Exhibit 10.18
PLEDGE AND SECURITY AGREEMENT
This Pledge and Security Agreement (this “Agreement”) is made and entered into as of December 23, 2011 by and between Howell Countryside, Inc., a New Jersey corporation (“Howell”), and HCI Properties LLC, a New Jersey limited liability company (“HCI”), each of which has a principal business address at Laurel Oak Corporate Center, 1103 Laurel Oak Road, Suite 105B, Voorhees, NJ 08043 (each of the foregoing is hereinafter individually and collectively referred to as “Pledgor”), and National Tax Credit Investors II, a California limited partnership, whose address is 4582 South Ulster Street Parkway, Suite 1100, Denver, Colorado 80237 (together with its successors and assigns, “Lender”).
R E C I T A L S
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
“Attorneys’ Fees and Costs” means (i) fees and out-of-pocket costs of Lender’s attorneys, as applicable, including, without limitation, costs of Lender’s in-house counsel, support staff costs, costs of preparing for litigation, computerized research, telephone and facsimile transmission expenses, mileage, deposition costs, postage, duplicating, process service, videotaping and similar costs and expenses; (ii) costs and fees of any expert witnesses; and (iii) all investigatory fees.
“Bankruptcy or Insolvency Event” means: (i) the making of a general assignment for the benefit of creditors by any Borrower or any guarantor of the Indebtedness; (ii) the voluntary appointment (at the request of any such party or with the consent of any such party) of a receiver, custodian, liquidator or trustee in bankruptcy of the property of any Borrower or any guarantor of the Indebtedness; (iii) the filing by any Borrower or any guarantor of the Indebtedness of a petition in bankruptcy or an adjudication of any Borrower or any guarantor of the Indebtedness as bankrupt or insolvent; (iv) the filing by any Borrower or any guarantor of the Indebtedness of any petition or answer seeking or acquiescing in any relief under any present or future federal, state or other law or regulation relating to bankruptcy, insolvency or other relief for debtors; (v) any Borrower or any guarantor of the Indebtedness admitting in writing its insolvency or inability to pay its debts generally as they become due; or (vi) the filing against any Borrower or any guarantor of the Indebtedness of a petition seeking any relief under any present or future federal, state or other law or regulation relating to bankruptcy, insolvency or other similar relief for debtors, or the involuntary appointment of a receiver, custodian, liquidator or trustee in bankruptcy of the property of any Borrower or any guarantor of the Indebtedness, if such petition or appointment is not vacated or discharged within thirty (30) days after the filing or making thereof.
“Borrower” is defined in the recitals hereto.
“Business Day” means any day other than a Saturday, a Sunday or any other day on which the national banking associations are not open for business.
“Event of Default” is defined in Section 9.
“Indebtedness” means the outstanding principal balance of the Note, interest at the interest rate set forth in the Note thereon, and all other amounts due at any time under, the Note, this Agreement or any other Loan Document, including late charges, default interest, and any advances permitted hereunder to protect the security of this Agreement
“Lender” is defined in the recitals hereto.
“Loan” is defined in the recitals hereto.
“Loan Documents” means the Note, this Agreement, all guaranties, all indemnity agreements, and any other documents now or in the future executed by Borrower, 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.
“Note” is defined in the recitals hereto.
“Pledged Collateral” is defined in Section 2.
“Pledged Interests” is defined in Section 2(a).
“Secured Obligations” is defined in Section 3.
“Transfer” means to sell, convey, mortgage, grant, bargain, encumber, pledge, assign, grant options with respect to, or otherwise transfer or dispose of (whether directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record), as applicable, all or any portion of, or any direct or indirect legal or beneficial interest in, the Pledged Collateral or any corporation, partnership (limited or general), limited liability company, trust or any other entity comprising Pledgor.
“UCC” is defined in Section 2(b).
