UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 29, 2005
CONSOLIDATED CAPITAL GROWTH FUND
(Exact name of Registrant as specified in its charter)
California 0-8639 94-2382571
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File Number) Identification Number)
organization)
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.03 Creation of a Direct Financial Obligation or an Obligation Under
an Off-Balance Sheet Arrangement of a Registrant
On August 29, 2005, the Registrant refinanced the mortgage encumbering The Lakes
Apartments. The refinancing replaced the existing mortgage, which at the time of
refinancing had a principal balance of $12,240,000, with a new mortgage loan in
the principal amount of approximately $9,708,000. The new loan was refinanced
under a permanent credit facility ("Permanent Credit Facility") with Fannie Mae,
which has a maturity of September 16, 2007, with one five-year extension option.
The Permanent Credit Facility includes properties in other partnerships that are
affiliated with the general partner of the Registrant. The Permanent Credit
Facility creates separate loans for each property that are not
cross-collateralized or cross-defaulted with the other property loans. The new
loan has a variable interest rate of the Fannie Mae discounted mortgage-backed
security index plus 85 basis points, which rate is currently 4.46% per annum,
and resets monthly, compared to 6.95% per annum on the prior mortgage. Monthly
principal payments are required based on a 30-year amortization schedule using
the interest rate in effect during the first month that any property is in the
Permanent Credit Facility. The loans are prepayable without penalty. In
connection with the refinancing, an affiliate of the Registrant's general
partner advanced the Registrant approximately $2,720,000 to cover the amount
needed to payoff the existing mortgage and closing costs.
In accordance with the terms of the loan agreement relating to the new mortgage,
the payment of the mortgage may be accelerated at the option of the lender if an
Event of Default, as defined in the loan agreement occurs. Events of Default
include, but are not limited to nonpayment of monthly interest and reserve
requirements and nonpayment of amounts outstanding on or before the maturity
date.
The foregoing description is qualified in its entirety by reference to the
Multifamily Note, Guaranty, Replacement Reserve and Security Agreement,
Assignment of Security Instrument and Multifamily Deed of Trust, Assignment of
Rents and Security Agreement copies of which are filed as exhibits 10.40 a,
10.40 b, 10.40 c, 10.40 d and 10.40 e to this report.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
The following exhibits are filed with this report (1):
10.40 a) Multifamily Note dated August 29, 2005 between Consolidated
Capital Growth Fund, a California Limited Partnership and GMAC
Commercial Mortgage Corporation.
10.40 b) Guaranty dated August 29, 2005 by AIMCO Properties, L.P. for the
benefit of GMAC Commercial Mortgage Corporation.
10.40 c) Replacement Reserve and Security Agreement dated August 29, 2005
between Consolidated Capital Growth Fund, a California Limited
Partnership and GMAC Commercial Mortgage Corporation.
10.40 d) Assignment of Security Instrument dated August 29, 2005 between
GMAC Commercial Mortgage Corporation and Fannie Mae.
10.40 e) Multifamily Deed of Trust, Assignment of Rents and Security
Agreement dated August 29, 2005 between Consolidated Capital Growth
Fund, a California Limited Partnership and GMAC Commercial Mortgage
Corporation.
(1) Schedules and supplemental materials to the exhibits have been omitted but
will be provided to the Securities and Exchange Commission upon request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED CAPITAL GROWTH FUND
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
Date: September 2, 2005
Exhibit 10.40 a
The Lakes Apartments
MULTIFAMILY NOTE
(VARIABLE LOAN)
US $9,708,078.00 As of August 29, 2005
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the
order of GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, the
principal sum of Nine Million Seven Hundred Eight Thousand Seventy-Eight and
00/100 Dollars (US $9,708,078.00), with interest on each Variable Loan at an
annual rate as calculated in Section 3 hereof.
This Note is executed and delivered by Borrower pursuant to one of either
(i) that certain Amended and Restated Loan Agreement, dated as of September 16,
2002, by and among certain borrowers signatory thereto and Lender or (ii) that
certain Loan Agreement dated as of November 1, 2002, by and among certain
borrowers signatory thereto and Lender. As used herein, the term "Loan
Agreement" shall mean whichever of the loan agreements described in the
preceding sentence shall apply from time to time in accordance with their
respective terms, along with all amendments, supplements, replacements,
restatements or other modifications thereto or thereof from time to time made.
The Loan Agreement shall evidence the obligation of Borrower to repay a Variable
Loan made by Lender to Borrower in accordance with the terms of the Loan
Agreement. This Note is entitled to the benefit and security of the Loan
Documents provided for in the Loan Agreement, to which reference is hereby made
for a statement of all of the terms and conditions under which the Variable Loan
evidenced hereby is made. The Loan Agreement requires certain of the terms of
each Variable Loan to be evidenced by one or a series of Loan Confirmation
Instruments, and reference is hereby made to each such Loan Confirmation
Instrument for such terms.
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. Event of Default and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Loan Agreement or, if not defined in the
Loan Agreement, as defined in the Security Instrument (as defined in Paragraph
5).
2. Address for Payment. All payments due under this Note shall be payable at
GMAC Commercial Mortgage Corporation, 200 Witmer Road, Horsham, PA 19044 ,
Attention: Servicing - Account Manager, or such other place as may be designated
by written notice to Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) This Note shall evidence a Variable Loan made from time to time under the
Loan Agreement. The Variable Loan shall bear interest at a rate determined in
accordance with Section 2.01 of the Loan Agreement.
(b) Borrower shall pay imputed interest on each Variable Loan in advance in the
form of a Discount in accordance with Section 1.04(b) of the Loan Agreement
(except that Borrower shall pay actual interest on the Variable Loan for the
partial month period, if any, in accordance with Section 1.04(a) of the Loan
Agreement).
(c) Borrower shall make monthly payments of principal each in the amount as set
forth on the attached Amortization Schedule. Lender shall apply each such
principal payment to the outstanding principal amount of the Loan on the
Rollover Date next following receipt of any such payment. If not sooner paid,
the entire principal amount of the Variable Loan shall be due and payable on the
earlier of (i) the termination of the Loan Agreement pursuant to subsection (e)
of Section 1.02 thereof, (ii) the fifth anniversary (unless such date is
extended pursuant to Section 1.07 of the Loan Agreement, in which case, the
tenth anniversary) of the Initial Closing Date or (iii) the maturity date of any
outstanding MBS, unless either (A) not less than five Business Days prior to the
maturity date of the outstanding MBS, a Borrower has requested that the
outstanding MBS be renewed with a new MBS or converted to a Fixed Loan to take
effect on the maturity date of the outstanding MBS and such new MBS has been
issued or conversion has occurred or (B) the MBS is automatically renewed, which
automatic renewal shall occur in the event that a Borrower does not make the
request set forth in subpart (iii)(A) above and does not give Lender notice not
less than five Business days prior to the maturity date of the outstanding MBS
that the Variable Loan related to such outstanding MBS shall be paid on the
maturity date of such outstanding MBS (the "Maturity Date"). Any MBS that is
issued as a result of an automatic renewal of a maturing MBS as contemplated by
subpart (iii)(B) above shall have a maturity date of three (3) months after the
MBS Issue Date.
(d) In addition to payment of principal and the Discount, Borrower shall pay the
Variable Loan Fee due on each Variable Loan in accordance with Section
1.04(b)(ii) of the Loan Agreement.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness that is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument") and reference is made to the Security Instrument for
other rights of Lender concerning the collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any additional notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
10 days after the amount is due, Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to 5 percent of such amount.
Borrower acknowledges that its failure to make timely payments will cause Lender
to incur additional expenses in servicing and processing the loan evidenced by
this Note (the "Loan"), and that it is extremely difficult and impractical to
determine those additional expenses. Borrower agrees that the late charge
payable pursuant to this Paragraph represents a fair and reasonable estimate,
taking into account all circumstances existing on the date of this Note, of the
additional expenses Lender will incur by reason of such late payment. The late
charge is payable in addition to, and not in lieu of, any interest payable at
the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as any monthly installment or any other payment due
under this Note remains past due for 30 days or more, interest under this Note
shall accrue on the unpaid principal balance from the earlier of the due date of
the first unpaid monthly installment or other payment due, as applicable, at a
rate (the "Default Rate") equal to the lesser of 4 percentage points above the
rate stated in the first paragraph of this Note or the maximum interest rate
which may be collected from Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the Loan, that, during the time that any monthly
installment or payment under this Note is delinquent for more than 30 days,
Lender will incur additional costs and expenses arising from its loss of the use
of the money due and from the adverse impact on Lender's ability to meet its
other obligations and to take advantage of other investment opportunities, and
that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment or payment due under this Note is delinquent for more than
30 days, Lender's risk of nonpayment of this Note will be materially increased
and Lender is entitled to be compensated for such increased risk. Borrower
agrees that the increase in the rate of interest payable under this Note to the
Default Rate represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional costs and
expenses Lender will incur by reason of Borrower's delinquent payment and the
additional compensation Lender is entitled to receive for the increased risks of
nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to any loss or damage suffered by Lender as a result
of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default, all Rents to which Lender is entitled under Section 3(a) of the
Security Instrument and the amount of all security deposits collected by
Borrower from tenants then in residence; (2) failure of Borrower to apply all
insurance proceeds and condemnation proceeds as required by the Security
Instrument; (3) failure of Borrower to comply with Section 14(d) or (e) of the
Security Instrument relating to the delivery of books and records, statements,
schedules and reports; (4) fraud or written material misrepresentation by
Borrower or any officer, director, partner, member or employee of Borrower in
connection with the application for or creation of the Indebtedness or any
request for any action or consent by Lender; or (5) failure to apply Rents,
first, to the payment of reasonable operating expenses (other than Property
management fees that are not currently payable pursuant to the terms of an
Assignment of Management Agreement or any other agreement with Lender executed
in connection with the Loan) and then to amounts ("Debt Service Amounts")
payable under this Note, the Security Instrument or any other Loan Document
(except that Borrower will not be personally liable (i) to the extent that
Borrower lacks the legal right to direct the disbursement of such sums because
of a bankruptcy, receivership or similar judicial proceeding, or (ii) with
respect to Rents that are distributed in any calendar year if Borrower has paid
all operating expenses and Debt Service Amounts for that calendar year).
(c) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; or (2) a Transfer that
is an Event of Default under Section 21 of the Security Instrument.
(d) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default, or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments. Pursuant to the terms of the Loan
Agreement, Borrower shall pay the entire amount of the Discount on any Variable
Loan in advance. Accordingly, any Variable Loan may be prepaid in whole or in
part and at any time without penalty. Borrower shall give Lender six (6)
Business Days advance notice of any prepayment.
11. Costs and Expenses. Borrower shall pay on demand all reasonable expenses and
costs, including reasonable fees and out-of-pocket expenses of attorneys and
expert witnesses and costs of investigation, incurred by Lender as a result of
any default under this Note or in connection with efforts to collect any amount
due under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Except as expressly provided in the Loan Agreement, presentment,
demand, notice of dishonor, protest, notice of acceleration, notice of intent to
demand or accelerate payment or maturity, presentment for payment, notice of
nonpayment, grace, and diligence in collecting the Indebtedness are waived by
Borrower and all endorsers and guarantors of this Note and all other third party
obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. Borrower agrees to an effective rate of
interest that is the stated rate of interest plus any additional rate of
interest resulting from any other charges or fees that are to be paid by
Borrower to Lender that may be found by a court of competent jurisdiction to be
interest. The amounts, if any, previously paid to Lender in excess of the
permitted amounts shall be applied by Lender to reduce the unpaid principal
balance of this Note. For the purpose of determining whether any applicable law
limiting the amount of interest or other charges permitted to be collected from
Borrower has been violated, all Indebtedness that constitutes interest, as well
as all other charges made in connection with the Indebtedness that constitute
interest, shall be deemed to be allocated and spread ratably over the stated
term of the Note. Unless otherwise required by applicable law, such allocation
and spreading shall be effected in such a manner that the rate of interest so
computed is uniform throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL. The provisions
of Section 11.07 of the Loan Agreement (entitled "Choice of Law; Consent to
Jurisdiction; Waiver of Jury Trial") are hereby incorporated into this Note by
this reference to the fullest extent as if the text of such Section were set
forth in its entirety herein.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 11.09 of the Loan Agreement.
20. Security for this Note. Reference is made hereby to the Loan Agreement and
the Security Documents for additional rights and remedies of Lender relating to
the indebtedness evidenced by this Note. Each Security Document shall be
released in accordance with the provisions of the Security Documents.
21. Loan May Not Be Reborrowed. Borrower may not re-borrow any amounts under
this Note which it has previously borrowed and repaid under this Note.
22. Default Under Loan Agreement and Other Loan Documents. The occurrence of an
Event of Default under the Loan Agreement or the Security Instrument shall
constitute an "Event of Default" under this Note in accordance with the Loan
Agreement and the Security Instrument. Upon the occurrence of an Event of
Default under the Loan Agreement or the Security Instrument, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof.
23. Loan Confirmation Instruments; Accounting for Variable Loans. The terms of
the Loan Agreement and this Note govern the repayment, and all other terms
relating to the Variable Loan. However, Borrower shall execute a Loan
Confirmation Instrument to create a physical instrument evidencing each MBS
issued to fund the Variable Loan. The Loan Confirmation Instrument executed by
Borrower in accordance with Section 2.02 of the Loan Agreement shall set forth
the amount, term, Discount, Closing Date and certain other terms of each MBS
issued to fund the Variable Loan. The Loan Confirmation Instrument shall
conclusively establish each of the terms described in the preceding sentence,
absent manifest error. The MBS evidenced by the Loan Confirmation Instrument
does not represent a separate indebtedness from that evidenced by this Note. In
making proof of this Note, no other documents other than this Note shall be
required. In making proof of the amount and terms of the outstanding Variable
Loans under this Note, this Note, the related Loan Confirmation Instruments, and
Lender's records concerning payments made by Borrower under this Note, shall be
conclusive evidence of the terms and outstanding amounts of the Variable Loan,
absent manifest error.
24. Modifications to Note. There are standard modifications to this Note that
are attached as Exhibit B-1 and Exhibit B-2 hereto. In addition, there may be
special modifications to this Note attached as Exhibit B-3 hereto. All such
exhibits are hereby incorporated into this Note as a part hereof.
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
CONSOLIDATED CAPITAL GROWTH FUND, a
California limited partnership, doing
business in North Carolina as
Consolidated Capital Growth Fund Limited
Partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By:/s/Patti K. Fielding
Patti K. Fielding
Executive Vice President and
Treasurer
PAY TO THE ORDER OF FANNIE MAE, WITHOUT
RECOURSE.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:/s/Max W. Foore
Max W. Foore
Vice President
EXHIBIT B-1
GMACCM LOAN AGREEMENT MODIFICATIONS
During any time that the terms, covenants and provisions of that certain Loan
Agreement dated as of November 1, 2002 and more particularly described in the
second paragraph on page 1 of the Note apply to the Variable Loan evidenced by
the Note, paragraphs 3 and 23 of the Note are amended and replaced with the
following substitute paragraphs 3 and 23:
"3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) This Note shall evidence a Variable Loan made from time to time under the
Loan Agreement. Borrower shall not be required to make monthly principal
payments prior to the Fannie Mae Addition Date, but shall make monthly payments
of principal after the Fannie Mae Reassignment Date, if it occurs, as set forth
in Section 1.04(d) of the Loan Agreement.
(b) Borrower shall pay actual interest on the Variable Loan during the period
described in accordance with Section 1.04(a) of the Loan Agreement. Borrower
shall pay interest on its Variable Rate Loan in arrears at a rate equal to LIBOR
Rate plus a number of basis points determined in accordance with Section 2.01 of
the Loan Agreement. For purposes of the previous sentence, the LIBOR Rate shall
be reset every ninety (90) days commencing on the date that is ninety (90) days
after the Initial Closing Date. On the date the Variable Loan is funded,
Borrower shall pay interest in advance from the date of funding through August
31, 2005. On October 1, 2005 and on the first (1st) day of each calendar month
thereafter, Borrower shall pay interest in arrears calculated for the actual
number of days since the first (1st) day of the previous calendar month.
(c) If not sooner paid, the entire principal amount of the Variable Loan shall
be due and payable in accordance with Section 1.02 of the Loan Agreement.
(d) Borrower shall not pay any Discount.
23. Loan Confirmation Instruments; Accounting for Variable Loans. The
terms of the Loan Agreement and this Note govern the repayment, and all other
terms relating to the Variable Loan. However, Borrower shall execute one or a
series of Loan Confirmation Instruments to create a physical instrument
evidencing the terms of the Variable Loan. The Loan Confirmation Instrument or
series of Loan Confirmation Instruments executed by Borrower in accordance with
Section 2.02 of the Loan Agreement shall set forth the amount, term, the
interest rate spread over the LIBOR Rate Closing Date and certain other terms
related to the funding the Variable Loan. The Loan Confirmation Instrument shall
conclusively establish each of the terms described in the preceding sentence,
absent manifest error. The variable terms evidenced by the Loan Confirmation
Instrument do not represent a separate indebtedness from that evidenced by this
Note. In making proof of this Note, no other documents other than this Note
shall be required. In making proof of the amount and terms of the outstanding
Variable Loans under this Note, this Note, the related Loan Confirmation
Instruments, and Lender's records concerning payments made by Borrower under
this Note, shall be conclusive evidence of the terms and outstanding amounts of
the Variable Loan, absent manifest error."
During any time that the terms, covenants and provisions of that certain Amended
and Restated Loan Agreement dated as of September 16, 2002 and more particularly
described in the second paragraph on page 1 of the Note apply to the Variable
Loan evidenced by the Note, this Exhibit B-1 shall not apply and paragraphs 3
and 23 of the Note shall not be amended or replaced with the provisions set
forth in this Exhibit B-1.
EXHIBIT B-2
AIMCO MODIFICATIONS
The following modifications are made to the text of the Note that precedes this
Exhibit:
1. Section 9(b)(4) is modified by deleting "or" at the end thereof.
2. Section 9(b)(5) is modified to read as follows:
"(5) failure to apply Rents, first, to the payment of reasonable operating
expenses (other than Property management fees that are not currently
payable pursuant to the terms of an Assignment of Management Agreement or
any other agreement with Lender executed in connection with the Loan) and
then to amounts ("Debt Service Amounts") payable under this Note, the
Security Instrument or any other Loan Document (except that Borrower will
not be personally liable (i) to the extent that Borrower lacks the legal
right to direct the disbursement of such sums because of a bankruptcy,
receivership or similar judicial proceeding, or (ii) with respect to Rents
that are distributed in any calendar quarter if Borrower has paid all
operating expenses and Debt Service Amounts for such calendar quarter to
date); or"
3. A new Section 9(b)(6) is added following Section 9(b)(5), stating as
follows:
"(6) failure to pay when due any water and sewer charges, fire, hazard or
other insurance premiums and ground rents owing from time to time in
connection with the Mortgaged Property."
Exhibit 10.40b
The Lakes Apartments
GUARANTY
This Guaranty (the "Guaranty") is made and entered into as of the 29th day
of August, 2005 by AIMCO PROPERTIES, L.P., a Delaware limited partnership (the
"Guarantor"), for the benefit of GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation ("Lender").
RECITALS
A. Lender has agreed to execute both (i) that certain Amended and Restated Loan
Agreement, dated as of September 16, 2002, by and among AIMCO Properties, L.P.,
a Delaware limited partnership, certain borrowers signatory thereto and Lender
and (ii) that certain Loan Agreement dated as of November 1, 2002, by and among
certain borrowers signatory thereto and Lender (as amended, supplemental or
otherwise modified or amended and restated from time to time, the "Loan
Agreement"), pursuant to which, inter alia, Lender has agreed, subject to the
terms, conditions and limitations of the Loan Agreement, to make a loan to
Consolidated Capital Growth Fund, a California limited partnership, doing
business in North Carolina as Consolidated Capital Growth Fund Limited
Partnership (the "Borrower") from time to time loan to be evidenced by the Note
(the "Loan"). Terms used herein not defined herein have the definition given
them in the Loan Agreement.
B. The repayment of the Loan and all of the Obligations of the Borrower under
the Loan Agreement or the other Loan Documents are guaranteed by this Guaranty
to the extent of Borrower's personal liability as provided in Section 9 of the
Note evidencing the Loan, and except for such obligations described herein,
Guarantor shall have no liability in connection with, or responsibility to
perform, under or in accordance with the Loan Agreement or other Loan Documents.
C. Guarantor owns, directly or indirectly, an ownership interest in the Borrower
and will receive a direct and material benefit from the Loans to the Borrower.
D. Lender is willing to make the Loan to the Borrower only if Guarantor agrees
to enter into this Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Loan to Borrower,
and in consideration thereof, Guarantor hereby agrees as follows:
Section 1. Definitions. All capitalized terms used but not defined in this
Guaranty shall have the meanings ascribed to such terms in the Loan Agreement.
The following terms shall have the meaning set forth below for purposes of this
Guaranty:
"Material Adverse Effect" means, with respect to any circumstance, act,
condition or event of whatever nature (including any adverse determination in
any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, or circumstance or circumstances, whether or not
related, a material adverse change in or a materially adverse effect upon the
present or future ability of the Guarantor, to the extent specifically referred
to in the applicable provision of that Guaranty, to perform the Guaranteed
Obligations.
"Net Worth" means, as of any date of determination and without double
counting any item, the sum of the capital stock or other capital equity
interests and additional paid-in capital plus retained earnings (or minus
accumulated deficits) of the Guarantor, the REIT and their respective
Subsidiaries on a consolidated basis determined in conformity with GAAP.
"REIT" means Apartment Investment and Management Company, a Maryland
corporation.
"Subsidiary" means, with respect to the REIT, the Guarantor or an
Affiliate of either of them, a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by the REIT, the
Guarantor or an Affiliate of either of them.
Section 2. Guaranty of Payment. Guarantor irrevocably, absolutely and
unconditionally guarantees to Lender all of the following (collectively, the
"Guaranteed Obligations"): the due and punctual payment when due, whether at
maturity or earlier, by reason of acceleration or otherwise, at all times, of
all amounts for which Borrower is personally liable under Section 9 of the Note.
This Guaranty shall be an unconditional guaranty of payment and performance and
not of collection, and is in no way conditioned upon any attempt by Lender to
pursue or exhaust any remedy against Borrower. This Guaranty is a continuing
guaranty which shall remain in full force and effect until all of the Guaranteed
Obligations have been paid and performed in full; and Guarantor shall not be
released from any obligations to Lender under this Guaranty as long as any
amount payable by the Borrower to Lender, or any obligation by the Borrower,
under the Loan Documents is not performed, satisfied, settled or paid in full.
Section 3. Form of Payment. All payments under this Guaranty shall be made
to Lender in immediately available funds, without reduction by any recoupment,
set-off, counterclaim or cross-claim against Lender.
