UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________________ to ________________
Commission file number 0-13261
SHELTER PROPERTIES VI
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0755618
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SHELTER PROPERTIES VI
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2002
Assets
Cash and cash equivalents $ 805
Receivables and deposits 819
Restricted escrows 788
Other assets 734
Investment properties:
Land $ 3,745
Buildings and related personal property 42,856
46,601
Less accumulated depreciation (27,729) 18,872
$ 22,018
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 89
Tenant security deposit liabilities 167
Accrued property taxes 615
Other liabilities 456
Due to affiliates 142
Mortgage notes payable 25,714
Partners' Deficit
General partners $ (255)
Limited partners (42,324 units issued and
outstanding) (4,910) (5,165)
$ 22,018
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
(restated)
Revenues:
Rental income $ 2,040 $ 2,136 $ 6,247 $ 6,224
Other income 259 213 698 680
Total revenues 2,299 2,349 6,945 6,904
Expenses:
Operating 874 936 2,556 2,729
General and administrative 108 109 335 343
Depreciation 459 438 1,397 1,329
Interest 509 458 1,492 1,386
Property taxes 204 202 613 621
Total expenses 2,154 2,143 6,393 6,408
Income from continuing operations 145 206 552 496
Income from discontinued operations -- -- -- 132
Net income $ 145 $ 206 $ 552 $ 628
Net income allocated
to general partners (1%) $ 1 $ 2 $ 6 $ 6
Net income allocated
to limited partners (99%) 144 204 546 622
$ 145 $ 206 $ 552 $ 628
Per Limited Partnership Unit
Income from continuing operations $ 3.40 $ 4.82 $ 12.90 $ 11.60
Income from discontinued operations -- -- -- 3.10
Net income $ 3.40 $ 4.82 $ 12.90 $ 14.70
Distributions per limited
partnership unit $ 13.37 $ 4.09 $103.08 $ 75.99
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 42,324 $ 2 $42,324 $42,326
Partners' deficit at
December 31, 2001 42,324 $ (257) $(1,093) $(1,350)
Distributions to partners -- (4) (4,363) (4,367)
Net income for the nine months
ended September 30, 2002 -- 6 546 552
Partners' deficit at
September 30, 2002 42,324 $ (255) $(4,910) $(5,165)
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2002 2001
Cash flows from operating activities:
Net income $ 552 $ 628
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,397 1,329
Amortization of discounts and loan costs 177 163
Loss on early extinguishment of debt 58 --
Change in accounts:
Receivables and deposits (467) 551
Other assets (72) (64)
Accounts payable (58) (91)
Tenant security deposit liabilities 11 (3)
Accrued property taxes 43 67
Other liabilities 64 15
Net cash provided by operating activities 1,705 2,595
Cash flows from investing activities:
Property improvements and replacements (1,030) (1,179)
Net (deposits to) withdrawals from restricted escrows (56) 185
Net cash used in investing activities (1,086) (994)
Cash flows from financing activities:
Repayment of mortgage notes payable (9,811) --
Proceeds from mortgage notes payable 14,892 --
Loan costs paid (483) (12)
Payments on mortgage note payable (610) (640)
Distributions to partners (4,367) (3,236)
Advances from affiliates 320 --
Repayment of advances from affiliates (320) --
Net cash used in financing activities (379) (3,888)
Net increase (decrease) in cash and cash equivalents 240 (2,287)
Cash and cash equivalents at beginning of period 565 2,780
Cash and cash equivalents at end of period $ 805 $ 493
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,252 $ 1,203
At December 31, 2001, approximately $139,000 of property improvements and
replacements were included in accounts payable and are included in property
improvements and replacements for the nine months ended September 30, 2002.
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES VI
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Shelter Properties VI (the
"Partnership" or "Registrant") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310 (b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. The general
partner responsible for management of the Partnership's business is Shelter
Realty VI Corporation (the "Corporate General Partner"). The Corporate General
Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The non-corporate
general partner, AIMCO Properties, L.P., is also an affiliate of AIMCO. In the
opinion of the Corporate General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and nine month periods ended September
30, 2002, are not necessarily indicative of the results that may be expected for
the fiscal year ending December 31, 2002. For further information, refer to the
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the year ended December 31, 2001.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which established standards for the way that
public business enterprises report information about long-lived assets that are
either being held for sale or have already been disposed of by sale or other
means. The standard requires that results of operations for a long-lived asset
that is being held for sale or has already been disposed of be reported as a
discontinued operation on the statement of operations. As a result, the
accompanying statements of operations for the nine months ended September 30,
2001 have been restated as of January 1, 2001 to reflect the operations of
Foxfire/Barcelona Apartments as income from discontinued operations due to its
sale in November 2000. During the first quarter of 2001, certain accruals of
approximately $132,000 related to the sale of Foxfire/Barcelona Apartments in
November 2000 were reversed due to actual costs being less than anticipated.
This accrual reversal is included as income from discontinued operations in the
nine month period ended September 30, 2001.
Effective April 1, 2002, the Partnership adopted SFAS No. 145, "Rescission of
FASB Statements No. 4, 44 and 64". SFAS No. 4 "Reporting Gains and Losses from
Extinguishment of Debt," required that all gains and losses from extinguishment
of debt be aggregated and, if material, classified as an extraordinary item.
SFAS No. 145 rescinds SFAS No. 4, and accordingly, gains and losses from
extinguishment of debt should only be classified as extraordinary if they are
unusual in nature and occur infrequently. Neither of these criteria applies to
the Partnership. As a result, the accompanying statements of operations reflect
the loss on early extinguishment of debt at River Reach Apartments, Rocky Creek
Apartments and Carriage House Apartments (see "Note C") as interest expense.
Note B - Reconciliation of Cash Flows
The following is a reconciliation of "Net cash provided by operating activities"
on the accompanying statements of cash flows to "Net cash from operations", as
defined in the partnership agreement of the Partnership (the "Partnership
Agreement"). However, "Net cash from operations" should not be considered an
alternative to net income as an indicator of the Partnership's operating
performance or to cash flows as a measure of liquidity.
Nine Months Ended
September 30,
2002 2001
(in thousands)
Net cash provided by operating activities $ 1,705 $ 2,595
Payments on mortgage notes payable (610) (640)
Property improvements and replacements (1,030) (1,179)
Change in restricted escrows, net (56) 185
Changes in reserves for net operating
liabilities 479 (475)
Additions to operating reserves (488) (486)
Net cash provided by operations $ 0 $ 0
During the nine months ended September 30, 2002 and 2001, the Corporate General
Partner reserved approximately $488,000 and $486,000, respectively, to fund
capital improvements at its properties.
Note C - Refinancing of Mortgage Notes Payable
On May 15, 2002, the Partnership refinanced the mortgages encumbering River
Reach Apartments. The refinancing replaced the first mortgage of approximately
$6,048,000 and the second mortgage of approximately $252,000 with a new mortgage
in the amount of $10,654,000. The new mortgage carries a stated interest rate of
7.16% compared to the 7.60% interest rate on the old mortgages. Payments on the
mortgage loan are due monthly until the loan matures on June 1, 2022, at which
time it is scheduled to be fully amortized. Total capitalized loan costs were
approximately $292,000 during the nine months ended September 30, 2002. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $48,000 during the nine months ended September 30, 2002 due to the
write off of unamortized loan costs and debt discounts. This amount is included
in interest expense. In addition, the Partnership was required to deposit
approximately $100,000 in a repair escrow account with the lender in order to
complete required repairs at the property.
On September 16, 2002, the Partnership refinanced the mortgages encumbering
Rocky Creek Apartments and Carriage House Apartments. These loans have initially
been refinanced under an interim credit facility ("Interim Credit Facility")
which has a term of three months. The Interim Credit Facility includes
properties in other partnerships that are affiliated with the Partnership.
However, the Interim Credit Facility creates separate loans for each property
that are not cross-collateralized or cross-defaulted with the other property
loans. During the three month term of the Interim Credit Facility, the
properties will be required to make interest-only payments. The first month's
interest, which was paid at the date of the refinancing, was calculated at LIBOR
plus 70 basis points. Interest for the following two months will be calculated
at LIBOR plus 150 basis points and is due monthly.
The Corporate General Partner anticipates that the Interim Credit Facility will
be transferred to a different lender before the end of the three-month term of
the Interim Credit Facility and converted to a permanent credit facility
("Permanent Credit Facility") with a maturity of five years, with one five-year
extension option. This Permanent Credit Facility will also create separate loans
for each property that are not cross-collateralized or cross-defaulted with the
other property loans. Each note under this Permanent Credit Facility will begin
as a variable rate loan with the option of converting to a fixed rate loan after
three years. The interest rate on the variable rate loans will be 85 basis
points over the Fannie Mae discounted mortgage-backed security index ( % for
October 2002), and the rate will reset monthly. Each loan will automatically
renew at the end of each month. In addition, monthly principal payments will be
required based on a 30-year amortization schedule, using the interest rate in
effect during the first month that any property is on the Permanent Credit
Facility. The loans will be prepayable without penalty.
The refinancing of the Rocky Creek Apartments loans replaced the first mortgage
of approximately $1,753,000 and second mortgage of approximately $74,000 with a
new mortgage in the amount of $2,340,000. Total capitalized loan costs were
approximately $103,000 during the nine months ended September 30, 2002. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $6,000 during the nine months ended September 30, 2002 due to the
write off of unamortized loan costs and debt discounts. This amount is included
in interest expense.
The refinancing of the Carriage House Apartments loans replaced the first
mortgage of approximately $1,616,000 and second mortgage of approximately
$68,000 with a new mortgage in the amount of $1,898,000. Total capitalized loan
costs were approximately $88,000 during the nine months ended September 30,
2002. The Partnership recognized a loss on the early extinguishment of debt of
approximately $5,000 during the nine months ended September 30, 2002 due to the
write off of unamortized loan costs and debt discounts. This amount is included
in interest expense. In addition, the Partnership was required to deposit
approximately $198,000 in a repair escrow account with the lender in order to
complete required repairs at the property.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership.
Affiliates of the Corporate General Partner are entitled to receive 5% of gross
receipts from all of the Registrant's properties as compensation for providing
property management services. The Partnership paid to such affiliates
approximately $351,000 and $348,000 for the nine months ended September 30, 2002
and 2001, respectively, which is included in operating expenses.
Affiliates of the Corporate General Partner received reimbursements of
accountable administrative expenses amounting to approximately $326,000 and
$454,000 for the nine months ended September 30, 2002 and 2001, respectively,
which are included in general and administrative expenses and investment
properties. Included in these amounts are fees related to construction
management services provided by an affiliate of the Corporate General Partner of
approximately $68,000 and $217,000 for the nine months ended September 30, 2002
and 2001, respectively. The construction management service fees are calculated
based on a percentage of current year additions to investment properties.
Pursuant to the Partnership Agreement and in connection with the sale of
Foxfire/Barcelona Village during 2000, the Corporate General Partner is entitled
to a commission of up to 1% for its assistance in the sale. Payment of such
commission is subordinate to the limited partners receiving a cumulative 7%
return on their investment. This return has not yet been met, and accordingly,
the fee of approximately $142,000 was accrued in 2000, and is included in due to
affiliates in the accompanying balance sheet at September 30, 2002.
During the nine months ended September 30, 2002, the Partnership paid an
affiliate of the Corporate General Partner approximately $149,000 for brokerage
fees associated with the refinancing of River Reach Apartments, Rocky Creek
Apartments and Carriage House Apartments. This amount is included in other
assets as a loan cost on the accompanying balance sheet.
During the nine months ended September 30, 2002, the Corporate General Partner
advanced the Partnership funds to cover expenses related to the refinancing of
River Reach Apartments totaling approximately $320,000. This advance was repaid
by the Partnership prior to September 30, 2002. Interest was charged at prime
plus 1%. Interest expense on this advance was approximately $1,000 for the nine
months ended September 30, 2002.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the Corporate General Partner. During the nine months ended
September 30, 2002 and 2001, the Partnership paid AIMCO and its affiliates
approximately $102,000 and $125,000, respectively, for insurance coverage and
fees associated with policy claims administration.
Note E - Legal Proceedings
In March 1998, several putative unitholders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Corporate General Partner and
several of their affiliated partnerships and corporate entities. The action
purports to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) which are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Corporate General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs seek monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which was heard on December 11, 2001.
On February 2, 2002, the Court served its order granting in part the demurrer.
The Court has dismissed without leave to amend certain of the plaintiffs'
claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a
putative class comprised of all non-affiliated persons who own or have owned
units in the partnerships. The Corporate General Partner and affiliated
defendants oppose the motion. On April 29, 2002, the Court held a hearing on
plaintiffs' motion for class certification and took the matter under submission
after further briefing, as order by the court, was submitted by the parties. On
July 10, 2002, the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the pre-trial and discovery cut-off dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement. On October 30, 2002, the court
entered an order extending the stay in effect through January 10, 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate General Partner and affiliated
defendants moved to strike the first amended complaint in its entirety for
violating the Court's July 10, 2001 order granting in part and denying in part
defendants' demurrer in the Nuanes action, or alternatively, to strike certain
portions of the complaint based on the statute of limitations. Other defendants
in the action demurred to the fourth amended complaint, and, alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions and took the matters under submission. On February 4, 2002, the
Court served notice of its order granting defendants' motion to strike the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002, the plaintiffs filed a notice appealing the order striking
the complaint. The parties are currently in the midst of briefing that appeal.
The Corporate General Partner does not anticipate that any costs, whether legal
or settlement costs, associated with these cases will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 2. Management's Discussion and Analysis or Plan of Operation
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. The matters discussed
in this report contain certain forward-looking statements, including, without
limitation, statements regarding future financial performance and the effect of
government regulations. The discussions of the Registrant's business and results
of operations, including forward-looking statements pertaining to such matters,
do not take into account the effects of any changes to the Registrant's business
and results of operations. Actual results may differ materially from those
described in the forward-looking statements and will be affected by a variety of
risks and factors including, without limitation: national and local economic
conditions; the terms of governmental regulations that affect the Registrant and
interpretations of those regulations; the competitive environment in which the
Registrant operates; financing risks, including the risk that cash flows from
operations may be insufficient to meet required payments of principal and
interest; real estate risks, including variations of real estate values and the
general economic climate in local markets and competition for tenants in such
markets; and possible environmental liabilities. Readers should carefully review
the Registrant's financial statements and the notes thereto, as well as the risk
factors described in the documents the Registrant files from time to time with
the Securities and Exchange Commission.
The Partnership's investment properties consist of five apartment complexes. The
following table sets forth the average occupancy of the properties for each of
the nine months ended September 30, 2002 and 2001:
Average
Occupancy
Property 2002 2001
Rocky Creek Apartments
Augusta, Georgia 93% 96%
Carriage House Apartments
Gastonia, North Carolina 92% 88%
Nottingham Square Apartments
Des Moines, Iowa 95% 95%
River Reach Apartments
Jacksonville, Florida 96% 96%
Village Garden Apartments
Fort Collins, Colorado 91% 96%
The increase in average occupancy at Carriage House Apartments is attributed to
a more aggressive marketing campaign and an improved local economy. The decrease
in average occupancy at Rocky Creek is due to more tenants purchasing homes due
to lower interest rates. The decrease in average occupancy at Village Garden
Apartments is attributed to changing economic conditions in the local market and
more tenants purchasing homes due to low interest rates.
Results of Operations
The Partnership realized net income of approximately $145,000 and $552,000 for
the three and nine months ended September 30, 2002, compared to net income of
approximately $206,000 and $628,000 for the three and nine months ended
September 30, 2001. The decrease in net income for the nine months ended
September 30, 2002 is due to the reduction in 2001 of certain accruals related
to the sale of Foxfire/Barcelona Apartments during 2000 which is included in
income from discontinued operations, partially offset by an increase in total
revenues. Effective January 1, 2002, the Partnership adopted Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which established standards for the way that
public business enterprises report information about long-lived assets that are
either being held for sale or have already been disposed of by sale or other
means. The standard requires that results of operations for a long-lived asset
that is being held for sale or has already been disposed of be reported as a
discontinued operation on the statement of operations. As a result, the
accompanying statements of operations have been restated as of January 1, 2001
to reflect the operations of Foxfire/Barcelona Apartments as income from
discontinued operations due to its sale in November 2000. During the first
quarter of 2001, certain accruals of approximately $132,000 related to the sale
of Foxfire/Barcelona Apartments in November 2000 were reversed due to actual
costs being less than anticipated. This accrual reversal is included as income
from discontinued operations in the nine months ended September 30, 2001.
The Partnership recognized income from continuing operations of approximately
$552,000 for the nine months ended September 30, 2002, compared to income from
continuing operations of approximately $496,000 for the nine months ended
September 30, 2001. The Partnership recognized income from continuing operations
of approximately $145,000 for the three months ended September 30, 2002,
compared to income from continuing operations of approximately $206,000 for the
three months ended September 30, 2001.
The increase in income from continuing operations for the nine months ended
September 30, 2002 is due to an increase in total revenues and a slight decrease
in total expenses. The decrease in income from continuing operations for the
three months ended September 30, 2002 is due to a decrease in total revenues and
a slight increase in total expenses. Total revenues decreased for the three
month period due to a decrease in rental income partially offset by an increase
in other income. Total revenues increased for the nine month period due to an
increase in rental and other income. Rental income increased primarily due to an
increase in occupancy at Carriage House, a decrease in concessions at all of the
Registrant's investment properties and increases in average rental rates at
three of the Registrant's investment properties partially offset by decreases in
occupancy at Rocky Creek and Village Gardens Apartments and decreases in average
rental rates at Rocky Creek and Carriage House Apartments. During the three
month period, these increases were offset by an increase in bad debt expense,
especially at Nottingham Square Apartments. Other income increased primarily due
to increased utility reimbursements, lease cancellation fees, late charges, and
cleaning damage fees primarily at Nottingham Square Apartments, partially offset
by a decrease in interest income as a result of lower average cash balances in
interest bearing accounts.
Total expenses decreased for the nine months ended September 30, 2002 primarily
due to a decrease in operating expenses partially offset by an increase in
depreciation and interest expenses. Total expenses increased for the three
months ended September 30, 2002 due to an increase in depreciation and interest
expenses partially offset by reduced operating expenses. Operating expenses
decreased primarily due to a decrease in property expenses and maintenance
expenses, partially offset by an increase in insurance expenses. Property
expenses decreased due to a decrease in utilities especially at Village Gardens
Apartments and decrease in maintenance salaries at all of the investment
properties. Maintenance expenses decreased due to a decrease in snow removal
expense at Nottingham Square, as well as an overall decrease in maintenance
costs at all of the investment properties. Insurance expense increased due to an
increase in hazard insurance at River Reach and Nottingham Square Apartments.
Depreciation expense increased due to property improvements and replacements
placed in service during the past twelve months at the Partnership's investment
properties. Interest expense increased due to the refinance of River Reach
Apartments on May 15, 2002 and the refinances of Rocky Creek Apartments and
Carriage House Apartments on September 16, 2002 which increased the debt
balance.
General and administrative expenses remained relatively constant over the
comparable periods. Included in general and administrative expenses at both
September 30, 2002 and 2001 are reimbursements to the Managing General Partner
allowed under the Partnership Agreement associated with its management of the
Partnership. Also included in general and administrative expenses are costs
associated with quarterly and annual communications which investors and
regulatory agencies and the annual audit required by the Partnership Agreement.
As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from increases in
expenses. As part of this plan, the Corporate General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no guarantee that the Corporate General Partner will be able to sustain
such a plan.
Liquidity and Capital Resources
At September 30, 2002, the Partnership held cash and cash equivalents of
approximately $805,000 compared to approximately $493,000 at September 30, 2001.
Cash and cash equivalents increased approximately $240,000 since December 31,
2001 due to approximately $1,705,000 of cash provided by operating activities
partially offset by approximately $1,086,000 and $379,000 of cash used in
investing and financing activities, respectively. Cash used in investing
activities consisted of property improvements and replacements and net deposits
to restricted escrows maintained by the mortgage lenders. Cash used in financing
activities consisted of distributions to partners, repayments of mortgage notes
payable and advances from affiliates, loan costs paid and principal payments on
mortgage notes payable which were partially offset by proceeds from mortgage
notes payable and advances from affiliates. The Registrant invests its working
capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the investment properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state and local legal and regulatory requirements. The Corporate
General Partner monitors developments in the area of legal and regulatory
compliance and is studying new federal laws, including the Sarbanes-Oxley Act of
2002. The Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance
measures with regard to governance, disclosure, audit and other areas. In light
of these changes, the Partnership expects that it will incur higher expenses
related to compliance, including increased legal and audit fees. Capital
improvements planned for each of the Registrant's properties are detailed below.
