UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to _________
Commission file number 0-10831
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Exact Name of Registrant as Specified in Its Charter)
California 94-2744492
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No___
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 120-2 of the Exchange Act). Yes _____ No __X__
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
March 31, December 31,
2004 2003
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 4,204 $ 2,417
Receivables and deposits 429 404
Restricted escrows 990 922
Other assets 1,941 999
Investment in affiliated partnerships (Note D) 1,050 992
Investment properties:
Land 21,814 22,780
Buildings and related personal property 96,759 100,078
118,573 122,858
Less: Accumulated depreciation (24,407) (23,194)
94,166 99,664
$102,780 $105,398
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 636 $ 211
Tenant security deposit liabilities 918 964
Accrued property taxes 339 564
Other liabilities 1,460 1,499
Due to affiliates (Note C) 665 255
Mortgage notes payable 71,250 75,195
75,268 78,688
Partners' Capital
General partner 136 128
Limited partners (199,043.2 units issued and
outstanding) 27,376 26,582
27,512 26,710
$102,780 $105,398
Note: The consolidated balance sheet at December 31, 2003 has been derived from
the audited financial statements at that date but does not include all the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31,
2004 2003
Revenues: (Restated)
Rental income $ 5,705 $ 3,747
Other income 503 284
Total revenues 6,208 4,031
Expenses:
Operating 2,906 1,913
General and administrative 263 258
Depreciation 1,411 980
Interest 1,210 851
Property taxes 458 226
Total expenses 6,248 4,228
Loss from continuing operations (40) (197)
(Loss) income from discontinued operations (Notes A and E) (649) 24
Gain on sale of discontinued operations (Note E) 1,433 --
Equity in income of investment (Note D) 58 350
Net income $ 802 $ 177
Net income allocated to general partner (1%) $ 8 $ 2
Net income allocated to limited partners (99%) 794 175
$ 802 $ 177
Per limited partnership unit:
Loss from continuing operations (0.20) (.98)
(Loss) income from discontinued operations (3.23) .12
Gain on sale of discontinued operations 7.13 --
Equity in income from investment 0.29 1.74
Net income per limited partnership unit $ 3.99 $ .88
Distributions per limited partnership unit $ -- $ 9.99
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 200,342.0 $ 1 $200,342 $200,343
Partners' capital at
December 31, 2003 199,043.2 $ 128 $ 26,582 $ 26,710
Net income for the three
months ended March 31, 2004 -- 8 794 802
Partners' capital at
March 31, 2004 199,043.20 $ 136 $ 27,376 $ 27,512
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2004 2003
Cash flows from operating activities:
Net income $ 802 $ 177
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,452 1,019
Amortization of loan costs, lease commissions and
mortgage premiums (35) (18)
Equity in income of investment (58) (350)
Gain on sale of discontinued operations (1,433) --
Loss on early extinguishment of debt 685 --
Change in accounts:
Receivables and deposits (25) 229
Other assets (1,007) (694)
Accounts payable 241 324
Tenant security deposit liabilities (46) (7)
Accrued property taxes (225) (100)
Other liabilities (39) (198)
Due to affiliates 77 --
Net cash provided by operating activities 389 382
Cash flows from investing activities:
Net proceeds from sale of discontinued operations 6,501 --
Net (deposits to) receipts from restricted escrows (68) 2
Property improvements and replacements (503) (357)
Principal receipts on Master Loan -- 15
Distributions from affiliated partnerships -- 258
Net cash provided by (used in) investing activities 5,930 (82)
Cash flows from financing activities:
Distributions to partners -- (1,993)
Payments on mortgage notes payable (407) (258)
Repayment of mortgage note payable (3,248) --
Prepayment penalties (871) --
Lease commissions, paid (6) (12)
Net cash used in financing activities (4,532) (2,263)
Net increase (decrease) in cash and cash equivalents 1,787 (1,963)
Cash and cash equivalents at beginning of period 2,417 3,175
Cash and cash equivalents at end of period $ 4,204 $ 1,212
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,234 $ 934
Supplemental disclosure of non-cash activity:
Property improvements and replacements in accounts
payable $ 84 $ --
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Institutional Properties (the "Partnership" or "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of ConCap Equities, Inc. (the "General
Partner"), which is ultimately owned by Apartment Investment and Management
Company ("AIMCO"), a publicly traded real estate investment trust, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three month
period ended March 31, 2004 are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 2004. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 2003.
As a result of the sale of Silverado Apartments to an unrelated third party
during the three months ended March 31, 2004 and in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", the accompanying consolidated statement of
operations for the three months ended March 31, 2003 has been restated as of
January 1, 2003 to reflect the operations of Silverado Apartments as (loss)
income from discontinued operations of approximately $(649,000) and $24,000 for
the three months ended March 31, 2004 and 2003, respectively, including revenues
of approximately $338,000 and $341,000, respectively.
Segment Reporting: Statement of Financial Accounting Standards ("SFAS") SFAS No.
131, "Disclosure about Segments of an Enterprise and Related Information"
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also established standards for related disclosures
about products and services, geographic areas, and major customers. (See "Note
F" for detailed disclosure of the Partnership's segments).
Note B - Net Investment in Master Loan
The Partnership was initially formed for the benefit of its limited partners to
lend funds to Consolidated Capital Equity Partners ("CCEP"), a California
general partnership. The general partner of CCEP is an affiliate of the General
Partner. The Partnership loaned funds to CCEP subject to a nonrecourse note with
a participation interest (the "Master Loan"). The loans were made to, and the
real properties that secured the Master Loan were purchased and owned by, CCEP.
The Master Loan matured in November 2000. The General Partner had been
negotiating with CCEP with respect to its options which included foreclosing on
the properties which collateralized the Master Loan or extending the terms of
the Master Loan. The General Partner decided to foreclose on the properties that
collateralized the Master Loan. The General Partner began the process of
foreclosure or executing deeds in lieu of foreclosure during 2002 on all the
properties in CCEP. During August 2002, the General Partner executed deeds in
lieu of foreclosure on four of the active properties of CCEP. In addition, one
of the properties held by CCEP was sold in December 2002. On November 10, 2003
the Partnership acquired the remaining four properties held by CCEP through a
foreclosure sale. As the deeds were executed, title in the properties previously
owned by CCEP were transferred to the Partnership, subject to the existing liens
on such properties, including the first mortgage loans. As a result, during the
years ended December 2003 and 2002, the Partnership assumed responsibility for
the operations of such properties. The results of operations of the four
properties foreclosed on in 2002 are reflected in the accompanying consolidated
statements of operations for the three months ended March 31, 2004 and 2003. The
results of operations for the four properties foreclosed on in November 2003 are
included in the three months ended March 31, 2004.
Prior to the acquisition of the four remaining properties held by CCEP at a
foreclosure sale in 2003, the principal balance of the Master Loan due to the
Partnership totaled approximately $14,144,000 at December 31, 2002. This amount
represented the fair market value of the remaining properties held by CCEP at
December 31, 2002, less the net liabilities owed by the properties. Interest,
calculated on the accrual basis, due to the Partnership pursuant to the terms of
the Master Loan Agreement, but not recognized in the income statements due to
the impairment of the loan, totaled approximately $440,000 for the three months
ended March 31, 2003. Interest income was recognized on the cash basis as
required by SFAS 114.
During the three months ended March 31, 2003, the Partnership received
approximately $15,000 from escrows released by the mortgage lender of Society
Park which was sold during 2002 as principal payments on the Master Loan from
CCEP. No advances were made by the Partnership to CCEP on the Master Loan during
the three months ended March 31, 2003.
Note C - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from the Partnership's properties for providing property management services.
The Partnership paid to such affiliates approximately $323,000 and $234,000 for
the three months ended March 31, 2004 and 2003, respectively, which is included
in operating expenses and (loss) income from discontinued operations.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $192,000 and $129,000 for the
three months ended March 31, 2004 and 2003, respectively which is included in
general and administrative expenses. Approximately $333,000 was payable to the
General Partner at March 31, 2004 and is included in due to affiliates.
In connection with the sale of Silverado Apartments on March 31, 2004 (see "Note
E"), the General Partner earned a disposition fee of approximately $332,000. The
fee is included in gain on sale of discontinued operations and due to
affiliates.
The Partnership insures its properties up to certain limits through coverage
provided by AIMCO which is generally self-insured for a portion of losses and
liabilities related to workers' compensation, property casualty and vehicle
liability. The Partnership insures its properties above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the General
Partner. During 2004, the Partnership anticipates its cost for insurance
coverage and fees associated with policy claims administration provided by AIMCO
and its affiliates will be approximately $190,000. The Partnership was charged
approximately $212,000 for 2003.
Note D - Investment in Affiliated Partnerships
Ownership Investment Balance
Partnership Type of Ownership Percentage March 31, 2004
(in thousands)
Consolidated Capital Non-controlling
Growth Fund General Partner 0.40% $ 14
Consolidated Capital Non-controlling
Properties III General Partner 1.85% 30
Consolidated Capital Non-controlling
Properties IV General Partner 1.85% 1,006
$1,050
These investments were assumed during the foreclosure of investment properties
from CCEP (see "Note B") and are accounted for on the equity method of
accounting. Distributions from the affiliated partnerships are accounted for as
a reduction of the investment balance until the investment balance is reduced to
zero. When the investment balance has been reduced to zero, subsequent
distributions received are recognized as income in the accompanying statements
of operations. During the three months ended March 31, 2004, the Partnership
recognized approximately $58,000 in equity in income of investment related to
the sale of a property in Consolidated Capital Properties IV. There was no
distribution associated with this sale. During the three months ended March 31,
2003, the Partnership received approximately $258,000 in distributions from two
of the partnerships. Approximately $243,000 of the distributions related to the
sale of a property in Consolidated Capital Growth Fund. Of this amount,
approximately $236,000 was recognized as equity in income from investment once
the investment balance allocated to that property had been reduced to zero. The
Partnership also recognized equity in income from investment of approximately
$114,000 related to the sale of a property in Consolidated Capital Properties
IV. There was no distribution associated with this sale.
Note E - Sale of Investment Property
On March 31, 2004, the Partnership sold Silverado Apartments, located in El
Paso, Texas, to an unaffiliated third party for $6,650,000. After payment of
closing costs, the net sales proceeds received by the Partnership were
approximately $6,501,000. The Partnership used a portion of the proceeds to
repay the mortgage encumbering the property of approximately $3,248,000. The
sale resulted in a gain on sale of investment property of approximately
$1,433,000 during the three months ended March 31, 2004. In addition, the
Partnership recorded a loss on early extinguishment of debt of approximately
$685,000 as a result of prepayment penalties paid partially offset by the write
off of the unamortized mortgage premium which is included in (loss) income from
discontinued operations. Pursuant to the Partnership Agreement and in
conjunction with the sale, a disposition fee of approximately $332,000 was
earned by the General Partner in accordance with the Partnership Agreement which
was accrued and included in due to affiliates. The fee was paid subsequent to
March 31, 2004. The results of the property's operations for the three months
ended March 31, 2004 and 2003 are included in (loss) income from discontinued
operations which was approximately ($649,000) and $24,000, respectively and
includes revenues of approximately $338,000 and $341,000, respectively.
Note F - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has two reportable segments:
residential properties and commercial property. The Partnership's property
segments consist of eight apartment complexes one each in North Carolina,
Colorado, Kansas, and Kentucky, four in Florida and one multiple use facility
consisting of apartment units and commercial space in Pennsylvania. The
Partnership rents apartment units to tenants for terms that are typically less
than twelve months. The commercial property leases space to various medical
offices, career service facilities, and retail shops at terms ranging from month
to month to five years.
Measurement of segment profit and loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segments are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segments are business units (investment properties)
that offer different products and services. The reportable segments are each
managed separately because they provide distinct services with different types
of products and customers.
Segment information for the three months ended March 31, 2004 and 2003 is shown
in the tables below (in thousands). The "Other" Column includes partnership
administration related items and income and expense not allocated to reportable
segments.
2004 Residential Commercial Other Totals
Rental income $ 5,361 $ 344 $ -- $ 5,705
Other income 471 31 1 503
Equity in income of investment -- -- 58 58
Interest expense 1,154 56 -- 1,210
Depreciation 1,352 59 -- 1,411
General and administrative
expenses -- -- 263 263
Gain on sale of investment 1,433 -- -- 1,433
Loss from discontinued operations (649) -- -- (649)
Segment profit (loss) 1,212 (206) (204) 802
Total assets 97,256 1,409 4,115 102,780
Capital expenditures for
investment properties 289 298 -- 587
2003 Residential Commercial Other Totals
(Restated) (Restated)
Rental income $ 3,489 $ 258 $ -- $ 3,747
Other income 257 27 -- 284
Equity in income of investment -- -- 350 350
Interest expense 795 56 -- 851
Depreciation 938 42 -- 980
General and administrative
expenses -- -- 258 258
Income from discontinued operations 24 -- -- 24
Segment profit (loss) 203 (152) 126 177
Total assets 64,477 867 15,894 81,238
Capital expenditures for
investment properties 340 17 -- 357
Note G - Contingencies
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint (the "Heller action") was filed against the same defendants that are
named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make at least
one round of tender offers to purchase all of the partnership interests in the
Partnerships within one year of final approval, if it is granted, and to provide
partners with the independent appraisals at the time of these tenders. The
proposed settlement also provided for the limitation of the allowable costs
which the General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety. On January 28, 2004, Objector filed his
opening brief in his pending appeal. On April 23, 2004, the General Partner and
its affiliates filed a response brief in support of the settlement and the
judgment thereto. Plaintiffs have also filed a brief in support of the
settlement. Objector is scheduled to file a reply brief no later than May 13,
2004.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the Managing General Partner. The Complaint is styled as a Collective Action
under the FLSA and seeks to certify state subclasses in California, Maryland,
and the District of Columbia. Specifically, the plaintiffs contend that AIMCO
Properties L.P. failed to compensate maintenance workers for time that they were
required to be "on-call". Additionally, the Complaint alleges AIMCO Properties
L.P. failed to comply with the FLSA in compensating maintenance workers for time
that they worked in responding to a call while "on-call". The Defendants have
filed an answer to the Amended Complaint denying the substantive allegations.
Discovery is currently underway.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Pursuant to a formal order of investigation received by AIMCO on March 29, 2004,
the Central Regional Office of the United States Securities and Exchange
Commission is conducting an investigation relating to certain matters. AIMCO
believes the areas of investigation include AIMCO's miscalculated monthly net
rental income figures in third quarter 2003, forecasted guidance, accounts
payable, rent concessions, vendor rebates, and capitalization of expenses and
payroll. AIMCO is cooperating fully. AIMCO does not believe that the ultimate
outcome will have a material adverse effect on its consolidated financial
condition or results of operations taken as a whole. Similarly, the General
Partner does not believe that the ultimate outcome will have a material adverse
effect on the Partnership's consolidated financial condition or results of
operations taken as a whole.
ITEM 2. Management's Discussion and Analysis Of Financial Condition and
Results of Operations
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of nine properties. The Sterling
is a multiple-use facility which consists of an apartment complex and commercial
space. The following table sets forth the average occupancy of the properties
for the three months ended March 31, 2004 and 2003:
Average Occupancy
Property 2004 2003
The Loft Apartments (3) 86% 81%
Raleigh, North Carolina
The Sterling Apartment Homes (3) 96% 91%
The Sterling Commerce Center (1) 74% 54%
Philadelphia, Pennsylvania
The Knolls Apartments (2) 73% 82%
Colorado Springs, Colorado
Indian Creek Village Apartments (2) 88% 91%
Overland Park, Kansas
Tates Creek Village Apartments (3) 91% 86%
Lexington, Kentucky
Plantation Gardens Apartments 88% 90%
Plantation, Florida
Palm Lake Apartments (3) 96% 91%
Tampa, Florida
The Dunes Apartments (3) 95% 90%
Indian Harbor, Florida
Regency Oaks Apartments 93% 92%
Fern Park, Florida
(1) The General Partner attributes the low occupancy in 2003 at The Sterling
Commerce Center to the loss of a major tenant in late December 2001.
During the fourth quarter of 2003, a new tenant signed a lease and
occupied a large portion of the vacant space.
(2) The General Partner attributes the decrease in occupancy at The Knolls and
Indian Creek Village Apartments to the competitive market of the apartment
industry in the properties' locations.
(3) The General Partner attributes the increase in occupancy at The Loft
Apartments, The Sterling Apartment Homes, Tates Creek Village Apartments,
Palm Lake Apartments, and The Dunes Apartments to an increase in marketing
outreach and promotions.
The Partnership's financial results are dependent upon a number of factors
including the ability to attract and maintain tenants at the investment
properties, interest rates on mortgage loans, costs incurred to operate the
investment properties, general economic conditions and weather. As part of the
ongoing business plan of the Partnership, the General Partner monitors the
rental market environment of its investment properties to assess the feasibility
of increasing rents, maintaining or increasing occupancy levels and protecting
the Partnership from increases in expenses. As part of this plan, the General
Partner attempts to protect the Partnership from the burden of inflation-related
increases in expenses by increasing rents and maintaining a high overall
occupancy level. However, the General Partner may use rental concessions and
rental rate reductions to offset softening market conditions, accordingly, there
is no guarantee that the General Partner will be able to sustain such a plan.
Further, a number of factors which are outside the control of the Partnership
such as the local economic climate and weather can adversely or positively
impact the Partnership's financial results.
Results of Operations
The Partnership's net income for the three months ended March 31, 2004 was
approximately $802,000 compared to net income of approximately $177,000 for the
corresponding period in 2003. The increase in net income for the three months
ended March 31, 2004 as compared to the three months ended March 31, 2003 is
primarily due to the gain on the sale of Silverado Apartments during the three
months ended March 31, 2004 and an increase in total revenues partially offset
by an increase in total expenses, a decrease in equity in income of investment
and a decrease in income from discontinued operations.
On March 31, 2004, the Partnership sold Silverado Apartments, located in El
Paso, Texas, to an unaffiliated third party for $6,650,000. After payment of
closing costs, the net sales proceeds received by the Partnership were
approximately $6,501,000. The Partnership used a portion of the proceeds to
repay the mortgage encumbering the property of approximately $3,248,000. The
sale resulted in a gain on sale of investment property of approximately
$1,433,000 during the three months ended March 31, 2004. In addition, the
Partnership recorded a loss on early extinguishment of debt of approximately
$685,000 as a result of prepayment penalties paid partially offset by the write
off of the unamortized mortgage premium which is included in (loss) income from
discontinued operations. Pursuant to the Partnership Agreement and in
conjunction with the sale a disposition fee of approximately $332,000 was earned
by the General Partner in accordance with the Partnership Agreement which was
accrued and included in due to affiliates. The fee was paid subsequent to March
31, 2004.
As a result of the sale of Silverado Apartments to an unrelated third party
during the three months ended March 31, 2004 and in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets", the accompanying consolidated statement of
operations for the three months ended March 31, 2003 has been restated as of
January 1, 2003 to reflect the operations of Silverado Apartments as (loss)
income from discontinued operations of approximately $(649,000) and $24,000 for
the three months ended March 31, 2004 and 2003, respectively, including revenues
of approximately $338,000 and $341,000, respectively.
The increase in total expenses and total revenues is largely due to the
acquisition at a foreclosure sale of four properties (Plantation Gardens, Palm
Lake, The Dunes and Regency Oaks Apartments) during November 2003. These
properties were sold at a foreclosure sale due to CCEP's inability to repay the
Master Loan and accrued interest. The Master Loan matured in November 2000. The
General Partner had been negotiating with CCEP with respect to its options which
included foreclosing on the properties which collateralized the Master Loan or
extending the terms of the Master Loan. The General Partner decided to foreclose
on the properties that collateralized the Master Loan. The General Partner began
the process of foreclosure or executing deeds in lieu of foreclosure during 2002
on all the properties in CCEP. The foreclosure process on the above four
properties held by CCEP was completed during the fourth quarter of 2003. As the
deeds were executed, title in the properties previously owned by CCEP were
transferred to the Partnership, subject to the existing liens on such
properties, including the first mortgage loans. As a result, the Partnership
assumed responsibility for the operations of such properties during the fourth
quarter of 2003.
