UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 19, 2003
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
(Exact name of registrant as specified in its charter)
California 0-11723 94-2883067
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation)
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant's telephone number)
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
On December 19, 2003, the Registrant entered into a mortgage encumbering
Glenbridge Manor Apartments, located in Cincinnati, Ohio. The mortgage has a
principal balance of $21,000,000 and a stated interest rate of 5.65% per annum.
After payment of closing costs, the Registrant received net proceeds of
approximately $20,693,000. The Registrant's general partner will use the net
proceeds to pay down existing debt obligations to an affiliate of the
Registrant.
Item 7. Financial Statements and Exhibits
(c) Exhibits (1)
10.35 Promissory Note dated December 17, 2003 between CCIP/2 Village
Brook, LLC, a Delaware limited partnership, and Northwestern Mutual
Life Insurance Company, a Wisconsin corporation.
10.34 Mortgage and Security Agreement dated December 17, 2003 between
CCIP/2 Village Brook, LLC, a Delaware limited partnership, and
Northwestern Mutual Life Insurance Company, a Wisconsin corporation.
(1) Schedules and supplemental materials to the exhibits have been omitted but
will be provided to the Securities and Exchange Commission upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
By: ConCap Equities, Inc.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
Date: January 5, 2004
Exhibit 10.35
Ohio
Loan No. A-332912
PROMISSORY NOTE
$21,000,000.00 Dated as of December 17, 2003
For value received, the undersigned, herein called "Borrower," promises to
pay to the order of THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin
corporation, who, together with any subsequent holder of this note, is
hereinafter referred to as "Lender", at 720 E. Wisconsin Avenue, Milwaukee, WI
53202 or at such other place as Lender shall designate in writing, in coin or
currency which, at the time or times of payment, is legal tender for public and
private debts in the United States, the principal sum of TWENTY ONE MILLION
DOLLARS or so much thereof as shall have been advanced from time to time plus
interest on the outstanding principal balance at the rate and payable as
follows:
Interest shall accrue from the date of advance until maturity at the
rate of five and sixty-five hundredths percent (5.65%) per annum (the
"Interest Rate").
Accrued interest only on the amount advanced shall be paid on the
fifteenth day of the month following the date of advance ("Amortization
Period Commencement Date") and on the fifteenth day of each month
thereafter until December 31, 2004. On the fifteenth day of the following
month and on the fifteenth day of each month thereafter until maturity,
installments of principal and interest shall be paid in the amount of
$130,847.00.
Interest will be calculated assuming each month contains thirty (30)
days and each calendar year contains three hundred sixty (360) days. In
the event of a partial month, however, interest for such month will be
calculated based on the actual number of days the principal balance of
this note is outstanding in the partial month and the actual number of
days in the respective calendar year.
Payments shall be made directly to Lender by electronic transfer of
funds using the Automated Clearing House System. All installments shall be
applied first in payment of interest, calculated monthly on the unpaid
principal balance, and the remainder of each installment shall be applied
in payment of principal. The entire unpaid principal balance plus accrued
interest thereon shall be due and payable on December 15, 2013 (the
"Maturity Date").
Borrower shall have the right, upon thirty (30) days written notice (which
written notice of prepayment may be revoked at any time prior to prepayment),
beginning July 1, 2004 of paying this note in full with a prepayment fee. This
fee represents consideration to Lender for loss of yield and reinvestment costs
and shall also be payable whenever prepayment occurs as a result of a
condemnation of all or substantially all of the Property. The fee shall be the
greater of Yield Maintenance or 1% of the outstanding principal balance of this
note.
"Yield Maintenance" means the amount, if any, by which
(i) the present value of the Then Remaining Payments (as hereinafter
defined) calculated using a periodic discount rate (corresponding to
the payment frequency under this note) which, when compounded for such
number of payment periods in a year, equals the per annum effective
yield of the Most Recently Auctioned United States Treasury Obligation
having a maturity date equal to the Maturity Date (or, if there is no
such equal maturity date, then the linearly interpolated per annum
effective yield of the two Most Recently Auctioned United States
Treasury Obligations having maturity dates most nearly equivalent to
the Maturity Date) as reported by The Wall Street Journal dated five
(5) business days preceding the date of prepayment; exceeds
(ii) the outstanding principal balance of this note (exclusive of all
accrued interest).
If such United States Treasury obligation yields shall not be reported as
of such time or the yields reported as of such time shall not be ascertainable,
then the periodic discount rate shall be equal to the Treasury Constant Maturity
Series yields reported, for the latest day for which such yields shall have been
so reported, as of five (5) business days preceding the prepayment date, in
Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded United States Treasury obligations having a
constant maturity most nearly equivalent to the Maturity Date.
"Then Remaining Payments" means payments in such amounts and at such times
as would have been payable subsequent to the date of such prepayment in
accordance with the terms of this note.
"Most Recently Auctioned United States Treasury Obligations" means the
U.S. Treasury bonds, notes and bills with maturities of 30 years, 10 years, 5
years, 2 years and 1 year which, as of the date the prepayment fee is
calculated, were most recently auctioned by the United States Treasury.
Upon the occurrence of an Event of Default (as defined in the Lien
Instrument) followed by the acceleration of the whole indebtedness evidenced by
this note, the payment of such indebtedness will constitute an evasion of the
prepayment terms hereunder and be deemed to be a voluntary prepayment hereof and
such payment will, therefore, to the extent not prohibited by law, include the
prepayment fee required under the prepayment in full privilege recited above or,
if such prepayment occurs prior to July 1, 2004 and results from an Event of
Default followed by an acceleration of the whole indebtedness, then such payment
will, to the extent not prohibited by law, include a prepayment fee equal to the
greater of Yield Maintenance or 6% of the outstanding principal balance of this
note.
Notwithstanding the above and provided Borrower is not in default under
any provision contained in the Loan Documents (as defined in the Lien
Instrument), this note may be prepaid in full at any time, without a prepayment
fee, during the last sixty (60) days of the term of this note.
Borrower acknowledges and agrees that the Interest Rate hereunder shall be
increased if certain financial statements and other reports are not furnished to
Lender, all as described in more detail in the provision of the Lien Instrument
entitled "Financial Statements".
This note is secured by certain property (the "Property") in the City of
Cincinnati, County of Hamilton, State of Ohio described in an Open-End Mortgage
and Security Agreement (the "Lien Instrument") of even date herewith executed by
CCIP/2 VILLAGE BROOKE, L.L.C., a Delaware limited liability company to THE
NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY.
Upon the occurrence of an Event of Default (as defined in the Lien
Instrument), the whole unpaid principal hereof and accrued interest shall, at
the option of Lender, to be exercised at any time thereafter, become due and
payable at once without notice, notice of the exercise of, and the intent to
exercise, such option being hereby expressly waived.
All parties at any time liable, whether primarily or secondarily, for
payment of indebtedness evidenced hereby, for themselves, their heirs, legal
representatives, successors and assigns, respectively, expressly waive
presentment for payment, notice of dishonor, protest, notice of protest, and
diligence in collection; consent to the extension by Lender of the time of said
payments or any part thereof; further consent that the real or collateral
security or any part thereof may be released by Lender, without in any way
modifying, altering, releasing, affecting, or limiting their respective
liability or the lien of the Lien Instrument; and agree to pay reasonable
attorneys' fees and expenses of collection in case this note is placed in the
hands of an attorney for collection or suit is brought hereon and any attorneys'
fees and expenses incurred by Lender to enforce or preserve its rights under any
of the Loan Documents in any bankruptcy or insolvency proceeding.
All amounts due Lender including principal and, to the extent permitted by
applicable law, interest not paid when due (without regard to any notice and/or
cure provisions contained in any of the Loan Documents), including principal
becoming due by reason of acceleration by Lender of the entire unpaid balance of
this note, shall bear interest from the due date thereof until paid at the
Default Rate. "Default Rate" means the lower of a rate equal to the interest
rate in effect at the time of the default as herein provided plus 5% per annum
or the maximum rate permitted by law.