2. Pledge and Creation of Security Interest. To secure the timely payment and performance of the Secured Obligations, each Pledgor hereby grants to Lender a security interest and continuing lien on all of such Pledgor’s rights, titles and interests in, to and under the following, in each case, whether now owned or existing or hereafter acquired or arising and wherever located (collectively, the “Pledged Collateral”):
4. Representations and Warranties. Each Pledgor represents and warrants as follows:
4.3 To the best of Pledgor’s knowledge, other than the filing of financing statements, no authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required either (i) for the pledge by each Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by each Pledgor or (ii) for the exercise by Lender of the rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement (except as may be required in connection with such disposition by laws affecting the foreclosure of security interests generally).
6. Pledgor’s Rights; Dividends; Etc.
6.1 So long as no Event of Default shall have occurred and be continuing:
(b) Each Pledgor shall be entitled to receive and retain any and all interest, dividends and distributions in respect of the Pledged Collateral, provided, however, that any and all:
shall be, and shall be forthwith delivered to Lender to hold as, Pledged Collateral and shall, if and when received by each Pledgor, be received in trust for the benefit of Lender, be segregated from the other property or funds of each Pledgor, and be forthwith delivered to Lender as Pledged Collateral in the same form as so received (with any necessary endorsement).
6.2 Upon the occurrence and during the continuance of an Event of Default:
8. Further Assurances. Borrower agrees that from time to time, at the expense of Borrower, it shall promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary and that Lender may reasonably request, in order to create and/or maintain the validity, perfection or priority of and protect any security interest granted or purported to be granted hereby, to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral and/or to better and more fully evidence or effectuate the rights of Lender under the Loan Documents.
9. Events of Defaults. The occurrence of any one or more of the following shall constitute an event of default (each an, “Event of Default”) under this Agreement:
9.1 any failure by Borrower to pay or deposit when due any amount required by the Note;
9.2 any failure by Pledgor to pay any amount required by this Agreement or any other Loan Document;
9.4 the occurrence of any Transfer;
9.6 any failure by Pledgors to perform any of their obligations under this Agreement (other than those specified in Sections 9(a) through (e)), as and when required, which continues for a period of thirty (30) days after notice of such failure by Lender to Pledgors. However, if Pledgors’ failure to perform its obligations as described in this Section 9 is of the nature that it cannot be cured within the thirty (30) day grace period but reasonably could be cured within ninety (90) days, then Pledgors shall have additional time as determined by Lender in its discretion, not to exceed an additional sixty (60) days, in which to cure such default, provided that Pledgors have diligently commenced to cure such default during the 30-day grace period and diligently pursues the cure of such default. However, no such notice or grace periods 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 Agreement, result in harm to Lender, impairment of the Note or this Agreement or any other security given under any other Loan Document;
9.9 the occurrence of any Bankruptcy or Insolvency Event; and
11. Application of Proceeds. Except as expressly provided elsewhere in this Agreement, all proceeds received by Lender in respect of any sale, any collection from, or other realization upon all or any part of the Pledged Collateral shall be applied in full or in part by Lender against, the Secured Obligations in the following order of priority: first, to the payment of all costs and expenses (including, without limitation, Attorney’s Fees and Costs) paid or incurred by Lender in connection with the exercise of any right or remedy hereunder or under the Note, in such order and priority as Lender may elect in its sole discretion; second, to the extent of any excess of such proceeds, to the payment of all other Secured Obligations (including, without limitation, interest at the Default Rate) for the benefit of Lender, in such order and priority as Lender may elect in its sole discretion; and third, to the extent of any excess of such proceeds, to the payment to or upon the order of Borrower or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.
13. Lender’s Right to Cure; Protective Advances.
13.2 Any advances made, amounts disbursed or fees or costs incurred by Lender in connection with any action taken pursuant to this Section 13, shall be secured hereby, 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 incurred until paid at the Default Rate (as defined in the Note).
16. Security Interest Absolute.
19.1 No Waiver. The rights and remedies of Lender and Borrower under this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law: (i) no claim or right arising out of this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (ii) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (iii) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement.