Exclusive of the items related to the operations of the foreclosed properties,
the Partnership recognized a net loss from continuing operations for the three
months ended March 31, 2004 of approximately $112,000 compared to net income
from continuing operations of approximately $153,000 for the corresponding
period in 2003. The decrease in net income from continuing operations for the
three months ended March 31, 2004 as compared to the three months ended March
31, 2003 is primarily due to a decrease in equity in income from investment and
an increase in total expenses, partially offset by an increase in total
revenues.
Total expenses, exclusive of the foreclosed properties, increased during the
three months ended March 31, 2004 primarily due to increases in operating
expenses and property tax expense partially offset by a decrease in depreciation
expense. Operating expenses increased during the three months ended March 31,
2004 primarily due to an increase in property expenses. Property expenses
increased primarily due to an increase in utility expenses at The Sterling
Commerce Center, The Knolls Apartments, Indian Creek Apartments and Tates Creek
Village Apartments. Property tax expense increased primarily due to the timing
of the receipt of the tax bills, which affected the recording of the associated
accrual at March 31, 2003 at Indian Creek Village Apartments. Depreciation
expense decreased due to capital improvements and replacements becoming fully
depreciated at The Sterling during 2003.
General and administrative expenses remained relatively constant for the three
month periods ended March 31, 2004 and 2003 as increases in the costs of
services included in the management reimbursements to the General Partner as
allowed under the Partnership Agreement were offset by reduced legal fees
associated with the foreclosures of the properties held by CCEP during 2003.
Also included in general and administrative expenses for the three months ended
March 31, 2004 and 2003 are costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement.
The increase in total revenues, exclusive of the foreclosed properties, during
the three months ended March 31, 2004 is primarily due to an increase in rental
income. Rental income increased primarily due to an increase in occupancy at The
Sterling Apartment Homes and Commerce Center, The Loft Apartments and Tates
Creek Village Apartments and a decrease in bad debt expense at The Sterling and
Indian Creek Village Apartments partially offset by a decrease in rental rates
at The Sterling Commerce Center, The Loft Apartments and The Knolls Apartments
and a decrease in occupancy at Indian Creek Village and The Knolls Apartments.
Equity in income from investment for the three months ended March 31, 2004 and
2003 is due to the recognition of the Partnership's share of distributions
received and recognized as earnings from affiliated partnerships in excess of
investment balance during the three months ended March 31, 2003. The Partnership
assumed investments in three affiliated partnerships during the foreclosure of
investment properties from CCEP as discussed above. These investments are
accounted for on the equity method of accounting. Distributions from the
affiliated partnerships are accounted for as a reduction of the investment
balance until the investment balance is reduced to zero. When the investment
balance has been reduced to zero, subsequent distributions received are
recognized as income in the accompanying statements of operations. During the
three months ended March 31, 2004, the Partnership recognized approximately
$58,000 in equity in income of investment related to the sale of a property in
Consolidated Capital Properties IV. There was no distribution associated with
this sale. During the three months ended March 31, 2003, the Partnership
received approximately $258,000 in distributions from two of the investments.
Approximately $243,000 of the distribution related to the sale of a property in
Consolidated Capital Growth Fund. Of this amount, approximately $236,000 was
recognized as equity in income from investment once the investment balance
allocated to that property had been reduced to zero. The Partnership also
recognized equity in income from investment of approximately $114,000 related to
the sale of a property in Consolidated Capital Properties IV. There was no
distribution associated with this sale.
Liquidity and Capital Resources
At March 31, 2004, the Partnership had cash and cash equivalents of
approximately $4,204,000 compared to approximately $1,212,000 at March 31, 2003.
Cash and cash equivalents increased approximately $1,787,000 since December 31,
2003 due to approximately $5,930,000 and $389,000 of cash provided by investing
and operating activities, respectively, partially offset by approximately
$4,532,000 of cash used in financing activities. Cash provided by investing
activities consisted of proceeds from the sale of Silverado Apartments partially
offset by property improvements and replacements and net deposits to escrow
accounts maintained by the mortgage lenders. Cash used in financing activities
consisted of principal payments made on the mortgages encumbering the
Partnership's properties, repayment of the mortgage note payable as a result of
the sale of Silverado Apartments, prepayment penalties paid and lease
commissions paid. The Partnership invests its working capital reserves in
interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The General Partner monitors developments in the area of legal and regulatory
compliance and is studying new federal laws, including the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance
measures with regard to governance, disclosure, audit and other areas. In light
of these changes, the Partnership expects that it will incur higher expenses
related to compliance, including increased legal and audit fees. Capital
improvements planned for each of the Partnership's properties are detailed
below.
The Loft Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $17,000 of capital improvements at The Loft Apartments, consisting
primarily of floor covering replacements. These improvements were funded from
operating cash flow. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$84,000 in capital improvements during the remainder of 2004. The additional
capital improvements will consist primarily of roof replacement and structural
improvements. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
The Sterling Apartment Homes and Commerce Center
During the three months ended March 31, 2004, the Partnership completed
approximately $346,000 of capital improvements at The Sterling Apartment Homes
and Commerce Center, consisting primarily of tenant improvements, floor covering
replacements and heating upgrades. These improvements were funded from operating
cash flow. The Partnership evaluates the capital improvement needs of the
property during the year and currently expects to complete an additional
$247,000 in capital improvements during the remainder of 2004. The additional
capital improvements will consist primarily of electrical and plumbing upgrades,
air conditioning unit replacements and structural improvements. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
The Knolls Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $35,000 of capital improvements at The Knolls Apartments
consisting primarily of floor covering and appliance replacements and other
building improvements. These improvements were funded from operating cash flow.
The Partnership evaluates the capital improvement needs of the property during
the year and currently expects to complete an additional $109,000 in capital
improvements during the remainder of 2004. The additional capital improvements
will consist primarily of interior and exterior building improvements.
Additional improvements may be considered and will depend on the physical
condition of the property as well as anticipated cash flow generated by the
property.
Indian Creek Village Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $21,000 of capital improvements at Indian Creek Village Apartments
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $130,000 in capital improvements during the remainder of
2004. The additional capital improvements will consist primarily of roof
replacement and fitness equipment. Additional improvements may be considered and
will depend on the physical condition of the property as well as anticipated
cash flow generated by the property.
Tates Creek Village Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $15,000 of capital improvements at Tates Creek Village Apartments
consisting primarily of floor covering and HVAC replacements. These improvements
were funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $97,000 in capital improvements during the remainder of
2004. The additional capital improvements will consist primarily of interior and
exterior building improvements. Additional improvements may be considered and
will depend on the physical condition of the property as well as anticipated
cash flow generated by the property.
Plantation Gardens Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $24,000 of capital improvements at Plantation Gardens Apartments
consisting primarily of floor covering and appliance replacements. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $181,000 in capital improvements during the remainder
of 2004. The additional capital improvements will consist primarily of interior
and exterior building improvements. Additional improvements may be considered
and will depend on the physical condition of the property as well as anticipated
cash flow generated by the property.
Palm Lake Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $23,000 of capital improvements at Palm Lake Apartments consisting
primarily of structural improvements and floor covering replacements. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $60,000 in capital improvements during the remainder
of 2004. The additional capital improvements will consist primarily of roof
replacement, swimming pool and structural improvements. Additional improvements
may be considered and will depend on the physical condition of the property as
well as anticipated cash flow generated by the property.
The Dunes Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $24,000 of capital improvements at The Dunes Apartments consisting
primarily of floor covering replacements. These improvements were funded from
operating cash flow. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$86,000 in capital improvements during the remainder of 2004. The additional
capital improvements will consist primarily of security equipment and swimming
pool improvements. Additional improvements may be considered and will depend on
the physical condition of the property as well as anticipated cash flow
generated by the property.
Regency Oaks Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $74,000 of capital improvements at Regency Oaks Apartments
consisting primarily of floor covering, air conditioning unit and appliance
replacements. These improvements were funded from operating cash flow. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $115,000 in capital
improvements during the remainder of 2004. The additional capital improvements
will consist primarily of interior and exterior building improvements.
Additional improvements may be considered and will depend on the physical
condition of the property as well as anticipated cash flow generated by the
property.
Silverado Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $8,000 of capital improvements at Silverado Apartments, consisting
primarily of floor covering replacements. These improvements were funded from
operating cash flow. The property was sold to an unrelated third party on March
31, 2004.
The additional capital improvements at the Partnership's properties will be made
only to the extent of cash available from operations and Partnership reserves.
To the extent that such budgeted capital improvements are completed, the
Partnership's distributable cash flow, if any, may be adversely affected at
least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering the Partnership's properties of approximately
$71,250,000 requires monthly payments of principal and interest and balloon
payments of approximately $3,903,000, $19,975,000 and $34,057,000 during 2005,
2008 and 2010, respectively. The General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
may risk losing such properties through foreclosure.
The Partnership distributed the following amounts during the three months ended
March 31, 2004 and 2003 (in thousands, except per unit data):
Three Months Per Limited Three Months Per Limited
Ended Partnership Ended Partnership
March 31, 2004 Unit March 31, 2003 Unit
Operations $ -- $ -- $ 362 $ 1.80
Sale (1) -- -- 1,631 8.19
$ -- $ -- $1,993 $ 9.99
(1) From the sale of Society Park Apartments owned by CCEP and received as a
principal payment on the Master Loan.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Future cash distributions will depend on the levels of net cash generated
from operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. There can be no assurance that
the Partnership will generate sufficient funds from operations, after planned
capital improvement expenditures, to permit any distributions to its partners
during the remainder of 2004 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 129,695.10 limited partnership units
(the "Units") in the Partnership representing 65.16% of the outstanding Units at
March 31, 2004. A number of these Units were acquired pursuant to tender offers
made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates
will acquire additional Units in exchange for cash or a combination of cash and
units in AIMCO Properties, L.P., the operating partnership of AIMCO, either
through private purchases or tender offers. In this regard on February 20, 2004,
AIMCO Properties, L.P. commenced a tender offer to acquire any and all units for
a purchase price of $239.13 per Unit. The tender offer will expire on May 14,
2004. Pursuant to the Partnership Agreement, unitholders holding a majority of
the Units are entitled to take action with respect to a variety of matters that
would include, but are not limited to, voting on certain amendments to the
Partnership Agreement and voting to remove the General Partner. As a result of
its ownership of 65.16% of the outstanding Units, AIMCO and its affiliates are
in a position to control all such voting decisions with respect to the
Partnership. Although the General Partner owes fiduciary duties to the limited
partners of the Partnership, the General Partner also owes fiduciary duties to
AIMCO as its sole stockholder. As a result, the duties of the General Partner,
as general partner, to the Partnership and its limited partners may come into
conflict with the duties of the General Partner to AIMCO, its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to make estimates and assumptions. The Partnership believes that of its
significant accounting policies, the following may involve a higher degree of
judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost less accumulated depreciation, unless
considered impaired. The investment properties foreclosed upon in the third
quarter of 2002 and fourth quarter of 2003 were recorded at fair market value at
the time of the foreclosure. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in national, regional and local economic climate; local conditions,
such as an oversupply of multifamily properties; competition from other
available multifamily property owners and changes in market rental rates. Any
adverse changes in these factors could cause impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
The Partnership leases certain commercial space to tenants under various lease
terms. The leases are accounted for as operating leases in accordance with SFAS
No. 13, "Accounting for Leases". Some of the leases contain stated rental
increases during their term. For leases with fixed rental increases, rents are
recognized on a straight-line basis over the terms of the leases. For all other
leases, minimum rents are recognized over the terms of the leases.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for its
borrowing activities used to maintain liquidity and fund business operations. To
mitigate the impact of fluctuations in U.S. interest rates, the Partnership
maintains its debt as fixed rate in nature by borrowing on a long-term basis.
Based on interest rates at March 31, 2004, a 100 point increase or decrease in
market interest rates would not have a material impact on the Partnership.
The following table summarizes the Partnership's debt obligations at March 31,
2004. The interest rates represent the weighted-average rates. The fair value of
the debt obligations approximated the recorded value as of March 31, 2004.
Principal Amount by Expected Maturity
Fixed Rate Debt
Long-term Average Interest
Debt Rate 7.67%
(in thousands)
2004 $ 1,283
2005 5,731
2006 1,886
2007 2,035
2008 22,060
Thereafter 36,204
Total $ 69,199
ITEM 4. Controls and Procedures
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the General Partner, who are the equivalent of the Partnership's principal
executive officer and principal financial officer, respectively, has evaluated
the effectiveness of the Partnership's disclosure controls and procedures (as
such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the
period covered by this report. Based on such evaluation, the principal executive
officer and principal financial officer of the General Partner, who are the
equivalent of the Partnership's principal executive officer and principal
financial officer, respectively, have concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint (the "Heller action") was filed against the same defendants that are
named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make at least
one round of tender offers to purchase all of the partnership interests in the
Partnerships within one year of final approval, if it is granted, and to provide
partners with the independent appraisals at the time of these tenders. The
proposed settlement also provided for the limitation of the allowable costs
which the General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety. On January 28, 2004, Objector filed his
opening brief in his pending appeal. On April 23, 2004, the Managing General
Partner and its affiliates filed a response brief in support of the settlement
and the judgment thereto. Plaintiffs have also filed a brief in support of the
settlement. Objector is scheduled to file a reply brief no later than May 13,
2004.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the Managing General Partner. The Complaint is styled as a Collective Action
under the FLSA and seeks to certify state subclasses in California, Maryland,
and the District of Columbia. Specifically, the plaintiffs contend that AIMCO
Properties L.P. failed to compensate maintenance workers for time that they were
required to be "on-call". Additionally, the Complaint alleges AIMCO Properties
L.P. failed to comply with the FLSA in compensating maintenance workers for time
that they worked in responding to a call while "on-call". The Defendants have
filed an answer to the Amended Complaint denying the substantive allegations.
Discovery is currently underway.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits:
S-K Reference
Number Description
Exhibit 3.1 Certificate of Limited
Partnership, as amended to date
(Exhibit 3 to the Registrant's Annual
Report on Form 10-K for the year ended
December 31, 1991, is incorporated
herein by reference).
Exhibit 3.2 Agreement of Limited Partnership,
incorporated by reference to the
Registration Statement of the
Registrant (File No. 2-72384) filed
April 23, 1981, as amended to date.
Exhibit 3.3 Fee Owner's Limited Partnership
Agreement dated November 14, 1990
(incorporated by reference to the 1990
Annual Report).
Exhibit 10.33* Purchase and Sale contract
between Consolidated Capital Equity
Partner, LP, a California limited
partnership and Cash Investments of El
Paso, LLC, a Texas limited liability
company dated December 8, 2003.
Exhibit 10.34* Assignment of purchase and sale
contract between Consolidated
Capital Equity Partners, LP, a
California limited partnership and
CCIP Silverado, LP, a Delaware
limited partnership dated December
8, 2003.
Exhibit 10.35* Reinstatement and first
amendment to purchase and sale
contract by and between CCIP
Silverado, LP, a Delaware limited
partnership, assignee of Consolidated
Capital Equity Partners, LP, a
California limited liability
partnership,and Cash Investments of
El Paso, LLC, a Texas limited
liability company and EPT San Mateo
Apartments, LP, a Texas limited
liability partnership, assignee of
original purchaser dated
February 6, 2004.
Exhibit 31.1 Certification of equivalent of
Chief Executive Officer pursuant to
Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 31.2 Certification of equivalent of
Chief Financial Officer pursuant to
Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted
Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 32.1 Certification Pursuant to 18
U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
* Schedules and supplemental materials to the exhibit filed
herewith have been omitted but will be provided to the
Securities and Exchange Commission upon request.
b) Reports on Form 8-K filed during the quarter ended March 31,
2004:
None filed during the quarter ended March 31, 2004.
SIGNATURES
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, thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President
and Chief Accounting Officer
Date: May 13, 2004
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Institutional Properties;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 13, 2004
/s/Martha L. Long
Martha L. Long
Senior Vice President of ConCap
Equities, Inc., equivalent of the
chief executive officer of the
Partnership
Exhibit 31.2
CERTIFICATION
I, Thomas M. Herzog, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Institutional Properties;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
Date: May 13, 2004
/s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President and Chief
Accounting Officer of ConCap
Equities, Inc., equivalent of
the chief financial officer of
the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Consolidated Capital
Institutional Properties (the "Partnership"), for the quarterly period ended
March 31, 2004 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive
officer of the Partnership, and Thomas M. Herzog, as the equivalent of the chief
financial officer of the Partnership, each hereby certifies, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Martha L. Long
Name: Martha L. Long
Date: May 13, 2004
/s/Thomas M. Herzog
Name: Thomas M. Herzog
Date: May 13, 2004
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 10.33
PURCHASE AND SALE CONTRACT
BETWEEN
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.,
a California limited partnership
AS SELLER
AND
CASH INVESTMENTS OF EL PASO, LLC,
a Texas limited liability company
AS PURCHASER
SILVERADO APARTMENTS
TABLE OF CONTENTS
Page(s)
ARTICLE 1 DEFINED TERMS......................................................1
ARTICLE 2 PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT........................6
2.1 Purchase and Sale................................................6
2.2 Purchase Price and Deposit.......................................6
2.3 Escrow Provisions Regarding Deposit..............................6
ARTICLE 3 FEASIBILITY PERIOD.................................................8
3.1 Feasibility Period...............................................8
3.2 Expiration of Feasibility Period.................................8
3.3 Conduct of Investigation.........................................9
3.4 Purchaser Indemnification........................................9
3.5 Property Materials..............................................10
3.6 Property Contracts..............................................10
ARTICLE 4 TITLE.............................................................11
4.1 Title Documents.................................................11
4.2 Survey..........................................................11
4.3 Objection and Response Process..................................11
4.4 Permitted Exceptions............................................12
4.5 Assumed Encumbrances............................................12
ARTICLE 5 CLOSING...........................................................14
5.1 Closing Date....................................................14
5.2 Seller Closing Deliveries.......................................14
5.3 Purchaser Closing Deliveries....................................15
5.4 Closing Prorations and Adjustments..............................16
5.5 Post Closing Adjustments........................................19
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER............19
6.1 Seller's Representations........................................19
6.2 AS-IS...........................................................20
6.3 Survival of Seller's Representations............................21
6.4 Definition of Seller's Knowledge................................21
6.5 Representations And Warranties Of Purchaser.....................22
ARTICLE 7 OPERATION OF THE PROPERTY.........................................22
7.1 Leases and Property Contracts...................................22
7.2 General Operation of Property...................................23
7.3 Liens...........................................................23
ARTICLE 8 CONDITIONS PRECEDENT TO CLOSING...................................23
8.1 Purchaser's Conditions to Closing...............................23
8.2 ................................................................24
ARTICLE 9 BROKERAGE.........................................................24
9.1 Indemnity.......................................................24
9.2 Survival........................................................24
9.3 Broker Signature Page...........................................24
9.4 Texas Real Estate License Act...................................25
ARTICLE 10 DEFAULTS AND REMEDIES............................................25
10.1 Purchaser Default...............................................25
10.2 Seller Default..................................................25
ARTICLE 11 RISK OF LOSS OR CASUALTY.........................................26
11.1 Major Damage....................................................26
11.2 Minor Damage....................................................26
11.3 Repairs.........................................................26
ARTICLE 12 EMINENT DOMAIN...................................................27
12.1 Eminent Domain..................................................27
ARTICLE 13 MISCELLANEOUS....................................................27
13.1 Binding Effect of Contract......................................27
13.2 Exhibits And Schedules..........................................27
13.3 Assignability...................................................27
13.4 Binding Effect..................................................27
13.5 Captions........................................................27
13.6 Number And Gender Of Words......................................28
13.7 Notices.........................................................28
13.8 Governing Law And Venue.........................................29
13.9 Entire Agreement................................................30
13.10 Amendments......................................................30
13.11 Severability....................................................30
13.12 Multiple Counterparts/Facsimile Signatures......................30
13.13 Construction....................................................30
13.14 Confidentiality.................................................30
13.15 Time Of The Essence.............................................31
13.16 Waiver..........................................................31
13.17 Attorneys Fees..................................................31
13.18 Time Periods....................................................31
13.19 1031 Exchange...................................................31
13.20 No Personal Liability of Officers, Trustees or directors of
Seller's Partners.........................................................32
13.21 No Personal Liability of Officers, Trustees or directors of
Purchaser's Partners......................................................32
13.22 No Exclusive Negotiations.......................................32
13.23 ADA Disclosure..................................................32
13.24 No Recording....................................................32
13.25 Relationship of Parties.........................................32
13.26 Dispute Resolution..............................................33
13.27 AIMCO Marks.....................................................33
13.28 Non-Solicitation of Employees...................................33
13.29 Survival........................................................33
13.29 Multiple Purchasers.............................................33
ARTICLE 14 LEAD-BASED PAINT DISCLOSURE......................................34
14.1 Disclosure......................................................34
14.2 Consent Agreement...............................................34
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT ("Purchase Contract") is made and entered
into as of the 8th day of December, 2003 (the "Effective Date") by and between
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P., a California limited partnership,
having an address at 4582 South Ulster Street Parkway, Suite 1100, Denver,
Colorado 80237 ("Seller"), and CASH INVESTMENTS OF EL PASO, LLC, a Texas limited
liability company, having a principal address at 8201 Lockheed, Spectrum
Building, El Paso, Texas 79925 ("Purchaser").
