the losing party, in addition to all other relief,
remedies and damages to which it is otherwise entitled, all
reasonable costs and expenses, including reasonable attorneys'
fees, incurred by the prevailing party in connection with said
litigation.
Co-Tenant Initial: M
Co-Tenancy Agreement for Applebee's, Crestview Hills, KY
IN WITNESS WHEREOF, The parties hereto have caused this Agreement
to be executed and delivered, as of the day and year first above
written.
Benson Mark A. Benson Living Trust
By: /s/ Mark Benson Trustee
Mark Benson, Trustee
Witness By: /s/ Carole Cononer
STATE OF )
) ss
COUNTY OF )
The foregoing instrument was acknowledged before me, a
Notary Public in and for the County and State aforesaid,
this day of ,1996, by ,
Notary Public.
Fund XIX AEI Net Lease Income & Growth Fund XIX Limited Partnership
By: AEI Fund Management XIX, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, President
Witness By: /s/ Laura Steidl
Witness By: /s/ Keith Dennler
State of Minnesota )
) ss.
County of Ramsey )
I, a Notary Public in and for the state and county of aforesaid,
hereby certify there appeared before me this 17th day of October,
1996, Robert P. Johnson, President of AEI Fund Management XIX,
Inc., corporate general partner of AEI Net Lease Income & Growth
Fund XIX Limited Partnership, who executed the foregoing
instrument in said capacity and on behalf of the corporation in
its capacity as corporate general partner, on behalf of said
limited partnership.
/s/ Linda A. Bisdorf
Notary Public
[notary seal]
Co-Tenant Initial:
Co-Tenancy Agreement for Applebee's, Crestview Hills, KY
State of California
County of San Mateo
On October 8, 1996, before me, Anne V. Gage, a Notary Public,
personally appeared Mark Benson, Trustee, personally known to me
(or Proved to me on the basis of satisfactory evidence) to be the
person(s) whose names(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the
same in his /her/their authorized capacity (ies) and that by
his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the
instrument.
Witness my hand and official seal.
Signature /s/ Anne V. Gage [notary seal]
Anne V. Gage
This acknowledgement must be attached to that certain Propery Co-
Tenancy Ownership Agreement
EXHIBIT A
A certain tract or parcel of land situated in the County of
Kenton, in the Commonwealth of Kentucky, and in the City of
Crestview Hills, commencing at a corner formed by the
intersection of the northwesterly right-of-way of Turkeyfoot
Road, also known as the State Route 1303, with the southerly
right-of-way of Interstate Route 275; thence from said corner
South 34 42' 34" West, along the Northwesterly right-of-way of
Turkeyfoot Road 372.64 feet to an iron pin; thence leaving said
right-of-way, North 4 57' 00" West 309.17 feet to a point; said
point being the TRUE POINT OF BEGINNING; thence along a new
division line, South 48 03' 00" West, 160.11 feet; thence North
83 42' 30" West 21.31 feet to a point on the Northeasterly right-
of-way of Crestview Hills Mall; thence along said right-of-way,
North 35 28' 00" West, 169.31 feet; thence along a curve to the
left, having a radius of 454.41 feet, chord bearing of North 45
17' 42" West 155.13 feet, and a total arc length of 155.89 feet,
to an iron pin; thence leaving said right-of-way and with the
East line of the City of Crestview Hills Property, Deed Book 855,
Page 45, North 34 52' 37" East, 128.49 feet to an iron pin;
thence leaving the East line of said City of Crestview Hills
Property, and with the South right-of-way of Interstate 275
Eastbound Ramp "D," South 61 22' 45" East 99.39 feet to an iron
pin; thence continuing with said right-of-way South 72 52' 01"
East, 108.09 feet to an iron pin; thence North 84 20'21" East,
90.33 feet to an iron pin; thence leaving said right-of-way and
with the West line of J. Thomas Gallenstein et al. Property, Deed
Book 952, Page 314, South 48 03' 00" West 122.28 feet to an iron
pin; thence along the South line of said J. Thomas Gallenstein et
al., South 41 57' 00" East 128.34 feet to the TRUE POINT OF
BEGINNING.
The parcel contains 1.4205 acres of land and is subject to all
legal easements and rights-of way of record.
The above description was prepared by Jay F. Bayer, Kentucky Land
Surveyor #2916.
Being the same property conveyed to Thomas and King, Inc., a
South Carolina corporation, by West Shell, Inc., a Kentucky
corporation by deed dated December 15, 1992, and of record in
Deed Book 1089, Page 346, in the Kenton County Clerk's Office.
Provided, however, that the Grantor retains a fifteen foot (15')
storm sewer easement upon the above-described 1.4205-acre parcel,
the centerline of said easement being described as follows:
Situated in the City of Crestview Hills, County of Kenton,
Commonwealth of Kentucky, and being a 15-foot wide strip of land
extending 7.5 feet on each side of the following described
centerline:
Beginning at a point in the grantor's Southeast boundary line
found by measuring from the intersection of the South right-of-
way line of Interstate 275 and the Northwest right-of-way line of
State Route 1303 (Turkeyfoot Road), south 34 42' 34" West, 372.64
feet along said right-of-way of State Route 1303, North 41 57'
00" West, 309.17 feet, thence South 48 03' 00" West, 54.00 feet
along the grantor's Southeast boundary line, said point being the
TRUE POINT OF BEGINNING;
thence North 12 57' 00" West, 60.00 feet;
The above description was prepared by Jay F. Bayer, Registered
Land Surveyor #2916 in the Commonwealth of Kentucky.
TOGETHER WITH a certain License Agreement between West Shell,
Inc. as Licensor and Thomas and King, Inc. d/b/a Applebee's
Restaurant as Licensee, dated December 1, 1992, and recorded
December 18, 1992 in Book 105, Page 59 of the Clerk's Office of
Kenton County, Kentucky.
PROMISSORY NOTE
$660,000 Effective as of November 6, 1996
FOR VALUE RECEIVED, the undersigned ("Borrower") hereby
jointly and severally agrees and promises to pay to the order of
AEI Net Lease Income & Growth Fund XIX Limited Partnership, a
Minnesota limited partnership (the "Partnership" or "Lender"), at
the principal office of its corporate general partner, AEI Fund
Management XIX, Inc., a Minnesota corporation, located at 1300
Minnesota World Trade Center, 30 East Seventh Street, Saint Paul,
Minnesota 55101 or such other place as the holder of this Note
may from time to time designate, the principal sum of Six Hundred
Sixty Thousand and 00/100 Dollars ($660,000.00) (the "Loan") (the
same constituting purchase money financing to enable Borrower to
purchase from Lender the real and personal property situated in
Williamson County, Texas, legally described in the Deed of Trust
of even date herewith securing Borrower's obligations hereunder),
together with interest on the unpaid principal balance at the
rates of interest hereinafter specified per annum, payable in
lawful money of the United States, as follows:
The unpaid principal balance of the Loan shall bear interest
at a rate of Nine (9%) percent per annum and such interest
shall be payable monthly, in arrears, on the principal
balance due from time to time and shall be computed and
assessed during the term hereof. If the entire outstanding
principal balance and accrued interest thereon is not paid
in full on or before May 1, 1997, and this Note is otherwise
not in default, on and after May 1, 1997, and continuing
throughout the remainder of the term of this Note, the
unpaid principal balance of the Loan shall bear interest at
a rate of Twelve (12%) percent per annum and such interest
shall be payable monthly, in arrears, on the principal
balance due from time to time and shall be computed and
assessed during the term hereof. Interest shall be
calculated on the outstanding loan balances from day-to-day
on a three hundred sixty-five (365) day basis. Interest
shall accrue from and including the effective date hereof as
set forth above.
Until the outstanding principal balance and accrued interest
under the Loan shall be paid in full, Borrower shall make
monthly payments in the amounts set forth on the attached
amortization schedule, said payments being due and payable
on or before the fifteenth day of the month. Lender
acknowledges that the rent payments payable by the Lessee
under that certain Net Lease Agreement dated August 13, 1992
between the Lender and Taco Cabana, Inc. (the "Lease"), have
been assigned to Lender and if paid when due, equal the
monthly installment due from Borrower hereunder. If said
rent payments or in lieu thereof, Borrower's payment have
not been received by the due date of the undersigned's
installment(s) due hereunder, Lender shall give Borrower
written notice of the same (constituting notice of default
hereunder) and Borrower shall have five (5) days from the
date of such notice opportunity to cure the default.
Unless the unpaid outstanding principal balance and accrued
interest thereon is previously paid, in any event the entire
unpaid outstanding principal and accrued interest pursuant
hereto shall be due and payable on October 1, 2005.
Borrower agrees to use their best efforts to obtain third
party financing to pay the unpaid balance of the Loan on or
before May 1, 1997. If Borrower shall be unable to obtain said
financing, it shall notify Lender in writing on or before April
15, 1997, accompanied by reasonable evidence of Borrower's
attempts to secure such financing. Borrower shall be obligated
to accept commercially reasonable offers of financing of the
same, unless such offer of financing shall be at an interest rate
or amortization or payment schedule less favorable than that
stated herein.
All payments (whether from Borrower directly or due to
payment of rents under the Lease, which, until an event of
default shall occur hereunder or under the Deed of Trust
securing this Note, shall be first applied as immediately set
forth in this sentence) shall be applied first to interest and
then to principal, except that if any advance made by the holder
of this Note under the terms of any instruments securing the
Note is not repaid, any monies received, at the option of the
holder, may first be applied to repay such advances, plus
interest thereon as specified under the terms of said
instruments, and the balance, if any, shall be applied on
account of any installments then due.
This Note will be governed by the laws of the State of Texas
and is the Note referenced in and secured by a Deed of Trust,
Security Agreement and Fixture Financing Statement and
Assignment of Rents and Leases ("Deed of Trust") of even date
herewith given by the undersigned to Mary Furgason, Trustee
concerning real and personal property situated in Williamson
County, Texas. This Note is further secured by a vendor's lien
and superior title retained in a deed from Lender to Borrower of
even date herewith.
If default be made in any payment of principal or interest
when due in accordance with the terms and conditions of this
Note, or if a default or an event of default occurs under the
Deed of Trust, or any other instrument securing this Note, the
entire unpaid principal balance together with accrued interest
thereon shall become immediately due and payable at the option
of the holder hereof.
Prior to default hereunder, the unpaid principal shall bear
interest at the rates provided in this Note. In the event of
default under this Note, at the option of the holder hereof,
interest shall thereafter be payable on the whole of the unpaid
principal sum at the rate of eighteen percent (18%) per annum or
the highest rate allowed by law if the highest rate allowed by
law is less than eighteen percent (18%) per annum, whether or
not the holder hereof has exercised its option to accelerate the
maturity of this Note and declare the entire unpaid principal
indebtedness due and payable.
No delay or omission on the part of the holder hereof in
exercising any right hereunder shall operate as a waiver of such
right or of any other remedy under this Note. A waiver on any
one occasion shall not be construed as a bar to, or waiver of,
any such right or remedy on a future occasion.
In the event of any default hereunder the undersigned agrees
to pay the costs of collection including reasonable attorney's
fees.
The Borrower and all other persons liable under this Note
hereby severally waive notices of intention to accelerate
maturity and notice of acceleration of maturity.
The makers, endorser, sureties, guarantors and all other
persons liable for all or any part of the principal balance
evidenced by this Note severally waive presentment for payment,
protest and notice of non-payment. Such parties hereby consent
to, without affecting their liability to any extension or
alteration of the time or terms of payment hereof, any renewal,
any release of all or any part of the security given for the
payment hereof, any acceptance of additional security of any
kind, and any release of, or resort to any party liable for
payment hereof.
All agreements between the undersigned and the holder hereof
are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the
indebtedness evidenced hereby or otherwise, shall the amount
paid or agreed to be paid to the holder for the use,
forbearance, loaning or detention of the indebtedness evidenced
hereby exceed the maximum interest rate permissible under
applicable law. If from any circumstances whatsoever,
fulfillment of any provisions hereof or of the Deed of Trust or
any other security instrument at any time given for the
performance of such provision shall be due, shall involve
transcending the limit of validity prescribed by law, then, the
obligation to be fulfilled shall automatically be reduced to the
limit of such validity and if from any circumstances the holder
of this Note should ever receive as interest an amount which
would exceed the highest lawful rate, such amount which would be
in excess of interest shall be applied to the reduction of the
principal balance evidenced hereby and not to the payment of
interest. This provision shall control every other provision of
all agreements between the undersigned and holder hereof and
shall also be binding upon and available to any subsequent
holder or endorsee of this Note.