Section 4. Guarantor's Obligations are Absolute. The obligations of
Guarantor under this Guaranty shall be absolute and unconditional, shall not be
subject to any counterclaim, set-off, recoupment, deduction, or defense based
upon any claim Guarantor may have against Lender or Borrower and shall remain in
full force and effect without regard to, and shall not be released, discharged
or terminated or in any other way affected by, any circumstance or condition
(whether or not Guarantor shall have any knowledge or notice thereof),
including, without limitation:
(a) any amendment or modification of, or extension of time for payment of any of
the principal of, interest on or other amounts payable under the Loan Documents;
(b) any exercise or non-exercise by Lender of any right, power or remedy under
or in respect of the Loan Documents, or any waiver, consent, forbearance,
indulgence or other action, inaction or omission by Lender under or in respect
of the Loan Documents;
(c) any assignment, sale or other transfer of Borrower's interest in all or any
part of the real or personal property which at any time constitutes collateral
for the payment of the Guaranteed Obligations, including, without limitation, a
conveyance of such property by Borrower to Lender by deed in lieu of
foreclosure;
(d) any bankruptcy, insolvency, reorganization, adjustment, dissolution,
liquidation or other like proceeding involving or affecting Borrower or Lender
or their respective properties or creditors, or any action taken with respect to
the Loan Documents by any trustee or receiver of Borrower or Lender, or by any
court, in any such proceeding;
(e) any invalidity or unenforceability, in whole or in part, of any term or
provision of the Loan Documents or Borrower's incapacity or lack of authority to
enter into the Loan Documents;
(f) any release, compromise, settlement or discharge with respect to all or any
portion of Borrower's obligations under the Loan Documents;
(g) any acceptance of additional or substituted collateral for payment of the
Guaranteed Obligations or any release or subordination of any collateral held at
any time by Lender as security for the payment of the Guaranteed Obligations; or
(h) any resort to Guarantor for payment of all or any portion of the Guaranteed
Obligations, whether or not Lender shall have resorted to any collateral
securing the Guaranteed Obligations, if any, or shall have proceeded to pursue
or exhaust its remedies against Borrower (or any other Person) primarily or
secondarily liable for the Guaranteed Obligations.
No exercise, delay in exercise or non-exercise by Lender of any right hereby
given it, no dealing by Lender with Borrower, Guarantor or any other Person, no
change, impairment or suspension of any right or remedy of Lender, and no act or
thing which, but for this provision, could act as a release or exoneration of
the liabilities of Guarantor hereunder, shall in any way affect, decrease,
diminish or impair any of the obligations of Guarantor hereunder or give
Guarantor or any other Person any recourse or defense against Lender.
Section 5. Waiver. Guarantor unconditionally waives the following:
(a) notice of acceptance of this Guaranty and notice of any of the matters
referred to in Section 4 hereof;
(b) all notices which may be required by statute, rule of law or otherwise to
preserve intact any rights which Lender may have against Guarantor under this
Guaranty, including, without limitation, any demand, proof or notice of
non-payment of any of the principal of, interest on or other amounts payable
under the Loan Documents, and notice of any failure on the part of Borrower to
perform and comply with any covenant, agreement, term or condition of the Loan
Documents;
(c) any right to the enforcement, assertion or exercise of any right, power or
remedy conferred upon Lender in the Loan Documents or otherwise;
(d) any requirement that Lender act with diligence in enforcing its rights under
the Loan Documents or this Guaranty;
(e) any right to require Lender to proceed against or exhaust its recourse
against Borrower or any security or collateral held by Lender, if any, at any
time for the payment of the Guaranteed Obligations or to pursue any other remedy
in its power before being entitled to payment from Guarantor under this Guaranty
or before proceeding against Guarantor;
(f) any failure by Lender to file or enforce a claim against the estate (either
in administration, bankruptcy or any other proceeding) of Borrower or any other
Person;
(g) any defense based upon an election of remedies by Lender which destroys or
otherwise impairs the subrogation rights of Guarantor or the right of Guarantor
(after payment of the Guaranteed Obligations) to proceed against Borrower for
reimbursement, or both;
(h) any defense based upon any taking, modification or release of any collateral
for the Guaranteed Obligations, if any, or any failure to perfect any security
interest in, or the taking of, or failure to take any other action with respect
to, any collateral securing payment of the Guaranteed Obligations, if any;
(i) any defense based upon the addition, substitution or release, in whole or in
part, of any Person(s), including, without limitation, another guarantor,
primarily or secondarily liable for or in respect of the Guaranteed Obligations;
(j) any rights or defenses based upon an offset by Guarantor against any
obligation now or hereafter owed to Guarantor by Borrower; and
(k) all other notices which may or might be lawfully waived by Guarantor;
it being the intention hereof that Guarantor shall remain liable as principal,
to the extent set forth in this Guaranty, until the payment and performance in
full of the Guaranteed Obligations, notwithstanding any act, omission or thing
which might otherwise operate as a legal or equitable discharge of Guarantor
other than the payment and performance in full of the Guaranteed Obligations. No
delay by Lender in exercising any rights and/or powers hereunder or in taking
any action to enforce Borrower's obligations under the Loan Documents shall
operate as a waiver as to such rights or powers or in any manner prejudice any
and all of Lender's rights and powers hereunder against Guarantor. The intention
of Guarantor under this Guaranty is that, so long as any of the Guaranteed
Obligations remains unsatisfied, the obligations of Guarantor hereunder shall
not be discharged except by performance and then only to the extent of such
performance. Guarantor agrees that Guarantor's obligations hereunder shall not
be affected by any circumstances, whether or not referred to in this Guaranty,
which might constitute a legal or equitable discharge of a surety or guarantor.
Section 6. Election of Remedies. This Guaranty may be enforced from time
to time, as often as occasion therefor may arise, and without any requirement
that Lender must first pursue or exhaust any remedies available to it against
Borrower under the Loan Documents or against any other Person or resort to any
collateral at any time held by it for performance of the Guaranteed Obligations,
if any, or any other source or means of obtaining payment of any of the
Guaranteed Obligations.
Section 7. Representations and Warranties of Guarantor. Guarantor hereby
represents and warrants to the Lender as follows:
(a) Due Organization; Qualification. Guarantor is qualified to transact business
and is in good standing in the State in which it is organized and in each other
jurisdiction in which such qualification and/or standing is necessary to the
conduct of its business and where the failure to be so qualified would adversely
affect the validity of, the enforceability of, or the ability of Guarantor to
perform the Guaranteed Obligations.
(b) Power and Authority. Guarantor has the requisite power and authority (i) to
own its properties and to carry on its business as now conducted and as
contemplated to be conducted in connection with the performance of the
Guaranteed Obligations, and (ii) to execute and deliver this Guaranty and to
carry out the transactions contemplated by this Guaranty.
(c) Due Authorization. The execution, delivery and performance of this Guaranty
has been duly authorized by all necessary action and proceedings by or on behalf
of Guarantor, and no further approvals or filings of any kind, including any
approval of or filing with any Governmental Authority, are required by or on
behalf of Guarantor as a condition to the valid execution, delivery and
performance by Guarantor of this Guaranty.
(d) Valid and Binding Obligations. This Guaranty has been duly authorized,
executed and delivered by Guarantor and constitutes the legal, valid and binding
obligations of Guarantor, enforceable against Guarantor in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
affecting the enforcement of creditors' rights generally or by equitable
principles or by the exercise of discretion by any court.
(e) Non-contravention: No Liens. Neither the execution and delivery of this
Guaranty, nor the fulfillment of or compliance with the terms and conditions of
this Guaranty nor the payment or performance of the Guaranteed Obligations:
(i) does or will conflict with or result in any breach or violation of any
Applicable Law enacted or issued by any Governmental Authority or other
agency having jurisdiction over Guarantor, any of the Mortgaged Properties
or any other portion of the Collateral or assets of Guarantor, or any
judgment or order applicable to Guarantor or to which Guarantor is
subject;
(ii) does or will conflict with or result in any material breach or
violation of, or constitute a default under, any of the terms, conditions
or provisions of Guarantor's Organizational Documents, any indenture,
existing agreement or other instrument to which Guarantor is a party or to
which Guarantor, any of the Mortgaged Properties or any other portion of
the Collateral or other assets of Guarantor is subject; or
(iii) does or will require the consent or approval of any creditor of
Guarantor, any Governmental Authority or any other Person except such
consents or approvals which have already been obtained.
(f) Pending Litigation or Other Proceedings. Since the date of the most recent
financial statements delivered to Lender pursuant to Section 8(b) of this
Guaranty, there is no pending or, to the best knowledge of guarantor, threatened
action, suit, proceeding or investigation, at law or in equity, before any
court, board, body or official of any Governmental Authority or arbitrator
which, if decided adversely to Guarantor, would have, or may reasonably be
expected to have, a Material Adverse Effect on Guarantor. Guarantor is not in
default with respect to any order of any Governmental Authority to any extent
which would have, or may reasonably be expected to have, a Material Adverse
Effect on Guarantor.
(g) Solvency. Guarantor is not insolvent and will not be rendered insolvent by
the transaction contemplated by this Guaranty and after giving effect to such
transaction, Guarantor will not be left with an unreasonably small amount of
capital with which to engage in its business or undertakings, nor will Guarantor
have incurred, have intended to incur, or believe that it has incurred, debts
beyond its ability to pay such debts as they mature. Guarantor did not receive
less than a reasonably equivalent value in exchange for incurrence of the
Guaranteed Obligations. There (i) is no contemplated, pending or, to the best of
Guarantor's knowledge, threatened bankruptcy, reorganization, receivership,
insolvency or like proceeding, whether voluntary or involuntary, affecting
Guarantor and (ii) has been no assertion or exercise of jurisdiction over
Guarantor by any court empowered to exercise bankruptcy powers.
(h) No Contractual Defaults. There are no material defaults by Guarantor or, to
the knowledge of Guarantor, by any other Person under any contract to which
Guarantor is a party other than defaults which do not have, and are not
reasonably be expected to have, a Material Adverse Effect on Guarantor. Neither
Guarantor nor, to the knowledge of Guarantor, any other Person, has received
notice or has any knowledge of any existing circumstances in respect of which it
could receive any notice of default or breach in respect of any contracts, which
default would have, or which may reasonably be expected to have, a Material
Adverse Effect on Guarantor.
(i) Representations True and Correct. The representations and warranties made by
Guarantor in this Guaranty are true, complete and correct in all material
respects as of the Initial Closing Date and do not contain any untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(j) ERISA. Guarantor is in compliance in all material respects with all
applicable provisions of ERISA and has not incurred any liability to the PBGC on
a Plan under Title LV of ERISA. None of the assets of Guarantor constitute plan
assets (within the meaning of Department of Labor Regulation ss. 2510.3-101) of
any employee benefit plan subject to Title I of ERISA.
(k) Financial Information. The financial statements of Guarantor which have been
furnished to the Lender are complete and accurate in all material respects and
present fairly the financial condition of Guarantor, as of its date in
accordance with GAAP, applied on a consistent basis. Since the date of the most
recent of such financial statements no event has occurred which would have, or
may reasonably be expected to have a Material Adverse Effect on Guarantor,
except as disclosed in any filings made by Guarantor or its affiliates with the
United States Securities and Exchange Commission ("SEC"). Guarantor has no
material contingent obligations which are not otherwise disclosed in its most
recent financial statements except as disclosed in any filings made by Guarantor
or its affiliates with the SEC.
(l) Accuracy of Information. No information, statement or report furnished in
writing to the Lender by Guarantor concerning the Guarantor in connection with
this Guaranty or any other Loan Document or in connection with the consummation
of the transactions contemplated hereby and thereby contains any material
misstatement of fact or omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading as of the date made, except to the extent that such
misstatements and omissions when considered in the totality of such information,
statements and reports furnished by Guarantor are not materially misleading in
the aggregate; provided, however, the foregoing representation and warranty
shall not apply to any information, statement or report prepared by any third
party.
(m) No Conflicts of Interest. To the best knowledge of Guarantor, no member,
officer, agent or employee of the Lender has been or is in any manner
interested, directly or indirectly, in that Person's own name, or in the name of
any other Person, in the Guarantor (other than through the ownership of publicly
traded shares of common stock of affiliates of the Guarantor or limited
partnership units of Guarantor), the Loan Documents, or any Mortgaged Property,
in any contract for property or materials to be furnished or used in connection
with such Mortgaged Property or in any aspect of the transactions contemplated
by the Loan Documents.
(n) Governmental Approvals. To the best of Guarantor's knowledge, no
Governmental Approval not already obtained or made is required for the execution
and delivery of this Guaranty or the performance of the terms and provisions
hereof by Guarantor.
(o) Governmental Orders. Guarantor is not presently under any cease or desist
order or other orders of a similar nature, temporary or permanent, of any
Governmental Authority which would have the effect of preventing or hindering
performance of its duties hereunder, nor are there any proceedings presently in
progress or to its knowledge contemplated which would, if successful, lead to
the issuance of any such order.
(p) No Reliance. Guarantor acknowledges, represents and warrants that it
understands the nature and structure of the transactions contemplated by this
Guaranty and the other Loan Documents; that it is familiar with the provisions
of all of the documents and instruments relating to such transactions; that it
understands the risks inherent in such transactions, including the risk of loss
of all or any of the Mortgaged Properties; and that it has not relied on the
Lender or Fannie Mae for any guidance or expertise in analyzing the financial or
other consequences of the transactions contemplated by this Guaranty or any
other Loan Document or otherwise relied on the Lender or Fannie Mae in any
manner in connection with interpreting, entering into or otherwise in connection
with this Guaranty, any other Loan Document or any of the matters contemplated
hereby or thereby.
(q) Compliance with Applicable Law. Guarantor is in compliance with Applicable
Law, including all Governmental Approvals, if any, except for such items of
noncompliance that, singly or in the aggregate, have not had and are not
reasonably expected to cause, a Material Adverse Effect on Guarantor.
(r) Contracts with Affiliates. Except for the management agreement relating to
each of the Mortgaged Properties or in the ordinary course of business and on
terms which are no less favorable to the Guarantor than would be obtained in a
corporate arms-length transaction with an unrelated third party, Guarantor has
not entered into and is not a party to any material contract, lease or other
agreement with any Affiliate of Guarantor for the provision of any service,
materials or supplies relating to any Mortgaged Property.
Section 8. Affirmative Covenants of Guarantor. Guarantor agrees and
covenants with the Lender that, at all times during the Term of this Guaranty:
(a) Maintenance of Existence. Guarantor shall maintain its existence and
continue to be a limited partnership organized under the laws of the state of
its organization. Guarantor shall continue to be duly qualified to do business
in each jurisdiction in which such qualification is necessary to the conduct of
its business and where the failure to be so qualified would adversely affect the
validity of, the enforceability of, or the ability to perform, its obligations
under this Guaranty.
(b) Financial Statements; Accountants' Reports: Other Information. The Guarantor
shall keep and maintain at all times complete and accurate books of accounts and
records in sufficient detail to correctly reflect all of the Guarantor's
financial transactions and assets. In addition, the Guarantor shall furnish, or
cause to be furnished, to the Lender the following:
(i) So long as Guarantor is a reporting company under the Securities
and Exchange Act of 1934 (the "'34 Act"), promptly upon their becoming
available, copies of (A) all 10K's, 10Q's, 8K's, annual reports and proxy
statements, and all replacement, substitute or similar filings or reports
required to be filed after the date of this Guaranty by the SEC or other
Governmental Authority exercising similar functions, and (B) all press
releases and other statements made available generally by Guarantor to the
public concerning material developments in the business of Guarantor.
(ii) In the event Guarantor is not a reporting company under the
'34 Act,
(A) Annual Financial Statements. As soon as available, and in
any event within 90 days after the close of its fiscal year during
the Term of this Agreement, the audited balance sheet of Guarantor
as of the end of such fiscal year, the audited statement of income,
equity and retained earnings of Guarantor for such fiscal year and
the audited statement of cash flows of Guarantor for such fiscal
year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the
prior fiscal year, prepared in accordance with GAAP, consistently
applied, and accompanied by a certificate of Guarantor's
independent certified public accountants to the effect that such
financial statements have been prepared in accordance with GAAP,
consistently applied, and that such financial statements fairly
present the results of its operations and financial condition for
the periods and dates indicated with such certification to be free
of exceptions and qualifications as to the scope of the audit or as
to the going concern nature of the business.
(B) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after each of the first three fiscal
quarters of each fiscal year during the Term of this Agreement, the
unaudited balance sheet of Guarantor as of the end of such fiscal
quarter, the unaudited statement of income and retained earnings of
Guarantor and the unaudited statement of cash flows of Guarantor
for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the
previous fiscal year, accompanied by a certificate of a member of
Senior Management (which certificate shall be without personal
liability to such officer) stating that such financial statements
have been prepared in accordance with GAAP, consistently applied,
and fairly present the results of its operations and financial
condition for the periods and dates indicated subject to year end
adjustments in accordance with GAAP.
(iii) [Left blank intentionally]
(iv) Other Reports. Promptly upon receipt thereof, all schedules,
financial statements or other similar reports delivered by the Guarantor
pursuant to the Loan Documents or reasonably requested by the Lender with
respect to the Guarantor's business affairs or condition (financial or
otherwise) subject to the confidentiality covenant set forth below.
After the providing by Guarantor of any statement, report or other
information on a collective basis to Standard & Poor's, Moody's Investors
Service, Duff & Phelps, Fitch and/or any other rating agency, and/or
after providing any statement, report or other information on a
collective basis to the banks or other institutions providing unsecured
lines of credit and loans to Guarantor, Guarantor shall promptly furnish
such statement, report or other information to Lender.
As used in this Paragraph (iv), the phrase "on a collective basis"
means as provided to a group as a whole as opposed to an individual
basis, e.g.., providing information to a rating agency or to a bank to
respond to a particular request of such rating agency or bank.
The Lender agrees to treat all Information received by it (I) under
this Paragraph (iv) as confidential and (II) which Guarantor requests in
writing to the Persons at the Lender who receive any Information
regarding Guarantor that such information be treated as confidential;
provided, however, that such Information may be disclosed (A) as required
by law, (B) to officers, directors, employees, agents, partners,
attorneys, auditors, accountants, engineers and other consultants of the
Lender, or its successors or assigns, who need to know such Information,
provided such Persons are instructed to treat such Information
confidentially, (C) by the Lender to any successor or assign of such
Person, (D) to any federal or state regulatory authority having
jurisdiction over the Lender, or its successors or assigns, (E) to any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) in compliance with any law, rule, regulation or order
applicable to the Lender, or its successors or assigns, (x) in response
to any subpoena or other legal process or information investigative
demand, or (y) in connection with any litigation to which the Lender, or
its successors or assigns, is a party. Guarantor agrees that Information
subject to this Paragraph (iv) does not include information which (I) was
publicly known, or otherwise known to the Lender, or its successors or
assigns, at the time of disclosure, (II) subsequently becomes publicly
known through no act of or omission by the Lender or its successors or
assigns, other than through disclosure by Guarantor or by any other
Person in violation of this Paragraph (iv) or any other confidentiality
arrangement and the Lender, or its successors or assigns, has knowledge
of such violation; provided, however, that in the event the disclosing
Person shall reasonably endeavor to notify Guarantor thereof as soon as
possible after such disclosure has been made and Guarantor shall be
afford an opportunity to seek protective orders, or such other
confidential treatment of such Information as Guarantor may deem
reasonable.
(v) Certification. All certifications required to be delivered
pursuant to this Section 8(b) shall run directly to and be for the benefit
of Lender and Fannie Mae.
(c) Maintain Licenses. Guarantor shall procure and maintain in full force and
effect all licenses, Permits, charters and registrations which are material to
the conduct of its business and shall abide by and satisfy all terms and
conditions of all such licenses, Permits, charters and registrations.
(d) Access to Records; Discussions With Senior Management. To the extent
permitted by law, Guarantor shall permit the Lender to:
(i) inspect Guarantor's books and records related to the Borrower
and the Mortgaged Property;
(ii) discuss Guarantor's affairs, finances and accounts with
Guarantor's Senior Management or, provided that Senior Management of
Guarantor has been given the opportunity by Lender to be a party to such
discussions, property managers and independent public accountants;
(iii) provided that Senior Management of Guarantor has been given
the opportunity by Lender to be a party to such discussions, discuss the
Mortgaged Properties' conditions, operations or maintenance with the
managers of such Mortgaged Properties and the officers and employees of
Guarantor; and
(iv) receive any other information that the Lender deems reasonably
necessary or relevant in connection with the Guaranty, any Loan Document
or the Guaranteed Obligations.
Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default, all inspections shall be conducted at reasonable times during normal
business hours and upon reasonable notice to the Guarantor.
(e) Inform the Lender of Material Events. Guarantor shall promptly, but in any
event within five (5) Business Days, inform the Lender in writing of any of the
following (and shall deliver to the Lender copies of any related written
communications, complaints, orders, judgments and other documents relating to
the following) of which Guarantor has actual knowledge:
(i) Defaults. The occurrence of any Event of Default or any
Potential Event of Default under any Loan Document;
(ii) Bankruptcy Proceedings. The commencement of any proceedings by
or against Guarantor under any applicable bankruptcy, reorganization,
liquidation, insolvency or other similar law now or hereafter in effect or
of any proceeding in which a receiver, liquidator, trustee or other
similar official is sought to be appointed for it;
(iii) Accounting Changes. Any material change in Guarantor's
accounting policies or financial reporting practices; and
(iv) Restructuring of Guarantor. Any restructuring or reorganization
of any Guarantor.
(f) ERISA. Guarantor shall at all times remain in compliance in all material
respects with all applicable provisions of ERISA and similar requirements of the
PBGC.
(g) Further Assurances. Provided they do not materially increase the Guaranteed
Obligations of Guarantor, Guarantor, at the request of the Lender, but without
incurring any liability beyond the Guaranteed Obligations, shall execute and
deliver and, if necessary, file or record such statements, documents,
agreements, UCC financing and continuation statements and such other instruments
and take such further action as the Lender from time to time may request as
reasonably necessary, desirable or proper to carry out more effectively the
purposes of this Guaranty or any of the other Loan Documents or to subject the
Collateral to the lien and security interests of the Loan Documents or to
evidence, perfect or otherwise implement, to assure the lien and security
interests intended by the terms of the Loan Documents or in order to exercise or
enforce its rights under the Loan Documents.
(h) Monitoring Compliance. Upon the request of the Lender, but without incurring
any liability beyond the Guaranteed Obligations, from time to time, Guarantor
shall promptly provide to the Lender such documents, certificates and other
information as may be deemed reasonably necessary to enable the Lender to
perform its functions under the Servicing Agreement as the same relates to the
Guarantor.
Section 9. Negative Covenants of Guarantor.
(a) Liquidation. Guarantor shall not dissolve or liquidate in whole or in
part.
(b) Principal Place of Business. Guarantor shall not change its principal
place of business or the location of its books and records without first giving
10 days' prior written notice to the Lender.
Section 10. Financial Covenants. Guarantor agrees and covenants with the
Lender that, at all times during the Term of this Guaranty, the Net Worth of the
REIT, the Guarantor and the Subsidiaries on a consolidated basis shall not be
below $1,500,000,000.
Section 11. Expenses. Guarantor agrees to pay all reasonable costs and
out-of-pocket expenses, including court costs and expenses and the reasonable
fees and disbursements of legal counsel, incurred by or on behalf of Lender in
connection with the enforcement of Guarantor's obligations under this Guaranty
or the protection of Lender's rights under this Guaranty. The covenants
contained in this Section shall survive the payment of the Guaranteed
Obligations.
Section 12. Condition of Borrower. Guarantor is fully aware of the
financial condition of Borrower and is executing and delivering this Guaranty
based solely upon Guarantor's own independent investigation of all matters
pertinent hereto and is not relying in any manner upon any representation or
statement made by Lender. Guarantor represents and warrants that Guarantor is in
a position to obtain, and Guarantor hereby assumes full responsibility for
obtaining, any additional information concerning Borrower's financial condition
and any other matters pertinent hereto as Guarantor may desire and Guarantor is
not relying upon or expecting Lender to furnish to Guarantor any information now
or hereafter in Lender's possession concerning the same or any other matter. By
executing this Guaranty, Guarantor knowingly accepts the full range of risks
encompassed within a contract of this type, which risks Guarantor acknowledges.
