UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 22, 2003
ANGELES PARTNERS IX
(Exact Name of Registrant as Specified in Its Charter)
California 0-9704 95-3417137
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification
Number)
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina
(Address of principal executive offices)
29602
(Zip Code)
Registrant's telephone number, including area code (864) 239-1000
N/A
(Former name or former address, if changed since last report)
Item 5. Other Events
On May 22, 2003, the Registrant refinanced the mortgages encumbering Forest
River Apartments. The refinancing replaced the existing mortgages in the current
aggregate principal balance of approximately $3,063,000 with a new mortgage in
the principal amount of approximately $4,810,000. The new mortgage has a
variable interest rate of the Fannie Mae discounted mortgage-backed security
index plus 85 basis points, which is currently 2.06% per annum compared to 7.83%
per annum on the prior mortgages. After repayment of the existing mortgages,
establishment of a completion/repair escrow and payment of closing costs the
Registrant received net proceeds of approximately $1,425,000. The Registrant
distributed approximately $1,485,000 in June of 2003 to its partners consisting
of refinance proceeds and cash from operations.
Item 7. Financial Statements and Exhibits
(c) Exhibits
10.18 a) Multifamily Note dated May 16, 2003 between Houston Pines,
a California Limited Partnership and GMAC Commercial Mortgage
Corporation.
10.18 b) Guaranty dated May 16, 2003 by AIMCO Properties, L.P. for
the benefit of GMAC Commercial Mortgage Corporation.
10.18 c) Completion/Repair and Security Agreement dated May 16, 2003
between Houston Pines, a California Limited Partnership and
GMAC Commercial Mortgage Corporation.
10.18 d) Replacement Reserve and Security Agreement dated May 16,
2003 between Houston Pines, a California Limited Partnership
and GMAC Commercial Mortgage Corporation.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ANGELES PARTNERS IX
By: Angeles Realty Corporation
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
Date: June 6, 2003
Exhibit 10.18(a)
Forest River Apartments
MULTIFAMILY NOTE
(VARIABLE LOAN)
US $4,810,000.00 As of May 16, 2003
FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay to the
order of GMAC COMMERCIAL MORTGAGE CORPORATION, a California corporation, the
principal sum of Four Million Eight Hundred Ten Thousand and 00/100 Dollars (US
$4,810,000.00), 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 one of either
(i) that certain Amended and Restated Loan Agreement, dated as of September 16,
2002, by and among certain borrowers signatory thereto and Lender or (ii) that
certain Loan Agreement dated as of November 1, 2002, by and among certain
borrowers signatory thereto and Lender. As used herein, the term "Loan
Agreement" shall mean whichever of the loan agreements described in the
preceding sentence shall apply from time to time in accordance with their
respective terms, along with all amendments, supplements, replacements,
restatements or other modifications thereto or thereof from time to time made.
The Loan Agreement shall evidence the obligation of Borrower to repay a Variable
Loan made by Lender to Borrower in accordance with the terms of the Loan
Agreement. This Note is entitled to the benefit and security of the Loan
Documents provided for in the Loan Agreement, to which reference is hereby made
for a statement of all of the terms and conditions under which the Variable Loan
evidenced hereby is made. The Loan Agreement requires certain of the terms of
each Variable Loan to be evidenced by one or a series of Loan Confirmation
Instruments, and reference is hereby made to each such Loan Confirmation
Instrument for such terms.
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. Event of Default and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Loan Agreement or, if not defined in the
Loan Agreement, as defined in the Security Instrument (as defined in Paragraph
5).
2. Address for Payment. All payments due under this Note shall be payable at
GMAC Commercial Mortgage Corporation, 200 Witmer Road, Horsham, PA 19044 ,
Attention: Servicing - Account Manager, or such other place as may be designated
by written notice to Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) This Note shall evidence a Variable Loan made from time to time under the
Loan Agreement. The Variable Loan shall bear interest at a rate determined in
accordance with Section 2.01 of the Loan Agreement.
(b) Borrower shall pay imputed interest on each Variable Loan in advance in the
form of a Discount in accordance with Section 1.04(b) of the Loan Agreement
(except that Borrower shall pay actual interest on the Variable Loan for the
partial month period, if any, in accordance with Section 1.04(a) of the Loan
Agreement).