In the event the undersigned shall sell, convey, transfer,
further mortgage or encumber or dispose of the subject property
of the Deed of Trust, or any part thereof, or any interest
therein, or agrees so to do, or if an interest in the
undersigned is sold, transferred, pledged or assigned, without
the written consent of holder of this Note being first obtained,
then at the sole option of said holder, the holder may declare
the entire unpaid principal balance due hereunder, together with
accrued interest, due and payable in full and call for payment
of the same in full at once.
This Note may be prepaid in whole or in part without
prepayment penalty.
/s/ John Schulz
John Schultz
/s/ Tom Bibleheimer
Tom Bibleheimer
ASSIGNMENT AND ASSUMPTION OF LEASE
THIS ASSIGNMENT, made effective as of the 6th day of
November, 1996, by AEI Net Lease Income & Growth Fund XIX Limited
Partnership, whose address is 1300 Minnesota World Trade Center,
St. Paul, Minnesota 55101 (herein called "Assignor") to Tom
Bibleheimer, whose address is 16418 Silver Saddle Court, Poway,
Ca. 92064 and John Schulz, whose address is 24252 Mimosa Drive,
Laguna Niguel, Ca. 92677 (herein called "Assignee"),
WITNESSETH:
FOR VALUE RECEIVED, Subject to the vendor's lien and the
lien of the Deed of Trust securing the purchase money financing
extended to Assignee by Assignor, Assignor hereby grants,
transfers and assigns to Assignee all of the right, title and
interest of Assignor in and to that certain lease by and between
Assignor and Taco Cabana, Inc., dated August 13, 1992, which
lease was assigned to Texas Taco Cabana, LP pursuant to the
General Assignment and Assumption of Leases between Taco Cabana,
Inc. and TC Lease Holding III, V, and VI, Inc. and pursuant to
the General Assignment and Assumption of Leases between TC Lease
Holding III, V, and VI, Inc. and Texas Taco Cabana, LP dated
October 31, 1993, (Texas Taco Cabana, LP hereinafter referred to
as "Tenant"), and in and to that certain Assignment of Alcohol
Sales Lease dated June 30, 1994 by and among Tenant, Cabana
Beverages, Inc. (Lessee under said Alcohol Sales Lease), and
Assignor herein (said lease and assignment of Alcohol Sales Lease
hereinafter being referred to as the "Lease"), which Lease
demises all of the real estate ("Premises") described in Exhibit
A attached hereto, together with any and all extensions and
renewals thereof, together with the immediate and continuing
right to collect and receive all rents, income, payments and
profits arising out of said Lease or out of the Premises or any
part thereof ("Rents"), together with the right to all proceeds
payable to Assignor pursuant to any purchase options on the part
of Tenant under the Lease, together with all payments derived
therefrom, if any, including but not limited to future claims for
the recovery of damages done to the Premises or for the abatement
of any nuisance existing thereon, future claims for damages
resulting from default under said Lease whether resulting from
acts of insolvency or acts of bankruptcy or otherwise, guarantees
thereof, and lump sum payments for the cancellation of said lease
or the waiver of any obligation or term thereof prior to the
expiration date and the return of any insurance premiums or ad
valorem tax payments made in advance and subsequently refunded,
AND ASSIGNOR FURTHER AGREES, ASSIGNS AND COVENANTS:
1. Representations. Assignor represents and warrants that
it is now the absolute owner of said Lease with full right and
title to assign the same and the Rents; that said Lease is valid,
in full force and effect and has not been modified or amended
except as disclosed to Assignee; that there are no outstanding
assignments or pledges thereof; that there are no existing
defaults under the provisions thereof on the part of any party to
the Lease; that no Rents have been waived, anticipated,
discounted, compromised or released; and that Tenant has no
defenses, setoffs, or counterclaims against Assignor.
2. Assumption; Present Assignment. This Assignment shall
constitute a perfected, absolute and present assignment.
Assignee hereby assumes and agrees to perform all of the
obligations, duties, and liabilities of the Lessor under the
Lease from and after the date hereof.
3. No Liability For Assignee. The Assignee shall not be
obligated to perform or discharge, nor does it hereby undertake
to perform or discharge any obligation, duty or liability under
said Lease incurred prior to the date hereof nor shall this
Assignment operate to place responsibility for the control, care,
management or repair of the Premises prior to the date hereof
upon the Assignee nor for the carrying out of any of the terms
and conditions of said Lease; nor shall it operate to make the
Assignee responsible or liable for any waste committed on the
Premises, or for any dangerous or defective condition of the
Premises, or for any negligence in the management, upkeep, repair
or control of said Premises, prior to the date hereof resulting
in loss or injury or death to any tenant, licensee, employee or
stranger nor liable for laches or failure to collect the rents
and Assignee shall be required to account only for such moneys as
are actually received by it.
4. Assignor Hold Assignee Harmless. The Assignor shall
and does hereby agree to indemnify and to hold Assignee harmless
of and from any and all liability, loss or damage which it may or
might incur under said Lease or under or by reason of this
Assignment, of and from any and all claims and demands whatsoever
which may be asserted against it by reason of any alleged
obligations or undertakings on Assignee's part to perform or
discharge any of the terms, covenants or agreements contained in
said Lease prior to the date hereof. Should the Assignee incur
any such liability, or in the defense of any such claims or
demands, the amount thereof, including costs, expenses, and
reasonable attorney's fees, Assignor shall reimburse the
Assignee therefor immediately upon demand,
5. Assignee Hold Assignor Harmless. The Assignee shall
and does hereby agree to indemnify and to hold Assignor harmless
of and from any and all liability, loss or damage which it may or
might incur under said Lease or under or by reason of this
Assignment and of and from any and all claims and demands
whatsoever which may be asserted against it by reason of any
alleged obligations or undertakings on Assignor's part to perform
or discharge any of the terms, covenants or agreements contained
in said Lease on or after the date hereof. Should the Assignor
incur any such liability, or in the defense of any such claims or
demands, the amount thereof, including costs, expenses, and
reasonable attorney's fees, Assignee shall reimburse the
Assignor therefor immediately upon demand.
6. Security Deposits. The Assignor represents that there
are no security deposits held by Assignor under the terms of the
Lease(s).
7. Authorization To Tenant. The Tenant under the Lease is
hereby irrevocably authorized and directed to recognize the
claims of Assignee hereunder, but Tenant shall continue to remit
all rent payments to Assignor until the purchase money financing
extended to Assignee by Assignor, as evidenced by the Promissory
Note and Deed of Trust ("Loan Documents") of even date herewith,
shall be paid in full. After satisfaction of the Assignee's
obligations under the Loan Documents, Assignor shall thereby
irrevocably direct and authorize the Tenant to pay to Assignee
all sums due under the Lease.
8. Successors And Assigns. This Assignment and each and
every covenant, agreement and provision hereof shall be binding
upon the Assignor and its successors and assigns including
without limitation each and every from time to time record owner
of the Premises or any other person having an interest therein
and shall inure to the benefit of the Assignee and its successors
and assigns. As used herein the words "successors and assigns"
shall also be deemed to mean the heirs, executors,
representatives and administrators of any natural person who is a
party to this Assignment.
9. Governing Law. This Assignment is intended to be
governed by the laws of the State of Texas.
10. Counterparts. This Agreement may be executed in
counterparts, and if so executed, though the signatures of the
parties may appear on separate counterparts, the same shall be
considered one and the same document as if all parties had
executed the same counterpart.
IN WITNESS WHEREOF, the Assignor has caused this Assignment
of Lease to be executed as of the date first above written.
TOM BIBLEHEIMER
/s/ Tom Bibleheimer
STATE OF California)
)SS.
COUNTY OF San Diego)
The foregoing instrument was acknowledged before me the 5th
day of November, 1996, by TOM BIBLEHEIMER.
/s/ L. Matella
Notary Public
[notary seal]
JOHN SCHULTZ John Shulz /s/ JS [changed to conform
to the facts]
/s/ John Shulz
STATE OF California)
)SS.
COUNTY OF San Diego)
The foregoing instrument was acknowledged before me the 5th
day of November, 1996, by JOHN SCHULTZ.
/s/ L. Matella
Notary Public [notary seal]
AEI NET INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: AEI Fund Management XIX, Inc.,
its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, Its President
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 6th
day of November, 1996, by Robert P. Johnson, the President of AEI
Fund Management XIX, Inc., a Minnesota corporation, corporate
general partner of AEI Net Lease Income & Growth Fund XIX Limited
Partnership, on behalf of said limited partnership.
/s/ Michael B. Daugherty
Notary Public
[notary seal]
Exhibit A Legal Description
Lot 2, Hesters Crossing Shopping Center, a subdivision of
Williamson County, Texas, according to the map or plat of record
in Cabinet H, Slide 221, Plat Records of Williamson County,
Texas.
DEED OF TRUST AND SECURITY AGREEMENT,
FIXTURE FINANCING STATEMENT AND ASSIGNMENT OF RENTS AND LEASES
THIS INDENTURE, made effective as of this 6th day of
November, 1996, between and among John Schulz and Tom
Bibleheimer, jointly and severally, whose post office address is
24252 Mimosa Drive, Laguna Niguel, Ca. 92677 and 16418 Silver
Saddle Court, Poway, Ca. 92064, respectively (herein called
"First Party"), and Mary Furgason, whose post office address is
14607 San Pedro, Suite 175, San Antonio, Texas 78232 (herein
called "Trustee"), and AEI Net Lease Income & Growth Fund XIX
Limited Partnership, a Minnesota limited partnership, whose
corporate general partner is AEI Fund Management XIX, Inc., a
Minnesota corporation, whose post office address is 1300
Minnesota World Trade Center, 30 East Seventh Street, Saint Paul,
Minnesota 55101, (herein called "Third Party").
WITNESSETH, that the said First Party hereby irrevocably
MORTGAGES, GRANTS, BARGAINS, SELLS, TRANSFERS, CONVEYS AND
WARRANTS TO TRUSTEE IN TRUST WITH POWER OF SALE AND GRANTS A
SECURITY INTEREST TO THIRD PARTY IN, the following properties
(all the following being hereinafter collectively referred to as
the "Premises"):
A. REAL PROPERTY
All the tracts or parcels of real property lying and being
in the County of Williamson, State of Texas, all as more fully
described in Exhibit "A" attached hereto and made a part hereof,
together with all the estates, title, dower, rights of
homestead,claims, demands, and rights of First Party of, in, and
to such rights in and to the real property and in and to lands
lying in streets, alleys strips or gores of land and roads
adjoining the real property and all buildings, structures,
improvements, fixtures and annexations, access rights, easements,
rights of way or use, servitudes, licenses, tenements,
hereditaments and appurtenances now or hereafter belonging or
pertaining to the real property, (and including all water, water
rights, and ditches connected with or usually had and enjoyed in
connection with the real property, whether represented by shares
of capital stock in a ditch company or by individual ownership or
otherwise); and
B. PERSONAL PROPERTY
Together with all buildings, equipment, fixtures,
improvements, building supplies and materials and personal
property now or hereafter attached to, located in, placed in or
necessary to the use of the improvements on the Premises
including, but without being limited to all machinery, fittings,
fixtures, apparatus, equipment or articles used to supply
heating, gas, electricity, air conditioning, water, light, waste
disposal, power, refrigeration, ventilation, and fire and
sprinkler protection, as well as all elevators, escalators,
overhead cranes, hoists and assists, and the like, and all
furnishings, supplies, draperies, maintenance and repair
equipment, floor coverings, screens, storm windows, blinds,
awnings, shrubbery and plants, ranges, ovens, refrigerators,
dishwashers, disposals, (it being understood that the enumeration
of any specific articles of property shall in no way be held to
exclude any items of property not specifically enumerated), as
well as renewals, replacements, proceeds, additions, accessories,
increases, parts, fittings, insurance payments, awards and
substitutes thereof, together with all interest of First Party in
any such items hereafter acquired, all of which personal property
mentioned herein shall be deemed fixtures and accessory to the
freehold and a part of the realty and not severable in whole or
in part without material injury to the Premises, but excluding
therefrom the trade fixtures, inventory and removable personal
property of any tenant or licensee of the Premises. Third Party
agrees to subordinate its lien on all such personal property in
favor of a purchase money security interest of First Party's
lender; and
C. RENTS, LEASES AND PROFITS
Together with all rents, leases and profits now due or which
may hereafter become due under or by virtue of any lease,
license, sublease, or agreement, whether written or verbal, for
the use or occupancy of the Premises or any part thereof,
including, specifically, that certain lease by and between Third
Party and Taco Cabana, Inc. dated August 13, 1992 (the "Lease"),
which Lessee's interest in said lease was assigned to Texas Taco
Cabana, LP pursuant to the General Assignment and Assumption of
Leases between Taco Cabana, Inc. and TC Lease Holding III, V, and
VI, Inc., and pursuant to the General Assignment and Assumption
of Leases between TC Lease Holding III, V, and VI, Inc. and Texas
Taco Cabana, LP, both dated October 31, 1993 (Texas Taco Cabana,
LP hereinafter referred to as "Tenant") and in and to that
certain Assignment of Alcohol Sales Lease dated June 30, 1994, by
and among Tenant, Cabana Beverages, Inc.; and
D. JUDGMENTS AND AWARDS
Together with any and all awards or compensation made by any
governmental or other lawful authorities for the taking or
damaging by eminent domain of the whole or any part of the
Premises, including any awards for a temporary taking, change of
grade of streets or taking of access.