Rocky Creek Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $75,000 in budgeted and non-budgeted capital improvements at Rocky
Creek Apartments primarily consisting of floor covering replacements, plumbing
enhancements, air conditioning replacements and appliance replacements. The
improvements were funded from operating cash flow. Capital improvements of
approximately $75,000 have been budgeted for 2002 which include electrical
enhancements, roof replacement, and water heater, floor covering and appliance
replacements. Additional improvements may be considered and will depend on the
physical condition of the property as well as anticipated cash flow generated by
the property.
Carriage House Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $93,000 in budgeted and non-budgeted capital improvements at
Carriage House Apartments primarily consisting of floor covering replacements,
plumbing enhancements, wall coverings, air conditioning replacements and a water
sub-metering project. These improvements were funded from operating cash flow
and replacement reserves. Capital improvements of approximately $82,000 have
been budgeted for 2002 which include appliance and floor covering replacements,
water submetering project and air conditioning unit upgrades. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Nottingham Square Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $445,000 in budgeted and non-budgeted capital improvements at
Nottingham Square Apartments primarily consisting of floor covering
replacements, door replacements, fire suppression improvements and balcony and
pool improvements. These improvements were funded from operating cash flow.
Capital improvements of approximately $416,000 have been budgeted for 2002 which
include floor covering replacements, swimming pool improvements, fencing
upgrades, parking lot improvements and structural upgrades. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
River Reach Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $221,000 in capital improvements at River Reach Apartments
primarily consisting of floor covering and appliance replacements, air
conditioning replacements, exterior painting and recreational facility
enhancements. These improvements were funded from operating cash and replacement
reserves. Capital improvements of approximately $335,000 have been budgeted for
2002 which include floor covering, air conditioning, and appliance replacements,
fitness equipment, landscaping improvements, exterior painting, and plumbing and
electrical enhancements. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Village Garden Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $57,000 in capital improvements at Village Garden Apartments
primarily consisting of floor covering replacements and electrical and plumbing
improvements. These improvements were funded from operating cash flow. Capital
improvements of approximately $150,000 have been budgeted for 2002 which include
floor covering and appliance replacements, fitness equipment and water heater
replacements. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
On May 15, 2002, the Partnership refinanced the mortgages encumbering River
Reach Apartments. The refinancing replaced the first mortgage of approximately
$6,048,000 and the second mortgage of approximately $252,000 with a new mortgage
in the amount of $10,654,000. The new mortgage carries a stated interest rate of
7.16% compared to the 7.60% interest rate on the old mortgages. Payments on the
mortgage loan are due monthly until the loan matures on June 1, 2022, at which
time it is scheduled to be fully amortized. Total capitalized loan costs were
approximately $292,000 during the nine months ended September 30, 2002. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $48,000 during the nine months ended September 30, 2002 due to the
write off of unamortized loan costs and debt discounts. This amount is included
in interest expense. In addition, the Partnership was required to deposit
approximately $100,000 in a repair escrow account with the lender in order to
complete required repairs at the property.
On September 16, 2002, the Partnership refinanced the mortgages encumbering
Rocky Creek Apartments and Carriage House Apartments. These loans have initially
been refinanced under an interim credit facility ("Interim Credit Facility")
which has a term of three months. The Interim Credit Facility includes
properties in other partnerships that are affiliated with the Partnership.
However, the Interim Credit Facility creates separate loans for each property
that are not cross-collateralized or cross-defaulted with the other property
loans. During the three month term of the Interim Credit Facility, the
properties will be required to make interest-only payments. The first month's
interest, which was paid at the date of the refinancing, was calculated at LIBOR
plus 70 basis points. Interest for the following two months will be calculated
at LIBOR plus 150 basis points and is due monthly.
The Corporate General Partner anticipates that the Interim Credit Facility will
be transferred to a different lender before the end of the three-month term of
the Interim Credit Facility and converted to a permanent credit facility
("Permanent Credit Facility") with a maturity of five years, with one five-year
extension option. This Permanent Credit Facility will also create separate loans
for each property that are not cross-collateralized or cross-defaulted with the
other property loans. Each note under this Permanent Credit Facility will begin
as a variable rate loan with the option of converting to a fixed rate loan after
three years. The interest rate on the variable rate loans will be 85 basis
points over the Fannie Mae discounted mortgage-backed security index ( % for
October 2002), and the rate will reset monthly. Each loan will automatically
renew at the end of each month. In addition, monthly principal payments will be
required based on a 30-year amortization schedule, using the interest rate in
effect during the first month that any property is on the Permanent Credit
Facility. The loans will be prepayable without penalty.
The refinancing of the Rocky Creek Apartments loans replaced the first mortgage
of approximately $1,753,000 and second mortgage of approximately $74,000 with a
new mortgage in the amount of $2,340,000. Total capitalized loan costs were
approximately $103,000 during the nine months ended September 30, 2002. The
Partnership recognized a loss on the early extinguishment of debt of
approximately $6,000 during the nine months ended September 30, 2002 due to the
write off of unamortized loan costs and debt discounts. This amount is included
in interest expense.
The refinancing of the Carriage House Apartments loans replaced the first
mortgage of approximately $1,616,000 and second mortgage of approximately
$68,000 with a new mortgage in the amount of $1,898,000. Total capitalized loan
costs were approximately $88,000 during the nine months ended September 30,
2002. The Partnership recognized a loss on the early extinguishment of debt of
approximately $5,000 during the nine months ended September 30, 2002 due to the
write off of unamortized loan costs and debt discounts. This amount is included
in interest expense. In addition, the Partnership was required to deposit
approximately $198,000 in a repair escrow account with the lender in order to
complete required repairs at the property.
The Partnership's current assets are thought to be sufficient for any near term
needs (exclusive of capital improvements) of the Partnership. Nottingham Square
has mortgage indebtedness of approximately $6,544,000, net of discounts, which
has a maturity date of November 2002. The Corporate General Partner is currently
planning to refinance the debt maturing in November 2002 prior to its maturity.
If the property cannot be refinanced or sold for a sufficient amount, the
Partnership will risk losing such property through foreclosure.
The mortgages encumbering River Reach and Village Garden Apartments of
approximately $14,932,000 mature in June 2022 and January 2021, respectively, at
which time the mortgages are scheduled to be fully amortized.
The mortgages encumbering Rocky Creek and Carriage House Apartments of
approximately $4,238,000 mature November 2002 and are automatically renewed
monthly.
The Partnership distributed the following amounts during the nine months ended
September 30, 2002 and 2001 (in thousands except per unit data):
Nine Months Per Nine Months Per
Ended Limited Ended Limited
September 30, Partnership September 30, Partnership
2002 Unit 2001 Unit
Operations $ 406 $ 9.49 $1,999 $46.76
Sale (1) -- -- 1,237 29.23
Refinance (2) 3,961 93.59 -- --
$4,367 $103.08 $3,236 $75.99
(1) From the sale of Foxfire/Barcelona Apartments in 2000. (2) From the
refinance of River Reach Apartments in May, 2002.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. The Partnership's cash
available for distribution is reviewed on a monthly basis. There can be no
assurance that the Partnership will generate sufficient funds from operations,
after required capital improvements, to permit further distributions to its
partners during the remainder of 2002 or subsequent periods. In addition, the
Partnership is restricted from making distributions if the amount in the reserve
account maintained by the mortgage lender for Nottingham Square Apartments is
less than $400 per apartment unit at the property. At September 30, 2002, the
reserve account was adequately funded with a balance of approximately $479,000.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 27,729 limited partnership units
(the "Units") in the Partnership representing 65.52% of the outstanding Units at
September 30, 2002. A number of these Units were acquired pursuant to tender
offers made by AIMCO or its affiliates. It is possible that AIMCO or its
affiliates will acquire additional units of limited partnership interest in the
Partnership in exchange for cash or a combination of cash and units in the
operating partnership of AIMCO either through private purchases or tender
offers. Under the Partnership Agreement, unitholders holding a majority of the
Units are entitled to take action with respect to a variety of matters which
would include voting on certain amendments to the Partnership Agreement and
voting to remove the Corporate General Partner. As a result of its ownership of
65.52% of the outstanding Units, AIMCO is in a position to control all voting
decisions with respect to the Registrant. Although the Corporate General Partner
owes fiduciary duties to the limited partners of the Partnership, the Corporate
General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As
a result, the duties of the Corporate General Partner, as managing general
partner, to the Partnership and its limited partners may come into conflict with
the duties of the Corporate General Partner to AIMCO, as its sole stockholder.
Critical Accounting Policies and Estimates
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include changes in the
national, regional and local economic climate; local conditions, such as an
oversupply of multifamily properties; competition from other available
multifamily property owners and changes in market rental rates. Any adverse
changes in these factors could cause an impairment in the Partnership's assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area.
Concessions are charged to income as incurred.
ITEM 3. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of the Corporate
General Partner, who are the equivalent of the Partnership's principal executive
officer and principal financial officer, respectively, have, within 90 days of
the filing date of this quarterly report, evaluated the effectiveness of the
Partnership's disclosure controls and procedures (as defined in Exchange Act
Rules (13a-14(c) and (15d-14(c)) and have determined that such disclosure
controls and procedures are adequate. There have been no significant changes in
the Partnership's internal controls or in other factors that could significantly
affect the Partnership's internal controls since the date of evaluation. The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its Corporate General Partner and
several of their affiliated partnerships and corporate entities. The action
purports to assert claims on behalf of a class of limited partners and
derivatively on behalf of a number of limited partnerships (including the
Partnership) which are named as nominal defendants, challenging, among other
things, the acquisition of interests in certain Corporate General Partner
entities by Insignia Financial Group, Inc. ("Insignia") and entities which were,
at one time, affiliates of Insignia; past tender offers by the Insignia
affiliates to acquire limited partnership units; management of the partnerships
by the Insignia affiliates; and the series of transactions which closed on
October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties
Trust, respectively, were merged into AIMCO. The plaintiffs seek monetary
damages and equitable relief, including judicial dissolution of the Partnership.
On June 25, 1998, the Corporate General Partner filed a motion seeking dismissal
of the action. In lieu of responding to the motion, the plaintiffs filed an
amended complaint. The Corporate General Partner filed demurrers to the amended
complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the Corporate General Partner and its affiliates terminated
the proposed settlement. In February 2000, counsel for some of the named
plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who
negotiated the settlement. On June 27, 2000, the Court entered an order
disqualifying them from the case and an appeal was taken from the order on
October 5, 2000. On December 4, 2000, the Court appointed the law firm of Lieff
Cabraser Heimann & Bernstein LLP as new lead counsel for plaintiffs and the
putative class. Plaintiffs filed a third amended complaint on January 19, 2001.
On March 2, 2001, the Corporate General Partner and its affiliates filed a
demurrer to the third amended complaint. On May 14, 2001, the Court heard the
demurrer to the third amended complaint. On July 10, 2001, the Court issued an
order sustaining defendants' demurrer on certain grounds. On July 20, 2001,
Plaintiffs filed a motion for reconsideration of the Court's July 10, 2001 order
granting in part and denying in part defendants' demurrer. On September 7, 2001,
Plaintiffs filed a fourth amended class and derivative action complaint. On
September 12, 2001, the Court denied Plaintiffs' motion for reconsideration. On
October 5, 2001, the Corporate General Partner and affiliated defendants filed a
demurrer to the fourth amended complaint, which was heard on December 11, 2001.
On February 2, 2002, the Court served its order granting in part the demurrer.
The Court has dismissed without leave to amend certain of the plaintiffs'
claims. On February 11, 2002, plaintiffs filed a motion seeking to certify a
putative class comprised of all non-affiliated persons who own or have owned
units in the partnerships. The Corporate General Partner and affiliated
defendants oppose the motion. On April 29, 2002, the Court held a hearing on
plaintiffs' motion for class certification and took the matter under submission
after further briefing, as order by the court, was submitted by the parties. On
July 10, 2002, the Court entered an order vacating the current trial date of
January 13, 2003 (as well as the pre-trial and discovery cut-off dates) and
stayed the case in its entirety through November 7, 2002 so that the parties can
have an opportunity to discuss settlement. On October 30, 2002, the court
entered an order extending the stay in effect through January 10, 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the Corporate General Partner and affiliated
defendants moved to strike the first amended complaint in its entirety for
violating the Court's July 10, 2001 order granting in part and denying in part
defendants' demurrer in the Nuanes action, or alternatively, to strike certain
portions of the complaint based on the statute of limitations. Other defendants
in the action demurred to the fourth amended complaint, and, alternatively,
moved to strike the complaint. On December 11, 2001, the court heard argument on
the motions and took the matters under submission. On February 4, 2002, the
Court served notice of its order granting defendants' motion to strike the
Heller complaint as a violation of its July 10, 2001 order in the Nuanes action.
On March 27, 2002, the plaintiffs filed a notice appealing the order striking
the complaint. The parties are currently in the midst of briefing that appeal.
The Corporate General Partner does not anticipate that any costs, whether legal
or settlement costs, associated with these cases will be material to the
Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 3, Amended and Restated Certificate and Agreement of
Limited Partnership (Exhibit A to the Prospectus included in
Registrant's Amendment No. 1 to Registration Statement, filed
March 21, 1984 (File No. 2-86995), is incorporated herein by
reference).
Exhibit 10(iii)(j), Loan Agreement by and among Shelter
Properties VI, and other affiliated partnerships, and GMAC
Commercial Mortgage Corporation, a California corporation, to
secure credit facility, dated September 16, 2002.
Exhibit 10(iii)(k), Multifamily Note by and among Shelter
Properties VI and GMAC Commercial Mortgage Corporation, a
California corporation, to secure loan for Rocky Creek
Apartments.
Exhibit 10(iii)(l), Multifamily Note by and among Shelter
Properties VI and GMAC Commercial Mortgage Corporation, a
California corporation, to secure loan for Carriage House
Apartments.
Exhibit 99, Certification of Chief Executive Officer and
Chief Financial Officer.
b) Reports on Form 8-K filed during the quarter ended September 30,
2002:
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES VI
By: Shelter Realty VI Corporation
Corporate General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Thomas C. Novosel
Thomas C. Novosel
Senior Vice President
and Chief Accounting Officer
Date: November 14, 2002
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
VI;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/Patrick J. Foye
Patrick J. Foye
Executive Vice President of Shelter Realty
VI Corporation, equivalent of the chief
executive officer of the Partnership
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Shelter Properties
VI;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
/s/Paul J. McAuliffe
Paul J. McAuliffe
Executive Vice President and Chief Financial
Officer of Shelter Realty VI Corporation,
equivalent of the chief financial officer of
the Partnership
Exhibit 99
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-QSB of Shelter Properties VI
Limited Partnership (the "Partnership"), for the quarterly period ended
September 30, 2002 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), Patrick J. Foye, as the equivalent of the chief
executive officer of the Partnership, and Paul J. McAuliffe, as the equivalent
of the chief financial officer of the Partnership, each hereby certifies,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: November 13, 2002
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: November 13, 2002
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.
EXHIBIT 10(iii)(j)
LOAN AGREEMENT
BY AND AMONG
BIG WALNUT, L.P.; VILLA NOVA, LIMITED PARTNERSHIP; DAVIDSON DIVERSIFIED REAL
ESTATE I, L.P.; LAKE EDEN ASSOCIATES, L.P.; AIMCO STEEPLECHASE, L.P.; SHELTER
PROPERTIES VI LIMITED PARTNERSHIP; WOODMERE ASSOCIATES, L.P.; SHELTER PROPERTIES
VI LIMITED PARTNERSHIP;
AND
GMAC COMMERCIAL MORTGAGE CORPORATION
DATED AS OF
September 16, 2002
TABLE OF CONTENTS
Page
LOAN AGREEMENT 1
ARTICLE 1 THE LOANS..........................................................2
SECTION 1.01. Commitment to Make Loans...................................2
SECTION 1.02. Maturity Date of Loans; Prepayments........................2
SECTION 1.03. Requests for Loans.........................................3
SECTION 1.04. Principal Interest Payments on Loans.......................3
SECTION 1.05. Intentionally Omitted......................................5
SECTION 1.06. Notes......................................................5
SECTION 1.07. Extension of Variable Facility Termination Date............5
SECTION 1.08. Conversion from a Variable Loan to a Fixed Loan............5
SECTION 1.09. Limitations on Right to Convert............................6
SECTION 1.10. Conditions to Conversion...................................6
ARTICLE 2 THE LOANS..........................................................7
SECTION 2.01. Rate Setting for Variable Loans and Fixed Loans............7
SECTION 2.02. Loan Confirmation Instrument for Variable Loans............7
SECTION 2.03. Breakage and other Costs...................................7
SECTION 2.04. Initial Loans..............................................8
SECTION 2.05. Determination of Loan Amount and Valuations................8
ARTICLE 3 ADDITIONAL LOANS...................................................9
SECTION 3.01. Right to Additional Loans..................................9
SECTION 3.02. Procedure for Additional Loans.............................9
SECTION 3.03. Conditions of Additional Loans.............................9
ARTICLE 4 CONDITIONS PRECEDENT TO REQUESTS..................................10
SECTION 4.01. Conditions Applicable to the Initial Loan Request, Conversion
Requests, Additional Loan Requests and Termination Requests..............10
SECTION 4.02. Conditions Precedent to Initial Loans.....................11
SECTION 4.03. Conditions Precedent to Additional Loans and Addition of the
Additional Mortgaged Property to the Collateral Pool.....................12
SECTION 4.04. Conditions Precedent to Conversion........................12
SECTION 4.05. Delivery of Documents Related to each Mortgaged Property..13
ARTICLE 5 REPRESENTATIONS AND WARRANTIES....................................13
SECTION 5.01. Representations and Warranties of Borrower................13
SECTION 5.02. Representations and Warranties of Lender..................14
ARTICLE 6 FEES ..........................................................14
SECTION 6.01. Standby Fee...............................................14
SECTION 6.02. Origination Fees..........................................14
SECTION 6.03. Due Diligence Fees........................................15
SECTION 6.04. Legal Fees and Expenses...................................15
SECTION 6.05. Collateral Release Fee....................................16
SECTION 6.06. Look-back Fee.............................................16
SECTION 6.07. Failure to Close any Request..............................16
ARTICLE 7 EVENTS OF DEFAULT.................................................16
SECTION 7.01. Events of Default.........................................16
ARTICLE 8 REMEDIES..........................................................16
SECTION 8.01. Remedies; Waivers.........................................16
SECTION 8.02. Waivers; Rescission of Declaration........................17
SECTION 8.03. Lender's Right to Protect Collateral and Perform Covenants and
Other Obligations..........................................................17
SECTION 8.04. No Remedy Exclusive.......................................17
SECTION 8.05. No Waiver.................................................17
SECTION 8.06. No Notice.................................................18
ARTICLE 9 RIGHTS OF FANNIE MAE..............................................18
SECTION 9.01. Special Pool Purchase Contract............................18
SECTION 9.02. Assignment of Rights......................................18
SECTION 9.03. Replacement of Lender.....................................18
SECTION 9.04. Fannie Mae and Lender Fees and Expenses...................19
SECTION 9.05. Third-Party Beneficiary...................................19
ARTICLE 10 INTEREST RATE PROTECTION.........................................19
SECTION 10.01. Interest Rate Protection..................................19
SECTION 10.02. Cap Terms.................................................19
SECTION 10.03. Cap Security Agreement; Delivery of Cap Payments..........20
SECTION 10.04. Termination...............................................20
SECTION 10.05. Performance Under Cap Documents...........................20
SECTION 10.06. Escrow Provisions.........................................20
ARTICLE 11 MISCELLANEOUS PROVISIONS.........................................21
SECTION 11.01. Counterparts..............................................21
SECTION 11.02. Amendments, Changes and Modifications.....................21
SECTION 11.03. Right to Complete or Partial Termination of Loan Commitment.
22
SECTION 11.04. Payment of Costs, Fees and Expenses.......................22
SECTION 11.05. Payment Procedure.........................................23
SECTION 11.06. Payments on Business Days.................................23
SECTION 11.07. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.