19.4 Notices. All notices and other communications required or permitted hereunder shall be in writing, and shall be (i) personally delivered with a written receipt of delivery; (ii) sent by a nationally-recognized overnight delivery service requiring a written acknowledgement of receipt or providing a certification of delivery or attempted delivery; (iii) sent by certified or registered mail, return receipt requested; or (iv) sent by confirmed facsimile transmission or electronic delivery with an original copy thereof transmitted to the recipient by one of the means described in subsections (i) through (iii) no later than three (3) Business Days thereafter. All notices and other communications shall be deemed effective when actually delivered as documented in a delivery receipt; provided, however, that if the same was sent by overnight courier or mail as aforesaid and is affirmatively refused or cannot be delivered during customary business hours by reason of the absence of a signatory to acknowledge receipt, or by reason of a change of address with respect to which the addressor did not have either knowledge or written notice delivered in accordance with this paragraph, then the first attempted delivery shall be deemed to constitute delivery. Each party shall be entitled to change its address for notices and communications hereunder from time to time by delivering to the other party notice thereof in the manner herein provided for the delivery of notices and communications generally. All notices and communications hereunder shall be sent to the addressee at its address set forth following its name below:
c/o AAH Management Co., Inc.
Laurelwood Corporate Center
1103 Laurel Oak Road, Suite 105B
Voorhees, NJ 08043
Attention: Barry Sharer
Facsimile: 856-435-4868
with copy to:
Paul & Katz, P.C.
Laurelwood Corporate Center
1103 Laurel Oak Road, Suite 105C
Voorhees, NJ 08043
Attention: Edward L. Paul
Facsimile: 856-435-7064
AIMCO
4582 South Ulster Street Parkway
Suite 1100
Denver, CO 80237
Attention: Trent Johnson, Esq.
Facsimile: 720-200-6882
with copy to:
Law Offices of Peter H. Alpert, Inc.
601 S. Figueroa Street, Suite 2330
Los Angeles, CA 90017
Attention: Peter H. Alpert
Facsimile: 213-687-1511
Any notice under the Note and any other Loan Document that does not specify how communications are to be given shall be given in accordance with this Section 21(d).
19.7 Successors and Assigns Bound. This Agreement shall bind, and the rights granted by this Agreement shall inure to, the respective successors and assigns of Lender and Borrower.
19.8 Sale of Note. Lender may freely assign or otherwise transfer all or any portion of its interest in the Note or the Indebtedness without obtaining the consent of or giving any notice thereof to Borrower. Upon any assignment or other transfer by Lender (or by operation of law) of all or any portion of Lender’s interest in the Note or the Indebtedness, the term “Lender,” as used herein, shall mean (as applicable) each party then holding an interest in the Note or the Indebtedness, including, without limitation, any assignee or other transferee or successor to Lender then becoming a holder of all or any portion of the Note or the Indebtedness.
19.13 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE. TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY CLAIM TO ASSERT THAT THE LAW OF ANY OTHER JURISDICTION GOVERNS THIS AGREEMENT.
19.15 JURY TRIAL WAIVER. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, BORROWER AND LENDER EACH (i) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (ii) 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.
19.19 [Intentionally Omitted]]
19.21 Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any Person or entity or any circumstance, is invalid or unenforceable, (i) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (ii) the remainder of this Agreement and the application of such provision to other Persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction.
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PLEDGOR: HCI PROPERTIES LLC,
a New Jersey limited liability company
By /s/Barry Sharer
Name: Barry Sharer
Title: Managing Member
HOWELL COUNTRYSIDE, INC.,
a New Jersey corporation
By /s/Barry Sharer
Name: Barry Sharer
Title: President
A.A.H. MANAGEMENT COMPANY, INC.,
a New Jersey corporation
By /s/Barry Sharer
Name: Name: Barry Sharer
Title: President
LENDER: NATIONAL TAX CREDIT INVESTORS II
a California limited partnership
By National Partnership Investments Corp.,
a California corporation,
General Partner
By /s/Jesse Curll
Name: Jesse Curll
Title: Vice President