TO HAVE AND TO HOLD THE SAME, together with the possession
and right of possession of the Premises unto the Trustee, its
successors and assigns, forever, in Trust;
HOWEVER, THIS CONVEYANCE IS MADE IN TRUST FOR THE PURPOSE
OF SECURING: (i) Payment of the principal sum of Six Hundred
Sixty Thousand and 00/100 Dollars ($660,000.00), with interest
thereon, according to the terms and conditions of that certain
Promissory Note (hereinafter referred to as "Note") of even date
herewith, the terms and conditions of which are incorporated
herein by reference and made a part hereof, together with any
extensions under or renewals or modifications thereof, made by
First Party and payable to the order of Third Party due and
payable with interest thereon at the rate(s) set forth in the
Note, the balance of said principal sum together with interest
thereon being due and payable in any event on May 1, 1997, unless
extended pursuant to the terms of the Note; (ii) payment at the
times demanded and with interest thereon at the same rate
specified in the Note of all sums advanced in protecting the lien
of this Indenture, in payment of taxes on the Premises and in
payment of insurance premiums covering improvements on the
Premises, in payment of principal and interest on prior liens, in
payment of expenses and attorney's fees herein provided for and
all sums advanced for any other purpose authorized herein; and
(iii) performance of all of the covenants and agreements of the
First Party herein and in said Note; (the Note and all sums,
together with interest thereon, being collectively referred to as
the "Indebtedness Secured Hereby").
AND THE SAID FIRST PARTY for itself, its heirs,
administrators, successors and assigns, does covenant that it is
lawfully seized of the Premises and has good right to sell, and
convey the same; that the Premises are free from all encumbrances
except those of record as of the date hereof and incorporated
herein in this Indenture; that the Trustee, its successors and
assigns, shall quietly enjoy and possess the Premises; and that
the First Party will WARRANT AND DEFEND the title to the same
against all lawful claims not specifically excepted in this
Indenture.
THE TRUST, PURPOSES, COVENANTS, AGREEMENTS AND CONDITIONS FOR AND
UPON WHICH THE PREMISES ARE CONVEYED AND THE OBLIGATIONS OF FIRST
PARTY ARE AS FOLLOWS, TO-WIT:
ARTICLE ONE
GENERAL COVENANTS, AGREEMENTS, WARRANTIES
SECTION 1.1 PAYMENT OF INDEBTEDNESS: OBSERVANCE OF
COVENANTS. First Party will duly and punctually pay each and
every installment of principal and interest on the Note and all
other Indebtedness Secured Hereby, as and when the same shall
become due, and shall duly and punctually perform and observe all
of the covenants, agreements and provisions contained herein, in
the Note, and any other instrument given as security for the
payment of the Note.
SECTION 1.2 MAINTENANCE: REPAIRS. First Party agrees that
it will keep and maintain the Premises in good condition, repair
and operating condition free from any waste or misuse, and will
comply with all requirements of law, municipal ordinances and
regulations, restrictions and covenants affecting the Premises
and their use, and will promptly repair or restore any buildings,
improvements or structures now or hereafter on the Premises which
may become damaged or destroyed to their condition prior to any
such damage or destruction. First Party further agrees that
without the prior consent of the Third Party, which consent shall
not be unreasonably withheld, it will not expand any improvements
on the Premises, erect any new improvements or make any material
alterations in any improvements which will alter the basic
structure, affect the market value or change the existing
architectural character of the Premises, and will complete within
a reasonable time any buildings now or at any time in the process
of erection on the Premises. First Party agrees not to acquiesce
in any rezoning classification, modification or restriction
affecting the Premises. First Party agrees that it will not
vacate or abandon the Premises.
SECTION 1.3 PAYMENT OF OPERATING COSTS: PRIOR MORTGAGES
AND LIENS. First Party agrees that it will pay all operating
costs and expenses of the Premises; keep the Premises free from
mechanics', materialmens' and other liens not expressly
subordinated to this Indenture or provide security satisfactory
to Third Party for the payment thereof; keep the Premises free
from levy, execution or attachment and will pay when due all
indebtedness which may be secured by mortgage, lien or charge on
the Premises and upon request will exhibit to Third Party
satisfactory evidence of such payment and discharge.
SECTION 1.4 PAYMENT OF IMPOSITIONS. First Party will pay
when due and before any penalty all taxes, assessments, water
charges, sewer charges, and other fees, taxes, charges and
assessments of every kind and nature whatsoever assessed or
charged against or constituting a lien on the Premises or any
interest therein, or the Indebtedness Secured Hereby
("Impositions") and will upon demand furnish to the Third Party
proof of the payment of any such Impositions. In the event of a
court decree or an enactment after the date hereof by any
legislative authority of any law imposing upon a trustee or third
party under a trust indenture or a mortgagee the payment of the
whole or any part of the Impositions herein required to be paid
by the First Party, or changing in any way the laws relating to
the taxation of debts secured by trust indentures or mortgages or
a trustee's, third party's or mortgagee's interest in premises
conveyed as security, so as to impose such Imposition on the
Trustee or Third Party or on the interest of the Trustee or Third
Party in the Premises, then, in any such event, First Party shall
bear and pay the full amount of such Imposition, provided that if
for any reason payment by First Party of any such Imposition
would be unlawful, or if the payment thereof would constitute
usury or render the Indebtedness Secured Hereby wholly or
partially usurious, Third Party, at its option, may declare the
whole sum secured by this Indenture with interest thereon to be
immediately due and payable, without prepayment premium, or Third
Party at its option, may pay that amount or portion of such
Imposition as renders the Indebtedness Secured Hereby unlawful or
usurious, in which event First Party shall concurrently therewith
pay the remaining lawful and non-usurious portion or balance of
said Imposition.
SECTION 1.5 CONTEST OF IMPOSITIONS, LIENS AND LEVIES.
First Party shall not be required to pay, discharge or remove any
Imposition, lien or levy so long as the First Party shall in good
faith contest the same or the validity thereof by appropriate
legal proceedings which shall operate to prevent the collection
of the levy, lien or Imposition so contested and the sale of the
Premises, or any part thereof to satisfy the same, provided that
the First Party shall, prior to the date such Levy, Lien or
Imposition is due and payable, have given such reasonable
security as may be demanded by the Third Party to insure such
payments and prevent any sale or forfeiture of the Premises by
reason of such nonpayment. Any such contest shall be prosecuted
with due diligence and the First Party shall promptly after final
determination thereof pay the amount of any such levy, lien or
Imposition so determined, together with all interest and
penalties, which may be payable in connection therewith.
Notwithstanding the provisions of this Section, First Party shall
(and if First Party shall fail so to do, Third Party, may but
shall not be required to) pay any such levy, lien or Imposition
notwithstanding such contest if in the reasonable opinion of the
Third Party, the Premises shall be in jeopardy or in danger of
being forfeited or foreclosed.
SECTION 1.6 PROTECTION OF SECURITY. First Party agrees to
promptly notify Third Party of and appear in and defend any suit,
action or proceeding that affects the value of the Premises, the
Indebtedness Secured Hereby or the rights or interest of Trustee
and Third Party hereunder. The Third Party may elect to appear
in or defend any such action or proceeding and First Party agrees
to indemnify and reimburse Third Party from any and all loss,
damage, expense or cost arising out of or incurred in connection
with any such suit, action or proceeding, including costs of
evidence of title and reasonable attorney's fees.
SECTION 1.7 ANNUAL STATEMENTS. First Party will within
ninety (90) days after the end of each fiscal year furnish to the
Third Party financial and operating statements of the Premises
and First Party, including a balance sheet and a profit and loss
statement, all in reasonable detail and conforming to generally
accepted accounting principles. Such financial statements shall
be prepared and certified by an officer of First Party
satisfactory to Third Party at the expense of First Party. In
the event First Party fails to furnish any such statements the
Third Party may cause an audit to be made of the respective books
and records at the sole cost and expense of the First Party.
Third Party also shall have the right after forty-eight (48)
hours advance notice to First Party, or without notice if the
Third Party deems the situation to be an emergency to examine at
their place of safekeeping at reasonable times all books,
accounts and records relating to the operation of the Premises
and First Party.
SECTION 1.8 ADDITIONAL ASSURANCES. First Party agrees
upon reasonable request by the Third Party to execute and deliver
such further instruments, financing statements under the Uniform
Commercial Code now in effect in Texas (presently being Chapter 9
of the Texas Business and Commerce Code) or as it may hereafter
be amended ("Code") and assurances and will do such further acts
as may be necessary or proper to carry out more effectively the
purposes of this Indenture and without limiting the foregoing, to
make subject to the lien hereof any property agreed to be
subjected hereto or covered by the granting clause hereof, or
intended so to be. First Party agrees to pay any recording fees,
filing fees, stamp taxes or other charges arising out of or
incident to the filing or recording of this Indenture, such
further assurances and instruments and the issuance and delivery
of the Note.
SECTION 1.9 DUE ON SALE OR MORTGAGING, ETC. In the event
First Party sells, conveys, transfers, further mortgages or
encumbers or disposes of the Premises, or any part thereof, or
any interest therein, or agrees so to do, without the written
consent of Third Party being first obtained, or if any
controlling interest in First Party is sold, conveyed, or
transferred without the written consent of Third Party being
first obtained, then at the sole option of Third Party, the Third
Party may declare the entire Indebtedness Secured Hereby due and
payable in full and call for payment of the same in full at once.
Third Party's consent as to any one transaction shall not be
deemed to be a waiver of the right to require consent to future
or successive transactions.
SECTION 1.10 RENEWALS AND EXTENSIONS. The Note may be from
time to time renewed or extended by the holder or holders
thereof, and in any such case all the provisions of this
Indenture, and the lien hereof, shall remain in full force and
with the same effect as if said Note had originally been made to
mature at such extended time or times.
SECTION 1.11 PURPOSE. The Indebtedness Secured Hereby is
in part payment of the purchase price of the Premises; the
Indebtedness Secured Hereby is secured both by this Indenture and
by a vendor's lien on the Premises, which is expressly retained
in a deed to First Party of even date. This Indenture does not
waive the vendor's lien, and the two liens and the rights created
by this instrument shall be cumulative. Third Party may elect to
foreclose under either of the liens without waiving the other or
may foreclose under both. The deed is incorporated into this
Indenture.
ARTICLE TWO
INSURANCE AND ESCROWS
SECTION 2.1 INSURANCE. First Party shall obtain and keep
in full force and effect during the term of this Indenture, at
First Party's sole cost and expense, such insurance as called for
in the Lease, if Tenant shall fail to obtain and maintain the
same, including but not limited to insurance against loss by
fire, lightning and risk customarily covered by standard extended
coverage endorsement, including the cost of debris removal,
together with a vandalism and malicious mischief endorsement, all
in the amounts of not less than the full insurable value or full
replacement cost of the improvements on the Premises, whichever
is greater, also, Broad Form Boiler and Machinery insurance on
all equipment and pressure fired vehicles or apparatus situate on
the Premises, and providing for full repair and replacement cost
coverage; also flood insurance in the maximum obtainable amount
unless evidence is provided that the Premises are not within a
flood plain as defined by the Federal Insurance Administration;
also, Rents Loss or Business Interruption Insurance covering
risk of loss due to the occurrence of any hazards insured against
under the required fire and extended coverage insurance in an
amount equal to the annual debt service on the Note plus the
amount of insurance premiums, taxes and special assessments in
that period.