23
SECTION 11.08. Severability..............................................24
SECTION 11.09. Notices...................................................25
SECTION 11.10. Further Assurances and Corrective Instruments.............26
SECTION 11.11. Term of this Agreement....................................26
SECTION 11.12. Assignments; Third-Party Rights...........................27
SECTION 11.13. Headings..................................................27
SECTION 11.14. General Interpretive Principles...........................27
SECTION 11.15. Interpretation............................................27
SECTION 11.16. Standards for Decisions, Etc..............................27
SECTION 11.17. Decisions in Writing......................................27
EXHIBITS
EXHIBIT A Schedule of Initial Mortgaged Property, Initial
Valuation and Loan Amount
EXHIBIT B Fixed Loan Note
EXHIBIT C Variable Loan Note
EXHIBIT D Conversion Request
EXHIBIT E Rate Form
EXHIBIT F Loan Confirmation Instrument
EXHIBIT G Loan Request
EXHIBIT H Additional Loan Request
EXHIBIT I Interest Rate Cap Security, Pledge and Assignment
Agreement
EXHIBIT J Termination Request
EXHIBIT K Guaranty
APPENDIX I ......Definitions
LOAN AGREEMENT
THIS LOAN AGREEMENT is made as of the 16th day of September, 2002 by and
among (i) BIG WALNUT, L.P., a Delaware limited partnership, VILLA NOVA, LIMITED
PARTNERSHIP, a Tennessee limited partnership DAVIDSON DIVERSIFIED REAL ESTATE I,
L.P., a Delaware limited partnership, LAKE EDEN ASSOCIATES, L.P., a Delaware
limited partnership, AIMCO STEEPLECHASE, L.P., a Delaware limited partnership,
SHELTER PROPERTIES VI LIMITED PARTNERSHIP, a South Carolina limited partnership,
WOODMERE ASSOCIATES, L.P., a Delaware limited partnership, SHELTER PROPERTIES VI
LIMITED PARTNERSHIP, a South Carolina limited partnership (individually a
"Borrower" and collectively with any Additional Borrower becoming a party to
this Agreement from time to time, the "Borrowers"), and (ii) GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation (the "Lender").
RECITALS
A.....Each Borrower owns a Multifamily Residential Property as more
particularly described in Exhibit A to this Agreement (unless otherwise defined
or the context clearly indicates otherwise, capitalized terms shall have the
meanings ascribed to such terms in Appendix I of this Agreement).
B.....Each Borrower has requested that Lender make a Loan to such Borrower
in the original principal amount set forth on Exhibit A, each of which Loans
initially shall be a Variable Loan.
C. To secure the obligations of each Borrower under this Agreement and the other
Loan Documents executed in connection with the Loan made to such Borrower, such
Borrower shall pledge its respective Collateral to Lender. The Collateral shall
be composed of (i) Security Instruments encumbering a Borrower's ownership
interest in the Multifamily Residential Property listed on Exhibit A as owned by
such Borrower and (ii) the other Security Documents executed by such Borrower
pursuant to this Agreement or the Loan Documents.
D.....The parties hereto anticipate that, from time to time, Additional
Loans will be made to Additional Borrowers under the terms and conditions of
this Agreement. At the time of the making of such Additional Loans, the
applicable Additional Borrower will become a party to this Agreement and the
other applicable Loan Documents. Additional Loans shall be available to
Additional Borrowers in a maximum aggregate principal amount Outstanding at any
time, together with all other then Outstanding Loans, of $210,000,000.
E.....Subject to the terms, conditions and limitations of this Agreement,
Lender has agreed to make the Initial Loans to each of the Borrowers and to make
Additional Loans to Additional Borrowers from time to time.
NOW, THEREFORE, Borrowers and Lender, in consideration of the mutual
promises and agreements contained in this Agreement, hereby agree as follows:
ARTICLE 1...
THE LOANS
SECTION 1.01......Commitment to Make Loans.
Subject to the terms, conditions and limitations of this Agreement, Lender
agrees to make Loans to the Borrowers, in the case of the Initial Loans, on the
Initial Closing Date, and in the case of Additional Loans to Additional
Borrowers, on the dates provided in Additional Loan Requests. No Loans shall be
increased after an Initial Closing as a result of increases in the Valuation of
any Mortgaged Property. Each Loan shall be a Variable Loan on the Closing Date
of such Loan. A Borrower shall be permitted to convert the Variable Loan to
which it is party (but not less than the entirety of any Variable Loan) to a
Fixed Loan pursuant to Sections 1.08, 1.09 and 1.10 of this Agreement.
SECTION 1.02......Maturity Date of Loans; Prepayments.
(a) Variable Loans. The maturity date of each Variable Loan shall be the earlier
of (i) the termination of this Agreement pursuant to subsection (e) of this
Section 1.02, (ii) the fifth anniversary (unless such date is extended pursuant
to Section 1.07 of this 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. 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. Except for fundings
that occur prior to the Fannie Mae Purchase Date and for fundings resulting in
payment of partial month interest as contemplated in Section 1.04(a), the
Variable Loans shall be funded by the sale of a series of MBSs, in an aggregate
amount sufficient to fund the outstanding aggregate principal balance of the
Variable Loans. The MBS Issue Date for each MBS shall be the first day of a
month and the maturity date of the MBS funding the Variable Loans, shall be
specified from time to time by each of the Borrowers, each of which dates shall
be a date which completes one (1), three (3), six (6) or nine (9) full months
after each MBS Issue Date, provided that, no more than three (3) times per
Calendar Year, with the consent of Lender, to facilitate the sale of a Mortgaged
Property, an Additional Loan on an Additional Mortgaged Property or the
conversion of a Variable Loan to a Fixed Loan, the maturity date of an MBS may
be a date other than as required by this sentence which completes not less than
one (1) full month after an MBS Issue Date. No MBS shall be issued after the
last day of the Variable Loan Availability Period.
For these purposes, a year shall be deemed to consist of 12 30-day months.
For example, the date which completes three full months after September 1 shall
be December 1; and the date which completes three full months after January 1
shall be April 1.
(b) Fixed Loans. The maturity date of any Fixed Loan shall be determined in
accordance with Section 1.08 of this Agreement.
(c) Prepayment of Variable Loans. Except as otherwise set forth in this Section
1.02(c) and Section 1.02(e) below, Variable Loans are prepayable at any time
without penalty or premium, provided that no return, refund or credit shall be
given for any Discount paid by Borrower in connection with any Variable Loan.
The issuance of an MBS on a Rollover Date to fund the repayment of a maturing
MBS shall not be a prepayment of the related Variable Loan under this Section
1.02(c) and the proceeds of such issuance shall not be deemed a separate or
independent advance under the Security Instrument. A Termination Fee will be
payable in connection with any prepayment of a Variable Loan or the payoff of
any Variable Loan prior to the date three (3) years after the Initial Closing
Date, provided that if the Variable Facility Termination Date has been extended
pursuant to Section 1.07 of this Agreement, the date eight (8) years after the
Variable Facility Termination Date. Notwithstanding the foregoing, no
Termination Fee shall be due (i) in connection with the conversion of a Variable
Loan to a Fixed Loan or (ii) if the prepayment or payoff is of a Variable Loan
unless the prepayment or payoff is in conjunction with a partial or complete
termination of the Loan commitment pursuant to Section 11.03 of this Agreement.
(d) Prepayment of Fixed Loans. Fixed Loans are not prepayable at any time prior
to maturity, provided that, notwithstanding the foregoing, Borrower may prepay
not less than all of any Fixed Loan pursuant to the yield maintenance provisions
of the Fixed Loan Note evidencing each such Fixed Loan.
(e) Termination Prior to Fannie Mae Purchase Date. Notwithstanding anything in
this Agreement to the contrary (i) all Borrowers may terminate this Agreement
and prepay all Loans in full at any time prior to the Fannie Mae Purchase Date
upon five (5) Business Days prior written notice to Lender and (ii) Lender may
terminate this Agreement and require that Borrower pay all Loans in full if the
Fannie Mae Purchase Date has not occurred on or before December 16, 2002 upon
twenty (20) Business Days written notice given on or at any time after November
15, 2002. In the event this Agreement is terminated pursuant to this subsection
(e), no Termination Fee shall be paid by Borrower. Borrower and Lender agree to
execute a supplement to this Agreement confirming that on the Fannie Mae
Purchase Date, this Agreement is in full force and effect (as it may be modified
in connection with the purchase by Fannie Mae) and that no notice of termination
has been given by either party.
SECTION 1.03......Requests for Loans.
Borrower shall request a Loan by giving Lender a Loan Request or an
Additional Loan Request in accordance with Section 2.04 or Section 3.02.
SECTION 1.04......Principal and Interest Payments on Loans.
(a) Partial Month Interest. Prior to the Fannie Mae Purchase Date or in the
event an MBS is issued on a date other than the first day of a calendar month,
Lender shall fund one or more of the Variable Loans, as may be requested by
Borrowers from funds available to Lender from sources other than the proceeds of
the issuance of MBS. Borrower shall pay interest on the original stated
principal amount of its Loan for the partial month period commencing on the
Closing Date of such Loan and ending on the last day of the calendar month in
which such Closing Date occurs. Commencing on the Fannie Mae Purchase Date,
Borrower shall pay interest on its Variable Loan at a rate per annum equal to
the greater of (1) the Coupon Rate as determined by Lender plus a number of
basis points equal to the Variable Loan Fee, and (2) a rate based on Lender's
cost of funds plus a number of basis points equal to the Variable Loan Fee, and
approved in advance, in writing, by Borrower. If Borrower elects to convert a
Variable Loan to a Fixed Loan on a Conversion Date occurring on a date other
than a Rollover Date, Borrower shall pay interest for such Fixed Loan at a rate
per annum equal to the greater of (1) the interest rate for the Fixed Loan
described in subsection (c)(i) of this Section 1.04 and (2) a rate based on
Lender's cost of funds, plus a number of basis points equal to the Variable Loan
Fee, and approved in advance, in writing, by Borrower.
(b) Variable Loans.
(i) Discount. Each Variable Loan shall be a discount loan once the MBS is issued
following the Fannie Mae Purchase Date and the stated principal amount of a
Variable Loan on the MBS Issue Date shall be the sum of the Price and the
Discount. The Price and Discount of each Variable Loan shall be determined in
accordance with the procedures set forth in Section 2.01. The Discount will be
comprised of interest paid to the purchaser of each MBS and the balance of the
proceeds of the Variable Loan made available by Lender to Borrower will be equal
to the Price. Borrower shall pay to Lender, in advance of each MBS Issue Date,
the Discount due in respect of such MBS. In no event shall Borrower be entitled
to any return or refund of the Discount or any portion thereof.
(ii) Variable Loan Fee. In addition to paying the Discount and the partial month
interest, if any, Borrower shall pay monthly installments of the Variable Loan
Fee to Lender for each Variable Loan Outstanding from the initial MBS Issue Date
to the maturity date of its Variable Loan. The Variable Loan Fee shall be
payable in advance, in accordance with the terms of the Variable Loan Note. The
first installment shall be payable on or prior to the Closing Date for the
Variable Loan and shall apply to the first full calendar month of such Loan.
Subsequent installments shall be payable on the first day of each calendar
month, commencing on the first day of the second full calendar month of such
Variable Loan, to the earlier of (i) its maturity date or (ii) if the Variable
Loan is converted to a Fixed Loan, the maturity date of the MBS issued to fund
the Variable Loan to be repaid on the Conversion Date. Each installment of the
Variable Loan Fee shall be in an amount equal to the product of (1) the Variable
Loan Fee, and (2) the original stated principal amount of the Variable Loan,
divided by 12.
(c) Coupon Rate for Fixed Loans.
(i) Coupon Rate. Each Fixed Loan shall bear interest at a Coupon Rate, per
annum, equal to the MBS Pass-Through Rate (as determined in accordance with
Section 2.01 hereof) for such Fixed Loan.
(ii) Fixed Loan Fee. In addition to paying any partial month interest, if any,
as described in Section 1.04(a) hereinabove, Borrower shall pay the Coupon Rate
for the Fixed Loan monthly in arrears, in accordance with the terms of the Fixed
Loan Note to Lender from the applicable MBS Issue Date to the maturity date of
the Fixed Loan. The first installment shall be payable on the first day of each
calendar month, commencing on the first day of the second full calendar month
following the MBS Issue Date for the MBS funding a Fixed Loan through the
maturity date of such Fixed Loan. Each installment of the Fixed Loan Fee shall
be in an amount equal to the product of (1) the Fixed Loan Fee, and (2) the
principal amount of the Fixed Loan, divided by 12.
(d) Principal Payments. The Borrower shall make monthly principal payments in
respect of each Loan in an amount sufficient to fully repay the Loan over the
Amortization Period. In the case of Variable Loans, such principal payments
shall be in accordance with the amortization schedule attached to each Variable
Note and shall be applied to reduce the principal amount of the relevant
Variable Loan on the Rollover Date next occurring after the making of any such
monthly payment.
(e) Interest Payments Prior to the Fannie Mae Purchase Date. Prior to the Fannie
Mae Purchase Date, the Borrower shall make interest payments on its Loan as
provided in the Note evidencing such Loan.
SECTION 1.05......Intentionally Omitted.
SECTION 1.06......Notes.
(a) Variable Loans. The obligation of each Borrower to repay its respective
Variable Loan shall be evidenced by a separate Variable Loan Note. Each Variable
Loan Note shall be payable to the order of Lender and shall be made in the
original principal amount of the Variable Loan to Borrower.
(b) Fixed Loans. The obligation of each Borrower to repay its respective Fixed
Loan shall be evidenced by a Fixed Loan Note. Each Fixed Loan Note shall be
payable to the order of Lender and shall be made in the original principal
amount of the Fixed Loan to the Borrower.
SECTION 1.07......Extension of Variable Facility Termination Date.
Borrowers shall have the right to extend the Variable Facility Termination
Date for one (1) period of five (5) years ("Extension") upon satisfaction of
each of the following conditions:
(a) Borrowers provide written notice requesting the Extension and setting forth
the term of the extension ("Extension Notice") to Lender not less than thirty
(30) nor more than ninety (90) days prior to the then effective Variable
Facility Termination Date.
(b) No Event of Default or Potential Event of Default exists on either the date
the Extension Notice is given or on the then effective Variable Facility
Termination Date.
(c) All of the representations and warranties of each Borrower contained in
Article 5 of this Agreement and the other Loan Documents are true and correct in
all material respects on the date the Extension Notice is given and on the then
effective Variable Facility Termination Date.
(d) Each Borrower is in compliance with all of the covenants contained in the
Loan Documents on the date the Extension Notice is given and on the then
effective Variable Facility Termination Date.
Upon receipt of the Extension Notice and upon compliance with conditions
set forth above, the Variable Facility Termination Date shall be extended for
five (5) years on the terms and conditions contained in this Agreement and the
other Loan Documents, provided that the Fees applicable to the Variable Facility
during the Extension shall be as agreed to by the parties prior to the
Extension.
SECTION 1.08......Conversion from a Variable Loan to a Fixed Loan.
Subject to the limitations set forth in Section 1.09, Borrower shall have
the right, from time to time prior to the date three (3) years after the Initial
Closing Date, to convert all, but not part of, any Variable Loan to a Fixed
Loan.
(a) Request. To convert any Variable Loan to a Fixed Loan, Borrower shall
deliver a Conversion Request to Lender. Each Conversion Request shall designate
(1) the particular Variable Loan to be converted and (2) the requested maturity
date of such Fixed Loan.
(b) Maturity of Fixed Loans. The requested maturity date for each Fixed Loan
specified by the Borrower in its Conversion Request shall not be earlier than
the date following seven (7) years after the Conversion Date for such Fixed Loan
and shall not be later than the date ten (10) years after the Initial Closing
Date.
(c) Amount of Fixed Loan. The principal amount of any Fixed Loan shall be equal
to the Outstanding principal amount of the Variable Loan being converted.
(d) Terms and Conditions of Fixed Loans. The terms and conditions, including but
not limited to the Fixed Loan Fee, applicable to any Fixed Loan converted from a
Variable Loan shall be consistent with the terms and conditions applicable to
fixed rate loans then being purchased by Fannie Mae under the Fannie Mae DUS
program with a similar principal balance and having similar maturity, Loan to
Value Ratio, Debt Service Coverage Ratio, collateral type and quality and other
material terms applicable to the proposed Fixed Loan at the time of the proposed
conversion.
(e) Closing. Subject to Section 1.09 and provided that all conditions contained
in Section 1.10 are satisfied, Lender shall permit the requested conversion to
close at offices designated by Lender on a Conversion Date selected by Lender,
and occurring within 30 Business Days after Lender's receipt of the Conversion
Request (or on such other date as Borrower and Lender may agree). At the
closing, Lender and Borrower shall execute and deliver, at the sole cost and
expense of Borrower, in form and substance satisfactory to Lender, the
Conversion Documents.
SECTION 1.09......Limitations on Right to Convert.
Borrower's right to convert all of a Variable Loan to a Fixed Loan is
subject to the following limitations:
(a) Conversion Date. The Conversion Date shall occur on a Rollover Date during
the Variable Loan Availability Period. If such Conversion Date occurs on a date
other than a Rollover Date, the Borrower shall pay interest for such partial
month as described in Section 1.04(a) hereof.
(b) Prepayment Upon Conversion. Payment of any Variable Loan upon conversion to
a Fixed Loan shall not be considered prepayment within the meaning of Section
1.02(c) hereof.
(c) Fannie Mae Purchase Date. No Conversion Request may be delivered prior to
the Fannie Mae Purchase Date.
SECTION 1.10......Conditions to Conversion.
The conversion of all or any of the Variable Loans to a Fixed Loan is
subject to the satisfaction, on or before the Closing Date, of the conditions
precedent contained in Sections 4.01 and 4.05.
ARTICLE 2
THE LOANS
SECTION 2.01......Rate Setting for Variable Loans and Fixed Loans.
Interest rates in effect for each Loan after the Fannie Mae Purchase Date
shall be set in accordance with the following procedures:
(a) Preliminary, Nonbinding Quote. At Borrower's request Lender shall quote an
estimate of the MBS Pass-Through Rate (for a proposed Fixed Loan) or Discount
(for a proposed Variable Loan). Lender's quote shall be based on (1) a
solicitation of bids from institutional investors selected by Lender in its
reasonable commercial judgment and (2) the proposed terms and amount of the Loan
selected by Borrower. The quote shall not be binding upon Lender.
(b) Rate Setting. If the applicable Borrower satisfies all of the conditions to
Lender's obligation to make the Loan, then Borrower may submit to Lender, by
facsimile transmission before 1:00 p.m. Washington, D.C. time on any Business
Day ("Rate Setting Date"), a completed and executed Rate Form. The Rate Form
shall specify the amount, term, MBS Issue Date, Facility Fee, any breakage fee
deposit amount, the proposed maximum Coupon Rate ("Maximum Annual Coupon Rate")
and Closing Date for the Loan.
(c) Rate Confirmation. Within one Business Day after receipt of the Rate Form,
Lender shall solicit bids from institutional investors selected by Lender in its
reasonable commercial judgment, based on the information in the Rate Form and,
provided the actual Coupon Rate (if the low bid were accepted) would be at or
below the Maximum Annual Coupon Rate, shall obtain a commitment for the purchase
of an MBS on the proposed Rollover Date meeting the terms described in the
related Rate Form. Lender shall then complete and countersign the Rate Form
thereby confirming the amount, term, MBS Issue Date, MBS Delivery Date, or MBS
Pass-Through Rate, Fixed Loan Fee or Variable Loan Fee, Coupon Rate, Discount,
Price, and Rollover Date for the Loan ("MBS Commitment") and shall immediately
deliver by facsimile transmission the Rate Form to Borrower.
SECTION 2.02......Loan Confirmation Instrument for Variable Loans.
On or before the applicable MBS Issue Date for a Variable Loan, the
applicable Borrower shall execute and deliver to Lender a fully executed Loan
Confirmation Instrument, confirming the amount, term, MBS Issue Date, MBS
Delivery Date, Variable Loan Fee, Coupon Rate, Discount, Price and Closing Date
for the MBS related to a Variable Loan, and Borrower's obligation to repay the
Variable Loan in accordance with the terms of the Variable Loan Note and this
Agreement. Upon the funding of the MBS, Lender shall insert the MBS Issue Date
on the Loan Confirmation Instrument and deliver a copy of the completed Loan
Confirmation Instrument to Borrower to evidence the funding on the MBS Issue
Date and to confirm that the Loan Confirmation Instrument is not effective until
such date. Lender's failure to do so shall not invalidate the Loan Confirmation
Instrument or otherwise affect in any way any obligation of Borrower to repay
its respective Variable Loan in accordance with the Loan Confirmation
Instrument, the Variable Loan Note and the other Loan Documents.
SECTION 2.03......Breakage and other Costs.
If Lender fails to fulfill the MBS Commitment and the proposed Loan is not
made on the terms set forth in Lender's Loan Confirmation Instrument for any
reason other than Lender's or the potential investor's default, Borrower shall
pay all reasonable out-of-pocket costs payable to the potential investor and
other reasonable costs, fees and damages incurred by Lender in connection with
its failure to fulfill the MBS Commitment. Lender reserves the right to require
Borrower to post a deposit at the time the Lender obtains an MBS Commitment.
Such deposit shall be refundable to Borrower upon the delivery of the related
MBS.
SECTION 2.04......Initial Loans.