NOW, THEREFORE, in consideration of mutual covenants set forth herein,
Seller and Purchaser hereby agree as follows:
RECITALS
A.....Seller owns the real estate located in El Paso County, Texas, as
more particularly described in Exhibit A attached hereto and made a part hereof,
and the improvements thereon, commonly known as Silverado Apartments.
B.....Purchaser desires to purchase, and Seller desires to sell, such
land, improvements and certain associated property, on the terms and conditions
set forth below.
ARTICLE 1...
DEFINED TERMS
Unless otherwise defined herein, any term with its initial letter
capitalized in this Contract shall have the meaning set forth in this ARTICLE 1.
1.1.1 ....."ADA" shall have the meaning set forth in Section 13.22.
1.1.2 ....."Additional Deposit" shall have the meaning set forth in
Section 2.2.2.
1.1.3 ....."AIMCO" shall have the meaning set forth in Section 14.2.
1.1.4 ....."AIMCO Marks" means all words, phrases, slogans, materials, software,
proprietary systems, trade secrets, proprietary information and lists, and other
intellectual property owned or used by Seller, the Property Manager, or AIMCO in
the marketing, operation or use of the Property (or in the marketing, operation
or use of any other properties managed by the Property Manager or owned by AIMCO
or an affiliate of either Property Manager or AIMCO).
1.1.5 ....."Assumed Deed of Trust" shall have the meaning set forth in Section
4.5.1.
1.1.6 ....."Assumed Encumbrances" shall have the meaning set forth in Section
4.5.1.
1.1.7 ....."Assumed Loan Documents" shall have the meaning set forth in Section
4.5.1.
1.1.8 ....."Assumption Guidelines" shall mean the Lender's requirements and
conditions to obtaining its approval and consent to the assumption by Purchaser
of the Existing Financing (and to the release of Seller from liability
thereunder) at the Closing, as provided to Purchaser and Seller prior to the
expiration of the Feasibility Period.
1.1.9 ....."Broker" [Intentionally Omitted]..
1.1.10 ...."Business Day" means any day other than a Saturday or Sunday or
Federal holiday or legal holiday in the States of Colorado and State of Texas.
1.1.11 ...."Closing" means the consummation of the purchase and sale and related
transactions contemplated by this Contract in accordance with the terms and
conditions of this Contract.
1.1.12 ...."Closing Date" means the date on which date the Closing of the
conveyance of the Property is required to be held pursuant to Section 5.1.
1.1.13 ...."Code" shall have the meaning set forth in Section 2.3.6.
1.1.14 ...."Consent Contract" shall have the meaning set forth in
Section 14.2.
1.1.15 ...."Consultants" shall have the meaning set forth in Section 3.1.
1.1.16 ...."Damage Notice" shall have the meaning set forth in Section 11.1.
1.1.17 ...."Deed" shall have the meaning set forth in Section 5.2.1.
1.1.18 ...."Deposit" means, to the extent actually deposited by Purchaser with
Escrow Agent, the Initial Deposit and the Additional Deposit.
1.1.19 ...."Escrow Agent" shall have the meaning set forth in Section 2.2.1.
1.1.20 ...."Excluded Permits" means those Permits which, under applicable law,
are nontransferable and such other Permits, if any, as may be designated as
Excluded Permits on Schedule 1.1.20.
1.1.21 ...."Feasibility Period" shall have the meaning set forth in
Section 3.1.
1.1.22 ...."FHA" shall have the meaning set forth in Section 13.22.
1.1.23 ...."Final Response Deadline" shall have the meaning set forth in
Section 4.3.
1.1.24 ...."Fixtures and Tangible Personal Property" means all fixtures,
furniture, furnishings, fittings, equipment, machinery, apparatus, appliances
and other articles of tangible personal property located on the Land or in the
Improvements as of the Effective Date and used or usable in connection with the
occupation or operation of all or any part of the Property, but only to the
extent transferable. The term "Fixtures and Tangible Personal Property" does not
include (a) equipment leased by Seller and the interest of Seller in any
equipment provided to the Property for use, but not owned or leased by Seller,
or (b) property owned or leased by any Tenant or guest, employee or other person
furnishing goods or services to the Property, or (c) property and equipment
owned by Seller, which in the ordinary course of business of the Property is not
used exclusively for the business, operation or management of the Property, or
(d) the property and equipment, if any, expressly identified in Schedule 1.1.24.
1.1.25 ...."General Assignment" shall have the meaning set forth in
Section 5.2.3.
1.1.26 ...."Good Funds" shall have the meaning set forth in Section 2.2.1.
1.1.27 ...."Improvements" means all buildings and improvements located on
the Land taken "as is."
1.1.28 ...."Independent Contract Consideration" shall have the meaning set
forhtin section 2.2.3.
1.1.29 ...."Initial Deposit" shall have the meaning set forth in
Section 2.2.1.
1.1.30 ...."Land" means all of those certain tracts of land located in the State
of Texas described on Exhibit A, and all rights, privileges and appurtenances
pertaining thereto.
1.1.31 ...."Lease(s)" means the interest of Seller in and to all leases,
subleases and other occupancy contracts, whether or not of record, which provide
for the use or occupancy of space or facilities on or relating to the Property
and which are in force as of the Closing Date for the applicable Property.
1.1.32 ...."Leases Assignment" shall have the meaning set forth in
Section 5.2.4.
1.1.33 ...."Lender" shall have the meaning set forth in Section 4.5.1.
1.1.34 ...."Lender's Assumption Fees" shall have the meaning set forth in
Section 4.5.3.
1.1.35 ...."Loan" shall have the meaning set forth in Section 4.5.1.
1.1.36 ...."Loan Assumption and Release" shall have the meaning set forth in
Section 4.5.2.
1.1.37 ...."Loan Balance" shall have the meaning set forth in Section 2.2.3.
1.1.38 ...."Loan Payoff" shall have the meaning set forth in Section 4.5.2.
1.1.39 ...."Losses" shall have the meaning set forth in Section 3.4.1.
1.1.40 ...."Materials" shall have the meaning set forth in Section 3.5.
1.1.41 ...."Miscellaneous Property Assets" means all contract rights, leases,
concessions, warranties, plans, drawings and other items of intangible personal
property relating to the ownership or operation of the Property and owned by
Seller, excluding, however, (a) receivables, (b) Property Contracts, (c) Leases,
(d) Permits, (e) cash or other funds, whether in petty cash or house "banks," or
on deposit in bank accounts or in transit for deposit, (f) refunds, rebates or
other claims, or any interest thereon, for periods or events occurring prior to
the Closing Date, (g) utility and similar deposits, (h) insurance or other
prepaid items, (i) Seller's proprietary books and records, or (j) any right,
title or interest in or to the AIMCO Marks. The term "Miscellaneous Property
Assets" also shall include all of Seller's rights, if any, in and to the name
"Silverado Apartments" as it relates solely to use in connection with the
Property (and not with respect to any other property owned or managed by Seller,
Property Manager, AIMCO, or their respective affiliates).
1.1.42 ...."Note" shall have the meaning set forth in Section 4.5.1.
1.1.43 ...."Objection Deadline" shall have the meaning set forth in
Section 4.3.
1.1.44 ...."Objection Notice" shall have the meaning set forth in
Section 4.3.
1.1.45 ...."Objections" shall have the meaning set forth in Section 4.3.
1.1.46 ...."Permits" means all licenses and permits granted by any governmental
authority having jurisdiction over the Property owned by Seller and required in
order to own and operate the Property.
1.1.47 ...."Permitted Exceptions" shall have the meaning set forth in Section
4.4.
1.1.48 ...."Property" means (a) the Land and Improvements and all rights of
Seller, if any, in and to all of the easements, rights, privileges, and
appurtenances belonging or in any way appertaining to the Land and Improvements,
(b) the right, if any and only to the extent transferable, of Seller in the
Property Contracts, Leases, Permits (other than Excluded Permits), and the
Fixtures and Tangible Personal Property, and (c) the Miscellaneous Property
Assets owned by Seller which are located on the Property and used in its
operation.
1.1.49 ...."Property Contracts" means all purchase orders, maintenance, service,
or utility contracts and similar contracts, excluding Leases, which relate to
the ownership, maintenance, construction or repair and/or operation of the
Property, but only to the extent the assignment of such contract to Purchaser is
permitted pursuant to the express terms of such contract, and not including (a)
any national contracts entered into by Seller, Property Manager, or AIMCO with
respect to the Property (i) which terminate automatically upon transfer of the
Property by Seller, or (ii) which Seller elects to terminate with respect to the
Property effective as of the Closing Date or which Purchaser does not accept
assignment of, or (b) any property management contract for the Property.
1.1.50 ...."Property Contracts Notice" shall have the meaning set forth in
Section 3.6.
1.1.51 ...."Property Manager" means the current property manager of the
Property.
1.1.52 ...."Proration Schedule" shall have the meaning set forth in
Section 5.4.1.
1.1.53 ...."Purchase Price" means the consideration to be paid by Purchaser to
Seller for the purchase of the Property pursuant to Section 2.2.
1.1.54 ...."Regional Property Manager" shall have the meaning set forth in
Section 6.4.
1.1.55 ...."Remediation" shall have the meaning set forth in Section 14.2.
1.1.56 ...."Required Loan Fund Amounts" shall have the meaning set forth in
Section 4.5.3.
1.1.57 ...."Response Deadline" shall have the meaning set forth in
Section 4.3.
1.1.58 ...."Response Notice" shall have the meaning set forth in Section 4.3.
1.1.59 ...."Seller's Indemnified Parties" shall have the meaning set forth
in Section 3.4.1
1.1.60 ...."Seller's Representations" shall have the meaning set forth in
Section 6.1.
1.1.61 ...."Survey" shall have the meaning ascribed thereto in Section 4.2.
1.1.62 ...."Survival Period" shall have the meaning set forth in Section 6.3.
1.1.63 ...."Survival Provisions" shall have the meaning set forth in Section
13.28.
1.1.64 ...."Tenant" means any person or entity entitled to occupy any portion of
the Property under a Lease.
1.1.65 ...."Tenant Deposits" means all security deposits, prepaid rentals,
cleaning fees and other refundable deposits and fees collected from Tenants,
plus any interest accrued thereon, paid by Tenants to Seller pursuant to the
Leases. Tenant deposits shall not included any non-refundable deposits or fees
paid by Tenants to Seller, either pursuant to the Leases or otherwise.
1.1.66 ...."Tenant Security Deposit Balance" shall have the meaning set forth in
Section 5.4.6.2.
1.1.67 ...."Terminated Contracts" shall have the meaning set forth in Section
3.6.
1.1.68 ...."Testing" shall have the meaning set forth in Section 14.2.
1.1.69 ...."Third Party Reports" means any reports, studies or other information
prepared or compiled for Purchaser by an Consultant or other third party in
connection with Purchaser's investigation of the Property.
1.1.70 ...."Title Commitment" shall have the meaning ascribed thereto in Section
4.1.
1.1.71 ...."Title Documents" shall have the meaning set forth in Section 4.1.
1.1.72 ...."Title Insurer" shall have the meaning set forth in Section 2.2.1.
1.1.73 ...."Title Policy" shall have the meaning set forth in Section 4.1.
1.1.74 ...."Uncollected Rents" shall have the meaning set forth in Section
5.4.6.1.
1.1.75 ...."Vendor Terminations" shall have the meaning set forth in Section
5.2.5.
ARTICLE 2...
PURCHASE AND SALE, PURCHASE PRICE & DEPOSIT
2.1 Purchase and Sale. Seller agrees to sell and convey the Property to
Purchaser and Purchaser agrees to purchase the Property from Seller, all in
accordance with the terms and conditions set forth in this Contract.
2.2 Purchase Price and Deposit. The total purchase price ("Purchase Price") for
the Property shall be $6,550,000.00, which shall be paid by Purchaser, as
follows:
2.2.1 .....Not later than 1 Business Day following the Effective Date, Purchaser
shall deliver to Stewart Title Guaranty Company, c/o Wendy Howell, National
Commercial Closing Specialist, 1980 Post Oak Boulevard, Suite 610, Houston,
Texas 77056, (800) 729-1906 ("Escrow Agent" or "Title Insurer") a deposit (the
"Deposit") of $64,500.00 in cash or other immediately available funds ("Good
Funds"). The Initial Deposit shall be held and disbursed in accordance with the
escrow provisions set forth in Section 2.3.
2.2.2 .....On the day that the Feasibility Period expires, Purchaser shall
deliver to Escrow Agent an additional deposit (the "Additional Deposit") of
$64,500.00 by wire transfer of Good Funds. The Additional Deposit shall be held
and disbursed in accordance with the escrow provisions set forth in Section 2.3.
2.2.3 .....In addition to the Deposit, Seller and Purchaser agree that the
amount of One Hundred and No/100 Dollars ($100.00) shall be paid by Purchaser to
Seller concurrently with the deposit into escrow of the Deposit, as
consideration for Seller's execution and delivery of this Purchase Contract (the
"Independent Contract Consideration"). The Independent Contract Consideration is
independent of any other consideration or payment provided for in this Purchase
Contract and, notwithstanding anything to the contrary herein, is non-refundable
in all events.
2.2.4 .....At the Closing, subject to Purchaser's obligations under Section 4.5,
Purchaser shall receive a credit against the Purchase Price in the amount of the
outstanding principal balance of the Note, together with all accrued but unpaid
interest (if any) thereon, as of the Closing Date (the "Loan Balance") to the
extent that the Loan Assumption and Release occurs at the Closing.
2.2.5 .....The balance of the Purchase Price for the Property shall be paid to
and received by Escrow Agent in Good Funds no later than 12:00 a.m. (Houston,
Texas, time) on the Closing Date (or such earlier time as required by Seller's
lender).
2.3 Escrow Provisions Regarding Deposit.
2.3.1 .....Escrow Agent shall hold the Deposit and make delivery of the Deposit
to the party entitled thereto under the terms of this Contract. Escrow Agent
shall invest the Deposit in such short-term, high-grade securities,
interest-bearing bank accounts, money market funds or accounts, bank
certificates of deposit or bank repurchase contracts as Escrow Agent, in its
discretion, deems suitable, and all interest and income thereon shall become
part of the Deposit and shall be remitted to the party entitled to the Deposit
pursuant to this Contract.
2.3.2 .....Escrow Agent shall hold the Deposit until the earlier occurrence of
(i) the Closing Date, at which time the Deposit shall be applied against the
Purchase Price, or (ii) the date on which Escrow Agent shall be authorized to
disburse the Deposit as set forth in Section 2.3.3. The tax identification
numbers of the parties shall be furnished to Escrow Agent upon request.
2.3.3 .....If the Deposit has not been released earlier in accordance with
Section 2.3.2, and either party makes a written demand upon Escrow Agent for
payment of the Deposit, Escrow Agent shall give written notice to the other
party of such demand. If Escrow Agent does not receive a written objection from
the other party to the proposed payment within 5 Business Days after the giving
of such notice, Escrow Agent is hereby authorized to make such payment (subject
to Purchaser's obligation under Section 3.5.2 to return all Third Party Reports
and information and Materials provided to Purchaser as a pre-condition to the
return of the Deposit to Purchaser). If Escrow Agent does receive such written
objection within such 5-Business Day period, Escrow Agent shall continue to hold
such amount until otherwise directed by written instructions from the parties to
this Contract or a final judgment or arbitrator's decision. However, Escrow
Agent shall have the right at any time to deposit the Deposit and interest
thereon, if any, with a court of competent jurisdiction in the state in which
the Property is located. Escrow Agent shall give written notice of such deposit
to Seller and Purchaser. Upon such deposit, Escrow Agent shall be relieved and
discharged of all further obligations and responsibilities hereunder.
2.3.4 .....The parties acknowledge that Escrow Agent is acting solely as a
stakeholder at their request and for their convenience, that Escrow Agent shall
not be deemed to be the agent of either of the parties for any act or omission
on its part unless taken or suffered in bad faith in willful disregard of this
Contract or involving gross negligence or illegal acts. Seller and Purchaser
jointly and severally shall indemnify and hold Escrow Agent harmless from and
against all costs, claims and expenses, including reasonable attorney's fees,
incurred in connection with the performance of Escrow Agent's duties hereunder,
except with respect to actions or omissions taken or suffered by Escrow Agent in
bad faith, in willful disregard of this Contract or involving gross negligence
on the part of the Escrow Agent.
2.3.5 .....The parties shall deliver to Escrow Agent an executed copy of this
Contract, which shall constitute the sole instructions to Escrow Agent. Escrow
Agent shall execute the signature page for Escrow Agent attached hereto with
respect to the provisions of this Section 2.3; provided, however, that (a)
Escrow Agent's signature hereon shall not be a prerequisite to the binding
nature of this Contract on Purchaser and Seller, and the same shall become fully
effective upon execution by Purchaser and Seller, and (b) the signature of
Escrow Agent will not be necessary to amend any provision of this Contract other
than this Section 2.3.
2.3.6 .....Escrow Agent, as the person responsible for closing the transaction
within the meaning of Section 6045(e)(2)(A) of the Internal Revenue Code of
1986, as amended (the "Code"), shall file all necessary information, reports,
returns, and statements regarding the transaction required by the Code
including, but not limited to, the tax reports required pursuant to Section 6045
of the Code. Further, Escrow Agent agrees to indemnify and hold Purchaser,
Seller, and their respective attorneys harmless from and against any Losses
resulting from Escrow Agent's failure to file the reports Escrow Agent is
required to file pursuant to this section.
2.3.7 .....The provisions of this Section 2.3 shall survive the termination of
this Contract, and if not so terminated, the Closing and delivery of the Deed to
Purchaser.
ARTICLE 3...