Such insurance policies shall be written on forms and with
insurance companies satisfactory to Third Party, shall name as
the insured parties the First Party, and Third Party as their
interests may appear, shall be in amounts sufficient to prevent
the First Party from becoming a co-insurer of any loss
thereunder, and shall bear a satisfactory mortgagee clause in
favor of the Third Party with loss proceeds under any such
policies to be made payable to the Third Party. First Party
shall also obtain and keep in full force and effect during the
term of this Indenture comprehensive general public liability
insurance covering the legal liability of the First Party against
claims for bodily injury, death or property damage occurring on,
in or about the Premises in such minimal amounts and with such
minimal limits as the Third Party may reasonably require. All
required policies of insurance or acceptable certificates thereof
together with evidence of the payment of current premiums
therefor shall be delivered to the Third Party. The First Party
shall, within thirty (30) days prior to the expiration,
termination, or change in or of any such policy, deliver other
original policies or certificates of the insurer evidencing the
renewal of such insurance together with evidence of the payment
of current premiums therefor. In the event of a trustee's sale
or foreclosure of this Indenture or any acquisition of the
Premises by Third Party all such policies and any proceeds
payable therefrom, whether payable before or after a foreclosure
sale, or during a period of redemption, if any, shall become the
absolute property of the Third Party to be utilized at its
discretion. In the event of a Trustee's sale or foreclosure or
the failure to obtain and keep any required insurance the First
Party empowers the Third Party to effect insurance upon the
Premises at First Party's expense and for the benefit of the
Third Party in the amounts and types aforesaid for a period of
time covering the time of redemption, if any, from foreclosure
sale, and if necessary therefore, to cancel any or all existing
insurance policies. First Party agrees to furnish Third Party
copies of all inspection reports and insurance recommendations
received by First Party from any insurer.
SECTION 2.2 ESCROWS. Upon the written request of Third
Party, First Party shall deposit with the Third Party, or at
Third Party's request, with its servicing agent on the first day
of each and every month hereafter, an amount equal to one-twelfth
(1/12th) of the estimated annual taxes and assessments and
insurance premiums ("Charges") due on the Premises. From time to
time out of such deposits Third Party will, upon the presentation
to the Third Party by the First Party of the bills therefor, pay
the Charges or will upon presentation of receipted bills
therefor, reimburse the First Party for such payments made by the
First Party. In the event the deposits on hand shall not be
sufficient to pay all of the estimated Charges when the same
shall become due from time to time, or the prior payments shall
be less than the currently estimated monthly amounts, then the
First Party shall pay to the Third Party on demand any amount
necessary to make up the deficiency. The excess of any such
deposits shall be credited to subsequent payments to be made for
such items. If a default or an event of default shall occur
under the terms of this Indenture or the Note the Third Party
may, at its option, without being required so to do, apply any
deposits on hand to the Indebtedness Secured Hereby, in such
order and manner as the Third Party may elect. When the
Indebtedness Secured Hereby has been fully paid any remaining
deposits shall be returned to the First Party as its interest may
appear. All deposits are hereby pledged as additional security
for the Indebtedness Secured Hereby, shall be held for the
purposes for which made as herein provided, but may be commingled
with other funds of the holder, shall be held without any
allowance of interest thereon and shall not be subject to the
decision or control of the First Party.
ARTICLE THREE
UNIFORM COMMERCIAL CODE
SECTION 3.1 FIXTURE FILING. This Indenture shall
constitute a security agreement as defined in the Code as adopted
in the State of Texas and until the grant of this Deed of Trust
shall terminate as provided herein, a first and prior pledge and
assignment and a first and prior lien security under the Code
with respect to the Premises. This INDENTURE SHALL BE EFFECTIVE
AS A FINANCING STATEMENT FILED AS A FIXTURE FILING from the date
of its filing in the real estate records of the County where the
Premises are situate. Information concerning the security
interest created by this instrument may be obtained from Third
Party, as secured party, at its address as set forth in page one
of this Indenture. The name of the record owner of the Premises
is the First Party and the address of the First Party, as debtor,
is as set forth in page one to this Indenture. This document
covers goods which are or are to become fixtures related to the
Premises of which the First Party is the record title owner as
more fully set forth on the first two pages of this Deed of
Trust.
SECTION 3.2 REPRESENTATIONS AND AGREEMENTS. (a) First
Party is and will be the true and lawful owner of the Premises,
subject to no liens, charges, security interest and encumbrances
other than the lien hereof and liens disclosed in writing prior
to the date hereof to Third Party; (b) any equipment or fixtures
are to be used by the First Party solely for business purposes
being installed upon the Premises for First Party's own use or as
the equipment and furnishings leased or furnished by the First
Party, as landlord, to tenants of the Premises; (c) such
equipment or fixtures will be kept at the buildings comprised in
the Premises and will not be removed therefrom without the
consent of the Third Party and may be affixed to such building
but will not be affixed to any other real estate; (d) unless
stated otherwise in this Indenture, the only persons having any
interest in the Premises are the First Party and the Third Party
and no financing statement covering any such property and any
proceeds thereof is on file in any public office except pursuant
hereto or purchase money security interests of First Party's
equipment vendors or lenders; (e) the remedies of the Third Party
hereunder are cumulative and separate, and the exercise of any
one or more of the remedies provided for herein or under the Code
shall not be construed as a waiver of any of the other rights of
the Third Party including having such non realty items deemed
part of the realty upon any sale or foreclosure thereof; (f) if
notice to any party of the intended disposition of the Premises
is required by law in a particular instance, such notice shall be
deemed commercially reasonable if given at least ten (l0) days
prior to such intended disposition and may be given by posting or
advertisement in a newspaper accepted for legal publications
either separately or as part of a notice given to sell or
foreclose the real property or may be given by private notice if
such parties are known to Third Party; (g) First Party will from
time to time provide Third Party on request with itemizations of
all such non-realty items on the Premises; (h) the filing of a
financing statement pursuant to the Code shall never impair the
stated intention of this Indenture that all the equipment,
personal property and fixtures comprising the Premises are, and
at all times and for all purposes and in all proceedings both
legal or equitable shall be regarded as part of the real property
mortgaged hereunder irrespective of whether such item is
physically attached to the real property or any such item is
referred to or reflected in a financing statement; (i) First
Party will on demand deliver all financing statements that may
from time to time be required by Third Party to establish and
perfect the priority of Third Party's security interest in such
Collateral; and (j) First Party shall give advance written notice
of any proposed change in First Party's name, identity or
structure and will execute and deliver to Third Party prior to or
concurrently with such change all additional financing statements
that Third Party may require to establish and perfect the
priority of Third Party's security interest.
SECTION 3.3 MAINTENANCE OF PROPERTY. Subject to the
provisions of this Section, in any instance where First Party in
its sound discretion determines that any item subject to a
security interest under this Indenture has become inadequate,
obsolete, worn out, unsuitable, undesirable or unnecessary for
the operation of the Premises, First Party may, at its expense,
remove and dispose of it and substitute and install other items
not necessarily having the same function, provided, that such
removal and substitution shall not impair the operating utility
and unity of the Premises. All substituted items shall become a
part of the Premises and subject to the lien of the Indenture.
Any amounts received or allowed First Party upon the sale or
other disposition of the removed items of property shall be
applied first against the cost of acquisition and installation of
the substituted items. Nothing herein contained shall be
construed to prevent any tenant or subtenant from removing from
the Premises trade fixtures, furniture and equipment installed by
it and removable by tenant under its terms of the lease, on the
condition, however, that the tenant or subtenant shall at its own
cost and expense, repair any and all damages to the Premises
resulting from or caused by the removal thereof, and shall not
remove such items without prior written notice to Third Party.
ARTICLE FOUR
APPLICATION OF INSURANCE AND AWARDS
SECTION 4.1 DAMAGE OR DESTRUCTION OF THE PREMISES. First
Party will give the Third Party prompt notice of any damage to or
destruction of the Premises and in case of loss covered by
policies of insurance the Third Party (whether before or after
foreclosure sale) is hereby authorized at its option to settle
and adjust any claim arising out of such policies and collect and
receipt for the proceeds payable therefrom, provided, that the
First Party may itself adjust and collect for any losses arising
out of a single occurrence aggregating not in excess of Ten
Thousand Dollars ($10,000.00). Any expense incurred by the Third
Party in the adjustment and collection of insurance proceeds
(including the cost of any independent appraisal of the loss or
damage on behalf of Third Party) shall be reimbursed to the Third
Party first out of any proceeds. The proceeds or any part
thereof shall be applied to reduction of the Indebtedness Secured
Hereby then most remotely to be paid, whether due or not, without
the application of any prepayment premium, or to the restoration
or repair of the Premises, the choice of application to be solely
at the discretion of Third Party.
SECTION 4.2 CONDEMNATION. First Party will give the Third
Party prompt notice of any action, actual or threatened, in
condemnation or eminent domain and hereby assigns, transfers, and
sets over to the Third Party the entire proceeds of any award or
claim for damages for all or any part of the Premises taken or
damaged under the power of eminent domain or condemnation, the
Third Party being hereby authorized to intervene in any such
action and to collect and receive from the condemning authorities
and give proper receipts and acquittances for such proceeds.
First Party will not enter into any agreements with the
condemning authority permitting or consenting to the taking of
the Premises unless prior written consent of Third Party is
obtained. To enforce its rights hereunder, Third Party shall be
entitled to participate in and control any condemnation
proceedings and to be represented therein by counsel of its own
choice, and First Party will deliver, or cause to be delivered,
to Third Party such instruments as may be requested by it from
time to time to permit such participation. In the event Third
Party, in its reasonable judgement, as a result of any such
decree, award or judgement, believes that the payment or
performance of any obligation secured by this Deed of Trust is
impaired, Third Party may, without notice, declare all of the
Indebtedness Secured Hereby immediately due and payable in full.
Any expenses incurred by the Third Party in intervening in such
action or collecting such proceeds shall be reimbursed to the
Third Party first out of the proceeds. The proceeds or any part
thereof shall be applied upon or in reduction of the Indebtedness
Secured Hereby then most remotely to be paid, whether due or not,
without the application of any prepayment premium, or to the
restoration or repair of the Premises, the choice of application
to be solely at the discretion of Third Party.
SECTION 4.3 DISBURSEMENT OF INSURANCE AND CONDEMNATION
PROCEEDS. Should any insurance or condemnation proceeds be
applied to the restoration or repair of the Premises the
restoration or repair shall be done under the supervision of an
architect acceptable to Third Party and pursuant to plans and
specifications approved by the Third Party. In such case the
proceeds shall be held by Third Party for such purposes and will
from time to time be disbursed by Third Party to defray the costs
of such restoration or repair under such safeguards and controls
as Third Party may reasonably require to assure completion in
accordance with the approved plans and specifications and free of
liens or claims. First Party shall on demand deposit with Third
Party and sums necessary to make up any deficits between the
actual cost of the work and the proceeds and provide such lien
waivers and completion bonds as Third Party may reasonably
require. Any surplus which may remain after payment of all costs
of restoration or repair may at the option of the Third Party be
applied on account of the Indebtedness Secured Hereby then most
remotely to be paid, whether due or not, without application of
any prepayment premium or shall be returned to First Party as its
interest may appear, the choice of application to be solely at
the discretion of Third Party.
SECTION 4.4 DISBURSEMENT OF INSURANCE AND CONDEMNATION
PROCEEDS PURSUANT TO THE LEASE. Should any insurance or
condemnation proceeds be required to be applied to the
restoration or repair of the Premises according to the terms of
the Lease, Third Party shall make the same available pursuant to
such terms.
ARTICLE FIVE
LEASES AND RENTS
SECTION 5.1 FIRST PARTY TO COMPLY WITH LEASES. First
Party will, at its own cost and expense, perform, comply with and
discharge all of the obligations of First Party under any leases
or agreements for the use of the Premises and use its best
efforts to enforce or secure the performance of each obligation
and undertaking of the respective tenants under any such leases
and will appear in and defend, at its own cost and expense, any
action or proceeding arising out of or in any manner connected
with the First Party's interest in any leases of the Premises.
First Party shall permit no assignment or surrender of any
tenant's interest under said leases unless the right to assign or
surrender is expressly reserved under the lease nor anticipate
any installment of rent for more than one month in advance of its
due date nor execute any mortgage or indenture or create or
permit a lien which may be or become superior to any such leases,
nor permit a subordination of any lease to such mortgage,
indenture, or lien. First Party will not modify or amend the
terms of any such leases nor borrow against or pledge the rentals
from such leases nor excuse or waive any default of the tenant
thereunder without the prior written consent of the Third Party.
SECTION 5.2 THIRD PARTY'S RIGHT TO PERFORM UNDER LEASES.
Should the First Party fail to perform, comply with or discharge
any obligations of First Party under any lease or other
obligation affecting the Premises or should the Third Party
become aware of or be notified by any tenant under any lease or
by other party to any agreement affecting the Premises of a
failure on the part of First Party to so perform, comply with or
discharge its obligations under said lease or agreement, Third
Party may, but shall not be obligated to, and without further
demand upon the First Party, and without waiving or releasing
First Party from any obligation in this Indenture contained,
remedy such failure, and the First Party agrees to repay upon
demand all sums incurred by the Third Party in remedying any such
failure together with interest at the rate as specified in the
Note. All such sums, together with interest as aforesaid shall
become so much additional Indebtedness Secured Hereby, but no
such advance shall be deemed to relieve the First Party from any
default hereunder.