Section 13. Further Assurances. Guarantor agrees at any time and from time
to time upon request by Lender to take, or cause to be taken, any action and to
execute and deliver any additional documents which, in the reasonable opinion of
Lender, may be necessary in order to assure to Lender the full benefits of this
Guaranty, so long as any such action does not materially increase Guarantor's
Guaranteed Obligations hereunder or materially decrease its rights hereunder.
Section 14. Subordination. Guarantor hereby irrevocably and
unconditionally agrees that any claims, direct or indirect, Guarantor may have
by subrogation or other form of reimbursement, against Borrower or to any
security or any interest therein, by virtue of this Guaranty or as a consequence
of any payment made by Guarantor pursuant to this Guaranty, shall be fully
subordinated in time and right of payment to the payment in full of the
Guaranteed Obligations and all other obligations of Guarantor to Lender under
this Guaranty.
Section 15. No Subrogation. Guarantor shall not have any right of
subrogation against Borrower by reason of any payment by Guarantor under this
Guaranty until such time as all of the Guaranteed Obligations have been
satisfied in full. Nothing in the foregoing shall affect any claim which any
Guarantor has against Borrower under the terms of the Organizational Documents
of the Borrower.
Section 16. Insolvency and Liability of Borrower. So long as any of the
Guaranteed Obligations is unpaid and this Guaranty is in effect, and to the
extent not prohibited by the applicable bankruptcy court, Guarantor agrees to
file all claims against Borrower in any bankruptcy or other proceeding in which
the filing of claims is required by law in connection with indebtedness owed by
Borrower to Guarantor and to assign to Lender all rights of Guarantor thereunder
up to the lesser of (i) the amount of such indebtedness or (ii) the amount of
the Guaranteed Obligations. In all such cases the Person or Persons authorized
to pay such claims shall pay to Lender the full amount thereof to the full
extent necessary to pay the Guaranteed Obligations, and Guarantor hereby assigns
to Lender all of Guarantor's rights to all such payments to which Guarantor
would otherwise be entitled. Notwithstanding the foregoing, and except to the
extent that any sums owed by Borrower to Lender under the Loan Documents shall
have been fully satisfied thereby, the liability of Guarantor hereunder shall in
no way be affected by
(a) the release or discharge of Borrower in any creditors', receivership,
bankruptcy or other proceedings; or
(b) the impairment, limitation or modification of the liability of Borrower or
the estate of Borrower in bankruptcy resulting from the operation of any present
or future provisions of the Bankruptcy Code or other statute or from the
decision in any court.
Section 17. Preferences, Fraudulent Conveyances, Etc. If Lender is
required to refund, or voluntarily refunds, any payment received from Borrower
because such payment is or may be avoided, invalidated, declared fraudulent, set
aside or determined to be void or voidable as a preference, fraudulent
conveyance, impermissible setoff or a diversion of trust funds under the
bankruptcy laws or for any similar reason, including, without limitation, any
judgment, order or decree of any court or administrative body having
jurisdiction over Lender or any of its property, or any settlement or compromise
of any claim effected by Lender with Borrower or other claimant (a "Rescinded
Payment"), then Guarantor's liability to Lender shall continue in full force and
effect, or Guarantor's liability to Lender shall be reinstated, as the case may
be, with the same effect and to the same extent as if the Rescinded Payment had
not been received by Lender (but only to the extent such Rescinded Payment was
part of the Guaranteed Obligations hereunder), notwithstanding the cancellation
or termination of any Note or any of the other Loan Documents. In addition,
Guarantor shall pay, or reimburse Lender for, all expenses (including all
reasonable attorneys' fees, court costs and related disbursements) incurred by
Lender in the defense of any claim that a payment received by Lender in respect
of all or any part of the Guaranteed Obligations from Guarantor must be
refunded. The provisions of this Section shall survive the termination of this
Guaranty and any satisfaction and discharge of Borrower by virtue of any
payment, court order or any federal or state law.
Section 18. Waiver. Neither this Guaranty nor any term hereof may be
changed, waived, discharged or terminated except by an instrument in writing
signed by Lender and Guarantor expressly referring to this Guaranty and to the
provisions so changed or limited. No such waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of Lender in exercising any
right under this Guaranty shall operate as a waiver thereof or otherwise by
prejudice thereto.
Section 19. Notices. All notices or other communications hereunder shall
be sufficiently given and shall be deemed given when sent in the manner
prescribed by the Loan Agreement addressed to the parties as follows:
As to the Guarantor: AIMCO
Stanford Place 3
4582 South Ulster St. Parkway
Suite 1100
Denver, Colorado 80237
Attn: Senior Vice President-Debt & Securities
with a copy to: Ballard Spahr Andrews & Ingersoll, LLP
Seventeenth Street Plaza Building
1225 17th Street, Suite 2300
Denver, Colorado 80202
Attn: Gwendolyn C. Allen, Esquire
If to Lender or Fannie Mae:
As provided in the Loan Agreement.
Section 20. Assignability by Lender. Lender may, without notice to
Guarantor, assign or transfer the Loans and the Loan Documents, in whole or in
part. In such event, each and every immediate and successive assignee,
transferee or holder of all or any part of the Loans and the Loan Documents
shall have the right to enforce this Guaranty, by legal action or otherwise, as
fully as if such assignee, transferee, or holder were by name specifically given
such right and power in this Guaranty. Lender shall have an unimpaired right to
enforce this Guaranty for its benefit as to so much of the Loans and the Loan
Documents as Lender has not sold, assigned or transferred.
Section 21. Guarantor Bound by Judgment Against Borrower. Guarantor shall
be conclusively bound, in any jurisdiction, by the judgment in any action by
Lender against Borrower in connection with the Loan Documents (wherever
instituted) as if Guarantor were a party to such action even if not so joined as
a party.
Section 22. Governing Law. The provisions of Section 11.06 of the Loan
Agreement (entitled Choice of Law; Consent to Jurisdiction; Waiver of Jury
Trial) are hereby incorporated into this Agreement by this reference to the
fullest extent as if the text of such Section were set forth in its entirety
herein.
Section 23. Invalid Provisions. If any provision of this Guaranty or the
application thereof to Guarantor or any circumstance in any jurisdiction whose
laws govern this Guaranty shall, to any extent, be invalid or unenforceable
under any applicable statute, regulation or rule of law, then such provision
shall be deemed inoperative to the extent of such invalidity or unenforceability
and shall be deemed modified to conform to such statute, regulation or rule or
law. The remainder of this Guaranty and the application of any such invalid or
unenforceable provision to parties, jurisdictions or circumstances other than
those to whom or to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability nor shall such invalidity or
unenforceability affect the validity or enforceability of any other provision of
this Guaranty.
Section 24. General Provisions. This Guaranty shall be binding upon the
respective successors and assigns of Guarantor, and shall inure to the benefit
of Lender and its successors and assigns, including, without limitation, each
successive holder of the Note. The descriptive headings of the Sections of the
Guaranty have been inserted herein for convenience of reference only and shall
not define or limit the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as of
the day and year first above written.
AIMCO PROPERTIES, L.P., a Delaware
limited partnership
By: AIMCO-GP, Inc., a Delaware
corporation, its general partner
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President and
Treasurer
STATE OF COLORADO, DENVER CITY/County ss:
On this 29th day of August, 2005, personally came before me, Gail D. Coalson, a
Notary Public of the City/County of Denver, State of Colorado, Patti K.
Fielding, who, being by me duly sworn, says that she is Executive Vice President
and Treasurer of AIMCO-GP, Inc., a Delaware corporation, general partner AIMCO
Properties, L.P., a Delaware limited partnership, and that the foregoing
instrument was duly executed by her for and on behalf of said limited
partnership. And said Executive Vice President and Treasurer acknowledged said
instrument to be the act and deed of said limited partnership.
Witness my hand and official seal.
My Commission Expires:02/17/2008
/s/Gail D. Coalson
Notary Public
Exhibit 10.40c
The Lakes Apartments
REPLACEMENT RESERVE AND SECURITY AGREEMENT
This REPLACEMENT RESERVE AND SECURITY AGREEMENT (this "Agreement") is made
this 29th day of August, 2005 by CONSOLIDATED CAPITAL GROWTH FUND, a California
limited partnership, doing business in North Carolina as Consolidated Capital
Growth Fund Limited Partnership ("Borrower"), and GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, its successors, transferees and assigns
("Lender").
RECITALS:
A. This Agreement is being executed in connection with Lender's making a
mortgage loan to Borrower in the original principal amount of $9,708,078.00 (the
"Loan"). The proceeds of the Loan will be used to finance a 600 unit multifamily
project known as The Lakes Apartments, and located in Raleigh (Wake County),
North Carolina (the "Property").
B. The Loan is evidenced by a Multifamily Note (including any addenda, the
"Note"), and is secured by a Multifamily Deed of Trust, Assignment of Rents and
Security Agreement (including any riders, the "Security Instrument") granting a
lien on the Property. The Note, Security Instrument, this Agreement and all
other documents executed in connection with the Loan are collectively referred
to as the "Loan Documents."
C. Lender requires as a condition to the making of the Loan that Borrower enter
into this Agreement. Lender has initially agreed to either partially or fully
waive its standard requirements that Borrower fund a replacement reserve on the
condition that Borrower agrees that Lender may later impose upon Borrower the
requirement to fund such replacement reserve in accordance with the terms of
this Agreement. All deposits to Lender required by this Agreement shall be
additional security for all of Borrower's obligations under the Loan Documents.
D. Lender intends to sell, transfer and deliver the Note and assign the Security
Instrument and other Loan Documents to Fannie Mae.
AGREEMENT:
NOW, THEREFORE, in consideration of the above and the mutual promises
contained in this Agreement, the receipt and sufficiency of which are
acknowledged, Borrower and Lender agree as follows:
1. Deposits to the Replacement Reserve
(a) Concurrently with the execution of this Agreement, Borrower shall deposit
with Lender the sum of $0.00 (the "Initial Deposit").
(b) Subject to the provisions of Sections 1(e), 2, 10 and 16 of this Agreement,
on each date that a regularly scheduled payment of principal or interest is due
under the Note, Borrower shall deposit with Lender the applicable Monthly
Deposit (as defined in Section 1(c) of this Agreement).
(c) The "Monthly Deposit" required to be made each month during the term of the
Loan is set forth below:
Amount of Monthly Deposit Period
$17,500.00 October 1, 2005 through the date that all amounts due and payable
under the Note and Security Instrument have been paid in full.
(d) Lender shall deposit any Initial Deposit and each Monthly Deposit, as
received, in an interest-bearing account (the "Replacement Reserve") which meets
the standards for custodial accounts as required by Lender from time to time.
(The Initial Deposit, if any, the Monthly Deposits and all other funds in the
Replacement Reserve are referred to collectively as the "Replacement Reserve".)
Lender or a designated representative of Lender shall have the sole right to
make withdrawals from such account. All interest earned on funds in the
Replacement Reserve shall be added to and become part of the Replacement
Reserve. Lender shall not be responsible for any losses resulting from the
investment of the Replacement Reserve or for obtaining any specific level or
percentage of earnings on such investment. If applicable law requires and
provided that no default or Event of Default exists under any of the Loan
Documents, Lender shall pay to Borrower the interest earned on the Replacement
Reserve once each year.
(e) On the date of this Agreement Lender has agreed to partially reduce, defer
or fully waive Borrower's obligation to make full Monthly Deposits to the
Replacement Reserve specified in Section 1(c) and (d) above. Notwithstanding
Sections 1(c) and (d) above, Borrower shall be required to deposit the "Reduced
Monthly Deposit" each month during the term of the Loan as set forth below:
Amount of Monthly Deposit Period
$0.00 October 1, 2005 through the date that all amounts due and payable under
the Note and Security Instrument have been paid in full.
In the event that (i) at any time during the Loan term Lender shall determine
that the Property is not being maintained in accordance with the requirements
set forth in the Security Instrument, or (ii) a default or Event of Default
otherwise occurs under this Agreement or any of the other Loan Documents, then,
upon the earlier of the (x) the date specified by Lender in written notice given
to Borrower by Lender or a designated representative of Lender, or (y) the first
day of the first calendar month after a default or Event of Default under this
Agreement or any of the Loan Documents, Borrower shall commence making the full
Monthly Deposits specified in Section 1(c) of this Agreement or in such written
notice, beginning on such date and continuing on the first day of each calendar
month thereafter during the remaining term of the Loan.
2. Loans with Terms Over 10 Years. If the Loan term exceeds 10 years, then, no
earlier than the 6th month and no later than the 9th month of the year which
commences on the 10th anniversary of the date of this Agreement (and the 20th
anniversary of the date of this Agreement if the Loan term exceeds 20 years), a
physical needs assessment shall be performed on the Property by Lender at the
expense of Borrower, which expense may be paid of out of the Replacement
Reserve. If determined necessary by Lender, after review of the physical needs
assessment, Borrower's required Monthly Deposits to the Replacement Reserve set
forth above shall be adjusted for the remaining Loan term so that the Monthly
Deposits will create a Replacement Reserve that will in Lender's determination,
be sufficient to meet required Replacements (defined below).
3. Replacement Reserve is Additional Security.
(a) Borrower assigns to Lender the Replacement Reserve as additional security
for all of the Borrower's obligations under the Loan Documents; provided,
however, Lender shall make disbursements from the Replacement Reserve in
accordance with the terms of this Agreement.
(b) Except as otherwise provided in Sections 4(f) and 6.1 of this Agreement,
Lender shall make disbursements from the Replacement Reserve to reimburse
Borrower for the costs of those items listed on Exhibit A (the "Replacements")
in accordance with the provisions of Section 4. Lender shall not be obligated to
make disbursements from the Replacement Reserve to reimburse Borrower for the
costs of routine maintenance to the Property or for costs which are to be
reimbursed from funds deposited with Lender pursuant to a Completion/Repair and
Security Agreement or any similar agreement.
4. Disbursements from Replacement Reserve.
(a) Upon written request from Borrower and satisfaction of the requirements set
forth in Sections 4 and 5 of this Agreement, Lender shall disburse to Borrower
amounts from the Replacement Reserve necessary to reimburse Borrower for the
actual approved costs of the Replacements. Lender shall not be obligated to make
disbursements from the Replacement Reserve to reimburse Borrower for the costs
of routine maintenance to the Property or for costs which are to be reimbursed
from funds deposited with Lender pursuant to a Completion/Repair and Security
Agreement or any similar agreement. In no event shall Lender be obligated to
disburse funds from the Replacement Reserve if a default or Event of Default
exists under this Agreement or any of the other Loan Documents.
(b) Each request for disbursement from the Replacement Reserve shall be in a
form specified or approved by Lender and shall include (i) the specific
Replacements for which the disbursement is requested, (ii) the quantity and
price of each item purchased, if the Replacement includes the purchase or
replacement of specific items, (iii) the price of all materials (grouped by type
or category) used in any Replacement other than the purchase or replacement of
specific items, and (iv) the cost of all contracted labor or other services
applicable to each Replacement for which such request for disbursement is made.
With each request, Borrower shall certify that all Replacements have been made
in accordance with all applicable laws, ordinances, and regulations of any
governmental office or authority having jurisdiction over the Property. Each
request for disbursement shall include copies of invoices for all items or
materials purchased and all contracted labor or services provided and, unless
Lender has agreed to issue joint checks pursuant to Section 4(d) in connection
with a particular Replacement, each request shall include evidence satisfactory
to Lender of payment of all such amounts.
(c) Each request for disbursement from the Replacement Reserve shall be made
only after completion of the Replacement for which disbursement is requested.
Borrower shall provide Lender evidence satisfactory to Lender in its reasonable
judgment, of completion.
(d) If the cost of a Replacement exceeds $2,500.00 and the contractor performing
the Replacement requires periodic payments pursuant to the terms of a written
contract, Lender at its discretion may approve in writing periodic payments for
work performed under such contract. A request for reimbursement from the
Replacement Reserve may be made after completion of a portion of the work under
such contract, provided (i) such contract requires payment upon completion of
such portion of work, (ii) the materials for which the request is made are on
site at the Property and are properly secured or have been installed in the
Property, (iii) all other conditions in this Agreement for disbursement have
been satisfied, (iv) funds remaining in the Replacement Reserve are, in Lender's
judgment, sufficient to complete such Replacement and the other Replacements
when required and (v) if required by Lender, each contractor or subcontractor
receiving payments under such contract shall provide a waiver of lien with
respect to amounts which have been paid to that contractor or subcontractor.
(e) Borrower shall not make a request for disbursement from the Replacement
Reserve more frequently than once in any quarter and (except in connection with
the final disbursement) the total cost of all Replacements in any request shall
not be less than $5,000.00.
(f) In the event Borrower requests a disbursement from the Replacement Reserve
to reimburse Borrower for labor or materials for replacements other than the
Replacements specified on Exhibit A, Borrower shall disclose in writing to
Lender why funds in the Replacement Reserve should be used to pay for such
replacements. If Lender determines that such replacements are of the type
intended to be covered by this Agreement, the costs for such replacements are
reasonable, and all other conditions for disbursement under this Agreement have
been met, Lender may at its discretion disburse funds from the Replacement
Reserve.
5. Performance of Replacements.
5.1 Workmanlike Completion
(a) Borrower shall make each Replacement when required in order to keep the
Property in good order and repair and in a good marketable condition and to keep
the Property or any portion thereof from deteriorating. Borrower shall complete
all Replacements in a good and workmanlike manner as soon as practicable
following the commencement of making each such Replacement.
(b) Lender shall have the right to approve all contracts or work orders with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials in connection with the Replacements. Upon Lender's
request, Borrower shall assign any contract or subcontract to Lender.
(c) In the event Lender determines in its sole discretion that any Replacement
is not being performed or completed in a workmanlike or timely manner, Lender
shall have the option to withhold disbursement for such unsatisfactory
Replacement, and may proceed under existing contracts or contract with third
parties to complete such Replacement and to apply the Replacement Reserve toward
the labor and materials necessary to complete such Replacement, without
providing any prior notice to Borrower and to exercise any and all other
remedies available to Lender upon a default or Event of Default.
(d) If at any time during the term of the Loan, Lender determines that
replacements not listed on Exhibit A are advisable to keep the Property in good
order and repair and in a good marketable condition, or to prevent deterioration
of the Property (the "Additional Replacements") Lender may send Borrower written
notice of the need for making such Additional Replacements. Borrower shall
promptly commence making such Additional Replacements in accordance with all the
requirements of the Security Instrument. Reimbursement from the Replacement
Reserve for such Additional Replacements shall not be made unless Lender has
determined to do so pursuant to Section 4(f). Except for Section 4, all
references in this Agreement to "Replacements" shall include the "Additional
Replacements."
(e) In order to facilitate Lender's completion or making the Replacements
pursuant to Sections 5(c) and (d) above, Lender is granted the right to enter
onto the Property and perform any and all work and labor necessary to complete
or make the Replacements and employ watchmen to protect the Property from
damage. All sums so expended by Lender shall be deemed to have been advanced to
Borrower and secured by the Security Instrument. For this purpose Borrower
constitutes and appoints Lender its true and lawful attorney-in-fact with full
power of substitution to complete or undertake the Replacements in the name of
Borrower. Borrower empowers said attorney-in-fact as follows: (i) to use any
funds in the Replacement Reserve for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to complete the Replacements;
(iii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become liens against
the Property, or as may be necessary or desirable for the completion of the
Replacements, or for the clearance of title; (v) to execute all applications and
certificates in the name of Borrower which may be required by any of the
contract documents; (vi) to prosecute and defend all actions or proceedings in
connection with the Property or the rehabilitation and repair of the Property;
and (vii) to do any and every act which Borrower might do in its own behalf to
fulfill the terms of this Agreement.
It is further understood and agreed that this power of attorney, which shall be
deemed to be a power coupled with an interest, cannot be revoked. Borrower
specifically agrees that all power granted to Lender under this Agreement may be
assigned by it to its successors or assigns as holder of the Note.
(f) Nothing in this Section 5 shall make Lender responsible for making or
completing the Replacements, require Lender to expend funds in addition to the
Replacement Reserve to make or complete any Replacement, obligate Lender to
proceed with the Replacements, or obligate Lender to demand from Borrower
additional sums to make or complete any Replacement.
5.2 Entry Onto Property; Inspections.
(a) Borrower shall permit Lender or Lender's representatives (including an
independent person such as an engineer, architect, or inspector) or third
parties making Replacements pursuant to Section 5.1 of this Agreement, to enter
onto the Mortgaged Property during normal business hours (subject to the rights
of tenants under their leases) to inspect the progress of any Replacements and
all materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the Property,
and to complete any replacements made pursuant to Section 5.1. Borrower agrees
to cause all contractors and subcontractors reasonably to cooperate with Lender
or Lender's representatives or such other persons described above in connection
with inspections described in this Section 5.2 or the completion of Replacements
pursuant to Section 5.1.
(b) Lender may inspect the Property in connection with any Replacement prior to
disbursing funds from the Replacement Reserve. Lender, at Borrower's expense,
also may require an inspection by an appropriate independent qualified
professional selected by Lender and a copy of a certificate of completion by an
independent qualified professional acceptable to Lender prior to the
disbursement of any amounts from the Replacement Reserve. Borrower shall pay
Lender a reasonable inspection fee not exceeding $300.00 for each such
inspection.
5.3 Lien-Free Completion.
(a) Borrower covenants and agrees that each of the Replacements and all
materials, equipment, fixtures, or any other item comprising a part of any
Replacement shall be constructed, installed or completed, as applicable, free
and clear of all mechanic's, materialman's or other liens (except for those
liens existing on the date of this Agreement which have been approved in writing
by Lender).
(b) Prior to each disbursement from the Replacement Reserve, Lender may require
Borrower to provide Lender with a search of title to the Property effective to
the date of the release, which search shows that no mechanic's or materialmen's
liens or other liens of any nature have been placed against the Property since
the date this Agreement (other than liens which Borrower is diligently
contesting in good faith and which have been bonded off to the satisfaction of
Lender) and that title to the Property is free and clear of all liens (other
than the lien of the Security Instrument and any other liens previously approved
in writing by the Lender, if any).
(c) In addition, as a condition to any disbursement, Lender may require Borrower
to obtain from each contractor, subcontractor, or materialman an acknowledgement
of payment and release of lien for work performed and materials supplied. Any
such acknowledgement and release shall conform to the requirements of applicable
law and shall cover all work performed and materials supplied (including
equipment and fixtures) for the Property by that contractor, subcontractor or
materialman through the date covered by the current reimbursement request (or,
in the event that payment to such contractor, subcontractor or materialmen is to
be made by a joint check, the release of lien shall be effective through the
date covered by the previous release of funds request.)
5.4 Compliance with Laws and Insurance Requirements.
(a) All Replacements shall comply with all applicable laws, ordinances, rules
and regulations of all governmental authorities having jurisdiction over the
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(b) In addition to any insurance required under the Security Instrument,
Borrower shall provide or cause to be provided worker's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement. All
such policies shall be in form and amount satisfactory to Lender. All such
policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. The originals of such
policies shall be delivered to Lender.
6. Default.
6.1 Default Under This Agreement. Borrower shall be in default under this
Agreement if it fails to comply with any provision of this Agreement and such
failure is not cured within 10 days after notice from Lender. Borrower
understands that a default under this Agreement shall be deemed to be an Event
of Default under the Security Instrument, and that in addition to the remedies
specified in this Agreement, Lender shall be able to exercise all of its rights
and remedies under the Security Instrument upon an Event of Default.