Prior to receipt of the Initial Loans, each Borrower shall deliver a Loan
Request to Lender, modified in accordance with the terms of this Agreement in
effect prior to the Fannie Mae Purchase Date. If upon submitting such Loan
Request all conditions precedent contained in Sections 4.01 and 4.02 are
satisfied, on or before the Initial Closing Date, Lender shall make the Initial
Loans to each of the Borrowers.
SECTION 2.05......Determination of Loan Amount and Valuations.
(a) Initial Determinations. Prior to the Closing Date for any Loan, Lender shall
determine (i) the Loan Amount for each Loan and the Valuation for the related
Mortgaged Property and (ii) the Debt Service Coverage Ratio and the Loan to
Value Ratio for the related Mortgaged Property. The determinations made as of
any Closing Date shall remain unchanged until the first anniversary of the
Closing Date of such Loan, except for Loans closed prior to the Fannie Mae
Purchase Date, which shall be subject to redetermination prior to the Fannie Mae
Purchase Date in accordance with Fannie Mae DUS Guide Underwriting Requirements,
as applied by Fannie Mae, in which event such redetermination shall remain
unchanged until the first anniversary of the Fannie Mae Purchase Date. Each
Borrower acknowledges that such redetermination may result in a Loan Amount that
is less than the Loan Amount on the Closing Date and in such event a Borrower
shall be required to prepay a portion of its Loan on the Fannie Mae Purchase
Date.
(b) Monitoring Determinations. Once each Calendar Quarter following the First
Anniversary, with respect to any Variable Loan or, if only Fixed Loans are
Outstanding, once each Calendar Year, within 20 Business Days after a Borrower
has delivered to Lender the reports required by Loan Documents and if Lender
reasonably decides that changed market or property conditions warrant, Lender
may determine the Valuation, Debt Service Coverage Ratio and the Loan to Value
Ratio for one or more of the Mortgaged Properties and compliance of the
applicable Borrower with the covenants set forth in the Loan Documents. In
determining Valuations, Lender shall use Cap Rates based on its internal survey
and analysis of cap rates for comparable sales in the vicinity of the applicable
Mortgaged Property, with such adjustments as Lender in its reasonable judgment
deems appropriate and without any obligation to use any information provided by
Borrower. If Lender is unable to determine a Cap Rate for a particular Mortgaged
Property, Lender shall have the right, not more than once annually, at the
applicable Borrower's expense, to obtain a market study in order to establish a
Cap Rate. Lender shall promptly disclose its determinations to the applicable
Borrower. Until redetermined, the outstanding Valuations shall remain in effect.
Notwithstanding anything in this Agreement to the contrary, no change in
Valuation, the Loan to Value Ratio or the Debt Service Coverage Ratio for any
Mortgaged Property shall (i) result in a Potential Event of Default or Event of
Default, (ii) require the prepayment of any Loans, or (iii) preclude the
issuance of an MBS on a Rollover Date.
ARTICLE 3
ADDITIONAL LOANS
SECTION 3.01......Right to Additional Loans.
Subject to the terms and conditions of this Article, an Additional
Borrower shall have the right, from time to time during the Term of this
Agreement, to obtain Additional Loans.
SECTION 3.02......Procedure for Additional Loans.
(a) Request. An Additional Borrower may deliver to Lender Additional Loan
Requests from time to time. Each Additional Loan Request shall be accompanied by
the following: (i) the information required by the DUS Guide Underwriting
Requirements with respect to the proposed Additional Mortgaged Property and any
additional information Lender may reasonably request; and (ii) the payment of
all Additional Collateral Due Diligence Fees.
(b) Underwriting. An Additional Borrower may obtain the Additional Loan if the
proposed Additional Mortgaged Property has a Debt Service Coverage Ratio of not
less than 1.10 to 1.0 and a Loan to Value Ratio of not more than 65%. Lender
shall evaluate the proposed Additional Mortgaged Property in accordance with the
DUS Guide Underwriting Requirements, and shall make underwriting determinations
as to the Debt Service Coverage Ratio and the Loan to Value Ratio on the basis
of the lesser of (1) the acquisition price of the proposed Additional Mortgaged
Property if purchased by the Additional Borrower within 12 months of the related
Additional Loan Request and (2) a Valuation made with respect to the proposed
Additional Mortgaged Property. Within 30 Business Days after receipt of (1) the
Additional Loan Request and (2) all reports, certificates and documents required
by the DUS Guide Underwriting Requirements, including a zoning analysis
undertaken in accordance with Section 206 of Part III of the DUS Guide, Lender
shall notify the Additional Borrower whether it shall consent to the Additional
Loan Request. Within five Business Days after receipt of Lender's consent to the
Additional Loan Request, an Additional Borrower shall notify Lender whether it
elects to obtain the Additional Loan. If the Additional Borrower fails to
respond within the period of five Business Days, it shall be conclusively deemed
to have elected not to obtain the Additional Loan.
(c) Closing. If Lender consents to the Additional Loan Request, the Additional
Borrower timely elects to obtain the Additional Loan and all conditions
precedent contained in Section 4.03 and all General Conditions contained in
Section 4.01 are satisfied, Lender shall make the Additional Loan, at a closing
to be held at offices designated by Lender on a Closing Date selected by Lender,
occurring within 30 Business Days after Lender's receipt of Borrower's election
(or on such other date as the Additional Borrower and Lender may agree).
SECTION 3.03......Conditions of Additional Loans.
(a) Maximum Amount of Additional Loans. The maximum aggregate original principal
amount of any Additional Loan shall not, together with the outstanding principal
balance of all other Loans, exceed $210,000,000.
(b) Minimum Amount of Additional Loans. The minimum amount of each Additional
Loan is $3,000,000, provided that, no more than three (3) times per Calendar
Year with the consent of Lender to facilitate the sale of a Mortgaged Property,
an Additional Loan for an Additional Mortgaged Property or the conversion of a
Variable Loan to a Fixed Loan, Additional Loans may be made in an original
principal amount of not less than $1,000,000.
(c) Terms and Conditions. The terms and conditions applicable to all Additional
Loans shall be the terms and conditions applicable to all Loans made under this
Agreement.
ARTICLE 4
CONDITIONS PRECEDENT TO REQUESTS
SECTION 4.01......Conditions Applicable to the Initial Loan Request,
Conversion Requests, Additional Loan Requests and Termination
Requests.
The obligation of Lender to close the transaction requested in a Request
for a particular Borrower shall be subject to the following general conditions
precedent ("General Conditions") in addition to any other conditions precedent
contained in this Agreement applicable to a Borrower.
(a) Payment of Expenses. The payment by the applicable Borrower of Lender's and
Fannie Mae's reasonable fees and expenses applicable to Borrower's Loan and
payable in accordance with this Agreement, including, but not limited to, the
legal fees and expenses described in Section 6.04.
(b) No Material Adverse Change. Except in connection with a Termination Request,
there has been no material adverse change in the financial condition, business
or prospects of the applicable Borrower or AIMCO or in the physical condition,
operating performance or value of the Mortgaged Property securing the Loan, from
the condition, business or prospects reflected in the financial statements,
reports and other information obtained by Lender during its review of Borrower
and AIMCO and the applicable Mortgaged Property securing the Loan.
(c) No Default. Except in connection with a Termination Request, there shall
exist no Event of Default or Potential Event of Default of the relevant Borrower
on the Closing Date for the Request and, after giving effect to the transaction
described in the Request, no Event of Default or Potential Event of Default
shall have occurred.
(d) No Insolvency. Except in connection with a Termination Request, receipt by
Lender on the Closing Date for the Request, of evidence satisfactory to Lender
that neither the applicable Borrower nor AIMCO is insolvent (within the meaning
of any applicable federal or state laws relating to bankruptcy or fraudulent
transfers) or will be rendered insolvent by the transactions contemplated by the
Loan Documents, or, after giving effect to such transactions, will be left with
an unreasonably small capital with which to engage in its business or
undertakings, or will have intended to incur, or believe that it has incurred,
debts beyond its ability to pay such debts as they mature or will have intended
to hinder, delay or defraud any existing or future creditor.
(e) No Untrue Statements. The Loan Documents applicable to the requesting
Borrower shall not contain any untrue or misleading statement of a material fact
and shall not fail to state a material fact necessary to make the information
contained therein not misleading.
(f) Representations and Warranties. All representations and warranties made by
the requesting Borrower and AIMCO in the Loan Documents shall be true and
correct in all material respects on the Closing Date for the Request with the
same force and effect as if such representations and warranties had been made on
and as of the Closing Date for the Request.
(g) No Condemnation or Casualty. Except in connection with a Termination
Request, there shall not be pending or threatened any condemnation or other
taking, whether direct or indirect, against the Mortgaged Property securing the
applicable Loan and there shall not have occurred any casualty to any
improvements located on such Mortgaged Property, which casualty would have a
material adverse effect on the continued operations of such Mortgaged Property.
(h) Delivery of Closing Documents. Except in connection with a Termination
Request, the receipt by Lender of the following, each dated as of the Closing
Date for the Request, in form and substance satisfactory to Lender in all
respects:
(i) The Loan Documents applicable to the requesting Borrower; and
(ii) Such other documents, instruments, approvals (and, if requested by Lender,
certified duplicates of executed copies thereof) and opinions as Lender may
reasonably request.
(i) Covenants. The requesting Borrower and AIMCO are in full compliance with
each of the covenants contained in the Loan Documents, without giving effect to
any notice and cure rights of Borrower.
(j) Opinion. Except in connection with a Termination Request, favorable opinions
of counsel to Borrower and AIMCO as to the due organization and qualification of
Borrower and AIMCO, the due authorization, execution, delivery and
enforceability of each Loan Document executed in connection with the Request and
such other matters as Lender may reasonably require.
SECTION 4.02......Conditions Precedent to Initial Loans.
The obligation of Lender to make the Initial Loans to the Borrowers is
subject to the following conditions precedent:
(a) Receipt by Lender of a fully executed Loan Request for each Initial Loan;
(b) Intentionally omitted.
(c) The Debt Service Coverage Ratio for each Mortgaged Property securing the
Initial Loan shall be not less than 1.10:1.0;
(d) The Loan to Value Ratio for the Mortgaged Property securing each Initial
Loan shall not be greater than 65%;
(e) Intentionally omitted.
(f) Intentionally omitted.
(g) Receipt by Lender of the portion of the Origination Fee due pursuant to
Section 6.02 and the Due Diligence Fees due pursuant to Section 6.03(a);
(h) Delivery of a Note, duly executed by each of the relevant Borrowers, each in
the amount and reflecting the terms of the relevant Initial Loan;
(i) Receipt by Lender of a Guaranty, duly executed by AIMCO; and
(j) Receipt of all documents required for the closing of the Initial Loan under
the DUS Guide.
SECTION 4.03......Conditions Precedent to Additional Loans and Addition of the
Additional Mortgaged Property to the Collateral Pool.
The obligation of Lender to make a requested Additional Loan for any
Additional Mortgaged Property is subject to the following conditions precedent:
(a) Receipt by Lender of the fully executed Additional Loan Request;
(b) Delivery by Lender to the Additional Borrower of the Rate Form for the
Additional Loan;
(c) If required by Section 6.02, receipt by Lender of the portion of the
Origination Fee not previously paid and the Additional Collateral Due Diligence
Fee;
(d) Receipt by Lender of confirmation that a Cap is in place meeting the
requirements of Article 10 of this Agreement, if required;
(e) The Coverage and LTV Tests for the Additional Loan will be satisfied;
(f) Delivery of a Note, duly executed by the relevant Additional Borrower, in
the amount and reflecting all of the terms of the Additional Loan;
(g) Receipt of all documents required for the closing of the Additional Loan
under the DUS Guide;
(h) Receipt by Lender of a Guaranty, duly executed by AIMCO; and
(i) If the aggregate of the original Loan Amounts for all Loans made pursuant to
this Agreement exceeds $210,000,000, receipt by Lender of the Collateral
Addition Fee.
(j) Prior to the Fannie Mae Purchase Date, Lender shall consider but may decline
to make Additional Loans if the total amount of all Loans initially funded is
more than 15 or the aggregate amount of all Loans made pursuant to this
Agreement exceeds $105,000,00000.
SECTION 4.04......Conditions Precedent to Conversion.
The conversion of any Variable Loan to a Fixed Loan is subject to the
satisfaction of the following additional conditions precedent on or before the
Conversion Date:
(a) After giving effect to the requested conversion, the Debt Service Coverage
Ratio for the Mortgaged Property securing such Fixed Loans will be not less than
1.35:1.0 and the Loan to Value Ratio for the Mortgaged Property securing such
Fixed Loans will be not more than 65%;
(b) Receipt by Lender of an endorsement to each Title Insurance Policy or
Policies related to the Mortgaged Property or Properties securing the Loan to be
converted, amending the effective date of the Title Insurance Policy or Policies
to the Closing Date and showing no additional exceptions to coverage other than
the exceptions shown on the Initial Closing Date and other exceptions approved
by Lender; and
(c) Receipt by Lender of one or more counterparts of each Conversion Document,
dated as of the Conversion Date, signed by each of the parties (other than
Lender) to such Conversion Document.
(d) The Conversion Request shall not be made until the Fannie Mae Purchase Date
occurs.
SECTION 4.05......Delivery of Documents Related to each Mortgaged Property.
It shall be a condition precedent to the making of each Loan that Lender
receive from the relevant Borrower each of the documents and reports required by
the DUS Guide in connection with the Mortgaged Property securing such Loan, in
form and substance satisfactory to Lender in all respects. Borrower acknowledges
and agrees that any such document or report that is not received or is otherwise
not satisfactory to Lender in some respects shall remain a requirement and
condition to the occurrence of the Fannie Mae Purchase Date. Each Borrower
hereby agrees to use its best efforts to satisfy all such requirements and
conditions prior to the Fannie Mae Purchase Date and acknowledges that failure
to do so may cause the Fannie Mae Purchase Date to be delayed or not to occur at
all.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
SECTION 5.01......Representations and Warranties of Borrower.
Each Borrower hereby represents and warrants to Lender for itself (but not
as to any other Borrower) as follows:
(a) Due Organization; Qualification.
(i) Borrower 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 such Borrower to perform the Obligations
under the Agreement and the other Loan Documents. Such Borrower is qualified to
transact business and is in good standing in the State in which the Mortgaged
Property owned by it is located.
(ii) Such Borrower's principal place of business, principal office and office
where it keeps its books and records as to the Collateral is located at the
address set out in Section 11.09 of the Agreement.
(b) Power and Authority. Such Borrower has the requisite power and authority (a)
to own its properties and to carry on their business as now conducted and as
contemplated to be conducted in connection with the performance of the
Obligations under the Agreement and under the other Loan Documents to which it
is a party and (b) to execute and deliver the Agreement and the other Loan
Documents and to carry out the transactions contemplated by the Agreement and
the other Loan Documents to which it is a party.
(c) Due Authorization. The execution, delivery and performance of the Agreement
and the other Loan Documents to which it is a party have been duly authorized by
all necessary action and proceedings by or on behalf of such Borrower, 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 such Borrower
as a condition to the valid execution, delivery and performance by such Borrower
of the Agreement or any of the other Loan Documents to which it is a party.
(d) Valid and Binding Obligations. The Agreement and the other Loan Documents to
which it is a party have been duly authorized, executed and delivered by such
Borrower and constitute the legal, valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their respective
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) No Default. The execution, delivery and performance of the obligations
imposed on such Borrower under the Loan Documents to which it is a party and the
Security Documents will not cause such Borrower to be in default under the
provisions of any agreement, judgment or order to which such Borrower is a party
or by which such Borrower is bound.
(f) Representations and Warranties in Other Loan Documents True. Each and every
representation and warranty set forth in any of the other Loan Documents to
which such Borrower is a party is true and correct in all material respects.
SECTION 5.02......Representations and Warranties of Lender.
Lender hereby represents and warrants to each Borrower as follows:
(a) Due Organization. Lender is a corporation duly organized, validly existing
and in good standing under the laws of the State of California.
(b) Power and Authority. Lender has the requisite power and authority to execute
and deliver this Agreement and to perform its obligations under this Agreement.
(c) Due Authorization. The execution and delivery by Lender of this Agreement,
and the consummation by it of the transactions contemplated thereby, and the
performance by it of its obligations thereunder, have been duly and validly
authorized by all necessary action and proceedings by it or on its behalf.
ARTICLE 6
FEES
SECTION 6.01......Standby Fee.
Borrowers shall pay the Standby Fee to Lender commencing on the first day
after the First Anniversary to the end of the Term of the Agreement. The Standby
Fee shall be the obligation of each Borrower based on the ratio of a Borrower's
Initial Loan to all Loans then outstanding. The Standby Fee shall be payable
monthly, in arrears, on the first Business Day following the end of the month,
except that the Standby Fee for the last month during the Term of this Agreement
shall be paid on the last day of the Term of this Agreement. AIMCO shall agree
to pay the total amount of the Standby Fee.
SECTION 6.02......Origination Fees.
Origination Fee. Each Borrower shall pay to Lender its prorata share
(based upon Loan amount) of an origination fee equal to $1,470,000 (which is
equal to the product obtained by multiplying (i) the maximum principal amount of
Loans that can be outstanding at any time hereunder ($210,000,000) by (ii)
0.70%) (the "Origination Fee"). $735,000 of the Origination Fee shall be payable
on the Initial Closing Date and the balance of the Origination Fee, $735,000,
shall be payable on the earlier of (A) December 31, 2002 and (B) the date on
which the aggregate original principal amount of Loans made pursuant to the
Agreement exceeds $105,000,000. On the Initial Closing Date, Lender shall apply
a credit in the amount of $3,874 against the Origination Fee, which credit may
be allocated among Borrowers. AIMCO shall agree to pay the entire amount of the
Origination Fee.
SECTION 6.03......Due Diligence and Processing Fees.
(a) Due Diligence Fees. Each Borrower shall pay to Lender due diligence fees
("Due Diligence Fees") with respect to the Mortgaged Property securing its Loan
in an amount equal to the actual out-of-pocket expenses incurred by Lender in
connection with Lender's due diligence plus $5,500.
Borrowers have previously paid to Lender a deposit in respect of the
Due Diligence Fees in the amount of $50,000.00 and shall pay the remainder of
the Due Diligence Fees, if any relating to Borrower's Loan or its Mortgaged
Property, to Lender on the Initial Closing Date. Any portion of the Due
Diligence Fee deposited with Lender by Borrower not actually used by Lender to
cover due diligence expenses for Borrower's Loan or the related Mortgaged
Property shall be promptly refunded to Borrower.
(b) Additional Due Diligence Fees for Additional Collateral. Each Additional
Borrower shall pay to Lender additional due diligence fees (the "Additional
Collateral Due Diligence Fees") with respect to each Additional Mortgaged
Property in an amount equal to the actual costs of Lender's due diligence on
such Mortgaged Properties, including but not limited to third party reports
required by Lender plus $5,500. The Additional Collateral Due Diligence Fees
shall be paid together with any Additional Request.
(c) Variable Rate Funding Fee. Borrower shall pay the Variable Rate Funding Fee
when submitting to Lender a Rate Form for processing.
SECTION 6.04......Legal Fees and Expenses.
(a) Initial Legal Fees. Borrower shall pay, or reimburse Lender for, all
reasonable out-of-pocket legal fees and expenses incurred by Lender and by
Fannie Mae in connection with the preparation, review and negotiation of this
Agreement, any other Loan Documents and any other documents executed in
connection with the transaction contemplated hereby and the proposed transfer of
the Loans to Fannie Mae. Lender's legal fees for the specific property level
work for each Initial Loan (excluding legal fees related to this Agreement and
other Loan Documents not relating to the documentation of individual Loans)
shall not exceed $5,000 per Initial Loan.
(b) Fees and Expenses Associated with Requests. Borrower shall pay, or reimburse
Lender and Fannie Mae for, all reasonable costs and expenses incurred by Lender
and Fannie Mae, including the out-of-pocket legal fees and expenses incurred by
Lender and Fannie Mae in connection with the preparation, review and negotiation
of all documents, instruments and certificates to be executed and delivered in
connection with each Request submitted by Borrower, the performance by Lender of
any of its obligations with respect to such Request, the satisfaction of all
conditions precedent to Borrower's rights or Lender's obligations with respect
to such Request, and all transactions related to any of the foregoing, including
the cost of title insurance premiums and applicable recordation and transfer
taxes and charges and all other reasonable costs and expenses in connection with
such Request. The obligations of Borrower under this subsection shall be
absolute and unconditional, regardless of whether the transaction requested in
any such Request actually occurs. Borrower shall pay such costs and expenses to
Lender on the Closing Date for a particular Request, or, as the case may be,
after demand by Lender if Lender determines that such Request will not be
approved.
SECTION 6.05......Collateral Release Fee.
In connection with the release of any Mortgaged Property from the
applicable Security Instrument, the Borrower shall, prior to such release, pay
Lender the Collateral Release Fee.