SECTION 5.3 ASSIGNMENT OF LEASES,PROFITS, AND RENTS. The
First Party does hereby sell, assign and transfer unto the Third
Party all of the leases, rents and profits now due and which may
hereafter become due under or by virtue of the Lease, and any
other lease, whether written or verbal, or any agreement for the
use or occupancy of the Premises, it being the intention of this
Indenture to establish an absolute transfer and assignment of all
such leases and agreements and all of the rents and profits from
the Premises unto the Third Party including the right to collect
in its own name all of said rents and profits; provided, First
Party acknowledges that Third Party shall have the right to
collect and retain such rents and profits unless and until the
Indebtedness Secured Hereby has been paid in full. Until an
event of default exists under this Indenture, any rents from the
Premises received by Third Party shall be first applied to
accrued interest, then to principal. Upon an event of default
and whether before or after a trustees sale or the institution of
legal proceedings to foreclose this Indenture or before or after
sale thereunder or during any period of redemption existing by
law, the Third Party, and without regard to waste, adequacy of
the security or solvency of the First Party, may revoke the
application of rents stated above, and may at its option, without
notice and without in any way waiving such default, either (a) in
person or by agent, with or without taking possession of or
entering the Premises, with or without bringing any action or
proceeding, give, or require First Party to give, notice to any
or all tenants under any Lease authorizing and directing the
tenant to pay such rents and profits to Third Party; continue to
collect all of the rents and profits; enforce the payment thereof
and exercise all of the rights of the Landlord under the leases
and all of the rights of Third Party hereunder; may enter upon,
take possession of, manage and operate said Premises, or any part
thereof; may cancel, enforce or modify the leases, and fix or
modify rents make from time to time all alterations, renovations,
repairs or replacements and do any acts which the Third Party
deems proper to protect the security hereof with or without the
taking possession of the Premises;or (b) apply for the
appointment of a receiver in accordance with the statutes and
laws made and provided for, which receivership First Party hereby
consents to, who shall collect the rents and profits, and all
other income of any kind; manage the premises so as to prevent
waste; execute leases within or beyond the period of
receivership, and perform the terms of the Indenture and apply
the rents and profits as hereinafter provided. Any such rents,
issues, and profits shall be applied to the payment when due of:
(i) all reasonable fees of any receiver appointed hereunder, (ii)
tenants security deposits, (iii) prior or current real state
taxes or special assessments then due,(iv) premiums for insurance
of the type required by the Indenture or, if the Indenture so
requires, to the periodic escrow for payment of the taxes or
special assessments then due, and (v) such alterations,
renovations, repairs and replacements and expenses incident to
taking and retaining possession of the Premises and managing and
operating the same and keeping the same properly insured and all
expenses for normal maintenance of the Premises, with interest on
all such items, in such order of priority as to any of such items
as Third Party in its sole discretion may determine, any statute,
law, custom, or use to the contrary notwithstanding. Any rents
remaining after application or the above items shall be applied
to the Indebtedness Secured Hereby. If the Premises shall be
foreclosed and sold pursuant to a foreclosure sale, then:
(a) If the Third Party is the purchaser at the
foreclosure sale, the rents shall be paid to the Third
Party to be applied to the extent of any deficiency
remaining after the sale, the balance to be retained by
the Third Party, and if the Premises be redeemed by the
First Party or any other party entitled to redeem, to
be applied as a credit against the redemption price
with any remaining excess rents to be paid to the First
Party, provided, if the Premises not be redeemed, any
remaining excess rents to belong to the Third Party,
whether or not a deficiency exists;
(b) If the Third Party is not the purchaser at the
foreclosure sale, the rents shall be paid to the Third
Party to be applied first, to the extent of any
deficiency remaining after the sale, the balance to be
retained by the purchaser, and if the Premises be
redeemed by the First Party or any other party entitled
to redeem, to be applied as credit against the
redemption price with any remaining excess rents to
paid to the First Party; provided, if the Premises are
not redeemed, any remaining excess rents shall be paid
first the purchaser at the foreclosure sale in an
amount equal to the interest accrued upon the sale
price, then to the Third Party to the extent of any
deficiency remaining unpaid and then the remainder to
the purchaser.
The entering upon and taking possession of the Premises, the
collection of such rents and profits and the application thereof
as aforesaid shall not cure or waive any defaults under this
Indenture nor in any way operate to prevent the Third Party from
pursuing any other remedy which it may now or hereafter have
under the terms of this Indenture or shall it in any way be
deemed to constitute the Third Party a mortgagee-in-possession.
The rights and powers of the Third Party hereunder shall remain
in full force and effect both prior to and after any foreclosure
of the Indenture and any sale pursuant thereto and until
expiration of the period of redemption from said sale, regardless
of whether a deficiency remains from the sale.
First Party covenants and represents to Third Party that (i)
First Party has full right, title, power and authority to assign
the leases and the rents, income and profits due or to become due
thereunder, (ii) no other assignment of any interest therein has
been made, (iii) there are no existing defaults under the
provisions of the leases, (iv) First Party has not performed any
act or executed any instrument which might prevent Third Party
from operating under any terms and conditions hereof or which
would have limited First Party in such operation, and (v) First
Party has not accepted and will not accept rent in excess of one
month in advance.
First Party hereby authorizes Third Party to give notice in
writing of this Assignment at any time and from time to time to
any tenant under any of the leases. The Third Party shall not be
obligated to perform or discharge any obligation or liability of
the landlord under any of said leases or under or by reason of
this Assignment; and the First Party shall and does hereby agree
to indemnify and hold the Third Party harmless of and from any
and all expenses, liability, loss or damage which it might incur
under said leases or under or by reason of this Assignment, and
of and from any and all claims by reason of any alleged
obligations or undertakings on its part to perform or discharge
any of the terms, covenants, or agreements contained in the
leases except by reason of Third Party's gross negligence or
willful misconduct.
Should Third Party incur any liability, loss, or damage under the
leases or under or by reason of this Assignment, or in the
defense of any such claims or demands, the amount thereof,
including costs, expenses, and reasonable attorney's fees, shall
be secured hereby; First Party shall reimburse Third Party
therefor immediately upon demand, and upon failure of First Party
so to do, Third Party may declare all sums secured hereby
immediately due and payable.
The purchaser at any foreclosure sale, including the Third Party,
shall have the right, at any time and without limitation, to
advance money to any receiver appointed hereunder to pay any part
or all of the items which the receiver would otherwise be
authorized to pay if cash were available from the Premises and
the sum so advanced, with interest at the rate provided for in
the Note, shall be a part of the sum required to be paid to
redeem from any foreclosure sale.
The rights hereunder shall in no way be dependent upon and shall
apply without regard to whether the Premises are in danger of
being lost, materially injured or damaged or whether the Premises
are adequate to discharge the Indebtedness Secured Hereby. The
rights contained herein are in addition to and shall be
cumulative with the rights given in any separate instrument, if
any, assigning any leases, rents and profits of the Premises and
shall not amend or modify the rights in any such separate
agreement.
Third Party may take or release other security, may release any
party primarily or secondarily liable for any Indebtedness
Secured Hereby, may grant extensions, renewals or indulgences
with respect to such indebtedness, and may apply any other
security therefor held by it to the satisfaction of such
indebtedness, without prejudice to any of its rights hereunder.
The violation of any of the covenants, representations, or
provisions contained herein by First Party shall be deemed to be
a default hereunder and under the terms of the Note and Deed of
Trust. A default by First Party under the terms of any of the
leases which would entitled the lessee or tenant thereunder to
cancel and terminate such lease shall be deemed a default under
the terms of the Note and the Deed of Trust. Any expenditures
made by Third Party in curing any such default on First Party's
behalf, with interest thereon at the highest lawful rate, shall
become part of the Indebtedness Secured Hereby.
ARTICLE SIX
RIGHTS OF THIRD PARTY
SECTION 6.1 RIGHT TO CURE DEFAULT. If the First Party
shall fail to comply with any of the covenants or obligations of
this Indenture, the Third Party may, but shall not be obligated
to, without further demand upon First Party, and without waiving
or releasing First Party from any obligation in this Indenture
contained, remedy such failure, and the First Party agrees to
repay upon demand all sums incurred by the Third Party in
remedying any such failure together with interest at the rate as
specified in the Note. All such sums, together with interest as
aforesaid shall become so much additional Indebtedness Secured
Hereby, but no such advance shall be deemed to relieve the First
Party from any failure hereunder.
SECTION 6.2 NO CLAIM AGAINST THE THIRD PARTY OR TRUSTEE.
Nothing contained in this Indenture shall constitute any consent
or request by the Third Party or Trustee, express or implied, for
the performance of any labor or services or for the furnishing of
any materials or other property in respect of the Premises or any
part thereof, nor as giving the First Party or any party in
interest with First Party any right, power or authority to
contract for or permit the performance of any labor or services
or the furnishing of any materials or other property in such
fashion as would create any personal liability against the Third
Party or Trustee in respect thereof or would permit the making of
any claim that any lien based on the performance of such labor or
services or the furnishing of any such materials or other
property is prior to this Indenture.
SECTION 6.3 INSPECTION. First Party will permit the Third
Party's authorized representatives to enter the Premises at all
times for the purpose of inspecting the same; provided the Third
Party shall have no duty to make such inspections and shall not
incur any liability or obligation for making or not making any
such inspections.
SECTION 6.4 WAIVERS; RELEASES; RESORT TO OTHER SECURITY,
ETC. Without affecting the liability of any party liable for
payment of any Indebtedness Secured Hereby or performance of any
obligation contained herein, and without affecting the rights of
the Third Party or Trustee with respect to any security not
expressly released in writing, the Third Party may, at any time,
and without notice to or the consent of the First Party or any
party in interest with the Premises or the Note (a) release any
person liable for payment of all or any part of the Indebtedness
Secured Hereby or for performance of any obligation herein, (b)
make any agreement extending the time or otherwise altering the
terms of payment of all or any part of the Indebtedness Secured
Hereby or modifying or waiving any obligation, or subordinating,
modifying or otherwise dealing with the lien or charge hereof,
(c) accept any additional security, (d) release or otherwise deal
with any property, real or personal, including any or all of the
Premises, including making partial releases of the Premises; or
(e) resort to any security agreements, pledges, contracts of
guarantee, assignments of rents and leases or other securities,
and exhaust any one or more of said securities and the security
hereunder, either concurrently or independently and in such order
as it may determine.
SECTION 6.5 RIGHTS CUMULATIVE. Each right, power or
remedy herein conferred upon the Third Party is cumulative and in
addition to every other right, power or remedy, express or
implied, now or hereafter arising, available to Third Party, at
law or in equity, or under the Code, or under any other
agreement, and each and every right, power and remedy herein set
forth or otherwise so existing may be exercised from time to time
as often and in such order as may be deemed expedient by the
Third Party and shall not be a waiver of the right to exercise at
any time thereafter any other right, power or remedy. No delay
or omission by the Third Party in the exercise of any right,
power or remedy arising hereunder or arising otherwise shall
impair any such right, power or remedy or the right of the Third
Party to resort thereto at a later date or be construed to be a
waiver of any default or event of default under this Indenture or
the Note.
SECTION 6.6 SUBSEQUENT AGREEMENTS. Any agreement
hereafter made by First Party and Third Party pursuant to this
Indenture shall be superior to the rights of the holder of any
intervening lien or encumbrance.
SECTION 6.7 WAIVER OF APPRAISEMENT, HOMESTEAD, MARSHALING.
The First Party hereby waives to the full extent lawfully allowed
the benefit of any homestead, appraisement, evaluation, stay and
extension laws now or hereinafter in force. First Party hereby
waives any rights available with respect to marshaling of assets
so as to require the separate sales of any portion of the
Premises, or as to require the Third Party to exhaust its
remedies against a specific portion of the Premises before
proceeding against the other and does hereby expressly consent to
and authorize the sale of the Premises or any part thereof as a
single unit or parcel.
SECTION 6.8 BUSINESS LOAN REPRESENTATIONS. The First
Party represents and warrants to Third Party that the loan
evidenced by the Note is a business loan transacted solely for
the purpose of carrying on the business of First Party and does
not constitute the homestead of First Party.