6.2 Application of Replacement Reserve Upon Default.
(a) Upon the occurrence of a default under this Agreement or an Event of Default
under the Security Instrument, Borrower shall immediately lose all of its rights
to receive disbursements from the Replacement Reserve unless and until all
amounts secured by the Security Instrument have been paid and the lien of the
Security Instrument has been released by Lender. Upon any such default or Event
of Default, Lender may in its sole and absolute discretion, use the Replacement
Reserve (or any portion thereof) for any purpose, including but not limited to
(i) repayment of any indebtedness secured by the Security Instrument, including
but not limited to principal prepayments and the prepayment premium applicable
to such full or partial prepayment (as applicable); provided, however, that such
application of funds shall not cure or be deemed to cure any default or Event of
Default; (ii) reimbursement of Lender for all losses and expenses (including,
without limitation, reasonable legal fees) suffered or incurred by Lender as a
result of such default or Event of Default; (iii) completion of the Replacement
as provided in Section 5.1, or for any other repair or replacement to the
Property; or (iv) payment of any amount expended in exercising (and exercise)
all rights and remedies available to Lender at law or in equity or under this
Agreement or under any of the other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply all or any portion
of the Replacement Reserve on account of any default or Event of Default by
Borrower or to repayment of the indebtedness secured by the Security Instrument
or in any specific order of priority.
7. Borrower's Other Obligations. Nothing contained in this Agreement shall
alter, impair or affect the obligations of Borrower, or relieve Borrower of any
of its obligations to make payments and perform all of its other obligations
required under the Loan Documents.
8. Remedies Cumulative. None of the rights and remedies conferred upon or
reserved to Lender under this Agreement is intended to be exclusive of any other
rights, and each and every right shall be cumulative and concurrent, and may be
enforced separately, successively or together, and may be exercised from time to
time as often as may be deemed necessary Lender.
9. Enforcement of Agreement. This Agreement is executed by Borrower and Lender
for the benefit of Lender. Borrower understands and agrees that in connection
with the anticipated sale or assignment and delivery of the Loan to Fannie Mae,
this Agreement may be assigned to Fannie Mae.
10. Balance in the Replacement Reserve. The insufficiency of any balance in the
Replacement Reserve shall not abrogate the Borrower's agreement to fulfill all
preservation and maintenance covenants in the Loan Documents. In the event that
the balance of the Replacement Reserve is less than the current estimated cost
to make the Replacements required by the Lender, Borrower shall deposit the
shortage within 10 days of request by Lender. In the event Lender determines
from time to time based on Lender's inspections, that the amount of the Monthly
Deposit is insufficient to fund the cost of likely Replacements and related
contingencies that may arise during the remaining term of the Loan, Lender may
require an increase in the amount of the Monthly Deposits upon 30 days prior
written notice to Borrower.
11. Indemnification. Borrower agrees to indemnify Lender and to hold Lender
harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys' fees and expenses) arising from or in
any way connected with the performance of the Replacements or the holding or
investment of the Replacement Reserve. Borrower assigns to Lender all rights and
claims Borrower may have against all persons or entities supplying labor or
materials in connection with the Replacements; provided, however, that Lender
may not pursue any such right or claim unless a default or Event of Default
exists under this Agreement or the Security Instrument.
12. Determinations by Lender. In any instance in this Agreement where the
consent or approval of Lender may be given or is required, or where any
determination, judgment or decision is to be rendered by Lender under this
Agreement, the granting, withholding or denial of such consent or approval and
the rendering of such determination, judgment or decision shall be made or
exercised by Lender (or its designated representative) at its discretion.
13. Borrower's Records. Borrower shall furnish such financial statements,
invoices, records, papers and documents relating to the Property as Lender may
reasonably require from time to time to make the determinations permitted or
required to be made by Lender under this Agreement.
14. Fees and Expenses.
(a) In addition to any other fees payable by Borrower to Lender in connection
with the Loan, Borrower shall pay Lender an annual fee of $50.00 for its
services in administering the Replacement Reserve and investing the Replacement
Reserve. The annual fee shall be due and payable by Borrower on the date
specified in a statement to Borrower regarding such fee.
(b) Borrower shall pay within 10 days of request from Lender (i) all reasonable
costs and expenses incurred by Lender in connection with collecting, holding and
disbursing the Replacement Reserve pursuant to this Agreement, and (ii) all
reasonable fees, charges, costs and expenses incurred by Lender in connection
with inspections made by Lender or Lender's representatives in carrying out
Lender's responsibility to make certain determinations under this Agreement.
15. Completion of Replacements. Lender's approval of any plans for any
Replacement, release of funds from the Replacement Reserve, inspection of the
Property by Lender or Lender's agents, or other acknowledgment of completion of
any Replacement in a manner satisfactory to Lender shall not be deemed an
acknowledgment or warranty to any person that the Replacement has been completed
in accordance with applicable building, zoning or other codes, ordinances,
statutes, laws, regulations or requirements of any governmental agency.
16. Transfer of Property/Transfer of Interests in Borrower. If a Transfer shall
occur or be contemplated, which Transfer requires the prior written consent of
Lender pursuant to the terms of the Security Instrument, Lender may review the
amount of the Replacement Reserve, the amount of the Monthly Deposits and the
likely repairs and replacements required by the Property and the related
contingencies which may arise during the remaining term of the Loan. Based upon
that review, Lender may require an additional deposit to the Replacement
Reserve, and/or an increase in the amount of the Monthly Deposits as a condition
to Lender's consent to such Transfer. In all events, the transferee shall be
required to assume Borrower's duties and obligations under this Agreement.
17. Termination of Replacement Reserve. After payment in full of all sums
secured by the Security Instrument and release by Lender of the lien of the
Security Instrument, Lender shall disburse to Borrower all amounts remaining in
the Replacement Reserve.
18. Entire Agreement; Amendment and Waiver. This Agreement contains the complete
and entire understanding of the parties with respect to the matters covered and
no change or amendment shall be valid unless it is made in writing and executed
by the parties to this Agreement. No specific waiver or forbearance for any
breach of any of the terms of this Agreement shall be considered as a general
waiver of that or any other term of this Agreement. If any provision of this
Agreement is in conflict with any provision of the Security Instrument regarding
the Replacement Reserve, the provision contained in this Agreement shall
control.
19. Notices. All notices under this Agreement shall be given in writing to the
other party at the address, and in the manner, provided in the Security
Instrument.
20. Severability. The invalidity, illegality, or unenforceability of any
provision of this Agreement pursuant to judicial decree shall not affect the
validity or enforceability of any other provision of this Agreement, all of
which shall remain in full force and effect.
21. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the jurisdiction in which the Property is located.
22. Non-Recourse. This Agreement is being executed in connection with the making
of the Loan pursuant to the terms of the Note. Borrower's liability hereunder
shall be limited to the extent provided in the Note.
23. Capitalized Terms. Any capitalized terms used in this Agreement and not
specifically defined herein, shall have the meanings set forth in the Security
Instrument.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Agreement:
-----
X Exhibit A Schedule of Work
-----
-----
X Exhibit B Modifications
-----
Borrower and Lender have executed this Agreement on the date and year
first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
BORROWER:
CONSOLIDATED CAPITAL GROWTH FUND, a
California limited partnership, doing
business in North Carolina as
Consolidated Capital Growth Fund Limited
Partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By:/s/Patti K. Fielding
Patti K. Fielding
Executive Vice President and
Treasurer
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:/s/Max W. Foore
Max W. Foore
Vice President
EXHIBIT A
REPLACEMENTS
[Attach and label as Exhibit A a copy of the completed Evaluator's
Summary: Physical Needs Over the Term or a comparable listing prepared by
Lender]
(Page B-1)
EXHIBIT B
MODIFICATIONS
1. Section 1(e) is amended by adding the following subparagraph (iii):
"(iii) at any time during the Loan term Lender shall determine that the
loan to value ratio of the Property is greater than 65%."
2. The following phrase is inserted at the end of Section 5.3:
"or as otherwise provided in Section 21(b)(6) of the Security Instrument."
_______________________
Borrower's Initials
Exhibit 10.40d
The Lakes Apartments
ASSIGNMENT OF SECURITY INSTRUMENT
(MULTIFAMILY MORTGAGE
(The Lakes Apartments)
GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, whose
address is 200 Witmer Road, P. O. Box 809, Horsham, Pennsylvania, 19044, Attn:
Servicing - Executive Vice President ("Lender"), as the holder of the instrument
hereinafter described and for valuable consideration hereby endorses, assigns
and delivers to FANNIE MAE, a corporation organized under the laws of the United
States of America, whose address is c/o GMAC Commercial Mortgage Corporation,
200 Witmer Road, P. O. Box 809, Horsham, Pennsylvania, 19044, Attn: Servicing -
Executive Vice President, its successors, participants and assigns, all right,
title and interest of Lender in and to the following:
A Multifamily Deed of Trust, Assignment of Rents and Security Agreement,
among Consolidated Capital Growth Fund, a California limited partnership,
doing business in North Carolina as Consolidated Capital Growth Fund
Limited Partnership (the "Borrower"), Mark S. Shiembob and Bernice H.
Cilley, as Trustee, and Lender, as Beneficiary, dated as of the 29th day of
August, 2005, and recorded immediately prior hereto, in the land records of
Wake County, North Carolina ("Land Records") securing the payment of a
Multifamily Note (Variable Loan), dated as of the 29th day of August, 2005,
in the original principal amount of $9,708,078.00 made by the Borrower,
payable to the order of Lender, and creating a first lien on the property
described in Exhibit A attached hereto and by this reference made a part
hereof.
Together with any and all notes and obligations therein described, the
debt secured thereby and all sums of money due and to become due thereon, with
the interest provided for therein, and hereby irrevocably appoints assignee
hereunder its attorney to collect and receive such debt, and to foreclose,
enforce and satisfy the foregoing the same as it might or could have done were
these presents not executed, but at the cost and expense of assignee.
Together with any and all other liens, privileges, security interests,
rights, entitlements, equities, claims and demands as to which assignor
hereunder possesses or to which assignor is otherwise entitled as additional
security for the payment of the notes and other obligations described herein.
This Assignment shall be governed in all respects by the laws of the state
in which the aforementioned instrument were recorded and shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, Lender has caused its name to be signed hereto by Max
W. Foore, its Vice President, and does hereby appoint said Vice President its
authorized officer to execute, acknowledge and deliver these presents on its
behalf, all done as of this the 29th day of August, 2005.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:/s/Max W. Foore
Max W. Foore
Vice President
STATE OF VIRGINIA, CITY OF RICHMOND ss:
On this ____ day of ________________, 2005, personally came before me,
__________ ___________________, a Notary Public of the City of Richmond, State
of Virginia, Max W. Foore, who, being by me duly sworn, says that he is Vice
President of GMAC Commercial Mortgage Corporation, a California corporation, and
that the foregoing instrument was duly executed by him for and on behalf of said
corporation. And said Vice President acknowledged said instrument to be the act
and deed of said corporation.
Witness my hand and official seal.
My Commission Expires:_______________
______________________________________________________________________________
Notary Public
Please mail to:
Bernice H. Cilley, Esquire
Troutman Sanders LLP
Post Office Box 1122
Richmond, Virginia 23218-1122
EXHIBIT A
TO THE ASSIGNMENT OF SECURITY INSTRUMENT
Exhibit 10.40e
Prepared by, and after recording return to:
Bernice H. Cilley, Esquire
Troutman Sanders LLP
P.O. Box 1122 Richmond, Virginia 23218-1122
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS
AND SECURITY AGREEMENT
(NORTH CAROLINA)
FANNIE MAE MULTIFAMILY SECURITY INSTRUMENT - Form 4034 11/01 Page iii
NORTH CAROLINA
(C) 1997-2001 Fannie Mae
TABLE OF CONTENTS
PAGE
1. DEFINITIONS............................................................1
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.............................6
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN POSSESSION.....6
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY..........8
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS; PREPAYMENT
PREMIUM...............................................................10
6. EXCULPATION...........................................................10
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.......................10
8. COLLATERAL AGREEMENTS.................................................11
9. APPLICATION OF PAYMENTS...............................................11
10. COMPLIANCE WITH LAWS..................................................12
11. USE OF PROPERTY.......................................................12
12. PROTECTION OF LENDER'S SECURITY.......................................12
13. INSPECTION............................................................12
14. BOOKS AND RECORDS; FINANCIAL REPORTING................................13
15. TAXES; OPERATING EXPENSES.............................................14
16. LIENS; ENCUMBRANCES...................................................15
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED PROPERTY........15
18. ENVIRONMENTAL HAZARDS.................................................16
19. PROPERTY AND LIABILITY INSURANCE......................................21
20. CONDEMNATION..........................................................22
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER..........23
22. EVENTS OF DEFAULT.....................................................26
23. REMEDIES CUMULATIVE...................................................27
24. FORBEARANCE...........................................................27
25. LOAN CHARGES..........................................................27
26. WAIVER OF STATUTE OF LIMITATIONS......................................28
27. WAIVER OF MARSHALLING.................................................28
28. FURTHER ASSURANCES....................................................28
29. ESTOPPEL CERTIFICATE..................................................28
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE......................28
31. NOTICE................................................................29
32. SALE OF NOTE; CHANGE IN SERVICER......................................29
33. SINGLE ASSET BORROWER.................................................29
34. SUCCESSORS AND ASSIGNS BOUND..........................................29
35. JOINT AND SEVERAL LIABILITY...........................................29
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY...................30
37. SEVERABILITY; AMENDMENTS..............................................30
38. CONSTRUCTION..........................................................30
39. LOAN SERVICING........................................................30
40. DISCLOSURE OF INFORMATION.............................................30
41. NO CHANGE IN FACTS OR CIRCUMSTANCES...................................30
42. SUBROGATION...........................................................31
43. ACCELERATION; REMEDIES................................................31
44. RELEASE...............................................................31
45. SUBSTITUTE TRUSTEE....................................................31
46. ENVIRONMENTAL INDEMNITY...............................................32
47. WAIVER OF TRIAL BY JURY...............................................32
FANNIE MAE MULTIFAMILY SECURITY INSTRUMENT - Form 4034 11/01 Page 33
NORTH CAROLINA
(C) 1997-2001 Fannie Mae
The Lakes Apartments
MULTIFAMILY DEED OF TRUST,
ASSIGNMENT OF RENTS AND
SECURITY AGREEMENT
THIS MULTIFAMILY DEED OF TRUST, ASSIGNMENT OF RENTS AND SECURITY AGREEMENT
(the "Instrument") is dated as of the 29th day of August, 2005, among
CONSOLIDATED CAPITAL GROWTH FUND, a limited partnership organized and existing
under the laws of California, doing business in North Carolina as Consolidated
Capital Growth Fund Limited Partnership, whose address is c/o AIMCO, Stanford
Place 3, 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237,
as grantor ("Borrower"), to MARK S. SHIEMBOB AND BERNICE H. CILLEY, as trustee
("Trustee"), for the benefit of GMAC COMMERCIAL MORTGAGE CORPORATION, a
corporation organized and existing under the laws of California, whose address
is 200 Witmer Road, P.O. Box 809, Horsham, Pennsylvania 19044, Attn: Servicing -
Executive Vice President, as beneficiary ("Lender").
Borrower, in consideration of the Indebtedness and the trust created by
this Instrument, irrevocably grants, conveys and assigns to Trustee and
Trustee's successors and assigns, in trust, with power of sale, the Mortgaged
Property, including the Land located in the County of Wake, State of North
Carolina and described in Exhibit A attached to this Instrument. To have and to
hold the Mortgaged Property unto Trustee and Trustee's successors and assigns,
forever.
TO SECURE TO LENDER the repayment of the Indebtedness evidenced by
Borrower's Multifamily Note payable to Lender dated as of the date of this
Instrument, and maturing as set forth in the Loan Agreement between Borrower and
Lender, in the principal amount of $9,708,078.00, and all renewals, extensions
and modifications of the Indebtedness, and the performance of the covenants and
agreements of Borrower contained in the Loan Documents.
Borrower represents and warrants that Borrower is lawfully seized of the
Mortgaged Property and has the right, power and authority to mortgage, grant,
convey and assign the Mortgaged Property, and that the Mortgaged Property is
unencumbered. Borrower covenants that Borrower will warrant and defend generally
the title to the Mortgaged Property against all claims and demands, subject to
any easements and restrictions listed in a schedule of exceptions to coverage in
any title insurance policy issued to Lender contemporaneously with the execution
and recordation of this Instrument and insuring Lender's interest in the
Mortgaged Property.
Covenants. Borrower and Lender covenant and agree as follows:
1. DEFINITIONS. The following terms, when used in this Instrument
(including when used in the above recitals), shall have the
following meanings:
(a) "Borrower" means all persons or entities identified as
"Borrower" in the first paragraph of this Instrument, together
with their successors and assigns.
(b) "Collateral Agreement" means any separate agreement between
Borrower and Lender for the purpose of establishing
replacement reserves for the Mortgaged Property, establishing
a fund to assure completion of repairs or improvements
specified in that agreement, or assuring reduction of the
outstanding principal balance of the Indebtedness if the
occupancy of or income from the Mortgaged Property does not
increase to a level specified in that agreement, or any other
agreement or agreements between Borrower and Lender which
provide for the establishment of any other fund, reserve or
account.
(c) "Environmental Permit" means any permit, license, or other
authorization issued under any Hazardous Materials Law with
respect to any activities or businesses conducted on or in
relation to the Mortgaged Property.
(d) "Event of Default" means the occurrence of any event listed in
Section 22.
(e) "Fixtures" means all property which is so attached to the Land
or the Improvements as to constitute a fixture under
applicable law, including: machinery, equipment, engines,
boilers, incinerators, installed building materials; systems
and equipment for the purpose of supplying or distributing
heating, cooling, electricity, gas, water, air, or light;
antennas, cable, wiring and conduits used in connection with
radio, television, security, fire prevention, or fire
detection or otherwise used to carry electronic signals;
telephone systems and equipment; elevators and related
machinery and equipment; fire detection, prevention and
extinguishing systems and apparatus; security and access
control systems and apparatus; plumbing systems; water
heaters, ranges, stoves, microwave ovens, refrigerators,
dishwashers, garbage disposers, washers, dryers and other
appliances; light fixtures, awnings, storm windows and storm
doors; pictures, screens, blinds, shades, curtains and curtain
rods; mirrors; cabinets, paneling, rugs and floor and wall
coverings; fences, trees and plants; swimming pools; and
exercise equipment.
(f) "Governmental Authority" means any board, commission,
department or body of any municipal, county, state or federal
governmental unit, or any subdivision of any of them, that has
or acquires jurisdiction over the Mortgaged Property or the
use, operation or improvement of the Mortgaged Property.
(g) "Hazardous Materials" means petroleum and petroleum products
and compounds containing them, including gasoline, diesel fuel
and oil; explosives; flammable materials; radioactive
materials; polychlorinated biphenyls ("PCBs") and compounds
containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could
become friable; underground or above-ground storage tanks,
whether empty or containing any substance; any substance the
presence of which on the Mortgaged Property is prohibited by
any federal, state or local authority; any substance that
requires special handling; and any other material or substance
now or in the future defined as a "hazardous substance,"
"hazardous material," "hazardous waste," "toxic substance,"
"toxic pollutant," "contaminant," or "pollutant" within the
meaning of any Hazardous Materials Law.
(h) "Hazardous Materials Laws" means all federal, state, and local
laws, ordinances and regulations and standards, rules,
policies and other governmental requirements, administrative
rulings and court judgments and decrees in effect now or in
the future and including all amendments, that relate to
Hazardous Materials and apply to Borrower or to the Mortgaged
Property. Hazardous Materials Laws include, but are not
limited to, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., the Toxic Substance Control Act, 15
U.S.C. Section 2601, et seq., the Clean Water Act, 33 U.S.C.
Section 1251, et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, et seq., and their
state analogs.
(i) "Impositions" and "Imposition Deposits" are defined in Section
7(a).
(j) "Improvements" means the buildings, structures, improvements,
and alterations now constructed or at any time in the future
constructed or placed upon the Land, including any future
replacements and additions.
(k) "Indebtedness" means the principal of, interest on, and all
other amounts due at any time under, the Note, this Instrument
or any other Loan Document, including prepayment premiums,
late charges, default interest, and advances as provided in
Section 12 to protect the security of this Instrument.
(l) [Intentionally omitted]
(m) "Key Principal" means the natural person(s) or entity
identified as such at the foot of this Instrument, and any
person or entity who becomes a Key Principal after the date of
this Instrument and is identified as such in an amendment or
supplement to this Instrument.
(n) "Land" means the land described in Exhibit A.
(o) "Leases" means all present and future leases, subleases,
licenses, concessions or grants or other possessory interests
now or hereafter in force, whether oral or written, covering
or affecting the Mortgaged Property, or any portion of the
Mortgaged Property (including proprietary leases or occupancy
agreements if Borrower is a cooperative housing corporation),
and all modifications, extensions or renewals.
(p) "Lender" means the entity identified as "Lender" in the first
paragraph of this Instrument and its successors and assigns,
or any subsequent holder of the Note.
(q) "Loan Documents" means the Note, this Instrument, all
guaranties, all indemnity agreements, all Collateral
Agreements, O&M Programs, and any other documents now or in
the future executed by Borrower, Key Principal, any guarantor
or any other person in connection with the loan evidenced by
the Note, as such documents may be amended from time to time.
(r) "Loan Servicer" means the entity that from time to time is
designated by Lender to collect payments and deposits and
receive notices under the Note, this Instrument and any other
Loan Document, and otherwise to service the loan evidenced by
the Note for the benefit of Lender. Unless Borrower receives
notice to the contrary, the Loan Servicer is the entity
identified as "Lender" in the first paragraph of this
Instrument.
(s) "Mortgaged Property" means all of Borrower's present and
future right, title and interest in and to all of the
following:
(1) the Land;
(2) the Improvements;
(3) the Fixtures;
(4) the Personalty;
(5) all current and future rights, including air rights, development
rights, zoning rights and other similar rights or
interests, easements, tenements, rights-of-way, strips and
gores of land, streets, alleys, roads, sewer rights,
waters, watercourses, and appurtenances related to or
benefitting the Land or the Improvements, or both, and all
rights-of-way, streets, alleys and roads which may have
been or may in the future be vacated;
(6) all proceeds paid or to be paid by any insurer of the Land,
the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property, whether or not Borrower
obtained the insurance pursuant to Lender's requirement;
(7) all awards, payments and other compensation made or to be made by any
municipal, state or federal authority with respect to the
Land, the Improvements, the Fixtures, the Personalty or any
other part of the Mortgaged Property, including any awards
or settlements resulting from condemnation proceedings or
the total or partial taking of the Land, the Improvements,
the Fixtures, the Personalty or any other part of the
Mortgaged Property under the power of eminent domain or
otherwise and including any conveyance in lieu thereof;
(8) all contracts, options and other agreements for the sale of
the Land, the Improvements, the Fixtures, the Personalty or
any other part of the Mortgaged Property entered into by
Borrower now or in the future, including cash or securities
deposited to secure performance by parties of their
obligations;
(9) all proceeds from the conversion, voluntary or involuntary, of
any of the above into cash or liquidated claims, and the right
to collect such proceeds;
(10) all Rents and Leases;
(11) all earnings, royalties, accounts receivable, issues and
profits from the Land, the Improvements or any other part of
the Mortgaged Property, and all undisbursed proceeds of the
loan secured by this Instrument and, if Borrower is a
cooperative housing corporation, maintenance charges or
assessments payable by shareholders or residents;
(12) all Imposition Deposits;
(13) all refunds or rebates of Impositions by any municipal, state
or federal authority or insurance company (other than refunds
applicable to periods before the real property tax year in
which this Instrument is dated);
(14) all tenant security deposits which have not been forfeited by
any tenant under any Lease; and
(15) all names under or by which any of the above Mortgaged
Property may be operated or known, and all trademarks, trade
names, and goodwill relating to any of the Mortgaged Property.
