Exhibit 10.42
PROMISSORY NOTE
("Note C")
Century Properties Fund XIX
(AZ)
19806-00-0868
March 30, 2007
$1,750,000.00
FOR VALUE RECEIVED
, the undersigned, CENTURY PROPERTIES
FUND XIX, a California limited partnership ("Maker"), hereby
promises to pay to the order of ING LIFE INSURANCE AND ANNUITY
COMPANY, a Connecticut corporation, or any subsequent holder hereof
("Payee"), at the office of Payee, c/o ING Investment Management
LLC, 5780 Powers Ferry Road, NW, Suite 300, Atlanta, Georgia
30327-4349, or at such other place as Payee may from time to time
designate in writing, the principal sum disbursed hereunder in
accordance with the Loan Agreement (as defined below) of ONE
MILLION, SEVEN HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS
($1,750,000.00) and interest thereon from and after the date of
disbursement hereunder at five and eighty-two hundredths percent
(5.82%) per annum ("Note Rate"), both principal and interest to be
paid in lawful money of the United States of America, as
follows:
(i)
Interest only from and including the date
of disbursement of the loan proceeds through and including the last
day of the month, shall be paid on the first day of the month
following the date of disbursement or, at the option of Payee, on
the date of disbursement; and
(ii)
Payments of accrued interest shall be
made on the first day of the second calendar month following the
date of disbursement and on the first day of each month thereafter
through and including the first day of October 2008; and
(iii)
Payments of principal and interest shall
be made in 300 successive monthly installments commencing on the
first day of November 2008, and continuing on the first day of each
and every calendar month thereafter up to and including October 1,
2033 (the "Maturity Date") or, upon exercise of Payee's right under
the following paragraph, the Call Date as to which Payee has
exercised its right, all but the final installment thereof to be in
the amount of Eleven Thousand, Eighty-Three and 51/100 Dollars
($11,083.51), and the final installment payable on the Maturity
Date, or, if earlier, the exercised Call Date to be in the full
amount of outstanding principal of this Promissory Note ("Note"),
interest and all other sums remaining unpaid hereunder and under
the Deed of Trust (as hereinafter defined).
Notwithstanding any provisions of this
Note to the contrary, the Payee reserves the right (the "Call
Option") to declare the entire amount of outstanding principal of
this Note, interest and
all other sums remaining unpaid hereunder
and under the Deed of Trust (defined below) to be due and payable
on any of the following dates (each referred to as a "Call
Date"):
(i)
the first day of May 2012;
(ii)
the first day of May 2017;
(iii)
the first day of May 2022;
(iv)
the first day of May 2027; or
(v)
the first day of May 2032.
Such Call Option shall be exercised by
Payee, in its sole and absolute discretion, by giving written
notice to Maker at least six (6) months prior to the Call Date as
to which Payee is electing, which notice shall refer to this Note
and state the Call Date elected by Payee. The exercise of
such right by Payee shall not relieve Maker of its obligation to
make scheduled payments hereunder, or to pay any other sums due and
owing hereunder, between the date of such notice and the elected
Call Date. The exercise of such right by Payee will result in
the original principal amount of this Note not having been fully
amortized by the payment of the monthly installments hereunder
prior to the exercised Call Date, and Maker shall be obligated to
make a payment of the entire amount of outstanding principal of
this Note and interest and all other sums remaining unpaid
hereunder and under the Deed of Trust on the Call Date.
All payments on account of the
Indebtedness (as hereinafter defined) shall be applied: (i) first,
to further advances, if any, made by the Payee as provided in the
Loan Documents (as hereinafter defined); (ii) next, to any Late
Charge (as hereinafter defined); (iii) next, to interest at the
Default Rate (as hereinafter defined), if applicable; (iv) next, to
the Prepayment Premium (as hereinafter defined), if applicable; (v)
next, to interest at the Note Rate on the unpaid principal balance
of this Note unless interest at the Default Rate is applicable; and
(vi) last, to reduce the unpaid principal balance of this Note.