FEASIBILITY PERIOD
3.1 Feasibility Period. Subject to the terms of Section 3.3 and 3.4 and the
right of Tenants under the Leases, from the Effective Date to and including the
date which is 30 days after the Effective Date (the "Feasibility Period"),
Purchaser, and its agents, contractors, engineers, surveyors, attorneys, and
employees (collectively, "Consultants") shall have the right from time to time
to enter onto the Property:
3.1.1 .....To conduct and make any and all customary studies, tests,
examinations, inquiries, and inspections, or investigations (collectively, the
"Inspections") of or concerning the Property (including, without limitation,
engineering and feasibility studies, evaluation of drainage and flood plain,
soil tests for bearing capacity and percolation and surveys, including
topographical surveys);
3.1.2 .....To confirm any and all matters which Purchaser may reasonably desire
to confirm with respect to the Property;
3.1.3 .....To ascertain and confirm the suitability of the Property for
Purchaser's intended use of the Property; and
3.1.4 .....To review the Materials at Purchaser's sole cost and expense.
3.2 Expiration of Feasibility Period. If the results of any of the matters
referred to in Section 3.1 appear unsatisfactory to Purchaser for any reason or
if Purchaser elects not to proceed with the transaction contemplated by this
Contract for any other reason, or for no reason whatsoever, in Purchaser's sole
and absolute discretion, then Purchaser shall have the right to terminate this
Contract by giving written notice to that effect to Seller and Escrow Agent on
or before 6:00 p.m. (in the time zone in which the Escrow Agent is located) on
the date of expiration of the Feasibility Period. If Purchaser exercises such
right to terminate, this Contract shall terminate and be of no further force and
effect, subject to and except for Purchaser's liability pursuant to Section 3.3
and any other provision of this Contract which survives such termination, and
Escrow Agent shall forthwith return the Initial Deposit to Purchaser (subject to
Purchaser's obligation under Section 3.5.2 to return all Third-Party Reports and
information and Materials provided to Purchaser as a pre-condition to the return
of the Initial Deposit). If Purchaser fails to provide Seller with written
notice of termination prior to the expiration of the Feasibility Period in
strict accordance with the notice provisions of this Contract, Purchaser's right
to terminate under this Section 3.2 shall be permanently waived and this
Contract shall remain in full force and effect, the Deposit (including both the
Initial Deposit and, when delivered, the Additional Deposit) shall be
nonrefundable, and Purchaser's obligation to purchase the Property shall be
non-contingent and unconditional except only for satisfaction of the conditions
expressly stated in Section 8.1, Section 4.3 and Section 4.5.4.
3.3 Conduct of Investigation. Purchaser shall not permit any mechanic's or
materialmen's liens or any other liens to attach to the Property by reason of
the performance of any work or the purchase of any materials by Purchaser or any
other party in connection with any Inspections conducted by or for Purchaser.
Purchaser shall give notice to Seller a reasonable time prior to entry onto the
Property and shall permit Seller to have a representative present during all
Inspections conducted at the Property. All information made available by Seller
to Purchaser in accordance with this Contract or obtained by Purchaser in the
course of its Inspections shall be treated as confidential information by
Purchaser, and, prior to the purchase of the Property by Purchaser, Purchaser
shall use its best efforts to prevent its Consultants from divulging such
information to any unrelated third parties except as reasonably necessary to
third parties engaged by Purchaser for the limited purpose of analyzing and
investigating such information for the purpose of consummating the transaction
contemplated by this Contract. The provisions of this Section 3.3 shall survive
the termination of this Contract, and if not so terminated shall survive (except
for the confidentiality provisions of this Section 3.3) the Closing and delivery
of the Deed to Purchaser.
3.4 Purchaser Indemnification.
3.4.1 .....Purchaser shall indemnify, hold harmless and, if requested by Seller
(in Seller's sole discretion), defend (with counsel approved by Seller) Seller,
together with Seller's affiliates, parent and subsidiary entities, successors,
assigns, partners, managers, members, employees, officers, directors, trustees,
shareholders, counsel, representatives, agents, Property Manager, Regional
Property Manager, and AIMCO (collectively, including Seller, "Seller's
Indemnified Parties"), from and against any and all damages, mechanics' liens,
liabilities, losses, demands, actions, causes of action, claims, costs and
expenses (including reasonable attorneys' fees, including the cost of in-house
counsel and appeals) (collectively, "Losses") arising from or related to
Purchaser's or its Consultant's entry onto the Property and not caused directly
by Seller or its agents (it being understood and agreed that the grant of
consent to allow buyer's access to the Property shall not constitute such a
cause), and any Inspections or other matters performed by Purchaser with respect
to the Property during the Feasibility Period or otherwise.
3.4.2 .....Notwithstanding anything in this Contract to the contrary, Seller
shall have the right, without limitation, to disapprove any and all entries,
surveys, tests, investigations and other matters that in Seller's reasonable
judgment could result in any injury to the Property or breach of any contract,
or expose Seller to any Losses or violation of applicable law, or otherwise
adversely affect the Property or Seller's interest therein; provided, however,
Purchaser shall be permitted to conduct a Phase I environmental study of the
Property and, with the prior written consent of Seller, a Phase II environmental
study. Purchaser shall use best efforts to minimize disruption to Tenants in
connection with Purchaser's or its Consultants' activities pursuant to this
Section. No consent by the Seller to any such activity shall be deemed to
constitute a waiver by Seller or assumption of liability or risk by Seller.
Purchaser hereby agrees to restore, at Purchaser's sole cost and expense, the
Property to the same condition existing immediately prior to Purchaser's
exercise of its rights pursuant to this Article 3. Purchaser shall maintain and
cause its third party consultants to maintain (a) casualty insurance and
comprehensive public liability insurance with coverages of not less than
$1,000,000.00 for injury or death to any one person and $1,000,000.00 for injury
or death to more than one person and $500,000.00 with respect to property
damage, by water or otherwise, and (b) worker's compensation insurance for all
of their respective employees in accordance with the law of the state in which
the Property is located. Seller shall deliver proof of the insurance coverage
required pursuant to this Section 3.4.2 to Seller (in the form of a certificate
of insurance) prior to the earlier to occur of (i) Purchaser's or Purchaser's
Consultants' entry onto the Property, or (ii) the expiration of 5 days after the
Effective Date. The provisions of this Section 3.4 shall survive the termination
of this Contract, and if not so terminated, the Closing and delivery of the Deed
to Purchaser.
3.5 Property Materials.
Within 10 days after the Effective Date, and to the extent the same exist
and are in Seller's possession or reasonable control (subject to Section 3.5.2),
Seller agrees to make the documents set forth on Schedule 3.5 (the "Materials")
available at the Property for review and copying by Purchaser at Purchaser's
sole cost and expense. In the alternative, at Seller's option and within the
foregoing 10-day period, Seller may deliver some or all of the Materials to
Purchaser, or make the same available to Purchaser on a secure web site
(Purchaser agrees that any item to be delivered by Seller under this Contract
shall be deemed delivered to the extent available to Purchaser on such secured
web site). To the extent that Purchaser determines that any of the Materials
have not been made available or delivered to Purchaser pursuant to this Section
3.5.1, Purchaser shall notify Seller and Seller shall use commercially
reasonable efforts to deliver the same to Purchaser within 3 Business Days after
such notification is received by Seller.
Except as specifically set forth in Section 6.1, in providing such
information and Materials to Purchaser, Seller makes no representation or
warranty, express, written, oral, statutory, or implied, and all such
representations and warranties are hereby expressly excluded and disclaimed. Any
information and Materials provided by Seller to Purchaser under the terms of
this Contract is for informational purposes only and shall be returned by
Purchaser to Seller as a condition to return of the Deposit to Purchaser (if
Purchaser is otherwise entitled to such Deposit pursuant to the terms of this
Contract) if this Contract is terminated for any reason. Except for the Seller's
Representations, Purchaser shall not in any way be entitled to rely upon the
accuracy of such information and Materials. Purchaser recognizes and agrees that
the Materials and other documents and information delivered or made available by
Seller pursuant to this Contract may not be complete or constitute all of such
documents which are in Seller's possession or control, but are those that are
readily available to Seller after reasonable inquiry to ascertain their
availability. Purchaser understands that, although Seller will use commercially
reasonable efforts to locate and make available the Materials and other
documents required to be delivered or made available by Seller pursuant to this
Contract, Purchaser will not rely on such Materials or other documents as being
a complete and accurate source of information with respect to the Property, and
except for the Seller's Representations, will instead in all instances rely
exclusively on its own Inspections and Consultants with respect to all matters
which it deems relevant to its decision to acquire, own and operate the
Property.
The provisions of this Section 3.5 shall survive the Closing and delivery
of the Deed to Purchaser.
3.6 Property Contracts. On or before the expiration of the Feasibility Period,
Purchaser may deliver written notice to Seller (the "Property Contracts Notice")
specifying any Property Contracts with respect to which Purchaser desires to
have Seller deliver notices of termination at the Closing (the "Terminated
Contracts"); provided that (a) the effective date of such termination after
Closing shall be subject to the express terms of such Terminated Contracts, (b)
if any such Property Contract cannot by its terms be terminated, it shall be
assumed by Purchaser and not be a Terminated Contract, and (c) to the extent
that any such Terminated Contract requires payment of a penalty or premium for
cancellation, Purchaser shall be solely responsible for the payment of any such
cancellation fees or penalties. If Purchaser fails to deliver the Property
Contracts Notice on or before the expiration of the Feasibility Period, there
shall be no Terminated Contracts and Purchaser shall assume all Property
Contracts at the Closing.
ARTICLE 4...
TITLE
4.1 Title Documents. Within 10 calendar days after the Effective Date, Seller
shall cause to be delivered to Purchaser a standard form commitment for title
insurance ("Title Commitment") for the Property in an amount equal to the
Purchase Price from Title Insurer for an owner's title insurance policy (the
"Title Policy"), together with copies of all instruments identified as
exceptions therein (together with the Title Commitment, referred to herein as
the "Title Documents"). Seller shall be responsible only for payment of the
basic premium for the Title Policy to the extent of the insured amount of
$6,450,000. Purchaser shall be solely responsible for payment of all other
premium amounts and costs relating to procurement of the Title Commitment, the
Title Policy, and any requested amendments or endorsements.
4.2 Survey. Within 10 days after the Effective Date, Seller shall deliver to
Purchaser or make available at the Property the existing survey of the Property
(subject to Section 3.5.2) (the "Survey"). Purchaser, at Purchaser's sole cost
and expense, may cause to be prepared an update of the Survey, or if no survey
has been provided by Seller, a new survey for the Property (which shall
constitute the Survey for the purposes of this Contract), to be delivered to
Purchaser and Seller no later than 10 days after the later to occur of the
Effective Date or the date on which Purchaser receives notice from Seller that
it does not have an existing survey of the Property.
4.3 Objection and Response Process. On or before the date which is 10 days after
the date on which Purchaser receives or obtains the last of the Title Commitment
and the Survey (the "Objection Deadline"), Purchaser shall give written notice
(the "Objection Notice") to the attorneys for Seller of any matter set forth in
the Title Documents or the Survey to which Purchaser objects (the "Objections").
If Purchaser fails to tender an Objection Notice on or before the Objection
Deadline, Purchaser shall be deemed to have approved and irrevocably waived any
objections to any matters covered by the Title Documents and the Survey. On or
before 5 Business Days after Seller's receipt of the Objection Notice (the
"Response Deadline"), Seller may, in Seller's sole discretion, give Purchaser
notice (the "Response Notice") of those Objections which Seller is willing to
cure, if any. Seller shall be entitled to reasonable adjournments of the Closing
Date to cure the Objections. If Seller fails to deliver a Response Notice by the
Response Deadline, Seller shall be deemed to have elected not to cure or
otherwise resolve any matter set forth in the Objection Notice. If Purchaser is
dissatisfied with the Response Notice, Purchaser may, as its exclusive remedy,
elect by written notice given to Seller on or before the expiration of 5
Business Days following the Response Deadline (the "Final Response Deadline"),
either (a) to accept the Title Documents and Survey with resolution, if any, of
the Objections as set forth in the Response Notice (or if no Response Notice is
tendered, without any resolution of the Objections) and without any reduction or
abatement of the Purchase Price, or (b) to terminate this Contract, in which
event the Initial Deposit shall be returned to Purchaser. If Purchaser fails to
give notice to terminate this Contract on or before the Final Response Deadline,
Purchaser shall be deemed to have elected to approve and irrevocably waived any
objections to any matters covered by the Title Documents and the Survey, subject
only to resolution, if any, of the Objections as set forth in the Response
Notice (or if no Response Notice is tendered, without any resolution of the
Objections).
4.4 Permitted Exceptions. The Deed delivered pursuant to this Contract shall be
subject to the following, all of which shall be deemed "Permitted Exceptions":
4.4.1 .....All matters shown in the Title Documents and the Survey, other than
(a) those Objections, if any, which Seller has agreed to cure pursuant to the
Response Notice under Section 4.3, (b) mechanics' liens and taxes due and
payable with respect to the period preceding Closing, (c) the standard exception
regarding the rights of parties in possession which shall be limited to those
parties in possession pursuant to the Leases, and (d) the standard exception
pertaining to taxes which shall be limited to taxes and assessments payable in
the year in which the Closing occurs and subsequent taxes and assessments;
4.4.2 .....All Leases;
4.4.3 .....The Assumed Encumbrances;
4.4.4 .....Applicable zoning and governmental regulations and ordinances; and
4.4.5 .....Any defects in or objections to title to the Property, or title
exceptions or encumbrances, arising by, through or under Purchaser.
4.5 Assumed Encumbrances.
4.5.1 .....Purchaser recognizes and agrees that, in connection with a loan (the
"Loan") made to Seller by GMAC Commercial Mortgage Corporation, a California
corporation (the "Lender"), the Property presently is encumbered by a
Multifamily Deed of Trust, Assignment of Rents and Security Agreement, dated as
of October 3, 2000 and recorded in Volume 3865, Page 635, Deed of Trust Records
of El Paso County, Texas (the "Assumed Deed of Trust") and certain other
security and related documents in connection with the Loan (collectively, the
"Assumed Encumbrances"). The Loan is evidenced by that certain that certain
Multifamily Note in the original principal amount of $3,525,000, dated as of
October 2, 2000, executed by Seller and payable to the order of the Lender (the
"Note", and together with the Assumed Deed of Trust, the Assumed Encumbrances
and any other documents executed by Seller in connection with the Loan, the
"Assumed Loan Documents"). The outstanding principal balance of the Note as of
the Effective Date is approximately $3,278,952.00. Monthly payments of principal
and interest under the Note presently are $29,200.00 (references made herein to
the Assumed Deed of Trust, the Assumed Encumbrances and the Assumed Loan
Documents shall be applicable to describe the documents referenced thereby
whether or not such are assumed by Purchaser pursuant to a Loan Assumption and
Release). Within 10 days after the Effective Date, Seller agrees that it will
make available to Purchaser (in the same manner in which Seller is permitted to
make the Materials available to Purchaser under Section 3.5.1) copies of the
Assumed Loan Documents (subject to Section 3.5.2).
4.5.2 .....Purchaser agrees to use diligent good faith best efforts to obtain
such authorizations as are necessary to allow, at Closing, both (a) Purchaser
shall assume Seller's obligations under the Note and all of the other Assumed
Loan Documents and accept title to the Property subject to the Assumed Deed of
Trust and the Assumed Encumbrances, and (b) the Lender shall release Seller, as
well as any guarantors and other obligated parties under the Assumed Loan
Documents, from all obligations under the Assumed Loan Documents (and any
related guarantees or letters of credit), including, without limitation, any
obligation to make payments of principal and interest under the Note
(collectively, the foregoing (a) and (b) referred to herein as the "Loan
Assumption and Release").
4.5.3 .....Purchaser further acknowledges that the Assumed Loan Documents
require the satisfaction by Purchaser of certain requirements as set forth
therein to allow for the Loan Assumption and Release, as set forth in the
Assumption Guidelines. Purchaser shall use commercially reasonable efforts to
promptly obtain the Assumption Guidelines and a schedule of all fees regarding
the Assumption and Release, a copy of which shall be obtained by Purchaser and
provided to Seller promptly upon Purchaser's receipt thereof, and to satisfy all
conditions of the requirements on Purchaser's part to be performed, as set forth
in the Assumption Guidelines. Purchaser, at its sole cost and expense and within
5 days after the Effective Date, shall make application to the Lender for the
Loan Assumption and Release and shall, within 15 days following the Effective
Date, satisfy the requirements set forth in the Assumption Guidelines and the
Assumed Loan Documents to allow for the Loan Assumption and Release. Purchaser
shall pay all fees and expenses (including, without limitation, all servicing
fees and charges, transfer fees, assumption fees and other fees to release
Seller of all liability under the Loan) imposed or charged by the Lender or its
counsel (such fees and expenses collectively being referred to as the "Lender's
Assumption Fees"), in connection with either the Loan Assumption and Release
(which obligation shall survive the termination of this Contract and the
Closing). Additionally, Purchaser shall be responsible for (a) replacing (and
increasing to the extent required by Lender) all reserves, impounds and other
accounts required to be maintained in connection with the Loan, and (b) funding
any additional reserves, impounds or accounts required by Lender to be
maintained by Purchaser in connection with the Loan after the Loan Assumption
and Release (the foregoing amounts in (a) and (b) collectively referred to
herein as the "Required Loan Fund Amounts"). Any existing reserves, impounds and
other accounts required to be replaced by Purchaser pursuant to the foregoing
sentence shall be released in Good Funds to Seller at the Closing. Purchaser
agrees promptly to deliver to the Lender all documents and information required
by the Assumed Loan Documents, and such other information or documentation as
the Lender reasonably may request, including, without limitation, financial
statements, income tax returns and other financial information for Purchaser and
any required guarantor. Seller agrees that it will cooperate with Purchaser and
Lender, at no cost or expense to Seller, in connection with Purchaser's
application to Lender for approval of the Loan Assumption and Release.
4.5.4 .....If, notwithstanding the timely delivery of such materials by
Purchaser and the satisfaction of the requirements of the Lender as set forth in
the Assumption Guidelines and Assumed Loan Documents, either (a) the Lender does
not consent to or allow the Loan Assumption and Release on or before the Closing
Date (including any extension thereof permitted by this Contract), or (b) such
consent is granted but the Loan Assumption and Release do not occur on or before
the Closing Date through no fault of the Purchaser, or (c) Lender modifies the
requirements of the Assumption Guidelines subsequent to the expiration of the
Feasibility Period, then Purchaser shall have no obligation to close the
purchase of the Property and this Purchase Contract shall automatically
terminate on or before 11:00 a.m. on the Closing Date, in which event the
Deposit shall be returned to Purchaser by the Escrow Agent (subject to
Purchaser's obligation under Section 3.5.2 to return all Third-Party Reports and
information and Materials provided to Purchaser as a pre-condition to the return
of the Deposit), and Seller and Purchaser shall evenly divide the cancellation
charges of the Escrow Agent and the Title Insurer, if any, and this Purchase
Contract shall automatically be of no further force and effect and neither party
shall have any further rights and obligations hereunder except as provided in
Section 3.4.
ARTICLE 5...
CLOSING
5.1 Closing Date. The Closing shall occur 30 days following the expiration of
the Feasibility Period (the "Closing Date") through an escrow with Escrow Agent,
whereby the Seller, Purchaser and their attorneys need not be physically present
at the Closing and may deliver documents by overnight air courier or other
means. Notwithstanding the foregoing to the contrary, Seller shall have the
option, by delivering written notice to Purchaser on or before 25 days after the
expiration of the Feasibility Period, to extend the Closing Date to the last
Business Day of the month in which the Closing Date otherwise would occur
pursuant to the preceding sentence. Further, the Closing Date may be extended
without penalty at the option of Seller to a date not later than 30 days
following the Closing Date specified in the first sentence of this paragraph
above (or, if applicable, as extended by Seller pursuant to the second sentence
of this paragraph) to satisfy a condition to be satisfied by Seller, or such
later date as is mutually acceptable to Seller and Purchaser.