(t) "Note" means the Multifamily Note described on page 1 of this
Instrument, including the Acknowledgment and Agreement of Key
Principal to Personal Liability for Exceptions to Non-Recourse
Liability (if any), and all schedules, riders, allonges and
addenda, as such Multifamily Note may be amended from time to
time.
(u) "O&M Program" is defined in Section 18(a).
(v) "Personalty" means all equipment, inventory, general
intangibles which are used now or in the future in connection
with the ownership, management or operation of the Land or the
Improvements or are located on the Land or in the
Improvements, including furniture, furnishings, machinery,
building materials, appliances, goods, supplies, tools, books,
records (whether in written or electronic form), computer
equipment (hardware and software) and other tangible personal
property (other than Fixtures) which are used now or in the
future in connection with the ownership, management or
operation of the Land or the Improvements or are located on
the Land or in the Improvements, and any operating agreements
relating to the Land or the Improvements, and any surveys,
plans and specifications and contracts for architectural,
engineering and construction services relating to the Land or
the Improvements and all other intangible property and rights
relating to the operation of, or used in connection with, the
Land or the Improvements, including all governmental permits
relating to any activities on the Land.
(w) "Property Jurisdiction" is defined in Section 30(a).
(x) "Rents" means all rents (whether from residential or
non-residential space), revenues and other income of the Land
or the Improvements, including subsidy payments received from
any sources (including, but not limited to payments under any
Housing Assistance Payments Contract) parking fees, laundry
and vending machine income and fees and charges for food,
health care and other services provided at the Mortgaged
Property, whether now due, past due, or to become due, and
deposits forfeited by tenants.
(y) "Taxes" means all taxes, assessments, vault rentals and other
charges, if any, general, special or otherwise, including all
assessments for schools, public betterments and general or
local improvements, which are levied, assessed or imposed by
any public authority or quasi-public authority, and which, if
not paid, will become a lien, on the Land or the Improvements.
(z) "Transfer" means (A) a sale, assignment, transfer or other
disposition (whether voluntary, involuntary or by operation of
law); (B) the granting, creating or attachment of a lien,
encumbrance or security interest (whether voluntary,
involuntary or by operation of law); (C) the issuance or other
creation of an ownership interest in a legal entity, including
a partnership interest, interest in a limited liability
company or corporate stock; (D) the withdrawal, retirement,
removal or involuntary resignation of a partner in a
partnership or a member or manager in a limited liability
company; or (E) the merger, dissolution, liquidation, or
consolidation of a legal entity. "Transfer" does not include
(i) a conveyance of the Mortgaged Property at a judicial or
non-judicial foreclosure sale under this Instrument or (ii)
the Mortgaged Property becoming part of a bankruptcy estate by
operation of law under the United States Bankruptcy Code. For
purposes of defining the term "Transfer," the term
"partnership" shall mean a general partnership, a limited
partnership, a joint venture and a limited liability
partnership, and the term "partner" shall mean a general
partner, a limited partner and a joint venturer.
2. UNIFORM COMMERCIAL CODE SECURITY AGREEMENT. This Instrument is
also a security agreement under the Uniform Commercial Code
for any of the Mortgaged Property which, under applicable law,
may be subject to a security interest under the Uniform
Commercial Code, whether acquired now or in the future, and
all products and cash and non-cash proceeds thereof
(collectively, "UCC Collateral"), and Borrower hereby grants
to Lender a security interest in the UCC Collateral. Borrower
hereby authorizes Lender to file financing statements,
continuation statements and financing statement amendments, in
such form as Lender may require to perfect or continue the
perfection of this security interest and Borrower agrees, if
Lender so requests, to execute and deliver to Lender such
financing statements, continuation statements and amendments.
Borrower shall pay all filing costs and all costs and expenses
of any record searches for financing statements that Lender
may require. Without the prior written consent of Lender,
Borrower shall not create or permit to exist any other lien or
security interest in any of the UCC Collateral. If an Event of
Default has occurred and is continuing, Lender shall have the
remedies of a secured party under the Uniform Commercial Code,
in addition to all remedies provided by this Instrument or
existing under applicable law. In exercising any remedies,
Lender may exercise its remedies against the UCC Collateral
separately or together, and in any order, without in any way
affecting the availability of Lender's other remedies. This
Instrument constitutes a financing statement with respect to
any part of the Mortgaged Property which is or may become a
Fixture.
3. ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION.
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender
all Rents. It is the intention of Borrower to establish a
present, absolute and irrevocable transfer and assignment to
Lender of all Rents and to authorize and empower Lender to
collect and receive all Rents without the necessity of further
action on the part of Borrower. Promptly upon request by
Lender, Borrower agrees to execute and deliver such further
assignments as Lender may from time to time require. Borrower
and Lender intend this assignment of Rents to be immediately
effective and to constitute an absolute present assignment and
not an assignment for additional security only. For purposes
of giving effect to this absolute assignment of Rents, and for
no other purpose, Rents shall not be deemed to be a part of
the "Mortgaged Property," as that term is defined in Section
1(s). However, if this present, absolute and unconditional
assignment of Rents is not enforceable by its terms under the
laws of the Property Jurisdiction, then the Rents shall be
included as a part of the Mortgaged Property and it is the
intention of the Borrower that in this circumstance this
Instrument create and perfect a lien on Rents in favor of
Lender, which lien shall be effective as of the date of this
Instrument.
(b) After the occurrence of an Event of Default, Borrower
authorizes Lender to collect, sue for and compromise Rents and
directs each tenant of the Mortgaged Property to pay all Rents
to, or as directed by, Lender, and Borrower shall, upon
Borrower's receipt of any Rents from any sources (including,
but not limited to subsidy payments under any Housing
Assistance Payments Contract), pay the total amount of such
receipts to the Lender. However, until the occurrence of an
Event of Default, Lender hereby grants to Borrower a revocable
license to collect and receive all Rents, to hold all Rents in
trust for the benefit of Lender and to apply all Rents to pay
the installments of interest and principal then due and
payable under the Note and the other amounts then due and
payable under the other Loan Documents, including Imposition
Deposits, and to pay the current costs and expenses of
managing, operating and maintaining the Mortgaged Property,
including utilities, Taxes and insurance premiums (to the
extent not included in Imposition Deposits), tenant
improvements and other capital expenditures. So long as no
Event of Default has occurred and is continuing, the Rents
remaining after application pursuant to the preceding sentence
may be retained by Borrower free and clear of, and released
from, Lender's rights with respect to Rents under this
Instrument. From and after the occurrence of an Event of
Default, and without the necessity of Lender entering upon and
taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower's license to collect
Rents shall automatically terminate and Lender shall without
notice be entitled to all Rents as they become due and
payable, including Rents then due and unpaid. Borrower shall
pay to Lender upon demand all Rents to which Lender is
entitled. At any time on or after the date of Lender's demand
for Rents, Lender may give, and Borrower hereby irrevocably
authorizes Lender to give, notice to all tenants of the
Mortgaged Property instructing them to pay all Rents to
Lender, no tenant shall be obligated to inquire further as to
the occurrence or continuance of an Event of Default, and no
tenant shall be obligated to pay to Borrower any amounts which
are actually paid to Lender in response to such a notice. Any
such notice by Lender shall be delivered to each tenant
personally, by mail or by delivering such demand to each
rental unit. Borrower shall not interfere with and shall
cooperate with Lender's collection of such Rents.
(c) Borrower represents and warrants to Lender that Borrower has
not executed any prior assignment of Rents (other than an
assignment of Rents securing indebtedness that will be paid
off and discharged with the proceeds of the loan evidenced by
the Note), that Borrower has not performed, and Borrower
covenants and agrees that it will not perform, any acts and
has not executed, and shall not execute, any instrument which
would prevent Lender from exercising its rights under this
Section 3, and that at the time of execution of this
Instrument there has been no anticipation or prepayment of any
Rents for more than two months prior to the due dates of such
Rents. Borrower shall not collect or accept payment of any
Rents more than two months prior to the due dates of such
Rents.
(d) If an Event of Default has occurred and is continuing, Lender
may, regardless of the adequacy of Lender's security or the
solvency of Borrower and even in the absence of waste, enter
upon and take and maintain full control of the Mortgaged
Property in order to perform all acts that Lender in its
discretion determines to be necessary or desirable for the
operation and maintenance of the Mortgaged Property, including
the execution, cancellation or modification of Leases, the
collection of all Rents, the making of repairs to the
Mortgaged Property and the execution or termination of
contracts providing for the management, operation or
maintenance of the Mortgaged Property, for the purposes of
enforcing the assignment of Rents pursuant to Section 3(a),
protecting the Mortgaged Property or the security of this
Instrument, or for such other purposes as Lender in its
discretion may deem necessary or desirable. Alternatively, if
an Event of Default has occurred and is continuing, regardless
of the adequacy of Lender's security, without regard to
Borrower's solvency and without the necessity of giving prior
notice (oral or written) to Borrower, Lender may apply to any
court having jurisdiction for the appointment of a receiver
for the Mortgaged Property to take any or all of the actions
set forth in the preceding sentence. If Lender elects to seek
the appointment of a receiver for the Mortgaged Property at
any time after an Event of Default has occurred and is
continuing, Borrower, by its execution of this Instrument,
expressly consents to the appointment of such receiver,
including the appointment of a receiver ex parte if permitted
by applicable law. Lender or the receiver, as the case may be,
shall be entitled to receive a reasonable fee for managing the
Mortgaged Property. Immediately upon appointment of a receiver
or immediately upon the Lender's entering upon and taking
possession and control of the Mortgaged Property, Borrower
shall surrender possession of the Mortgaged Property to Lender
or the receiver, as the case may be, and shall deliver to
Lender or the receiver, as the case may be, all documents,
records (including records on electronic or magnetic media),
accounts, surveys, plans, and specifications relating to the
Mortgaged Property and all security deposits and prepaid
Rents. In the event Lender takes possession and control of the
Mortgaged Property, Lender may exclude Borrower and its
representatives from the Mortgaged Property. Borrower
acknowledges and agrees that the exercise by Lender of any of
the rights conferred under this Section 3 shall not be
construed to make Lender a mortgagee-in-possession of the
Mortgaged Property so long as Lender has not itself entered
into actual possession of the Land and Improvements.
(e) If Lender enters the Mortgaged Property, Lender shall be
liable to account only to Borrower and only for those Rents
actually received. Lender shall not be liable to Borrower,
anyone claiming under or through Borrower or anyone having an
interest in the Mortgaged Property, by reason of any act or
omission of Lender under this Section 3, and Borrower hereby
releases and discharges Lender from any such liability to the
fullest extent permitted by law.
(f) If the Rents are not sufficient to meet the costs of taking
control of and managing the Mortgaged Property and collecting
the Rents, any funds expended by Lender for such purposes
shall become an additional part of the Indebtedness as
provided in Section 12.
(g) Any entering upon and taking of control of the Mortgaged
Property by Lender or the receiver, as the case may be, and
any application of Rents as provided in this Instrument shall
not cure or waive any Event of Default or invalidate any other
right or remedy of Lender under applicable law or provided for
in this Instrument.
4. ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED PROPERTY.
(a) As part of the consideration for the Indebtedness, Borrower
absolutely and unconditionally assigns and transfers to Lender
all of Borrower's right, title and interest in, to and under
the Leases, including Borrower's right, power and authority to
modify the terms of any such Lease, or extend or terminate any
such Lease. It is the intention of Borrower to establish a
present, absolute and irrevocable transfer and assignment to
Lender of all of Borrower's right, title and interest in, to
and under the Leases. Borrower and Lender intend this
assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an
assignment for additional security only. For purposes of
giving effect to this absolute assignment of the Leases, and
for no other purpose, the Leases shall not be deemed to be a
part of the "Mortgaged Property," as that term is defined in
Section 1(s). However, if this present, absolute and
unconditional assignment of the Leases is not enforceable by
its terms under the laws of the Property Jurisdiction, then
the Leases shall be included as a part of the Mortgaged
Property and it is the intention of the Borrower that in this
circumstance this Instrument create and perfect a lien on the
Leases in favor of Lender, which lien shall be effective as of
the date of this Instrument.
(b) Until Lender gives notice to Borrower of Lender's exercise of
its rights under this Section 4, Borrower shall have all
rights, power and authority granted to Borrower under any
Lease (except as otherwise limited by this Section or any
other provision of this Instrument), including the right,
power and authority to modify the terms of any Lease or extend
or terminate any Lease. Upon the occurrence of an Event of
Default, the permission given to Borrower pursuant to the
preceding sentence to exercise all rights, power and authority
under Leases shall automatically terminate. Borrower shall
comply with and observe Borrower's obligations under all
Leases, including Borrower's obligations pertaining to the
maintenance and disposition of tenant security deposits.
(c) Borrower acknowledges and agrees that the exercise by Lender,
either directly or by a receiver, of any of the rights
conferred under this Section 4 shall not be construed to make
Lender a mortgagee-in-possession of the Mortgaged Property so
long as Lender has not itself entered into actual possession
of the Land and the Improvements. The acceptance by Lender of
the assignment of the Leases pursuant to Section 4(a) shall
not at any time or in any event obligate Lender to take any
action under this Instrument or to expend any money or to
incur any expenses. Lender shall not be liable in any way for
any injury or damage to person or property sustained by any
person or persons, firm or corporation in or about the
Mortgaged Property. Prior to Lender's actual entry into and
taking possession of the Mortgaged Property, Lender shall not
(i) be obligated to perform any of the terms, covenants and
conditions contained in any Lease (or otherwise have any
obligation with respect to any Lease); (ii) be obligated to
appear in or defend any action or proceeding relating to the
Lease or the Mortgaged Property; or (iii) be responsible for
the operation, control, care, management or repair of the
Mortgaged Property or any portion of the Mortgaged Property.
The execution of this Instrument by Borrower shall constitute
conclusive evidence that all responsibility for the operation,
control, care, management and repair of the Mortgaged Property
is and shall be that of Borrower, prior to such actual entry
and taking of possession.
(d) Upon delivery of notice by Lender to Borrower of Lender's
exercise of Lender's rights under this Section 4 at any time
after the occurrence of an Event of Default, and without the
necessity of Lender entering upon and taking and maintaining
control of the Mortgaged Property directly, by a receiver, or
by any other manner or proceeding permitted by the laws of the
Property Jurisdiction, Lender immediately shall have all
rights, powers and authority granted to Borrower under any
Lease, including the right, power and authority to modify the
terms of any such Lease, or extend or terminate any such
Lease.
(e) Borrower shall, promptly upon Lender's request, deliver to
Lender an executed copy of each residential Lease then in
effect. All Leases for residential dwelling units shall be on
forms approved by Lender, shall be for initial terms of at
least six months and not more than two years, and shall not
include options to purchase. If customary in the applicable
market, residential Leases with terms of less than six months
may be permitted with Lender's prior written consent.
(f) Borrower shall not lease any portion of the Mortgaged Property
for non-residential use except with the prior written consent
of Lender and Lender's prior written approval of the Lease
agreement. Borrower shall not modify the terms of, or extend
or terminate, any Lease for non-residential use (including any
Lease in existence on the date of this Instrument) without the
prior written consent of Lender. Borrower shall, without
request by Lender, deliver an executed copy of each
non-residential Lease to Lender promptly after such Lease is
signed. All non-residential Leases, including renewals or
extensions of existing Leases, shall specifically provide that
(1) such Leases are subordinate to the lien of this Instrument
(unless waived in writing by Lender); (2) the tenant shall
attorn to Lender and any purchaser at a foreclosure sale, such
attornment to be self-executing and effective upon acquisition
of title to the Mortgaged Property by any purchaser at a
foreclosure sale or by Lender in any manner; (3) the tenant
agrees to execute such further evidences of attornment as
Lender or any purchaser at a foreclosure sale may from time to
time request; (4) the Lease shall not be terminated by
foreclosure or any other transfer of the Mortgaged Property;
(5) after a foreclosure sale of the Mortgaged Property, Lender
or any other purchaser at such foreclosure sale may, at
Lender's or such purchaser's option, accept or terminate such
Lease; and (6) the tenant shall, upon receipt after the
occurrence of an Event of Default of a written request from
Lender, pay all Rents payable under the Lease to Lender.
(g) Borrower shall not receive or accept Rent under any Lease
(whether residential or non-residential) for more than two
months in advance.
5. PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN DOCUMENTS;
PREPAYMENT PREMIUM. Borrower shall pay the Indebtedness when
due in accordance with the terms of the Note and the other
Loan Documents and shall perform, observe and comply with all
other provisions of the Note and the other Loan Documents.
Borrower shall pay a prepayment premium in connection with
certain prepayments of the Indebtedness, including a payment
made after Lender's exercise of any right of acceleration of
the Indebtedness, as provided in the Note.
6. EXCULPATION. Borrower's personal liability for payment of the
Indebtedness and for performance of the other obligations to
be performed by it under this Instrument is limited in the
manner, and to the extent, provided in the Note.
7. DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.
(a) Borrower shall deposit with Lender on the day monthly
installments of principal or interest, or both, are due under
the Note (or on another day designated in writing by Lender),
until the Indebtedness is paid in full, an additional amount
sufficient to accumulate with Lender the entire sum required
to pay, when due (1) any water and sewer charges which, if not
paid, may result in a lien on all or any part of the Mortgaged
Property, (2) the premiums for fire and other hazard
insurance, rent loss insurance and such other insurance as
Lender may require under Section 19, (3) Taxes, and (4)
amounts for other charges and expenses which Lender at any
time reasonably deems necessary to protect the Mortgaged
Property, to prevent the imposition of liens on the Mortgaged
Property, or otherwise to protect Lender's interests, all as
reasonably estimated from time to time by Lender. The amounts
deposited under the preceding sentence are collectively
referred to in this Instrument as the "Imposition Deposits".
The obligations of Borrower for which the Imposition Deposits
are required are collectively referred to in this Instrument
as "Impositions". The amount of the Imposition Deposits shall
be sufficient to enable Lender to pay each Imposition before
the last date upon which such payment may be made without any
penalty or interest charge being added. Lender shall maintain
records indicating how much of the monthly Imposition Deposits
and how much of the aggregate Imposition Deposits held by
Lender are held for the purpose of paying Taxes, insurance
premiums and each other obligation of Borrower for which
Imposition Deposits are required. Any waiver by Lender of the
requirement that Borrower remit Imposition Deposits to Lender
may be revoked by Lender, in Lender's discretion, at any time
upon notice to Borrower.
(b) Imposition Deposits shall be held in an institution (which may
be Lender, if Lender is such an institution) whose deposits or
accounts are insured or guaranteed by a federal agency. Lender
shall not be obligated to open additional accounts or deposit
Imposition Deposits in additional institutions when the amount
of the Imposition Deposits exceeds the maximum amount of the
federal deposit insurance or guaranty. Lender shall apply the
Imposition Deposits to pay Impositions so long as no Event of
Default has occurred and is continuing. Unless applicable law
requires, Lender shall not be required to pay Borrower any
interest, earnings or profits on the Imposition Deposits.
Borrower hereby pledges and grants to Lender a security
interest in the Imposition Deposits as additional security for
all of Borrower's obligations under this Instrument and the
other Loan Documents. Any amounts deposited with Lender under
this Section 7 shall not be trust funds, nor shall they
operate to reduce the Indebtedness, unless applied by Lender
for that purpose under Section 7(e).
(c) If Lender receives a bill or invoice for an Imposition, Lender
shall pay the Imposition from the Imposition Deposits held by
Lender. Lender shall have no obligation to pay any Imposition
to the extent it exceeds Imposition Deposits then held by
Lender. Lender may pay an Imposition according to any bill,
statement or estimate from the appropriate public office or
insurance company without inquiring into the accuracy of the
bill, statement or estimate or into the validity of the
Imposition.
(d) If at any time the amount of the Imposition Deposits held by
Lender for payment of a specific Imposition exceeds the amount
reasonably deemed necessary by Lender, the excess shall be
credited against future installments of Imposition Deposits.
If at any time the amount of the Imposition Deposits held by
Lender for payment of a specific Imposition is less than the
amount reasonably estimated by Lender to be necessary,
Borrower shall pay to Lender the amount of the deficiency
within 15 days after notice from Lender.
(e) If an Event of Default has occurred and is continuing, Lender
may apply any Imposition Deposits, in any amounts and in any
order as Lender determines, in Lender's discretion, to pay any
Impositions or as a credit against the Indebtedness. Upon
payment in full of the Indebtedness, Lender shall refund to
Borrower any Imposition Deposits held by Lender.
8. COLLATERAL AGREEMENTS. Borrower shall deposit with Lender such
amounts as may be required by any Collateral Agreement and
shall perform all other obligations of Borrower under each
Collateral Agreement.
9. APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the
Indebtedness which is less than all amounts due and payable at
such time, then Lender may apply that payment to amounts then
due and payable in any manner and in any order determined by
Lender, in Lender's discretion. Neither Lender's acceptance of
an amount which is less than all amounts then due and payable
nor Lender's application of such payment in the manner
authorized shall constitute or be deemed to constitute either
a waiver of the unpaid amounts or an accord and satisfaction.
Notwithstanding the application of any such amount to the
Indebtedness, Borrower's obligations under this Instrument and
the Note shall remain unchanged.
10. COMPLIANCE WITH LAWS. Borrower shall comply with all laws,
ordinances, regulations and requirements of any Governmental
Authority and all recorded lawful covenants and agreements
relating to or affecting the Mortgaged Property, including all
laws, ordinances, regulations, requirements and covenants
pertaining to health and safety, construction of improvements
on the Mortgaged Property, fair housing, zoning and land use,
and Leases. Borrower also shall comply with all applicable
laws that pertain to the maintenance and disposition of tenant
security deposits. Borrower shall at all times maintain
records sufficient to demonstrate compliance with the
provisions of this Section 10. Borrower shall take appropriate
measures to prevent, and shall not engage in or knowingly
permit, any illegal activities at the Mortgaged Property that
could endanger tenants or visitors, result in damage to the
Mortgaged Property, result in forfeiture of the Mortgaged
Property, or otherwise materially impair the lien created by
this Instrument or Lender's interest in the Mortgaged
Property. Borrower represents and warrants to Lender that no
portion of the Mortgaged Property has been or will be
purchased with the proceeds of any illegal activity.
11. USE OF PROPERTY. Unless required by applicable law, Borrower
shall not (a) except for any change in use approved by Lender,
allow changes in the use for which all or any part of the
Mortgaged Property is being used at the time this Instrument
was executed, (b) convert any individual dwelling units or
common areas to commercial use, (c) initiate or acquiesce in a
change in the zoning classification of the Mortgaged Property,
or (d) establish any condominium or cooperative regime with
respect to the Mortgaged Property.
12. PROTECTION OF LENDER'S SECURITY.
(a) If Borrower fails to perform any of its obligations under this
Instrument or any other Loan Document, or if any action or
proceeding is commenced which purports to affect the Mortgaged
Property, Lender's security or Lender's rights under this
Instrument, including eminent domain, insolvency, code
enforcement, civil or criminal forfeiture, enforcement of
Hazardous Materials Laws, fraudulent conveyance or
reorganizations or proceedings involving a bankrupt or
decedent, then Lender at Lender's option may make such
appearances, disburse such sums and take such actions as
Lender reasonably deems necessary to perform such obligations
of Borrower and to protect Lender's interest, including (1)
payment of fees and out-of-pocket expenses of attorneys,
accountants, inspectors and consultants, (2) entry upon the
Mortgaged Property to make repairs or secure the Mortgaged
Property, (3) procurement of the insurance required by Section
19, and (4) payment of amounts which Borrower has failed to
pay under Sections 15 and 17.