No provision of this note shall require the payment or permit the
collection of interest, including any fees paid which are construed under
applicable law to be interest, in excess of the maximum permitted by law. If any
such excess interest is collected or herein provided for, or shall be
adjudicated to have been collected or be so provided for herein, the provisions
of this paragraph shall govern, and Borrower shall not be obligated to pay the
amount of such interest to the extent that it is in excess of the amount
permitted by law. Any such excess collected shall, at the option of Lender,
unless otherwise required by applicable law, be immediately refunded to Borrower
or credited on the principal of this note immediately upon Lender's awareness of
the collection of such excess.
Borrower, but not its member, shall be personally liable for the
indebtedness evidenced hereby and any indebtedness secured by the Lien
Instrument (collectively, the 'Indebtedness")
All notices, demands, requests and consents permitted or required under
this note shall be given in the manner prescribed in the Lien Instrument.
This note, the interpretation hereof and the rights, obligations, duties
and liabilities hereunder shall be governed and controlled by the laws of the
State of Ohio.
CCIP/2 VILLAGE BROOKE, L.L.C., a
Delaware limited liability company
By: Consolidated Capital Institutional
Properties/2, a California limited
partnership, its sole member
By: ConCap Equities, Inc., a
Delaware corporation, its general
partner
By: /s/Patti K. Fielding
Name: Patti K. Fielding
Its: Executive Vice President
Attest: /s/Leslie E. Green
Name: Leslie E. Green
Its: Assistant Secretary
(corporate seal)
Exhibit 10.36
Ohio
Loan No. A-332912
RECORDING REQUESTED BY
WHEN RECORDED MAIL TO
The Northwestern Mutual Life Ins. Co.
720 East Wisconsin Avenue - Rm N16WC
Milwaukee, WI 53202
Attn: Cherie L. Esmeier
SPACE ABOVE THIS LINE FOR
RECORDER'S USE
OPEN-END MORTGAGE and SECURITY AGREEMENT
(TOTAL PRINCIPAL INDEBTEDNESS NOT TO EXCEED $31,500,000.00)
THIS MORTGAGE and SECURITY AGREEMENT is made as of the 17th day of
December, 2003 between CCIP/2 VILLAGE BROOKE, L.L.C., a Delaware limited
liability company, c/o AIMCO, 2000 South Colorado Boulevard, Tower 2, Suite
2-1000, Denver, CO 80222, herein (whether one or more in number) called
"Mortgagor", and THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, a Wisconsin
corporation, 720 E. Wisconsin Avenue, Milwaukee, WI 53202, herein called
"Mortgagee":
WITNESSETH, That Mortgagor, in consideration of the indebtedness herein
mentioned, does hereby grant, convey, mortgage and warrant unto Mortgagee
forever, the following property (herein referred to as the "Property"):
A. The land in the City of Cincinnati, County of Hamilton, State of Ohio,
described in Exhibit "A" attached hereto and incorporated herein (the
"Land");
B. All easements, appurtenances, tenements and hereditaments belonging to
or benefiting the Land, including but not limited to all waters, water
rights, water courses, all ways, trees, rights, liberties and
privileges;
C. All improvements to the Land, including, but not limited to, all
buildings, structures and improvements now existing or hereafter
erected on the Land; all fixtures and equipment of every description
belonging to Mortgagor which are or may be placed or used upon the
Land or attached to the buildings, structures or improvements,
including, but not limited to, all engines, boilers, elevators and
machinery, all heating apparatus, electrical equipment,
air-conditioning and ventilating equipment, water and gas fixtures,
and all furniture and easily removable equipment; all of which, to the
extent permitted by applicable law, shall be deemed an accession to
the freehold and a part of the realty as between the parties hereto;
and
D. Mortgagor's interest in all articles of personal property of every
kind and nature whatsoever, including, but not limited to all
carpeting, draperies, ranges, microwave ovens, refrigerators,
dishwashers, easily removable equipment and fixtures, furniture, etc.,
now or hereafter located upon the Land or in or on the buildings and
improvements and now owned or leased or hereafter acquired or leased
by Mortgagor.
Mortgagor agrees not to sell, transfer, assign or remove anything described in
B, C and D above now or hereafter located on the Land without prior written
consent from Mortgagee unless (i) such action does not constitute a sale or
removal of any buildings or structures or the sale or transfer of waters or
water rights and (ii) such action results in the substitution or replacement
with similar items of equal value.
Without limiting the foregoing grants, Mortgagor hereby pledges to
Mortgagee, and grants to Mortgagee a security interest in, all of Mortgagor's
present and hereafter acquired right, title and interest in and to the Property
and any and all
E. cash and other funds now or at any time hereafter deposited by or for
Mortgagor on account of tax, special assessment, replacement or other
reserves required to be maintained pursuant to the Loan Documents (as
hereinafter defined) with Mortgagee or a third party, or otherwise
deposited with, or in the possession of, Mortgagee pursuant to the
Loan Documents; and
F. surveys, soils reports, environmental reports, guaranties, warranties,
architect's contracts, construction contracts, drawings and
specifications, applications, permits, surety bonds and other
contracts relating to the acquisition, design, development,
construction and operation of the Property; and
G. accounts, chattel paper, deposit accounts, instruments, equipment,
inventory, documents, general intangibles, letter-of-credit rights,
investment property and all other personal property of Mortgagor, in
each case, to the extent associated with or arising from the
ownership, development, operation, use or disposition of any portion
of the property (including, without limitation, any and all rights in
the property name "Glenbridge Manors"); and
H. present and future rights to condemnation awards, insurance proceeds
or other proceeds at any time payable to or received by Mortgagor on
account of the Property or any of the foregoing personal property.
All personal property hereinabove described is hereinafter referred to as the
"Personal Property".
If any of the Property is of a nature that a security interest therein can
be perfected under the Uniform Commercial Code, this instrument shall constitute
a security agreement and financing statement if permitted by applicable law and
Mortgagor authorizes Mortgagee to file a financing statement describing such
Property and, at Mortgagee's request, agrees to join with Mortgagee in the
execution of any financing statements and to execute any other instruments that
may be necessary or desirable, in Mortgagee's determination, for the perfection
or renewal of such security interest under the Uniform Commercial Code.
TO HAVE AND TO HOLD the Property unto Mortgagee, its successors and
assigns, forever, for the purpose of securing:
(a) Payment to the order of Mortgagee of the indebtedness evidenced by a
promissory note of even date herewith (and any restatement, extension or renewal
thereof and any amendments thereto) executed by Mortgagor for the principal sum
of TWENTY ONE MILLION DOLLARS, with final maturity no later than December 15,
2013 and with interest as therein expressed, and late fees, if any (which
promissory note, as such instrument may be amended, restated, renewed and
extended, is hereinafter referred to as the "Note"), it being recognized that
the funds may not have been fully advanced as of the date hereof but may be
advanced in the future in accordance with the terms of a written contract; and
(b) Payment of all sums that may become due Mortgagee under the provisions
of, and the performance of each agreement of Mortgagor contained in, the Loan
Documents; and
(c) Payment of such additional sums, up to a total unpaid loan
indebtedness not to exceed $31,500,000.00, with interest thereon, as may
hereafter be loaned by Mortgagee to Mortgagor when evidenced by a promissory
note or notes of Mortgagor, such additional note or notes to be identified by
recital that it or they are secured by this mortgage, and such note or notes
shall be included in the word "Note" wherever it appears in the context of this
mortgage, and the indebtedness evidenced by such additional note or notes shall
have the same priority as the indebtedness secured hereby; and
(d) Unpaid balances of loan advances made after this mortgage is delivered
to the recorder for record, such advances to be made pursuant to the provisions
of the Commitment (as hereinafter defined). The maximum amount of unpaid
balances of said advances in the aggregate and exclusive of interest accrued
thereon which may be outstanding at any time is Twenty One Million Dollars
($21,000,000.00).
(e) Unpaid balances of advances made by the Mortgagee, with respect to the
Property for the payment of taxes, assessments, insurance premiums or costs
incurred for the protection of the Property as provided for in Section 5301.233
of the Revised Code of Ohio; payment by Mortgagor to Mortgagee of all sums
expended or advanced by Mortgagee pursuant to any term or provision of this
instrument or the other Loan Documents; performance and observance of each
covenant and agreement of Mortgagor contained in this instrument or in the other
Loan Documents; and payment by Mortgagor to Mortgagee of all other liabilities
and indebtedness, direct or contingent, now or hereafter owing by Mortgagor to
Mortgagee.