5.2 Seller Closing Deliveries. No later than 1 Business Day prior to the Closing
Date, Seller shall deliver to Escrow Agent, each of the following items:
5.2.1 .....Special Warranty Deed (the "Deed") in the form attached as Exhibit B
to Purchaser, subject to the Permitted Exceptions.
5.2.2 .....A Bill of Sale in the form attached as Exhibit C.
5.2.3 .....A General Assignment in the form attached as Exhibit D (the "General
Assignment").
5.2.4 .....An Assignment of Leases and Security Deposits in the form attached as
Exhibit E (the "Leases Assignment").
5.2.5 .....A letter in the form attached hereto as Exhibit F, prepared by
Purchaser and countersigned by Seller to each of the vendors under the
Terminated Contracts informing them of the termination of such Terminated
Property Contract as of the Closing Date (subject to any delay in the
effectiveness of such termination pursuant to the express terms of each
applicable Terminated Contract) (the "Vendor Terminations").
5.2.6 .....A closing statement executed by Seller.
5.2.7 .....A title affidavit or at Seller's option an indemnity, as applicable,
in the customary form reasonably acceptable to Seller to enable Title Insurer to
delete the standard exceptions to the title insurance policy set forth in this
Contract (other than matters constituting any Permitted Exceptions and matters
which are to be completed or performed post-Closing) to be issued pursuant to
the Title Commitment; provided that such affidavit does not subject Seller to
any greater liability, or impose any additional obligations, other than as set
forth in this Contract; and
5.2.8 .....A certification of Seller's non-foreign status pursuant to Section
1445 of the Internal Revenue Code of 1986, as amended.
5.2.9 .....A rent roll for the Property certified by Seller, but limited to
Seller's knowledge, listing the name of each tenant, monthly base rent payable,
lease expiration date and unapplied security deposit as of the Closing Date.
5.2.10 ....Notification letters to all Tenants, executed by Seller in the form
attached hereto as Exhibit F.
5.2.11 ....Resolutions, certificates of good standing, and such other
organizational documents as Title Insurer shall reasonably require evidencing
Seller's authority to consummate this transaction.
5.2.12 ....Evidence that Seller's management agreement with the Property Manager
has been terminated effective as of the Closing Date.
5.3 Purchaser Closing Deliveries. No later than 1 Business Day prior to the
Closing Date (except for the balance of the Purchase Price which is to be
delivered at the time specified in Section 2.2.4), Purchaser shall deliver to
the Escrow Agent (for disbursement to Seller upon the Closing) the following
items with respect to the Property being conveyed at such Closing:
5.3.1 .....The full Purchase Price (with credit for the Deposit and the Loan
Balance), plus or minus the adjustments or prorations required by this Contract.
5.3.2 .....A title affidavit or at Purchaser's option an indemnity, as
applicable, in the customary form reasonably acceptable to Purchaser to enable
Title Insurer to delete the standard exceptions to the title insurance policy
set forth in this Contract (other than matters constituting any Permitted
Exceptions and matters which are to be completed or performed post-Closing) to
be issued pursuant to the Title Commitment; provided that such affidavit does
not subject Purchaser to any greater liability, or impose any additional
obligations, other than as set forth in this Contract.
5.3.3 .....Any declaration or other statement which may be required to be
submitted to the local assessor with respect to the terms of the sale of the
Property.
5.3.4 .....A closing statement executed by Purchaser.
5.3.5 .....A countersigned counterpart of the General Assignment.
5.3.6 .....A countersigned counterpart of the Leases Assignment.
5.3.7 .....Notification letters to all Tenants, executed by Purchaser in the
form attached hereto as Exhibit F.
5.3.8 .....The Vendor Terminations.
5.3.9 .....Any cancellation fees or penalties due to any vendor under any
Terminated Property Contract as a result of the termination thereof.
5.3.10 ....Resolutions, certificates of good standing, and such other
organizational documents as Title Insurer shall reasonably require evidencing
Purchaser's authority to consummate this transaction.
5.3.11 ....All documents, instruments, guaranties, Lender Fees, Required Loan
Fund Amounts, and other items or funds required by the Lender to cause the Loan
Assumption and Release.
5.3.12 ....Such other instruments, documents or certificates as are required to
be delivered by Purchaser to Seller in accordance with any of the other
provisions of this Contract.
5.4 Closing Prorations and Adjustments.
5.4.1 .....General. All normal and customarily proratable items, including,
without limitation, collected rents, operating expenses, personal property
taxes, other operating expenses and fees, shall be prorated as of the Closing
Date, Seller being charged or credited, as appropriate, for all of same
attributable to the period up to the Closing Date (and credited for any amounts
paid by Seller attributable to the period on or after the Closing Date, if
assumed by Purchaser) and Purchaser being responsible for, and credited or
charged, as the case may be, for all of same attributable to the period on and
after the Closing Date. Seller shall prepare a proration schedule (the
"Proration Schedule") of the adjustments described in this Section 5.4 prior to
Closing. Such adjustments shall be submitted to Purchaser for its approval
(which approval will not be unreasonably withheld or delayed) and then paid by
Purchaser to Seller (if the prorations result in a net credit to Seller) or by
Seller to Purchaser (if the prorations result in a net credit to Purchaser), by
increasing or reducing the cash to be paid by Purchaser at Closing.
5.4.2 .....Operating Expenses. All of the operating, maintenance, taxes (other
than real estate taxes, such as rental taxes), and other expenses incurred in
operating the Property that Seller customarily pays, and any other costs
incurred in the ordinary course of business for the management and operation of
the Property, shall be prorated on an accrual basis. Such adjustments shall be
submitted to Purchaser for its approval (which approval will not be unreasonably
withheld or delayed). Seller shall pay all such expenses that accrue prior to
Closing and Purchaser shall pay all such expenses that accrue from and after the
Closing Date.
5.4.3 .....Utilities. The final readings and final billings for utilities will
be made if possible as of the Closing Date, in which case Seller shall pay all
such bills as of the Closing Date and no proration shall be made at the Closing
with respect to utility bills. Otherwise, a proration shall be made based upon
the parties' reasonable good faith estimate and a readjustment made within 30
days after the Closing, if necessary. Seller shall be entitled to the return of
any deposit(s) posted by it with any utility company, and Seller shall notify
each utility company serving the Property to terminate Seller's account,
effective as of noon on the Closing Date.
5.4.4 .....Real Estate Taxes. Any real estate ad valorem or similar taxes for
the Property, or any installment of assessments payable in installments which
installment is payable in the calendar year of Closing, shall be prorated to the
date of Closing, based upon actual days involved. The proration of real property
taxes or installments of assessments shall be based upon the assessed valuation
and tax rate figures (assuming payment at the earliest time to allow for the
maximum possible discount) for the year in which the Closing occurs to the
extent the same are available; provided, that in the event that actual figures
(whether for the assessed value of the Property or for the tax rate) for the
year of Closing are not available at the Closing Date, the proration shall be
made using figures from the preceding year (assuming payment at the earliest
time to allow for the maximum possible discount). The proration of real property
taxes or installments of assessments shall be final and not subject to
re-adjustment after Closing.
5.4.5 .....Property Contracts. Purchaser shall assume at Closing the obligations
under the Property Contracts assumed by Purchaser, provided that any payments
under the Property Contracts have been prorated.
5.4.6 .....Leases.
5.4.6.1 ...All collected rent (whether fixed monthly rentals, additional
rentals, escalation rentals, retroactive rentals, operating cost pass-throughs
or other sums and charges payable by Tenants under the Leases), income and
expenses from any portion of the Property shall be prorated as of the Closing
Date (prorated for any partial month). Purchaser shall receive all collected
rent and income attributable to dates from and after the Closing Date. Seller
shall receive all collected rent and income attributable to dates prior to the
Closing Date. Notwithstanding the foregoing, no prorations shall be made in
relation to either (a) non-delinquent rents which have not been collected as of
the Closing Date, or (b) delinquent rents existing, if any, as of the Closing
Date (the foregoing (a) and (b) referred to herein as the "Uncollected Rents").
In adjusting for Uncollected Rents, no adjustments shall be made in Seller's
favor for rents which have accrued and are unpaid as of the Closing, but
Purchaser shall pay Seller such accrued Uncollected Rents as and when collected
by Purchaser; provided, however, that Purchaser shall first be entitled to apply
any rents collected from Tenants first to amounts owing to Purchaser and then to
Uncollected Rents owing to Seller. Purchaser agrees to bill Tenants of the
Property for all Uncollected Rents. After the Closing, Seller shall continue to
have the right, but not the obligation, in its own name, to demand payment of
and to collect Uncollected Rents owed to Seller by any Tenant, which right shall
include, without limitation, the right to continue or commence legal actions or
proceedings against any Tenant and the delivery of the Leases Assignment shall
not constitute a waiver by Seller of such right. Purchaser agrees to cooperate
with Seller at no additional expense to Purchaser in connection with all efforts
by Seller to collect such Uncollected Rents and to take the following steps,
whether before or after the Closing Date, to carry out the intention of the
foregoing, (i) the delivery to Seller, within 7 days after a written request, of
any relevant books and records (including, without limitation, rent statements,
receipted bills and copies of tenant checks used in payment of such rent), and
(ii) the execution of any and all consents or other documents; provided,
however, that Purchaser's obligation to cooperate with Seller pursuant to this
sentence shall not obligate Purchaser to terminate any Tenant lease with an
existing Tenant or evict any existing Tenant from the Property or file suit or
be a party to a suit against any Tenant or past Tenant.
5.4.6.2 ...At Closing, Purchaser shall receive a credit against the Purchase
Price in an amount equal to the unapplied balance of all cash (or cash
equivalent) Tenant Deposits, including, but not limited to, security, damage or
other deposits or required to be paid by any of the Tenants to secure their
respective obligations under the Leases, together, in all cases, with any
interest payable to the Tenants thereunder as may be required by their
respective Tenant Lease or state law (the "Tenant Security Deposit Balance").
Any cash (or cash equivalents) held by Seller which constitute the Tenant
Security Deposit Balance shall be retained by Seller in exchange for the
foregoing credit against the Purchase Price and shall not be transferred by
Seller pursuant to this Contract (or any of the documents delivered at Closing),
but the obligation with respect to the Tenant Security Deposit Balance
nonetheless shall be assumed by Purchaser. The Tenant Security Deposit Balance
shall not include any non-refundable deposits or fees paid by Tenants to Seller,
either pursuant to the Leases or otherwise. The Tenant Security Deposit Balance
shall not include any non-refundable deposits or fees paid by Tenants to Seller,
either pursuant to the Leases or otherwise.
5.4.6.3 ...With respect to operating expenses, taxes, utility charges, other
operating cost pass-throughs, retroactive rental escalations, sums or charges
payable by Tenants under the Tenant Leases, to the extent that Seller has
received as of the Closing payments allocable to periods subsequent to Closing,
the same shall be properly prorated with an adjustment in favor of Purchaser,
and Purchaser shall reserve a credit therefor at Closing. With respect to any
payments received by Purchaser after the Closing allocable to Seller prior to
Closing, Purchaser shall promptly pay the same to Seller.
5.4.7 .....Existing Loan. Seller shall be responsible for all principal required
to be paid under the terms of the Note prior to Closing, together with all
interest accrued under the Note prior to Closing, all of which may be a credit
against the Purchase Price as provided in Section 2.2.2. Purchaser shall be
responsible for the payment of all principal required to be paid from and after
Closing, together with all interest accruing under the Note from and after
Closing. Purchaser also shall be responsible for all Lender Fees and all other
fees, penalties, interest and other amounts due and owing from and after Closing
under the Assumed Loan Documents (including, without limitation, as a result of
the Loan Payoff, or, as applicable, the Loan Assumption and Release). As set
forth in Section 4.5.3, any existing reserves, impounds and other accounts
maintained in connection with the Loan and required to be replaced by Purchaser,
shall be released in Good Funds to Seller at the Closing.
5.4.8 .....Insurance. No proration shall be made in relation to insurance
premiums and insurance policies will not be assigned to Purchaser.
5.4.9 .....Employees. All of Seller's and Seller's manager's on-site employees
shall have their employment at the Property terminated by Seller as of the
Closing Date.
5.4.10 ....Closing Costs. Purchaser shall pay any transfer, sales, use, gross
receipts or similar taxes, the cost of recording any instruments required to
discharge any liens or encumbrances against the Property, any premiums or fees
required to be paid by Purchaser with respect to the Title Policy pursuant to
Section 4.1, and one-half of the customary closing costs of the Escrow Agent and
one half of the Escrow Agent's escrow fee. Seller shall pay the base premium for
the Title Policy to the extent required by Section 4.1, and one-half of the
customary closing costs of the Escrow Agent. In addition to the customary
closing costs incurred by Escrow Agent (except for costs or liabilities arising
from Escrow Agent's cross negligence and/or willful misconduct), Escrow Agent
shall receive a fee of $500.00 for its services hereunder, to be borne equally
by Seller and Purchaser.
5.4.11 ....Survival. The provisions of this Section 5.4 shall survive the
Closing and delivery of the Deed to Purchaser.
5.4.12 ....Possession. Possession of the Property, subject to the Leases,
Property Contracts which are not identified as Terminated Contracts during the
Feasibility Period (subject to the limitations of Section 3.6), and Permitted
Exceptions, shall be delivered to Purchaser at the Closing upon release from
escrow of all items to be delivered by Purchaser pursuant to Section 5.3,
including, without limitation, the Purchase Price. To the extent reasonably
available to Seller, originals or copies of the Leases and Property Contracts,
lease files, warranties, guaranties, operating manuals, keys to the property,
and Seller's books and records (other than proprietary information) regarding
the Property shall be made available to Purchaser at the Property after the
Closing.
5.5 Post Closing Adjustments. In general, and except as provided in this
Contract or the Closing Documents, Seller shall be entitled to all income, and
shall pay all expenses, relating to the operation of the Property for the period
prior to the Closing Date and Purchaser shall be entitled to all income, and
shall pay all expenses, relating to the operation of the Property for the period
commencing on and after the Closing Date. Purchaser or Seller may request that
Purchaser and Seller undertake to re-adjust any item on the Proration Schedule
(or any item omitted therefrom) in accordance with the provisions of Section 5.4
of this Contract; provided, however, that neither party shall have any
obligation to re-adjust any items (a) after the expiration of 60 days after
Closing, or (b) subject to such 60-day period, unless such items exceeds
$2,500.00 in magnitude (either individually or in the aggregate). The provisions
of this Section 5.6 shall survive the Closing and delivery of the Deed to
Purchaser.
ARTICLE 6...
REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER
6.1 Seller's Representations. Except, in all cases, for any fact, information or
condition disclosed in the Title Documents, the Permitted Exceptions, the
Property Contracts or the Materials, or which is otherwise known to Purchaser
prior to the Closing, Seller represents and warrants to Purchaser the following
(collectively, the "Seller's Representations") as of the Effective Date and as
of the Closing Date (provided that Purchaser's remedies if any such Seller's
Representations are untrue as of the Closing Date are limited to those set forth
in Section 8.1):
6.1.1 .....Seller is organized, validly existing and, if applicable, in good
standing under the laws of the state of its formation set forth in the initial
paragraph of this Contract; and, subject to Section 8.2.4, has or at the Closing
shall have the entity power and authority to sell and convey the Property and to
execute the documents to be executed by Seller and prior to the Closing will
have taken as applicable, all corporate, partnership, limited liability company
or equivalent entity actions required for the execution and delivery of this
Contract, and the consummation of the transactions contemplated by this
Contract. The compliance with or fulfillment of the terms and conditions hereof
will not conflict with, or result in a breach of, the terms, conditions or
provisions of, or constitute a default under, any contract to which Seller is a
party or by which Seller is otherwise bound, which conflict, breach or default
would have a material adverse affect on Seller's ability to consummate the
transaction contemplated by this Contract or on the Property. Subject to Section
8.2.4, this Contract is a valid, binding and enforceable agreement against
Seller in accordance with its terms;
6.1.2 .....Other than the Leases, the Property is not subject to any written
lease executed by Seller or, to Seller's knowledge, any other possessory
interests of any person;
6.1.3 .....Seller is not a "foreign person," as that term is used and defined in
the Internal Revenue Code, Section 1445, as amended;
6.1.4 .....Except for any actions by Seller to evict Tenants under the Leases,
to Seller's knowledge, there are no actions, proceedings, litigation or
governmental investigations or condemnation actions either pending or threatened
against the Property;
6.1.5 .....To Seller's knowledge, Seller has not received any written notice of
any uncured material violations of any federal, state, county or municipal law,
ordinance, order, regulation or requirement affecting the Property; and
6.1.6 .....To Seller's knowledge, Seller has not received any written notice of
any material default by Seller under any of the Property Contracts that will not
be terminated on the Closing Date.
6.1.7 .....To Seller's knowledge: (A) no hazardous or toxic materials or other
substances regulated by applicable federal or state environmental laws are
stored by Seller on, in or under the Property in quantities which violate
applicable laws governing such materials or substances, and (B) the Property is
not used by Seller for the storage, treatment, generation or manufacture of any
hazardous or toxic materials or other substances in a manner which would
constitute a violation of applicable federal or state environmental laws.
6.1.8 .....To Seller's knowledge, the rent roll and operating statements
delivered by Seller to Purchaser pursuant to Section 3.5 is accurate in all
material respects.
6.2 AS-IS. Except for Seller's Representations, the Property is expressly
purchased and sold "AS IS," "WHERE IS," and "WITH ALL FAULTS." The Purchase
Price and the terms and conditions set forth herein are the result of
arm's-length bargaining between entities familiar with transactions of this
kind, and said price, terms and conditions reflect the fact that Purchaser shall
have the benefit of, and is not relying upon, any information provided by Seller
or statements, representations or warranties, express or implied, made by or
enforceable directly against Seller , including, without limitation, any
relating to the value of the Property, the physical or environmental condition
of the Property, any state, federal, county or local law, ordinance, order or
permit; or the suitability, compliance or lack of compliance of the Property
with any regulation, or any other attribute or matter of or relating to the
Property (other than any covenants of title contained in the Deed conveying the
Property and Seller's Representations). Purchaser agrees that Seller shall not
be responsible or liable to Purchaser for any defects, errors or omissions, or
on account of any conditions affecting the Property. Purchaser, its successors
and assigns, and anyone claiming by, through or under Purchaser, hereby fully
releases Seller's Indemnified Parties from, and irrevocably waives its right to
maintain, any and all claims and causes of action that it or they may now have
or hereafter acquire against Seller's Indemnified Parties with respect to any
and all Losses arising from or related to any defects, errors, omissions or
other conditions affecting the Property. Purchaser represents and warrants that,
as of the date hereof and as of the Closing Date, it has and shall have reviewed
and conducted such independent analyses, studies (including, without limitation,
environmental studies and analyses concerning the presence of lead, asbestos,
PCBs and radon in and about the Property), reports, investigations and
inspections as it deems appropriate in connection with the Property. If Seller
provides or has provided any documents, summaries, opinions or work product of
consultants, surveyors, architects, engineers, title companies, governmental
authorities or any other person or entity with respect to the Property,
including, without limitation, Purchaser and Seller agree that Seller has done
so or shall do so only for the convenience of both parties, Purchaser shall not
rely thereon except to the extent of the Seller's Representations and the
reliance by Purchaser upon any such documents, summaries, opinions or work
product shall not create or give rise to any liability of or against Seller's
Indemnified Parties. Purchaser shall rely only upon any title insurance obtained
by Purchaser with respect to title to the Property. Purchaser acknowledges and
agrees that no representation has been made and no responsibility is assumed by
Seller with respect to current and future applicable zoning or building code
requirements or the compliance of the Property with any other laws, rules,
ordinances or regulations, the financial earning capacity or expense history of
the Property, the continuation of contracts, continued occupancy levels of the
Property, or any part thereof, or the continued occupancy by tenants of any
Leases or, without limiting any of the foregoing, occupancy at Closing. Prior to
Closing, Seller shall have the right, but not the obligation, to enforce its
rights against any and all Property occupants, guests or tenants. Purchaser
agrees that the departure or removal, prior to Closing, of any of such guests,
occupants or tenants shall not be the basis for, nor shall it give rise to, any
claim on the part of Purchaser, nor shall it affect the obligations of Purchaser
under this Contract in any manner whatsoever; and Purchaser shall close title
and accept delivery of the Deed with or without such tenants in possession and
without any allowance or reduction in the Purchase Price under this Contract.
