-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OmNRgPJjeBS7GS8WaxhjyoyIIf5Jz4G8tkh4hImM2alQEFc6pL+HXcBnXoa21gGO 3x9T3J8xoJRoHfNXpd/KEA== 0000780590-98-000002.txt : 19980331 0000780590-98-000002.hdr.sgml : 19980331 ACCESSION NUMBER: 0000780590-98-000002 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980330 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTURY PROPERTIES FUND XIX CENTRAL INDEX KEY: 0000705752 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942887133 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: SEC FILE NUMBER: 000-11935 FILM NUMBER: 98579583 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: PO BOX 1089 C/O INSIGNIA FINANICAL GROUP CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391513 MAIL ADDRESS: STREET 1: C/O INSIGNIA FINANCIAL GROUP 14TH FL STREET 2: ONE INSIGNIA FINANCIAL PLZ CITY: GREENVILLE STATE: SC ZIP: 29062 10KSB 1 FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) FORM 10-KSB (Mark One) [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the fiscal year ended December 31, 1997 [ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from to Commission file number 0-11935 CENTURY PROPERTIES FUND XIX (Name of small business issuer in its charter) California 94-2887133 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) (864) 239-1000 Issuer's telephone number Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Limited Partnership Units (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. X State issuer's revenues for its most recent fiscal year. $15,989,000 State the aggregate market value of the voting partnership interest held by non- affiliates computed by reference to the price at which the partnership interest was sold, or the average bid and asked prices of such partnership interest, as of a specified date within the past 60 days. Market value information for registrant's partnership interests is not available. Should a trading market develop for these interests, it is the Managing General Partner's belief that the aggregate market value of the voting partnership interests would not exceed $25 million. DOCUMENTS INCORPORATED BY REFERENCE SEE EXHIBIT INDEX PART I ITEM 1. DESCRIPTION OF BUSINESS Century Properties Fund XIX (the "Partnership") was organized in August 1982, as a California limited partnership under the Uniform Limited Partnership Act of the California Corporations Code. Fox Partners II, a California general partnership, is the general partner of the Partnership. The general partners of Fox Partners II are Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Partners 83, a California general partnership. The Partnership's Registration Statement, filed pursuant to the Securities Act of 1933 (No. 2-79007), was declared effective by the Securities and Exchange Commission on September 20, 1983. The Partnership marketed its securities pursuant to its Prospectus dated September 20, 1983, which was amended on June 13, 1984, and thereafter supplemented (hereinafter the "Prospectus"). The Prospectus was filed with the Securities and Exchange Commission pursuant to Rule 424(b) of the Securities Act of 1933. Beginning in September 1983 through October 1984, the Partnership offered $90,000,000 in Limited Partnership Units and sold units having an initial cost of $89,292,000. The net proceeds of this offering were used to acquire thirteen income-producing real properties. The Partnership's original property portfolio was geographically diversified with properties acquired in seven states. The Partnership's acquisition activities were completed in June 1985 and since then the principal activity of the Partnership has been managing its portfolio. One property was sold in each of the years 1988, 1992, 1993, and 1994. In addition, one property was foreclosed on in 1993. See "Item 2. Description of Properties" for a description of the Partnership's remaining properties. The Managing General Partner of the Partnership intends to maximize the operating results and, ultimately, the net realizable value of each of the Partnership's properties in order to achieve the best possible return for the investors. Such results may best be achieved through property sales, refinancings, debt restructurings or relinquishment of the assets. The Partnership intends to evaluate each of its holdings periodically to determine the most appropriate strategy for each of the assets. The Partnership has no full time employees. The Managing General Partner is vested with full authority as to the general management and supervision of the business and affairs of the Partnership. Limited partners have no right to participate in the management or conduct of such business and affairs. NPI-AP Management L.P. ("NPI-AP"), an affiliate of the Managing General Partner, provides day-to-day management services for the Partnership's residential investment properties. See "Item 12. Certain Relationships and Related Transactions" for discussion of transactions with affiliates. The business in which the Partnership is engaged is highly competitive, and the Partnership is not a significant factor in its industry. Each of its apartment properties is located in or near a major urban area and, accordingly, competes for rentals not only with similar apartment properties in its immediate area but with hundreds of similar apartment properties throughout the urban area, including properties owned and/or managed by affiliates of the Partnership. Such competition is primarily on the basis of location, rents, services and amenities. In addition, the Partnership competes with significant numbers of individuals and organizations (including similar partnerships, real estate investment trusts and financial institutions) with respect to the sale of improved real properties, primarily on the basis of the prices and terms of such transactions. There have been, and it is possible there may be other, Federal, state and local legislation and regulations enacted relating to the protection of the environment. The Partnership is unable to predict the extent, if any, to which such new legislation or regulations might occur and the degree to which such existing or new legislation or regulations might adversely affect the properties owned by the Partnership. The Partnership monitors its properties for evidence of pollutants, toxins and other dangerous substances, including the presence of asbestos. In certain cases environmental testing has been performed, which resulted in no material adverse conditions or liabilities. In no case has the Partnership received notice that it is a potentially responsible party with respect to an environmental clean up site. Change in Control Pursuant to a series of transactions which closed during 1996, affiliates of Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and outstanding shares of stock of FCMC, NPI Equity Investment II, Inc. ("NPI Equity"), the managing general partner of FRI, and National Property Investors, Inc. ("NPI"). NPI was the sole shareholder of NPI Equity until December 31, 1996, at which time the stock of NPI Equity was acquired by Insignia Properties Trust, an affiliate of Insignia. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and FCMC. See "Item 9. Director's, Executive Officers, Promotors and Control Persons, Compliance with Section 16(a) of the Exchange Act." On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the Managing General Partner of the Partnership. Tender Offers On January 19, 1996, an affiliate of Insignia purchased from DeForest Ventures I L.P. all of its interest in the Partnership. Pursuant to a Schedule 13-D filed by such affiliate with the Securities and Exchange Commission, such Insignia affiliate acquired 24,811.66 limited partnership units or approximately 28% of the total limited partnership units of the Partnership. (See "Item 11. Security Ownership of Certain Beneficial Owners and Management.") On August 28, 1997, an Insignia affiliate (the "Purchaser") commenced tender offers for limited partnership interests in six real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 27,000 of the outstanding units of limited partnership interest in the Partnership, at $175.00 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 28, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on August 28, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the Managing General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, including as a result of the Purchaser's affiliation with various Insignia affiliates that provide property management services to the Partnership's properties, the manner in which the Purchaser votes its limited partner interests in the Partnership may not always be consistent with the best interests of the other limited partners. As a result of the tender offer, such Insignia affiliate purchased 4,892 of the outstanding limited partner units of the Partnership. At December 31, 1997, such Insignia affiliate owns a total of 29,938.66 units, which is approximately 33.5% of the total outstanding units. (See "Item 11. Security Ownership of Certain Beneficial Owners and Management.") ITEM 2. DESCRIPTION OF PROPERTIES: The following table sets forth the Partnership's investments in properties:
Date of Property Purchase Type of Ownership Use Wood Lake Apartments 12/83 Fee ownership subject to Apartment- Atlanta, Georgia first mortgage 220 units Greenspoint Apartments 02/84 Fee ownership subject to Apartment- Phoenix, Arizona first mortgage 336 units Sandspoint Apartments 02/84 Fee ownership subject to Apartment- Phoenix, Arizona first mortgage 432 units Vinings Peak Apartments (formerly 04/84 Fee ownership subject to Apartment- Wood Ridge Apartments) first mortgage 280 units Atlanta, Georgia Plantation Crossing Apartments 06/84 Fee ownership subject to Apartment- Atlanta, Georgia first mortgage 180 units Sunrunner Apartments 07/84 Fee ownership subject to Apartment- St. Petersburg, Florida first mortgage 200 units McMillan Place Apartments 06/85 Fee ownership subject to Apartment- Dallas, Texas first and second mortgages 402 units Misty Woods Apartments 06/85 Fee ownership subject to Apartment- Charlotte, North Carolina first mortgage 228 units
SCHEDULE OF PROPERTIES (IN THOUSANDS): Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis Wood Lake $12,938 $ 5,711 5-30 yrs S/L $ 3,510 Greenspoint 13,898 5,420 5-30 yrs S/L 3,083 Sandspoint 16,149 6,522 5-30 yrs S/L 3,466 Vinings Peak 14,881 6,337 5-30 yrs S/L 4,173 Plantation Crossing 9,134 3,895 5-30 yrs S/L 2,593 Sunrunner 7,349 3,387 5-30 yrs S/L 2,168 McMillan Place 13,840 5,441 5-30 yrs S/L 5,311 Misty Woods 7,652 3,303 5-30 yrs S/L 2,340 $95,841 $40,016 $26,644 See "Note A" of the consolidated financial statements included in "Item 7" for a description of the Partnership's depreciation policy. SCHEDULE OF MORTGAGES(IN THOUSANDS): Principal Principal Balance At Stated Balance December 31, Interest Period Maturity Due At Property 1997 Rate Amortized Date Maturity Wood Lake $ 7,532 7.50% 25 yrs 01/01/03 $ 6,792 Greenspoint 8,821 8.33% 30 yrs 05/15/05 7,988 Sandspoint 9,799 8.33% 30 yrs 05/15/05 8,874 Vinings Peak 8,747 7.50% 25 yrs 01/01/03 7,888 Plantation Crossing 5,103 7.50% 25 yrs 01/01/03 4,602 Sunrunner 3,250 7.33% (1) 11/01/03 3,250 McMillan Place 1st Mortgage 10,152 8.25% (1) (2) 10,152 2nd Mortgage 2,139 8.25% (2) (2) 2,139 Misty Woods 5,357 7.88% 30 yrs. 01/01/06 4,777 $60,900 (1) Payments are interest only. (2) The mortgages secured by McMillan Place Apartments, in the amount of $12,291,000, were in default as of January 20, 1997, due to non-payment upon the acceleration of maturity. The Managing General Partner was successfully able to refinance these mortgages on January 29, 1998 (See "Note F" in "Item 7. Financial Statements" for further discussion). The new maturity note for the McMillan Place mortgage notes payable is October 31, 2002. The mortgage notes payable are nonrecourse and are secured by pledge of certain of the Partnership's rental properties and by pledge of revenues from the respective rental properties. The notes impose prepayment penalties if repaid prior to maturity. SCHEDULE OF RENTAL RATES AND OCCUPANCY: Average Annual Average Rental Rates Occupancy Property 1997 1996 1997 1996 Wood Lake $ 9,189/unit $ 8,968/unit 93% 94% Greenspoint 7,838/unit 7,686/unit 91% 92% Sandspoint 6,751/unit 6,455/unit 89% 95% Vinings Peak 8,541/unit 8,289/unit 92% 95% Plantation Crossing 8,157/unit 8,028/unit 90% 94% Sunrunner 6,291/unit 6,116/unit 95% 94% McMillan Place 5,955/unit 5,942/unit 95% 94% Misty Woods 6,641/unit 6,281/unit 91% 94% The Managing General Partner attributes the decrease in occupancy at Sandspoint Apartments and Plantation Crossing Apartments to increased competition which has resulted from new construction of similar complexes in the local area. As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other apartment complexes in the area. The Managing General Partner believes that all of the properties are adequately insured. The multi- family residential properties' lease terms are for one year or less. No individual tenant leases 10% or more of the available space. Real estate taxes and rates in 1997 for each property were (in thousands): 1997 1997 Billing Rate Wood Lake $122 3.25% Greenspoint 143 1.05% Sandspoint 140 1.31% Vinings Peak 168 3.25% Plantation Crossing 64 2.84% Sunrunner 121 2.45% McMillan Place 286 2.56% Misty Woods 92 1.37% ITEM 3. LEGAL PROCEEDINGS In August 1997, an Insignia affiliate (the "Purchaser") commenced tender offers for limited partner interests in six real estate limited partnerships including the Partnership (collectively, the "Tender Partnerships"), in which various Insignia affiliates act as general partner. On September 5, 1997, a partnership claiming to be a holder of limited partnership units in one of the Tender Partnerships, filed a complaint with respect to a putative class action in the Court of Chancery in the State of Delaware in and for New Castle County (the "City Partnerships complaint") challenging the actions of the defendants (including Insignia and certain Insignia affiliates) in connection with the tender offers. Neither the Partnership nor the Managing General Partner were named as defendants in the action. The City Partnerships complaint alleges that, among other things, the defendants have intentionally mismanaged the Tender Partnerships and coerced the limited partners into selling their units pursuant to the tender offers for substantially lower prices than the units are worth. The plaintiffs also allege that the defendants breached an alleged duty to provide an independent analysis of the fair market value of the limited partnership units, failed to appoint a disinterested committee to review the tender offer and did not adequately consider other alternatives available to the limited partners. On September 8, 1997, persons claiming to be holders of limited partnership units in the Tender Partnerships filed a complaint with respect to a putative class action and derivative suit in the Superior Court for the State of California for the County of San Mateo (the "Kline complaint") challenging the actions of the defendants (including Insignia, certain Insignia affiliates and the Tender Partnerships) in connection with the tender offers. The Kline complaint alleges that, among other things, the defendants have intentionally mismanaged the Tender Partnerships and that, as a result of the tender offers, the Purchaser will acquire effective voting control over the Tender Partnerships at substantially lower prices than the units are worth. On September 24, 1997, the court denied the plaintiffs' application for a temporary restraining order and their request for preliminary injunctive relief preventing the completion of the tender offers. On September 10, 1997, persons claiming to be holders of limited partnership units in the Tender Partnerships filed a complaint with respect to a putative class action and derivative suit in the Superior Court for the State of California for the County of Alameda (the "Heller complaint") challenging the actions of the defendants (including Insignia, certain Insignia affiliates and the Tender Partnerships) in connection with the tender offers. The Heller complaint alleges that, among other things, the defendants have intentionally mismanaged the Tender Partnerships and that, as a result of the tender offers, the Purchaser will acquire effective voting control of the Tender Partnerships at substantially lower prices than the units are worth. The plaintiffs also allege that the defendants breached an alleged duty to retain an independent advisor to consider alternatives to the tender offers. The Managing General Partner believes that the allegations contained in the City Partnerships, Kline and Heller complaints are without merit and has been advised that the plaintiffs in each of the actions intend to discontinue the actions. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS During the year ended December 31, 1997, no matter was submitted to a vote of unit holders through the solicitation of proxies or otherwise. PART II ITEM 5.MARKET FOR THE PARTNERSHIP'S COMMON EQUITY AND RELATED SECURITY HOLDER MATTERS Century Properties Fund XIX (the "Partnership"), a publicly-held limited partnership, sold 89,292 Limited Partnership Units aggregating $89,292,000. The Partnership currently has 89,292 units outstanding held by 5,900 limited partners of record. There is no intention to sell additional Limited Partnership Units nor is there an established public trading market for these units. The Partnership is prohibited from making distributions from operations of McMillan Place Apartments until the mortgages encumbering the property are satisfied. However, under the terms of the refinancing obtained on McMillan Place Apartments on January 29, 1998, the Partnership is now permitted to make distributions from the operations of the Partnership's other properties. No cash distributions were paid during the years ended December 31, 1997 and 1996. The Managing General Partner anticipating making distributions in the second and fourth quarters of 1998. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION This item should be read in conjunction with the consolidated financial statements and other items contained elsewhere in this report. Results of Operations The Partnership realized net income for the year ended December 31, 1997, of approximately $85,000 versus a net loss of approximately $962,000 for the year ended December 31, 1996. The increase in net income is partially attributable to the extraordinary loss on early extinguishment of debt in 1996 from the refinancing of Sunrunner (see discussion below). The increase in net income is primarily attributable to an increases in rental and other income and decreases in operating and interest expenses. The increase in rental income is primarily due to increases in average rental rates at each of the Partnership's investment properties which more than offset the average occupancy decreases at several of the investment properties. The increase in other income is primarily due to increase in lease cancellation fees at Sunrunner, Misty Woods, McMillan Place, and Vinings Peak. The decrease in operating expenses is primarily the result of a decline in major repairs and maintenance in 1997. This decrease is the result of exterior rehabilitation projects at Vinings Peak and McMillan Place Apartments, and exterior painting projects at Wood Lake and Plantation Crossing Apartments during 1996. These projects were undertaken in order to enhance the appearance and appeal of the properties. Included in operating expenses for the year ended December 31, 1997, are approximately $307,000 in major repairs and maintenance costs, versus approximately $963,000 for the corresponding period in 1996. The 1997 costs are comprised primarily of landscaping and exterior building repairs. The 1996 costs consist primarily of exterior painting, gutter repairs, wood replacement and landscaping as noted above. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Liquidity and Capital Resources At December 31, 1997, the Partnership had unrestricted cash of approximately $4,787,000 as compared to approximately $3,419,000 at December 31, 1996. The net increase in cash and cash equivalents for the years ended December 31, 1997 and 1996, was approximately $1,368,000 and $551,000, respectively. Net cash provided by operating activities increased due to the increase in net income discussed above. This increase was partially offset by an increase in cash used for accounts payable due to the timing of payments. Net cash used in investing activities increased due to an increase in net deposits to restricted escrows. This increase was almost entirely offset by a reduction in property improvements and replacements. Net cash used in financing activities decreased due to a decrease in loan costs as a result of the refinancing of the mortgage encumbering Sunrunner in 1996. An affiliate of the Managing General Partner has made available to the Partnership a credit line of up to $150,000 per property owned by the Partnership. The Partnership has no outstanding amounts due under this line of credit. Based on present plans, the Managing General Partner does not anticipate the need to borrow in the near future. Other than cash and cash equivalents, the line of credit is the Partnership's only unused source of liquidity. Effective November 1, 1996, the Partnership refinanced the mortgage encumbering Sunrunner with a new first mortgage in the amount of $3,250,000. The loan requires monthly payments of approximately $20,000 at a rate of 7.33% and matures November 1, 2003. The Partnership incurred closing costs and fees of $114,000. In connection with the Sunrunner refinancing, the Partnership recognized an extraordinary loss on early extinguishment of debt of $14,000, consisting of a prepayment penalty. In connection with the refinancing, the property was conveyed from a wholly-owned subsidiary, Century Sunrunner 19, L.P., back to the Partnership. On January 29, 1998, the Managing General Partner was successfully able to refinance the mortgages encumbering McMillan Place, which had been in default since January 20, 1997. The first mortgage was increased to $10,219,000 and was extended through October 31, 2002. This first mortgage requires interest only payments through October 31, 2001 at a rate of 9.15% and will float in the final year at 325 basis points over the one year treasury rate. The second note has been decreased to approximately $2,101,000. This second note also matures on October 31, 2002, however, $800,000 of it does not pay nor accrue interest over its term. The remaining amount of the second note, approximately $1,301,000, accrues interest at the same rates as the first mortgage. In connection with this refinancing, the Partnership also borrowed an additional $270,000 from an affiliate of the Managing General Partner. As a result of the refinancings, the Partnership was forgiven debt of approximately $105,000 and it had a net cash usage of approximately $358,000 for payments on mortgage notes, accrued interest and loan costs. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $60,900,000 is amortized over varying periods with required balloon payments ranging from October 2002 to January 2006, at which time the properties will either be refinanced, foreclosed or sold. The Partnership was prohibited from making distributions from the operations of the Partnership until the mortgages encumbering McMillan Place are satisfied. However, under the terms of the refinancing obtained on McMillan Place on January 29, 1998, the Partnership is now permitted to make distributions from the operations of the Partnership's other investment properties. No distributions were paid during the years ended December 31, 1997 and 1996. The Managing General Partner anticipates making distributions in the second and fourth quarters of 1998. Year 2000 The Partnership is dependent upon the Managing General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The Managing General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this annual report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of this annual report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. ITEM 7. FINANCIAL STATEMENTS CENTURY PROPERTIES FUND XIX LIST OF FINANCIAL STATEMENTS Independent Auditors' Report Consolidated Balance Sheet - December 31, 1997 Consolidated Statements of Operations - Years ended December 31, 1997 and 1996 Consolidated Statements of Changes in Partners' Capital (Deficit) - Years ended December 31, 1997 and 1996 Consolidated Statements of Cash Flows - Years ended December 31, 1997 and 1996 Notes to Consolidated Financial Statements Independent Auditors' Report To the Partners Century Properties Fund XIX Greenville, South Carolina We have audited the accompanying consolidated balance sheet of Century Properties Fund XIX (a limited partnership) (the "Partnership") and its subsidiary as of December 31, 1997, and the related consolidated statements of operations, changes in partners' deficit and cash flows for each of the two years in the period ended December 31, 1997. These consolidated financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Century Properties Fund XIX and its subsidiary as of December 31, 1997, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ Imowitz Koenig & Co., LLP Certified Public Accountants New York, N.Y. January 30, 1998 CENTURY PROPERTIES FUND XIX CONSOLIDATED BALANCE SHEET (in thousands, except unit data) December 31, 1997 Assets Cash and cash equivalents $ 4,787 Receivables and deposits 845 Restricted escrows 406 Other assets 875 Investment properties (Notes A and E) Land $ 11,635 Buildings and related personal property 84,206 95,841 Less accumulated depreciation (40,016) 55,825 $62,738 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 173 Tenant security deposits payable 278 Accrued property taxes 421 Other liabilities 1,180 Mortgage notes payable (Note B) 60,900 Partners' Capital (Deficit) General partner's $ (9,096) Limited partners' (89,292 units issued and outstanding) 8,882 (214) $62,738 See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 1997 1996 Revenues: Rental income $ 15,147 $ 14,971 Other income 842 776 Total revenues 15,989 15,747 Expenses: Operating 6,497 7,274 General and administrative 348 415 Depreciation 2,870 2,790 Interest 5,042 5,143 Property taxes 1,147 1,073 Total expenses 15,904 16,695 Income (loss) before extraordinary item 85 (948) Extraordinary loss on early extinguishment of debt (Note B) -- (14) Net income (loss) $ 85 $ (962) Net income (loss) allocated to general partner $ 10 $ (114) Net income (loss) allocated to limited partners 75 (848) $ 85 $ (962) Net income (loss) per limited partnership unit: Income (loss) before extraordinary item $ .84 $ (9.36) Extraordinary loss on early extinguishment of debt -- (.14) Net income (loss) $ .84 $ (9.50) See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (in thousands, except unit data) Limited Partnership General Limited Units Partner's Partners' Total Original Capital contributions 89,292 $ -- $ 89,292 $89,292 Partners' (deficit) capital at December 31, 1995 89,292 $ (8,992) $ 9,655 $ 663 Net loss for the year ended December 31,1996 -- (114) (848) (962) Partners' (deficit) capital at December 31, 1996 89,292 (9,106) 8,807 (299) Net income for the year ended ended December 31, 1997 -- 10 75 85 Partners' (deficit) capital at December 31, 1997 89,292 $ (9,096) $ 8,882 $ (214) See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XIX CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, except unit data) Years Ended December 31, 1997 1996 Cash flows from operating activities: Net income (loss) $ 85 $ (962) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 2,870 2,790 Amortization of loan costs 135 124 Loss on disposal of property -- 11 Extraordinary loss on early extinguishment of debt -- 14 Change in accounts: Receivables and deposits 10 (65) Other assets (26) 16 Accounts payable (92) 306 Tenant security deposits payable (5) (22) Accrued property taxes 54 (134) Other liabilities 224 429 Net cash provided by operating activities 3,255 2,507 Cash flows from investing activities: Property improvements and replacements (832) (1,130) Net (deposits to) withdrawals from restricted (256) 58 escrows Net cash used in investing activities (1,088) (1,072) Cash flows from financing activities: Payments on mortgage notes payable (768) (747) Repayment of mortgage notes payable -- (3,177) Proceeds from long-term borrowings -- 3,250 Loan costs (31) (196) Debt extinguishment costs -- (14) Net cash used in financing activities (799) (884) Net increase in cash and cash equivalents 1,368 551 Cash and cash equivalents at beginning of year 3,419 2,868 Cash and cash equivalents at end of year $ 4,787 $ 3,419 Supplemental disclosure of cash flow information: Cash paid for interest $ 4,686 $ 4,653 See Accompanying Notes to Consolidated Financial Statements CENTURY PROPERTIES FUND XIX Notes to Consolidated Financial Statements December 31, 1997 NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization: Century Properties Fund XIX (the "Partnership") is a California limited partnership organized in August 1982, to acquire, operate and ultimately sell residential apartment complexes. As of December 31, 1997, the Partnership operates eight residential apartment complexes located throughout the United States. The general partner of the Partnership is Fox Partners II, a California general partnership. The general partners of Fox Partners II are Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), a California corporation, Fox Realty Investors ("FRI"), a California general partnership, and Fox Partners 83, a California general partnership. The capital contributions of $89,292,000 ($1,000 per unit) were made by the limited partners, including 100 Limited Partnership Units purchased by FCMC. Principles of Consolidation: The Partnership's financial statements include the accounts of Misty Woods CPF 19, LLC, a wholly owned subsidiary. The Partnership has the ability to control the major operating and financial policies of this partnership. All intercompany transactions have been eliminated. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Allocation of Income, Loss, and Distribution: Net income, net loss, and distributions of cash of the Partnership are allocated between general and limited partners in accordance with the provisions of the Partnership Agreement. Fair Value of Financial Instruments: Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long term debt) approximates their fair value due to the short term maturity of these instruments. The fair value of the Partnership's long term debt, after discounting the scheduled loan payments to maturity, approximates its carrying amount. Due to significant prepayment penalties associated with portions of the debt, the Partnership would be unable to refinance those obligations. Cash and Cash Equivalents: The Partnership considers all highly liquid investments with a maturity, when purchased, of three months or less to be cash equivalents. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Security Deposits: The Partnership requires security deposits from lessees for the duration of the lease and such deposits are included in receivables and deposits. The security deposits are refunded when the tenant vacates, provided the tenant has not damaged its space, and is current on its rental payments. Investment Properties: Investment properties are stated at cost. Acquisition fees are capitalized as a cost of real estate. In accordance with SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. Depreciation: Depreciation is computed by the straight-line method over estimated useful lives ranging from 27.5 to 30 years for buildings and improvements and five to seven years for furnishings. Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its leases. Advertising Costs: The Partnership expenses the costs of advertising as incurred. Advertising expense, included in operating expenses, was approximately $256,000 and $263,000 for the years ended December 31, 1997 and 1996, respectively. Loan Costs: Loan costs of approximately $1,039,000 are included in other assets in the accompanying consolidated balance sheet and are being amortized on a straight- line basis over the life of the loans. At December 31, 1997, accumulated amortization is approximately $289,000. Amortization of loan costs is included in interest expense. Income Taxes: Taxable income or loss of the Partnership is reported in the income tax returns of its partners. Accordingly, no provision for income taxes is made in the consolidated financial statements of the Partnership. Distributions: Cash distributions have been suspended since 1987. Prior to the refinance of McMillan Place (see "Note F"), the Partnership was prohibited from making any distributions except from sales or refinancing of its properties, until the mortgages encumbering McMillan Place were satisfied. Under the terms of the refinancing of the mortgages encumbering McMillan Place, on January 29, 1998, the Partnership is now permitted to make distributions from the operations of all properties except McMillan Place. Reclassifications: Certain reclassifications have been made to the 1996 balances to conform to the 1997 presentation. NOTE B - MORTGAGE NOTES PAYABLE The principle terms of mortgage notes payable are as follows (in thousands): Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 1997 Interest Rate Date Maturity Wood Lake $ 7,532 $ 57 7.50% 01/01/03 $ 6,792 Greenspoint 8,821 68 8.33% 05/15/05 7,988 Sandspoint 9,799 76 8.33% 05/15/05 8,874 Vinings Peak 8,747 67 7.50% 01/01/03 7,888 (formerly Wood Ridge) Plantation Crossing 5,103 39 7.50% 01/01/03 4,602 Sunrunner 3,250 20 (1) 7.33% 11/01/03 3,250 McMillan Place 1st Mortgage 10,152 89 8.25% (1) 10,152 2nd Mortgage 2,139 -- 8.25% (2) 2,139 Misty Woods 5,357 40 7.88% 01/01/06 4,777 $60,900 $456 (1) Payments are interest only. (2) The mortgages secured by McMillan Place Apartments, in the amount of $12,291,000, were in default as of January 20, 1997, due to non-payment upon the acceleration of maturity. The Managing General Partner was successfully able to refinance these mortgages on January 29, 1998 (see "Note F"). The new maturity date for the McMillan Place mortgage notes payable is October 31, 2002. Effective November 1, 1996, the Partnership refinanced the mortgage encumbering Sunrunner with a new first mortgage in the amount of $3,250,000. The loan requires monthly payments of approximately $20,000 at a rate of 7.33% and matures November 1, 2003. The Partnership incurred closing costs and fees of $114,000. In connection with the Sunrunner refinancing, the Partnership recognized an extraordinary loss on early extinguishment of debt of $14,000, consisting primarily of a prepayment penalty. In connection with the refinancing, the property was conveyed from a wholly-owned subsidiary, Century Sunrunner 19, L.P., back to the Partnership. The mortgage notes payable are nonrecourse and are secured by pledge of certain of the Partnership's rental properties and by pledge of revenues from the respective rental properties. The notes impose prepayment penalties if repaid prior to maturity. Scheduled principal payments on the mortgage notes payable subsequent to December 31, 1997, are as follows (in thousands): 1998 $12,887 1999 643 2000 695 2001 751 2002 812 Thereafter 45,112 $60,900 Included in 1998 payments is the December 31, 1997, outstanding loan balance on the McMillan Place notes payable, as it was in default at December 31, 1997. Subsequent to December 31, 1997, the mortgage notes encumbering McMillan Place were refinanced with a new maturity date of October 31, 2002 (see "Note F"). NOTE C - INCOME TAXES The Partnership files its tax return on an accrual basis and has computed depreciation for tax purposes using accelerated methods, which are not in accordance with generally accepted accounting principles. A reconciliation of the net income (loss) per the financial statements to the net taxable income (loss) to partners is as follows (in thousands, except unit data): 1997 1996 Net income (loss) as reported $ 85 $ (962) Add (deduct): Depreciation differences (531) (709) Construction period interest and taxes 3 9 Miscellaneous (21) (8) Prepaid Rent (4) 48 Federal taxable loss $ (468) $(1,622) Federal taxable loss per limited partnership unit $ (5) $ (16) The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets and liabilities (in thousands): 1997 Net liabilities as reported $ (214) Land and buildings (4,858) Accumulated depreciation (24,321) Syndication and distribution costs 12,413 Prepaid rent 44 Other (18) Net liabilities - Federal tax basis $(16,954) NOTE D - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on its Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Pursuant to a series of transactions which closed during 1996, affiliates of Insignia Financial Group, Inc. ("Insignia") acquired all of the issued and outstanding shares of stock of FCMC, NPI Equity Investments II, Inc. ("NPI Equity"), the managing general partner of FRI, and National Property Investors, Inc. ("NPI"). NPI was the sole stockholder of NPI Equity until December 31, 1996, at which time the stock of NPI Equity was acquired by Insignia Properties Trust, an affiliate of Insignia. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and FCMC. The following transactions with affiliates of Insignia, NPI, and affiliates of NPI were incurred during the years ended December 31, 1997 and 1996 (in thousands): 1997 1996 Property management fees (included in operating expenses) $740 $737 Reimbursement for services of affiliates including approximately $15,000 and $31,000 of construction service reimbursements in 1997 and 1996, respectively (included in investment properties and operating and general and administrative expenses) 179 187 During the year ended December 31, 1996, the Partnership paid approximately $7,000 to affiliates of the Managing General Partner for expense reimbursements incurred in connection with the November 1996 refinancing of Sunrunner Apartments. For the period January 19, 1996, to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. In accordance with the Partnership Agreement, the general partner received a partnership management incentive allocation equal to ten percent of net and taxable income (loss) before gains on property dispositions. The general partner was also allocated its two percent continuing interest in the Partnership's net and taxable income (loss) after the preceding allocation. The general partner is also allocated gain on property dispositions to the extent it is entitled to receive distributions and then 12 percent of remaining gain. On August 28, 1997, an Insignia affiliate (the "Purchaser") commenced tender offers for limited partnership interests in six real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 27,000 of the outstanding units of limited partnership interest in the Partnership, at $175.00 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 28, 1997. As a result of the tender offer, such Insignia affiliate purchased 4,892 of the outstanding limited partner units of the Partnership. In September 1997, the Partnership, along with the Managing General Partner, Insignia and certain Insignia affiliates, was named as a defendant in two separate actions regarding alleged mismanagement of the Partnership and coercion of the limited partners into selling their units pursuant to the tender offers for substantially lower prices than the units are worth. The Managing General Partner believes that these allegations are without merit and has been informed that the plaintiffs in each of these actions intend to discontinue the actions. NOTE E - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (in thousands) Initial Cost To Partnership Buildings Cost and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition Wood Lake $ 7,532 $ 1,206 $ 10,980 $ 752 Greenspoint 8,821 2,165 11,199 534 Sandspoint 9,799 2,124 13,158 867 Vinings Peak 8,747 1,632 12,321 928 Plantation Crossing 5,103 1,062 7,576 496 Sunrunner 3,250 634 6,485 230 McMillan Place 12,291 2,399 10,826 615 Misty Woods 5,357 429 6,846 377 Total $60,900 $ 11,651 $ 79,391 $4,799
Gross Amount at Which Carried At December 31, 1997 Buildings Accum- Year Depre- And Related ulated of Date ciable Personal Deprec- Construc- Acqu- Life- Description Land Property Total iation tion ired Years Wood Lake $ 1,206 $11,732 $12,938 $ 5,711 1983 12/83 5-30 yrs. Greenspoint 2,140 11,758 13,898 5,420 1986 2/84 5-30 yrs. Sandspoint 2,147 14,002 16,149 6,522 1986 2/84 5-30 yrs. Vinings Peak 1,632 13,249 14,881 6,337 1982 4/84 5-30 yrs. Plantation Crossing 1,062 8,072 9,134 3,895 1980 6/84 5-30 yrs. Sunrunner 587 6,762 7,349 3,387 1981 7/84 5-30 yrs. McMillan Place 2,427 11,413 13,840 5,441 1985 6/85 5-30 yrs. Misty Woods 434 7,218 7,652 3,303 1986 6/85 5-30 yrs. Total $11,635 $84,206 $95,841 $40,016
Reconciliation of Investment Properties and Accumulated Depreciation: Years Ended December 31, 1997 1996 Balance at beginning of year $95,009 $93,928 Property improvements 832 1,130 Disposal of property -- (49) Balance at end of year $95,841 $95,009 Accumulated Depreciation Balance at beginning of year $37,146 $34,394 Additions charged to expense 2,870 2,790 Disposal of property -- (38) Balance at end of year $40,016 $37,146 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1997 and 1996, is approximately $90,981,000 and $90,149,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 1997 and 1996, is approximately $64,337,000 and $60,936,000, respectively. NOTE F - SUBSEQUENT EVENT On January 29, 1998, the Managing General Partner was successfully able to refinance the mortgages encumbering McMillan Place, which had been in default since January 20, 1997. The first mortgage was increased to $10,219,000 and was extended through October 31, 2002. This first mortgage requires interest only payments through October 31, 2001 at a rate of 9.15% and will float in the final year at 325 basis points over the one year treasury rate. The second note has been decreased to approximately $2,101,000. This second note also matures on October 31, 2002, however, $800,000 of it does not pay nor accrue interest over its term. The remaining amount of the second note, approximately $1,301,000, accrues interest at the same rates as the first mortgage. In connection with this refinancing, the Partnership also borrowed an additional $270,000 from an affiliate of the Managing General Partner. As a result of the refinancings, the Partnership was forgiven debt of approximately $105,000 and it had a net cash usage of approximately $358,000 for payments on mortgage notes, accrued interest and loan costs. Under the terms of the refinanced mortgages, the Partnership is no longer restricted from making distributions to its partners from cash from operations generated by the Partnership's properties other than McMillan Place. The Partnership is still prohibited, however, from making distributions from cash from operations derived from McMillan Place. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANT ON ACCOUNTING AND FINANCIAL DISCLOSURES There were no disagreements with Imowitz Koenig & Co., LLP regarding the 1997 or 1996 audits of the Partnership's financial statements. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT Neither Century Properties Fund XIX (the "Partnership") nor Fox Partners II ("Fox"), the general partner of the Partnership, has any officers or directors. Fox Capital Management Corporation ("FCMC" or the "Managing General Partner"), the managing general partner of Fox, manages and controls substantially all of the Partnership's affairs and has general responsibility and ultimate authority in all matters affecting its business. The names and ages of, as well as the positions and offices held by, the executive officers and directors of the Managing General Partner are set forth below. Name Age Position William H. Jarrard, Jr. 51 President and Director Ronald Uretta 41 Vice President and Treasurer Martha L. Long 38 Controller Robert D. Long, Jr. 30 Vice President Daniel M. LeBey 32 Vice President and Secretary Kelley M. Buechler 40 Assistant Secretary William H. Jarrard, Jr. has been President and Director of the Managing General Partner since June 1996. He has acted as Senior Vice President of Insignia Properties Trust ("IPT"), parent of the Managing General Partner, since May 1997. Mr. Jarrard previously acted as Managing Director - Partnership Administration of Insignia From January 1991 through September 1997 and served as Managing Director - Partnership Administration and Asset Management of Insignia from July 1994 until January 1996. Ronald Uretta has been Vice President and Treasurer of the Managing General Partner since June 1996 and Insignia's Treasurer since January 1992. Since August 1996, he has also served as Insignia's Chief Operating Officer. He has also served as Insignia's Secretary from January 1992 to June 1996 and as Insignia's Chief Financial Officer from January 1992 to August 1996. Martha L. Long has been Controller of the Managing General Partner since December 1996 and Senior Vice President - Finance and Controller of Insignia since January 1997. In June 1994, Ms. Long joined Insignia as its Controller, and was promoted to Senior Vice President - Finance in January 1997. Prior to that time, she was Senior Vice President and Controller of the First Savings Bank, in Greenville, SC. Robert D. Long, Jr. has been Vice President of the Managing General Partner since January 2, 1998. Mr. Long joined Metropolitan Asset Enhancement, L.P. ("MAE"), an affiliate of Insignia, in September 1993. Since 1994 he has acted as Vice President and Chief Accounting Officer of the MAE subsidiaries. Mr. Long was an accountant for Insignia until joining MAE in 1993. Prior to joining Insignia, Mr. Long was an auditor for the State of Tennessee and was associated with the accounting firm of Harsman Lewis and Associates. Daniel M. LeBey has been Vice President and Secretary of the Managing General Partner since January 29, 1998, and Insignia's Assistant Secretary since April 30, 1997. Since July 1996, he has also served as Insignia's Associate General Counsel. From September 1992 until June 1996, Mr. LeBey was an attorney with the law firm of Alston & Bird LLP, Atlanta, Georgia. Kelley M. Buechler has been Assistant Secretary of the Managing General Partner since June 1996 and Assistant Secretary of Insignia since 1991. No family relationships exist among any of the officers or directors of the Managing General Partner. ITEM 10. EXECUTIVE COMPENSATION No direct form of compensation or remuneration was paid by the Partnership to any officer or director of the Managing General Partner. The Partnership has no plan, nor does the Partnership presently propose a plan, which will result in any remuneration being paid to any officer or director upon termination of employment. However, fees and other payments have been made to the Partnership's Managing General Partner and its affiliates, as described in "Item 12. Certain Relationships and Related Transactions." ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The Partnership is a limited partnership and has no officers or directors. The Managing General Partner has discretionary control over most of the decisions made by or for the Partnership in accordance with the terms of the Partnership Agreement. The Managing General Partner directly owns 100 limited partnership units in the Partnership. The following table sets forth certain information regarding limited partnership units of the Partnership owned by each person who is known by the Partnership to own beneficially or exercise voting or dispositive control over more than 5% of the Partnership's limited partnership units, by each of the Managing General Partner's directors and by all directors and executive officers of the Managing General Partner as a group as of January 1, 1998. Name and address of Amount and nature of Beneficial Owner Beneficial Ownership % of Class Insignia Properties L.P. 29,938.66 33.5 All directors and executive officers as a group (6 persons) -- -- (1) The business address for Insignia Properties L.P. is One Insignia Financial Plaza, Greenville, South Carolina 29602. On August 28, 1997, a wholly-owned subsidiary of Insignia Properties L.P. ("IPLP"), an Insignia affiliate, (the "Purchaser"), commenced tender offers for limited partnership interests in six real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 27,000 of the outstanding units of limited partnership interest in the Partnership, at $175.00 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 28, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on August 28, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the Managing General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, including as a result of the Purchaser's affiliation with various Insignia affiliates, the manner in which the Purchaser votes its limited partner interests in the Partnership may not always be consistent with the best interests of the other limited partners. As a result of the tender offer, IPLP purchased 4,892 of the outstanding limited partner units of the Partnership. As a result of its ownership of 29,938.66 limited partnership units, IPLP could be in a position to significantly influence all voting decisions with respect to the Partnership. Under the Partnership Agreement, unit holders holding a majority of the Units are entitled to take action with respect to a variety of matters. When voting on matters, IPLP would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of its affiliation with the Managing General Partner. However, IPLP has agreed for the benefit of non-tendering unit holders, that it will vote its 24,811.66 Units acquired on January 19, 1996: (i) against any proposal to increase the fees and other compensation payable by the Partnership to the Managing General Partner and any of its affiliates; and (ii) on all other matters submitted by it or its affiliates, in proportion to the votes cast by non tendering unit holders. Except for the foregoing, no other limitations are imposed on IPLP's right to vote each Unit acquired on January 19, 1996, or with the August 28, 1997, tender offer. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in Insignia Properties Trust, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the Managing General Partner of the Partnership. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The Partnership has no employees and is dependent on its Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and as reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Pursuant to a series of transactions which closed during 1996, affiliates of Insignia acquired all of the issued and outstanding shares of stock of FCMC, NPI Equity Investments II, Inc. ("NPI Equity"), the managing general partner of FRI, and National Property Investors, Inc. ("NPI"). NPI was the sole stockholder of NPI Equity until December 31, 1996, at which time the stock of NPI Equity was acquired by Insignia Properties Trust, an affiliate of Insignia. In connection with these transactions, affiliates of Insignia appointed new officers and directors of NPI Equity and FCMC. The following transactions with affiliates of Insignia, NPI, and affiliates of NPI were incurred during the years ended December 31, 1997 and 1996 (in thousands): 1997 1996 Property management fees $740 $737 Reimbursement for services of affiliates including approximately $15,000 and $31,000 of construction service reimburse- ments in 1997 and 1996, respectively 179 187 During the year ended December 31, 1996, the Partnership paid approximately $7,000 to affiliates of the Managing General Partner for expense reimbursements incurred in connection with the November 1996 refinancing of Sunrunner Apartments. For the period from January 19, 1996, to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the Managing General Partner. An affiliate of the Managing General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the Managing General Partner who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the Managing General Partner by virtue of the agent's obligations is not significant. In accordance with the Partnership Agreement, the general partner received a partnership management incentive allocation equal to ten percent of net and taxable income (loss) before gains on property dispositions. The general partner was also allocated its two percent continuing interest in the Partnership's net and taxable income (loss) after the preceding allocation. The general partner is also allocated gain on property dispositions to the extent it is entitled to receive distributions and then 12 percent of remaining gain. At December 31, 1997, an affiliate of Insignia owned approximately 33.5% of the limited partnership units of the Partnership, as discussed in "Item 11" above. ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: See Exhibit Index contained herein. (b) Reports on Form 8-K filed in the fourth quarter of 1997: None. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CENTURY PROPERTIES FUND XIX By: FOX PARTNERS II, Its General Partner By: FOX CAPITAL MANAGEMENT CORPORATION, Its Managing General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, Jr. President and Director Date: March 30, 1998 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Signature/Name Title Date /s/William H. Jarrard, Jr. President and Director March 30, 1998 William H. Jarrard, Jr. /s/Ronald Uretta Vice President and March 30, 1998 Ronald Uretta Treasurer EXHIBIT INDEX Exhibit Number Description of Exhibit 2.1 NPI, Inc. Stock Purchase Agreement, dated as of August 7, 1995, incorporated by reference to the Registrant's Current Report on Form 8-K dated August 7, 1995. 2.2 Partnership Units Purchase Agreement dated as of August 17, 1995 incorporated by reference to Exhibit 2.1 to Form 8-K filed by Insignia Financial Group, Inc. ("Insignia") with the Securities and Exchange Commission on September 1, 1995. 2.3 Management Purchase Agreement dated as of August 17, 1995 incorporated by reference to Exhibit 2.2 to Form 8-K filed by Insignia with the Securities and Exchange Commission on September 1, 1995. 3.4 Agreement of Limited Partnership, incorporated by reference to Exhibit A to the Prospectus of the Registrant dated September 20, 1983, as amended on June 13, 1989, and as thereafter supplemented contained in the Registrant's Registration Statement on Form S-11 (Reg. No. 2-79007). 10.1 Amended and Restated Note A, made as of September 1, 1994, by the Registrant in favor of The Travelers Insurance Company ("Travelers") in the principal amount of $10,800,000, incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 1994. 10.2 Amended and Restated Note B, made as of September 1, 1994, by the Registrant in favor of Travelers in the principal amount of $2,138,673.53, incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 1994. 10.3 Amended and Restated Deed of Trust, dated as of September 1, 1994, between the Registrant and Travelers, incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 1994. 10.4 Amended and Restated Note B, made as of September 1, 1994, between the Registrant and Travelers, incorporated by reference to the Registrant's Form 10-Q for the quarter ended September 30, 1994. 10.5 Promissory Note made December 15, 1995, by the Registrant in favor of Connecticut General Life Insurance Company ("CIGNA") in the principal amount of $22,000,000 relating to the refinancing of Wood Lake, Wood Ridge, and Plantation Crossing incorporated by reference to Exhibit 10.5 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995. 10.6 Form of Deed to Secure Debt and Security Agreement from the Registrant to CIGNA relating to the refinancing of Wood Lake, Wood Ridge, and Plantation Crossing incorporated by reference to Exhibit 10.6 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995. 10.7 First Mortgage Note from the Registrant to Secore Financial Corporation ("Secore") relating to the refinancing of Misty Woods Apartments incorporated by reference to Exhibit 10.7 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995. 10.8 First Mortgage and Security Agreement dated as of December 29, 1995, from the Registrant to Secore relating to the refinancing of Misty Woods Apartments incorporated by reference to Exhibit 10.8 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995. 10.9 Multifamily Note secured by a Mortgage or Deed of Trust dated November 1, 1996, between Century Properties Fund XIX and Lehman Brothers Holdings, Inc., d/b/a Lehman Capital, a Division of Lehman Brothers Holdings Inc., d/b/a Lehman Capital, a Division of Lehman Brothers Holdings Inc., relating to Sunrunner Apartments incorporated by reference to Exhibit 10.9 to the Partnership's Annual Report on Form 10-K for the year ended December 31, 1995. 10.10 Amendment to Amended and Restated Note A dated January 29, 1998, between the Partnership and The Travelers Insurance Company relating to McMillan Place. 10.11 Amendement to Amended and Restated Note B dated January 29, 1998, between the Partnership and The Travelers Insurance Company relating to McMillian Place. 16. Letter from the Registrant's former Independent Auditor dated April 27, 1994, incorporated by reference to Exhibit 10 to the Registrant's Current Report on Form 8-K dated April 22, 1994. 27. Financial data schedule. EX-27 2
5 This schedule contains summary financial information extracted from Century Properties Fund XIX 1997 Year-End 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000705752 CENTURY PROPERTIES FUND XIX 1,000 12-MOS DEC-31-1997 DEC-31-1997 4,787 0 0 0 0 0 95,841 40,016 62,738 0 60,900 0 0 0 (214) 62,738 0 10,862 0 0 15,904 0 5,042 0 0 0 0 0 0 85 0.83 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-10.10 3 EXHIBIT 10.10 AMENDMENT TO AMENDED AND RESTATED NOTE A THIS AMENDMENT TO AMENDED AND RESTATED NOTE A (as more particularly defined in Paragraph 1, this "Amendment") is made of the 29th day of January, 1998, by and between CENTURY PROPERTIES FUND XIX, a California limited partnership (as more particularly defined in Paragraph 1 hereof, "Maker"), having an address as set forth in Paragraph 7 (hereinafter defined), and THE TRAVELERS INSURANCE COMPANY, a Connecticut corporation, having an address as set forth in Paragraph 7 (as more particularly defined in Paragraph 1 hereof, "Payee"). WITNESSETH: WHEREAS, Payee and Maker are parties to that certain Modification and Severance Agreement dated as of September 1, 1994 (as more particularly defined in Paragraph 1 hereof, "Modification and Severance Agreement"); WHEREAS, Payee is the owner and holder of that certain Amended and Restated Note A dated as of September 1, 1994, executed and delivered by Maker payable to the order of Payee, in the restated principal amount of Ten Million Eight Hundred Thousand Dollars ($10,800,000) (as more particularly defined in Paragraph 1 hereof, "Note"), repayment of which is secured by, among other things: (a) that certain Amended and Restated Deed of Trust A dated as of September 1, 1994, executed and delivered by Maker for the benefit of Payee, recorded in Volume 94180, Page 03686 in the Deed of Trust Records, Dallas County, Texas ("Land Records") (as more particularly defined in Paragraph 1 hereof, "Deed of Trust"); and (b) all other documents, certificates, affidavits and other instruments now or at any time prior or subsequent hereto evidencing, securing, or relating to any way to any of the above referenced documents (collectively the foregoing, including the Note and the Modification and Severance Agreement, are more particularly defined in Paragraph 1 hereof as the "Loan Documents"); and WHEREAS, Maker has requested that Payee amend certain provisions of the Loan Documents (collectively, the "Modifications") pursuant to the Modification and Severance Agreement, and in order to accomplish the Modifications, Maker and Payee have agreed to enter into this Amendment and the other Amendment Documents (hereinafter defined) which modify each and all of the Loan Documents. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Maker and Payee hereby agree as follows: 1. DEFINITIONS. All capitalized terms used herein and not otherwise defined in this Paragraph 1 or the Note shall have the meanings for such terms set forth in the Modification and Severance Agreement. The parties further agree that the following terms shall have the meanings hereinafter set forth, such definitions to be applicable equally to the singular and plural forms, and to the masculine and feminine forms, of such terms: "AMENDMENT" shall mean this Amendment to Amended and Restated Note A between Maker and Payee, as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "AMENDMENT DOCUMENTS" shall have the meaning of the same defined term set forth in the Modification and Severance Agreement. "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as codified at 11 U.S.C. Section 101 et. seq., as amended from time to time. "CASH MANAGEMENT AGREEMENT" shall mean collectively, that certain Cash Management Agreement dated as of September 1, 1994, by and among Maker, as Borrower", Payee, as "Lender", and NPI-AP Management, L.P., as "Manager", as modified by the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "CONTINGENT ADDITIONAL INTEREST" shall have the meaning set forth in Section 2.1(d) of the Note and Paragraph 3(b) hereof. "CONVERTED TREASURY YIELD" shall mean the yield available, or if there is more than one yield available, the average yields, on United States Treasury non-callable bonds (excluding Flower Bonds) and notes having a maturity date closest to (before, on or after) the Maturity Date, as reported in the Wall Street Journal or similar publication on the fifth (5th) business day preceding the date prepayment will be made, converted to a monthly equivalent yield. As used herein, the terms "Converted Treasury Yield" and monthly "equivalent yield" are annualized rates which reflect the frequency of the interest payments made during a calendar year. "DEED OF TRUST OR DEED OF TRUST A" shall mean collectively, that certain Amended and Restated Deed of Trust A dated as of September 1, 1994, executed and delivered by Maker for the benefit of Payee, recorded in Volume 94180, Page 03686 in the Land Records, as modified by the Amendment to Amended and Restated Deed of Trust A and Amended and Restated Assignment of Leases and Rents A of even date herewith, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "EFFECTIVE