ARTICLE SEVEN
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT. It shall be an event of
default under this Indenture if (a) the First Party or any co-
maker, guarantor or surety shall fail to pay any principal or
interest on the Note when and as the same becomes due (whether
Tenant shall pay rent under the Lease or not, or whether such
failure of First Party to pay shall occur at the stated maturity
or at a date fixed for any installment payment or any accelerated
payment date or otherwise); or (b) the First Party shall fail to
comply with or perform any of the terms, conditions or covenants
of the Note or of this Indenture; or (c) the First Party shall
fail to pay when due any other Indebtedness Secured Hereby; or
(d) the First Party, or any maker, guarantor or surety of the
Note shall make an assignment for the benefit of its creditors,
or shall admit in writing its inability to pay its debts as they
become due or shall file a petition in bankruptcy, or shall be
adjudicated a bankrupt or insolvent, or shall file a petition
seeking any reorganization, dissolution, liquidation,
arrangement, composition, readjustment or similar relief under
any present or future bankruptcy or insolvency statute, law or
regulation or shall file an answer admitting to or not contesting
the material allegations of a petition filed against it in such
proceedings, or shall not within sixty (60) days after the filing
of such a petition have the same dismissed or vacated, or shall
seek or consent to or acquiesce in the appointment of any
trustee, receiver or liquidator of a material part of its
properties, or shall not within sixty (60) days after the
appointment without the consent or acquiescence of it of a
trustee, receiver or liquidator of any material part of its
properties have such appointment vacated; or (e) the First Party
shall default in the performance of any terms, conditions or
covenants of any other instrument securing the Note; or (f) any
representation or warranty made by First Party herein, in the
Note or in any other instrument securing the Note shall be false,
breached or dishonored; or (g) the First Party or any maker,
guarantor or surety of the Note shall be adjudged incompetent or
die and satisfactory provisions are not made for the substitution
of the liability of said party's estate for the repayment of the
Indebtedness Secured Hereby or the First Party shall be
dissolved, liquidated or wound up.
SECTION 7.2 THIRD PARTY AND TRUSTEE'S POWER TO ACCELERATE
AND SELL.
(a) Upon default by First Party in the payment when
due, time being of the essence, of any Indebtedness
Secured Hereby, or default by First Party in the
performance of any agreement hereunder, or an event of
default shall occur, then all of the unpaid principal
Indebtedness Secured Hereby, including any payments or
advances made by Third Party under the provisions
hereof, together with all earned or accrued interest,
court costs, and reasonable attorney's fees hereunder,
shall without demand or presentment, notice, protest,
or action of any nature (each of which is expressly
waived by First Party hereby) at the option of Third
Party immediately become due and payable, and the said
Trustee hereunder shall at the request of said Third
Party enforce this Trust;and
(b) and after advertising the time, place and terms of
the sale, and the property to be sold, by posting or
causing to be posted written or printed notice thereof
for at least the number of days required by applicable
law or statute, including but not limited to Section
51.002, Texas Property Code, as amended, successively
next before the date of said sale at the courthouse
door of the county or counties where said real estate
is situated, and with the County Clerk of such county
or counties, which notices may be posted by the Trustee
acting or by any other person, the Trustee shall sell
the same, in accordance with such advertisement at
public auction in front of the courthouse door of such
county or counties where such real estate is situated
on the first Tuesday of any month between the hours of
l0:00 A.M. and 4:00 P.M. to the highest bidder for cash
and sell all the property so advertised, as an entirety
or in parcels as the Trustee acting may elect, and make
due conveyance to the purchaser or purchasers with
general warranty binding said First Party herein, its
successors and assigns. And a sale of less than the
whole of the property herein conveyed or any defective
or irregular sale made hereunder shall not exhaust the
power of sale herein conferred, but subsequent sales
hereunder may be made as long and as often as any of
this Indebtedness Secured Hereby remains unpaid and any
of said property exists. The recitals in any conveyance
executed by the Trustee shall be full evidence of the
truth of the matters therein stated, and all
prerequisites to said sale shall be presumed to have
been performed, and such sale and conveyance shall be
conclusive against First Party, regardless of whether
such prerequisites actually shall have been performed.
Third Party may become the purchaser at any sale, being
the highest bidder, and
(c) In addition to the posting of the notice provided
above, Third Party shall, at least twenty-one (21) days
preceding the date specified in the hereinabove
described notice as the date upon which said property
will be sold as aforesaid, serve written notice of the
proposed sale by certified mail on each debtor
obligated to pay such debt according to the records of
the Third Party, which service shall be completed upon
deposit of the notice, or a copy thereof, enclosed in a
postpaid wrapper, properly addressed to each of such
debtors at the most recent address as shown by the
records of Third Party, in a post office or official
depository under the care and custody of the United
States Postal Service, or its successors. It is
expressly agreed that the affidavit of any person
having knowledge of the facts to the effect that such
service was completed as aforesaid, shall be prima
facie evidence of the fact of such service and it is
further expressly agreed and stipulated that Third
Party, or employee, agent, or representative of Third
Party may make such service as aforesaid, and
(d) The Trustee making such sale shall receive the
proceeds thereof and apply the same as follows: (1) pay
the reasonable expenses of this trust and the
attorney's fees provided in said Note; (2) all amounts
with interest as aforesaid that may have been expended
by the holder of any part of the Indebtedness Secured
Hereby arising under the covenants and agreements
hereinabove contained and not evidenced by the Note;
(3) all past due interest and accrued interest; (4) the
unpaid principal of the Indebtedness Secured Hereby;
and (5) the remainder of such proceeds of sale, if any,
shall be paid to First Party or its assigns. In the
event the hereinbefore described property becomes
vacant and remains vacant for a period of thirty (30)
days, or in case any default is made in the payment of
the Indebtedness Secured Hereby, or any portion
thereof, or in case default is made in any covenant or
agreement made herein, or in the Note secured hereby,
then all rents, revenues, rights and profits arising or
accruing from said property, are hereby assigned,
transferred and set out to Third Party, and Third Party
is hereby expressly authorized and empowered to enter
upon said Premises, take possession thereof and rent
same for such rental as it may deem proper; to collect
and receive all rentals, revenues, rights and profits
arising or accruing therefrom, and to manage and
control said property so long as such vacancy or
default shall continue, and all tenants, or other
persons then in possession of said property, are hereby
directed upon production of this Indenture or certified
copy hereof, to pay all such rents, revenues, rights
and profits to Third Party. The provision of this
Section shall become effective immediately upon the
happening of any such vacancy or default, and as often
as same shall occur, and shall remain effective so long
as any such vacancy or default shall continue. Any
monies or rents collected by Third Party, less
reasonable expenses of collection, shall be applied on
the Indebtedness Secured Hereby, and to such portion or
items of said indebtedness as Third Party may elect.
The exercise of its rights under this Section by Third
Party shall not in anyway prejudice or impair otherwise
its right of foreclosure hereunder, nor shall Third
Party be liable for any inability or failure to collect
such rents. First Party specifically agrees that after
any sale under this Indenture it shall be a mere tenant
at sufferance of the purchaser of said property at the
Trustee's sale, and that purchaser shall be entitled to
immediate possession thereof, and that if the First
Party fails to vacate the Premises immediately, the
purchaser may, and he shall have the right to go into
any justice court in the precinct or county in which
the property is located and file an action in forcible
entry and detainer, which action shall lie against the
First Party as tenant at sufferance,and
(e) Third Party may, at its option, accomplish all or
any of the aforesaid in such manner as permitted or
required by Chapter 51 of the Texas Property Code as
then amended relating to the sale of real estate or by
Chapter 9 of the Texas Business and Commerce Code
relating to the sale of collateral after default by a
debtor (as said article or chapter now exist or may be
hereinafter amended or succeeded), or by any other
present or subsequent articles or enactments relating
to same. In instances where the personalty is located
in states other than Texas, such sales shall be made in
accordance with local law for such state, including, to
the extent there relevant, the Uniform Commercial Code
there in effect. Nothing contained in the Paragraph
shall be construed to limit in any way Trustee's right
to sell the Premises by private sale if, and to the
extent that such private sale is permitted under
applicable law or by public or private sale after entry
of a judgment by any court of competent jurisdiction
ordering same. At any such sale:
(i) whether made under the
power herein contained, the aforesaid Chapter
51 the Texas Property Code, any other
applicable law or by virtue of any judicial
proceedings or any other legal right, remedy or
recourse, it shall not be necessary for Trustee
to have physically present, or to have
constructive possession of, the Premises (First
Party shall deliver to Trustee any portion of
the Premises not actually or constructively
possessed by Trustee immediately upon demand by
Trustee) and the title to and right of
possession of any such property shall pass to
the purchaser thereof as completely as if the
same had been actually present and delivered to
purchaser at such sale;
(ii) each instrument
of conveyance executed by Trustee shall contain
a general warranty of title, binding upon First
Party;
(iii) each and every
recital contained in any instrument of
conveyance made by Trustee shall conclusively
establish the truth and accuracy of the matters
recited therein, including, without limitation,
matters recited therein, including, without
limitation, nonpayment of the Indebtedness,
advertisement and conduct of such sale in the
manner provided herein and otherwise by law and
appointment of any successor Trustee hereunder;
(iv) any and all
prerequisites to the validity thereof shall be
conclusively presumed to have been performed;
(v) the receipt of Trustee
or of such other party or officer making the
sale shall be sufficient to discharge to the
purchaser or purchasers for his or their
purchase money, and no such purchaser or
purchasers, or his or their assigns or personal
representatives, shall thereafter be obligated
to see to the application of such purchase
money be in any way answerable for any loss,
misapplication or nonapplication thereof;
(vi) to the fullest
extent permitted by law, First Party shall be
completely and irrevocably divested of all of
its right, title, interest, claim and demand
whatsoever, either at law or in equity, in and
to the property sold, and such sale shall be a
perpetual bar, both at law and in equity,
against First Party and against all other
persons claiming or to claim the property sold
or to any part thereof by, through or under
First Party; and
(vii) to the extent and
under such circumstances as are permitted by
law, Third Party may be a purchaser at any such
sale.
SECTION 7.3 DIVESTMENT OF RIGHTS; TENANT AT SUFFERANCE.
After sale of the Premises, or any portion thereof, First Party
will be divested of any and all interest and claim thereto,
including any interest or claim to all insurance policies, bonds,
loan commitments and other intangible property covered hereby.
Additionally, with respect to the Premises, after a sale of all
or any portion thereof, First Party will be considered a tenant
at sufferance of the purchaser of the same, and said purchaser
shall be entitled to immediate possession thereof, and if First
Party shall fail to vacate the Premises immediately, purchaser
may and shall have the right, without further notice to First
Party, to go into any justice court in any precinct or county in
which the Premises is located and file an action in forcible
entry and detainer, which action shall lie against the First
Party or its assigns or legal representatives, as a tenant at
sufferance. This remedy is cumulative of any and all remedies
the Third Party may have hereunder or otherwise.
SECTION 7.4 RECEIVER. Upon an event of default or
bringing of any suit or action to foreclose this Indenture or to
enforce any other remedy available hereunder, the Third Party
shall be entitled as a matter of right without notice and without
giving bond and without regard to the solvency or insolvency of
the First Party, or waste of the Premises or adequacy of the
security of the Premises, to obtain the appointment of a receiver
of all of the Premises and of the earnings, rents and profits
thereof under any statute or law providing for the same with the
right to apply the earnings, rents and payments to the costs and
expenses of the receivership, including reasonable attorney's
fees, to the repayment of the Indebtedness Secured Hereby and to
the operation, maintenance, upkeep and repair of the Premises,
including payment of taxes on the Premises and payments of
premiums of insurance on the Premises to which appointment the
First Party does hereby irrevocably consent.
SECTION 7.5 RIGHTS UNDER CODE. In addition to the rights
available to the Third Party hereunder, Third Party shall also
have all the rights, remedies and recourse available to a secured
party under the Uniform Commercial Code including the right to
proceed under the provisions of the Uniform Commercial Code
governing default as to any Personal Property which may be
included in the Premises or which may be deemed non-realty or to
proceed as to such personal property in accordance with the
procedures and remedies available pursuant to a trustee's sale or
foreclosure of real estate, in addition to, and not in limitation
of the other rights, remedies, and recourses afforded by the Note
and at law or in equity.
SECTION 7.6 RIGHT TO DISCONTINUE PROCEEDINGS. In the
event Third Party shall have requested Trustee to invoke any
right, remedy or recourse permitted under this Indenture and
shall thereafter elect to discontinue or abandon the same for any
reason, Third Party shall have the unqualified right to do so and
in such event First Party, Trustee and Third Party shall be
restored to their former positions with respect to the
Indebtedness Secured Hereby. This Indenture, the Premises and
all rights, remedies and recourse of Third Party shall continue
as if the same had not been invoked.
SECTION 7.7 SUCCESSOR TRUSTEE. At the option of the Third
Party, with or without any reason, a successor or substitute
Trustee may be appointed by Third Party without any formality
other than a designation in writing of a successor or substitute
Trustee, who shall thereupon become vested with and succeed to
all the powers and duties given to the Trustee herein named, the
same as if the successor or substitute Trustee had been named
original Trustee herein; and such right to appoint a successor or
substitute Trustee shall exist as often and whenever Third Party
desires. If Third Party is a corporation, the corporation may
act through any authorized officer, or by any agent or attorney
in fact properly authorized by any such officer.