"Loan Documents" means this instrument, the Note, that certain Loan
Application dated November 7, 2003 from Mortgagor to Mortgagee and that certain
acceptance letter issued by Mortgagee dated December 10, 2003 (together, the
"Commitment"), that certain Absolute Assignment of Leases and Rents of even date
herewith between Mortgagor and Mortgagee (the "Absolute Assignment"), that
certain Certification of Borrower of even date herewith, that certain Limited
Liability Company Supplement dated contemporaneously herewith, any other
supplements and authorizations required by Mortgagee and any other agreement
entered into or document executed by Mortgagor and delivered to Mortgagee in
connection with the indebtedness evidenced by the Note, except for that certain
Environmental Indemnity Agreement of even date herewith given by AIMCO
Properties, L.P., a Delaware limited partnership ("Principal") and Mortgagor to
Mortgagee (the "Environmental Indemnity Agreement"), as any of the foregoing may
be amended from time to time.
TO PROTECT THE SECURITY OF THIS MORTGAGE, MORTGAGOR COVENANTS AND AGREES:
Payment of Debt. Mortgagor agrees to pay the indebtedness hereby secured (the
"Indebtedness") promptly and in full compliance with the terms of the Loan
Documents.
Ownership. Mortgagor represents that it owns the Property and has good and
lawful right to convey the same and that the Property is free and clear from any
and all encumbrances whatsoever, except as appears in the title evidence
accepted by Mortgagee. Mortgagor does hereby forever warrant and shall forever
defend the title and possession thereof against the lawful claims of any and all
persons whomsoever.
Maintenance of Property and Compliance with Laws. Mortgagor agrees to keep the
buildings and other improvements now or hereafter erected on the Land in good
condition and repair; not to commit or suffer any waste; to comply with all
laws, rules and regulations affecting the Property; and to permit Mortgagee to
enter at all reasonable times for the purpose of inspection and of conducting,
in a reasonable and proper manner, such tests as Mortgagee determines to be
necessary in order to monitor Mortgagor's compliance with applicable laws and
regulations regarding hazardous materials affecting the Property.
Business Restriction Representation and Warranty. Mortgagor represents and
warrants that Mortgagor (to the extent that Mortgagor should reasonably know),
all persons and entities owning (directly or indirectly) an ownership interest
in Mortgagor, all guarantors of all or any portion of the Indebtedness, and all
persons and entities executing any separate indemnity agreement in favor of
Mortgagee in connection with the Indebtedness: (i) are not, and shall not
become, a person or entity with whom Mortgagee is restricted from doing business
with under regulations of the Office of Foreign Asset Control ("OFAC") of the
Department of the Treasury (including, but not limited to, those named on OFAC's
Specially Designated and Blocked Persons list) or under any statute, executive
order (including, but not limited to, the September 24, 2001 Executive Order
Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten
to Commit, or Support Terrorism), or other governmental action; (ii) are not
knowingly engaged in, and shall not engage in, any dealings or transaction or be
otherwise associated with such persons or entities described in (i) above; and
(iii) are not, and shall not become, a person or entity whose activities are
regulated by the International Money Laundering Abatement and Financial
Anti-Terrorism Act of 2001 or the regulations or orders thereunder.
Insurance. Mortgagor agrees to keep the Property insured for the protection of
Mortgagee and Mortgagee's wholly owned subsidiaries and agents in such manner,
in such amounts and in such companies as Mortgagee may from time to time
approve, and to keep the policies therefor, properly endorsed, on deposit with
Mortgagee, or at Mortgagee's option, to keep certificates of insurance (Acord 27
for all property insurance and Acord 25-S for all liability insurance)
evidencing all insurance coverages required hereunder on deposit with Mortgagee,
which certificates shall provide at least thirty (30) days notice of
cancellation to Mortgagee and shall list Mortgagee as the certificate holder;
that insurance loss proceeds from all property insurance policies, whether or
not required by Mortgagee (less expenses of collection) shall, at Mortgagee's
option, be applied on the Indebtedness, whether due or not, or to the
restoration of the Property, or be released to Mortgagor, but such application
or release shall not cure or waive any default under any of the Loan Documents.
If Mortgagee elects to apply the insurance loss proceeds on the Indebtedness, no
prepayment privilege fee shall be due thereon.
Notwithstanding the foregoing provision, Mortgagee agrees that if the
insurance loss proceeds are less than the unpaid principal balance of the Note
and if the casualty occurs prior to the last twenty-four (24) months of the term
of the Note, then the insurance loss proceeds (less expenses of collection)
shall be applied to restoration of the Property to its condition prior to the
casualty, subject to satisfaction of the following conditions:
(a) There is no existing Event of Default at the time of casualty, and if
there shall occur any Event of Default after the date of the casualty,
Mortgagee shall have no further obligation to release insurance loss
proceeds hereunder.
(b) The casualty insurer has not denied liability for payment of insurance
loss proceeds as a result of any act, neglect, use or occupancy of the
Property by Mortgagor.
(c) Mortgagee shall be satisfied that all insurance loss proceeds so held,
together with supplemental funds to be made available by Mortgagor,
shall be sufficient to complete the restoration of the Property. Any
remaining insurance loss proceeds may, at the option of Mortgagee, be
applied on the Indebtedness, whether or not due, or be released to
Mortgagor.
(d) If required by Mortgagee, Mortgagee shall be furnished a satisfactory
report addressed to Mortgagee from an environmental engineer or other
qualified professional satisfactory to Mortgagee to the effect that no
adverse environmental impact to the Property resulted from the
casualty.
(e) Mortgagee shall release casualty insurance proceeds as restoration of
the Property progresses provided that Mortgagee is furnished
satisfactory evidence of the costs of restoration and if, at the time
of such release, there shall exist no Monetary Default (as hereinafter
defined) under the Loan Documents and no default with respect to which
Mortgagee shall have given Mortgagor notice pursuant to the Notice of
Default provision herein. If the estimated cost of restoration exceeds
$1,000,000.00, the drawings and specifications for the restoration
shall be approved by Mortgagee in writing prior to commencement of the
restoration.
(f) Prior to each release of funds, Mortgagor shall obtain for the benefit
of Mortgagee an endorsement to Mortgagee's title insurance policy
insuring Mortgagee's lien as a first and valid lien on the Property
subject only to liens and encumbrances theretofore approved by
Mortgagee.
(g) Mortgagor shall pay all costs and expenses incurred by Mortgagee,
including, but not limited to, reasonable outside legal fees, title
insurance costs, third-party disbursement fees, third-party
engineering reports and inspections deemed necessary by Mortgagee.
(h) All reciprocal easement and operating agreements benefiting the
Property, if any, shall remain in full force and effect between the
parties thereto on and after restoration of the Property.
(i) Mortgagee shall be satisfied that Projected Debt Service Coverage of
at least 1.25 will be produced from the leasing of not more than 93%
of the units to former tenants or approved new tenants with leases
satisfactory to Mortgagee for terms of at least 1 year to commence not
later than ninety (90) days following completion of such restoration
("Approved Leases").
"Projected Debt Service Coverage" means a number calculated by dividing
Projected Operating Income Available for Debt Service for the first fiscal year
following restoration of the Property by the debt service during the same fiscal
year under all indebtedness secured by any portion of the Property. For purposes
of the preceding sentence, "debt service" means the greater of (x) debt service
due under all such indebtedness during the first fiscal year following
completion of the restoration of the Property and (y) debt service that would be
due and payable during such fiscal year if all such indebtedness were amortized
over 25 years (whether or not amortization is actually required) and if interest
on such indebtedness were due as it accrues at the face rate shown on the notes
therefor (whether or not interest payments based on such face rates are
required).
"Projected Operating Income Available for Debt Service" means projected
gross annual rent from the Approved Leases for the first full fiscal year
following completion of the restoration of the Property less:
(A) The operating expenses of the Property for the last fiscal year preceding
the casualty and
(B) the following:
(i) a replacement reserve for capital improvements, unit remodels and
structural items based on not less than $350.00 per unit per annum;
(ii) the amount, if any, by which actual gross income during such fiscal
period exceeds that which would be earned from the rental of 93% of
the total number of apartment units in the Property;
(iii) the amount, if any, by which the actual management fee is less than
3.0% of gross revenue during such fiscal period;
(iv) the amount, if any, by which the actual insurance and real estate
taxes are less than $623,500.00 per annum; and
(v) the amount, if any, by which total actual operating expenses,
excluding management fees, insurance, real estate taxes and
replacement reserves, are less than $606,100.00 per annum.