Purchaser hereby releases Seller from any and all claims and liabilities
relating to the foregoing matters. The provisions of this Section 6.2 shall
survive the Closing and delivery of the Deed to Purchaser.
6.3 Survival of Seller's Representations. Seller and Purchaser agree that
Seller's Representations shall survive Closing for a period of 12 months (the
"Survival Period"). Seller shall have no liability after the Survival Period
with respect to Seller's Representations contained herein except to the extent
that Purchaser has provided notice to Seller during the Survival Period for
breach of any of Seller's Representations. Under no circumstances shall Seller
be liable to Purchaser for more than $50,000 in any individual instance or in
the aggregate for all breaches of Seller's Representations, nor shall Purchaser
be entitled to bring any claim for a breach of Seller's Representations unless
the claim for damage (either in the aggregate or as to any individual claim) by
Purchaser exceeds $5,000. In the event that Seller breaches any representation
contained in Section 6.1 and Purchaser had knowledge of such breach prior to the
Closing Date, Purchaser shall be deemed to have waived any right of recovery,
and Seller shall not have any liability in connection therewith.
6.4 Definition of Seller's Knowledge. Any representations and warranties made
"to the knowledge of Seller" shall not be deemed to imply any duty of inquiry.
For purposes of this Contract, the term Seller's "knowledge" shall mean and
refer only to actual knowledge of the Designated Representative of the Seller
and shall not be construed to refer to the knowledge of any other partner,
officer, director, agent, employee or representative of the Seller, or any
affiliate of the Seller, or to impose upon such Designated Representative any
duty to investigate the matter to which such actual knowledge or the absence
thereof pertains, or to impose upon such Designated Representative any
individual personal liability. As used herein, the term Designated
Representative shall refer to Lea Ann Butler who is the Regional Property
Manager handling this Property (the "Regional Property Manager").
6.5 Representations And Warranties Of Purchaser. For the purpose of inducing
Seller to enter into this Contract and to consummate the sale and purchase of
the Property in accordance herewith, Purchaser represents and warrants to Seller
the following as of the Effective Date and as of the Closing Date:
6.5.1 .....Purchaser is a limited partnership organized, validly existing and in
good standing under the laws of Texas.
6.5.2 .....Purchaser, acting through any of its or their duly empowered and
authorized officers or members, has all necessary entity power and authority to
own and use its properties and to transact the business in which it is engaged,
and has full power and authority to enter into this Contract, to execute and
deliver the documents and instruments required of Purchaser herein, and to
perform its obligations hereunder; and no consent of any of Purchaser's
partners, directors, officers or members are required to so empower or authorize
Purchaser. The compliance with or fulfillment of the terms and conditions hereof
will not conflict with, or result in a breach of, the terms, conditions or
provisions of, or constitute a default under, any contract to which Purchaser is
a party or by which Purchaser is otherwise bound, which conflict, breach or
default would have a material adverse affect on Purchaser's ability to
consummate the transaction contemplated by this Contract. This Contract is a
valid, binding and enforceable agreement against Purchaser in accordance with
its terms.
6.5.3 .....No pending or, to the knowledge of Purchaser, threatened litigation
exists which if determined adversely would restrain the consummation of the
transactions contemplated by this Contract or would declare illegal, invalid or
non-binding any of Purchaser's obligations or covenants to Seller.
6.5.4 .....Other than Seller's Representations, Purchaser has not relied on any
representation or warranty made by Seller or any representative of Seller in
connection with this Contract and the acquisition of the Property.
The provisions of this Section 6.5 shall survive the Closing and delivery
of the Deed to Purchaser.
ARTICLE 7...
OPERATION OF THE PROPERTY
7.1 Leases and Property Contracts. During the period of time from the Effective
Date to the Closing Date, in the ordinary course of business Seller may enter
into new Property Contracts, new Leases, renew existing Leases or modify,
terminate or accept the surrender or forfeiture of any of the Leases, modify any
Property Contracts, or institute and prosecute any available remedies for
default under any Lease or Property Contract without first obtaining the written
consent of Purchaser; provided, however, Seller agrees that any such new
Property Contracts or any new or renewed Leases shall not have a term in excess
of 1 year (or such longer period of time for which such Property Contracts or
Leases are entered into by Seller in the ordinary course of its operation of the
Property) without the prior written consent of Purchaser, which consent shall
not be unreasonably withheld, conditioned or delayed.
7.2 General Operation of Property. Except as specifically set forth in this
Article 7, Seller shall operate the Property after the Effective Date in the
ordinary course of business, and except as necessary in the Seller's sole
discretion to address (a) any life or safety issue at the Property or (b) any
other matter which in Seller's reasonable discretion materially adversely
affecting the use, operation or value of the Property, Seller will not make any
material alterations to the Property or remove any material Fixtures and
Tangible Personal Property without the prior written consent of Purchaser which
consent shall not be unreasonably withheld, denied or delayed.
7.3 Liens. Other than utility easements and temporary construction easements
granted by Seller in the ordinary course of business, Seller covenants that it
will not voluntarily create or cause any lien or encumbrance to attach to the
Property between the Effective Date and the Closing Date (other than Leases and
Property Contracts as provided in Section 7.1) unless Purchaser approves such
lien or encumbrance, which approval, prior to the expiration of the Feasibility
Period, shall not be unreasonably withheld or delayed. If Purchaser approves any
such subsequent lien or encumbrance, the same shall be deemed a Permitted
Encumbrance for all purposes hereunder.
ARTICLE 8...
CONDITIONS PRECEDENT TO CLOSING
8.1 Purchaser's Conditions to Closing. Purchaser's obligation to close
under this Contract, shall be subject to and conditioned upon the fulfillment
of each and all of the following conditions precedent:
8.1.1 .....All of the documents required to be delivered by Seller to Purchaser
at the Closing pursuant to the terms and conditions hereof shall have been
delivered;
8.1.2 .....Each of the representations, warranties and covenants of Seller
contained herein shall be true in all material respects as of the Closing Date;
8.1.3 .....Seller shall have complied with, fulfilled and performed in all
material respects each of the covenants, terms and conditions to be complied
with, fulfilled or performed by Seller hereunder; and
8.1.4 .....Neither Seller nor Seller's general partner shall be a debtor in any
bankruptcy proceeding nor shall have been in the last 6 months a debtor in any
bankruptcy proceeding.
Notwithstanding anything to the contrary, there are no other conditions on
Purchaser's obligation to Close except as expressly set forth in this Section
8.1. If any condition set forth in Sections 8.1.1, 8.1.3 or 8.1.4 is not met,
Purchaser may (a) waive any of the foregoing conditions and proceed to Closing
on the Closing Date with no offset or deduction from the Purchase Price, or (b)
if such failure constitutes a default by Seller, exercise any of its remedies
pursuant to Section 10.2. If the condition set forth in Section 8.1.2 is not
met, Purchaser may, as its sole and exclusive remedy, (i) notify Seller of
Purchaser's election to terminate this Contract and receive a return of the
Deposit from the Escrow Agent, or (ii) waive such condition and proceed to
Closing on the Closing Date with no offset or deduction from the Purchase Price.
8.2 Without limiting any of the rights of Seller elsewhere provided for in this
Contract, Seller's obligation to close with respect to conveyance of the
Property under this Contract shall be subject to and conditioned upon the
fulfillment of each and all of the following conditions precedent:
8.2.1 .....All of the documents and funds required to be delivered by Purchaser
to Seller at the Closing pursuant to the terms and conditions hereof shall have
been delivered;
8.2.2 .....Each of the representations, warranties and covenants of Purchaser
contained herein shall be true in all material respects as of the Closing Date;
8.2.3 .....Purchaser shall have complied with, fulfilled and performed in all
material respects each of the covenants, terms and conditions to be complied
with, fulfilled or performed by Purchaser hereunder; and
8.2.4 .....Seller shall have received all consents and approvals to the
consummation of the transactions contemplated hereby (a) of Seller's partners,
members, managers, shareholders or directors to the extent required by Seller's
organizational documents, or (b) that are required by law.
8.2.5 .....The Loan Assumption and Release shall have occurred.
If any of the foregoing conditions to Seller's obligation to close with
respect to conveyance of the Property under this Contract are not met, Seller
may (a) waive any of the foregoing conditions and proceed to Closing on the
Closing Date, or (b) if such failure constitutes a default by Purchaser,
exercise any of its remedies under Section 10.1.
ARTICLE 9...
BROKERAGE
9.1 Indemnity. Purchaser represents and warrants to Seller that it has dealt
only with Richard Aguilar Majestic Realtors ("Other Broker"). Seller and
Purchaser each represents and warrants to the other that, other than Other
Broker, it has not dealt with or utilized the services of any other real estate
broker, sales person or finder in connection with this Contract, and each party
agrees to indemnify, hold harmless, and, if requested in the sole and absolute
discretion of the indemnitee, defend (with counsel approved by the indemnitee)
the other party from and against all Losses relating to brokerage commissions
and finder's fees arising from or attributable to the acts or omissions of the
indemnifying party. The provisions of this Section 9.1 shall survive the
termination of this Contract, and if not so terminated, the Closing and delivery
of the Deed to Purchaser.
9.2 Survival. Seller agrees to pay Other Broker, contingent upon the
consummation of the Closing, a commission equal to $100,000. Other Broker shall
not be deemed a party or third party beneficiary of this Contract.
9.3 Broker Signature Page. Other Broker shall execute the signature page for
Other Broker attached hereto solely for purposes of confirming the matters set
forth therein; provided, however, that (a) Other Broker's signature hereon shall
not be a prerequisite to the binding nature of this Contract on Purchaser and
Seller, and the same shall become fully effective upon execution by Purchaser
and Seller, and (b) the signature of Other Broker will not be necessary to amend
any provision of this Contract.
9.4 Texas Real Estate License Act. The Texas Real Estate License Act requires
written notice to Purchaser from any licensed real estate broker or salesman who
is to receive a commission from Purchaser that Purchaser should have an attorney
of its own selection examine an abstract of title to the property being acquired
or that Purchaser should be furnished with or should obtain a title insurance
policy. Notice to that effect is, therefore, hereby given to Purchaser on behalf
of Other Broker.
ARTICLE 10..
DEFAULTS AND REMEDIES
10.1 ......Purchaser Default. If Purchaser defaults in its obligations hereunder
to (a) deliver the Initial Deposit or Additional Deposit, (b) deliver to the
Seller the deliveries specified under Section 5.3 on the date required
thereunder, or (c) deliver the Purchase Price at the time required by Section
2.2.5 and close on the purchase of the Property on the Closing Date, then,
immediately and without notice or cure, Purchaser shall forfeit the Deposit, and
the Escrow Agent shall deliver the Deposit to Seller, and neither party shall be
obligated to proceed with the purchase and sale of the Property. If, Purchaser
defaults in any of its other representations, warranties or obligations under
this Contract, and such default continues for more than 10 days after written
notice from Seller, then Purchaser shall forfeit the Deposit, and the Escrow
Agent shall deliver the Deposit to Seller, and neither party shall be obligated
to proceed with the purchase and sale of the Property. The Deposit is liquidated
damages and recourse to the Deposit is, except for Purchaser's indemnity
obligations hereunder, Seller's sole and exclusive remedy for Purchaser's
failure to perform its obligation to purchase the Property or breach of a
representation or warranty. Seller expressly waives the remedies of specific
performance and additional damages for such default by Purchaser. SELLER AND
PURCHASER ACKNOWLEDGE THAT SELLER'S DAMAGES WOULD BE DIFFICULT TO DETERMINE, AND
THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES RESULTING FROM A
DEFAULT BY PURCHASER IN ITS OBLIGATION TO PURCHASE THE PROPERTY. SELLER AND
PURCHASER FURTHER AGREE THAT THIS SECTION 10.1.1 IS INTENDED TO AND DOES
LIQUIDATE THE AMOUNT OF DAMAGES DUE SELLER, AND SHALL BE SELLER'S EXCLUSIVE
REMEDY AGAINST PURCHASER, BOTH AT LAW AND IN EQUITY, ARISING FROM OR RELATED TO
A BREACH BY PURCHASER OF ITS OBLIGATION TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THIS CONTRACT, OTHER THAN WITH RESPECT TO PURCHASER'S INDEMNITY
OBLIGATIONS HEREUNDER.
10.2 ......Seller Default. If Seller, prior to the Closing, defaults in its
representations, warranties, covenants, or obligations under this Contract,
including to sell the Property as required by this Contract and such default
continues for more than 10 days after written notice from Purchaser, then, at
Purchaser's election and as Purchaser's sole and exclusive remedy, either (A)
this Contract shall terminate, and all payments and things of value, including
the Deposit, provided by Purchaser hereunder shall be returned to Purchaser
(subject to Purchaser's obligation under Section 3.5.2 to return all Third-Pary
Reports and information and Materials provided to Purchaser as a pre-condition
to the return of the Deposit) and Purchaser may recover, as its sole recoverable
damages (but without limiting its right to receive a refund of the Deposit), its
direct and actual out-of-pocket expenses and costs (documented by paid invoices
to third parties) in connection with this transaction, which damages shall not
exceed $50,000 in aggregate, or (B) Purchaser may seek specific performance of
Seller's obligation to deliver the Deed pursuant to this Contract (but not
damages). Purchaser agrees that it shall promptly deliver to Seller an
assignment of all of Purchaser's right, title and interest in and to (together
with possession of) all plans, studies, surveys, reports, and other materials
paid for with the out-of-pocket expenses reimbursed by Seller pursuant to the
foregoing sentence. SELLER AND PURCHASER FURTHER AGREE THAT THIS SECTION 10.2 IS
INTENDED TO AND DOES LIMIT THE AMOUNT OF DAMAGES DUE PURCHASER AND THE REMEDIES
AVAILABLE TO PURCHASER, AND SHALL BE PURCHASER'S EXCLUSIVE REMEDY AGAINST
SELLER, BOTH AT LAW AND IN EQUITY ARISING FROM OR RELATED TO A BREACH BY SELLER
OF ITS REPRESENTATIONS, WARRANTIES, OR COVENANTS OR ITS OBLIGATION TO CONSUMMATE
THE TRANSACTIONS CONTEMPLATED BY THIS CONTRACT. UNDER NO CIRCUMSTANCES MAY
PURCHASER SEEK OR BE ENTITLED TO RECOVER ANY SPECIAL, CONSEQUENTIAL, PUNITIVE,
SPECULATIVE OR INDIRECT DAMAGES, ALL OF WHICH PURCHASER SPECIFICALLY WAIVES,
FROM SELLER FOR ANY BREACH BY SELLER, OF ITS REPRESENTATIONS, WARRANTIES OR
COVENANTS OR ITS OBLIGATIONS UNDER THIS CONTRACT. PURCHASER SPECIFICALLY WAIVES
THE RIGHT TO FILE ANY LIS PENDENS OR ANY LIEN AGAINST THE PROPERTY UNLESS AND
UNTIL IT HAS IRREVOCABLY ELECTED TO SEEK SPECIFIC PERFORMANCE OF THIS CONTRACT
AND HAS FILED AN ACTION SEEKING SUCH REMEDY.
ARTICLE 11..
RISK OF LOSS OR CASUALTY
11.1 ......Major Damage. In the event that the Property is damaged or destroyed
by fire or other casualty prior to Closing, and the cost of repair is more than
$300,000, then Seller shall have no obligation to repair such damage or
destruction and shall notify Purchaser in writing of such damage or destruction
(the "Damage Notice"). Within 10 days after Purchaser's receipt of the Damage
Notice, Purchaser may elect at its option to terminate this Contract by
delivering written notice to Seller. In the event Purchaser fails to terminate
this Contract within the foregoing 10-day period, this transaction shall be
closed in accordance with the terms of this Contract for the full Purchase Price
notwithstanding any such damage or destruction and Purchaser shall receive all
insurance proceeds pertaining thereto (plus a credit against the Purchase Price
in the amount of any deductible payable by Seller in connection therewith) at
Closing.
11.2 ......Minor Damage. In the event that the Property is damaged or destroyed
by fire or other casualty prior to the Closing, and the cost of repair is less
than $300,000, this transaction shall be closed in accordance with the terms of
this Contract, notwithstanding the damage or destruction; provided, however,
Seller shall make such repairs to the extent of any recovery from insurance
carried on the Property if they can be reasonably effected before the Closing.
Subject to Section 11.3, if Seller is unable to effect such repairs, then
Purchaser shall receive all insurance proceeds pertaining thereto (plus a credit
against the Purchase Price in the amount of any deductible payable by Seller in
connection therewith) at Closing.
11.3 ......Repairs. To the extent that Seller elects to commence any repair,
replacement or restoration of the Property prior to Closing, then Seller shall
be entitled to receive and apply available insurance proceeds to any portion of
such repair, replacement or restoration completed or installed prior to Closing,
with Purchaser being responsible for completion of such repair, replacement or
restoration after Closing from the balance of any available insurance proceeds.
The provisions of this Section 11.3 shall survive the Closing and delivery of
the Deed to Purchaser.
ARTICLE 12..
EMINENT DOMAIN
12.1 ......Eminent Domain. In the event that, at the time of Closing, any
material part of the Property is (or previously has been) acquired, or is about
to be acquired, by any governmental agency by the powers of eminent domain or
transfer in lieu thereof (or in the event that at such time there is any notice
of any such acquisition or intent to acquire by any such governmental agency),
Purchaser shall have the right, at Purchaser's option, to terminate this
Contract by giving written notice within 10 days after Purchaser's receipt from
Seller of notice of the occurrence of such event, and if Purchaser so terminates
this Contract shall recover the Deposit hereunder (subject to Purchaser's
obligation under Section 3.5.2 to return all Third-Party Reports and information
and Materials provided to Purchaser as a pre-condition to the return of the
Deposit). If Purchaser fails to terminate this Contract within such 10-day
period, this transaction shall be closed in accordance with the terms of this
Contract for the full Purchase Price and Purchaser shall receive the full
benefit of any condemnation award. It is expressly agreed between the parties
hereto that this section shall in no way apply to customary dedications for
public purposes which may be necessary for the development of the Property.
ARTICLE 13..
MISCELLANEOUS
13.1 ......Binding Effect of Contract. This Contract shall not be binding on
either party until executed by both Purchaser and Seller. As provided in Section
2.3.5 above, the Escrow Agent's execution of this Contract shall be a
pre-requisite to its effectiveness.
13.2 ......Exhibits And Schedules. All Exhibits and Schedules, whether or not
annexed hereto, are a part of this Contract for all purposes.
13.3 ......Assignability. This Contract is not assignable by Purchaser without
first obtaining the prior written approval of the Seller, except that Purchaser
may assign this Contract to one or more entities, without the approval of
Seller, so long as (a) Purchaser is an affiliate of the purchasing entity(ies),
and (b) Purchaser is not released from its liability hereunder. As used herein,
an affiliate is a person or entity controlled by, under common control with, or
controlling another person or entity.