DATE" shall mean the day and year first above written, subject to satisfaction of the conditions precedent to the effectiveness hereof on or before such date, as determined by Payee. "FEES AND EXPENSES" shall mean all fees, costs and expenses (including reasonable attorneys fees and other professionals fees) incurred by Payee in connection with the interpretation, enforcement and/or collection of this Note and/or any of the other Loan Documents, the protection of or realization on the Premises and any other collateral under the Loan Documents, enforcement of any guaranty or indemnity and/or defense of any action relating to this Note and/or any of the other Loan Documents, the Premises and any other collateral and/or the indebtedness and obligations evidenced thereby, and whether the same were incurred in connection with any nonjudicial, quasi-judicial, judicial or administrative actions or proceedings, prior to trial, at trial, on appeal or review or in settlement, or in any Insolvency Proceeding (as defined in the Modification and Severance Agreement) and whether or not suit was filed thereon. "FIRST AMENDMENT TO MODIFICATION AND SEVERANCE AGREEMENT" shall mean that certain First Amendment to Modification and Severance Agreement of even date herewith entered into by and between Maker and Payee. "GUARANTIES" shall mean collectively, the Guaranty of Payment and Hazardous Materials Guaranty. "GUARANTY OF PAYMENT" shall mean collectively, that certain Guaranty of Payment dated as of September 1, 1994, executed and delivered by the Responsible Parties to and in favor of Payee, as ratified and confirmed by the joinder of the Responsible Parties in the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "HAZARDOUS MATERIALS GUARANTY" shall mean collectively, that certain Hazardous Material Guaranty and Indemnification Agreement dated as of September 1, 1994, executed and delivered by the Responsible Parties to and in favor of Payee, as ratified and confirmed by the joinder of the Responsible Parties in the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "INTEREST RATE" shall mean (a) for the period prior to the Effective Date, eight and one-quarter percent (8.25%) per annum, (b) for the period from the Effective Date to and including October 31, 2001, nine and fifteen one- hundredths percent (9.15%) per annum, and (c) for the period from November 1, 2001, to the date on which the Outstanding Principal Balance and all other amounts owed under the Loan Documents are paid in full, a fixed rate per annum equal to 325 basis points plus the annualized yield, or if there is more than one yield available, the average yields, on United States Treasury non-callable bonds (excluding Flower Bonds) and notes having one-year maturity, as determined by Payee on November 1, 2001, by reference to the Wall Street Journal or similar publication, not to exceed in all cases the maximum interest rate allowed by law. "LATE CHARGE" shall mean four percent (4%) of the amount of any payment (including any installment payments and deposits to reserves and escrows) not received by Payee on the due date thereof. "LOAN DOCUMENTS" shall mean have meaning of the same defined term set forth in the Modification and Severance Agreement. "LOAN DOCUMENTS A" shall mean have the meaning of the same defined term set forth in the Modification and Severance Agreement. "LOAN DOCUMENTS B" shall mean have the meaning of the same defined term set forth in the Modification and Severance Agreement. "MAKER" shall mean Century Properties Fund XIX, a California limited partnership, and its legal representatives, successors and assigns. As used herein and in each of the Loan Documents to which the Maker is a party, the term Maker shall be synonymous with Borrower, Grantor and Assignor, as applicable. "MANAGER'S LIABILITY LETTER" shall mean collectively, that certain Manager's Liability Letter dated as of September 1, 1994, by and between NPI-AP Management, L.P. and Payee, as modified by the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "MATURITY DATE" shall mean October 31, 2002, or such earlier date the entire Outstanding Principal Balance and accrued and unpaid interest thereon, and any other sums which are due and payable in full pursuant to the terms and provisions of this Note, are due and payable by reason of the acceleration of the maturity of this Note. "MODIFICATION AND SEVERANCE AGREEMENT" shall mean collectively, that certain Modification and Severance Agreement dated as of September 1, 1994, between Maker and Payee, as modified by the First Amendment of Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "NOTE OR NOTE A" shall mean collectively, that certain Amended and Restated Note A dated as of September 1, 1994, executed and delivered by Maker, as "Maker", payable to the order of Payee, as "Payee", in the restated principal amount of Ten Million Eight Hundred Thousand Dollars ($10,800,000), as modified by this Amendment, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "NOTE B" shall mean collectively, that certain Amended and Restated Note B dated as of September 1, 1994, executed and delivered by Maker, as "Maker", payable to the order of Payee, as "Payee", in the restated principal amount of Two Million One Hundred Thirty Eight Thousand Six Hundred Seventy Three Dollars and Fifty Three Cents ($2,138,673.53), as modified by the Amendment to Amended and Restated Note B of even date herewith, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "ORIGINAL PRINCIPAL AMOUNT" shall mean Ten Million Eight Hundred Thousand Dollars ("$10,800,000"). "PAYEE" shall mean The Travelers Insurance Company and its legal representatives, successors and assigns, including any subsequent owner and holder of the Loan Documents. As used herein and in each of the other Loan Documents to which Payee is a party, the term Payee shall be synonymous with Lender, Beneficiary, and Assignee, as applicable. "PERSON" shall mean an individual, estate, trust, trustee, receiver, partnership, limited liability partnership, corporation, limited liability company, depository institution (including federal or state savings banks, savings and loan associations, and credit unions), governmental authorities, or other legal entity. "PREMISES" shall have the meaning of the same defined term set forth in the Deed of Trust. "RESPONSIBLE PARTIES" shall mean collectively, Maker, Fox Partners II, a California general partnership, Fox Capital Management Corporation, a California corporation, NPI Equity Investments II, Inc., a Florida corporation, and NPI-AP Management, L.P., a Delaware limited partnership, and their respective legal representatives, successors and assigns. "TERM" shall mean the period commencing on September 1, 1994, and ending on October 31, 2002. "USE AND RETENTION LETTER" shall mean collectively, that certain Use and Retention of Funds Letter dated as of September 1, 1994, by and among the Responsible Parties and Payee, as modified by the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. The definitions set forth in this Paragraph 1 are hereby incorporated in the Note and shall supersede the definitions set forth in the Note for any of such terms and shall, from and after the Effective Date, constitute the definitions to be used for all purposes with respect to the Note. The words "herein", "hereof", "hereunder" and other words of similar import refer to this Amendment as a whole and not to any particular Section or Paragraph, unless specifically designated otherwise. The use of the term "including" shall mean in all cases "including but not limited to," unless specifically designated otherwise. No rules of construction against the drafter of this Amendment shall apply in any interpretation or enforcement of this Amendment, any documents or certificates executed pursuant hereto, or any provisions of any of the foregoing. 2. OUTSTANDING PRINCIPAL AMOUNT. From and after the Effective Date, the last paragraph of Page 3 of the Note is hereby revised in its entirety to read as follows: FOR VALUE RECEIVED, Maker hereby unconditionally and irrevocably promises to pay to the order of Payee, at Payee's office, or at such other place as Payee may designate from time to time, the Original Principal Amount of Ten Million Eight Hundred Thousand Dollars ($10,800,000), together with interest (including Contingent Additional Interest, if applicable), and other Fees and Expenses, charges and sums (including any prepayment, premium, if applicable), in accordance with the terms hereinafter set forth, in immediately available funds, in lawful money of the United States of America, which shall be legal tender in payment of all debts and dues, public and private, at the time of payment. As of the Effective Date, the Outstanding Principal Balance under the Note is and shall conclusively be deemed to be Ten Million Two Hundred Nineteen Thousand One Hundred Thirty Eight and 47/100 Dollars ($10,219,138.47). 3. PAYMENT SCHEDULE. (A) From and after the Effective Date, Section 2.1 (b) of the Note is hereby revised in its entirety to read as follows: (b) Commencing on March 1, 1998 and continuing on the first day of each consecutive calendar month thereafter, Maker shall make monthly payments of interest only, in arrears, calculated at the Interest Rate on the Outstanding Principal Balance. (B) From and after the Effective Date, Section 2.1 of the Note is hereby revised to include the following new provisions: (c) If and to the extent there is any Excess Cash Collateral, as defined in and pursuant to Paragraph 3(c) of the Cash Management Agreement, Maker shall remit to Payee all Excess Cash Collateral on or before the twentieth (20th) day after the end of each calendar year, for the preceding calendar year, to be applied by Payee to principal, interest, advances, and other sums or charges first, under the Loan Documents A, and second, under Loan Documents B, in such order, proportion and priority as Payee with respect to each of the Loan Documents A and Loan Documents A, in its sole and absolute discretion, deems appropriate. (d) Additional interest under this Note ("Contingent Additional Interest") shall be paid upon maturity of this Note (whether by acceleration, upon sale of refinance, or otherwise) equal to 50% of the Appreciated Fair Market Value. "Appreciated Fair Market Value" shall mean the amount by which the (1) Fair Market Value of the Premises determined as of the Maturity Date, exceeds (2) the fair market value of the Premises as of the date of this Note, which value is conclusively stipulated for purposes of this calculation to be $12,860,000. For purposes of calculating Contingent Additional Interest, Marker and Payee agree that "Fair Market Value" shall mean the fair market value of the Premises as of the Maturity Date as determined by one of the following methods: (i) in the case of a sale or other transfer of the Premises or any interests therein or in the Maker, in an arms length, bonafide third party sales transaction approved by Payee ("Third Party Sale"), the gross sales price (inclusive of all consideration to any of the Responsible Parties and any Person related thereto, of whatsoever from or nature) attributed to the Premises, less and except the actual, reasonable and necessary costs of such sale allocable to the Premises payable to unrelated third parties, not to exceed 2% unless approved in advance by Payee in its sole discretion, and actual, customary prorations of income and expenses of the Premises related thereto; (ii) in the case of any transfer of the Premises or any interests therein or in the Maker in a transaction approved by Payee which is other than a Third Party Sale or in the event of payoff upon the Maturity Date that is not accompanied by a transfer, such amount as is agreed upon by Payee and Maker on or before sixty (60) days prior to the earlier of the date of any such transfer or the Maturity Date, or in the absence of any such agreement, the fair market value, as of the Maturity Date, of the leased, fee interest in the Premises, free and clear of any liens and encumbrances, as opined by a general real estate appraiser selected by Payee, who is certified or licensed in the State of Texas, if the State of Texas certifies or licenses appraisers at such time, and holds an MAI (or equivalent) designation of the American Institute of Real Estate Appraisers ("Appraisal Institute") (in the event of the continued existence of the Appraisal Institute at such time), and in accordance with the Appraisal Institute's then current Code of Professional Ethics and Standards of Professional Appraisal Practice (if and in the event the Appraisal Institute continues to exist at such time) (the fees and expenses incurred by Payee for such appraiser to be reimbursed by Borrower on demand and constitute additional indebtedness secured by the Loan Documents); and, (iii) in the case of any casualty or condemnation affecting all or substantially all of the Premises, the aggregate amount of all awards, settlements or other proceeds arising from all insurance policies relating to the Premises plus the residual value of any remaining portion of the Premises less and expect the actual, reasonable and necessary costs and expenses of adjusting and collecting such awards, settlements and/or proceeds. In the event more than one method may be applicable for determining Fair Market Value, Payee shall have the right to select the applicable method. 