All projections referenced above shall be calculated in a manner
satisfactory to Mortgagee.
Condemnation. Mortgagor hereby assigns to Mortgagee (i) any award and any other
proceeds resulting from damage to, or the taking of, all or any portion of the
Property, and (ii) the proceeds from any sale or transfer in lieu thereof
(collectively, "Condemnation Proceeds") in connection with condemnation
proceedings or the exercise of any power of eminent domain or the threat thereof
(hereinafter, a "Taking"); if the Condemnation Proceeds are less than the unpaid
principal balance of the Note and such damage or Taking occurs prior to the last
twenty four (24) months of the term of the Note, such Condemnation Proceeds
(less expenses of collection) shall be applied to restoration of the Property to
its condition, or the functional equivalent of its condition prior to the
Taking, subject to the conditions set forth above in the section entitled
"Insurance" and subject to the further condition that restoration or replacement
of the improvements on the Land to their functional and economic utility prior
to the Taking be possible. Any portion of such award and proceeds not applied to
restoration shall, at Mortgagee's option, be applied on the Indebtedness,
whether due or not, or be released to Mortgagor, but such application or release
shall not cure or waive any default under any of the Loan Documents.
Taxes and Special Assessments. Mortgagor agrees to pay before delinquency all
taxes and special assessments of any kind that have been or may be levied or
assessed against the Property, this instrument, the Note or the Indebtedness, or
upon the interest of Mortgagee in the Property, this instrument, the Note or the
Indebtedness, and to procure and deliver to Mortgagee within 30 days after
Mortgagee shall have given a written request to Mortgagor, the official receipt
of the proper officer showing timely payment of all such taxes and assessments;
provided, however, that Mortgagor shall not be required to pay any such taxes or
special assessments if the amount, applicability or validity thereof shall
currently be contested in good faith by appropriate proceedings and funds
sufficient to satisfy the contested amount have been deposited in an escrow
satisfactory to Mortgagee.
Personal Property. With respect to the Personal Property, Mortgagor hereby
represents, warrants and covenants as follows:
(a) Except for the security interest granted hereby, Mortgagor is, and as
to portions of the Personal Property to be acquired after the date hereof will
be, the sole owner of the Personal Property, free from any lien, security
interest, encumbrance or adverse claim thereon of any kind whatsoever. Mortgagor
shall notify Mortgagee of, and shall indemnify and defend Mortgagee and the
Personal Property against, all claims and demands of all persons at any time
claiming the Personal Property or any part thereof or any interest therein.
(b) Except as otherwise provided above, Mortgagor shall not lease, sell,
convey or in any manner transfer the Personal Property without the prior consent
of Mortgagee.
(c) Mortgagor is a limited liability company organized under the laws of
the State of Delaware. Until the Indebtedness is paid in full, Mortgagor (i)
shall not change its legal name without providing Mortgagee with thirty (30)
days prior written notice; (ii) shall not change its state of organization; and
(iii) shall preserve its existence and shall not, in one transaction or a series
of transactions, merge into or consolidate with any other entity.
(d) At the request of Mortgagee, Mortgagor shall join Mortgagee in
executing one or more financing statements and continuations and amendments
thereof pursuant to the Uniform Commercial Code in form satisfactory to
Mortgagee, and Mortgagor shall pay the cost of filing the same in all public
offices wherever filing is deemed by Mortgagee to be necessary or desirable.
Mortgagor shall also, at Mortgagor's expense, take any and all other action
requested by Mortgagee to perfect Mortgagee's security interest under the
Uniform Commercial Code with respect to the Personal Property, including,
without limitation, exercising Mortgagor's best efforts to obtain any consents,
agreements or acknowledgments required of third parties to perfect Mortgagee's
security interest in Personal Property consisting of deposit accounts,
letter-of-credit rights, investment property, and electronic chattel paper.
Other Liens. With the exception of the lien of this instrument, the lien
securing any additional indebtedness incurred by Mortgagor and secured by the
Property (the "Subordinate Debt"), or the lien securing any permitted AIMCO-Held
Subordinate Debt (as hereinafter defined), Mortgagor agrees to keep the Property
or any personal property free from all other liens either prior or subsequent to
the lien created by this instrument. The creation of (i) any other lien, whether
or not prior to the lien created hereby, (ii) or the assignment or pledge by
Mortgagor of its revocable license to collect, use and enjoy rents and profits
from the Property, (iii) or the granting or permitting of a security interest in
or other encumbrance on the ownership interests in Mortgagor, shall constitute a
default under the terms of this instrument, except that upon written notice to
Mortgagee, Mortgagor may proceed to contest in good faith and by appropriate
proceedings any mechanics liens, tax liens or judgment liens with respect to the
Property or any personal property described herein after the Loan Closing Date
(as defined in the Loan Commitment), provided funds sufficient to satisfy the
contested amount have been deposited in an escrow account reasonably
satisfactory to Mortgagee.
Notwithstanding the above, Mortgagor may incur indebtedness, other than the
Indebtedness, provided that each of the following terms and conditions are
satisfied:
(i) except as set forth in subsection (ii) (C) below, no liens may be
placed on the Property (other than the lien to secure the Indebtedness and the
lien to secure any permitted AIMCO-Held Subordinate Debt) and, further, no debt
shall be evidenced by a note or any like instrument (other than the Indebtedness
and any permitted AIMCO-Held Subordinate Debt);
(ii) the Subordinate Debt may be evidenced by a note and secured by a lien
on the Property, provided that:
(A) the Debt Service Coverage (as hereinafter defined) with respect
to the Property after the proposed Subordinate Debt is incurred
and secured by the Property will equal at least 1.25, based on
operating expenses of the Property for the last full fiscal year,
as determined by Mortgagee in its reasonable discretion from the
financial statements provided to Mortgagee by Mortgagor.
(B) the principal amount of such Subordinate Debt, together with the
amount of the Indebtedness and all other Subordinate Debt then
encumbering the Property, shall not exceed 75% of the value of
the Property at the time Mortgagor incurs the proposed
Subordinate Debt, as determined by Mortgagee, in Mortgagee's sole
discretion; and in that regard, Mortgagee shall receive from
Mortgagor (at Mortgagor's cost) an appraisal of the Property from
a qualified appraiser approved by Mortgagee, in a form
satisfactory to Mortgagee, which evidences the value of the
Property sufficient to meet such 75% loan to value ratio.
(C) any note and security instrument evidencing or securing such
Subordinate Debt (i) shall by its terms be expressly subordinate
to the Indebtedness and to all amendments, extensions and
renewals thereof; (ii) shall provide that the holder of any
Subordinate Debt cannot exercise its remedies for a default under
such Subordinate Debt without the prior written consent of
Mortgagee, all pursuant to the terms of an intercreditor
agreement substantially in Mortgagee's standard form; (iii) shall
provide that, so long as the Indebtedness is outstanding, all
payments under any such note and/or security therefor shall
accrue if the same are unpaid; (iv) shall provide that all
revenues from the Property shall be applied in the following
order: (x) all monthly installments of principal and interest on
the Indebtedness and any other amounts due under the Loan
Documents; (y) amounts due with respect to the operation and
maintenance of the Property, including, without limitation, any
and all operating expenses, capital expenses and tax and
insurance payments, and (z) amounts due with respect to any
Subordinate Debt which is secured by a lien on the Property; and
(v) shall provide that the holder of any Subordinate Debt provide
Mortgagee with notice of any default under the Subordinate Debt
not cured within any applicable grace period at the same time it
provides such notice to Mortgagor;
(D) Mortgagor delivers to Mortgagee evidence, in writing, that the
Subordinate Debt loan documents, the Debt Service Coverage and
the aggregate loan to value ratio limitations set forth herein
comply in all respects with the provisions of this covenant
entitled "Other Liens"; and
(E) Mortgagor's incurring of Subordinate Debt and placement of a
subordinate lien on the Property securing such Subordinate Debt
shall not constitute an Event of Default under the Loan
Documents.