Interest shall be calculated on the basis of a year
consisting of 360 days and with twelve thirty-day months, except
that interest due and payable for less than a full month shall be
calculated by multiplying the actual number of days elapsed in such
period by a daily interest rate based on a 360-day year. As
used herein, the term "Indebtedness" shall mean the aggregate of
the unpaid principal amount of this Note, accrued interest, all
Late Charges, any Prepayment Premium, and advances made by Payee
under the Loan Documents.
In the event any installment of principal
or interest due hereunder, or any escrow fund payment for real
estate taxes, assessments, other similar charges or insurance
premiums due under the Deed of Trust shall be more than ten (10)
days overdue, Maker shall pay to the holder hereof a late charge
("Late Charge") of four cents ($.04) for each dollar so overdue or,
if less, the maximum amount permitted under applicable law, in
order to defray part of the cost of collection and of handling
delinquent payments. The Late Charge shall not apply,
however, to the accelerated balance of the Loan at any Call
Date.
The terms of this Note are expressly
limited so that in no event whatsoever shall the amount paid or
agreed to be paid to the Payee exceed the highest lawful rate of
interest permissible under applicable law. If, from any
circumstances whatsoever, fulfillment of any provision hereof or
any other documents securing the Indebtedness at the time
performance of such provision shall be due, shall involve the
payment of interest exceeding the highest rate of interest
permitted by law which a court of competent jurisdiction may deem
applicable hereto, then, ipso facto , the obligation
to be fulfilled shall be reduced to the highest lawful rate of
interest permissible under applicable law; and if for any reason
whatsoever Payee shall ever receive as interest an amount which
would be deemed unlawful, such interest shall be applied to the
payment of the last maturing installment or installments of the
principal portion of the Indebtedness (whether or not then due and
payable) and not to the payment of interest.
This Note is one of four Promissory Notes
by Maker to Payee as follows (inclusive of this Note): (i)
Promissory Note dated May 17, 2005, in the original amount of
$11,000,000.00 ("Original Note"), (ii) Promissory Note dated this
same date in the amount of $3,000,000.00 ("Note B"), (iii)
Promissory Note dated this same date in the amount of $1,750,000.00
("Note C"), and (iv) Promissory Note dated this same date in the
amount of $1,750,000.00 ("Note D"). Disbursements under Note
B, Note C and Note D, among other things, are subject to the
certain Loan Agreement dated as of this same date between Maker and
Payee ("Loan Agreement"). The Original Note, Note B, Note C
and Note D are collectively referred to as the "Notes."
ANYTHING HEREIN TO THE CONTRARY NOTWITHSTANDING, THIS NOTE
MAY NOT BE PREPAID BY MAKER WITHOUT A SIMULTANEOUS PREPAYMENT, IN
FULL, OF ALL OF THE NOTES (TOGETHER WITH ANY APPLICABLE PREPAYMENT
PREMIUM THEREON).
Payment of this Note is secured by a Deed
of Trust, Security Agreement, Financing Statement and Fixture
Filing dated May 17, 2005, as modified by the Modification
Agreement dated as of on or about this same date (as modified, the
"Deed of Trust") by Maker, as Trustor, for the benefit of Payee, as
Beneficiary, encumbering certain real estate and other property
interests situated in Maricopa County, Arizona and more
particularly described in the Deed of Trust (the "Premises").
The Notes, the Deed of Trust, the Loan Agreement, and all
other instruments now or hereafter evidencing, securing or
guarantying the loan evidenced hereby are sometimes collectively
referred to as the "Loan Documents." The Deed of Trust
contains "due on sale or further encumbrance" provisions
which, together with all other terms of the Deed of Trust, are
incorporated herein by this reference.