ARTICLE EIGHT
HAZARDOUS MATERIALS
SECTION 8.1 DEFINITIONS.
a. "Hazardous Substance" means hazardous substance
or waste, toxic substances, polychlorinated
biphenyls. asbestos or related materials, including
but not limited to, substances defined as "hazardous
substance(s)," "toxic substance(s)," "hazardous
waste," "pollutant," or "contaminant" in the
Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sec.
9061, et seq. ("CERCLA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Sec. 6901, et seq., the
Federal Resource Conservation and Recovery Act of
1976 ("RCRA") and any other federal, state or local
environmental laws, statutes, regulations,
requirements and ordinances. The term does include
petroleum, including crude oil or any fraction
thereof, natural gas and natural gas liquids,
liquefied natural gas, and synthetic gas usable for
fuel or mixtures thereof.
b. Hazardous Substance Claim ("Claim") means
discovery of Hazardous Substance on the Premises or
receipt of a notice, claim, demand or complaint from
any government agency or office or from any third
party for the payment of damages, costs or expenses
for Hazardous Substance disposal or remedial action
pursuant to federal, state or local law relative to
the Premises and relating to Hazardous Substance
deposited on the Premises prior to the time that
Third Party becomes an owner of the Premises,
including, but not limited to, legal, engineering,
testing and other fees. A "Claim" shall not include
deposits of any Hazardous Substance by Third Party,
its agents or employees.
c. Hazardous Substance Liability ("Liability")
means the occurrence of a claim, and all damages,
costs and expenses in connection therewith, including
but not limited to legal, engineering, testing and
other fees, and including a final determination or
judgment entered or agreed upon.
SECTION 8.1 CERTIFICATION. First Party covenants,
represents and warrants to Third Party, its successors and
assigns, (i) that it has not used or permitted the Premises to be
used, and will not knowingly permit the Premises to be used,
whether directly or through contractors, agents or tenants, and
to the best of First Party's knowledge after reasonable
investigation and except as disclosed to Third Party in writing
prior to the date thereof, the Premises has not at any time been
used for the generating, transporting, treating, storage,
manufacture, emission or, disposal of any Hazardous Substance;
(ii) to the best of First Party's actual knowledge, that except
as disclosed to Third Party in writing prior to the date thereof,
there have been no investigations or reports involving First
Party or the Premises by any governmental authority which in any
way pertain to Hazardous Substances; (iii) to the best of First
Party's actual knowledge, except as disclosed to Third Party
prior to the date hereof, that the operation of the Premises has
not violated and is not currently violating, and shall not
violate during the term of this Deed of Trust, any federal, state
or local law, regulation, ordinance or requirement governing
Hazardous Substance; (iv) to the best of First Party's actual
knowledge, that the Premises is not listed in the United States
Environmental Protection Agency's National Priorities List of
Hazardous Waste Sites nor any other list, schedule, log,
inventory or record of Hazardous Substance or hazardous waste
sites, whether maintained by the United States Government or any
state or local agency; and (v) that, to the best of First Party's
actual knowledge, the Premises does not contain any formaldehyde,
urea or asbestos, except as may have been disclosed in writing to
the Third Party by the First Party at the time of execution and
delivery of this Deed of Trust.
SECTION 8.3 NOTICE. If a Claim occurs, the First Party
upon receiving actual or constructive notice thereof shall
immediately notify the Third Party in writing.
SECTION 8.4 DISPOSAL. If a Claim occurs, First Party
will proceed immediately and diligently after receipt of notice
of the Claim to dispose of or secure the Hazardous Substance in
full compliance with all applicable laws and regulations, and if
First Party fails to commence disposal or security within five
(5) days after receipt of notice of a Claim or if in the sole
opinion of Third Party the Hazardous Substance imposes a threat
requiring immediate attention, Third Party may at its option
proceed to so dispose of or secure the Hazardous Substance,
provided, however, if the First Party in good faith believes that
the claimed Hazardous Substance is not in fact a Hazardous
Substance, First Party shall have the right to challenge such
Claim in an appropriate forum before commencing such disposal
work.
SECTION 8.5 LEGAL ACTIONS. In the event legal action is
taken against Third Party or the Premises regarding a Claim, or
commenced by First Party to challenge a Claim, First Party shall
defend such action at its own expense, and Third Party shall
cooperate with First Party in the defense thereof, or at Third
Party's election, assume the defense at the expense of First
Party. Third Party shall have the right to join First Party as
party defendant in any such legal action brought against it or
the Premises, and First Party hereby consents to the entry of an
order making it a party defendant.
SECTION 8.6 INDEMNITY. First Party shall at all times
indemnify and save Third Party harmless from and against all
liability which Third Party may, for any cause and at any time,
sustain or incur by reason of a Claim, including but not limited
to any loss, including attorneys fees, as a result of any
inaccuracy in any statements herein certified.
SECTION 8.7 PAYMENT BY FIRST PARTY. First Party shall
pay, upon demand by Third Party, the amount of any Liability paid
by Third Party. First Party shall satisfy and discharge any
judgment recovered against Third Party or the Premises by reason
of such Liability promptly after the entry thereof, unless an
appeal is taken and any bonds required to stay the collection
thereof are procured and filed by First Party. If a final
judgment is entered against Third Party or the Premises after
appeal, Third Party shall satisfy and discharge such judgment.
Third Party may in its reasonable discretion make any payment as
required herein, and First Party shall promptly repay to Third
Party the amount of such payment, with interest.
SECTION 8.8 RELIANCE AND BENEFIT. First Party is aware
that Third Party is relying on the representations and covenants
contain in this Article in making the loan secured by this Deed
of Trust, and all collateral security documents. This Article
shall be binding upon and shall inure to the benefit of the
parties, their legal representatives, successors, and assigns and
shall survive the foreclosure of this Deed of Trust or acceptance
of a deed in lieu of such a foreclosure.
ARTICLE NINE
MISCELLANEOUS
SECTION 9.1 RELEASE OF TRUST. When all Indebtedness
Secured Hereby has been paid, this Indenture and all assignments
herein contained shall be released at the cost and expense of the
First Party, otherwise to remain in full force and effect.
SECTION 9.2 CHOICE OF LAW. This Indenture is intended to
be construed under the laws of the state where the Premises are
situate.
SECTION 9.3 CHANGES OF OWNERSHIP. In the event that the
ownership of the Premises becomes vested in a person or persons
other than the First Party, the Third Party may continue to deal
with the First Party without any obligation to deal with such
successor or successors in interest with reference to this
Indenture and the Indebtedness Secured Hereby until notified of
such vesting. Upon such notification, the Third Party may
thereafter deal with such successor in place of First Party
without any obligation to thereafter deal with First Party and
without waiving any liability of First Party hereunder or under
the Note. The First Party shall give immediate written notice to
the Third Party of any conveyance, transfer or change of
ownership of the Premises but nothing in this Section contained
shall constitute the consent of the Third Party to any such
conveyance, transfer or change or negate any provisions elsewhere
in this Indenture giving Third Party the right to declare the
entire unpaid balance of the Indebtedness Secured Hereby due and
payable immediately on such vesting.
SECTION 9.4 SUCCESSORS AND ASSIGNS. This Indenture and
each and every covenant, agreement and other provision hereof
shall be binding upon the First Party and its successors and
assigns including without limitation each and every from time to
time record owner of the Premises or any other person having an
interest therein, shall run with the land, and shall inure to the
benefit of the Third Party and its successors and assigns. As
used herein the words "successors and assigns" shall also be
deemed to include the heirs, representatives, administrators and
executors of any natural person who is a party to this Indenture.
SECTION 9.5 UNENFORCEABILITY OF CERTAIN CLAUSES. The
enforceability or invalidity of any provisions hereof shall not
render any other provision or provisions herein contained
unenforceable or invalid.
SECTION 9.6 CAPTIONS AND HEADINGS. The captions and
headings of the various sections of this Indenture are for
convenience only and are not to be construed as confining or
limiting in any way the scope or intent of the provisions hereof.
Whenever the context requires or permits the singular shall
include the plural, the plural shall include the singular and the
masculine, feminine and neuter shall be freely interchangeable.
SECTION 9.7 NOTICES. Any notice which any party hereto
may desire or may be required to give to any other party shall be
in writing and the mailing thereof by certified mail or
nationally recognized overnight carrier to their respective
addresses as set forth in this Indenture or to such other places
any party hereto may hereafter by notice in writing designate
shall constitute service of notice hereunder.
SECTION 9.9 LIMITATIONS. All agreements between First
Party hereof and Third Party hereof are hereby expressly limited
so that in no contingency or event whatsoever, shall the amount
paid, or agreed to be paid, to the Third Party hereof for the
use, forbearance or detention of the money to be loaned under
said Note exceed the maximum amount permissible under applicable
law. If, for any circumstances whatsoever, fulfillment of any of
the provisions hereof or of said Note at the time performance of
such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then, ipso facto, the obligation
to be fulfilled shall be reduced to the limit of such validity,
and if from any circumstances Third Party hereof should ever
receive as interest an amount that would exceed the highest
lawful rate, such amount that would be excessive interest shall
be applied to the reduction of the principal amount owed under
said Note and not to the payment of interest or shall be refunded
to First Party hereof.
SECTION 9.9 TRUSTEE. Trustee accepts this Trust when
this Indenture, duly executed and acknowledged is made a public
record as provided by law.
SECTION 9.10 REQUEST FOR COPY OF NOTICE OF DEFAULT. First
Party requests that a copy of any notice of default and of any
notice of sale hereunder be mailed to him at the address
hereinabove set forth.
SECTION 9.11 REMEDIES CUMULATIVE, CONCURRENT AND NON-
EXCLUSIVE. Trustee and Third Party shall have all rights,
remedies and recourses granted in the documentation executed by
First Party or Third Party respecting the Premises and available
at law or equity (including specifically, but not limited to,
those granted by the Uniform Commercial Code in effect and
applicable to the Premises or any portion thereof) and same (a)
shall be cumulative and concurrent; (b) may be pursued
separately, successively or concurrently against First Party, any
Guaranty or others obligated under the Note, or against the
Premises, or against any one or more of them at the sale
discretion of Third Party; (c) may be exercised as often as
occasion thereof shall arise, it being agreed by First Party that
the exercise or failure to exercise any of the same shall in no
event be construed as a waiver or release thereof or of any other
right, remedy or recourse; and (d) are intended to be, and shall
be, nonexclusive.
SECTION 9.12 RELEASE OF AND RESORT TO COLLATERAL. Any
part of the Premises may be released by the Third Party without
affecting, subordinating or releasing the lien, security interest
and assignment hereof against the remainder. The lien, security
interest and other rights granted hereby shall not affect or be
affected by any other security taken for the same indebtedness or
any part thereof. The taking of additional security, or the
rearrangement, extension or renewal of the Indebtedness, or any
part thereof, shall not release or impair the lien, security
interest and other rights granted hereby or affect the liability
of any endorser, guarantor or surety, or improve the right of any
permitted junior lienholder; and this Deed of Trust, as well as
any instrument given to secure any rearrangement, renewal or
extension of the Indebtedness Secured Hereby, or any part
thereof, shall be and remain a first and prior lien, except as
otherwise provided herein, on all of the Premises not expressly
released until the Indebtedness is completely paid.
SECTION 9.13 WAIVER OF REDEMPTION, NOTICE AND MARSHALLING
OF ASSETS. To the fullest extent permitted by law, First Party
hereby irrevocably and unconditionally waives and releases (a)
all benefits that might accrue to First Party by any present or
future laws exempting the Premises from attachment, levy or sale
on or providing for any appraisement, valuation, stay of
execution, exemption from civil process, redemption or extension
of time for payment; (b) all notices of any Event of Default
(except as may be provided for under the terms hereof) or of
Third Party's or Trustee's election to exercise or the actual
exercise of any right, remedy or recourse provided for under the
documents of this transaction between the First Party and the
Third Party; (c) any right to appraisal or marshall of assets or
a sale in inverse order of alienation; (d) the exemption of
homestead; and (e) the administration of estates of decedents, or
other matters whatever to defeat, reduce or affect the right of
Third Party under the terms of this Deed of Trust, to sell the
Premises for the collection of the Indebtedness Secured Hereby
(without any prior or different resort for collection) or the
right of Third Party, under the terms of this Deed of Trust, to
the payment of the Indebtedness Secured Hereby out of the
proceeds of sale of the Premises in preference to every other
person and claimant whatever (only reasonable expenses of such
sale being first deducted). First Party expressly waives and
relinquishes any right or remedy which it may have or be able to
assert by reason of the provisions of Chapter 34 of the Business
and Commerce Code of the State of Texas pertaining to the rights
and remedies of sureties.