(iii) The holder of any Subordinate Debt shall execute such instruments
and documents in connection with the status of such Subordinate Debt as
Mortgagee shall from time to time reasonably request, including, but not limited
to, an intercreditor agreement substantially in Mortgagee's standard form, and,
further, Mortgagor and the holder of any Subordinate Debt shall execute such
other instruments and documents in connection with the status of such
Subordinate Debt as Mortgagee shall from time to time request. Mortgagor shall
bear any and all expenses necessary in connection with its compliance with the
provisions of this subsection, including, without limitation, reasonable
attorneys' fees.
(iv) Mortgagee shall be paid a fee in the amount of $7,500.00 for each and
every occurrence of Subordinate Debt placed on the Property.
"Debt Service Coverage" means a number calculated by dividing Net Income
Available for Debt Service for a fiscal period by the debt service during the
same fiscal period under all indebtedness (including the Indebtedness) secured
by any portion of the Property. For purposes of the preceding sentence, "debt
service" means the actual debt service due under all indebtedness secured by any
portion of the Property based upon an amortization schedule which is the shorter
of the actual amortization schedule or 25 years (whether or not amortization is
actually required) and, if an accrual loan, as if interest and principal on such
indebtedness were due monthly.
"Net Income Available for Debt Service" means net income (prior to giving
effect to any capital gains or losses and any extraordinary items) from the
Property, determined in accordance with generally accepted accounting
principles, for a fiscal period, plus (to the extent deducted in determining net
income from the Property) the following:
(A) interest on indebtedness secured by any portion of the Property for
such fiscal period;
(B) depreciation, if any, of fixed assets at or constituting the
Property;
(C) amortization of loan costs and leasing commissions which have been
prepaid; and
less the following:
(D) a replacement reserve for capital improvements, unit remodels and
structural items, based on not less than $350.00 per unit per annum;
(E) the amount, if any, by which actual gross income during such fiscal
period exceeds that which would be earned from the rental of 93% of
the units in the Property;
(F) the amount, if any, by which the actual management fee is less than
3.0% of gross revenue during such fiscal period;
(G) the amount, if any, by which the actual real estate taxes and
insurance are less than $623,500.00 per annum;
(H) the amount, if any, by which total actual operating expenses,
excluding management fees, insurance, real estate taxes and
replacement reserves, are less than $606,100.00 per annum.
All adjustments to net income referenced above shall be calculated in a manner
reasonably satisfactory to Mortgagee.
AIMCO-Held Subordinate Debt; Deed in Lieu Accepted by AIMCO. In connection with
a one-time transfer of the Property which is permitted under the terms of this
instrument, and provided that no "change in the proportionate ownership of
Mortgagor" (as hereinafter defined) and no Change of Control (as hereinafter
defined) has occurred prior to such transfer, the proposed transferee (the "New
Mortgagor") may (in addition to the lien securing the Indebtedness) incur
AIMCO-Held Subordinate Debt (as hereinafter defined), secured by a lien upon the
Property; provided, however, each of the following terms and conditions are
satisfied:
(i) Any such indebtedness ("AIMCO-Held Subordinate Debt") shall be
incurred by the New Mortgagor solely in connection with its purchase of the
Property and no other debt shall remain on the Property, with the exception of
the Indebtedness;
(ii) The holder of the AIMCO-Held Subordinate Debt shall execute such
instruments and documents in connection with the status of such AIMCO-Held
Subordinate Debt as Mortgagee shall from time to time reasonably request,
including but not limited to, an intercreditor agreement substantially in
Mortgagee's standard form, and, further, the New Mortgagor and the holder of any
AIMCO-Held Subordinate Debt shall execute such other instruments and documents
in connection with the status of such AIMCO-Held Subordinate Debt as Mortgagee
shall from time to time request. Mortgagor and New Mortgagor shall be jointly
and severally liable for any and all expenses necessary in connection with its
compliance with the provisions of this subsection (ii), including, without
limitation, reasonable attorneys' fees and Mortgagee's fee;
(iii) The AIMCO-Held Subordinate Debt (and any and all documents evidencing
such AIMCO-Held Subordinate Debt) shall be and remain held by and in favor of
AIMCO REIT (as hereinafter defined), Principal or any entity in which AIMCO REIT
or Principal holds the Controlling Interests (as hereinafter defined), whether
directly or indirectly, and which entity shall have a term of existence not
expiring prior to ten (10) years after the maturity date of the Note (the "AIMCO
Subordinate Lender"), and further, the loan documents evidencing the AIMCO-Held
Subordinate Debt shall provide that Mortgagee shall receive written notice of
any defaults thereunder together with the opportunity, but not the obligation,
to cure such defaults, and such cure period shall extend by at least thirty (30)
days the cure period given the New Mortgagor under such AIMCO-Held Subordinate
Debt loan documents, unless such cure has been commenced in the permitted time
period and is being diligently pursued and then, and in such case, the period
for cure shall be automatically extended by a reasonable period in which to
complete the cure. "Controlling Interests" means such majority and/or managing
general partner interests which, together with a majority of limited partnership
interests ifnecessary for consent purposes, vest in the holder of such interests
the sole power, right and authority to control the day to day operations of
Mortgagor, including, without limitation, the authority to manage, operate and
finance the Property;
(iv) On the date of the transfer, Mortgagee and the AIMCO Subordinate
Lender shall execute and record among the applicable land records a
subordination agreement in Mortgagee's standard form; provided, however, that
the AIMCO Subordinate Lender shall have the right, without Mortgagee's consent,
to accept a transfer of title to the Property from Mortgagor back to the AIMCO
Subordinate Lender by deed in lieu of foreclosure, which such transfer (by deed
in lieu of foreclosure) shall not constitute an Event of Default under the Loan
Documents;
(v) The combined Debt Service Coverage with respect to the Property after
the proposed AIMCO-Held Subordinate Debt is incurred will equal at least 1.25
(if the AIMCO-Held Subordinate Debt requires a balloon payment, such payment
cannot be due prior to the maturity date of the Indebtedness); and Mortgagee has
advised the Mortgagor and New Mortgagor in writing of such determination prior
to any transfer taking place and if such transfer takes place prior to such
determination for any reason, said transfer shall be void ab initio;
(vi) The principal amount of the AIMCO-Held Subordinate Debt, together
with the Indebtedness encumbering the Property, shall not exceed 75% of the
proposed sale price for the Property at the time of the proposed sale to New
Mortgagor; and, if for any reason such transfer shall take place prior to a
determination by Mortgagee that the 75% test is met, said transfer shall be void
ab initio;
(vii) Not less than 60 days prior to the transfer, the New Mortgagor must
have submitted to Mortgagee, a complete and accurate application, together with
all required supporting documentation (including a written term sheet specifying
all of the terms of the proposed AIMCO-Held Subordinate Debt), for a subordinate
mortgage loan in the principal amount of the proposed AIMCO-Held Subordinate
Debt; and
(viii) Mortgagor has paid all costs and expenses incurred by Mortgagee in
connection with the AIMCO-Held Subordinate Debt as well as a fee payable to
Mortgagee in the amount of $7,500.00.
Notwithstanding any language to the contrary, AIMCO Subordinate Lender shall
have the right, without Mortgagee's consent, to accept a transfer of title to
the Property back to AIMCO Subordinate Lender from Mortgagor by deed-in-lieu of
foreclosure. Such transfer (by deed in lieu) shall not constitute an Event of
Default under the Loan Documents.
Costs, Fees and Expenses. Mortgagor agrees to appear in and defend any action or
proceeding purporting to affect the security hereof or the rights or powers of
Mortgagee hereunder; to pay all costs and expenses, including the cost of
obtaining evidence of title and reasonable attorney's fees, incurred in
connection with any such action or proceeding; and to pay any and all reasonable
attorney's fees and expenses of collection and enforcement in the event the Note
is placed in the hands of an attorney for collection, enforcement of any of the
Loan Documents is undertaken or suit is brought thereon.
Failure of Mortgagor to Act. If Mortgagor fails to make any payment or do any
act as herein provided, Mortgagee may, without obligation so to do, upon prior
written notice to Mortgagor (except in the case of emergency) but without
releasing Mortgagor from any obligation hereof: (i) make or do the same in such
manner and to such extent as Mortgagee may deem necessary to protect the
security hereof, Mortgagee being authorized to enter upon the Property for such
purpose; (ii) appear in and defend any action or proceeding purporting to affect
the security hereof, or the rights or powers of Mortgagee; (iii) pay, purchase,
contest or compromise any encumbrance, charge or lien which in the judgment of
Mortgagee appears to be prior or superior hereto; and (iv) in exercising any
such powers, pay necessary expenses, employ counsel and pay its reasonable fees.