(b) Any amounts disbursed by Lender under this Section 12, or
under any other provision of this Instrument that treats such
disbursement as being made under this Section 12, shall be
added to, and become part of, the principal component of the
Indebtedness, shall be immediately due and payable and shall
bear interest from the date of disbursement until paid at the
"Default Rate", as defined in the Note.
(c) Nothing in this Section 12 shall require Lender to incur any
expense or take any action.
13. INSPECTION. Lender, its agents, representatives, and designees
may make or cause to be made entries upon and inspections of
the Mortgaged Property (including environmental inspections
and tests) during normal business hours, or at any other
reasonable time.
14. BOOKS AND RECORDS; FINANCIAL REPORTING.
(a) Borrower shall keep and maintain at all times at the Mortgaged
Property or the management agent's offices, and upon Lender's
request shall make available at the Mortgaged Property,
complete and accurate books of account and records (including
copies of supporting bills and invoices) adequate to reflect
correctly the operation of the Mortgaged Property, and copies
of all written contracts, Leases, and other instruments which
affect the Mortgaged Property. The books, records, contracts,
Leases and other instruments shall be subject to examination
and inspection at any reasonable time by Lender.
(b) Borrower shall furnish to Lender all of the following:
(1) within 120 days after the end of each fiscal year of Borrower, a
statement of income and expenses for Borrower's operation
of the Mortgaged Property for that fiscal year, a statement
of changes in financial position of Borrower relating to
the Mortgaged Property for that fiscal year and, when
requested by Lender, a balance sheet showing all assets and
liabilities of Borrower relating to the Mortgaged Property
as of the end of that fiscal year;
(2) within 120 days after the end of each fiscal year of Borrower, and at
any other time upon Lender's request, a rent schedule for
the Mortgaged Property showing the name of each tenant, and
for each tenant, the space occupied, the lease expiration
date, the rent payable for the current month, the date
through which rent has been paid, and any related
information requested by Lender;
(3) within 120 days after the end of each fiscal year of Borrower, and at
any other time upon Lender's request, an accounting of all
security deposits held pursuant to all Leases, including
the name of the institution (if any) and the names and
identification numbers of the accounts (if any) in which
such security deposits are held and the name of the person
to contact at such financial institution, along with any
authority or release necessary for Lender to access
information regarding such accounts;
(4) within 120 days after the end of each fiscal year of Borrower, and at
any other time upon Lender's request, a statement that
identifies all owners of any interest in Borrower and the
interest held by each, if Borrower is a corporation, all
officers and directors of Borrower, and if Borrower is a
limited liability company, all managers who are not members;
(5) upon Lender's request, a monthly property management report
for the Mortgaged Property, showing the number of inquiries
made and rental applications received from tenants or
prospective tenants and deposits received from tenants and any
other information requested by Lender;
(6) upon Lender's request, a balance sheet, a statement of income
and expenses for Borrower and a statement of changes in
financial position of Borrower for Borrower's most recent
fiscal year; and
(7) if required by Lender, a statement of income and expense for
the Mortgaged Property for the prior month or quarter.
(c) Each of the statements, schedules and reports required by
Section 14(b) shall be certified to be complete and accurate
by an individual having authority to bind Borrower, and shall
be in such form and contain such detail as Lender may
reasonably require. Lender also may require that any
statements, schedules or reports be audited at Borrower's
expense by independent certified public accountants acceptable
to Lender.
(d) If Borrower fails to provide in a timely manner the
statements, schedules and reports required by Section 14(b),
Lender shall have the right to have Borrower's books and
records audited, at Borrower's expense, by independent
certified public accountants selected by Lender in order to
obtain such statements, schedules and reports, and all related
costs and expenses of Lender shall become immediately due and
payable and shall become an additional part of the
Indebtedness as provided in Section 12.
(e) If an Event of Default has occurred and is continuing,
Borrower shall deliver to Lender upon written demand all books
and records relating to the Mortgaged Property or its
operation.
(f) Borrower authorizes Lender to obtain a credit report on
Borrower at any time.
(g) If an Event of Default has occurred and Lender has not
previously required Borrower to furnish a quarterly statement
of income and expense for the Mortgaged Property, Lender may
require Borrower to furnish such a statement within 45 days
after the end of each fiscal quarter of Borrower following
such Event of Default.
15. TAXES; OPERATING EXPENSES.
(a) Subject to the provisions of Section 15(c) and Section 15(d),
Borrower shall pay, or cause to be paid, all Taxes when due
and before the addition of any interest, fine, penalty or cost
for nonpayment.
(b) Subject to the provisions of Section 15(c), Borrower shall pay
the expenses of operating, managing, maintaining and repairing
the Mortgaged Property (including insurance premiums,
utilities, repairs and replacements) before the last date upon
which each such payment may be made without any penalty or
interest charge being added.
(c) As long as no Event of Default exists and Borrower has timely
delivered to Lender any bills or premium notices that it has
received, Borrower shall not be obligated to pay Taxes,
insurance premiums or any other individual Imposition to the
extent that sufficient Imposition Deposits are held by Lender
for the purpose of paying that specific Imposition. If an
Event of Default exists, Lender may exercise any rights Lender
may have with respect to Imposition Deposits without regard to
whether Impositions are then due and payable. Lender shall
have no liability to Borrower for failing to pay any
Impositions to the extent that any Event of Default has
occurred and is continuing, insufficient Imposition Deposits
are held by Lender at the time an Imposition becomes due and
payable or Borrower has failed to provide Lender with bills
and premium notices as provided above.
(d) Borrower, at its own expense, may contest by appropriate legal
proceedings, conducted diligently and in good faith, the
amount or validity of any Imposition other than insurance
premiums, if (1) Borrower notifies Lender of the commencement
or expected commencement of such proceedings, (2) the
Mortgaged Property is not in danger of being sold or
forfeited, (3) Borrower deposits with Lender reserves
sufficient to pay the contested Imposition, if requested by
Lender, and (4) Borrower furnishes whatever additional
security is required in the proceedings or is reasonably
requested by Lender, which may include the delivery to Lender
of the reserves established by Borrower to pay the contested
Imposition.
(e) Borrower shall promptly deliver to Lender a copy of all
notices of, and invoices for, Impositions, and if Borrower
pays any Imposition directly, Borrower shall promptly furnish
to Lender receipts evidencing such payments.
16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of
any mortgage, deed of trust, deed to secure debt, security
interest or other lien or encumbrance (a "Lien") on the
Mortgaged Property (other than the lien of this Instrument) or
on certain ownership interests in Borrower, whether voluntary,
involuntary or by operation of law, and whether or not such
Lien has priority over the lien of this Instrument, is a
"Transfer" which constitutes an Event of Default.
17. PRESERVATION, MANAGEMENT AND MAINTENANCE OF MORTGAGED
PROPERTY.
(a) Borrower (1) shall not commit waste or permit impairment or
deterioration of the Mortgaged Property, (2) shall not abandon
the Mortgaged Property, (3) shall restore or repair promptly,
in a good and workmanlike manner, any damaged part of the
Mortgaged Property to the equivalent of its original
condition, or such other condition as Lender may approve in
writing, whether or not insurance proceeds or condemnation
awards are available to cover any costs of such restoration or
repair, (4) shall keep the Mortgaged Property in good repair,
including the replacement of Personalty and Fixtures with
items of equal or better function and quality, (5) shall
provide for professional management of the Mortgaged Property
by a residential rental property manager satisfactory to
Lender under a contract approved by Lender in writing, and (6)
shall give notice to Lender of and, unless otherwise directed
in writing by Lender, shall appear in and defend any action or
proceeding purporting to affect the Mortgaged Property,
Lender's security or Lender's rights under this Instrument.
Borrower shall not (and shall not permit any tenant or other
person to) remove, demolish or alter the Mortgaged Property or
any part of the Mortgaged Property except in connection with
the replacement of tangible Personalty.
(b) If, in connection with the making of the loan evidenced by the
Note or at any later date, Lender waives in writing the
requirement of Section 17(a)(5) above that Borrower enter into
a written contract for management of the Mortgaged Property
and if, after the date of this Instrument, Borrower intends to
change the management of the Mortgaged Property, Lender shall
have the right to approve such new property manager and the
written contract for the management of the Mortgaged Property
and require that Borrower and such new property manager enter
into an Assignment of Management Agreement on a form approved
by Lender. If required by Lender (whether before or after an
Event of Default), Borrower will cause any Affiliate of
Borrower to whom fees are payable for the management of the
Mortgaged Property to enter into an agreement with Lender, in
a form approved by Lender, providing for subordination of
those fees and such other provisions as Lender may require.
"Affiliate of Borrower" means any corporation, partnership,
joint venture, limited liability company, limited liability
partnership, trust or individual controlled by, under common
control with, or which controls Borrower (the term "control"
for these purposes shall mean the ability, whether by the
ownership of shares or other equity interests, by contract or
otherwise, to elect a majority of the directors of a
corporation, to make management decisions on behalf of, or
independently to select the managing partner of, a
partnership, or otherwise to have the power independently to
remove and then select a majority of those individuals
exercising managerial authority over an entity, and control
shall be conclusively presumed in the case of the ownership of
50% or more of the equity interests).
18. ENVIRONMENTAL HAZARDS.
(a) Except for matters covered by a written program of operations
and maintenance approved in writing by Lender (an "O&M
Program") or matters described in Section 18(b), Borrower
shall not cause or permit any of the following:
(1) the presence, use, generation, release, treatment, processing,
storage (including storage in above ground and underground
storage tanks), handling, or disposal of any Hazardous
Materials on or under the Mortgaged Property or any other
property of Borrower that is adjacent to the Mortgaged
Property;
(2) the transportation of any Hazardous Materials to, from, or
across the Mortgaged Property;
(3) any occurrence or condition on the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in
violation of Hazardous Materials Laws; or
(4) any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or
any property of Borrower that is adjacent to the Mortgaged
Property.
The matters described in clauses (1) through (4) above are referred to
collectively in this Section 18 as "Prohibited Activities or Conditions".
(b) Prohibited Activities and Conditions shall not include the
safe and lawful use and storage of quantities of (1)
pre-packaged supplies, cleaning materials and petroleum
products customarily used in the operation and maintenance of
comparable multifamily properties, (2) cleaning materials,
personal grooming items and other items sold in pre-packaged
containers for consumer use and used by tenants and occupants
of residential dwelling units in the Mortgaged Property; and
(3) petroleum products used in the operation and maintenance
of motor vehicles from time to time located on the Mortgaged
Property's parking areas, so long as all of the foregoing are
used, stored, handled, transported and disposed of in
compliance with Hazardous Materials Laws.
(c) Borrower shall take all commercially reasonable actions
(including the inclusion of appropriate provisions in any
Leases executed after the date of this Instrument) to prevent
its employees, agents, and contractors, and all tenants and
other occupants from causing or permitting any Prohibited
Activities or Conditions. Borrower shall not lease or allow
the sublease or use of all or any portion of the Mortgaged
Property to any tenant or subtenant for nonresidential use by
any user that, in the ordinary course of its business, would
cause or permit any Prohibited Activity or Condition.
(d) If an O&M Program has been established with respect to
Hazardous Materials, Borrower shall comply in a timely manner
with, and cause all employees, agents, and contractors of
Borrower and any other persons present on the Mortgaged
Property to comply with the O&M Program. All costs of
performance of Borrower's obligations under any O&M Program
shall be paid by Borrower, and Lender's out-of-pocket costs
incurred in connection with the monitoring and review of the
O&M Program and Borrower's performance shall be paid by
Borrower upon demand by Lender. Any such out-of-pocket costs
of Lender which Borrower fails to pay promptly shall become an
additional part of the Indebtedness as provided in Section 12.
(e) Borrower represents and warrants to Lender that, except as
previously disclosed by Borrower to Lender in writing:
(1) Borrower has not at any time engaged in, caused or permitted
any Prohibited Activities or Conditions;
(2) to the best of Borrower's knowledge after reasonable and
diligent inquiry, no Prohibited Activities or Conditions exist
or have existed;
(3) except to the extent previously disclosed by Borrower to Lender in
writing, the Mortgaged Property does not now contain any
underground storage tanks, and, to the best of Borrower's
knowledge after reasonable and diligent inquiry, the
Mortgaged Property has not contained any underground
storage tanks in the past. If there is an underground
storage tank located on the Property which has been
previously disclosed by Borrower to Lender in writing, that
tank complies with all requirements of Hazardous Materials
Laws;
(4) Borrower has complied with all Hazardous Materials Laws, including all
requirements for notification regarding releases of
Hazardous Materials. Without limiting the generality of
the foregoing, Borrower has obtained all Environmental
Permits required for the operation of the Mortgaged
Property in accordance with Hazardous Materials Laws now in
effect and all such Environmental Permits are in full force
and effect;
(5) no event has occurred with respect to the Mortgaged Property
that constitutes, or with the passing of time or the giving of
notice would constitute, noncompliance with the terms of any
Environmental Permit;
(6) there are no actions, suits, claims or proceedings pending or,
to the best of Borrower's knowledge after reasonable and
diligent inquiry, threatened that involve the Mortgaged
Property and allege, arise out of, or relate to any Prohibited
Activity or Condition; and
(7) Borrower has not received any complaint, order, notice of violation or
other communication from any Governmental Authority with
regard to air emissions, water discharges, noise emissions
or Hazardous Materials, or any other environmental, health
or safety matters affecting the Mortgaged Property or any
other property of Borrower that is adjacent to the
Mortgaged Property.
The representations and warranties in this Section 18 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the loan evidenced by the Note, until the Indebtedness
has been paid in full.
(f) Borrower shall promptly notify Lender in writing upon the
occurrence of any of the following events: (1) Borrower's
discovery of any Prohibited Activity or Condition;
(2) Borrower's receipt of or knowledge of any complaint, order, notice of
violation or other communication from any Governmental
Authority or other person with regard to present or future
alleged Prohibited Activities or Conditions or any other
environmental, health or safety matters affecting the
Mortgaged Property or any other property of Borrower that
is adjacent to the Mortgaged Property; and
(3) any representation or warranty in this Section 18 becomes
untrue after the date of this Agreement.
Any such notice given by Borrower shall not relieve Borrower of, or result in a
waiver of, any obligation under this Instrument, the Note, or any other Loan
Document.
(g) Borrower shall pay promptly the costs of any environmental
inspections, tests or audits ("Environmental Inspections")
required by Lender in connection with any foreclosure or deed
in lieu of foreclosure, or as a condition of Lender's consent
to any Transfer under Section 21, or required by Lender
following a reasonable determination by Lender that Prohibited
Activities or Conditions may exist. Any such costs incurred by
Lender (including the fees and out-of-pocket costs of
attorneys and technical consultants whether incurred in
connection with any judicial or administrative process or
otherwise) which Borrower fails to pay promptly shall become
an additional part of the Indebtedness as provided in Section
12. The results of all Environmental Inspections made by
Lender shall at all times remain the property of Lender and
Lender shall have no obligation to disclose or otherwise make
available to Borrower or any other party such results or any
other information obtained by Lender in connection with its
Environmental Inspections. Lender hereby reserves the right,
and Borrower hereby expressly authorizes Lender, to make
available to any party, including any prospective bidder at a
foreclosure sale of the Mortgaged Property, the results of any
Environmental Inspections made by Lender with respect to the
Mortgaged Property. Borrower consents to Lender notifying any
party (either as part of a notice of sale or otherwise) of the
results of any of Lender's Environmental Inspections. Borrower
acknowledges that Lender cannot control or otherwise assure
the truthfulness or accuracy of the results of any of its
Environmental Inspections and that the release of such results
to prospective bidders at a foreclosure sale of the Mortgaged
Property may have a material and adverse effect upon the
amount which a party may bid at such sale. Borrower agrees
that Lender shall have no liability whatsoever as a result of
delivering the results of any of its Environmental Inspections
to any third party, and Borrower hereby releases and forever
discharges Lender from any and all claims, damages, or causes
of action, arising out of, connected with or incidental to the
results of, the delivery of any of Lender's Environmental
Inspections.
(h) If any investigation, site monitoring, containment, clean-up,
restoration or other remedial work ("Remedial Work") is
necessary to comply with any Hazardous Materials Law or order
of any Governmental Authority that has or acquires
jurisdiction over the Mortgaged Property or the use, operation
or improvement of the Mortgaged Property under any Hazardous
Materials Law, Borrower shall, by the earlier of (1) the
applicable deadline required by Hazardous Materials Law or (2)
30 days after notice from Lender demanding such action, begin
performing the Remedial Work, and thereafter diligently
prosecute it to completion, and shall in any event complete
the work by the time required by applicable Hazardous
Materials Law. If Borrower fails to begin on a timely basis or
diligently prosecute any required Remedial Work, Lender may,
at its option, cause the Remedial Work to be completed, in
which case Borrower shall reimburse Lender on demand for the
cost of doing so. Any reimbursement due from Borrower to
Lender shall become part of the Indebtedness as provided in
Section 12.
(i) Borrower shall cooperate with any inquiry by any Governmental
Authority and shall comply with any governmental or judicial
order which arises from any alleged Prohibited Activity or
Condition.
(j) Borrower shall indemnify, hold harmless and defend (i) Lender,
(ii) any prior owner or holder of the Note, (iii) the Loan
Servicer, (iv) any prior Loan Servicer, (v) the officers,
directors, shareholders, partners, employees and trustees of
any of the foregoing, and (vi) the heirs, legal
representatives, successors and assigns of each of the
foregoing (collectively, the "Indemnitees") from and against
all proceedings, claims, damages, penalties and costs (whether
initiated or sought by Governmental Authorities or private
parties), including fees and out-of-pocket expenses of
attorneys and expert witnesses, investigatory fees, and
remediation costs, whether incurred in connection with any
judicial or administrative process or otherwise, arising
directly or indirectly from any of the following:
(1) any breach of any representation or warranty of Borrower in
this Section 18;
(2) any failure by Borrower to perform any of its obligations
under this Section 18;
(3) the existence or alleged existence of any Prohibited Activity
or Condition;
(4) the presence or alleged presence of Hazardous Materials on or
under the Mortgaged Property or any property of Borrower that
is adjacent to the Mortgaged Property; and
(5) the actual or alleged violation of any Hazardous Materials
Law.
(k) Counsel selected by Borrower to defend Indemnitees shall be
subject to the approval of those Indemnitees. However, any
Indemnitee may elect to defend any claim or legal or
administrative proceeding at the Borrower's expense.
(l) Borrower shall not, without the prior written consent of those
Indemnitees who are named as parties to a claim or legal or
administrative proceeding (a "Claim"), settle or compromise
the Claim if the settlement (1) results in the entry of any
judgment that does not include as an unconditional term the
delivery by the claimant or plaintiff to Lender of a written
release of those Indemnitees, satisfactory in form and
substance to Lender; or (2) may materially and adversely
affect Lender, as determined by Lender in its discretion.
(m) Lender agrees that the indemnity under this Section 18 shall
be limited to the assets of Borrower and Lender shall not seek
to recover any deficiency from any natural persons who are
general partners of Borrower.
(n) Borrower shall, at its own cost and expense, do all of the
following:
(1) pay or satisfy any judgment or decree that may be entered
against any Indemnitee or Indemnitees in any legal or
administrative proceeding incident to any matters against
which Indemnitees are entitled to be indemnified under this
Section 18;
(2) reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are
entitled to be indemnified under this Section 18; and
(3) reimburse Indemnitees for any and all expenses, including fees
and out-of-pocket expenses of attorneys and expert witnesses,
paid or incurred in connection with the enforcement by
Indemnitees of their rights under this Section 18, or in
monitoring and participating in any legal or administrative
proceeding.
(o) In any circumstances in which the indemnity under this Section
18 applies, Lender may employ its own legal counsel and
consultants to prosecute, defend or negotiate any claim or
legal or administrative proceeding and Lender, with the prior
written consent of Borrower (which shall not be unreasonably
withheld, delayed or conditioned), may settle or compromise
any action or legal or administrative proceeding. Borrower
shall reimburse Lender upon demand for all costs and expenses
incurred by Lender, including all costs of settlements entered
into in good faith, and the fees and out-of-pocket expenses of
such attorneys and consultants.
(p) The provisions of this Section 18 shall be in addition to any
and all other obligations and liabilities that Borrower may
have under applicable law or under other Loan Documents, and
each Indemnitee shall be entitled to indemnification under
this Section 18 without regard to whether Lender or that
Indemnitee has exercised any rights against the Mortgaged
Property or any other security, pursued any rights against any
guarantor, or pursued any other rights available under the
Loan Documents or applicable law. If Borrower consists of more
than one person or entity, the obligation of those persons or
entities to indemnify the Indemnitees under this Section 18
shall be joint and several. The obligation of Borrower to
indemnify the Indemnitees under this Section 18 shall survive
any repayment or discharge of the Indebtedness, any
foreclosure proceeding, any foreclosure sale, any delivery of
any deed in lieu of foreclosure, and any release of record of
the lien of this Instrument.
19. PROPERTY AND LIABILITY INSURANCE.
(a) Borrower shall keep the Improvements insured at all times
against such hazards as Lender may from time to time require,
which insurance shall include but not be limited to coverage
against loss by fire and allied perils, general boiler and
machinery coverage, and business income coverage. Lender's
insurance requirements may change from time to time throughout
the term of the Indebtedness. If Lender so requires, such
insurance shall also include sinkhole insurance, mine
subsidence insurance, earthquake insurance, and, if the
Mortgaged Property does not conform to applicable zoning or
land use laws, building ordinance or law coverage. If any of
the Improvements is located in an area identified by the
Federal Emergency Management Agency (or any successor to that
agency) as an area having special flood hazards, and if flood
insurance is available in that area, Borrower shall insure
such Improvements against loss by flood.
(b) All premiums on insurance policies required under Section
19(a) shall be paid in the manner provided in Section 7,
unless Lender has designated in writing another method of
payment. All such policies shall also be in a form approved by
Lender. All policies of property damage insurance shall
include a non-contributing, non-reporting mortgage clause in
favor of, and in a form approved by, Lender. Lender shall have
the right to hold the original policies or duplicate original
policies of all insurance required by Section 19(a). Borrower
shall promptly deliver to Lender a copy of all renewal and
other notices received by Borrower with respect to the
policies and all receipts for paid premiums. At least 30 days
prior to the expiration date of a policy, Borrower shall
deliver to Lender the original (or a duplicate original) of a
renewal policy in form satisfactory to Lender.
(c) Borrower shall maintain at all times commercial general
liability insurance, workers' compensation insurance and such
other liability, errors and omissions and fidelity insurance
coverages as Lender may from time to time require.
(d) All insurance policies and renewals of insurance policies
required by this Section 19 shall be in such amounts and for
such periods as Lender may from time to time require, and
shall be issued by insurance companies satisfactory to Lender.
(e) Borrower shall comply with all insurance requirements and
shall not permit any condition to exist on the Mortgaged
Property that would invalidate any part of any insurance
coverage that this Instrument requires Borrower to maintain.