SECTION 6.06......Look-back Fee.
On the date 31 months after the Initial Closing Date, AIMCO shall pay to
Lender the Look-back Fee, if any. The Look-back Fee shall not be payable if,
prior to the date 30 months after the Initial Closing Date, this Agreement has
been terminated and Borrower has paid the applicable Termination Fee and
satisfied all of each Borrower's Obligations under this Agreement and each of
the other Loan Documents.
SECTION 6.07......Failure to Close any Request.
If Borrower makes a Request and fails to close on the Request for any
reason other than the default by Lender or the proposed purchaser of an MBS,
then Borrower shall pay to Lender and Fannie Mae all damages incurred by Lender
and Fannie Mae in connection with the failure to close.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01......Events of Default.
The occurrence of a default under any Loan Document related to a
Borrower's Loan beyond the cure period, if any, set forth therein shall be an
Event of Default under this Agreement. Notwithstanding the foregoing, an Event
of Default with respect to a Loan, Mortgaged Property or Borrower shall not
constitute an Event of Default with respect to any other Borrower.
ARTICLE 8
REMEDIES
SECTION 8.01......Remedies; Waivers.
Upon the occurrence of an Event of Default, Lender may do any one or more
of the following with respect to the respective Loans secured by a Mortgaged
Property to which the Event of Default pertains (or the Borrower causing such
Event of Default ) related (without presentment, protest or notice of protest,
all of which are expressly waived by each Borrower):
(a) by written notice to the defaulting Borrower, to be effective upon dispatch,
declare the principal of, and interest on, the Borrower's Loan and all other
sums owing by such Borrower to Lender under any of the Loan Documents forthwith
due and payable, whereupon the relevant Loans will terminate and the principal
of, and interest on, the Loans and all other sums owing by Borrower to Lender
under any of the Loan Documents will become forthwith due and payable.
(b) Lender shall have the right to pursue any other remedies available to it
under any of the Loan Documents.
(c) Lender shall have the right to pursue all remedies available to it at law or
in equity, including obtaining specific performance and injunctive relief.
SECTION 8.02......Waivers; Rescission of Declaration.
Lender shall have the right, to be exercised in its complete discretion,
to waive any breach hereunder (including the occurrence of an Event of Default),
by a writing setting forth the terms, conditions, and extent of such waiver
signed by Lender and delivered to the Borrower. Unless such writing expressly
provides to the contrary, any waiver so granted shall extend only to the
specific event or occurrence which gave rise to the waiver and not to any other
similar event or occurrence which occurs subsequent to the date of such waiver.
SECTION 8.03......Lender's Right to Protect Collateral and Perform Covenants and
Other Obligations.
If Borrower fails to perform the covenants and agreements contained in
this Agreement or any of the other Loan Documents to which it is a party and the
same constitutes an Event of Default which has occurred and is continuing, then
Lender at Lender's option, upon five (5) Business Days' prior notice (except in
an emergency, in which case no notice is required) to the Borrower, may make
such appearances, disburse such sums and take such action as Lender deems
necessary, in its sole discretion, to protect Lender's interest, including (i)
disbursement of reasonable attorneys' fees, (ii) entry upon the Mortgaged
Property to make repairs and replacements, (iii) procurement of satisfactory
insurance as provided in Section 5 of the Security Instrument encumbering the
Mortgaged Property, and (iv) if the Security Instrument encumbers a leasehold,
exercise of any option to renew or extend the ground lease on behalf of Borrower
and the curing of any default of Borrower in the terms and conditions of the
ground lease. Any amounts disbursed by Lender pursuant to this Section, with
interest thereon, shall become additional indebtedness of Borrower secured by
the Loan Documents. Unless Borrower and Lender agree to other terms of payment,
such amounts shall be immediately due and payable and shall bear interest from
the date of disbursement at the interest rate in effect from time to time for
the relevant Loan unless collection from the applicable Borrower of interest at
such rate would be contrary to applicable law, in which event such amounts shall
bear interest at the highest rate which may be collected from Borrower under
applicable law. Nothing contained in this Section shall require Lender to incur
any expense or take any action hereunder.
SECTION 8.04......No Remedy Exclusive.
Unless otherwise expressly provided, no remedy herein conferred upon or
reserved is intended to be exclusive of any other available remedy, but each
remedy shall be cumulative and shall be in addition to other remedies given
under the Loan Documents or existing at law or in equity.
SECTION 8.05......No Waiver.
No delay or omission to exercise any right or power accruing under any
Loan Document upon the happening of any Event of Default or Potential Event of
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised from time to time
and as often as may be deemed expedient.
SECTION 8.06......No Notice.
To entitle Lender to exercise any remedy reserved to Lender in this
Article, it shall not be necessary to give any notice, other than such notice as
may be expressly required under the applicable provisions of this Agreement or
any of the other Loan Documents.
ARTICLE 9
RIGHTS OF FANNIE MAE
SECTION 9.01......Special Pool Purchase Contract.
Borrower and Lender have each entered into this Loan Agreement with the
expectation that Fannie Mae shall enter into an agreement with Lender ("Special
Pool Purchase Contract"), pursuant to which, inter alia, (i) Lender shall assign
all of its rights but none of its obligations, which Lender expressly retains,
under this Agreement to Fannie Mae, (ii) Fannie Mae shall accept the assignment
of Lender's rights, (iii) subject to the terms, limitations and conditions
contained in the Special Pool Purchase Contract, Fannie Mae shall purchase a
100% participation interest in each Loan issued under this Agreement by issuing
to Lender a series of MBS, each MBS in such series in the amount and for a term
equal to the Loan purchased and backed by an interest in Fixed Loan Notes or
Variable Loan Notes, as the case may be, and the separate Collateral securing
each of the Notes, (iv) Lender shall assign to Fannie Mae all of Lender's
interest in the Notes and Collateral securing the Loans, and (v) Lender shall
service the loans evidenced by the Notes. The parties expressly acknowledge and
agree that Borrowers, Lender and Fannie Mae may offer comments and proposed
amendments and revisions to this Agreement and the other Loan Documents and that
nothing herein shall be deemed to be acceptable to or binding upon Fannie Mae
until the Special Pool Purchase Contract is fully executed and delivered by
Fannie Mae and Lender and Borrowers, Lender and Fannie Mae are in agreement on
the final form of this Agreement and the other Loan Documents.
SECTION 9.02......Assignment of Rights.
Each Borrower acknowledges and consents to the assignment to Fannie Mae of
all of the rights of Lender under this Agreement and all other Loan Documents,
including the right and power to make all decisions on the part of Lender to be
made under this Agreement and the other Loan Documents, but Fannie Mae, by
virtue of this assignment, shall not be obligated to perform the obligations of
Lender under this Agreement or the other Loan Documents.
SECTION 9.03......Replacement of Lender.
At the request of Fannie Mae made after the Fannie Mae Purchase Date, each
Borrower and Lender shall agree to the assumption by another lender designated
by Fannie Mae (which lender shall meet Fannie Mae's then current standards for
lenders for credit facilities of the type and size of the Loans evidenced by
this Agreement), of all of the obligations of Lender under this Agreement and
the other Loan Documents, and/or any related servicing obligations, and, at
Fannie Mae's option, the concurrent release of Lender from its obligations under
this Agreement and the other Loan Documents, and/or any related servicing
obligations, and shall execute all releases, modifications and other documents
which Fannie Mae determines are necessary or desirable to effect such
assumption.
SECTION 9.04......Fannie Mae and Lender Fees and Expenses.
A Borrower's obligation to pay fees, costs or expenses incurred or charged
by Lender pursuant to this Agreement shall be deemed to provide for Borrower's
payment of all reasonable fees, costs and expenses incurred or charged by Lender
or Fannie Mae in connection with Borrower's respective Loan.
SECTION 9.05......Third-Party Beneficiary.
Each Borrower hereby acknowledge and agree that Fannie Mae is a third
party beneficiary of all of the representations, warranties and covenants made
by such Borrower to, and all rights under this Agreement conferred upon, Lender,
and, by virtue of its status as third-party beneficiary and/or assignee of
Lender's rights under this Agreement, Fannie Mae shall have the right to enforce
all of the provisions of this Agreement against Borrower.
ARTICLE 10
INTEREST RATE PROTECTION
SECTION 10.01.....Interest Rate Protection.
(a) The Initial Cap. To protect against fluctuations in interest rates, Borrower
shall make arrangements for Caps to be in place and maintained at all times with
respect to each Variable Loan Outstanding. The Cap for each Variable Loan shall
be in place for a period beginning on the Closing Date of each such Variable
Loan and ending not earlier than the earlier of (i) three (3) years after the
Closing Date of such Variable Loan and (ii) the Variable Loan Termination Date
then in effect (the "Initial Cap Period"). Notwithstanding the foregoing, Lender
shall not require the Cap to be in place until the Fannie Mae Purchase Date.
(b) Subsequent Caps. Subject to the other terms of this Article 10, additional
Caps (each, a "Subsequent Cap") shall be required upon expiration of the Cap in
place for the Initial Cap Period, such Subsequent Cap to be in effect for a
period beginning on the last day of the Initial Cap Period and ending not
earlier than the Variable Loan Termination Date then in effect. If the Variable
Loan Termination Date is extended pursuant to Section 1.07 of this Agreement,
the terms of this Article 10 shall apply as if the first day of the period after
the original Variable Loan Termination Date is the Closing Date for the Loan. It
is the intention of the parties, and a condition of the making of Variable
Loans, that the Borrower shall obtain, and shall maintain at all times during
the Term of this Agreement so long as any Variable Loan is Outstanding, Caps in
an aggregate notional principal amount equal to each Variable Loan Outstanding
and covering the entire term of the Variable Loans and meeting the conditions
set forth in Section 10.02.
SECTION 10.02.....Cap Terms.
Each Cap shall:
(a) provide for a notional principal amount equal at all times to the
outstanding principal balance of the related Variable Loan;
(b) be in effect for the terms required in Section 10.01;
(c) provide for a notional interest rate not greater than the lowest interest
rate that would result in a Debt Service Coverage Ratio for the Mortgaged
Property securing the Loan subject to the Cap of not less than 1.1 to 1 (the
"Cap Interest Rate");
(d) require the counterparty to make interest payments on the notional principal
amount at a rate equal to the amount by which the then applicable Coupon Rate
exceeds the Cap Interest Rate;
(e) require the counterparty to make such interest payments to an account
pledged to Lender pursuant to the Cap Security Agreement; and
(f) be evidenced, governed and secured on terms and conditions, and pursuant to
documentation (the "Cap Documents"), in form and content acceptable to Fannie
Mae, and with a counterparty approved by Fannie Mae.
SECTION 10.03.....Cap Security Agreement; Delivery of Cap Payments.
Pursuant to a Cap Security Agreement, Lender shall be granted an
enforceable, perfected, first priority lien on and security interest in each Cap
and payments due under the Cap (including scheduled and termination payments) in
order to secure Borrower's obligations to Lender under this Agreement. With
respect to each Cap, the Cap Security Agreement must be delivered by Borrower to
Lender no later than the effective date of the Cap.
SECTION 10.04.....Termination.
Borrower shall not terminate, transfer or consent to any transfer of any
existing Cap without Lender's prior written consent as long as Borrower is
required to maintain a Cap pursuant to this Agreement; provided, however, that
if, and at such time as, any Variable Loan is converted to a Fixed Loan or
repaid in full, Borrower shall have the right to terminate the existing Cap with
respect to such Variable Loan.
SECTION 10.05.....Performance Under Cap Documents.
Borrower agrees to comply fully with, and to otherwise perform when due,
its obligations under, all applicable Cap Documents and all other agreements
evidencing, governing and/or securing any Cap arrangement contemplated under
this Article 10. Borrower shall not exercise, without Lender's prior written
consent, and shall exercise, at Lender's direction, any rights or remedies under
any Cap Document, including without limitation the right of termination.
SECTION 10.06.....Escrow Provisions.
(a) Monthly Cap Escrow Payment. Until Borrower obtains a Cap or Caps that have a
term through the entire term of each Variable Loan, the Borrower shall, on the
first Business Day of each month, deposit with the Lender the Monthly Cap Escrow
Payment. The "Monthly Cap Escrow Payment" means, with respect to the first 24
months after the purchase of a Cap for less than the entire remaining term of
any portion of the Variable Loan Commitment (the "Original Escrow Period"), an
amount equal to one twenty-fourth (1/24) of 100% of the cost, as reasonably
estimated quarterly by the Lender, to obtain any required Subsequent Cap plus
any amount required to increase the Cap Escrow Fund to the amount then required
to be funded in the Cap Escrow Fund based on the then current cost estimate.
After the Original Escrow Period, the Monthly Cap Escrow Payment means an amount
equal to the excess of
(i) 100% of the cost, as reasonably estimated by the Lender, to
obtain any required Subsequent Cap, over
(ii) the amount in the Cap Escrow Fund on the date immediately
preceding the date of calculation, provided that such amount shall be
calculated quarterly until the final of three (3) months before the
expiration of the Cap then in effect, during which three (3) month period
such amount shall be calculated monthly.
In no event shall the Borrower be required to make deposits into the Cap
Escrow Fund if the amount in the Cap Escrow Fund equals or exceeds 100% of the
cost, as then reasonably estimated by the Lender, to obtain any required
Subsequent Cap.
(b) Cap Escrow Fund. The Lender shall deposit the Monthly Cap Escrow Payments in
an interest bearing account (the "Cap Escrow Fund") which meets the standards
for custodial accounts as required by Lender from time to time. (The Monthly Cap
Escrow Payment and all other funds in the Cap Escrow Fund are referred to
collectively as the "Cap Escrow Fund"). 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 Cap Escrow Fund shall be added to and become
part of the Cap Escrow Fund. Lender shall not be responsible for any losses
resulting from the investment of the Cap Escrow Fund or for obtaining any
specific level or percentage of earnings on such investment. If required by
applicable law, provided that no Event of Default exists under any of the Loan
Documents, Lender shall pay to Borrower the interest earned on the Cap Escrow
Fund once each year. Borrower assigns to Lender the Cap Escrow Fund as
additional security for all of the Borrower's obligations under the Loan
Documents; provided, however, Lender shall apply funds in the Cap Escrow Fund to
purchase the next Subsequent Cap required. To the extent such Cap Escrow Funds
are insufficient to purchase any required Subsequent Cap, the Borrower shall
promptly remit such funds to the Lender or the provider of the Cap. Any amount
in the Cap Escrow Fund not used to purchase a Subsequent Cap shall be returned
to the Borrower at such time as Lender determines that no additional Subsequent
Caps will be required to be purchased.
ARTICLE 11
MISCELLANEOUS PROVISIONS
SECTION 11.01.....Counterparts.
To facilitate execution, this Agreement may be executed in any number of
counterparts. It shall not be necessary that the signatures of, or on behalf of,
each party, or that the signatures of all persons required to bind any party,
appear on each counterpart, but it shall be sufficient that the signature of, or
on behalf of, each party, appear on one or more counterparts. All counterparts
shall collectively constitute a single agreement. It shall not be necessary in
making proof of this Agreement to produce or account for more than the number of
counterparts containing the respective signatures of, or on behalf of, all of
the parties hereto.
SECTION 11.02.....Amendments, Changes and Modifications.
This Agreement may be amended, changed, modified, altered or terminated
only by written instrument or written instruments signed by Lender and Borrower
affected thereby.
SECTION 11.03.....Right to Complete or Partial Termination of Loan Commitment.
Subject to the terms and conditions of this Article, Borrowers shall have
the right to permanently reduce the amount of Loans available under the
Agreement.
(a) Procedure for Complete or Partial Termination of Loan Commitment
(i) Request. To permanently reduce the Loan commitment, Borrowers shall deliver
a Termination Request to Lender. A permanent reduction of the Loan commitment to
$0 shall be referred to as a "Complete Termination." The Termination Request
shall include the following:
(A) The proposed amount of the reduction in the Loan
commitment; and
(B) Unless there is a Complete Termination, a
designation by Borrower of the Loans, if any, which will be prepaid in
connection with such termination.
(ii) Closing. If all General Conditions contained in Section 4.01 are satisfied,
Lender shall reduce the Loan commitment, to the amount designated by Borrowers,
at a closing to be held at offices designated by Lender on a Closing Date
selected by Lender, within thirty (30) Business Days after Lender's receipt of
the Termination Request (or on such other date as Borrowers and Lender may
agree), by (A) payment in full of all Variable Loans required to be paid to
reduce the aggregate unpaid principal balance of all Loans Outstanding to no
greater than the reduced commitment, (B) payment of the Variable Loan
Termination Fee, and (C) executing and delivering all documents reasonably
required by Lender to evidence the reduction in the Loan commitment.
SECTION 11.04. Payment of Costs, Fees and Expenses.
Borrower shall pay, on demand, all reasonable fees, costs, charges or
expenses (including the fees and expenses of attorneys, accountants and other
experts) incurred by Lender in connection with:
(a) Any amendment, consent or waiver to this Agreement or the Loan Documents to
which Borrower is a party (whether or not any such amendments, consents or
waivers are entered into).
(b) Defending or participating in any litigation arising from actions by third
parties and brought against or involving Lender with respect to (i) the
Mortgaged Property securing Borrower's Loan, (ii) any event, act, condition or
circumstance in connection with such Mortgaged Property or (iii) the
relationship between Lender and Borrower in connection with this Agreement or
any of the transactions contemplated by this Agreement.
(c) The administration or enforcement of, or preservation of rights or remedies
under, this Agreement or any other Loan Documents or in connection with the
foreclosure upon, sale of or other disposition of any Collateral granted
pursuant to the Loan Documents.
(d) Any disclosure documents related to a Loan, including the reasonable fees
and expenses of Lender's attorneys and accountants.
Borrower shall also pay, on demand, any transfer taxes, documentary taxes,
assessments or charges made by any governmental authority by reason of the
execution, delivery, filing, recordation, performance or enforcement of any of
the Loan Documents to which it is a party or its Loan. Any attorneys' fees and
expenses payable by Borrower pursuant to this Section shall be recoverable
separately from and in addition to any other amount included in such judgment,
and such obligation is intended to be severable from the other provisions of
this Agreement and to survive and not be merged into any such judgment. Any
amounts payable by Borrower pursuant to this Section, with interest thereon if
not paid when due, shall become additional indebtedness of Borrower secured by
the Loan Documents to which it is a party. Such amounts shall bear interest from
the date such amounts are due until paid in full at the interest rates in effect
from time to time for the relevant Loan unless collection from Borrower of
interest at such rate would be contrary to applicable law, in which event such
amounts shall bear interest at the highest rate which may be collected from the
Borrower under applicable law. The provisions of this Section are cumulative
with, and do not exclude the application and benefit to Lender of, any provision
of any other Loan Document relating to any of the matters covered by this
Section.
SECTION 11.05. Payment Procedure.
All payments to be made to Lender pursuant to this Agreement or any of the
Loan Documents shall be made in lawful currency of the United States of America
and in immediately available funds by wire transfer to an account designated by
Lender before 1:00 p.m. (Eastern Standard time) on the date when due.
SECTION 11.06. Payments on Business Days.
In any case in which the date of payment to Lender or the expiration of
any time period hereunder occurs on a day which is not a Business Day, then such
payment or expiration of such time period need not occur on such date but may be
made on the next succeeding Business Day with the same force and effect as if
made on the day of maturity or expiration of such period, except that interest
shall continue to accrue for the period after such date to the next Business
Day.
SECTION 11.07. Choice of Law; Consent to Jurisdiction; Waiver of Jury Trial.
PRIOR TO THE FANNIE MAE PURCHASE DATE, THIS LOAN AGREEMENT SHALL BE
GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN ACCORDANCE
WITH THE LAWS OF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW APPLICABLE TO
CONFLICTS OR CHOICE OF LAW), BUT THE NOTES, THE SECURITY DOCUMENTS AND ALL OTHER
LOAN DOCUMENTS SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED
PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE JURISDICTION WHERE THE
MORTGAGED PROPERTY SECURING A LOAN IS LOCATED.