Sums so expended shall be payable by Mortgagor immediately upon demand with
interest from date of expenditure at the Default Rate (as defined in the Note).
All sums so expended by Mortgagee and the interest thereon shall be included in
the Indebtedness and secured by the lien of this instrument.
Event of Default. Any default by Mortgagor in making any required payment of the
Indebtedness or any default in any provision, covenant, agreement, warranty or
certification contained in any of the Loan Documents shall, except as provided
in the two immediately succeeding paragraphs, constitute an "Event of Default".
Notice of Default. A default in any payment required in the Note or any other
Loan Document, whether or not payable to Mortgagee, (a "Monetary Default") shall
not constitute an Event of Default unless Mortgagee shall have given a written
notice of such Monetary Default to Mortgagor and Mortgagor shall not have cured
such Monetary Default by payment of all amounts in default (including payment of
interest at the Default Rate, as defined in the Note, from the date of default
to the date of cure on amounts owed to Mortgagee) within five (5) business days
after the date on which Mortgagee shall have given such notice to Mortgagor.
Any other default under the Note or under any other Loan Document (a
"Non-Monetary Default") shall not constitute an Event of Default unless
Mortgagee shall have given a written notice of such Non-Monetary Default to
Mortgagor and Mortgagor shall not have cured such Non-Monetary Default within
thirty (30) days after the date on which Mortgagee shall have given such notice
of default to Mortgagor (or, if theNon-Monetary Default is not curable within
such 30-day period, Mortgagor shall not have diligently undertaken and continued
to pursue the curing of such Non-Monetary Default and deposited an amount
sufficient to cure such Non-Monetary Default in an escrow account satisfactory
to Mortgagee).
In no event shall the notice and cure period provisions recited above
constitute a grace period for the purposes of commencing interest at the Default
Rate (as defined in the Note).
Appointment of Receiver. Upon commencement of any proceeding to enforce any
right under this instrument, including foreclosure thereof, Mortgagee (without
limitation or restriction by any present or future law, without regard to the
solvency or insolvency at that time of any party liable for the payment of the
Indebtedness, without regard to the then value of the Property, whether or not
there exists a threat of imminent harm, waste or loss to the Property and or
whether the same shall then be occupied by the owner of the equity of redemption
as a homestead) shall have the absolute right to the appointment of a receiver
of the Property and of the revenues, rents, profits and other income therefrom,
and said receiver shall have (in addition to such other powers as the court
making such appointment may confer) full power to collect all such income and,
after paying all necessary expenses of such receivership and of operation,
maintenance and repair of said Property, to apply the balance to the payment of
any of the Indebtedness then due.
Foreclosure. Upon the occurrence of an Event of Default, the entire unpaid
Indebtedness shall, at the option of Mortgagee, become immediately due and
payable for all purposes without any notice or demand, except as required by
law, (ALL OTHER NOTICE OF THE EXERCISE OF SUCH OPTION, OR OF THE INTENT TO
EXERCISE SUCH OPTION, BEING HEREBY EXPRESSLY WAIVED), and Mortgagee may, in
addition to exercising any rights it may have with respect to the Personal
Property under the Uniform Commercial Code of the jurisdiction in which the
Property is located, institute proceedings in any court of competent
jurisdiction to foreclose this instrument as a mortgage, or to enforce any of
the covenants hereof, or Mortgagee may, either personally or by agent or
attorney in fact, enter upon and take possession of the Property and may manage,
rent or lease the Property or any portion thereof upon such terms as Mortgagee
may deem expedient, and collect, receive and receipt for all rentals and other
income therefrom and apply the sums so received as hereinafter provided in case
of sale. Mortgagee is hereby further authorized and empowered, as agent or
attorney in fact, either after or without such entry, to sell and dispose of the
Property en masse or in separate parcels (as Mortgagee may think best), and all
the right, title and interest of Mortgagor therein, by advertisement or in any
manner provided by the laws of the jurisdiction in which the Property is
located, (MORTGAGOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A HEARING PRIOR TO SUCH
SALE), and to issue, execute and deliver a deed of conveyance, all as then may
be provided by law; and Mortgagee shall, out of the proceeds or avails of such
sale, after first paying and retaining all fees, charges, costs of advertising
the Property and of making said sale, and attorneys' fees as herein provided,
apply such proceeds to the Indebtedness, including all sums advanced or expended
by Mortgagee or the legal holder of the Indebtedness, with interest from date of
advance or expenditure at the Default Rate (as defined in the Note), rendering
the excess, if any, as provided by law; such sale or sales and said deed or
deeds so made shall be a perpetual bar, both in law and equity, against
Mortgagor, the heirs, successors and assigns of Mortgagor, and all other persons
claiming the Property aforesaid, or any part thereof, by, from, through or under
Mortgagor. The legal holder of the Indebtedness may purchase the Property or any
part thereof, and it shall not be obligatory upon any purchaser at any such sale
to see to the application of the purchase money.
Prohibition on Transfer/One-Time Transfer. The present ownership and management
of the Property is a material consideration to Mortgagee in making the loan
secured by this instrument, and Mortgagor shall not (i) convey title to all or
any part of the Property, (ii) enter into any contract to convey (land
contract/installment sales contract/contract for deed) title to all or any part
of the Property which gives a purchaser possession of, or income from, the
Property prior to a transfer of title to all or any part of the Property
("Contract to Convey"), (iii) cause or permit a change in the proportionate
ownership of Mortgagor, or (iv) cause or permit a Change of Control. Except if
resulting from the death or legal incompetency of any individual, any such
conveyance, entering into a Contract to Convey, change in the proportionate
ownership of Mortgagor or Change of Control shall constitute a default under the
terms of this instrument.
Notwithstanding the foregoing, provided that there is no change in the
proportionate ownership of Mortgagor and no Change of Control, the following
transfers are permitted: (a) the transfer of any ownership interest in Mortgagor
which is made to a Qualified REIT Subsidiary (as defined in Section 856(I)(2) of
the Internal Revenue Code of 1986) of AIMCO REIT, (b) the transfer of any
partnership interest in a constituent member of Mortgagor, (c) the transfer of
shares of common stock, limited partnership interests or other beneficial forms
of ownership interests in Mortgagor or other forms of securities of AIMCO REIT
or Principal and the issuance of all varieties of convertible debt, equity and
other similar securities of AIMCO REIT or Principal, and the subsequent transfer
of such securities, provided that no Change of Control occurs as a result of
such transfer, either upon such transfer or upon the subsequent conversion to
equity of such convertible debt or other securities, (d) the issuance by AIMCO
REIT or Principal of additional common stock, limited partnership interests or
other beneficial or ownership interests, convertible debt, equity and other
similar securities, and the subsequent transfer of such convertible debt or
other securities, provided that no Change of Control occurs as a result of such
transfer, either upon such transfer or upon the subsequent conversion to equity
of such convertible debt or other securities, and (e) so long as AIMCO REIT owns
100% of the stock of AIMCO-LP, Inc., a transfer of limited partnership interests
that results in AIMCO-LP, Inc. owning not less than 50.1% of the limited
partnership interests in Principal.
For the purposes of this instrument, the following terms shall have the
following meanings:
(a) A "change in the proportionate ownership of Mortgagor" means any
conveyance, assignment, grant of security interest or other transfer resulting
in either Apartment Investment and Management Company, a Maryland corporation
("AIMCO REIT") and/or Principal owning (directly or indirectly) less than a 50%
ownership interest in Mortgagor.