(f) In the event of loss, Borrower shall give immediate written
notice to the insurance carrier and to Lender. Borrower hereby
authorizes and appoints Lender as attorney-in-fact for
Borrower to make proof of loss, to adjust and compromise any
claims under policies of property damage insurance, to appear
in and prosecute any action arising from such property damage
insurance policies, to collect and receive the proceeds of
property damage insurance, and to deduct from such proceeds
Lender's expenses incurred in the collection of such proceeds.
This power of attorney is coupled with an interest and
therefore is irrevocable. However, nothing contained in this
Section 19 shall require Lender to incur any expense or take
any action. Lender may, at Lender's option, (1) hold the
balance of such proceeds to be used to reimburse Borrower for
the cost of restoring and repairing the Mortgaged Property to
the equivalent of its original condition or to a condition
approved by Lender (the "Restoration"), or (2) apply the
balance of such proceeds to the payment of the Indebtedness,
whether or not then due. To the extent Lender determines to
apply insurance proceeds to Restoration, Lender shall do so in
accordance with Lender's then-current policies relating to the
restoration of casualty damage on similar multifamily
properties.
(g) Lender shall not exercise its option to apply insurance
proceeds to the payment of the Indebtedness if all of the
following conditions are met: (1) no Event of Default (or any
event which, with the giving of notice or the passage of time,
or both, would constitute an Event of Default) has occurred
and is continuing; (2) Lender determines, in its discretion,
that there will be sufficient funds to complete the
Restoration; (3) Lender determines, in its discretion, that
the rental income from the Mortgaged Property after completion
of the Restoration will be sufficient to meet all operating
costs and other expenses, Imposition Deposits, deposits to
reserves and loan repayment obligations relating to the
Mortgaged Property; (4) Lender determines, in its discretion,
that the Restoration will be completed before the earlier of
(A) one year before the maturity date of the Note or (B) one
year after the date of the loss or casualty; and (5) upon
Lender's request, Borrower provides Lender evidence of the
availability during and after the Restoration of the insurance
required to be maintained by Borrower pursuant to this Section
19.
(h) If the Mortgaged Property is sold at a foreclosure sale or
Lender acquires title to the Mortgaged Property, Lender shall
automatically succeed to all rights of Borrower in and to any
insurance policies and unearned insurance premiums and in and
to the proceeds resulting from any damage to the Mortgaged
Property prior to such sale or acquisition.
20. CONDEMNATION.
(a) Borrower shall promptly notify Lender of any action or
proceeding relating to any condemnation or other taking, or
conveyance in lieu thereof, of all or any part of the
Mortgaged Property, whether direct or indirect (a
"Condemnation"). Borrower shall appear in and prosecute or
defend any action or proceeding relating to any Condemnation
unless otherwise directed by Lender in writing. Borrower
authorizes and appoints Lender as attorney-in-fact for
Borrower to commence, appear in and prosecute, in Lender's or
Borrower's name, any action or proceeding relating to any
Condemnation and to settle or compromise any claim in
connection with any Condemnation. This power of attorney is
coupled with an interest and therefore is irrevocable.
However, nothing contained in this Section 20 shall require
Lender to incur any expense or take any action. Borrower
hereby transfers and assigns to Lender all right, title and
interest of Borrower in and to any award or payment with
respect to (i) any Condemnation, or any conveyance in lieu of
Condemnation, and (ii) any damage to the Mortgaged Property
caused by governmental action that does not result in a
Condemnation.
(b) Lender may apply such awards or proceeds, after the deduction
of Lender's expenses incurred in the collection of such
amounts, at Lender's option, to the restoration or repair of
the Mortgaged Property or to the payment of the Indebtedness,
with the balance, if any, to Borrower. Unless Lender otherwise
agrees in writing, any application of any awards or proceeds
to the Indebtedness shall not extend or postpone the due date
of any monthly installments referred to in the Note, Section 7
of this Instrument or any Collateral Agreement, or change the
amount of such installments. Borrower agrees to execute such
further evidence of assignment of any awards or proceeds as
Lender may require.
21. TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN BORROWER.
(a) The occurrence of any of the following events shall constitute
an Event of Default under this Instrument:
(1) a Transfer of all or any part of the Mortgaged Property or any
interest in the Mortgaged Property;
(2) a Transfer of a Controlling Interest in Borrower;
(3) a Transfer of a Controlling Interest in any entity which owns,
directly or indirectly through one or more intermediate
entities, a Controlling Interest in Borrower;
(4) a Transfer of all or any part of Key Principal's ownership
interests (other than limited partnership interests) in
Borrower, or in any other entity which owns, directly or
indirectly through one or more intermediate entities, an
ownership interest in Borrower;
(5) if Key Principal is an entity, (A) a Transfer of a Controlling
Interest in Key Principal, or (B) a Transfer of a Controlling
Interest in any entity which owns, directly or indirectly
through one or more intermediate entities, a Controlling
Interest in Key Principal;
(6) if Borrower or Key Principal is a trust, the termination or
revocation of such trust; and
(7) a conversion of Borrower from one type of legal entity into
another type of legal entity, whether or not there is a
Transfer.
Lender shall not be required to demonstrate any actual impairment of its
security or any increased risk of default in order to exercise any of its
remedies with respect to an Event of Default under this Section 21.
(b) The occurrence of any of the following events shall not
constitute an Event of Default under this Instrument,
notwithstanding any provision of Section 21(a) to the
contrary:
(1) a Transfer to which Lender has consented;
(2) a Transfer that occurs by devise, descent, or by operation of
law upon the death of a natural person;
(3) the grant of a leasehold interest in an individual dwelling
unit for a term of two years or less not containing an option
to purchase;
(4) a Transfer of obsolete or worn out Personalty or Fixtures that
are contemporaneously replaced by items of equal or better
function and quality, which are free of liens, encumbrances
and security interests other than those created by the Loan
Documents or consented to by Lender;
(5) the grant of an easement, if before the grant Lender
determines that the easement will not materially affect the
operation or value of the Mortgaged Property or Lender's
interest in the Mortgaged Property, and Borrower pays to
Lender, upon demand, all costs and expenses incurred by Lender
in connection with reviewing Borrower's request; and
(6) the creation of a tax lien or a mechanic's, materialman's or
judgment lien against the Mortgaged Property which is bonded
off, released of record or otherwise remedied to Lender's
satisfaction within 30 days of the date of creation.
(c) Lender shall consent, without any adjustment to the rate at
which the Indebtedness secured by this Instrument bears
interest or to any other economic terms of the Indebtedness,
to a Transfer that would otherwise violate this Section 21 if,
prior to the Transfer, Borrower has satisfied each of the
following requirements:
(1) the submission to Lender of all information required by Lender
to make the determination required by this Section 21(c);
(2) the absence of any Event of Default;
(3) the transferee meets all of the eligibility, credit, management and
other standards (including any standards with respect to
previous relationships between Lender and the transferee
and the organization of the transferee) customarily applied
by Lender at the time of the proposed Transfer to the
approval of borrowers in connection with the origination or
purchase of similar mortgages, deeds of trust or deeds to
secure debt on multifamily properties;
(4) the Mortgaged Property, at the time of the proposed Transfer,
meets all standards as to its physical condition that are
customarily applied by Lender at the time of the proposed
Transfer to the approval of properties in connection with the
origination or purchase of similar mortgages on multifamily
properties;
(5) in the case of a Transfer of all or any part of the Mortgaged Property,
or direct or indirect ownership interests in Borrower or
Key Principal (if an entity), if transferor or any other
person has obligations under any Loan Document, the
execution by the transferee or one or more individuals or
entities acceptable to Lender of an assumption agreement
(including, if applicable, an Acknowledgement and Agreement
of Key Principal to Personal Liability for Exceptions to
Non-Recourse Liability) that is acceptable to Lender and
that, among other things, requires the transferee to
perform all obligations of transferor or such person set
forth in such Loan Document, and may require that the
transferee comply with any provisions of this Instrument or
any other Loan Document which previously may have been
waived by Lender;
(6) if a guaranty has been executed and delivered in connection
with the Note, this Instrument or any of the other Loan
Documents, the Borrower causes one or more individuals or
entities acceptable to Lender to execute and deliver to Lender
a guaranty in a form acceptable to Lender; and
(7) Lender's receipt of all of the following:
(A) a non-refundable review fee in the amount of $3,000 and a
transfer fee equal to 1 percent of the outstanding
Indebtedness immediately prior to the Transfer.
(B) In addition, Borrower shall be required to reimburse Lender
for all of Lender's out-of-pocket costs (including reasonable
attorneys' fees) incurred in reviewing the Transfer request,
to the extent such expenses exceed $3,000.
(d) For purposes of this Section, the following terms shall have
the meanings set forth below:
(1) "Initial Owners" means, with respect to Borrower or any other
entity, the persons or entities who on the date of the Note
own in the aggregate 100% of the ownership interests in
Borrower or that entity.
(2) A Transfer of a "Controlling Interest" shall mean, with
respect to any entity, the following:
(i) if such entity is a general partnership or a joint venture, a
Transfer of any general partnership interest or joint venture
interest which would cause the Initial Owners to own less than
51% of all general partnership or joint venture interests in
such entity;
(ii) if such entity is a limited partnership, a Transfer of any
general partnership interest;
(iii) if such entity is a limited liability company or a limited
liability partnership, a Transfer of any membership or other
ownership interest which would cause the Initial Owners to own
less than 51% of all membership or other ownership interests
in such entity;
(iv) if such entity is a corporation (other than a Publicly-Held
Corporation) with only one class of voting stock, a Transfer
of any voting stock which would cause the Initial Owners to
own less than 51% of voting stock in such corporation;
(v) if such entity is a corporation (other than a Publicly-Held
Corporation) with more than one class of voting stock, a
Transfer of any voting stock which would cause the Initial
Owners to own less than a sufficient number of shares of
voting stock having the power to elect the majority of
directors of such corporation; and
(vi) if such entity is a trust, the removal, appointment or
substitution of a trustee of such trust other than (A) in the
case of a land trust, or (B) if the trustee of such trust
after such removal, appointment or substitution is a trustee
identified in the trust agreement approved by Lender.
(3) "Publicly-Held Corporation" shall mean a corporation the
outstanding voting stock of which is registered under Section
12(b) or 12(g) of the Securities and Exchange Act of 1934, as
amended.
22. EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default under this
Instrument:
(a) any failure by Borrower to pay or deposit when due any amount
required by the Note, this Instrument or any other Loan
Document;
(b) any failure by Borrower to maintain the insurance coverage
required by Section 19;
(c) any failure by Borrower to comply with the provisions of
Section 33;
(d) fraud or material misrepresentation or material omission by
Borrower, or any of its officers, directors, trustees, general
partners or managers, Key Principal or any guarantor in
connection with (A) the application for or creation of the
Indebtedness, (B) any financial statement, rent roll, or other
report or information provided to Lender during the term of
the Indebtedness, or (C) any request for Lender's consent to
any proposed action, including a request for disbursement of
funds under any Collateral Agreement;
(e) any Event of Default under Section 21;
(f) the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Lender's reasonable judgment,
could result in a forfeiture of the Mortgaged Property or
otherwise materially impair the lien created by this
Instrument or Lender's interest in the Mortgaged Property;
(g) any failure by Borrower to perform any of its obligations
under this Instrument (other than those specified in Sections
22(a) through (f)), as and when required, which continues for
a period of 30 days after notice of such failure by Lender to
Borrower, but no such notice or grace period shall apply in
the case of any such failure which could, in Lender's
judgment, absent immediate exercise by Lender of a right or
remedy under this Instrument, result in harm to Lender,
impairment of the Note or this Instrument or any other
security given under any other Loan Document;
(h) any failure by Borrower to perform any of its obligations as
and when required under any Loan Document other than this
Instrument which continues beyond the applicable cure period,
if any, specified in that Loan Document; and
(i) any exercise by the holder of any other debt instrument
secured by a mortgage, deed of trust or deed to secure debt on
the Mortgaged Property of a right to declare all amounts due
under that debt instrument immediately due and payable.
23. REMEDIES CUMULATIVE. Each right and remedy provided in this
Instrument is distinct from all other rights or remedies under
this Instrument or any other Loan Document or afforded by
applicable law, and each shall be cumulative and may be
exercised concurrently, independently, or successively, in any
order.
24. FORBEARANCE.
(a) Lender may (but shall not be obligated to) agree with
Borrower, from time to time, and without giving notice to, or
obtaining the consent of, or having any effect upon the
obligations of, any guarantor or other third party obligor, to
take any of the following actions: extend the time for payment
of all or any part of the Indebtedness; reduce the payments
due under this Instrument, the Note, or any other Loan
Document; release anyone liable for the payment of any amounts
under this Instrument, the Note, or any other Loan Document;
accept a renewal of the Note; modify the terms and time of
payment of the Indebtedness; join in any extension or
subordination agreement; release any Mortgaged Property; take
or release other or additional security; modify the rate of
interest or period of amortization of the Note or change the
amount of the monthly installments payable under the Note; and
otherwise modify this Instrument, the Note, or any other Loan
Document.
(b) Any forbearance by Lender in exercising any right or remedy
under the Note, this Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of
or preclude the exercise of any other right or remedy. The
acceptance by Lender of payment of all or any part of the
Indebtedness after the due date of such payment, or in an
amount which is less than the required payment, shall not be a
waiver of Lender's right to require prompt payment when due of
all other payments on account of the Indebtedness or to
exercise any remedies for any failure to make prompt payment.
Enforcement by Lender of any security for the Indebtedness
shall not constitute an election by Lender of remedies so as
to preclude the exercise of any other right available to
Lender. Lender's receipt of any awards or proceeds under
Sections 19 and 20 shall not operate to cure or waive any
Event of Default.
25. LOAN CHARGES. If any applicable law limiting the amount of
interest or other charges permitted to be collected from
Borrower is interpreted so that any charge provided for in any
Loan Document, whether considered separately or together with
other charges levied in connection with any other Loan
Document, violates that law, and Borrower is entitled to the
benefit of that law, that charge is hereby reduced to the
extent necessary to eliminate that violation. The amounts, if
any, previously paid to Lender in excess of the permitted
amounts shall be applied by Lender to reduce the principal of
the Indebtedness. For the purpose of determining whether any
applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been
violated, all Indebtedness which constitutes interest, as well
as all other charges levied in connection with the
Indebtedness which constitute interest, shall be deemed to be
allocated and spread over the stated term of the Note. Unless
otherwise required by applicable law, such allocation and
spreading shall be effected in such a manner that the rate of
interest so computed is uniform throughout the stated term of
the Note.
26. WAIVER OF STATUTE OF LIMITATIONS. Borrower hereby waives the
right to assert any statute of limitations as a bar to the
enforcement of the lien of this Instrument or to any action
brought to enforce any Loan Document.
27. WAIVER OF MARSHALLING. Notwithstanding the existence of any
other security interests in the Mortgaged Property held by
Lender or by any other party, Lender shall have the right to
determine the order in which any or all of the Mortgaged
Property shall be subjected to the remedies provided in this
Instrument, the Note, any other Loan Document or applicable
law. Lender shall have the right to determine the order in
which any or all portions of the Indebtedness are satisfied
from the proceeds realized upon the exercise of such remedies.
Borrower and any party who now or in the future acquires a
security interest in the Mortgaged Property and who has actual
or constructive notice of this Instrument waives any and all
right to require the marshalling of assets or to require that
any of the Mortgaged Property be sold in the inverse order of
alienation or that any of the Mortgaged Property be sold in
parcels or as an entirety in connection with the exercise of
any of the remedies permitted by applicable law or provided in
this Instrument.
28. FURTHER ASSURANCES. Borrower shall execute, acknowledge, and
deliver, at its sole cost and expense, all further acts,
deeds, conveyances, assignments, estoppel certificates,
financing statements, transfers and assurances as Lender may
require from time to time in order to better assure, grant,
and convey to Lender the rights intended to be granted, now or
in the future, to Lender under this Instrument and the Loan
Documents.
29. ESTOPPEL CERTIFICATE. Within 10 days after a request from
Lender, Borrower shall deliver to Lender a written statement,
signed and acknowledged by Borrower, certifying to Lender or
any person designated by Lender, as of the date of such
statement, (i) that the Loan Documents are unmodified and in
full force and effect (or, if there have been modifications,
that the Loan Documents are in full force and effect as
modified and setting forth such modifications); (ii) the
unpaid principal balance of the Note; (iii) the date to which
interest under the Note has been paid; (iv) that Borrower is
not in default in paying the Indebtedness or in performing or
observing any of the covenants or agreements contained in this
Instrument or any of the other Loan Documents (or, if the
Borrower is in default, describing such default in reasonable
detail); (v) whether or not there are then existing any
setoffs or defenses known to Borrower against the enforcement
of any right or remedy of Lender under the Loan Documents; and
(vi) any additional facts requested by Lender.
30. GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.
(a) This Instrument, and any Loan Document which does not itself
expressly identify the law that is to apply to it, shall be
governed by the laws of the jurisdiction in which the Land is
located (the "Property Jurisdiction").
(b) Borrower agrees that any controversy arising under or in
relation to the Note, this Instrument, or any other Loan
Document shall be litigated exclusively in the Property
Jurisdiction. The state and federal courts and authorities
with jurisdiction in the Property Jurisdiction shall have
exclusive jurisdiction over all controversies which shall
arise under or in relation to the Note, any security for the
Indebtedness, or any other Loan Document. Borrower irrevocably
consents to service, jurisdiction, and venue of such courts
for any such litigation and waives any other venue to which it
might be entitled by virtue of domicile, habitual residence or
otherwise.
31. NOTICE.
(a) All notices, demands and other communications ("notice") under
or concerning this Instrument shall be in writing. Each notice
shall be addressed to the intended recipient at its address
set forth in this Instrument, and shall be deemed given on the
earliest to occur of (1) the date when the notice is received
by the addressee; (2) the first Business Day after the notice
is delivered to a recognized overnight courier service, with
arrangements made for payment of charges for next Business Day
delivery; or (3) the third Business Day after the notice is
deposited in the United States mail with postage prepaid,
certified mail, return receipt requested. As used in this
Section 31, the term "Business Day" means any day other than a
Saturday, a Sunday or any other day on which Lender is not
open for business.
(b) Any party to this Instrument may change the address to which
notices intended for it are to be directed by means of notice
given to the other party in accordance with this Section 31.
Each party agrees that it will not refuse or reject delivery
of any notice given in accordance with this Section 31, that
it will acknowledge, in writing, the receipt of any notice
upon request by the other party and that any notice rejected
or refused by it shall be deemed for purposes of this Section
31 to have been received by the rejecting party on the date so
refused or rejected, as conclusively established by the
records of the U.S. Postal Service or the courier service.
(c) Any notice under the Note and any other Loan Document which
does not specify how notices are to be given shall be given in
accordance with this Section 31.
32. SALE OF NOTE; CHANGE IN SERVICER. The Note or a partial
interest in the Note (together with this Instrument and the
other Loan Documents) may be sold one or more times without
prior notice to Borrower. A sale may result in a change of the
Loan Servicer. There also may be one or more changes of the
Loan Servicer unrelated to a sale of the Note. If there is a
change of the Loan Servicer, Borrower will be given notice of
the change.
33. SINGLE ASSET BORROWER. Until the Indebtedness is paid in full,
Borrower (a) shall not acquire any real or personal property
other than the Mortgaged Property and personal property
related to the operation and maintenance of the Mortgaged
Property; (b) shall not operate any business other than the
management and operation of the Mortgaged Property; and (c)
shall not maintain its assets in a way difficult to segregate
and identify.
34. SUCCESSORS AND ASSIGNS BOUND. This Instrument shall bind, and
the rights granted by this Instrument shall inure to, the
respective successors and assigns of Lender and Borrower.
However, a Transfer not permitted by Section 21 shall be an
Event of Default.
35. JOINT AND SEVERAL LIABILITY. If more than one person or entity
signs this Instrument as Borrower, the obligations of such
persons and entities shall be joint and several.
36. RELATIONSHIP OF PARTIES; NO THIRD PARTY BENEFICIARY.
(a) The relationship between Lender and Borrower shall be solely
that of creditor and debtor, respectively, and nothing
contained in this Instrument shall create any other
relationship between Lender and Borrower.
(b) No creditor of any party to this Instrument and no other
person shall be a third party beneficiary of this Instrument
or any other Loan Document. Without limiting the generality of
the preceding sentence, (1) any arrangement (a "Servicing
Arrangement") between the Lender and any Loan Servicer for
loss sharing or interim advancement of funds shall constitute
a contractual obligation of such Loan Servicer that is
independent of the obligation of Borrower for the payment of
the Indebtedness, (2) Borrower shall not be a third party
beneficiary of any Servicing Arrangement, and (3) no payment
by the Loan Servicer under any Servicing Arrangement will
reduce the amount of the Indebtedness.
37. SEVERABILITY; AMENDMENTS. The invalidity or unenforceability
of any provision of this Instrument shall not affect the
validity or enforceability of any other provision, and all
other provisions shall remain in full force and effect. This
Instrument contains the entire agreement among the parties as
to the rights granted and the obligations assumed in this
Instrument. This Instrument may not be amended or modified
except by a writing signed by the party against whom
enforcement is sought.
38. CONSTRUCTION. The captions and headings of the sections of
this Instrument are for convenience only and shall be
disregarded in construing this Instrument. Any reference in
this Instrument to an "Exhibit" or a "Section" shall, unless
otherwise explicitly provided, be construed as referring,
respectively, to an Exhibit attached to this Instrument or to
a Section of this Instrument. All Exhibits attached to or
referred to in this Instrument are incorporated by reference
into this Instrument. Any reference in this Instrument to a
statute or regulation shall be construed as referring to that
statute or regulation as amended from time to time. Use of the
singular in this Agreement includes the plural and use of the
plural includes the singular. As used in this Instrument, the
term "including" means "including, but not limited to."
39. LOAN SERVICING. All actions regarding the servicing of the
loan evidenced by the Note, including the collection of
payments, the giving and receipt of notice, inspections of the
Property, inspections of books and records, and the granting
of consents and approvals, may be taken by the Loan Servicer
unless Borrower receives notice to the contrary. If Borrower
receives conflicting notices regarding the identity of the
Loan Servicer or any other subject, any such notice from
Lender shall govern.
40. DISCLOSURE OF INFORMATION. Lender may furnish information
regarding Borrower or the Mortgaged Property to third parties
with an existing or prospective interest in the servicing,
enforcement, evaluation, performance, purchase or
securitization of the Indebtedness, including trustees, master
servicers, special servicers, rating agencies, and
organizations maintaining databases on the underwriting and
performance of multifamily mortgage loans. Borrower
irrevocably waives any and all rights it may have under
applicable law to prohibit such disclosure, including any
right of privacy.
41. NO CHANGE IN FACTS OR CIRCUMSTANCES. All information in the
application for the loan submitted to Lender (the "Loan
Application") and in all financial statements, rent rolls,
reports, certificates and other documents submitted in
connection with the Loan Application are complete and accurate
in all material respects. There has been no material adverse
change in any fact or circumstance that would make any such
information incomplete or inaccurate.
42. SUBROGATION. If, and to the extent that, the proceeds of the
loan evidenced by the Note are used to pay, satisfy or
discharge any obligation of Borrower for the payment of money
that is secured by a pre-existing mortgage, deed of trust or
other lien encumbering the Mortgaged Property (a "Prior
Lien"), such loan proceeds shall be deemed to have been
advanced by Lender at Borrower's request, and Lender shall
automatically, and without further action on its part, be
subrogated to the rights, including lien priority, of the
owner or holder of the obligation secured by the Prior Lien,
whether or not the Prior Lien is released.