ON AND AFTER THE FANNIE MAE PURCHASE DATE AND NOTWITHSTANDING ANYTHING IN
THE NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS TO THE
CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND RIGHTS AND OBLIGATIONS OF THE
BORROWER UNDER THE NOTES AND OTHER LOAN DOCUMENTS TO WHICH IT IS A PARTY, SHALL
BE GOVERNED BY, INTERPRETED, CONSTRUED AND ENFORCED PURSUANT TO AND IN
ACCORDANCE WITH THE LAWS OF THE DISTRICT OF COLUMBIA (EXCLUDING THE LAW
APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO THE EXTENT OF PROCEDURAL AND
SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE CREATION, PERFECTION AND
FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND ENFORCEMENT OF THE RIGHTS AND
REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH MATTERS SHALL BE GOVERNED BY
THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED PROPERTY IS LOCATED, (2) THE
PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE OF
SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER THAN DEPOSIT ACCOUNTS), WHICH
MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION DETERMINED BY THE
CHOICE OF LAW PROVISIONS OF THE DISTRICT OF COLUMBIA UNIFORM COMMERCIAL CODE AND
(3) THE PERFECTION, THE EFFECT OF PERFECTION AND NON-PERFECTION AND FORECLOSURE
OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS LOCATED. BORROWER AGREES THAT ANY
CONTROVERSY ARISING UNDER OR IN RELATION TO THE NOTES, THE SECURITY DOCUMENTS OR
ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED HEREIN, LITIGATED
IN THE DISTRICT OF COLUMBIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES WITH
JURISDICTION IN DISTRICT OF COLUMBIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN,
HAVE JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO
THE LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION,
JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY
DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH
ANY OF THE LOAN DOCUMENTS. THE BORROWER IRREVOCABLY CONSENTS TO SERVICE,
JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE
NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVE ANY
OTHER VENUE TO WHICH THEY MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL
RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT LENDER
FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST
BORROWER AND AIMCO AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION.
INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER
JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED
HEREIN THAT THE LAWS OF DISTRICT OF COLUMBIA SHALL GOVERN THE RIGHTS AND
OBLIGATIONS OF BORROWER AND LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN
BY BORROWER AND TO PERSONAL JURISDICTION WITHIN THE DISTRICT OF COLUMBIA. THE
BORROWER (I) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO
ANY ISSUE ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II)
WAIVE ANY RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR
HEREAFTER EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE
AND EACH ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE.
FURTHER, THE BORROWER HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF LENDER
(INCLUDING, BUT NOT LIMITED TO, LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, TO THE BORROWER THAT LENDER WILL NOT SEEK TO ENFORCE THE PROVISIONS
OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY AND
VOLUNTARILY AGREED TO BY BORROWER UPON CONSULTATION WITH INDEPENDENT LEGAL
COUNSEL SELECTED BY BORROWER'S FREE WILL.
SECTION 11.08. Severability.
In the event any provision of this Agreement or in any other Loan Document
shall be held invalid, illegal or unenforceable in any jurisdiction, such
provision will be severable from the remainder hereof as to such jurisdiction
and the validity, legality and enforceability of the remaining provisions will
not in any way be affected or impaired in any jurisdiction.
SECTION 11.09. Notices.
(a) Manner of Giving Notice. Each notice, direction, certificate or other
communication hereunder (in this Section referred to collectively as "notices"
and singly as a "notice") which any party is required or permitted to give to
the other party pursuant to this Agreement shall be in writing and shall be
deemed to have been duly and sufficiently given if:
(i) personally delivered with proof of delivery thereof (any notice so delivered
shall be deemed to have been received at the time so delivered);
(ii) sent by Federal Express (or other similar overnight courier) designating
morning delivery (any notice so delivered shall be deemed to have been received
on the Business Day it is delivered by the courier);
(iii) sent by telecopier or facsimile machine which automatically generates a
transmission report that states the date and time of the transmission, the
length of the document transmitted, and the telephone number of the recipient's
telecopier or facsimile machine (to be confirmed with a copy thereof sent in
accordance with paragraphs (1) or (2) above within two Business Days) (any
notice so delivered shall be deemed to have been received (i) on the date of
transmission, if so transmitted before 5:00 p.m. (local time of the recipient)
on a Business Day, or (ii) on the next Business Day, if so transmitted on or
after 5:00 p.m. (local time of the recipient) on a Business Day or if
transmitted on a day other than a Business Day);
addressed to the parties as follows:
As to Borrower: c/o AIMCO Properties, L.P.
2000 South Colorado Boulevard
Tower 2, Suite 100
Denver, CO 80222
Attention: Patti K. Fielding
Telecopy No.: (303) 300-3241
with a copy to: c/o AIMCO Properties, L.P.
2000 South Colorado Boulevard
Tower 2, Suite 100
Denver, CO 80222
Attention: Miles Cortez, Esquire
Telecopy No.: (303) 300-3297
As to Lender: GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044
Attention:
Telecopy No.:
with a copy to: GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044
Attention:
Telecopy No.:
As to Fannie Mae: Fannie Mae
3939 Wisconsin Avenue, N.W.
Washington, D.C. 20016-2899
Attention: Vice President for
Multifamily Asset Management
Telecopy No.: (202) 752-5016
with a copy to: Arter & Hadden LLP
1801 K Street, N.W.
Suite 400K
Washington, D.C. 20006
Attention: Lawrence H. Gesner, Esquire
Telecopy No.: (202) 857-0172
(b) Change of Notice Address. Any party may, by notice given pursuant to this
Section, change the person or persons and/or address or addresses, or designate
an additional person or persons or an additional address or addresses, for its
notices, but notice of a change of address shall only be effective upon receipt.
Each party agrees that it shall not refuse or reject delivery of any notice
given hereunder, that it shall acknowledge, in writing, receipt of the same upon
request by the other party and that any notice rejected or refused by it shall
be deemed for all purposes of this Agreement 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, the courier service or facsimile.
(c) Fannie Mae. Notices to Fannie Mae shall neither be required nor effective
until the Fannie Mae Purchase Date.
SECTION 11.10. Further Assurances and Corrective Instruments.
(a) Further Assurances. To the extent permitted by law, the parties hereto agree
that they shall, from time to time, execute, acknowledge and deliver, or cause
to be executed, acknowledged and delivered, such supplements hereto and such
further instruments as Lender or Borrower may request and as may be required in
the opinion of Lender or its counsel to effectuate the intention of or
facilitate the performance of this Agreement or any Loan Document.
(b) Further Documentation. Without limiting the generality of subsection (a), in
the event any further documentation or information is required by Lender to
correct patent mistakes in the Loan Documents, materials relating to the Title
Insurance Policies or the funding of the Loans, Borrower shall provide, or cause
to be provided to Lender, at Borrower's cost and expense, such documentation or
information. Borrower shall execute and deliver to Lender such documentation,
including any amendments, corrections, deletions or additions to the Notes, the
Security Instruments or the other Loan Documents to which it is a party as is
reasonably required by Lender.
(c) Compliance with Investor Requirements. Without limiting the generality of
subsection (a), Borrower shall do anything necessary to comply with the
reasonable requirements of Lender to enable Lender to sell any MBS backed by a
Loan.
SECTION 11.11. Term of this Agreement.
This Agreement shall continue in effect until the Termination Date.
SECTION 11.12. Assignments; Third-Party Rights.
No Borrower shall assign this Agreement, or delegate any of its
obligations hereunder, without the prior written consent of Lender. Lender may
assign its rights and obligations under this Agreement separately or together,
without any Borrower's consent, but may not delegate its obligations under this
Agreement after the Fannie Mae Purchase Date except as provided in Section 9.03.
SECTION 11.13. Headings.
Article and Section headings used herein are for convenience of reference
only, are not part of this Agreement and are not to affect the construction of,
or to be taken into consideration in interpreting, this Agreement.
SECTION 11.14. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in Appendix I and
elsewhere in this Agreement have the meanings assigned to them in this Agreement
and include the plural as well as the singular, and the use of any gender herein
shall be deemed to include the other genders; (ii) accounting terms not
otherwise defined herein have the meanings assigned to them in accordance with
GAAP; (iii) references herein to "Articles," "Sections," "subsections,"
"paragraphs" and other subdivisions without reference to a document are to
designated Articles, Sections, subsections, paragraphs and other subdivisions of
this Agreement; (iv) a reference to a subsection without further reference to a
Section is a reference to such subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to paragraphs and
other subdivisions; (v) a reference to an Exhibit or a Schedule without a
further reference to the document to which the Exhibit or Schedule is attached
is a reference to an Exhibit or Schedule to this Agreement; (vi) the words
"herein," "hereof," "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provision; and (vii) the word
"including" means "including, but not limited to."
SECTION 11.15. Interpretation.
The parties hereto acknowledge that each party and their respective
counsel have participated in the drafting and revision of this Agreement and the
Loan Documents. Accordingly, the parties agree that any rule of construction
which disfavors the drafting party shall not apply in the interpretation of this
Agreement and the Loan Documents or any amendment or supplement or exhibit
hereto or thereto.
SECTION 11.16. Standards for Decisions, Etc.
Unless otherwise provided herein, if Lender's approval is required for any
matter hereunder, such approval may be granted or withheld in Lender's sole and
absolute discretion. Unless otherwise provided herein, if Lender's designation,
determination, selection, estimate, action or decision is required, permitted or
contemplated hereunder, such designation, determination, selection, estimate,
action or decision shall be made in Lender's sole and absolute discretion.
SECTION 11.17. Decisions in Writing.
Any approval, designation, determination, selection, action or decision of
Lender or Borrower must be in writing to be effective.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
(Signatures appear on following pages)
BORROWER:
BIG WALNUT, L.P., a Delaware limited partnership
By: Davidson Diversified Properties, Inc., a
Tennessee corporation, its general partner
By:
Patti K. Fielding
Senior Vice President
VILLA NOVA, LIMITED Partnership, a Tennessee
limited partnership
By: Davidson Properties, Inc., a Tennessee
corporation, its managing general partner
By:
Patti K. Fielding
Senior Vice President
DAVIDSON DIVERSIFIED REAL ESTATE I, L.P., a
Delaware limited partnership
By: Davidson Diversified Properties, Inc., a
Tennessee corporation, its managing
general partner
By:
Patti K. Fielding
Senior Vice President
LAKE EDEN ASSOCIATES, L.P., a Delaware limited
partnership
By: Jacques-Miller Associates, a Tennessee
general partnership, its managing general
partner
By: JMA Equities, L.P., a Delaware limited
partnership, its managing partner
By: MAE JMA, Inc., a Delaware
corporation, its managing general
partner
By:
Patti K. Fielding
Senior Vice President
AIMCO STEEPLECHASE, L.P., a Delaware limited
partnership
By: AIMCO Holdings, L.P., a Delaware limited
partnership, its sole general partner
By: AIMCO Holdings QRS, Inc., a Delaware
corporation, its sole general partner
By:
Patti K. Fielding
Senior Vice President
SHELTER PROPERTIES VI LIMITED PARTNERSHIP, a
South Carolina limited partnership
By: Shelter Realty VI Corporation, a South
Carolina corporation, its corporate
general partner
By:
Patti K. Fielding
Senior Vice President
WOODMERE ASSOCIATES, L.P., a Delaware limited
partnership
By: Jacques-Miller Associates, a Tennessee
general partnership, its managing general
partner
By: JMA Equities, L.P., a Delaware limited
partnership, its managing partner
By: MAE JMA, Inc., a Delaware
corporation, its general partner
By:
Patti K. Fielding
Senior Vice President
SHELTER PROPERTIES VI LIMITED PARTNERSHIP, a
South Carolina limited partnership
By: Shelter Realty VI Corporation, a South
Carolina corporation, its corporate
general partner
By:
Patti K. Fielding
Senior Vice President
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Name:
Title:
A-1
EXHIBIT A
- --------------------------------------------------------------------------------
Mortgaged Property Initial Valuation Loan Amount
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Big Walnut Apartments (Whitehall, OH) $8,800,000.00 $5,720,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Villa Nova Apartments (Indianapolis, IN) $3,900,000.00 $2,535,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Versailles on the Lake Apartments (Fort $3,724,000.00 $2,420,600.00
Wayne, IN)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lebanon Station Apartments (Columbus, OH) $10,550,000.00 $6,857,500.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Emerald Ridge Apartments (Tyler, TX) $9,500,000.00 $6,168,575.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Rocky Creek Apartments (Augusta, GA) $3,600,000.00 $2,340,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Woodmere Apartments (Cincinnati, OH) $4,700,000.00 $2,223,000.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Carriage House Apartments (Gastonia, NC) $2,920,000.00 $1,898,000.00
- --------------------------------------------------------------------------------
B-7
EXHIBIT B
Fixed Loan Note
FIXED LOAN NOTE
US $____________ __________, 20__
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if more
than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE CORPORATION,
a _________________ corporation, the principal sum of
___________________________ __________________________________________________
Dollars (US $____________________), with interest on the unpaid principal
balance at the annual rate of __________________ percent (____%).
This Note is executed and delivered by Borrower pursuant to that certain
Loan Agreement dated as of ______________, 2002 by and between Borrower, certain
other Borrowers signatory thereto and Lender (as amended from time to time, the
"Loan Agreement"), to evidence the obligation of Borrower to repay a Fixed 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 the terms and conditions under which the Fixed Loan evidenced hereby is
made.
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, 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) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of
______________________________________________________________________________
Dollars (US $__________________________), shall be payable on the first day of
each month beginning on __________________, _____, until the entire unpaid
principal balance evidenced by this Note is fully paid. Any accrued interest
remaining past due for 30 days or more shall be added to and become part of the
unpaid principal balance and shall bear interest at the rate or rates specified
in this Note, and any reference below to "accrued interest" shall refer to
accrued interest which has not become part of the unpaid principal balance. Any
remaining principal and interest shall be due and payable on
___________________________________ or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "Maturity Date"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to
have been received on the due date solely for the purpose of
calculating interest due.
4. 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, 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 prior
notice to Borrower. Lender may exercise this option to accelerate
regardless of any prior forbearance.
7. Late Charge. If any monthly installment due hereunder is not received
by Lender on or before the 10th day of each month or if any other
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
date such amount is due, counting from and including the date such
amount is due, Borrower shall pay to Lender, immediately and without
demand by Lender, a late charge equal to 5 percent of such monthly
installment or other amount due. 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
other 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 the 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.
(a) A prepayment premium shall be payable in connection with any prepayment
made under this Note as provided below:
(1) Borrower may voluntarily prepay all (but not less than all) of the
unpaid principal balance of this Note on the last Business Day of a
calendar month if Borrower has given Lender at least 30 days, but not
more than 60 days, prior notice of its intention to make such
prepayment. Such notice shall be addressed to Lender and shall include,
at a minimum, the date upon which Borrower intends to make the
prepayment. If Borrower fails to prepay this Note within five (5)
Business Days of the stated date of prepayment, Lender shall have the
right to recalculate the prepayment premium pursuant to Schedule A
based upon the date that Borrower actually prepays this Note. Such
prepayment shall be made by paying (A) the amount of principal being
prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated
pursuant to Schedule A. For all purposes, including the accrual of
interest, any prepayment received by Lender on any day other than the
last calendar day of the month shall be deemed to have been received on
the last calendar day of such month. For purposes of this Note, a
"Business Day" means any day other than a Saturday, Sunday or any other
day on which Lender is not open for business.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid
principal balance of this Note outstanding at the time of the
acceleration, (A) all accrued interest and all other sums due Lender
under this Note and the other Loan Documents, and (B) the prepayment
premium calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no
more than 90 days before the Maturity Date, or (B) any prepayment
occurring as a result of the application of any insurance proceeds or
condemnation award under the Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any required prepayment of less than the unpaid principal balance of
this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless
Lender agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of
this Note are a material part of the consideration for the loan
evidenced by this Note, and acknowledges that the terms of this Note
are in other respects more favorable to Borrower as a result of the
Borrower's voluntary agreement to the prepayment premium provisions.
11. Costs and Expenses. Borrower shall pay on demand all expenses and
costs, including 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. 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. Borrower agrees to pay an effective rate of interest
equal to the sum of the interest rate provided for in this Note and any
additional rate of interest resulting from any other charges of
interest or in the nature of interest paid or to be paid in connection
with the loan evidenced by this Note and any other fees or amounts to
be paid by Borrower pursuant to any of the other Loan Documents.
Neither this Note nor any of the other Loan Documents shall be
construed to create a contract for the use, forbearance or detention of
money requiring payment of interest at a rate greater than the maximum
interest rate permitted to be charged under applicable law. 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. 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 11.06 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 11.08 of the Security Documents.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (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 this Note. 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.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER
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 SCHEDULES. The following Schedules are attached to this Note:
-----
X Schedule A Prepayment Premium (required)
-----
-----
Schedule B Modifications to Multifamily Note
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
BORROWER
__________________________________________
__________________________________________
Borrower's Social Security/Employer ID Number
B-9
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made during the first ______ years
beginning on the date of the Note (the "Yield Maintenance
Period"), the prepayment premium shall be the greater of:
(i) 1% of the amount of principal being prepaid; or
(ii) The product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the difference obtained by subtracting from the interest rate on this Note
the yield rate (the "Yield Rate") on the __________% U.S. Treasury Security due
_________________________ (the "Specified U.S. Treasury Security"), as the Yield
Rate is reported in The Wall Street Journal on the twenty-fifth Business Day
preceding (x) the date Borrower stated to be the intended prepayment date in its
notice of prepayment given to Lender where prepayment is voluntary, or (y) the
date Lender accelerates the Loan or otherwise accepts a prepayment pursuant to
Paragraph 10(a)(3) of this Note,
by
(C) the present value factor calculated using the following formula:
1 - (1 + r)-n
r
[r = Yield Rate
n = the number of 365-day years (or 366-day
years, if applicable), and any fraction
thereof, remaining between the Prepayment
Date and the expiration of the Yield
Maintenance Period]
In the event that no Yield Rate is published for
the Specified U.S. Treasury Security, then the
nearest equivalent U.S. Treasury Security shall be
selected at Lender's discretion. If the
publication of such Yield Rates in The Wall Street
Journal is discontinued, Lender shall determine
such Yield Rates from another source selected by
Lender.
For purposes of subparagraph (ii)(C), the
"Prepayment Date" shall be (x) in the case of a
voluntary prepayment, the date on which the
prepayment is made, and (y) in any other case, the
date on which Lender accelerates the unpaid
principal balance of this Note.
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 90 days before the Maturity
Date, the prepayment premium shall be 1% of the amount of
principal being prepaid.
_____________________________
INITIAL(S)
B-10
SCHEDULE B TO FIXED LOAN NOTE
MODIFICATIONS TO MULTIFAMILY NOTE
C-9
EXHIBIT C
Variable Loan Note
SECTION 11.18. ______________ Apartments
SECTION 11.19. MULTIFAMILY NOTE
(VARIABLE LOAN)
US $__________________ As of _________, 2002
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the
order of GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, the
principal sum of _________________________ Dollars and 00/100 Dollars (US
$________________________), 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 that certain
Loan Agreement, dated as of _____________, 2002, by and among Borrower, certain
other borrowers signatory thereto and Lender (as amended, supplemented or
otherwise modified or amended and restated from time to time, the "Loan
Agreement"), to 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 a Loan Confirmation Instrument, 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
Instruments or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instruments under Section 12 of the Security Instruments. 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 Instruments (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, 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, except as provided in subsection (e)
below.
(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.
(e) Notwithstanding any contrary provisions of subsection (b), (c) and (d)
above, prior to the Fannie Mae Purchase Date, Borrower shall pay interest on its
Variable Rate Loan in arrears at a rate equal to (i) LIBOR Rate plus a number of
basis points equal to the Variable Loan Fee for the thirty (30) day period
commencing on the Initial Closing Date and (ii) after such thirty (30) day
period, the higher of (A) LIBOR Rate plus 150 basis points or (B) a rate based
on Lender's costs of funds, as determined by Lender, plus a number of basis
points equal to the Variable Loan Fee, for the period from and including the
thirty-first (31st) day after the Initial Closing Date until the Fannie Mae
Purchase Date. 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 hereof, Borrower shall pay interest
in advance from the date hereof through October 15, 2002. On November 15, 2002
and on the fifteenth (15th) day of each calendar month thereafter, Borrower
shall pay interest in arrears calculated for the actual number of days since the
fifteenth (15th) day of the previous calendar month.
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 Instruments")
and reference is made to the Security Instruments 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 five 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
any Other Loan Document shall constitute an "Event of Default"
under this Note, and, accordingly, upon the occurrence of an
Event of Default under the Loan Agreement, 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. Priority of Loans. To the extent each MBS issued to fund or renew the Loan
evidenced by this Note shall be deemed to secure a separate Variable Loan, the
lien of each Security Document executed by Borrower from time to time to secure
this Note, shall secure each separate Variable Loan (and the lien of each
Security Instrument and other Security Document executed by Borrower to secure
its obligations under the Loan Documents) to the same extent and with the same
effect as if the Variable Loan had been made (and any guaranty obligation had
been incurred) on the date on which (i) with respect to each other Security
Instrument, the Security Instrument is recorded in the land records of the
jurisdiction in which the real property covered by the Security Instrument is
located, or (ii) with respect to each other Security Document, the date on which
the Security Document is executed and delivered to Lender.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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.