13.4 ......Binding Effect. Subject to Section 13.3, this Contract shall be
binding upon and inure to the benefit of Seller and Purchaser, and their
respective successors, heirs and permitted assigns.
13.5 ......Captions. The captions, headings, and arrangements used in this
Contract are for convenience only and do not in any way affect, limit, amplify,
or modify the terms and provisions hereof.
13.6 ......Number And Gender Of Words. Whenever herein the singular number is
used, the same shall include the plural where appropriate, and words of any
gender shall include each other gender where appropriate.
13.7 ......Notices. All notices, demands, requests and other communications
required or permitted hereunder shall be in writing, and shall be (a) personally
delivered with a written receipt of delivery, (b) sent by a nationally
recognized overnight delivery service requiring a written acknowledgement of
receipt or providing a certification of delivery or attempted delivery, (c) sent
by certified or registered mail, return receipt requested, or (d) sent by
confirmed facsimile transmission with an original copy thereof transmitted to
the recipient by one of the means described in subsections (a) through (c) no
later than 3 Business Days thereafter. All notices shall be deemed effective
when actually delivered as documented in a delivery receipt; provided, however,
that if the notice was sent by overnight courier or mail as aforesaid and is
affirmatively refused or cannot be delivered during customary business hours by
reason of the absence of a signatory to acknowledge receipt, or by reason of a
change of address with respect to which the addressor did not have either
knowledge or written notice delivered in accordance with this paragraph, then
the first attempted delivery shall be deemed to constitute delivery. Each party
shall be entitled to change its address for notices from time to time by
delivering to the other party notice thereof in the manner herein provided for
the delivery of notices. All notices shall be sent to the addressee at its
address set forth following its name below:
......To Purchaser:
......8201 Lockheed
......Spectrum Building
......El Paso, Texas 79925
......Telephone No. (915) 779-5740
......Facsimile No. (915) 779-3291
......With a copy to:
......Scherr Legate & Erlich, PLLC
......109 N. Oregon, 12th Floor
......El Paso, Texas 79901
......Attn: William Ehrlich, Esq.
......Telephone No. (915) 544-0100
......Facsimile No. (915) 544-7529
To Seller:
c/o AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Attn: Mr. Harry Alcock
Telephone No. (303) 691-4344
Facsimile No. (303) 300-3282
and
c/o AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Attn: Mr. Patrick Slavin
Telephone No. (303) 691-4340
Facsimile No. (303) 300-3252
with copy to:
Chad Asarch, Esq.
Vice President and Assistant General Counsel
AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, Colorado 80237
Telephone No. (303) 691-4303
Facsimile No. (303) 300-3297
and a copy to:
Jackson Walker LLP
112 E. Pecan Street
Suite 2100
San Antonio, Texas 78205
Attn: Eileen E. Sommer, Esq.
Telephone No. (210) 978-7784
Facsimile No. (210) 978-7790
Any notice required hereunder to be delivered to the Escrow Agent shall be
delivered in accordance with above provisions as follows:
......Stewart Title Guaranty Company
1980 Post Oak Boulevard
Suite 610
Houston, Texas 77056
Attn: Wendy Howell
Telephone No. (800) 729-1906
Facsimile No. (713) 552-1703
Unless specifically required to be delivered to the Escrow Agent pursuant
to the terms of this Contract, no notice hereunder must be delivered to the
Escrow Agent in order to be effective so long as it is delivered to the other
party in accordance with the above provisions.
13.8 ......Governing Law And Venue. The laws of the State of Texas shall govern
the validity, construction, enforcement, and interpretation of this Contract,
unless otherwise specified herein except for the conflict of laws provisions
thereof. Subject to Section 13.25, all claims, disputes and other matters in
question arising out of or relating to this Contract, or the breach thereof,
shall be decided by proceedings instituted and litigated in a court of competent
jurisdiction in the state in which the Property is situated, and the parties
hereto expressly consent to the venue and jurisdiction of such court.
13.9 ......Entire Agreement. This Contract embodies the entire Contract between
the parties hereto concerning the subject matter hereof and supersedes all prior
conversations, proposals, negotiations, understandings and Contracts, whether
written or oral.
13.10 .....Amendments. This Contract shall not be amended, altered, changed,
modified, supplemented or rescinded in any manner except by a written contract
executed by all of the parties; provided, however, that, as provided in Section
2.3.5 above, the signature of the Escrow Agent shall not be required as to any
amendment of this Contract other than an amendment of Section 2.3.
13.11 .....Severability. In the event that any part of this Contract shall be
held to be invalid or unenforceable by a court of competent jurisdiction, such
provision shall be reformed, and enforced to the maximum extent permitted by
law. If such provision cannot be reformed, it shall be severed from this
Contract and the remaining portions of this Contract shall be valid and
enforceable.
13.12 .....Multiple Counterparts/Facsimile Signatures. This Contract may be
executed in a number of identical counterparts. This Contract may be executed by
facsimile signatures which shall be binding on the parties hereto, with original
signatures to be delivered as soon as reasonably practical thereafter.
13.13 .....Construction. No provision of this Contract shall be construed in
favor of, or against, any particular party by reason of any presumption with
respect to the drafting of this Contract; both parties, being represented by
counsel, having fully participated in the negotiation of this instrument.
13.14 .....Confidentiality. Purchaser shall not disclose the terms and
conditions contained in this Contract and shall keep the same confidential,
provided that Purchaser may disclose the terms and conditions of this Contract
(a) as required by law, (b) to consummate the terms of this Contract, or any
financing relating thereto, or (c) to Purchaser's or Seller's lenders, attorneys
and accountants. Any information and Materials provided by Seller to Purchaser
hereunder are confidential and Purchaser shall be prohibited from making such
information public to any other person or entity other than its agents and legal
representatives, without Seller's prior written authorization, which may be
granted or denied in Seller's sole discretion. Notwithstanding the foregoing,
the parties (and each employee, representative, or other agent of the parties)
may disclose to any and all persons, without limitation of any kind, the tax
treatment and any facts that may be relevant to the tax structure of the
transaction, provided, however, that no party (and no employee, representative,
or other agent thereof) shall disclose any other information that is not
relevant to understanding the tax treatment and tax structure of the transaction
(including the identity of any party and any information that could lead another
to determine the identity of any party), or any other information to the extent
that such disclosure could result in a violation of any federal or state
securities law.
13.15 .....Time Of The Essence. It is expressly agreed by the parties hereto
that time is of the essence with respect to this Contract.
13.16 .....Waiver. No delay or omission to exercise any right or power accruing
upon any default, omission, or failure of performance hereunder shall impair any
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. No waiver, amendment, release, or modification of this Contract shall
be established by conduct, custom, or course of dealing and all waivers must be
in writing and signed by the waiving party.
13.17 .....Attorneys Fees. In the event either party hereto commences litigation
or arbitration against the other to enforce its rights hereunder, the
substantially prevailing party in such litigation shall be entitled to recover
from the other party its reasonable attorneys' fees and expenses incidental to
such litigation and arbitration, including the cost of in-house counsel and any
appeals.
13.18 .....Time Periods. Should the last day of a time period fall on a weekend
or legal holiday, the next Business Day thereafter shall be considered the end
of the time period.
13.19 .....1031 Exchange. Seller and Purchaser acknowledge and agree that the
purchase and sale of the Property may be part of a tax-free exchange under
Section 1031 of the Code for either Purchaser or Seller. Each party hereby
agrees to take all reasonable steps on or before the Closing Date to facilitate
such exchange if requested by the other party, provided that (a) no party making
such accommodation shall be required to acquire any substitute property, (b)
such exchange shall not affect the representations, warranties, liabilities and
obligations of the parties to each other under this Contract, (c) no party
making such accommodation shall incur any additional cost, expense or liability
in connection with such exchange (other than expenses of reviewing and executing
documents required in connection with such exchange), and (d) no dates in this
Contract will be extended as a result thereof. Notwithstanding anything to the
contrary contained in the foregoing, if Seller so elects to close the transfer
of the Property as an exchange, then (i) Seller, at its sole option, may
delegate its obligations to transfer the Property under this Contract, and may
assign its rights to receive the Purchase Price from Purchaser, to a deferred
exchange intermediary (an "Intermediary") or to an exchange accommodation
titleholder, as the case may be; (ii) such delegation and assignment shall in no
way reduce, modify or otherwise affect the obligations of Seller pursuant to
this Contract; (iii) Seller shall remain fully liable for its obligations under
this Contract as if such delegation and assignment shall not have taken place;
(iv) Intermediary or exchange accommodation titleholder, as the case may be,
shall have no liability to Purchaser; and (v) the closing of the transfer of the
Property to Purchaser shall be undertaken by direct deed from Seller (or, if
applicable, from other affiliates of Seller whom Seller will cause to execute
such deeds) to Purchaser or to exchange accommodation titleholder, as the case
may be. Notwithstanding anything to the contrary contained in the foregoing, if
Purchaser so elects to close the acquisition of the Property as an exchange,
then (i) Purchaser, at its sole option, may delegate its obligations to acquire
the Property under this Contract, and may assign its rights to receive the
Property from Seller, to an Intermediary or to an exchange accommodation
titleholder, as the case may be; (ii) such delegation and assignment shall in no
way reduce, modify or otherwise affect the obligations of Purchaser pursuant to
this Contract; (iii) Purchaser shall remain fully liable for its obligations
under this Contract as if such delegation and assignment shall not have taken
place; (iv) Intermediary or exchange accommodation titleholder, as the case may
be, shall have no liability to Seller; and (v) the closing of the acquisition of
the Property by Purchaser or the exchange accommodation titleholder, as the case
may be, shall be undertaken by direct deed from Seller (or, if applicable, from
other affiliates of Seller whom Seller will cause to execute such deeds) to
Purchaser (or to exchange accommodation titleholder, as the case may be).
13.20 .....No Personal Liability of Officers, Trustees or directors of Seller's
Partners. Purchaser acknowledges that this Contract is entered into by Seller
which is a Delaware limited partnership, and Purchaser agrees that none of
Seller's Indemnified Parties shall have any personal liability under this
Contract or any document executed in connection with the transactions
contemplated by this Contract.
13.21 .....No Personal Liability of Officers, Trustees or directors of
Purchaser's Partners. Seller acknowledges that this Contract is entered into by
Purchaser which is a Texas limited partnership, and Seller agrees that none of
Purchaser's employees, limited partners, or the officers or directors of its
general partner shall have any personal liability under this Contract or any
document executed in connection with the transactions contemplated by this
Contract.
13.22 .....No Exclusive Negotiations. Seller shall have the right, at all times
prior to the expiration of the Feasibility Period, to solicit backup offers and
enter into discussions, negotiations, or any other communications concerning or
related to the sale of the Property with any third-party; provided, however,
that such communications are subject to the terms of this Contract, and that
Seller shall not enter into any contract or binding Contract with a third-party
for the sale of the Property unless such Contract is contingent on the
termination of this Contract without the Property having been conveyed to
Purchaser.
13.23 .....ADA Disclosure. Purchaser acknowledges that the Property may be
subject to the federal Americans With Disabilities Act (the "ADA"), and the
federal Fair Housing Act (the "FHA"). The ADA requires, among other matters,
that tenants and/or owners of "public accommodations" remove barriers in order
to make the Property accessible to disabled persons and provide auxiliary aids
and services for hearing, vision or speech impaired persons. Seller makes no
warranty, representation or guarantee of any type or kind with respect to the
Property's compliance with the ADA or the FHA (or any similar state or local
law), and Seller expressly disclaims any such representation.
13.24 .....No Recording. Purchaser shall not cause or allow this Contract or any
contract or other document related hereto, nor any memorandum or other evidence
hereof, to be recorded or become a public record without Seller's prior written
consent, which consent may be withheld at Seller's sole discretion. If the
Purchaser records this Contract or any other memorandum or evidence thereof,
Purchaser shall be in default of its obligations under this Contract. Purchaser
hereby appoints the Seller as Purchaser's attorney-in-fact to prepare and record
any documents necessary to effect the nullification and release of the Contract
or other memorandum or evidence thereof from the public records. This
appointment shall be coupled with an interest and irrevocable.
13.25 .....Relationship of Parties. Purchaser and Seller acknowledge and agree
that the relationship established between the parties pursuant to this Contract
is only that of a seller and a purchaser of property. Neither Purchaser nor
Seller is, nor shall either hold itself out to be, the agent, employee, joint
venturer or partner of the other party.
13.26 .....Dispute Resolution. Any controversy, dispute, or claim of any nature
arising out of, in connection with, or in relation to the interpretation,
performance, enforcement or breach of this Contract, including any claim based
on contract, tort or statute, shall be resolved at the written request of any
party to this Contract by binding arbitration. The arbitration shall be
administered in accordance with the then current Commercial Arbitration Rules of
the American Arbitration Association. Any matter to be settled by arbitration
shall be submitted to the American Arbitration Association in the state in which
the Property is located. The parties shall attempt to designate one arbitrator
from the American Arbitration Association. If they are unable to do so within 30
days after written demand therefor, then the American Arbitration Association
shall designate an arbitrator. The arbitration shall be final and binding, and
enforceable in any court of competent jurisdiction. The arbitrator shall award
attorneys' fees (including those of in-house counsel) and costs to the
prevailing party and charge the cost of arbitration to the party which is not
the prevailing party. Notwithstanding anything herein to the contrary, this
Section 13.25 shall not prevent Purchaser or Seller from seeking and obtaining
equitable relief on a temporary or permanent basis, including, without
limitation, a temporary restraining order, a preliminary or permanent injunction
or similar equitable relief, from a court of competent jurisdiction located in
the City of San Antonio, Texas (to which all parties hereto consent to venue and
jurisdiction) by instituting a legal action or other court proceeding in order
to protect or enforce the rights of such party under this Contract or to prevent
irreparable harm and injury. The court's jurisdiction over any such equitable
matter, however, shall be expressly limited only to the temporary, preliminary,
or permanent equitable relief sought; all other claims initiated under this
Contract between the parties hereto shall be determined through final and
binding arbitration in accordance with this Section 13.25.
13.27 .....AIMCO Marks. Purchaser agrees that Seller, the Property Manager or
AIMCO, or their respective affiliates, are the sole owners of all right, title
and interest in and to the AIMCO Marks (or have the right to use such AIMCO
Marks pursuant to license agreements with third parties) and that no right,
title or interest in or to the AIMCO Marks is granted, transferred, assigned or
conveyed as a result of this Contract. Purchaser further agrees that Purchaser
will not use the AIMCO Marks for any purpose.
13.28 .....Non-Solicitation of Employees. Purchaser acknowledges and agrees
that, without the express written consent of Seller, neither Purchaser nor any
of Purchaser's employees, affiliates or agents shall solicit any of Seller's
employees or any employees located at the Property (or any of Seller's
affiliates' employees located at any property owned by such affiliate) for
potential employment.
13.29 .....Survival. Except for (a) all of the provisions of this Article 13
(other than Section 13.19, 13.21 and 13.23), and (b) any provision of this
Contract which expressly states that it shall so survive (the foregoing (a) and
(b) referred to herein as the "Survival Provisions"), none of the terms and
provisions of this Contract shall survive the termination of this Contract, and,
if the Contract is not so terminated, all of the terms and provisions of this
Contract (other than the Survival Provisions) shall be merged into the Closing
documents and shall not survive Closing.
13.29 Multiple Purchasers. As used in this Contract, the term "Purchaser",
means all entities acquiring any interest in the Property at the Closing,
including, without limitation, any assignee(s) of the original Purchaser
pursuant to Section 13.3 of this Contract. In the event that "Purchaser" has any
obligations or makes any covenants, representations or warranties under this
Contract, the same shall be made jointly and severally by all entities being a
Purchaser hereunder. In the event that Seller receives notice from any entity
being a Purchaser hereunder, the same shall be deemed to constitute notice from
all entities being a Purchaser hereunder. In the event that any entity being a
Purchaser hereunder takes any action, breaches any obligation or otherwise acts
pursuant to the terms of this Contract, the same shall be deemed to be the
action of the other entity(ies) being a Purchaser hereunder and the action of
"Purchaser" under this Contract. In the event that Seller is required to give
notice or take action with respect to Purchaser under this Contract, notice to
any entity being a Purchaser hereunder or action with respect to any entity
being a Purchaser hereunder shall be a notice or action to all entities being a
Purchaser hereunder. In the event that any entity being a Purchaser hereunder
desires to bring an action or arbitration against Seller, such action must be
joined by all entities being a Purchaser hereunder in order to be effective. In
the event that there is any agreement by Seller to pay any amount pursuant to
this Contract to Purchaser under any circumstance, that amount shall be deemed
maximum aggregate amount to be paid to all parties being a Purchaser hereunder
and not an amount that can be paid to each party being a Purchaser hereunder. In
the event that Seller is required to return the Initial Deposit, Additional
Deposit or other amount to Purchaser, Seller shall return the same to any entity
being a Purchaser hereunder and, upon such return, shall have no further
liability to any other entity being a Purchaser hereunder for such amount. The
foregoing provisions also shall apply to any documents, including without
limitation, the General Assignment and Assumption and the Assignment and
Assumption of Leases and Security Deposits, executed in connection with this
Contract and the transactions contemplated hereby.
ARTICLE 14..
LEAD-BASED PAINT DISCLOSURE
14.1 ......Disclosure. Seller and Purchaser hereby acknowledge delivery of the
Lead Based Paint Disclosure attached as Exhibit H hereto. The provisions of this
Section 14.1 shall survive the Closing and delivery of the Deed to Purchaser.
14.2 ......Consent Agreement. Testing (the "Testing") has been performed at the
Property with respect to lead based paint. Law Engineering and Environmental
Services, Inc., performed the Testing and reported its findings in the Report of
Findings dated May 14, 2001, a copy of which has been provided to Purchaser and
the cover sheet of which is attached hereto as Exhibit I (the "Report"). The
Report certifies the Property as free from the hazards of lead based paint. By
execution hereof, Purchaser acknowledges receipt of a copy of the Report, the
Lead Based Paint Disclosure Statement attached hereto as Exhibit H, and
acknowledges receipt of that certain Consent Agreement (the "Consent Agreement")
by and among the United States Environmental Protection Agency (executed
December 19, 2001), the United States Department of Housing and Urban
Development (executed January 2, 2002), and Apartment Investment and Management
Company ("AIMCO") (executed December 18, 2001). Because the Property has been
certified as free from the hazards of lead based paint, Seller is not required
under the Consent Agreement to remediate or abate any lead based paint condition
at the Property prior to Closing. Purchaser acknowledges and agrees that (1)
after Closing, the Purchaser and the Property shall be subject to the Consent
Agreement and the provisions contained herein related thereto, and (2) that
Purchaser shall not be deemed a third party beneficiary to the Consent
Agreement. The provisions of this Section 14.2 shall survive the termination of
this Contract, and if not so terminated, the Closing and delivery of the Deed to
Purchaser.
[Remainder of Page Intentionally Left Blank]
NOW, THEREFORE, the parties hereto have executed this Contract as of the
date first set forth above.
Seller:
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By: ConCap Holdings, Inc.,
a Texas corporation,
its general partner
By: /s/Patrick Slavin
Patrick Slavin
Senior Vice President
Purchaser:
CASH INVESTMENTS OF EL PASO, LP,
a Texas limited partnership
By:/s/Richard Aguilar
Name: Richard Aguilar
Title: Vice President
ESCROW AGENT SIGNATURE PAGE
The undersigned executes the Contract to which this signature page is
attached for the purpose of agreeing to the provisions of Section 2.3 of the
Contract, and hereby establishes ________________________, 2003 as the date of
opening of escrow and designates ___________________________________ as the
escrow number assigned to this escrow.