IN WITNESS WHEREOF, the First Party has caused these
presents to be executed effective as of the date first above
written.
/s/ John Shulz
John Schultz John Schulz /s/ JS [changed to conform
to the facts]
/s/ Tom Bibleheimer
Tom Bibleheimer
STATE OF California)
)ss.
COUNTY OF San Diego)
The foregoing instrument was acknowledged before me this
5th day of November, 1996, by John Schultz and Tom Bibleheimer.
/s/ L. Matella
Notary Public
[notary seal]
THIS DOCUMENT WAS DRAFTED BY and AFTER RECORDING, RETURN THIS
DOCUMENT TO:
Michael B. Daugherty
1300 Minnesota World Trade Center
30 South Seventh Street
St. Paul, Minnesota 55101
(612) 720-0777
Exhibit A
Legal Description
Lot 2, Hesters Crossing Shopping Center, a subdivision of
Williamson County, Texas, according to the map or plat of record
in Cabinet H, Slide 221, Plat Records of Williamson County,
Texas.
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 6th day of
November, 1996, by and between Texas Taco Cabana LP ("Tenant"),
whose address is 8918 Tesero Drive Suite 200, San Antonio, Texas,
AEI Net Lease Income & Growth Fund XIX Limited Partnership
("Mortgagee"), whose address is 1300 Minnesota World Trade
Center, Saint Paul Minnesota, and John Schultz and Tom
Bibleheimer ("Mortgagor"), whose addresses are 24252 Mimosa
Drive, Laguna Niguel, Ca. 92677 and 16418 Silver Saddle Court,
Poway, Ca. 92064, respectively.
PRELIMINARY STATEMENT OF FACTS:
A. Mortgagee has agreed to make a mortgage loan in the
amount of $660,000 to Mortgagor for purchase money financing,
repayment of which is to be secured by a Deed of Trust and
Security Agreement and Fixture Financing Statement ("Deed of
Trust") on real estate (the "Premises") all as more fully
described in Exhibit "A" attached hereto.
B. The Deed of Trust is to be recorded in the County where
the Premises are situate.
C. The Tenant is the present lessee under a lease dated
August 13, 1992, made by Tenant's predecessor in interest, Taco
Cabana, Inc. and Mortgagee, as landlord, demising all or a
portion of the Premises, (said lease and all amendments thereto
being referred to as the "Lease").
D. As a condition precedent to Mortgagee's disbursement of
loan proceeds, Mortgagee has required that Tenant subordinate the
lease and its interest in the Premises in all respects to the
lien of the Deed of Trust, but subject to the terms hereof
respecting all Tenant's rights under the Lease so long as Tenant
is not in default thereunder after the expiration of any
applicable cure period.
E. In return the Mortgagee is agreeable to not disturbing
the Tenant's possession of the Premises.
F. The Mortgagee is disbursing the loan proceeds in
reliance upon the agreements contained in this instrument which
but for it would not disburse the loan.
NOW, THEREFORE, in consideration of the sum of $1.00 and
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party
hereto, it is hereby agreed as follows:
1. SUBORDINATION. The Lease, and the rights of Tenant in,
to or under the Lease and the Premises (except as further set
forth herein), are hereby subjected and subordinated and shall
remain in all respects and for all purposes subject, subordinate
and junior to the lien of the Deed of Trust, and to the rights
and interest of the from time to time holder of the Deed of
Trust, as fully and with the same effect as if the Deed of Trust
had been duly executed, acknowledged and recorded, and the
indebtedness secured thereby had been fully disbursed prior to
the execution of the Lease or possession of the Premises by
Tenant, or its predecessors in interest.
2. TENANT NOT TO BE DISTURBED. So long as Tenant is not
in default (beyond any period given Tenant to cure such default)
in the payment of rent or additional rent or in the performance
of any of the terms, covenants or conditions of the Lease on
Tenant's part to be performed, Tenant's possession of the
Premises and any extensions or renewals thereof which may be
effected in accordance with any renewal rights therefor in the
Lease, or any other rights of Tenant set forth in the Lease
(including but not limited to Tenant's Option to Purchase the
Premises as set forth in Article 34 of the Lease), shall not be
diminished or interfered with by Mortgagee, and Tenant's
occupancy of the Premises shall not be disturbed by Mortgagee for
any reason whatsoever during the term of the Lease or any such
extensions or renewals thereof. Without limiting the generality
of the foregoing, the lien created by the Deed of Trust or any
other document executed in connection with the Deed of Trust
shall not be deemed to be a lien, encumbrance, or any matter
encumbering title to the Premises that Lessee has created,
suffered, or permitted as described in Article 34(C).
3. TENANT NOT TO BE JOINED IN FORECLOSURE. So long as
Tenant is not in default (beyond any period given Tenant to cure
such default) in the payment of rent or additional rent or in the
performance of any of the terms, covenants or conditions of the
Lease on Tenant's part to be performed, Mortgagee will not join
Tenant as a party defendant in any action or proceeding
foreclosing the Deed of Trust unless such joinder is necessary to
foreclose the Deed of Trust and then only for such purpose and
not for the purpose of terminating the Lease.
4. TENANT TO ATTORN TO MORTGAGEE. Pursuant to the
assignment of rents set forth in the Deed of Trust, or if the
interests of Landlord shall be transferred to and owned by
Mortgagee by reason of foreclosure or other proceedings brought
by it in lieu of or pursuant to a foreclosure, or by any other
manner, and Mortgagee succeeds to the interest of the Landlord
under the Lease, Tenant shall be bound to Mortgagee under all of
the terms, covenants and conditions of the Lease for the balance
of the term thereof remaining and any extensions or renewals
thereof which may be effected in accordance with any option
therefor in the Lease, with the same force and effect as if
Mortgagee were the landlord under the Lease, and Tenant does
hereby attorn to Mortgagee as its landlord, said attornment to be
effective and self-operative immediately until release of the
Deed of Trust or upon Mortgagee otherwise succeeding to the
interest of the Landlord under the Lease, without the execution
of any further instruments on the part of any of the parties
hereto; provided, however, that Tenant shall pay rent to
Mortgagee until Tenant receives written notice from Mortgagee
that it has either been paid in full by Mortgagor, or has
transferred its interest in the Deed of Trust, which assignee has
succeeded to the interest of the Mortgagee. The respective
rights and obligations of Tenant and Mortgagee upon such
attornment, to the extent of the then remaining balance of the
term of the Lease and any such extensions and renewals, shall be
and are the same as now set forth therein; it being the intention
of the parties hereto for this purpose to incorporate the Lease
in this Agreement by reference with the same force and effect as
if set forth at length herein.
5. MORTGAGEE NOT BOUND BY CERTAIN ACTS OF LANDLORD.
Tenant shall agree not to enter into any material modification of
the Lease nor to make any payment or rent or any other monetary
obligation to Mortgagor without Mortgagee's prior written
consent. If Mortgagee shall succeed to the interest of Landlord
under the Lease, Mortgagee shall not be liable for any act or
omission of any prior landlord (including Mortgagor) if the same
constitutes a material modification of the Lease, unless
Mortgagee's prior written consent was obtained; In the event of
a default by Mortgagor under the Lease or an occurrence that
would give rise to an offset against rent or claim against
Mortgagor under the Lease, Tenant will give Mortgagee notice of
such defaults or occurrence at the address of Mortgagee as set
forth above and will give Mortgagee such time as is reasonably
required to cure such default or rectify such occurrence,
provided Mortgagee uses reasonable diligence to correct the same.
6. ASSIGNMENT OF LEASE. Mortgagor has by a separate
Assignment of Rents in the Deed of Trust or Assignment of Lease
("Assignment") assigned its interest in the rents and payments
due under the Lease to Mortgagee as security for repayment of the
loan. The Mortgagee has required that all rents and other
payments due under the Lease be paid directly to it. Mortgagor
hereby authorizes and directs Tenant and the Tenant agrees to pay
any payments due under the terms of the Lease to Mortgagee. The
Assignment does not diminish any obligations of the Mortgagor
under the Lease or impose any such obligations on the Mortgagee.
7. SUCCESSORS AND ASSIGNS. This Agreement and each and
every covenant, agreement and other provisions hereof shall be
binding upon the parties hereto and their heirs, administrators,
representatives, successors and assigns, including without
limitation each and every from time to time holder of the Lease
or any other person having an interest therein and shall inure to
the benefit of the Mortgagee and its successors and assigns.
8. CHOICE OF LAW. This Agreement is made and executed
under and in all respects is to be governed and construed by the
laws of the State where the Premises are situate.
9. CAPTIONS AND HEADINGS. The captions and headings of
the various sections of this Agreement are for convenience only
and are not to be construed as confining or limiting in any way
the scope or intent of the provisions hereof. Whenever the
context requires or permits, the singular shall include the
plural, the plural shall include the singular and the masculine,
feminine and neuter shall be freely interchangeable.
10. NOTICES. Any notice which any party hereto may desire
or may be required to give to any other party shall be in writing
and the mailing thereof by certified mail, or equivalent, to the
addresses as set forth above, or to such other places any party
hereto may by notice in writing designate shall constitute
service of notice hereunder.
11. COUNTERPARTS. This Agreement may be executed in
counterparts, and if so executed, though the signatures of the
parties may appear on separate counterparts, the same shall be
considered one and the same document as if all parties had
executed the same counterpart.
IN WITNESS WHEREOF, the parties hereto have each caused this
Agreement to be executed as of the date first above written.
TOM BIBLEHEIMER
/s/ Tom Bibleheimer
JOHN SCHULTZ John Schulz /s/ JS [changed to conform
/s/ John Schulz to the facts]
STATE OF California)
)SS.
COUNTY OF San Diego)
The foregoing instrument was acknowledged before me the 5th
day of November, 1996, by TOM BIBLEHEIMER.
/s/ L. Matella
Notary Public
[notary seal]
STATE OF California)
)SS.
COUNTY OF San Diego)
The foregoing instrument was acknowledged before me the 5th
day of November, 1996, by JOHN SCHULTZ.
/s/ L. Matella
Notary Public [notary seal]
AEI NET INCOME & GROWTH FUND XIX LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: AEI Fund Management
XIX, Inc., its corporate general partner
By: /s/ Robert P. Johnson
Robert P. Johnson, Its President
STATE OF MINNESOTA )
)SS.
COUNTY OF RAMSEY )
The foregoing instrument was acknowledged before me the 6th
day of October [November changed to conform to the facts], 1996,
by Robert P. Johnson, the President of AEI Fund Management XIX,
Inc., a Minnesota corporation, corporate general partner of AEI
Net Lease Income & Growth Fund XIX Limited Partnership, on behalf
of said limited partnership.
/s/ Michael B. Daugherty
Notary Public
[notary seal]
TEXAS TACO CABANA LP
By: TACO CABANA MANAGEMENT, INC., its General Partner
By:/s/ J. Eliasberg
Its: /s/ Executive Vice President
STATE OF TEXAS )
)SS.
COUNTY OF )
Before me, the undersigned authority, on this day personally
appeared James Eliasberg, the Executive Vice President of Taco
Cabana Management, Inc., a Minnesota corporation, corporate
general partner of Texas Taco Cabana LP, known to be to be the
person and officer whose name is subscribed to the foregoing
instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, in the capacity
therein stated, and as the act and deed of said corporation
acting as said general partner on behalf of said limited
partnership.
Given under my hand and seal of office this 5th day of
November, 1996.
By: /s/ Shelley Jean Pollok
Printed Name: Shelley Jean Pollok
Notary Public in and for
Bexar County, Texas
My Commission Expires:
4/16/2000 [notary seal]
Exhibit A Legal Description
Lot 2, Hesters Crossing Shopping Center, a subdivision of
Williamson County, Texas, according to the map or plat of record
in Cabinet H, Slide 221, Plat Records of Williamson County,
Texas.
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000868740
<NAME> AEI NET LEASE INCOME & GROWTH FUND XIX LTD PARTNERSHIP
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,660,008
<SECURITIES> 0
<RECEIVABLES> 126,484
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,815,289
<PP&E> 18,839,061
<DEPRECIATION> (1,024,890)
<TOTAL-ASSETS> 21,129,984
<CURRENT-LIABILITIES> 486,137
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,919,132
<TOTAL-LIABILITY-AND-EQUITY> 21,129,984
<SALES> 0
<TOTAL-REVENUES> 1,825,288
<CGS> 0
<TOTAL-COSTS> 542,525
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,149,577
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,149,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,149,577
<EPS-PRIMARY> 53.88
<EPS-DILUTED> 53.88
</TABLE>