________________________________,
a ______________________________
By: __________________________, its
________________________
By: __________________________
Name:___________________
Title:____________________
Pay to the order of ________________________________________, without
recourse.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Name:
Title:
D-2
EXHIBIT D
Conversion Request
THE LOAN AGREEMENT REQUIRES THERE TO OCCUR AT A CLOSING TO BE HELD AT
OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED BY YOU, AND OCCURRING
WITHIN 30 BUSINESS DAYS AFTER YOUR RECEIPT OF THE CONVERSION REQUEST (OR ON SUCH
OTHER DATE TO WHICH WE MAY AGREE), AS LONG AS NONE OF THE LIMITATIONS CONTAINED
IN SECTION 1.09 OF THE LOAN AGREEMENT IS VIOLATED, AND ALL CONDITIONS CONTAINED
IN SECTION 1.10 OF THE LOAN AGREEMENT ARE SATISFIED.
____________________, ______
VIA: _______________________
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044
[Note: Subject to change in the event Lender or its address changes]
Re: CONVERSION REQUEST issued pursuant to Loan Agreement, dated as of
____________, by and between the undersigned ("Borrower"), certain other
borrowers signatory thereto and Lender (as amended from time to time, the
"Loan Agreement").
Ladies and Gentlemen:
This constitutes a Conversion Request pursuant to the terms of the
above-referenced Loan Agreement.
Section 1. Request. Borrower hereby requests that there occur a conversion
of the Variable Loan to a Fixed Loan in accordance with the terms of the Loan
Agreement. The amount of the conversion shall be $_________________________.
Maturity Date of current
MBS issued to fund Variable Loan: ________________________________
Amount of Variable Loan: ________________________________
(Note: Any Fixed Loans made in conjunction with a conversion of a Variable
Loan must be accompanied by a Loan Request and shall be reviewed in
accordance with the terms of the Loan Agreement.)
All documents, instruments and certificates required to be delivered
pursuant to the conditions contained in Section 1.10 of the Loan Agreement,
including the Conversion Documents, will be delivered on or before the Closing
Date.
Section 2. Capitalized Terms. All capitalized terms used but not defined
in this Request shall have the meanings ascribed to such terms in the Loan
Agreement.
Sincerely,
________________________________,
a ______________________________
By: __________________________, its
________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
E-3
EXHIBIT E
Rate Form
Pursuant to Section 2.01(b) of that certain Loan Agreement dated as of
________________ (as amended from time to time, the "Loan Agreement") by and
among GMAC COMMERCIAL MORTGAGE CORPORATION, a _________________ corporation
("Lender"), the undersigned (the "Borrower"), and certain other borrowers
signatory thereto, Borrower hereby requests that Lender cause Fannie Mae to
issue an MBS with the following terms:
Designation of Loan _____ Fixed Loan
(Check One) _____ Variable Loan
FOR VARIABLE LOAN ONLY:
Proposed Discount Rate ________ %
Loan Amount $______________________
Term _______ months
MBS Issue Date _______________, _______
Variable Loan Fee _______________________
Maximum Annual Coupon Rate ________ %
Price _______________________
Breakage Fee Deposit $______________________
Closing Date no later than _______________, _______
FOR FIXED LOAN ONLY:
Proposed Pass-Through Rate ________ %
Loan Amount $______________________
Term _______ months
MBS Issue Date _______________, _______
Fixed Facility Fee _______________________
Maximum Annual Coupon Rate ________ %
Amortization Period _______________________
Closing Date no later than _______________, _______
Lender will provide Borrower with written confirmation when and if it has
obtained a commitment for the purchase of a Fannie Mae MBS having the
characteristics described above. In the event that the lowest available Coupon
Rate is greater than that specified above, Lender will not proceed without the
prior written authorization of Borrower.
Borrower certifies that all conditions contained in Article 2 of the Loan
Agreement that are required to be satisfied will be satisfied on or before the
Closing Date.
Defined terms used herein shall have the same meaning as set forth in the
Loan Agreement.
Dated: ____________________, ____
________________________________,
a ______________________________
By: __________________________, its
________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
Pursuant to Section 2.01(c) of the Loan Agreement, Lender hereby confirms
that it has obtained a commitment for the purchase of a Fannie Mae MBS in
conformance with the terms noted above except for the following:
.
Dated: ______________________________________________
GMAC COMMERCIAL MORTGAGE CORPORATION, a
corporation
By:
Name:
Title:
Rate Setting Date: ____________________, ______, ___:___ AM/PM Eastern Time
F-3
EXHIBIT F
Loan Confirmation Instrument
THIS LOAN CONFIRMATION INSTRUMENT (the "Loan Confirmation Instrument") is
made as of the ____ day of _______________, _____, by _____________________, a
_______________________ ("Borrower") for the benefit of GMAC COMMERCIAL MORTGAGE
CORPORATION, a _________________ corporation ("Lender").
RECITALS
A. Borrower, certain other borrowers signatory thereto and Lender are parties to
that certain Loan Agreement, dated as of ___________________ (as amended from
time to time, the "Loan Agreement").
B. All of Lender's right, title and interest in the Loan Agreement and the Loan
Documents executed in connection with the Loan Agreement or the transactions
contemplated by the Loan Agreement have been assigned to Fannie Mae pursuant to
that certain Assignment of Loan Agreement and Other Loan Documents, dated as of
________________ (the "Assignment"). Fannie Mae has not assumed any of the
obligations of Lender under the Loan Agreement or the Loan Documents as a result
of the Assignment. Fannie Mae has designated Lender as the servicer of the Loans
contemplated by the Loan Agreement.
C. In accordance with this Loan Confirmation Instrument and the Loan Agreement,
Lender is requesting that Fannie Mae issue an MBS to fund a Variable Loan made
to Borrower.
D. Borrower is executing this Loan Confirmation Instrument pursuant to the Loan
Agreement to confirm certain terms of the Loan Agreement and that certain
Variable Loan Note dated the same date as the Loan Agreement in the original
principal amount of $_________________ (as amended from time to time, the
"Variable Note") relating to the Variable Loan, and Borrower's obligation to
repay the Loan in accordance with the terms of the Variable Note and this Loan
Confirmation Instrument.
NOW, THEREFORE, Borrower, in consideration of Lender's requesting that
Fannie Mae issue an MBS to fund a Variable Loan, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby agree as follows:
Section 1. Confirmation of Loan and Terms of MBS. Borrower hereby confirms
the following terms of the Variable Loan, and confirms and agrees that it shall
repay the Loan to Lender in accordance with the terms of the Variable Note and
the Loan Agreement:
Loan Amount $_______________________
MBS Term _______ months
MBS Issue Date _________________, ______
Variable Loan Fee $_______________________
Coupon Rate _______ %
Discount _______ %
Price ________________________
Closing Date _______________, ________
Section 2. Beneficiaries. This Loan Confirmation Instrument is made for the
express benefit of Lender.
Section 3. Purpose. The terms of the Loan Agreement and the Variable Note
govern the repayment, and all other terms relating to the Variable Loan.
However, this Loan Confirmation Instrument has been executed to create a
physical instrument evidencing the above-described Loan and MBS under the
Variable Note. The Variable Loan and the MBS evidenced by this Loan Confirmation
Instrument do not represent a separate indebtedness from that evidenced by the
Variable Note.
Section 4. Effectiveness of Loan Confirmation Instrument. This Loan
Confirmation Instrument will not be effective until the sale of the MBS has been
completed, at which time Lender shall note the date of such funding by
completing the date block at the foot of this Loan Confirmation Instrument, and
executing this Loan Confirmation Instrument below such date block, and such
completion shall be binding on Borrower, absent manifest error.
Section 5. Capitalized Terms. All capitalized terms used in this Loan
Confirmation Instrument which are not specifically defined herein shall have the
respective meanings set forth in the Loan Agreement.
Section 6. Counterparts. This Loan Confirmation Instrument may be executed
in counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Borrower has executed this Loan Confirmation
Instrument as an instrument under seal as of the day and year first above
written.
________________________________,
a ______________________________
By: __________________________, its
________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
- -----------------------------------------------------
Date of Funding: _______________________, _______
- -----------------------------------------------------
GMAC COMMERCIAL MORTGAGE CORPORATION, a
corporation
By:
Name:
Title:
G-3
EXHIBIT G
Loan Request
THE LOAN AGREEMENT REQUIRES YOU TO MAKE THE REQUESTED INITIAL LOAN, IF ALL
CONDITIONS CONTAINED IN SECTION 2.04(a) OF THE LOAN AGREEMENT ARE SATISFIED, AT
A CLOSING TO BE HELD ON THE INITIAL CLOSING DATE.
____________________, ______
VIA: _______________________
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044
[Note: Subject to change in the event Lender or its address changes]
Re: LOAN REQUEST issued pursuant to Loan Agreement, dated as of _____________ by
and between the undersigned ("Borrower"), certain other borrowers signatory
thereto, and Lender (as amended from time to time, the "Loan Agreement")
Ladies and Gentlemen:
This constitutes a Loan Request pursuant to the terms of the above-referenced
Loan Agreement.
Section 1. Request. Borrower hereby requests that Lender make a Loan in
accordance with the terms of the Loan Agreement. Following is the information
required by the Loan Agreement with respect to this Request:
(a) Amount. The amount of the Initial Loan shall be $_____________.
(b) Accompanying Documents. All documents, instruments and certificates
required to be delivered pursuant to the conditions contained in
Article 4 of the Loan Agreement, including (i) a confirmed Rate
Form, and (ii) a Loan Confirmation Instrument will be delivered on
or before the Closing Date.
(c) Wiring Information. Please wire the Initial Loan on or before the
Closing Date into our account in accordance with the following
wiring information:
___________________________________________
___________________________________________
___________________________________________
Section 2. Capitalized Terms. All capitalized terms used but not defined in this
Request shall have the meanings ascribed to such terms in the Loan Agreement.
(Remainder of page intentionally left blank)
Sincerely,
________________________________,
a ______________________________
By: __________________________, its
________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
H-2
EXHIBIT H
Additional Loan Request
THE LOAN AGREEMENT REQUIRES YOU TO PERMIT THE REQUESTED INCREASE IN THE
LOAN, AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE
SELECTED BY YOU, AND OCCURRING WITHIN THIRTY (30) BUSINESS DAYS AFTER YOUR
RECEIPT OF THE LOAN INCREASE REQUEST (OR ON SUCH OTHER DATE AS WE AGREE), AS
LONG AS ALL CONDITIONS CONTAINED IN SECTIONS 3.01, 3.02, 3.03, 4.01 AND 4.03 OF
THE LOAN AGREEMENT ARE SATISFIED. REFERENCE IS MADE TO THE LOAN AGREEMENT FOR
THE SCOPE OF LENDER'S OBLIGATIONS WITH RESPECT TO THIS REQUEST.
____________________, ______
VIA: _______________________
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044
[Note: Subject to change in the event Lender or its address changes]
Re: ADDITIONAL LOAN REQUEST issued pursuant to Loan Agreement, dated as of
____________, by and between the undersigned ("Borrower"), certain other
borrowers signatory thereto and Lender (as amended from time to time, the "Loan
Agreement")
Ladies and Gentlemen:
This constitutes an Additional Loan Request pursuant to the terms of the
above-referenced Loan Agreement.
Section 1. Request. Borrower hereby requests that Lender make an
Additional Loan in accordance with the terms of the Loan Agreement. Following is
the information required by the Loan Agreement with respect to this Request:
(a) Amount. The amount of the Additional Loan shall be $_____________.
(b) Accompanying Documents. All documents, instruments and certificates
required to be delivered pursuant to the conditions contained in
Article 4 of the Loan Agreement, including (i) a confirmed Rate Form
and (ii) a Loan Confirmation Instrument will be delivered on or
before the Closing Date.
(c) Wiring Information. Please wire the Additional Loan on or before the
Closing Date into our account in accordance with the following
wiring information:
___________________________________________
___________________________________________
___________________________________________
Section 2. Capitalized Terms. All capitalized terms used but not defined in this
Request shall have the meanings ascribed to such terms in the Loan Agreement.
Sincerely,
________________________________,
a ______________________________
By: __________________________, its
________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
I-6
EXHIBIT I
Interest Rate Cap Security, Pledge and Assignment Agreement
This INTEREST RATE CAP SECURITY, PLEDGE AND ASSIGNMENT AGREEMENT (this
"Agreement"), dated as of ____________, ______, is by and among (i)
________________________, a ______________________ (the "Grantor"), and (ii)
GMAC COMMERCIAL MORTGAGE CORPORATION, a _________________ corporation
("Lender").
RECITALS:
A. Grantor, certain other borrowers signatory thereto, and Lender are party to
that certain Loan Agreement dated as of ___________________ (such agreement, as
the same may be amended, supplemented or otherwise modified or amended and
restated, from time to time, the "Loan Agreement"), pursuant to which Lender has
agreed to provide Loans in accordance with and subject to the terms of the Loan
Agreement. As set forth in Section 1.2 of this Agreement, all capitalized terms
not otherwise defined herein shall have their respective meanings set forth in
the Loan Agreement.
B. As required by the Loan Agreement, the Grantor has made arrangements for the
acquisition of a Cap or Caps pursuant to certain documents attached as Exhibit A
to this Agreement (the "Cap Documents").
C. As security for the Grantor's obligations under the Loan Agreement and the
Note, the Grantor and the Lender are entering into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and undertakings
set forth in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Grantor and the
Lender agree as follows:
1. Incorporation of Recitals; Definitions; Interpretation; Reference Materials.
1.1. Incorporation of Recitals. The recitals set forth in this Agreement are, by
this reference, incorporated into and deemed a part of this Agreement.
1.2. Definitions. Capitalized terms used in this Agreement shall have the
meanings given to those terms in this Agreement. Capitalized terms used in this
Agreement and not defined in this Agreement, but defined in the Loan Agreement,
shall have the meanings given to those terms in the Loan Agreement.
1.3. Interpretation. Words importing any gender include all genders. The
singular form of any word used in this Agreement shall include the plural, and
vice versa, unless the context otherwise requires. Words importing persons
include natural persons, firms, associations, partnerships and corporations. The
parties hereto acknowledge that each party and their respective counsel have
participated in the drafting and revision of this Agreement. Accordingly, the
parties agree that any rule of construction which disfavors the drafting party
shall not apply in the interpretation of this Agreement or any statement or
supplement or exhibit hereto.
1.4. Reference Materials. Sections mentioned by number only are the respective
sections of this Agreement so numbered. Reference to "this section" or "this
subsection" shall refer to the particular section or subsection in which such
reference appears. Any captions, titles or headings preceding the text of any
section and any table of contents or index attached to this Agreement are solely
for convenience of reference and shall not constitute part of this Agreement or
affect its meaning, construction or effect.
2. Collateral and Obligations; Further Assurances.
2.1. Security Interest in Collateral. To secure the Grantor's obligations under
the Loan Agreement, the Note and the other Loan Documents (the "Obligations"),
the Grantor hereby assigns, pledges and grants a security interest to the Lender
in and to all of the Grantor's right, title and interest in and to the following
(collectively, the "Collateral"):
(i) the Cap and the Cap Documents;
(ii) any and all moneys (collectively, "Payments") payable to the Grantor, from
time to time, pursuant to the Cap Documents by the counterparty under the Cap
Documents (the "Counterparty");
(iii) all rights of the Grantor under any of the foregoing, including all rights
of the Grantor to the Payments, contract rights and general intangibles now
existing or hereafter arising with respect to any or all of the foregoing;
(iv) all rights, liens and security interests or guarantees now existing or
hereafter granted by the Counterparty or any other person to secure or guaranty
payment of the Payments due pursuant to the Cap Documents;
(v) all documents, writings, books, files, records and other documents arising
from or relating to any of the foregoing, whether now existing or hereafter
arising;
(vi) all extensions, renewals and replacements of the foregoing; and
(vii) all cash and non-cash proceeds and products of any of the foregoing,
including, without limitation, interest, dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any or all of the other
Collateral.
3. Delivery of Cap Documents.
3.1 Acquisition of Cap; Delivery of Cap Documents. The Grantor has, on or before
the date of this Agreement, executed and delivered the Cap Documents to the
Counterparty and has delivered to the Lender fully executed originals of such
Cap Documents. True, complete and correct copies of the Cap Documents and all
amendments thereto, fully executed by all parties, are attached as Exhibit A
hereto. The Grantor hereby represents and warrants to the Lender that there is
no additional security for or any other arrangements or agreements relating to
the Cap Documents.
3.2 Obligations Remain Absolute. Nothing contained herein shall relieve the
Grantor of its primary obligation to pay all amounts due in respect of its
obligations under the Loan Agreement, the Note or the Other Loan Documents.
4. Representations and Warranties.
4.1 Representations and Warranties of the Grantor. The Grantor represents and
warrants to the Lender on the Closing Date that:
(i) it has all requisite power and authority to enter into this Agreement and to
carry out its obligations under this Agreement; the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary action
on the part of the Grantor; this Agreement has been duly executed and delivered
by it and is the valid and binding obligation of the Grantor, enforceable
against it in accordance with its terms; and
(ii) it is the legal and beneficial owner of, and has good and marketable title
to (and full right and authority to assign), the Collateral, free and clear of
all Liens.
5. Maintenance, Administration of Cap.
5.1 Compliance with Reimbursement Agreement. The Grantor agrees to comply with
the provisions of the Loan Agreement related to obtaining and maintaining at all
applicable times a Cap which satisfies the requirements of the Loan Agreement.
5.2 Event of Default. Upon the occurrence and during the continuance of any
"Event of Default" under the Loan Agreement, the Lender shall have and may
exercise the same rights, powers, and remedies with respect to the Collateral
that the Grantor may exercise, which rights, powers, and remedies are
incorporated herein by this reference for all purposes. In furtherance and not
in limitation of the foregoing, the Lender shall have all rights, remedies and
recourses with respect to the Collateral granted in the Loan Agreement and any
other instrument executed in connection therewith, or existing at common law or
equity (including specifically those granted by the Uniform Commercial Code as
adopted in the District of Columbia, the right of offset, the right to sell the
Collateral at public or private sale, and the right to receive distributions to
Grantor, and such rights and remedies (i) shall be cumulative and concurrent,
(ii) may be pursued separately, successively or concurrently against the Grantor
and any other party obligated under the Obligations, or against the Collateral,
or any other security for the Obligations, at the sole discretion of the Lender,
(iii) may be exercised as often as occasion therefor shall arise, it being
agreed by Grantor that the exercise or failure to exercise any of same shall in
no event be construed as a waiver or release thereof or of any other right,
remedy or recourse, and (iv) are intended to be and shall be, non-exclusive.
If the proceeds of sale, collection or other realization of or upon the
Collateral are insufficient to cover the costs and expenses of such realization
and the payment in full of the Obligations, the Grantor shall remain liable for
any deficiency (subject to the applicable non-recourse provisions of the Loan
Agreement).
Upon the occurrence and continuance of an "Event of Default" under the
Loan Agreement, in case of any sale by the Lender of any of the Collateral,
which may be elected at the option and in the complete discretion of the Lender,
the Collateral so sold may be retained by the Lender until the selling price is
paid by the purchaser, but the Lender shall not incur any liability in case of
failure of the purchaser to take up and pay for the Collateral so sold. In case
of any such failure, such Collateral so sold may be again similarly sold. After
deducting all costs or expenses of every kind (including, without limitation,
the reasonable attorneys' fees and legal expenses incurred by the Lender), the
Lender shall apply the residue of the proceeds of any sale or sales in repayment
of the principal and interest due under the Note and any other amounts due
Lender in connection therewith in such manner as the Lender may deem advisable.
6. Miscellaneous Provisions.
4.1 Termination. This Agreement shall terminate upon the date which is
ninety-one (91) days after the date on which all amounts due under the Loan
Agreement, the Note and the other Loan Documents have been paid in full,
provided that during such ninety-one (91) day period no Act of Bankruptcy (as
defined below) shall have occurred. "Act of Bankruptcy" means the filing of a
petition in bankruptcy or other commencement of a bankruptcy or similar
proceeding by or against the Grantor under any applicable bankruptcy,
insolvency, reorganization or similar law now in effect or any such proceeding
by or against the Grantor under any applicable bankruptcy, insolvency,
reorganization or similar law in effect after the date of this Agreement. Upon
termination of this Agreement, all Collateral shall be reassigned to the Grantor
without recourse, representation or warranty.
4.2 Attorney-In-Fact. Without limiting any rights or powers granted by this
Agreement to the Lender, upon the occurrence and during the continuance of any
"Event of Default" under the Loan Agreement, the Lender is hereby appointed the
attorney-in-fact of the Grantor for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instruments which the
Lender may deem necessary or advisable to accomplish the purposes hereof, which
appointment as attorney-in-fact is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, the Lender shall have the
right and power to receive, endorse and collect all checks made payable to the
order of the Grantor representing any dividend, payment or other distribution in
respect of the Collateral or any part thereof and to give full discharge for the
same.