ESCROW AGENT:
STEWART TITLE GURANTY COMPANY
By:
Name:
Title:
BROKER SIGNATURE PAGE
The undersigned Other Broker hereby executes this Broker Signature Page
solely to confirm the following: (a) Other Broker represents only the Purchaser
in the transaction described in the Contract to which this signature page is
attached, and (b) Other Broker acknowledges that the only compensation due to
Broker in connection with the Closing of the transaction described in the
Contract to which this signature page is as set forth in Section 9.2 of the
Contract.
OTHER BROKER:
RICHARD AGUILAR
MAJESTIC REALTORS
By: /s/ Richard Aguilar
Name: Richard Aguilar
Title: Vice President
Exhibit 10.34
ASSIGNMENT OF PURCHASE AND SALE CONTRACT
THIS ASSIGNMENT OF PURCHASE AND SALE CONTRACT (this "Assignment") is made
and entered into effective as of the 8th day of December, 2003 by and between
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P., a California limited partnership
("Assignor") and CCIP SILVERADO, L.P., a Delaware limited partnership
("Assignee").
W I T N E S S E T H :
WHEREAS, Assignor has entered into that certain Purchase and Sale Contract
(the "Purchase Contract"), dated as of December 8, 2003, by and between
Assignor, as Seller, and Cash Investments of El Paso, LLC, a Texas limited
liability company, as Purchaser, covering certain improved real property located
in El Paso County, Texas, known as the Silverado Apartments, located at 9300
Viscount, El Paso, Texas, as more particularly described in the Purchase
Contract and on the attached Exhibit A (the "Property");
WHEREAS, Assignor is no longer the owner of the Property but transferred
and conveyed the Property to Assignee, and was named as the Seller under the
Purchase Contract by virtue of a scrivener's error, and to evidence the intent
of Assignor and Assignee that Assignee is and was to have been named as the
Seller under the Purchase Contract, Assignor desires to assign the Purchase
Contract to Assignee, and Assignee desires to accept such assignment, all upon
the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and in further
consideration of $10.00 and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Assignor and Assignee do hereby
agree as follows:
1. Assignment. Assignor does hereby assign to Assignee all of Assignor's
right, title and interest in and to the Purchase Contract.
2. Acceptance. Assignee does hereby accept the assignment of the Purchase
Contract and assumes all of the benefits and burdens thereof as though
originally named as the seller thereunder.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as
of the date first set out above.
ASSIGNOR:
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.,
a Delaware limited partnership
By: ConCap Holdings, Inc.,
a Texas corporation,
its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
ASSIGNEE:
CCIP SILVERADO, L.P.,
a Delaware limited partnership
By: CCIP Silverado, L.L.C., a Delaware limited
liability company, doing business in Texas
as CCIP Silverado of Texas, L.L.C.,
its general partner
By: Consolidated Capital Institutional
Properties, a California limited
partnership, its sole member
By: ConCap Equities, Inc.,
a Delaware corporation,
its general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
EXHIBIT A
LEGAL DESCRIPTION
Being a portion of Lots 5 & 8, Farah Subdivision, in the City of El Paso, El
Paso County, Texas, and being more particularly described as follows:
Commencing at an existing city monument in the center line intersection of
Viscount Boulevard and Shaver Drive; thence with center line of Viscount
Boulevard South 70(0) 24' 52" East a distance of 39.92; Thence, leaving said
center line South 19(0) 35' 08" West a distance of 60.00' to a 5/8" rebar with
cap set on the South right of way of said Boulevard, and being the POINT OF
BEGINNING,
Thence with said right of way South 70(0) 24' 52" East a distance of 116.12" to
a 3/8" rebar found at the beginning of a curve to the right;
Thence with the arc of said curve 690.93 " having a radius of 763.92', a delta
of 51 (0) 47' 30" and a chord being South 44(0) 31' 07" East a distance of
667.26' to a 5/8" rebar with cap set;
Thence with said right of way South 18(0) 37' 22" East a distance of 510.83' to
a 5/8" rebar with cap set;
Thence leaving said right of way South 71(0) 22' 38" West a distance of 239.94'
to a 5/8"' rebar with cap set;
Thence North 54(0)07' 22" West a distance of 529.00' to a 5/8" rebar with cap
set;
Thence North 19(0) 35' 08" East a distance of 262.80' to an inaccessible corner
and being the Southwest corner of El Paso Electric Company sub-station site;
Thence South 70(0)24' 52" East a distance of 145.73' to a galvanized fence
post found;
Thence South 18(0) 37' 22" East a distance of 39.99' to a 5/8" rebar with cap
set being the South boundary line of El Paso Electric Company sub-station site;
Thence North 71(0) 22' 38" East a distance of 25.00' to a 5/8" rebar with cap
set being the Southeast corner of El Paso Electric Company sub-station site;
Thence North 18(0) 37' 22" West a distance of 185.00' to an inaccessible corner
and being the Northeast corner of El Paso Elective sub-station site;
Thence South 71(0)22' 38" West a distance of 25.00' to a 5/8' rebar with cap
set;
Thence South 18(0)37' 22" East a distance of 17.75" to an inaccessible corner;
Thence North 70(0) 24' 52" West a distance of 115.76' to an inaccessible corner
being the Northeast corner of El Paso Electric Company sub-station site;
Thence South 19(0) 35' 08"' West a distance of 49.99' to an inaccessible corner
being the Southwest corner of El Paso Electric Company sub-station site;
Thence North 70(0)24' 52" West a distance of 287.30' to a 5/8" rebar with cap
set;
Thence North 19(0) 35" 08" East a distance of 380.01 to THE POINT OF BEGINNING.
Exhibit 10.35
REINSTATEMENT AND FIRST AMENDMENT
TO PURCHASE AND SALE CONTRACT
(with Assignment and Assumption of Purchase Contract)
THIS REINSTATEMENT AND FIRST AMENDMENT TO PURCHASE AND SALE CONTRACT (this
"Amendment") is entered into effective as of the 6th day of February, 2004, by
and between CCIP SILVERADO, L.P., a Delaware limited partnership ("Seller"),
assignee of CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P., a California limited
partnership ("Original Seller"), and CASH INVESTMENTS OF EL PASO, LLC, a Texas
limited liability company ("Original Purchaser") and EPT SAN MATEO APARTMENTS,
LP, a Texas limited partnership, assignee of Original Purchaser ("Purchaser").
RECITALS:
A. Original Seller and Original Purchaser entered into that certain
Purchase and Sale Contract dated as of December 8, 2003 ("Purchase Contract"),
covering certain parcels of real property located in El Paso County, Texas, as
more particularly described in the Purchase Contract.
B. Original Seller transferred and conveyed to Seller, an affiliate of
Original Seller, the Property, through scrivenor's error was identified as the
seller in the Purchase Contract, and to correct such error assigned to Seller,
and Seller assumed, all the rights and obligations of Seller under the Purchase
Contract pursuant to that certain Assignment of Purchase and Sale Contract dated
effective as of December 8, 2003.
C. The Closing did not occur on the Closing Date.
D. Purchaser and Seller desire to reinstate and amend the Purchase
Contract in certain respects, as set forth below.
E. Purchaser desires to assign its rights and obligations under the
Purchase Contract to Purchaser.
F. All capitalized terms used but not defined in this Amendment shall have
the meaning ascribed to them in the Purchase Contract.
AGREEMENTS:
FOR TEN DOLLARS AND OTHER GOOD AND VALUABLE CONSIDERATION THE RECEIPT AND
SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, Original Purchaser, Purchaser and
Seller hereby agree as follows:
1. Reinstatement. Effective as of February 6, 2004, Seller and Purchaser
hereby reinstate the Purchase Contract in full force and effect, subject to the
modifications and amendments set forth in this Amendment.
2. Seller's Name. Effective as of December 8, 2003, Seller and Original
Purchaser hereby agree that the Purchase Contract shall be, and is hereby,
amended such that the name of the Seller as stated in the Purchase Contract
shall be CCIP SILVERADO, L.P., a Delaware corporation in lieu of CONSOLIDATED
CAPITAL EQUITY PARTNERS, L.P., a California limited partnership.
3. Seller's Signature Block. Effective as of December 8, 2003, Seller and
Original Purchaser hereby agree that the Purchase Contract shall be, and is
hereby, amended such that the signature block of Seller contained within the
Purchase Contract shall be as set forth below as Seller's signature to this
Amendment.
4. Assignment and Assumption. Subject to the Amendments of the Purchase
Contract set forth in this Amendment and the provisions of Section 13.3 of the
Purchase Contract, Original Purchaser does hereby assign to Purchaser all of
Original Purchaser's rights under the Purchase Contract, and Purchaser does
hereby accept such assignment and assumes all of the benefits and burdens
thereof, provided, however, that it is acknowledged and agreed that Original
Purchaser is not and shall not be released from its liabilities under the
Purchase Contract by virtue of such assignment and assumption.
5. Definitions. ARTICLE I of the Purchase Contract is hereby amended as
follows:
(a) Each of the following definitions shall be deleted in
their entirety, and the words "Intentionally omitted" inserted in
their place: (i) "Assumed Deed of Trust", (ii) "Assumed
Encumbrances", (iii) "Assumed Loan Documents", (iv) "Assumption
Guidelines", (v) "Loan Assumption and Release", (vi) "Loan Balance"
and (vii) "Required Loan Fund Amounts".
(b) Each of the following definitions shall be amended as
follows:
(i) In order (1) to add the phrase "Block 1" behind the words
"Lots 5 & 8", and (2) to add the recording information of the
plat of the Farah Subdivision, each as referred to in the
first paragraph of the legal description of the Land set
forth on Exhibit A to the Purchase Contract, and (3) to
correct a typographical error in the description of a curve
referred to in the fourth paragraph of said Exhibit A to read
"690.53" instead of "690.93" minutes, the definition of
"Land" shall be amended such that the Exhibit A attached to
the Purchase Contract shall be replaced with Exhibit A
attached hereto.
(ii) The definition of "Lender" set forth in Section 1.1. 32
shall be amended and restated as follows:
"Lender" means Federal Home Loan Mortgage Corporation,
assignee of GMAC Commercial Mortgage Corporation, a
California corporation, whose servicer is GMAC Commercial
Mortgage Corporation, a California corporation.
(iii)The definition of "Lender's Assumption's Fees" set forth
in Section 1.1.34 shall be amended and restated as follows:
"Lender Fees" shall mean all fees and expenses
(including, without limitation, all prepayment penalties and
pay-off fees) imposed or charged by Lender or its counsel in
connection with the Loan Payoff, and, to the extent that the
Loan Payoff occurs on a date other than as permitted under
the Note and Deed of Trust, any amounts of interest charged
by Lender for the period from the Closing Date to the
permitted prepayment date, the amount of the Lender's Fees to
be determined as of the Closing Date.
(iv) The definition of "Loan Payoff" set forth in Section
1.1.38 shall be amended and restated as follows:
"Loan Payoff" shall have the meaning set forth in
Section 5.4.7.
(v) The definition of "Miscellaneous Property Assets" shall
be amended to add to the end of the last sentence thereof,
before the ".", the following: "and any and all rights,
warranties, claims and/or causes of action held by Seller (as
the assignee of Consolidated Capital Equity Partners, L.P.)
against Hencie International, Inc. (and/or its successors,
legal representatives and assigns), under that certain
Agreement between Owner and Contractor, dated May 1, 2000, by
and between Consolidated Capital Equity Partners, L.P. and
Hencie International, Inc.
(vi) The definition of "Note" set forth in Section 1.1.42
shall be amended and restated as follows:
"Note" means that certain that certain Multifamily Note
in the original principal amount of $3,525,000, dated as of
October 2, 2000, executed by Consolidated Capital Equity
Partners, L.P., a California limited partnership, and payable
to the order of the GMAC Commercial Mortgage Corporation, a
California corporation, as (i) assigned to Lender and (ii)
assumed by Seller pursuant to that certain Assumption
Agreement by and between Consolidated Capital Equity
Partners, L.P., Seller and Lender, dated as of July 31, 2002.
(c) To insert the following definitions to the end of ARTICLE
I, as follows:
(i) 1.1.76 "Deed of Trust" shall have the meaning set forth
in Section 4.5.
(ii) 1.1.77 "Environmental Report" means collectively (a)
that certain Phase I environmental study prepared for
Purchaser, dated January 22, 2004, prepared by EMC
Environmental Services, Inc., and (b) each test of and/or oil
sample analysis and report which has been or may hereafter be
obtained with respect to the 250 KVA transformer serial
#71K5537, located on the Property, and each and any other
transformer located on the Property.
6. Purchase Price. Section 2.2 of the Purchase Contract is hereby amended
such that:
(a) the Purchase Price for the Property as set forth in the
first sentence thereof shall be an amount equal to $6,650,000 less
the Lender's Fees; and
(b) Section 2.2.4 shall be deleted in its entirety and
replaced with the words "Intentionally Omitted".
7. Property Materials. Each of the three paragraphs of Section 3.5 shall
be numbered in the order in which they appear as 3.5.1, 3.5.2 and 3.5.3,
respectively.
8. Title Policy. Section 4.1 of the Purchase Contract shall be amended
such that Seller shall be responsible only for payment of the basic premium for
the Title Policy to the extent of the insured amount of $6,550,000.
9. Permitted Exceptions. Section 4.4.3 of the Purchase Contract is hereby
deleted in its entirety.
10. Existing Deed of Trust. Section 4.5 of the Purchase Contract shall be
amended and restated as follows:
4.5 Existing Deed of Trust. It is understood and agreed that,
whether or not Purchaser gives an Objection Notice with respect
thereto, any deeds of trust and/or mortgages (including any and all
mortgages which secure the Note) and any related assignment of
leases and rents, financing statements, subordination agreements and
other collateral agreements pertaining to such liens and security
interests against the Property (collectively and whether one or
more, the "Deed of Trust"), shall not be deemed Permitted
Exceptions, whether Purchaser gives written notice of such or not,
and shall be paid off, satisfied, discharged and/or cured by Seller
at Closing, provided that the Lender's Fees due in connection with
the Loan Payoff shall be paid by Purchaser.
11. Purchaser Financing. A new Section 4.6 shall be added to the Purchase
Contract to read as follows:
4.6 Purchaser Financing. Purchaser assumes full
responsibility to obtain the funds required for settlement, and
Purchaser's acquisition of such funds shall not be a contingency
to the Closing.
12. Closing Date. Each of Seller, Original Purchaser and Purchaser hereby
agree that Section 5.1 of the Purchase Contract shall be amended such that (a)
the Closing Date shall be extended to March 31, 2004 (subject to all other
provisions set forth in Section 5.1. with respect to the Closing and the Closing
Date), and (b) by adding the following sentence as a new second sentence
thereto: "Seller agrees that, not later than 10 calendar days prior to the
Closing Date, Seller will deliver or cause to be delivered to Purchaser final
drafts of the counterpart documents to be executed and delivered by Purchaser at
the Closing pursuant to Section 5.3.5, Section 5.3.6 and Section 5.3.7, together
with copies of the drafts of the documents to be executed by Seller pursuant to
Section 5.2.1 and Section 5.2.2."
13. Seller Closing Deliveries.
(a) Section 5.2.1 shall be amended such that (i) the word
"Purchaser" shall be replaced with the words "Purchase Contract",
and (ii) the form of the Deed attached as Exhibit B shall be in the
form attached hereto as Exhibit B; and
(b) Because of the assurances already provided to Purchaser by
virtue of the agreement of Seller contained in Section 5.4.9, the
provisions Section 5.2.12 of the Purchase Contract are omitted in
their entirety.
14. Purchaser Closing Deliveries. Section 5.3.11 of the Purchase Contract
is amended and restated in its entirety to read as follows:
5.3.11 The Lender Fees (subject to reduction thereof from the
amount set forth in Section 2.2 in the calculation of the Purchase
Price).
15. Existing Loan. Section 5.4.7 of the Purchase Contract is hereby
amended and restated in its entirety as follows:
5.4.7 Existing Loan. On the Closing Date, Seller shall pay
(which payment may be made by Seller out of the proceeds of the
Purchase Price) the outstanding principal balance of the Note
together with all interest accrued under the Note prior to the
Closing Date (the "Loan Payoff"). Purchaser shall pay all Lender
Fees (subject to reduction of such amount from the amount set forth
in Section 2.2 in the calculation of the Purchase Price). Any
existing reserves, impounds and other accounts maintained in
connection with the Loan shall be released in Good Funds to Seller
at the Closing unless credited by Lender against the amount due from
Seller under the Note.
16. Environmental. Section 6.1.7 of the Purchase Contract is hereby
amended to insert at the beginning of subpart (A) thereof "except as disclosed
or referred to in the Environmental Report,".
17. Closing Conditions. Section 8.2.5 of the Purchase Contract is hereby
deleted in its entirety.
18. Expiration of Feasibility Period. Original Purchaser and Purchaser
acknowledge that each of the Feasibility Period and Objection Deadline has
expired, together with Purchaser's right to terminate the Purchase Contract
pursuant to the provisions of Section 3.2 of the Purchase Contract, and that
Purchaser shall have no right to a return of the Deposit except as set forth in
Section 10.2, Section 11.1 and Section 12.1. In that connection, Purchaser
acknowledges that it has had full opportunity to conduct and make all
Investigations of or concerning the Property that Purchaser desires to make,
ascertain or confirm, and that Purchaser understands and agrees that Seller
shall have no liability for any matter existing with respect to the condition of
the Property, as set forth in Section 6.2 of the Purchase Contract, including
but not limited to any further investigation, testing, repair, restoration,
replacement or remediation of any such condition, specifically including without
limitation any matter concerning the environmental condition of the Property set
forth in the Environmental Report and/or any matter concerning the transformers,
boilers, pipes or other equipment or condition of the Property.
19. Expiration of Title Review. Original Purchaser and Purchaser
acknowledge that the Objection Deadline has expired, together with Purchaser's
right to terminate the Purchase Contract pursuant to the provisions of Section
4.3 with respect to the matters set forth in the Title Documents and Survey, but
without waiver of the provisions of Section 4.4.1, Section 4.4.5 (as modified in
this Amendment) and Section 7.3 of the Purchase Contract.
20. Conforming Amendments. Any and all terms and provisions of the
Purchase Contract are hereby amended and modified wherever necessary, and even
though not specifically addressed herein, so as to conform to the amendments set
forth in the preceding paragraphs hereof.
21. Full Force and Effect. Except as expressly modified and amended
hereby, all other terms and conditions of the Purchase Contract shall continue
in full force and effect.
22. Facsimile and Counterparts. This Amendment may be executed (a) by
facsimile transmission, the same of which will be treated as an original and (b)
in one or more counterparts, each of which shall be deemed an original and all
of which combined shall constitute one and the same instrument.
Executed as of the date first set forth above.
Seller:
CCIP SILVERADO, L.P.,
a Delaware limited partnership
By: CCIP Silverado, L.L.C., a Delaware
limited liability company, doing
business in Texas as CCIP Silverado of
Texas, L.L.C., its general partner
By: Consolidated Capital Institutional
Properties, a California limited
partnership, its sole member
By: ConCap Equities, Inc.,
a Delaware corporation,
its general partner
By: /s/Patrck Slavin
Name: Patrick Slavin
Title: Senior Vice
President
Original Purchaser:
CASH INVESTMENTS OF EL PASO, LP,
a Texas limited partnership
By:/s/ Richard Aguilar
Name: Richard Aguilar
Title: General Partner
Purchaser:
EPT SAN MATEO APARTMENTS, LP
a Texas limited partnership
By: EPT San Mateo Management, LLC,
a Texas limited liability company,
its general partner
By: /s/Richard Aguilar
Name: Richard Aguilar
Title: Manager