4. PREPAYMENT. From and after the Effective Date, Section 2.2 of the Note is hereby revised in its entirety to read as follows: (a) Except as expressly permitted in Section 2.1(c), no full or partial prepayments of principal shall be allowed under this Note prior to November 1, 2001. (b) There shall be no privilege to prepay this Note prior to November 1, 2001 without payment of a prepayment premium. Payee agrees to accept a prepayment of this Note prior to November 1, 2001, upon not less than thirty (30) days' prior written notice to Payee of its election to prepay this Note ("Prepayment Notice"), provided Maker shall pay the entire remaining Outstanding Principal Balance of this Note, all accrued and unpaid interest hereunder, all additional sums, Fees and Expenses and charges due under the Loan Documents, and a prepayment premium equal to the greater of: (A) an amount equal to one percent (1%) of the portion of the Outstanding Principal Balance being prepaid; or (B) an amount determined by: (i) calculating the sum of the present values as of the date of prepayment of all unpaid principal and interest payments required under the Loan Documents (including, without limitation, the Contingent Additional Interest determined as of the original scheduled Maturity Date) by discounting such payments from their scheduled payment dates back to the date of prepayment, utilizing a discount rate equal to the Coverted Treasury Yield, divided by the frequency of the interest payments made during a calendar year; and (ii) subtracting from such sum the Outstanding Principal Balance as of the date prepayment will be made. (c) Although Maker shall have the right to give one Prepayment Notice which may be revoked by Maker upon notice of revocation given at least five (5) days prior to the prepayment date specified in the Prepayment Notice, any Prepayment Notice after the initial Prepayment Notice shall be irrevocable. The Prepayment Notice shall specify the intended date of prepayment, which date shall be a business day not more than sixty (60) days after the date of the Prepayment Notice. After delivery of a Prepayment Notice, the Outstanding Principal Balance, together with the prepayment premium described above, shall be absolutely and unconditionally due and payable in full on the date specified in such notice, and failure to pay the same in full on such date shall, at Payee's sole option, constitute a default, without notice or opportunity to cure, subject to the Maker's one-time right to revoke its initial Prepayment Notice at least five (5) days prior to the date specified therein for prepayment. If the amounts necessary to prepay the Note in accordance with the terms and provisions hereof are received by Payee after 2:00 p.m., such prepayment shall be deemed to have been made on the next occurring business day and Payee shall be entitled to receive interest on the Outstanding Principal Balance, calculated through the effective date of such prepayment. (d) Maker acknowledges that it possesses no right to prepay the Loan, except as expressly provided herein. Maker further acknowledges and agrees that, except as expressly provided herein, if the Loan is prepaid prior to the Maturity Date, for any reason, including but not limited to, acceleration of the Maturity Date by reason of a default under the Loan Documents, any subsequent tender of payment of the Loan made by Maker or by anyone on behalf of Maker or otherwise, including any tender of payment at any time prior to or at foreclosure sale or proceedings or during any redemption period following foreclosure, or during any federal or state bankruptcy or insolvency proceedings, shall constitute an evasion of the restrictions on prepayment set forth herein, and shall be deemed a voluntary prepayment prior to the Maturity Date requiring payment of the prepayment premium provided for, if any, and Payee shall not be required to accept such payment if it does not include payment of the prepayment premium provided for, if any. Further, Payee's acceptance of such prepayment without the requisite prepayment premium shall not constitute or be deemed to constitute a waiver by Payee of its right to seek payment of the required prepayment premium in accordance with the terms hereof or nay rights and remedies Payee may have under this Note, and other Loan Documents, at law or in equity on account of Maker's failure to timely pay such prepayment premium as and when required hereunder. To the extent permitted by law, Payee may bid at any foreclosure sale, as part of the indebtedness evidenced by the Loan Documents, the amount of the prepayment premium, if any, which is payable hereunder for prepayment of the Loan occurring on the date of such foreclosure. (e) Maker and Payee have negotiated the Modifications upon the understanding that if the Loan is paid or prepaid prior to the Maturity Date, for any reason, except as expressly provided herein, Payee shall receive the prepayment premium provided for as partial compensation for the cost of reinvesting the prepayment proceeds and the loss of the contracted rate of return on the Loan. Maker agrees that the prepayment premium provided for herein is reasonable. Maker agrees that Payee shall not be obligated, as a condition precedent to its receipt of the prepayment premium provided for, to actually reinvest all or any part of the amount prepaid in any United States Treasury instruments or obligations or otherwise. 5. CALCULATION OF INTEREST. From and after the Effective Date, the following sentence shall be added to the end of Section 2.5 of the Note: The foregoing provision shall not be applicable to Contingent Additional Interest, the calculation of which shall be governed solely by Section 2.1(d) of the Note. 6. PAYMENTS AFTER DEFAULT. From and after the Effective Date, the phrase "Fees and Expenses or any other sums and charges," shall be inserted after the defined term "Outstanding Principal Balance" in line 190 of the Note, and the text commencing with the word "unless" in line 191 through the word "payment" in line 193 of the Note are hereby deleted. The following provision shall be added to the end of Section 2.6 of the Note: Notwithstanding any other provision hereof or of any of the other Loan Documents, from and after the occurrence of a Default, all payments, Rents and other amounts received by Payee may be applied by Payee in such manner and to such indebtedness (whether to payment of advances made by Payee pursuant to any provision of any of the Loan Documents, contributions to any reserves, interest, principal, Late Charges, interest at the Default Rate, prepayment premiums, Fees and Expenses or otherwise) and in such amounts and order of priority as Payee may determine in the exercise of its sole and absolute discretion. 7. DEFAULT. From and after the Effective Date, the phrase "or Fees and Expenses or any other sums and charges (including any prepayment premium if applicable)" shall be inserted after the word "interest" in line 212 of the Note. A reference to the "seventh (7th) day" shall be inserted in lieu of the reference to the "fifth (5th) day" in line 213 of the Note. Further, the phrase "interest (including Contingent Additional Interest, if applicable), Fees and Expenses and other sums and charges (including any prepayment premium, if applicable)" shall be inserted in lieu of the phrase "accrued interest thereon" in lines 231 and 232 of the Note. 8. FEES AND EXPENSES. From and after the Effective Date, the following sentence shall be added at the end of Section 3.4 of the Note: Upon the occurrence of a Default, Maker promises to pay all Fees and Expenses incurred by Payee. In the event that Maker fails to make any payment of money due to Payee under this Note (other than the payment of the then Outstanding Principal Balance due on the Maturity Date or the date specified in any Prepayment Notice) with seven (7) days after the due date thereof, Payee shall be entitled to collect a Late Charge as liquidated damages, which Late Charge shall be due in addition to any interest, whether or not calculated at the Default Rate, in connection with each such delinquency in payment. Because the actual damages suffered by Payee would be impracticable or extremely difficult or impossible to determine, Maker agrees the amount of the Late Charge shall be the amount of damages to which Payee is entitled upon each such breach, in compensation for such delinquent payment, and that the amount of such liquidated damages is reasonable. 9. NOTICES. All notices given or required to be given to Maker and Payee under Section 4.1 of the Note are hereby revised as follows: If to Maker: c/o Insignia Properties Trust One Insignia Financial Plaza Greenville, South Carolina 29601 If to Payee: The Travelers Insurance Company Real Estate Investments One Tower Square, 9-PBA Hartford, Connecticut 06183-2030 Attn: Loan No. 502262 With a Copy to: The Travelers Insurance Company Real Estate Investments One Tower Square, 9-PBA Hartford, Connecticut 06183-2030 With a Copy to: Constance Collins Davis, Esquire Andrews & Kurth L.L.P. A Registered Limited Liability Partnership 1701 Pennsylvania Ave., N.W., Suite 200 Washington, DC 20006 The foregoing notice addresses shall be applicable for the Note and each and all of the Loan Documents until such time as either party notifies the other of any changes therein with respect to such party. 10. REFERENCES TO OTHER LOAN DOCUMENTS. From and after the Effective Date, all references to the Hazardous Materials Guaranty and Indemnification Agreement, Use and Retention Funds Letter, and Manager's Liability Letter Agreement, are hereby revised to refer instead to the defined terms Guaranties, Use and Retention Letter, and Manager's Liability Letter, respectively. 11. NO USURY. All agreements between Maker and Payee are expressly limited so that in no contingency or event whatsoever, whether of advancement of the proceeds hereof, acceleration of maturity of the remaining Outstanding Principal Balance, upon a Default or otherwise, shall the amount paid or agreed to be paid to Payee for the use, forbearance or detention of the money advanced or to be advanced hereunder exceed the highest lawful rate permissible under the laws of the State of Texas. Said highest lawful rate is determined by reference to the indicated (weekly) rate ceiling (as defined and described in Texas Revised Civil Statues Article 5069-1.04, as amended). If, from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents or of any other agreement referred to herein or pertaining hereto, at the time when performance of such provisions shall be due, shall involve transcending the highest rate prescribed by law, which a court of competent jurisdiction may deem applicable hereto, the ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate, and if from any circumstances, Payee shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied first, to the reduction of the remaining Outstanding Principal Balance and other indebtedness due hereunder (other than interest) or under the other Loan Documents without any prepayment premium or charge and not to the payment of interest, with the excess being deemed to have been a payment made by mistake to be refunded to Maker. All sums paid or agreed to be paid to the holder of the Note for the use, forbearance or detention or detention of the Indebtedness, outstanding from time to time shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread from the date of disbursement of the proceeds of the Note until payment in full of the Indebtedness so that the actual rate of interest on account of the Indebtedness is uniform through the term thereof. Neither Maker nor any other party obligated to pay all of any part of the Indebtedness evidenced by the Note shall have any claim or remedy against Payee for any damages whatsoever, or any defenses to enforcement of the Note or any of the other Loan Documents, relating in any way to allegations that the interest paid or collected thereunder was in excess of the lawful limit, and Maker, for itself and for any and all parties claiming by, under or through it, hereby waives any such claims, remedies or defenses. Neither Maker nor any other party obligated to pay all or any part of the Indebtedness evidenced by this Note shall have any claim or remedy against Payee for any damages whatsoever, or any defenses to enforcement of this Note or any of the other Loan Documents, relating in any way to allegations that the interest paid or collected hereunder was in excess of the lawful limit, and Maker, for itself and for any and all parties claiming by, under and through it, hereby waives any such claims, remedies or defenses. This provision shall control every other provision of the Loan Documents, Maker hereby represents and warrants to Payee that the interest under this Note (including the Interest Rate, Default Rate and Contingent Additional Interest) is not usurious without regard to the provisions of this Paragraph. 12. NO NOVATION. This Amendment and the other Amendment Documents shall not cause a novation of any of the indebtedness and obligations of Maker or any of the Responsible Parties under the Loan Documents, including the Note, nor shall the same extinguish, terminate or impair the indebtedness and obligations of Maker or the Responsible Parties and Payee's rights and remedies under the Loan Documents, including the Note. Maker hereby acknowledges, represents, warrants and agrees that neither Maker nor any of the Responsible Parties has any defenses, rights of set-off, counterclaims or other claims against Payee in connection with the Loan Documents, including the Amendment Documents, or the indebtedness or obligations evidenced and/or secured thereby. 13. RATIFICATION. Except as expressly modified herein, each and all of the terms, covenants, representations, warranties and provisions of the Note are and shall remain in full force and effect unmodified in any way. Maker hereby ratifies and reaffirms each an all of the terms, covenants, representations, warranties and provisions of the Note, as modified hereby, and confirms that the Loan Documents shall continue as a first priority, valid and enforceable, properly perfected lien upon the Premises and all other collateral described in the Loan Documents to secure repayment of the Note, as modified hereby, and all other indebtedness and obligations under the Loan Documents, including the Amendment Documents. 14. MISCELLANEOUS. (A) MISCELLANEOUS. This Amendment shall be construed under and governed by the internal laws of the State of Texas, excluding conflicts of laws principles. TIME IS OF THE ESSENCE under the Note and each of the other loan Documents and each and every provision hereof and thereof. (B) AMENDMENT/MODIFICATION. This Amendment and each of the other Loan Documents, and the terms of each of them, may not be charged, waived, modified, canceled, discharged or terminated orally, but only by an instrument or instruments in writing signed by the party against which enforcement of the change, wavier, modification, cancellation, discharge or termination is asserted. (C) COUNTERPARTS. This Amendment and each of the other Loan Documents may be executed in any number of counterparts, each of which shall constitute an original but all of which together will constitute one instrument. (D) WAIVER OF TRIAL BY JURY. MAKER, FOR ITSELF, EACH OF THE RESPONSIBLE PARTIES, AND ALL PERSONS OR ENTITIES CLAIMING BY, THROUGH OR UNDER ANY OF THEM, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS ANY OR ALL OF THEM MAY HAVE TO TRIAL BY JURY IN ANY LITIGATION OR ACTION BROUGHT ON, UNDER OR BY VIRTUE OR RELATING IN ANY WAY TO THIS AMENDMENT OR ANY OTHER OF THE LOAN DOCUMENTS, OR ANY CLAIMS, DEFENSES, RIGHTS OF SET-OFF OR OTHER ACTIONS PERTAINING HERETO OR THERETO. THIS WAIVER MAY BE FILED WITH THE CLERK OR JUDGE OF ANY COURT AS A WRITTEN CONSENT TO WAIVER OR JURY TRIAL. MAKER ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR PAYEE'S ENTERING INTO THE LOAN DOCUMENTS. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE INDEBTEDNESS EVIDENCED BY THE LOAN DOCUMENTS. (E). ENTIRE AGREEMENT. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. (F). NOTICE OF INVALIDITY OF ORAL AGREEMENTS. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above. MAKER: CENTURY PROPERTIES FUND XIX, a California limited partnership, by its duly authorized, sole general partner BY: FOX PARTNERS II, a California general partnership, by its authorized, managing general partner WITNESS: BY: FOX CAPITAL MANAGEMENT CORPORATION, a California corporation, by its duly authorized officer /s/Douglas G. Brown BY: /s/William H. Jarrard, Jr. Name:Douglas G. Brown Name: William H. Jarrard, Jr. Title: President PAYEE: ATTEST: THE TRAVELERS INSURANCE COMPANY /s/Robert Scoville By:/s/Lynn M. Latham Name:Robert Scoville Name:Lynn M. Latham Title:Asst. Secretary Title:Vice President EX-10.11 4 EXHIBIT 10.11 AMENDMENT TO AMENDED AND RESTATED NOTE B THIS AMENDMENT TO AMENDED AND RESTATED NOTE B (as more particularly defined in Paragraph 1, this "Amendment") is made of the 29th day of January, 1998, by and between CENTURY PROPERTIES FUND XIX, a California limited partnership (as more particularly defined in Paragraph 1 hereof, "Maker"), having an address as set forth in Paragraph 7 (hereinafter defined), and THE TRAVELERS INSURANCE COMPANY, a Connecticut corporation, having an address as set forth in Paragraph 7 (as more particularly defined in Paragraph 1 hereof, "Payee"). WITNESSETH: WHEREAS, Payee and Maker are parties to that certain Modification and Severance Agreement dated as of September 1, 1994 (as more particularly defined in Paragraph 1 hereof, "Modification and Severance Agreement"); WHEREAS, Payee is the owner and holder of that certain Amended and Restated Note B dated as of September 1, 1994, executed and delivered by Maker, as "Maker", payable to the order of Payee, as "Payee" in the restated principal amount of Two Million One Hundred Thirty Eight Thousand Six Hundred Seventy Three Dollars and Fifty Three Cents ($2,138,673.53) (as more particularly defined in Paragraph 1 hereof, "Note"), repayment of which is secured by, among other things: (a) that certain Amended and Restated Deed of Trust B dated as of September 1, 1994, executed and delivered by Maker for the benefit of Payee, recorded in Volume 94180, Page 03769 in the Deed of Trust Records, Dallas County, Texas ("Land Records") (as more particularly defined in Paragraph 1 hereof, "Deed of Trust"); and (b) all other documents, certificates, affidavits and other instruments now or at any time prior or subsequent hereto evidencing, securing, or relating to any way to any of the above referenced documents (collectively the foregoing, including the Note and the Modification and Severance Agreement, are more particularly defined in Paragraph 1 hereof as the "Loan Documents"); and WHEREAS, Maker has requested that Payee amend certain provisions of the Loan Documents (collectively, the "Modifications") pursuant to the Modification and Severance Agreement, and in order to accomplish the Modifications, Maker and Payee have agreed to enter into this Amendment and the other Amendment Documents (hereinafter defined) which modify each and all of the Loan Documents; and WHEREAS, as a condition precedent to the effectiveness of such Modifications, Maker shall have, among other things, unconditionally and irrevocably paid to Payee a Curtailment (hereinafter defined) in the amount of Five Hundred Forty Thousand Dollars on account of the Note, which amount shall be applied to reduce the outstanding amounts thereunder prior to the Effective Date. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Maker and Payee hereby agree as follows: 1. DEFINITIONS. All capitalized terms used herein and not otherwise defined in this Paragraph 1 or the Note shall have the meanings for such terms set forth in the Modification and Severance Agreement. The parties further agree that the following terms shall have the meanings hereinafter set forth, such definitions to be applicable equally to the singular and plural forms, and to the masculine and feminine forms, of such terms: "AMENDMENT" shall mean this Amendment to Amended and Restated Note B between Maker and Payee, as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "AMENDMENT DOCUMENTS" shall have the meaning of the same defined term set forth in the Modification and Severance Agreement. "BANKRUPTCY CODE" shall mean the United States Bankruptcy Code, as codified at 11 U.S.C. Section 101 et. seq., as amended from time to time. "CASH MANAGEMENT AGREEMENT" shall mean collectively, that certain Cash Management Agreement dated as of September 1, 1994, by and among Maker, as "Borrower", Payee, as "Lender", and NPI-AP Management, L.P., as "Manager", as modified by the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "CURTAILMENT" shall have the meaning of the same defined term set forth in the Modification and Severance Agreement. "DEED OF TRUST OR DEED OF TRUST B" shall mean collectively, that certain Amended and Restated Deed of Trust B dated as of September 1, 1994, executed and delivered by Maker for the benefit of Payee, recorded in Volume 94180, 03769 in the Land Records, as modified by the Amendment to Amended and Restated Deed of Trust B and Amended and Restated Assignment of Leases and Rents B of even date herewith, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "DEFAULT RATE" shall mean, for the applicable portion of the Outstanding Principal Balance, the per annum interest rate equal to the aggregate of (a) the Interest Rate applicable to such Principal Portion, and (b) five percent (5.00%) per annum, not to exceed the maximum interest rate permitted by law. "EFFECTIVE DATE" shall mean the day and year first above written, subject to satisfaction of the conditions precedent to the effectiveness hereof on or before such date, as determined by Payee. "FEES AND EXPENSES" shall mean all fees, costs and expenses (including reasonable attorneys fees and other professionals fees) incurred by Payee in connection with the interpretation, enforcement and/or collection of this Note and/or any of the other Loan Documents, the protection of or realization on the Premises and any other collateral under the Loan Documents, enforcement of any guaranty or indemnity and/or defense of any action relating to this Note and/or any of the other Loan Documents, the Premises and any other collateral and/or the indebtedness and obligations evidenced thereby, and whether the same were incurred in connection with any nonjudicial, quasi-judicial, judicial or administrative actions or proceedings, prior to trial, at trial, on appeal or review or in settlement, or in any Insolvency Proceeding (as defined in the Modification and Severance Agreement) and whether or not suit was filed thereon. "FIRST AMENDMENT TO MODIFICATION AND SEVERANCE AGREEMENT" shall mean that certain First Amendment to Modification and Severance Agreement of even date herewith entered into by and between Maker and Payee. "GUARANTIES" shall mean collectively, the Guaranty of Payment and Hazardous Materials Guaranty. "GUARANTY OF PAYMENT" shall mean collectively, that certain Guaranty of Payment dated as of September 1, 1994, executed and delivered by the Responsible Parties to and in favor of Payee, as ratified and confirmed by the joinder of the Responsible Parties in the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "HAZARDOUS MATERIALS GUARANTY" shall mean collectively, that certain Hazardous Material Guaranty and Indemnification Agreement dated as of September 1, 1994, executed and delivered by the Responsible Parties to and in favor of Payee, as ratified and confirmed by the joinder of the Responsible Parties in the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "INTEREST RATE" shall mean (a) for the period prior to the Effective Date, eight and one-quarter percent (8.25%) per annum, (b) for the period from the Effective Date to and including October 31, 2001, nine and fifteen one- hundredths percent (9.15%) per annum, and (c) for the period from November 1, 2001, to the date on which the Outstanding Principal Balance and all other amounts owed under the Loan Documents are paid in full, a fixed rate per annum equal to 325 basis points plus the annualized yield, or if there is more than one yield available, the average yields, on United States Treasury non-callable bonds (excluding Flower Bonds) and notes having one-year maturity, as determined by Payee on November 1, 2001, by reference to the Wall Street Journal or similar publication, not to exceed in all cases the maximum interest rate allowed by law. "LATE CHARGE" shall mean four percent (4%) of the amount of any payment (including any installment payments and deposits to reserves and escrows (to the extent not duplicative of late charges for the same under Loan Documents A)) not received by Payee on the due date thereof. "LOAN DOCUMENTS" shall mean have meaning of the same defined term set forth in the Modification and Severance Agreement. "LOAN DOCUMENTS A" shall mean have the meaning of the same defined term set forth in the Modification and Severance Agreement. "LOAN DOCUMENTS B" shall mean have the meaning of the same defined term set forth in the Modification and Severance Agreement. "MAKER" shall mean Century Properties Fund XIX, a California limited partnership, and its legal representatives, successors and assigns. As used herein and in each of the Loan Documents to which the Maker is a party, the term Maker shall be synonymous with Borrower, Grantor and Assignor, as applicable. "MANAGER'S LIABILITY LETTER" shall mean collectively, that certain Manager's Liability Letter dated as of September 1, 1994, by and between NPI-AP Management, L.P. and Payee, as modified by the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "MATURITY DATE" shall mean October 31, 2002, or such earlier date the entire Outstanding Principal Balance and accrued and unpaid interest thereon, and any other sums which are due and payable in full pursuant to the terms and provisions of this Note, are due and payable by reason of the acceleration of the maturity of this Note. "MODIFICATION AND SEVERANCE AGREEMENT" shall mean collectively, that certain Modification and Severance Agreement dated as of September 1, 1994, between Maker and Payee, as modified by the First Amendment of Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "NET PROCEEDS" shall mean the amount by which: (a) either (i) in the case of a sale or other transfer of the Premises or any interests therein or in the Maker, in an arms length, bonafide third party sales transaction approved by Payee ("Third Party Sale"), the gross sales price (inclusive of all consideration to any of the Responsible Parties and any Person related thereto, of whatsoever form or nature) attributed to the Premises, less and except the actual, reasonable and necessary costs of such sale allocable to the Premises payable to unrelated third parties, not to exceed 2% unless approved in advance by Payee in its sole discretion, and actual, customary prorations of income and expenses of the Premises related thereto; or (ii) in the case of any transfer of the Premises or any interests therein or in the Maker in a transaction approved by Payee which is other than a Third Party Sale or in the event of payoff prior to the Maturity Date that is not accompanied by a transfer, including any refinancing, such amount as is agreed upon by Payee and Maker on or before sixty (60) days prior to the date of any such transfer, or in the absence of any such agreement, the fair market value, as of such date, of the leased, fee interest in the Premises, free and clear of any liens and encumbrances, as opined by a general real estate appraiser selected by Payee, who is certified or licensed in the Sate of Texas, if the State of Texas certifies or licenses appraisers at such time, and holds an MAI (or equivalent) designation of the American Institute of Real Estate Appraisers ("Appraisal Institute") (in the event of the continued existence of the Appraisal Institute at such time), and in accordance with the Appraisal Institute's then current Code of Professional Ethics and Standards of Professional Appraisal Practice (if and in the event the Appraisal Institute continues to exist at such time) (the fees and expenses incurred by Payee for such appraiser to be reimbursed by Borrower on demand and constitute additional indebtedness secured by the Loan Documents); exceeds (b) all amounts necessary to pay and discharge in full the indebtedness and obligations under the Loan Documents (whether to payment of advances made by Payee pursuant to any provision of any of the Loan Documents, contributions to any reserves, interest, principal, Late Charges, interest at the Default Rate, prepayment premiums, Fees and Expenses or otherwise), other than the Non-Interest Bearing Portion. "NOTE OR NOTE B" shall mean collectively, that certain Amended and Restated Note B dated as of September 1, 1994, executed and delivered by Maker, as "Maker", payable to the order of Payee, as "Payee", in the restated principal amount of Two Million One Hundred Thirty Eight Thousand Six Hundred Seventy Three Dollars and Fifty Three Cents ($2,138,673.53), as modified by this Amendment, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "NOTE A" shall mean collectively, that certain Amended and Restated Note A dated as of September 1, 1994, executed and delivered by Maker, as "Maker", payable to the order of Payee, as "Payee", in the restated principal amount of Ten Million Eight Hundred Thousand Dollars ($10,800,000), as modified by the Amendment to Amended and Restated Note A of even date herewith, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. "ORIGINAL PRINCIPAL AMOUNT" shall mean Two Million One Hundred Thousand Eight Hundred Sixty Two Dollars ($2,100,862.0), after giving effect to the Curtailment and certain forgiveness of indebtedness in accordance with the terms of the Modification and Severance Agreement. "PAYEE" shall mean The Travelers Insurance Company and its legal representatives, successors and assigns, including any subsequent owner and holder of the Loan Documents. As used herein and in each of the other Loan Documents to which Payee is a party, the term Payee shall be synonymous with Lender, Beneficiary, and Assignee, as applicable. "PERSON" shall mean an individual, estate, trust, trustee, receiver, partnership, limited liability partnership, corporation, limited liability company, depository institution (including federal or state savings banks, savings and loan associations, and credit unions), governmental authorities, or other legal entity. "PREMISES" shall have the meaning of the same defined term set forth in the Deed of Trust. "RESPONSIBLE PARTIES" shall mean collectively, Maker, Fox Partners II, a California general partnership, Fox Capital Management Corporation, a California corporation, NPI Equity Investments II, Inc., a Florida corporation, and NPI-AP Management, L.P., a Delaware limited partnership, and their respective legal representatives, successors and assigns. "SALE OR REFINANCE" shall have the meaning of the same defined term set forth in Paragraph 2(b). "TERM" shall mean the period commencing on September 1, 1994, and ending on October 31, 2002. "USE AND RETENTION LETTER" shall mean collectively, that certain Use and Retention of Funds Letter dated as of September 1, 1994, by and among the Responsible Parties and Payee, as modified by the First Amendment to Modification and Severance Agreement, and as the same may be amended, modified, extended, spread, consolidated, restated or replaced from time to time. The definitions set forth in this Paragraph 1 are hereby incorporated in the Note and shall supersede the definitions set forth in the Note for any of such terms and shall, from and after the Effective Date, constitute the definitions to be used for all purposes with respect to the Note. The words "herein", "hereof", "hereunder" and other words of similar import refer to this Amendment as a whole and not to any particular Section or Paragraph, unless specifically designated otherwise. The use of the term "including" shall mean in all cases "including but not limited to," unless specifically designated otherwise. No rules of construction against the drafter of this Amendment shall apply in any interpretation or enforcement of this Amendment, any documents or certificates executed pursuant hereto, or any provisions of any of the foregoing. 