No prepayment of the principal of this
Note shall be allowed prior to the first day of April 2008 (the
"Lock Out Period"). Commencing April 1, 2008, the principal
of this Note may be prepaid in whole, but not in part, on any
regular scheduled payment date, provided that: (1) not later
than sixty (60) days prior to such prepayment, Maker delivers
written notice to Payee that Maker intends to prepay this Note in
full on the date specified in such notice; and, (2) Maker pays to
Payee at the time of such prepayment, a sum (the "Prepayment
Premium") equal to the greater of the following
calculations:
(i)
The sum of (a) the present value of the
scheduled monthly payments set forth above in this Note from the
date of prepayment to the Maturity
Date or the next applicable Call Date,
whichever is the next to occur, and (b) the present value of the
amount of principal and interest due on the Maturity Date or the
next applicable Call Date, whichever is the next to occur (assuming
all scheduled monthly payments due prior to such date were made
when due); minus the outstanding principal balance of this Note as
of the date of prepayment. The present values described in
clauses (a) and (b) above shall be computed on a monthly basis as
of the date of prepayment discounted at an interest rate equal to
the yield of actively traded U.S. Treasury obligations having the
same maturity as the Maturity Date or the next applicable Call
Date, whichever is the next to occur, as published in the Federal
Reserve Statistical Release H.15 (519) Selected Interest Rates
listed under the U.S. Government Securities, Treasury Constant
Maturities, plus twenty (20) basis points (“Treasury
Rate”). The Treasury Rate so used shall be the
“week ending” yield for the week immediately preceding
the date of such prepayment. If no Treasury Constant
Maturities, are published for the specific length of time
from the date of prepayment of this Note to the Maturity Date or
the next applicable Call Date, whichever is the next to occur, the
Treasury Rate that shall be used shall be computed based on a
linearly interpolated interest rate yield between the two Treasury
Constant Maturities, that (i) most closely correspond with
the Maturity Date or the next applicable Call Date, whichever is
the next to occur, as of the date of such prepayment and
(ii) bracket in time the Maturity Date or the next applicable
Call Date, whichever is the next to occur, one being before the
Maturity Date or the next applicable Call Date and the other being
after the Maturity Date or the next applicable Call Date. If
for any reason Treasury Constant Maturities, is no longer
published in the Federal Reserve Statistical Release H. 15 (519)
Selected Interest Rates, the Treasury Rate shall be based on the
yields reported in another publication of comparable reliability
and institutional acceptance as selected by the Payee in its sole
and absolute discretion that most closely approximates yields in
percent per annum of actively traded U.S. Treasury obligations of
varying maturities. The sum calculated in accordance with
this subparagraph (i) is intended to be the sum that, together with
the principal amount prepaid, shall be sufficient to enable Payee
to invest in U.S. Treasury obligations for the remaining original
term of this Note or until the next applicable Call Date, whichever
is next to occur, to produce, as nearly as possible, the same
effective yield to the Maturity Date or the next applicable Call
Date, whichever is next to occur, as would have been produced under
this Note, adjusted, however, for the addition of twenty (20)
basis points to the discount rate as set forth in the second
sentence of this subparagraph (i).
(ii)
One percent (1%) of the then outstanding
principal balance of this Note.
Except as provided in the next sentence,
in no event shall the amount prepaid be less than the total amount
of the then outstanding principal and accrued and unpaid interest
thereon plus one percent (1%) of the then outstanding principal
balance of this Note. Notwithstanding the foregoing Lock Out
Period, no Prepayment Premium shall be payable with respect to
a
prepayment that (a) results from
application of proceeds of casualty insurance with respect to
insured property damage or compensation received in respect of
condemnation or other governmental taking of all or part of the
Premises, in either case when no Event of Default exists, or (b) is
made within ninety (90) days prior to the Maturity Date or any Call
Date, regardless of whether Payee has exercised its option to call
this Note. In the event the Prepayment Premium were to be construed
by a court having jurisdiction thereof to be an interest payment,
in no event shall the Prepayment Premium exceed an amount equal to
the excess, if any, of (i) interest calculated at the highest
applicable rate permitted by applicable law, as construed by courts
having jurisdiction hereof, on the principal balance of this Note
from time to time outstanding from the date thereof to the date of
such acceleration, less (ii) interest theretofore paid and accrued
on this Note.
If the maturity of the Indebtedness is
accelerated by Payee as a consequence of the occurrence of an Event
of Default, or in the event the right to foreclose the Deed of
Trust shall otherwise accrue to Payee, the Maker agrees that an
amount equal to the Prepayment Premium (determined as if
pre