(b) "Change of Control" means the earliest to occur of (i) the date on
which an acquiring person (as hereinafter defined) becomes (by acquisition,
consolidation, merger or otherwise), directly or indirectly, the beneficial
owner of more than 50% of the total voting equity capital of AIMCO REIT then
outstanding, (ii) the date on which AIMCO REIT shall cease to hold (whether
directly or indirectly through a wholly-owned intermediary entity such as
AIMCO-LP, Inc. or AIMCO-GP, Inc.) at least 50.1% of the limited partnership
interests in Principal, or (iii) the date on which AIMCO REIT shall cease for
any reason to hold (whether directly or indirectly) 100% of the membership
interests in Mortgagor held as of the date hereof (as evidenced by
organizational charts and documents provided to Mortgagee) or (iv) the
replacement (other than solely by reason of retirement at age sixty-five or
older, death or disability) of more than 50% (or such lesser percentage as is
required for decision making by the board of directors (or the board of
trustees, if applicable) of the members of the board of directors (or the board
of trustees, if applicable) of AIMCO REIT over a one-year period where such
replacement shall not have been approved by a vote of at least a majority of the
board of directors (or the board of trustees, if applicable) of AIMCO REIT then
still in office who either were members of such board of directors (or board of
trustees, if applicable) at the beginning of such one year period or whose
election as members of the board of directors (or the board of trustees, if
applicable) was previously so approved.
(c) An "acquiring person" shall not be deemed to include any member of the
Mortgagor Control Group (as hereinafter defined) unless such member has,
directly or indirectly, disposed of, sold or otherwise transferred to, or
encumbered or restricted (whether by means of voting trust agreement or
otherwise) for the benefit of an acquiring person, all or any portion of the
Voting Equity Capital (as hereinafter defined) of AIMCO REIT, directly or
indirectly, owned or controlled by such member for the taking of any action
which, directly, constitutes or would constitute a Change of Control, in which
event such member of the Mortgagor Control Group shall be deemed to constitute
an acquiring person to the extent of the Voting Equity Capital of AIMCO REIT
owned or controlled by such member. "Mortgagor Control Group" means Terry
Considine, Peter K. Kompaniez, Richard S. Ellwood, J. Landis Martin, Thomas L.
Rhodes or John D. Smith.
(d) "Voting Equity Capital" means securities of any class or classes, the
holders of which are ordinarily, in the absence of contingencies, entitled to
elect a majority of the board of directors (or persons performing similar
functions).
Notwithstanding the above, provided there is then no default in the terms
and conditions of any Loan Document and upon prior written request from
Mortgagor, Mortgagee shall not withhold its consent to a one-time transfer of
all but not less than all of the Property, provided:
(i) the Property shall have achieved Debt Service Coverage of at least
1.25 for the last full fiscal year and there are no junior liens on
the Property, with the exception of the AIMCO-Held Subordinate Debt,
if any;
(ii) the transferee or an owner of the transferee (in either case, the
"Creditworthy Party") has a net worth determined in accordance with
generally accepted accounting principles of at least $50,000,000.00
with cash and cash equivalents of at least $5,000,000.00 after
funding the equity needed to close the purchase of the Property and
a minimum overall real estate portfolio debt service coverage ratio
of 1.35 for the prior twelve (12) month period;
(iii) the transferee or the Creditworthy Party is experienced in the
ownership and management of at least 20,000 units of garden
apartments/mid-rise apartments;
(iv) neither the transferee nor the Creditworthy Party is subject to any
bankruptcy, reorganization or insolvency proceedings or any criminal
charges or proceedings and is not a current or past litigant,
plaintiff or defendant in any suit brought against or by Mortgagee;
(v) the Creditworthy Party assumes or guarantees in writing all of the
obligations and liabilities of Mortgagor under the Loan Documents,
Mortgagee receives a satisfactory enforceability opinion with
respect thereto from counsel reasonably approved by Mortgagee, and
Mortgagor and Principal shall be released from liability under the
Loan Documents except as provided in clause (viii) below;
(vi) the Creditworthy Party executes Mortgagee's then current forms of
Guarantee of Recourse Obligations and Environmental Indemnity
Agreement and Mortgagee receives a satisfactory enforceability
opinion with respect thereto from counsel reasonably approved by
Mortgagee;
(vii) an environmental report on the Property which meets Mortgagee's then
current requirements and is updated to no earlier than 90 days prior
to the date of transfer, is provided to Mortgagee at least 30 days
prior to the date of transfer and said report shall be satisfactory
to Mortgagee at the time of transfer;
(viii) Mortgagor and Principal shall remain liable under the Environmental
Indemnity Agreement, dated of even date herewith, to the extent
provided therein, except for acts or occurrences after the date of
the transfer of the Property;
(ix) Mortgagee receives an endorsement to its policy of title insurance,
satisfactory to Mortgagee; and
(x) the outstanding balance of the Note at the time of the transfer is
not more than 65% of the gross purchase price of the Property.
If Mortgagor shall make a one-time transfer to an approved Creditworthy
Party, Mortgagee shall be paid a fee equal to one percent (1%) of the then
outstanding balance of the Note at the time of transfer. The fee shall be paid
on or before the closing date of such one-time transfer. At the time of such
transfer, no modification of the interest rate or repayment terms of the Note
will be required.
No subsequent transfers of the Property or changes in the proportionate
ownership of transferee shall be allowed. For purposes of this provision, a
"change in the proportionate ownership of transferee" means, in the case of the
transferee being a corporation, a change in, or the existence of a lien on, the
ownership of the voting stock of such corporation; in the case of the transferee
being a trust, a change in, or the existence of a lien on, the beneficial
ownership of such trust; in the case of the transferee being a limited liability
company, a change in the ownership of, or the existence of a lien on, the
limited liability company interests of such limited liability company; and in
the case of the transferee being a partnership, a change in the ownership of, or
the existence of a lien on, the general partnership interests of such
partnership.
Financial Statements. Mortgagor agrees to furnish to Mortgagee, at Mortgagor's
expense and within 90 days after the close of each fiscal year ("Financial
Statements Due Date"), annual unaudited financial statements on the Property
(the "Statements"), which includes the following:
(a) a balance sheet; and
(b) a statement of operations with a detailed line item breakdown of all
operating expenses for the Property including a separate
supplemental schedule listing the capitalized costs associated with
tenant improvements, leasing commissions and capital improvements.
Mortgagor also agrees to provide Mortgagee by the Financial Statements Due
Date a current rent roll for the Property (the "Rent Roll") and a certification
(the "Certification") by a managing member of Mortgagor stating that the
Statements and Rent Roll are true and correct in all material respects and the
Statements have been prepared in accordance with generally accepted accounting
principles. Mortgagor acknowledges that Mortgagee requires the Statements, Rent
Roll and Certification in order to record accurately the value of the Property
for financial and regulatory reporting.
If Mortgagor does not furnish, or cause to be furnished, the Statements,
Rent Roll and Certification to Mortgagee by the Financial Statements Due Date,
within 30 days after Mortgagee shall have given written notice to Mortgagor that
the Statements, Rent Roll and/or Certification have not been received as
required,
(x) interest on the unpaid principal balance of the Indebtedness shall as
of the Financial Statements Due Date, accrue and become payable at a rate
equal to the sum of the Interest Rate (as defined in the Note) plus one
percent (1%) per annum (the "Increased Rate"); and
(y) Mortgagee may elect to obtain an independent appraisal and audit of
the Property at Mortgagor's expense, and Mortgagor agrees that it will,
upon request, promptly make Mortgagor's books and records regarding the
Property available to Mortgagee and the person(s) performing the appraisal
and audit (which obligation Mortgagor agrees can be specifically enforced
by Mortgagee).
The amount of the payments due under the Note during the time in which the
Increased Rate shall be in effect shall be changed to an amount which is
sufficient to amortize the then unpaid principal balance at the Increased Rate
during the then remaining portion of a period of 25 years commencing with the
Amortization Period Commencement Date (as defined in the Note). Interest shall
continue to accrue and be due and payable monthly at the Increased Rate until
the Statements, Rent Roll and Certification shall be furnished to Mortgagee as
required. Commencing on the date on which the Statements, Rent Roll and
Certification are received by Mortgagee, interest on the unpaid principal
balance shall again accrue at the Interest Rate and the payments due during the
remainder of the term of the Note shall be changed to an amount which is
sufficient to amortize the then unpaid principal balance at the Interest Rate
during the then remaining portion of a period of 25 years commencing with the
Amortization Period Commencement Date. Notwithstanding the foregoing, Mortgagee
shall have the right to conduct an independent audit at its own expense at any
time.