2. OUTSTANDING PRINCIPAL AMOUNT. The following additional modifications are hereby made to the Note: (a) From and after the Effective Date, all references in the Note to the outstanding principal balance or Original Principal Amount of $2,138,673.53 with respect to the Note are hereby revised to state the new outstanding principal balance and Original Principal Amount of $2,100,862.00. As of the Effective Date, the Outstanding Principal Balance of the Note is and shall conclusively be deemed to be $2,100,862.00. (b) From and after the Effective Date, the last paragraph of Page 3 of the Note is hereby revised in its entirety to read as follows: FOR VALUE RECEIVED, Maker hereby unconditionally and irrevocably promises to pay to the order of Payee, at Payee's office, or at such other place as Payee may designate from time to time, the Outstanding Principal Amount of Two Million One Hundred Thousand Eight Hundred Sixty Two Dollars ($2,100,862.00), together with interest, as applicable, and other Fees and Expenses, charges and sums, in accordance with the terms hereinafter set forth, in immediately available funds, in lawful money of the United States of America, which shall be legal tender in payment of all debts and dues, public and private, at the time of payment. The Outstanding Principal Amount shall consist of (a) a non-interest bearing initial portion in the amount of Eight Hundred Thousand Dollars ($800,000) or so much thereof as remains unpaid from time to time ("Non-Interest Bearing Portion"), and (b) an interest bearing portion which shall consist of the entire Outstanding Principal Balance less and except only the Non-Interest Bearing Portion ("Interest Bearing Portion"). The Interest Bearing Portion shall bear interest at the Interest Rate for the period from and after the Effective Date until paid in full. The Non-Interest Bearing Portion shall not bear interest unless and until a Default occurs. At Payee's option, the entire Outstanding principal Balance, including the Non-Interest Bearing Portion and the Interest Bearing Portion, shall bear interest at the Default Rate from and after a Default. Any and all payments, Rents and other amounts received by Payee shall be applied by Payee in such manner and to such indebtedness (whether to payment of advances made by Payee pursuant to any provision of any of the Loan Documents, contributions to any reserves, interest, principal, Late Charges, interest at the Default Rate, prepayment premiums, Fees and Expenses or otherwise) first, under the Loan Documents A, and second under Loan Documents B, and in such amounts and order of priority under each of the Loan Documents A and Loan Documents B as Payee may determine in the exercise of its sole and absolute discretion, and Payee shall be fully entitled, in its discretion, to apply any such payments, Rents and other amounts to the Interest Bearing Portion of the Outstanding Principal Balance, all accrued and unpaid interest thereon and any other indebtedness and obligations under the Loan Documents prior to applying any such amounts to the Non-Interest Bearing Portion. Notwithstanding anything herein to the contrary, Payee agrees that upon the occurrence of any sale or other transfer of the Premises or any interests therein or in the Maker, in a sale, refinance or other transaction approved by Payee prior to the Maturity Date ("Sale or Refinance") and provided (i) there is no Default under the Loan Documents which remains uncured, (ii) Maker has paid and discharged in full all indebtedness and obligations under the Loan Documents (whether to payment of advances made by Payee pursuant to any provision of any of the Loan Documents, contributions to any reserves, interest, principal, Late Charges, interest at the Default Rate, prepayment premiums, Fees and Expenses or otherwise), other than the Non-Interest Bearing Portion, then Maker shall be entitled to retain up to, but not in excess of $540,000 of the Net Proceeds prior to application of such Net Proceeds to payment of the Non- Interest Bearing Portion of the Outstanding Principal Balance, and if and to the extent that such remaining Net Proceeds are insufficient to pay the Non-Interest Bearing Portion in full, Payee agrees to forgive the shortfall (but no amount other than such shortfall) in such payment. In no event shall the aforesaid sum of $540,000 bear interest. 3. PAYMENT SCHEDULE. From and after the Effective Date, Section 2.1 of the Note is hereby revised to include the following new provisions: (b) Commencing on March 1, 1998, and continuing on the first day of each consecutive calendar month thereafter, Maker shall make monthly payments of interest only, in arrears, calculated at the Interest Rate on the Interest Bearing Portion of the Outstanding Principal Balance. (c) If and to the extent there is any Excess Cash Collateral, as defined in and pursuant to Paragraph 3(c) of the Cash Management Agreement, Maker shall remit to Payee all Excess Cash Collateral on or before the twentieth (20th) day after the end of each calendar year, for the preceding calendar year, to be applied by Payee to principal, interest, advances, and other sums or charges first, under the Loan Documents A, and second, under Loan Documents B, in such order, proportion and priority as Payee with respect to each of the Loan Documents A and Loan Documents A, in its sole and absolute discretion, deems appropriate. 4. PAYMENTS AFTER DEFAULT. From and after the Effective Date, the phrase "Fees and Expenses or any other sums and charges," shall be inserted after the defined term "Outstanding Principal Balance" in line 190 of the Note, and the text commencing with the word "unless" in line 184 through the word "payment" in line 186 of the Note are hereby deleted. The following provision shall be added to the end of Section 2.6 of the Note: Notwithstanding any other provision hereof or of any of the other Loan Documents, from and after the occurrence of a Default, all payments, Rents and other amounts received by Payee may be applied by Payee in such manner and to such indebtedness (whether to payment of advances made by Payee pursuant to any provision of any of the Loan Documents, contributions to any reserves, interest, principal, Late Charges, interest at the Default Rate, prepayment premiums, Fees and Expenses or otherwise) and in such amounts and order of priority as Payee may determine in the exercise of its sole and absolute discretion. 5. DEFAULT. From and after the Effective Date, the phrase "or Fees and Expenses or any other sums and charges" shall be inserted after the word "interest" in line 205 of the Note. A reference to the "seventh (7th) day" shall be inserted in lieu of the reference to the "fifth (5th) day" in line 206 of the Note. Further, the phrase "interest, Fees and Expenses and other sums and charges" shall be inserted in lieu of the phrase "accrued interest thereon" in lines 224 of the Note. 6. FEES AND EXPENSES. From and after the Effective Date, the following sentence shall be added at the end of Section 3.4 of the Note: Upon the occurrence of a Default, Maker promises to pay all Fees and Expenses incurred by Payee. In the event that Maker fails to make any payment of money due to Payee under this Note (other than the payment of the then Outstanding Principal Balance due on the Maturity Date or the date specified in any Prepayment Notice) with seven (7) days after the due date thereof, Payee shall be entitled to collect a Late Charge as liquidated damages, which Late Charge shall be due in addition to any interest, whether or not calculated at the Default Rate, in connection with each such delinquency in payment. Because the actual damages suffered by Payee would be impracticable or extremely difficult or impossible to determine, Maker agrees the amount of the Late Charge shall be the amount of damages to which Payee is entitled upon each such breach, in compensation for such delinquent payment, and that the amount of such liquidated damages is reasonable. 7. NOTICES. All notices given or required to be given to Maker and Payee under Section 4.1 of the Note are hereby revised as follows: If to Maker: c/o Insignia Properties Trust One Insignia Financial Plaza Greenville, South Carolina 29601 If to Payee: The Travelers Insurance Company Real Estate Investments One Tower Square, 9-PBA Hartford, Connecticut 06183-2030 Attn: Loan No. 502262 With a Copy to: The Travelers Insurance Company Real Estate Investments One Tower Square, 9-PBA Hartford, Connecticut 06183-2030 With a Copy to: Constance Collins Davis, Esquire Andrews & Kurth L.L.P. A Registered Limited Liability Partnership 1701 Pennsylvania Ave., N.W., Suite 200 Washington, DC 20006 The foregoing notice addresses shall be applicable for the Note and each and all of the Loan Documents until such time as either party notifies the other of any changes therein with respect to such party. 8. REFERENCES TO OTHER LOAN DOCUMENTS. From and after the Effective Date, all references to the Hazardous Materials Guaranty and Indemnification Agreement, Use and Retention Funds Letter, and Manager's Liability Letter Agreement, are hereby revised to refer instead to the defined terms Guaranties, Use and Retention Letter, and Manager's Liability Letter, respectively. 9. NO USURY. All agreements between Maker and Payee are expressly limited so that in no contingency or event whatsoever, whether of advancement of the proceeds hereof, acceleration of maturity of the remaining Outstanding Principal Balance, upon a Default or otherwise, shall the amount paid or agreed to be paid to Payee for the use, forbearance or detention of the money advanced or to be advanced hereunder exceed the highest lawful rate permissible under the laws of the State of Texas. Said highest lawful rate is determined by reference to the indicated (weekly) rate ceiling (as defined and described in Texas Revised Civil Statues Article 5069-1.04, as amended). If, from any circumstances whatsoever, fulfillment of any provision hereof or of any of the Loan Documents or of any other agreement referred to herein or pertaining hereto, at the time when performance of such provisions shall be due, shall involve transcending the highest rate prescribed by law, which a court of competent jurisdiction may deem applicable hereto, the ipso facto, the obligation to be fulfilled shall be reduced to the highest lawful rate, and if from any circumstances, Payee shall ever receive as interest an amount which would exceed the highest lawful rate, such amount which would be excessive interest shall be applied first, to the reduction of the remaining Outstanding Principal Balance and other indebtedness due hereunder (other than interest) or under the other Loan Documents without any prepayment premium or charge and not to the payment of interest, with the excess being deemed to have been a payment made by mistake to be refunded to Maker. All sums paid or agreed to be paid to the holder of the Note for the use, forbearance or detention or detention of the Indebtedness, outstanding from time to time shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread from the date of disbursement of the proceeds of the Note until payment in full of the Indebtedness so that the actual rate of interest on account of the Indebtedness is uniform through the term thereof. Neither Maker nor any other party obligated to pay all of any part of the Indebtedness evidenced by the Note shall have any claim or remedy against Payee for any damages whatsoever, or any defenses to enforcement of the Note or any of the other Loan Documents, relating in any way to allegations that the interest paid or collected thereunder was in excess of the lawful limit, and Maker, for itself and for any and all parties claiming by, under or through it, hereby waives any such claims, remedies or defenses. Neither Maker nor any other party obligated to pay all or any part of the Indebtedness evidenced by this Note shall have any claim or remedy against Payee for any damages whatsoever, or any defenses to enforcement of this Note or any of the other Loan Documents, relating in any way to allegations that the interest paid or collected hereunder was in excess of the lawful limit, and Maker, for itself and for any and all parties claiming by, under and through it, hereby waives any such claims, remedies or defenses. This provision shall control every other provision of the Loan Documents, Maker hereby represents and warrants to Payee that the interest under this Note (including the Interest Rate and Default Rate) is not usurious without regard to the provisions of this Paragraph. 10. NO NOVATION. This Amendment and the other Amendment Documents shall not cause a novation of any of the indebtedness and obligations of Maker or any of the Responsible Parties under the Loan Documents, including the Note, nor shall the same extinguish, terminate or impair the indebtedness and obligations of Maker or the Responsible Parties and Payee's rights and remedies under the Loan Documents, including the Note. Maker hereby acknowledges, represents, warrants and agrees that neither Maker nor any of the Responsible Parties has any defenses, rights of set-off, counterclaims or other claims against Payee in connection with the Loan Documents, including the Amendment Documents, or the indebtedness or obligations evidenced and/or secured thereby. 11. RATIFICATION. Except as expressly modified herein, each and all of the terms, covenants, representations, warranties and provisions of the Note are and shall remain in full force and effect unmodified in any way. Maker hereby ratifies and reaffirms each an all of the terms, covenants, representations, warranties and provisions of the Note, as modified hereby, and confirms that the Loan Documents shall continue as a first priority, valid and enforceable, properly perfected lien upon the Premises and all other collateral described in the Loan Documents to secure repayment of the Note, as modified hereby, and all other indebtedness and obligations under the Loan Documents, including the Amendment Documents. 12. MISCELLANEOUS. (A) MISCELLANEOUS. This Amendment shall be construed under and governed by the internal laws of the State of Texas, excluding conflicts of laws principles. TIME IS OF THE ESSENCE under the Note and each of the other loan Documents and each and every provision hereof and thereof. (B) AMENDMENT/MODIFICATION. This Amendment and each of the other Loan Documents, and the terms of each of them, may not be charged, waived, modified, canceled, discharged or terminated orally, but only by an instrument or instruments in writing signed by the party against which enforcement of the change, wavier, modification, cancellation, discharge or termination is asserted. (C) COUNTERPARTS. This Amendment and each of the other Loan Documents may be executed in any number of counterparts, each of which shall constitute an original but all of which together will constitute one instrument. (D) WAIVER OF TRIAL BY JURY. MAKER, FOR ITSELF, EACH OF THE RESPONSIBLE PARTIES, AND ALL PERSONS OR ENTITIES CLAIMING BY, THROUGH OR UNDER ANY OF THEM, HEREBY EXPRESSLY, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS ANY OR ALL OF THEM MAY HAVE TO TRIAL BY JURY IN ANY LITIGATION OR ACTION BROUGHT ON, UNDER OR BY VIRTUE OR RELATING IN ANY WAY TO THIS AMENDMENT OR ANY OTHER OF THE LOAN DOCUMENTS, OR ANY CLAIMS, DEFENSES, RIGHTS OF SET-OFF OR OTHER ACTIONS PERTAINING HERETO OR THERETO. THIS WAIVER MAY BE FILED WITH THE CLERK OR JUDGE OF ANY COURT AS A WRITTEN CONSENT TO WAIVER OR JURY TRIAL. MAKER ACKNOWLEDGES THAT IT HAS CONSULTED WITH LEGAL COUNSEL REGARDING THE MEANING OF THIS WAIVER AND ACKNOWLEDGES THAT THIS WAIVER IS AN ESSENTIAL INDUCEMENT FOR PAYEE'S ENTERING INTO THE LOAN DOCUMENTS. THIS WAIVER SHALL SURVIVE THE REPAYMENT OF THE INDEBTEDNESS EVIDENCED BY THE LOAN DOCUMENTS. (E). ENTIRE AGREEMENT. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO. (F). NOTICE OF INVALIDITY OF ORAL AGREEMENTS. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first written above. MAKER: CENTURY PROPERTIES FUND XIX, a California limited partnership, by its duly authorized, sole general partner BY: FOX PARTNERS II, a California general partnership, by its authorized, managing general partner WITNESS: BY: FOX CAPITAL MANAGEMENT CORPORATION, a California corporation, by its duly authorized officer /s/Douglas G. Brown BY: /s/William H. Jarrard, Jr. Name:Douglas G. Brown Name: William H. Jarrard, Jr. Title: President PAYEE: ATTEST: THE TRAVELERS INSURANCE COMPANY /s/Robert Scoville By:/s/Lynn M. Latham Name:Robert Scoville Name:Lynn M. Latham Title:Asst. Secretary Title:Vice President -----END PRIVACY-ENHANCED MESSAGE-----