43. ACCELERATION; REMEDIES. At any time during the existence of an
Event of Default, Lender, at Lender's option, may declare the
Indebtedness to be immediately due and payable without further
demand, and may invoke the power of sale and any other
remedies permitted by applicable law or provided in this
Instrument or in any other Loan Document. Borrower
acknowledges that the power of sale granted in this Instrument
may be exercised by Lender without prior judicial hearing.
Borrower has the right to bring an action to assert the
non-existence of an Event of Default or any other defense of
Borrower to acceleration and sale. Lender shall be entitled to
collect all costs and expenses incurred in pursuing such
remedies, including reasonable attorneys' fees, costs of
documentary evidence, abstracts and title reports.
If Lender invokes the power of sale and if it is determined in a hearing
held in accordance with applicable law that Trustee can proceed to sale, Trustee
shall take such action regarding notice of sale and shall give such additional
notices to Borrower and to other persons as North Carolina law may require.
After the lapse of such time as may be required by applicable law and after the
publication of the notice of sale, Trustee shall sell the Mortgaged Property
according to the laws of North Carolina. Trustee may sell the Mortgaged Property
at the time and place and under the terms designated in the notice of sale in
one or more parcels and in such order as Trustee may determine. Trustee may
postpone sale of all or any part of the Mortgaged Property by public
announcement at the time and place of any previously scheduled sale. Lender or
Lender's designee may purchase the Mortgaged Property at any sale.
Trustee shall deliver to the purchaser at the sale, within a reasonable
time after the sale, a deed conveying the Mortgaged Property so sold without any
covenant or warranty, express or implied. The recitals in Trustee's deed shall
be prima facie evidence of the truth of the statements made therein. Trustee
shall apply the proceeds of the sale in the following order: (a) to all costs
and expenses of the sale, including Trustee's fees not to exceed 5% of the gross
sales price, reasonable fees and out-of-pocket expenses of attorneys and costs
of title evidence; (b) to the Indebtedness in such order as Lender, in Lender's
discretion, directs; and (c) the excess, if any, to the person or persons
legally entitled thereto.
44. RELEASE. Upon payment of the Indebtedness, Lender or Trustee shall cancel
this Instrument. Borrower shall pay the reasonable costs incurred in canceling
this Instrument. If Trustee is requested to cancel this Instrument, the Note
shall be surrendered to Trustee.
45. SUBSTITUTE TRUSTEE. Lender may from time to time remove Trustee and appoint
a successor trustee to any Trustee appointed under this Instrument by an
instrument recorded in the county in which this Instrument is recorded. Without
conveyance of the Mortgaged Property, the successor trustee shall succeed to all
the title, powers and duties conferred upon the Trustee herein and by applicable
law.
46. ENVIRONMENTAL INDEMNITY. Section 18(n)(3) is deleted and the following new
provision is inserted in its place:
"reimburse Indemnitees for any and all expenses, including reasonable
attorneys' fees and out-of-pocket expenses and fees and out-of-pocket expenses
of expert witnesses, paid or incurred in connection with the enforcement by
Indemnitees of their rights under this Section 18, or in monitoring and
participating in any legal or administrative proceeding."
47. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND AGREES
NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
INSTRUMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS BORROWER AND LENDER THAT
IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE
FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY,
KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Instrument:
-----
X Exhibit A Description of the Land (required)
-----
-----
X Exhibit B Modifications to Instrument
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative, as a sealed instrument.
CONSOLIDATED CAPITAL GROWTH FUND, a
California limited partnership, doing
business in North Carolina as
Consolidated Capital Growth Fund Limited
Partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By:/s/Patti K. Fielding
Patti K. Fielding
Executive Vice President and
Treasurer
STATE OF COLORADO, DENVER CITY/County ss:
On this ____ day of ________________, 2005, personally came before me,
__________ ___________________, a Notary Public of the City/County of Denver,
State of Colorado, Patti K. Fielding, who, being by me duly sworn, says that she
is Executive Vice President and Treasurer of ConCap Equities, Inc., a Delaware
corporation, general partner of Consolidated Capital Growth Fund, a California
limited partnership, , doing business in North Carolina as Consolidated Capital
Growth Fund Limited Partnership, and that the foregoing instrument was duly
executed by her for and on behalf of said limited partnership. And said
Executive Vice President and Treasurer acknowledged said instrument to be the
act and deed of said limited partnership.
Witness my hand and official seal.
My Commission Expires:_______________
______________________________________________________________________________
Notary Public
KEY PRINCIPAL
Name: AIMCO Properties, L.P.
Address: Stanford Place 3
4582 South Ulster St. Parkway
Suite 1100
Denver, Colorado 80237
FANNIE MAE MULTIFAMILY SECURITY INSTRUMENT - Form 4034 11/01 Page A-1
NORTH CAROLINA
(C) 1997-2001 Fannie Mae
EXHIBIT A
[DESCRIPTION OF THE LAND]
EXHIBIT B
MODIFICATIONS TO INSTRUMENT
The following modifications are made to the text of the Instrument that precedes
this Exhibit:
1. Paragraph 7 is amended to add the following subparagraph:
(f) Notwithstanding the provisions of Subparagraph 7(a), Lender will not
require Borrower to deposit with Lender amounts sufficient to accumulate
with Lender the entire sum required to pay Taxes, provided that Borrower
delivers to Lender a letter of credit and opinion of the letter of credit
issuer's counsel, both in form and content satisfactory to Lender in its
sole discretion, in an amount equal to one (1) year's Taxes. In the event
that Borrower does not timely pay Taxes or fails to provide Lender with
proof of such payment, Lender shall have the right to (i) cash the letter
of credit and apply the proceeds of the same to the payment of Taxes, (ii)
deposit any proceeds in excess of the amount of Taxes then due and payable
into Lender's account for Imposition Deposits and (iii) require Borrower
to deposit with Lender Imposition Deposits as provided in Subparagraph
7(a).
2. Paragraph 18(a) is amended to add the following sections:
(5) the presence of any form of toxic mold or fungus in the Mortgaged
Property of a type which may pose a significant risk to human health
or the environment or would negatively impact the value of the
Mortgaged Property (collectively "Mold");
(6) any activity, condition, event or omission that causes the growth of
Mold on or in the Mortgaged Property.
3. The defined term "Prohibited Activities or Conditions" is amended to
include the matters described in Sections 18(a)(5) and 18(a)(6).
4. A new Section 21(a)(8) is added as follows:
(8) if, at any time, AIMCO REIT loses the authority or the ownership
interests necessary to control, either directly or indirectly,
Borrower and Guarantor and Borrower's and Grantor's
Controlling Entities ("AIMCO Authorization"), Grantor
covenants to send notice of such loss of AIMCO Authorization
to Lender within fifteen (15) business days. Such loss of
AIMCO Authorization, shall be deemed a Transfer hereunder, and
such Transfer shall constitute an Event of Default under
Section 21(a) unless AIMCO REIT regains such AIMCO
Authorization within sixty (60) days after the date of the
loss.
5. A new Section 21(a)(9) is added as follows:
(9) if, Borrower fails to extend its term of existence to December
31, 2022 (the "Extension") on or before May 1, 2006 ("Extension
Completion Date"). Borrower covenants to notify Lender when the
Extension is completed. If the Extension is not completed by the
Extension Completion Date, an Event of Default shall be deemed to
have occurred hereunder.
6. AIMCO STANDARD.
A. Section 1(v) is modified to read as follows:
(v) "Personalty" means all furniture, furnishings, equipment,
machinery, building materials, appliances, goods, supplies, tools,
books, records (whether in written or electronic form), computer
equipment (hardware and software) and other tangible personal
property (other than Fixtures) which are used now or in the future
exclusively in connection with the ownership, management or
operation of the Land or the Improvements or are located on the Land
or in the Improvements, and any operating agreements relating to the
Land or the Improvements, and any surveys, plans and specifications
and contracts for architectural, engineering and construction
services relating to the Land or the Improvements and all other
intangible property and rights exclusively relating to the operation
of, or used exclusively in connection with, the Land or the
Improvements including all governmental permits relating to any
activities on the Land.
B. Section 7(c) is modified to read as follows:
(c) Notwithstanding the provisions of Section 7(a), Lender
will not require Borrower to deposit with Lender amounts sufficient
to accumulate with Lender the entire sum required to pay the water
and sewer charges, fire, hazard or other insurance premiums, and
ground rents. At least annually, Borrower must provide Lender with
proof of payment of all such Impositions for which Lender is not
collecting Imposition Deposits. In the event that Borrower does not
timely pay any of the Impositions, or fails to provide Lender with
proof of such payment, or upon the occurrence of an Event of Default
hereunder, or upon Borrower's failure to maintain the Mortgaged
Property in a satisfactory manner in accordance with the
requirements of this Instrument, then in any such events, Lender may
require Borrower to deposit with Lender the Imposition Deposits as
provided in Section 7(a).
C. Except in a case where Lender in its discretion determines that an
emergency exists, Lender may take actions specified in Section
12(a) only if Lender has notified Borrower of Borrower's failure
to perform any of its obligations under this Instrument or any
other Loan Document and Borrower does not cure the failure within
ten (10) days after such notice. If Lender so determines that an
emergency exists, Lender shall notify Borrower of the action
taken within ten (10) days after the action is taken.
D. Sections 14(b)(4) and 14(b)(5) are modified to read as follows:
(4) within 120 days after the end of each fiscal year of Borrower,
and at any other time upon Lender's request, a statement that
identifies all owners of any interest in Borrower and each
general partner in Borrower, and confirming that the ownership
of each other Controlling Entity has not changed in a manner
that violates Section 21(a);
(5) promptly following Lender's request, quarterly or monthly
income and expense statements for the Property relating to a
quarterly or monthly period, as the case may be, ending no
later than 45 days before the request;
E. For purposes of Section 14(b), Borrower shall be deemed to have
delivered any statement or document "upon Lender's request" if
Borrower has delivered the document promptly following Lender's
request.
F. Notwithstanding Section (14)(c), unless an Event of Default has
occurred and is continuing, or Lender has determined that an
event having a Material Adverse Effect has occurred, Lender may
require that the financial statements required by Sections
14(b)(1), 14(b)(2) and 14(b)(3) be audited, but may not require
that any other financial statements required by Section 14 be
audited. Certification of a statement by the chief financial
officer of the entity that is the subject of the statement or, in
the case of a partnership, the chief financial officer of the
general partner, will be acceptable to Lender as certification by
an individual having authority to bind Borrower.
G. Lender shall not have Borrower's books and records audited pursuant
to Section 14(d) unless Lender has given Borrower notice specifying
the statements, schedules and reports required by Section 14(b) that
Borrower has failed to provide, and Borrower has not provided such
statements by the expiration of ten days after such notice.
H. So long as Borrower is contesting the amount and validity of any
Imposition other than insurance premiums diligently and in good
faith as described in Section 15(d) and all of the conditions
specified in clauses (1) through (4) of Section 15(d) are satisfied,
Lender will refrain from applying Imposition Deposits to payment of
the contested Imposition.
I. Section 15(e) and Section 16 are modified to read as follows:
15(e) Borrower shall promptly deliver to Lender a copy of all
notices of, and invoices for Impositions, and if Borrower pays any
Imposition directly (which Borrower has no obligation to do unless
Imposition Deposits have been waived or are insufficient and Lender
has notified Borrower of that insufficiency), Borrower shall
promptly furnish to Lender receipts evidencing such payments.
16. LIENS; ENCUMBRANCES. Borrower acknowledges that, to the extent
provided in Section 21, the grant, creation or existence of any
mortgage, deed of trust, deed to secure debt, security interest or
other lien or encumbrance (a "Lien") on the Mortgaged Property
(other than the lien of this Instrument), or on certain ownership
interests in Borrower, whether voluntary, involuntary or by
operation of law, and whether or not such lien has priority over the
lien of this Instrument, is a "Transfer" which constitutes an Event
of Default.
J. For purposes of Section 18(b), "pre-packaged supplies, cleaning
materials and petroleum products customarily used in the operation
and maintenance of comparable multifamily properties" shall include,
without limitation, pool, spa, maintenance and gardening materials.
K. The second sentence of Section 18(c) is modified to read as follows:
Borrower shall not lease or allow the sublease or use of all or any
portion of the Mortgaged Property to any tenant or subtenant for
nonresidential use by any user that, in the ordinary course of its
business, would be reasonably expected to cause or permit any
Prohibited Activity or Condition.
L. For purposes of Section 18(d), Borrower shall only be obligated to
pay out-of-pocket expenses incurred by Lender in connection with the
monitoring and review of an O&M Program and Borrower's performance
to the extent such expenses are reasonable.
M. Borrower's representation and warranty in Section 18(e)(4) regarding
requirements for notification regarding releases of Hazardous
Materials shall relate only to such releases, if any, at or
affecting the Mortgaged Property.
N. Section 18(e)(5) is modified to read as follows:
(5) no event has occurred with respect to the Mortgaged Property
that constitutes, or with the passing of time or the giving of
notice would reasonably be expected to constitute,
noncompliance with the terms of any Environmental Permit;
O. Section 18(g) is modified to read as follows:
(g) Borrower shall pay promptly the costs of any environmental
inspections, tests or audits ("Environmental Inspections") required
by Lender in connection with or in preparation for any foreclosure
or deed in lieu of foreclosure. Borrower shall also pay promptly the
reasonable costs of any Environmental Inspections required by Lender
in connection with, or as a condition of Lender's consent to any
Transfer under Section 21, or required by Lender following a
reasonable determination by Lender that Prohibited Activities or
Conditions may exist. Any such costs incurred by Lender (including
the fees and out-of-pocket costs of attorneys and technical
consultants whether incurred in connection with any judicial or
administrative process or otherwise) which Borrower fails to pay
promptly shall become an additional part of the Indebtedness as
provided in Section 12. The results of all Environmental Inspections
made by Lender in connection with or in preparation for any
foreclosure or deed in lieu of foreclosure shall at all times remain
the property of Lender and Lender shall have no obligation to
disclose such results to or otherwise make such results available to
Borrower or any other party. Lender will make available to Borrower
the results of all other Environmental Inspections made by Lender.
Lender hereby reserves the right, and Borrower hereby expressly
authorizes Lender, to make available to any party, including any
prospective bidder at a foreclosure sale of the Mortgaged Property,
the results of any Environmental Inspections made by Lender with
respect to the Mortgaged Property. Borrower consents to Lender
notifying any party (either as part of a notice of sale or
otherwise) of the results of any of Lender's Environmental
Inspections. Except in the case of an Environmental Inspection
performed in connection with a foreclosure or deed in lieu of
foreclosure, or a disclosure of Environmental Inspection results
that Lender is required by law to make, Lender shall notify Borrower
of its intention to disclose such information and shall give
Borrower ten days to provide supplemental information, explanations
or corrections to accompany the disclosure. Borrower acknowledges
that Lender cannot control or otherwise assure the truthfulness or
accuracy of the results of any of its Environmental Inspections and
that the release of such results to prospective bidders at a
foreclosure sale of the Mortgaged Property may have a material and
adverse effect upon the amount which a party may bid at such sale.
Borrower agrees that Lender shall have no liability whatsoever as a
result of delivering the results of any of its Environmental
Inspections to any third party, and Borrower hereby releases and
forever discharges Lender from any and all claims, damages, or
causes of action, arising, out of, connected with or incidental to
the results of, the delivery of any of Lender's Environmental
Inspections.
P. Lender shall not commence Remedial Work under the second sentence of
Section 18(h) unless Lender has given Borrower notice of its
intention to do so and Borrower has not begun performing the
Remedial Work within 10 days after such notice.
Q. The following sentence is added at the end of Section 18(j):
However, Borrower shall have no obligation to indemnify any of the
foregoing parties to the extent that the proceedings, claims,
damages, penalties or costs arise out of the gross negligence or
willful misconduct of Lender, any prior owner or holder of the Note,
the Loan Servicer or any prior Loan Servicer.
R. For purposes of Section 19(b), Lender will accept a duplicate
original of any insurance policy.
S. For purposes of Section 19(d), an insurance company will be
acceptable to Lender if it has a rating in Best's Key Rating Guide
of at least "A-" and a financial size category of at least "v,"
provided that if Fannie Mae changes its requirements for the
financial rating of insurers generally, Lender may change the
requirement set forth in this sentence in a manner consistent with
any such change.
T. Clause (2) of Section 19(g) is modified to read as follows:
(2) Lender determines, in its discretion, that the combination of
insurance proceeds and amounts provided by the Borrower will be
sufficient to complete the Restoration.
U. For purposes of Section 19(h), Lender shall automatically succeed to
rights of Borrower in and to insurance policies and unearned
premiums only to the extent permitted by the applicable policies and
insurance companies.
V. Section 21(a)(2) is modified to read as follows:
(2) if Borrower is a limited partnership, a Transfer of (A) any
general partnership interest (except for a Transfer to a
Qualified REIT Subsidiary, as defined in Section 856(i)(2) of
the Internal Revenue Code of 1986, 100% owned by Apartment
Investment and Management Company, a Maryland corporation or
to a Qualified REIT Subsidiary, as defined in Section 856
(l)(1) of the Internal Revenue Code of 1986, 100% owned by
AIMCO OP), or (B) limited partnership interests in Borrower
that would cause the Initial Owners of Borrower to own less
than 51% of all limited partnership interests in Borrower;
W. New Sections 21(b)(7), 21(b)(8), 21(b)(9), and 21(b)(10) are added,
as follows:
(7) The Transfer of any limited or general partnership interests
in Borrower provided no Change of Control occurs as a result
of such Transfer.
(8) The Transfer of shares of common stock, limited partnership
interests or other beneficial or ownership interests or other
forms of securities in AIMCO REIT or AIMCO OP, and the
issuance of all varieties of convertible debt, equity and
other similar securities of AIMCO REIT or AIMCO OP, and the
subsequent Transfer of such securities; provided, however,
that no Change of Control occurs as a result of such Transfer,
either upon such Transfer or upon the subsequent conversion to
equity of such convertible debt or other securities.
(9) The issuance by AIMCO REIT or AIMCO OP of additional common
stock, limited partnership interests or other beneficial or
ownership interests, convertible debt, equity and other
similar securities, and the subsequent Transfer of such
convertible debt or securities; provided, however, that no
Change of Control occurs as the result of such Transfer,
either upon such Transfer or upon the subsequent conversion to
equity of such convertible debt or other securities.
(10) So long as AIMCO REIT owns 100% of the stock of AIMCO-LP,
Inc., a Transfer of limited partnership interests that results
in AIMCO-LP, Inc. owning not less than 50.1% of the limited
partnership interests in AIMCO OP.
X. Section 21(b)(8) shall apply only to a Transfer of an interest in a
Controlling Entity that is prohibited by Section 21(a)(7).
Y. A new Section 21(d) is added, as follows:
(d) For purposes of this Section 21, the following terms shall
be defined as follows:
(1) "Change of Control" shall mean the earliest to occur of
(A) the date an Acquiring Person becomes (by
acquisition, consolidation, merger or otherwise),
directly or indirectly, the beneficial owner of more
than forty percent (40%) of the total Voting Equity
Capital of AIMCO REIT then outstanding, or (B) the date
on which AIMCO REIT shall cease to hold (whether
directly or indirectly through a wholly owned
intermediary entity such as AIMCO-LP, Inc. or AIMCO-GP,
Inc.) at least 50.1% of the limited partnership
interests in AIMCO OP, or (C) the date on which AIMCO
REIT shall cease for any reason to hold (whether
directly or indirectly) (i) the interests in the
Managing General Partner held as of the date of this
Instrument (as evidenced by organizational charts and
documents submitted to Lender as of such date) and (ii)
the Controlling Interest(s) in the Borrower, or (D) the
replacement (other than solely by reason of retirement
at age sixty-five or older, death or disability) of more
than 50% (or such lesser percentage as is required for
decisionmaking by the board of directors of trustees, if
applicable) of the members of the board of directors (or
trustee, if applicable) of AIMCO REIT over a one-year
period where such replacement shall not have been
approved by a vote of at least a majority of the board
of directors (or trustees, if applicable) of AIMCO REIT
then still in office who either were members of such
board of directors (or trustees, if applicable) at the
beginning of such one year period or whose election as
members of the board of directors (or trustees, if
applicable) was previously so approved.
(2) "Acquiring Person" shall mean a "person" or group of
"persons" within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended.
However, notwithstanding the foregoing, "Acquiring
Person" shall not be deemed to include any member of the
Borrower Control Group unless such member has, directly
or indirectly, disposed of, sold or otherwise
transferred to, or encumbered or restricted (whether by
means of voting trust agreement or otherwise) for the
benefit of an Acquiring Person, all or any portion of
the Voting Equity Capital of AIMCO REIT directly or
indirectly owned or controlled by such member or such
member directly or indirectly votes all or any portion
of the Voting Equity Capital of AIMCO REIT, directly or
indirectly, owned or controlled by such member for the
taking of any action which, directly or indirectly
constitutes or would result in a Change of Control, in
which event such member of the Borrower Control Group
shall be deemed to constitute an Acquiring Person to the
extent of the Voting Equity Capital of AIMCO REIT owned
or controlled by such member.
(3) "Borrower Control Group" shall mean Terry Considine,
Peter K. Kompaniez, Richard S. Ellwood, J. Landis
Martin, Thomas L. Rhodes and James N. Bailey.
(4) A "Person" shall mean an individual, an estate, a trust,
a corporation, a partnership, a limited liability
company or any other organization or entity (whether
governmental or private).
(5) "Security" shall have the same meaning as in Section
2(1) of the Securities Act of 1933, as amended.
(6) "Controlling Interest(s)" shall mean (i) with respect to
a partnership, such majority and/or managing general
partner interests which, together with a majority of
limited partnership interests if necessary for consent
purposes, vest in the holder of such interests the sole
power, right and authority to control the day to day
operations of the Borrower; including, without
limitation, the authority to manage, operate and finance
the Mortgaged Property, (ii) with respect to a
corporation, the number of shares which entitle the
holder to elect a majority of the board of directors of
the Borrower, and (iii) with respect to a limited
liability company, such majority and/or managing member
interests as vest in the holder of such interests the
sole power, right and authority to control the day to
day operations of the Borrower; including, without
limitation, the authority to manage, operate and finance
the Mortgaged Property.
(7) "AIMCO REIT" shall mean Apartment Investment and
Management Company, a corporation organized and existing
under the laws of the State of Maryland.
(8) "AIMCO OP" shall mean AIMCO Properties, L.P., a limited
partnership organized and existing under the laws of the
State of Delaware.
(9) "Managing General Partner" shall mean the entity
executing this Instrument on behalf of the Borrower
and/or its successors or assigns in interest.
(10) "Voting Equity Capital" shall mean Securities of any
class or classes, the holders of which are ordinarily,
in the absence of contingencies, entitled to elect a
majority of the board of directors (or Persons
performing similar functions).
Z. Section 22(a) is modified to read as follows:
(a) any failure by Borrower to pay or deposit (i) any
Imposition Deposit within three days after it is due, or (ii) any
other amount required by the Note, this Instrument, or any other
Loan Document when due.
AA. Section 28 shall obligate Borrower to provide such further
assurances as Lender reasonably may require.
BB. The words "Except as otherwise disclosed to Lender in writing,
before the date of this Instrument" are added at the beginning of
the second sentence of Section 41.
CC. Section 37 is modified by adding: "; provided, however, that in the
event of a Transfer, any or some or all of the Modifications to
Instrument set forth in Exhibit B (if any) may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee". The modifications set forth in this
Exhibit B shall be null and void unless title to the Mortgaged
Property is vested in an entity whose Controlling Interest(s) are
directly or indirectly held by AIMCO REIT or AIMCO OP.
INITIALS