Release. If Mortgagor shall pay Mortgagee the Indebtedness when and as the same
shall become due and payable, whether by acceleration or otherwise, Mortgagee
shall execute and deliver to Mortgagor, at Mortgagor's cost, an appropriate
release and discharge of this instrument, in recordable form, whereupon the
right, title and interest of Mortgagee in the Property shall thereupon cease,
terminate and become void.
Advances. This instrument secures the unpaid balance of loan advances made after
this instrument is delivered to the County Recorder for record. The maximum
amount of unpaid balances of all loan advances in the aggregate, exclusive of
interest thereon and other advances made pursuant hereto, which may be
outstanding at any time is $31,500,000.00. In addition to any other debt or
obligation secured hereby, this instrument shall also secure unpaid balances of
advances made with respect to the Property for the payment of taxes,
assessments, insurance premiums or costs incurred for the protection of the
Property as provided for in Section 5301.233 of the Ohio Revised Code. If and to
the extent applicable, Mortgagor hereby waives any right it may have under
Section 5301.232(c) of the Ohio Revised Code.
Property Management. The management company for the Property shall be reasonably
satisfactory to Mortgagee. Any change in the management company to an entity
unaffiliated with Mortgagor or Principal without the prior written consent of
Mortgagee shall constitute a default under this instrument.
Deposits by Mortgagor. To assure the timely payment of real estate taxes and
special assessments (including personal property taxes, if appropriate), upon
the occurrence of an Event of Default, Mortgagee shall thence forth have the
option to require Mortgagor to deposit funds with Mortgagee, in monthly or other
periodic installments in amounts estimated by Mortgagee from time to time
sufficient to pay real estate taxes and special assessments as they become due.
If at any time the funds so held by Mortgagee shall be insufficient to pay any
of said expenses, Mortgagor shall, upon receipt of notice thereof, immediately
deposit such additional funds as may be necessary to remove the deficiency. All
funds so deposited shall be irrevocably appropriated to Mortgagee to be applied
to the payment of such real estate taxes and special assessments and, at the
option of Mortgagee after default, the Indebtedness.
Notices. Any notices, demands, requests and consents permitted or required
hereunder or under any other Loan Document shall be in writing, may be delivered
personally or sent by certified mail with postage prepaid or by reputable
courier service with charges prepaid. Any notice or demand sent to Mortgagor by
certified mail or reputable courier service shall be addressed to Mortgagor at
c/o AIMCO, 2000 South Colorado Boulevard, Tower 2, Suite 2-1000, Denver, CO
80222 or such other address in the United States of America as Mortgagor shall
designate in a notice to Mortgagee given in the manner described herein. Any
notice sent to Mortgagee by certified mail or reputable courier service shall be
addressed to The Northwestern Mutual Life Insurance Company to the attention of
the Real Estate Investment Department at 720 East Wisconsin Avenue, Milwaukee,
WI 53202, or at such other addresses as Mortgagee shall designate in a notice
given in the manner described herein. Any notice given to Mortgagee shall refer
to the Loan No. set forth above. Any notice or demand hereunder shall be deemed
given when received. Any notice or demand which is rejected, the acceptance of
delivery of which is refused or which is incapable of being delivered during
normal business hours at the address specified herein or such other address
designated pursuant hereto shall be deemed received as of the date of attempted
delivery.
Modification of Terms. Without affecting the liability of Mortgagor or any other
person (except any person expressly released in writing) for payment of the
Indebtedness or for performance of any obligation contained herein and without
affecting the rights of Mortgagee with respect to any security not expressly
released in writing, Mortgagee may, at any time and from time to time, either
before or after the maturity of the Note, without notice or consent: (i) release
any person liable for payment of all or any part of the Indebtedness or for
performance of any obligation; (ii) make any agreement extending the time or
otherwise altering the terms of payment of all or any part of the Indebtedness,
or modifying or waiving any obligation, or subordinating, modifying or otherwise
dealing with the lien or charge hereof; (iii) exercise or refrain from
exercising or waive any right Mortgagee may have; (iv) accept additional
security of any kind; (v) release or otherwise deal with any property, real or
personal, securing the Indebtedness, including all or any part of the Property.
Exercise of Options. Whenever, by the terms of this instrument, of the Note or
any of the other Loan Documents, Mortgagee is given any option, such option may
be exercised when the right accrues or at any time thereafter, and no acceptance
by Mortgagee of payment of Indebtedness in default shall constitute a waiver of
any default then existing and continuing or thereafter occurring.
Nature and Succession of Agreements. Each of the provisions, covenants and
agreements contained herein shall inure to the benefit of, and be binding on,
the heirs, executors, administrators, successors, grantees, and assigns of the
parties hereto, respectively, and the term "Mortgagee" shall include the owner
and holder of the Note.
Legal Enforceability. No provision of this instrument, the Note or any other
Loan Documents shall require the payment of interest or other obligation in
excess of the maximum permitted by law. If any such excess payment is provided
for in any Loan Documents or shall be adjudicated to be so provided, the
provisions of this paragraph shall govern and Mortgagor shall not be obligated
to pay the amount of such interest or other obligation to the extent that it is
in excess of the amount permitted by law.
Limitation of Liability. Notwithstanding any provision contained herein to the
contrary, the personal liability of Mortgagor shall be limited as provided in
the Note.
Miscellaneous. Time is of the essence in each of the Loan Documents. The
remedies of Mortgagee as provided herein or in any other Loan Document or at law
or in equity shall be cumulative and concurrent, and may be pursued singly,
successively, or together at the sole discretion of Mortgagee, and may be
exercised as often as occasion therefor shall occur; and neither the failure to
exercise any such right or remedy nor any acceptance by Mortgagee of payment of
Indebtedness in default shall in any event be construed as a waiver or release
of any right or remedy. Neither this instrument nor any other Loan Document may
be modified or terminated orally but only by agreement or discharge in writing
and signed by Mortgagor and Mortgagee. If any of the provisions of any Loan
Document or the application thereof to any persons or circumstances shall to any
extent be invalid or unenforceable, the remainder of such Loan Document and each
of the other Loan Documents, and the application of such provision or provisions
to persons or circumstances other than those as to whom or which it is held
invalid or unenforceable, shall not be affected thereby, and every provision of
each of the Loan Documents shall be valid and enforceable to the fullest extent
permitted by law.
Waiver of Jury Trial. Mortgagor hereby waives any right to trial by jury with
respect to any action or proceeding (a) brought by Mortgagor, Mortgagee or any
other person relating to (i) the obligations secured hereby and/or any
understandings or prior dealings between the parties hereto or (ii) the Loan
Documents or the Environmental Indemnity Agreement, or (b) to which Mortgagee is
a party.
Captions. The captions contained herein are for convenience and reference only
and in no way define, limit or describe the scope or intent of, or in any way
affect this instrument.
Governing Law. This instrument, the interpretation hereof and the rights,
obligations, duties and liabilities hereunder shall be governed and controlled
by the laws of the State of Ohio.
Mortgagee shall be and hereby is authorized and empowered to do, as
Mortgagee, all things provided to be done in the mechanics' lien law of the
State of Ohio (including Section 1311.14 of the Ohio Revised Code), and all acts
amendatory or supplementary thereto.
With respect to any agreement by Mortgagor in this instrument or in any
other Loan Document to pay Mortgagee's attorneys' fees and disbursements
incurred in connection with the Indebtedness, Mortgagor agrees that each Loan
Document is a "contract of indebtedness" and that the attorneys' fees and
disbursements referenced are those which are a reasonable amount, all as
contemplated by Ohio Revised Code Section 1301.21, as such Section may hereafter
be amended. Mortgagor further agrees that the indebtedness incurred in
connection with the Indebtedness is not incurred for purposes that are primarily
personal, family or household and confirms that the total amount owed on the
contract of the indebtedness exceeds $100,000.00.
IN WITNESS WHEREOF, this instrument has been executed by the Mortgagor as
of the day and year first above written.
CCIP/2 VILLAGE BROOKE, L.L.C., a Delaware
limited liability company
By: Consolidated Capital Institutional
Properties/2, a California limited
partnership, its sole member
By: ConCap Equities, Inc., a
Delaware corporation, its
general partner
By: /s/Patti K. Fielding
Name: Patti K. Fielding
Its: Executive Vice President
Attest: /s/Leslie E. Green
Name: Leslie E. Green
Its: Assistant
Secretary
(corporate seal)