4.3 Further Assurances. At any time and from time to time, at the expense of the
Grantor, the Grantor shall promptly execute and deliver to Lender all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Lender may request, in order to carry out the intent and
purposes of this Agreement or to enable Lender to exercise and enforce its
rights and remedies under this Agreement all at the sole expense of the Grantor.
4.4 Expenses. The Grantor agrees to pay to Lender all reasonable out-of-pocket
expenses (including reasonable expenses for legal services of every kind) of, or
incident to, the preservation of rights under or enforcement of any of the
provisions of this Agreement or performance by Lender of any obligations of the
Grantor in respect of the Collateral which Grantor has failed or refused to
perform, or any actual or attempted sale, or any exchange, enforcement,
collection, compromise or settlement in Collateral and defending or asserting
rights and claims of Lender in respect thereof, by litigation or otherwise,
including expenses of insurance, and all such expenses shall be Obligations
hereby secured.
a. No Deemed Waiver. No failure on the part of Lender or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by Lender or any of its agents of any
right, power or remedy hereunder preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies herein are
cumulative and are not exclusive of any remedies provided by law.
b. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties to this Agreement with respect to the subject matter of this
Agreement. This Agreement may not be amended, changed, waived or modified except
by a writing executed by each party hereto.
c. Successors and Assigns. This Agreement shall inure to the benefit of, and be
enforceable by, the Grantor and Lender and their respective successors and
permitted assigns, and nothing herein expressed or implied shall be construed to
give any other person any legal or equitable rights under this Agreement.
d. Notices. The provisions of Section 11.08 of the Loan Agreement (entitled
"Notices") are hereby incorporated into this Agreement by this reference to the
fullest extent as if the text of such provisions were set forth in their
entirety herein.
e. 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 provisions were set forth in their entirety herein.
f. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of law or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party.
g. Multiple Counterparts. This Agreement may be simultaneously executed in
multiple counterparts, all of which shall constitute one and the same instrument
and each of which shall be, and shall be deemed to be, an original.
The Grantor and Lender have caused this Agreement to be signed as an
instrument under seal, on the date first written above, by their respective
officers duly authorized.
(a)
GRANTOR
________________________________,
a ______________________________
By: __________________________, its
________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
(i) LENDER
GMAC COMMERCIAL MORTGAGE CORPORATION, a
_____________________ corporation
By:
Name:
Title:
I-7
EXHIBIT A
Cap Documents
(See Attached)
J-2
EXHIBIT J
Termination Request
THE LOAN AGREEMENT PURSUANT TO WHICH THIS REQUEST IS DELIVERED REQUIRES
YOU TO PERMIT THE LOAN COMMITMENT TO BE REDUCED TO THE AMOUNT DESIGNATED BY US,
AT A CLOSING TO BE HELD AT OFFICES DESIGNATED BY YOU ON A CLOSING DATE SELECTED
BY YOU, WITHIN FIFTEEN (15) BUSINESS DAYS AFTER YOUR RECEIPT OF THE TERMINATION
REQUEST (OR ON SUCH OTHER DATE TO WHICH WE MAY AGREE), IF ALL CONDITIONS
CONTAINED IN SECTION 11.03 ARE SATISFIED. REFERENCE IS MADE TO THE LOAN
AGREEMENT FOR THE SCOPE OF THE LENDER'S OBLIGATIONS WITH RESPECT TO THIS
REQUEST.
____________________, ______
VIA: _______________________
GMAC Commercial Mortgage Corporation
200 Witmer Road
Horsham, PA 19044
[Note: Subject to change in the event Lender or its address changes]
Re: LOAN TERMINATION REQUEST issued pursuant to Loan Agreement, dated as of
____________, by and between the undersigned ("Borrower"), certain other
borrowers signatory thereto and Lender (as amended from time to time, the "Loan
Agreement")
Ladies and Gentlemen:
This constitutes a Termination Request pursuant to the terms of the
above-referenced Loan Agreement.
Section 1. Request. The Borrower hereby requests a permanent reduction in
the amount of the Loan commitment in accordance with the terms of the Loan
Agreement. Following is the information required by the Loan Agreement with
respect to this Request:
(a) Amount of Reduction. The amount of the permanent reduction in
the Loan commitment is as follows:
Amount of Reduction:
$
Resulting Amount of
Loan commitment:
$
(b) Required Prepayments. Following are any Loans that shall be
prepaid in connection with the permanent reduction in the Loan commitment:
Closing Date of Loan: _____________________________________
Maturity Date of Loan: _____________________________________
Amount of Loan: _____________________________________
(c) Accompanying Documents. All documents, instruments and
certificates required to be delivered pursuant to the conditions contained
in Section 11.03 of the Loan Agreement will be delivered on or before the
Closing Date.
Section 2. Prepayments and Termination Fee. The Borrower shall pay the required
amount of the prepayment for any required to be prepaid, and the required amount
of the Termination Fee, pursuant to the terms of Section 11.03 of the Loan
Agreement, as two of the conditions to the permanent reduction in the Loan
Commitment.
Section 3. Capitalized Terms. All capitalized terms used but not defined in this
Request shall have the meanings ascribed to such terms in the Master Agreement.
Sincerely,
________________________________,
a ______________________________
By: __________________________, its
________________________
By: ______________________________
Name: ______________________________
Title: ______________________________
EXHIBIT K
Guaranty
________________________ Apartments
EXCEPTIONS TO NON-RECOURSE GUARANTY
This Exceptions to Non-Recourse Guaranty ("Guaranty") is entered into as
of ___________________, by the undersigned (the "Key Principal" whether one or
more), for the benefit of GMAC COMMERCIAL MORTGAGE CORPORATION, a California
corporation, and/or any subsequent holder of the Note (the "Lender").
RECITALS
A. Lender has agreed to execute that certain Loan Agreement, dated as of
_________________________ (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
____________________________, a _______________________ (the "Borrower") from
time to time 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
Exceptions to Non-Recourse Guaranty to the extent of Borrower's personal
liability as provided in Section 9 of the Note evidencing the Loan and as
provided herein. 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 Loan to the
Borrower.
D. Lender is willing to make the Loan to the Borrower only if Guarantor
agrees to enter into this Exceptions to Non-Recourse Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Loan to Borrower,
and in consideration thereof, Key Principal agrees as follows:
"Indebtedness" and other capitalized terms used but not defined in this
Guaranty shall have the meanings assigned to them in the Security Instrument.
Key Principal hereby absolutely, unconditionally and irrevocably
guarantees to Lender the full and prompt payment when due, whether at maturity
or earlier, by reason of acceleration or otherwise, and at all times thereafter,
of all amounts for which Borrower is personally liable under Paragraph 9 of the
Note.
The obligations of Key Principal under this Guaranty shall survive any
foreclosure proceeding, any foreclosure sale, any delivery of any deed in lieu
of foreclosure, and any release of record of the Security Instrument.
Key Principal's obligations under this Guaranty constitute an
unconditional guaranty of payment and not merely a guaranty of collection.
The obligations of Key Principal under this Guaranty shall be performed
without demand by Lender and shall be unconditional irrespective of the
genuineness, validity, regularity or enforceability of the Note, the Security
Instrument, or any other Loan Document, and without regard to any other
circumstance which might otherwise constitute a legal or equitable discharge of
a surety or a guarantor. Key Principal hereby waives the benefit of all
principles or provisions of law, statutory or otherwise, which are or might be
in conflict with the terms of this Guaranty and agrees that Key Principal's
obligations shall not be affected by any circumstances, whether or not referred
to in this Guaranty, which might otherwise constitute a legal or equitable
discharge of a surety or a guarantor. Key Principal hereby waives the benefits
of any right of discharge under any and all statutes or other laws relating to
guarantors or sureties and any other rights of sureties and guarantors
thereunder. Without limiting the generality of the foregoing, Key Principal
hereby waives, to the fullest extent permitted by law, diligence in collecting
the Indebtedness, presentment, demand for payment, protest, all notices with
respect to the Note and this Guaranty which may be required by statute, rule of
law or otherwise to preserve Lender's rights against Key Principal under this
Guaranty, including notice of acceptance, notice of any amendment of the Loan
Documents, notice of the occurrence of any default or Event of Default, notice
of intent to accelerate, notice of acceleration, notice of dishonor, notice of
foreclosure, notice of protest, and notice of the incurring by Borrower of any
obligation or indebtedness. Key Principal also waives, to the fullest extent
permitted by law, all rights to require Lender to (a) proceed against Borrower
or any other guarantor of Borrower's payment or performance with respect to the
Indebtedness (an "Other Guarantor"), (b) if Borrower or any guarantor is a
partnership, proceed against any general partner of Borrower or the guarantor,
(c) proceed against or exhaust any collateral held by Lender to secure the
repayment of the Indebtedness, or (d) pursue any other remedy it may now or
hereafter have against Borrower, or, if Borrower is a partnership, any general
partner of Borrower.
At any time or from time to time and any number of times, without notice
to Key Principal and without affecting the liability of Key Principal, (a) the
time for payment of the principal of or interest on the Indebtedness may be
extended or the Indebtedness may be renewed in whole or in part; (b) the time
for Borrower's performance of or compliance with any covenant or agreement
contained in the Note, the Security Instrument or any other Loan Document,
whether presently existing or hereinafter entered into, may be extended or such
performance or compliance may be waived; (c) the maturity of the Indebtedness
may be accelerated as provided in the Note, the Security Instrument, or any
other Loan Document; (d) the Note, the Security Instrument, or any other Loan
Document may be modified or amended by Lender and Borrower in any respect,
including an increase in the principal amount; and (e) any security for the
Indebtedness may be modified, exchanged, surrendered or otherwise dealt with or
additional security may be pledged or mortgaged for the Indebtedness.
If more than one person executes this Guaranty, the obligations of those
persons under this Guaranty shall be joint and several. Lender, in its
discretion, may (a) bring suit against Key Principal, or any one or more of the
Persons constituting Key Principal, and any Other Guarantor, jointly and
severally, or against any one or more of them; (b) compromise or settle with any
one or more of the Persons constituting Key Principal, or any Other Guarantor,
for such consideration as Lender may deem proper; (c) release one or more of the
Persons constituting Key Principal, or any Other Guarantor, from liability; and
(d) otherwise deal with Key Principal and any Other Guarantor, or any one or
more of them, in any manner, and no such action shall impair the rights of
Lender to collect from Key Principal any amount guaranteed by Key Principal
under this Guaranty. Nothing contained in this paragraph shall in any way affect
or impair the rights or obligations of Key Principal with respect to any Other
Guarantor.
Any indebtedness of Borrower held by Key Principal now or in the future is
and shall be subordinated to the Indebtedness and any such indebtedness of
Borrower shall be collected, enforced and received by Key Principal, as trustee
for Lender, but without reducing or affecting in any manner the liability of Key
Principal under the other provisions of this Guaranty.
Key Principal shall have no right of, and hereby waives any claim for,
subrogation or reimbursement against Borrower or any general partner of Borrower
by reason of any payment by Key Principal under this Guaranty, whether such
right or claim arises at law or in equity or under any contract or statute,
until the Indebtedness has been paid in full and there has expired the maximum
possible period thereafter during which any payment made by Borrower to Lender
with respect to the Indebtedness could be deemed a preference under the United
States Bankruptcy Code.
If any payment by Borrower is held to constitute a preference under any
applicable bankruptcy, insolvency, or similar laws, or if for any other reason
Lender is required to refund any sums to Borrower, such refund shall not
constitute a release of any liability of Key Principal under this Guaranty. It
is the intention of Lender and Key Principal that Key Principal's obligations
under this Guaranty shall not be discharged except by Key Principal's
performance of such obligations and then only to the extent of such performance.
Key Principal shall from time to time, upon request by Lender, deliver to
Lender such financial statements as Lender may reasonably require.
Lender may assign its rights under this Guaranty in whole or in part and,
upon any such assignment, all the terms and provisions of this Guaranty shall
inure to the benefit of such assignee to the extent so assigned. The terms used
to designate any of the parties herein shall be deemed to include the heirs,
legal representatives, successors and assigns of such parties.
This Guaranty and the other Loan Documents represent the final agreement
between the parties and may not be contradicted by evidence of prior,
contemporaneous or subsequent oral agreements. There are no unwritten oral
agreements between the parties. All prior or contemporaneous agreements,
understandings, representations, and statements, oral or written, are merged
into this Guaranty and the other Loan Documents. Key Principal acknowledges that
it has received a copy of the Note and all other Loan Documents. Neither this
Guaranty nor any of its provisions may be waived, modified, amended, discharged,
or terminated except by an agreement in writing signed by the party against
which the enforcement of the waiver, modification, amendment, discharge, or
termination is sought, and then only to the extent set forth in that agreement.
Key Principal agrees that any controversy arising under or in relation to
this Guaranty shall be litigated exclusively in the jurisdiction where the Land
is located (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
this Guaranty, the Note, the Security Instrument or any other Loan Document. Key
Principal 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.
Key Principal (or each Key Principal, if more than one) agrees to notify
Lender (in the manner for giving notices provided in Section 31 of the Security
Instrument) of any change in Key Principal's address within 10 Business Days
after such change of address occurs.
KEY PRINCIPAL AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH
RESPECT TO ANY ISSUE ARISING OUT OF THIS GUARANTY OR THE RELATIONSHIP BETWEEN
THE PARTIES AS GUARANTOR 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.
IN WITNESS WHEREOF, Key Principal has signed and delivered this Guaranty
or has caused this Guaranty to be signed and delivered by its duly authorized
representative.
Key Principal:
AIMCO PROPERTIES, L.P., a Delaware limited
partnership
By: AIMCO-GP, Inc., a Delaware corporation,
its general partner
By:
Patti K. Fielding
Senior Vice President
EXHIBIT A
MODIFICATIONS TO EXCEPTIONS TO NON-RECOURSE GUARANTY
The following modifications are made to the Exceptions to Non-recourse
Guaranty which precedes this Exhibit:
1.____Recitals A-D, as set forth on page one, have been used in the place and
stead of recitals A-C in the standard form 4501.
2. Paragraph 11 is hereby deleted in its entirety and the following is
inserted in lieu thereof:
"(11) Guarantor shall from time to time, upon request by
Lender deliver to Lender such financial statements as Lender may
reasonably request subject to a confidentiality agreement in form
and content reasonably satisfactory to Guarantor and Lender. 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 11, 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.
3. Paragraph 2 is hereby modified by adding the following sentence:
"In addition Guarantor hereby agrees to pay the Standby Fee, the
Origination Fee and the Look-back Fee as defined in the Loan
Agreement as a primary obligation of Guarantor."
4. All capitalized terms used in this Exhibit not specifically defined
herein shall have the meanings set forth in the text of the
Exceptions to Non-Recourse Guaranty that precedes this Exhibit or in
the Loan Agreement.
___________________________
GUARANTOR'S INITIALS
EXHIBIT 10(iii)k
Rocky Creek Apartments
MULTIFAMILY NOTE
(VARIABLE LOAN)
US $2,340,000.00 As of September 16, 2002
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the
order of GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, the
principal sum of Two Million Three Hundred Forty Thousand Dollars and 00/100
Dollars (US $2,340,000.00), 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 that certain
Loan Agreement, dated as of September 16, 2002, by and among Borrower, certain
other borrowers signatory thereto and Lender (as amended, supplemented or
otherwise modified or amended and restated from time to time, the "Loan
Agreement"), to 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 a Loan Confirmation Instrument, 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
Instruments or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instruments under Section 12 of the Security Instruments. 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 Instruments (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, 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, except as provided in
subsection (e) below.
(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.
(e) Notwithstanding any contrary provisions of subsection (b), (c) and (d)
above, prior to the Fannie Mae Purchase Date, Borrower shall pay interest on its
Variable Rate Loan in arrears at a rate equal to (i) LIBOR Rate plus a number of
basis points equal to the Variable Loan Fee for the thirty (30) day period
commencing on the Initial Closing Date and (ii) after such thirty (30) day
period, the higher of (A) LIBOR Rate plus 150 basis points or (B) a rate based
on Lender's costs of funds, as determined by Lender, plus a number of basis
points equal to the Variable Loan Fee, for the period from and including the
thirty-first (31st) day after the Initial Closing Date until the Fannie Mae
Purchase Date. 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 hereof, Borrower shall pay interest
in advance from the date hereof through October 15, 2002. On November 15, 2002
and on the fifteenth (15th) day of each calendar month thereafter, Borrower
shall pay interest in arrears calculated for the actual number of days since the
fifteenth (15th) day of the previous calendar month.
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 Instruments") and reference is made to the Security Instruments
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 five 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 any Other Loan Document shall
constitute an "Event of Default" under this Note, and, accordingly, upon the
occurrence of an Event of Default under the Loan Agreement, 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. Priority of Loans. To the extent each MBS issued to fund or renew the Loan
evidenced by this Note shall be deemed to secure a separate Variable Loan, the
lien of each Security Document executed by Borrower from time to time to secure
this Note, shall secure each separate Variable Loan (and the lien of each
Security Instrument and other Security Document executed by Borrower to secure
its obligations under the Loan Documents) to the same extent and with the same
effect as if the Variable Loan had been made (and any guaranty obligation had
been incurred) on the date on which (i) with respect to each other Security
Instrument, the Security Instrument is recorded in the land records of the
jurisdiction in which the real property covered by the Security Instrument is
located, or (ii) with respect to each other Security Document, the date on which
the Security Document is executed and delivered to Lender.
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]
SHELTER PROPERTIES VI LIMITED
PARTNERSHIP, a South Carolina limited
partnership
By: Shelter Realty VI Corporation, a
South Carolina corporation, its
corporate general partner
By: ___________________________
Patti K. Fielding
Senior Vice President
Pay to the order of ________________________________________, without
recourse.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Robert D. Falese, III
Vice President
EXHIBIT 10(iii)(l)
Carriage House Apartments
MULTIFAMILY NOTE
(VARIABLE LOAN)
US $1,898,000.00 As of September 16, 2002
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the
order of GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, the
principal sum of One Million Eight Hundred Ninety Eight Dollars and 00/100
Dollars (US $1,898,000.00), 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 that certain
Loan Agreement, dated as of September 16, 2002, by and among Borrower, certain
other borrowers signatory thereto and Lender (as amended, supplemented or
otherwise modified or amended and restated from time to time, the "Loan
Agreement"), to 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 a Loan Confirmation Instrument, 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
Instruments or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instruments under Section 12 of the Security Instruments. 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 Instruments (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, 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, except as provided in
subsection (e) below.
(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.
(e) Notwithstanding any contrary provisions of subsection (b), (c) and (d)
above, prior to the Fannie Mae Purchase Date, Borrower shall pay interest on its
Variable Rate Loan in arrears at a rate equal to (i) LIBOR Rate plus a number of
basis points equal to the Variable Loan Fee for the thirty (30) day period
commencing on the Initial Closing Date and (ii) after such thirty (30) day
period, the higher of (A) LIBOR Rate plus 150 basis points or (B) a rate based
on Lender's costs of funds, as determined by Lender, plus a number of basis
points equal to the Variable Loan Fee, for the period from and including the
thirty-first (31st) day after the Initial Closing Date until the Fannie Mae
Purchase Date. 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 hereof, Borrower shall pay interest
in advance from the date hereof through October 15, 2002. On November 15, 2002
and on the fifteenth (15th) day of each calendar month thereafter, Borrower
shall pay interest in arrears calculated for the actual number of days since the
fifteenth (15th) day of the previous calendar month.
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 Instruments") and reference is made to the Security Instruments
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
15 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 five 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 any Other Loan Document shall
constitute an "Event of Default" under this Note, and, accordingly, upon the
occurrence of an Event of Default under the Loan Agreement, 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. Priority of Loans. To the extent each MBS issued to fund or renew the Loan
evidenced by this Note shall be deemed to secure a separate Variable Loan, the
lien of each Security Document executed by Borrower from time to time to secure
this Note, shall secure each separate Variable Loan (and the lien of each
Security Instrument and other Security Document executed by Borrower to secure
its obligations under the Loan Documents) to the same extent and with the same
effect as if the Variable Loan had been made (and any guaranty obligation had
been incurred) on the date on which (i) with respect to each other Security
Instrument, the Security Instrument is recorded in the land records of the
jurisdiction in which the real property covered by the Security Instrument is
located, or (ii) with respect to each other Security Document, the date on which
the Security Document is executed and delivered to Lender.
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.
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SHELTER PROPERTIES VI LIMITED
PARTNERSHIP, a South Carolina limited
partnership
By: Shelter Realty VI Corporation, a
South Carolina corporation, its
corporate general partner
By:
_________________________________
Patti K. Fielding
Senior Vice President
Pay to the order of ________________________________________, without
recourse.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Robert D. Falese, III
Vice President