(c) Borrower shall make monthly payments of principal each in the amount as set
forth on the attached Amortization Schedule. Lender shall apply each such
principal payment to the outstanding principal amount of the Loan on the
Rollover Date next following receipt of any such payment. If not sooner paid,
the entire principal amount of the Variable Loan shall be due and payable on the
earlier of (i) the termination of the Loan Agreement pursuant to subsection (e)
of Section 1.02 thereof, (ii) the fifth anniversary (unless such date is
extended pursuant to Section 1.07 of the Loan Agreement, in which case, the
tenth anniversary) of the Initial Closing Date or (iii) the maturity date of any
outstanding MBS, unless either (A) not less than five Business Days prior to the
maturity date of the outstanding MBS, a Borrower has requested that the
outstanding MBS be renewed with a new MBS or converted to a Fixed Loan to take
effect on the maturity date of the outstanding MBS and such new MBS has been
issued or conversion has occurred or (B) the MBS is automatically renewed, which
automatic renewal shall occur in the event that a Borrower does not make the
request set forth in subpart (iii)(A) above and does not give Lender notice not
less than five Business days prior to the maturity date of the outstanding MBS
that the Variable Loan related to such outstanding MBS shall be paid on the
maturity date of such outstanding MBS (the "Maturity Date"). Any MBS that is
issued as a result of an automatic renewal of a maturing MBS as contemplated by
subpart (iii)(B) above shall have a maturity date of three (3) months after the
MBS Issue Date.
(d) In addition to payment of principal and the Discount, Borrower shall pay the
Variable Loan Fee due on each Variable Loan in accordance with Section
1.04(b)(ii) of the Loan Agreement.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness that is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument") and reference is made to the Security Instrument for
other rights of Lender concerning the collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any additional notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
10 days after the amount is due, Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to 5 percent of such amount.
Borrower acknowledges that its failure to make timely payments will cause Lender
to incur additional expenses in servicing and processing the loan evidenced by
this Note (the "Loan"), and that it is extremely difficult and impractical to
determine those additional expenses. Borrower agrees that the late charge
payable pursuant to this Paragraph represents a fair and reasonable estimate,
taking into account all circumstances existing on the date of this Note, of the
additional expenses Lender will incur by reason of such late payment. The late
charge is payable in addition to, and not in lieu of, any interest payable at
the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as any monthly installment or any other payment due
under this Note remains past due for 30 days or more, interest under this Note
shall accrue on the unpaid principal balance from the earlier of the due date of
the first unpaid monthly installment or other payment due, as applicable, at a
rate (the "Default Rate") equal to the lesser of 4 percentage points above the
rate stated in the first paragraph of this Note or the maximum interest rate
which may be collected from Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the Loan, that, during the time that any monthly
installment or payment under this Note is delinquent for more than 30 days,
Lender will incur additional costs and expenses arising from its loss of the use
of the money due and from the adverse impact on Lender's ability to meet its
other obligations and to take advantage of other investment opportunities, and
that it is extremely difficult and impractical to determine those additional
costs and expenses. Borrower also acknowledges that, during the time that any
monthly installment or payment due under this Note is delinquent for more than
30 days, Lender's risk of nonpayment of this Note will be materially increased
and Lender is entitled to be compensated for such increased risk. Borrower
agrees that the increase in the rate of interest payable under this Note to the
Default Rate represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional costs and
expenses Lender will incur by reason of Borrower's delinquent payment and the
additional compensation Lender is entitled to receive for the increased risks of
nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to any loss or damage suffered by Lender as a result
of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default, all Rents to which Lender is entitled under Section 3(a) of the
Security Instrument and the amount of all security deposits collected by
Borrower from tenants then in residence; (2) failure of Borrower to apply all
insurance proceeds and condemnation proceeds as required by the Security
Instrument; (3) failure of Borrower to comply with Section 14(d) or (e) of the
Security Instrument relating to the delivery of books and records, statements,
schedules and reports; (4) fraud or written material misrepresentation by
Borrower or any officer, director, partner, member or employee of Borrower in
connection with the application for or creation of the Indebtedness or any
request for any action or consent by Lender; or (5) failure to apply Rents,
first, to the payment of reasonable operating expenses (other than Property
management fees that are not currently payable pursuant to the terms of an
Assignment of Management Agreement or any other agreement with Lender executed
in connection with the Loan) and then to amounts ("Debt Service Amounts")
payable under this Note, the Security Instrument or any other Loan Document
(except that Borrower will not be personally liable (i) to the extent that
Borrower lacks the legal right to direct the disbursement of such sums because
of a bankruptcy, receivership or similar judicial proceeding, or (ii) with
respect to Rents that are distributed in any calendar year if Borrower has paid
all operating expenses and Debt Service Amounts for that calendar year).
(c) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; or (2) a Transfer that
is an Event of Default under Section 21 of the Security Instrument.
(d) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default, or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments. Pursuant to the terms of the Loan
Agreement, Borrower shall pay the entire amount of the Discount on any Variable
Loan in advance. Accordingly, any Variable Loan may be prepaid in whole or in
part and at any time without penalty. Borrower shall give Lender six (6)
Business Days advance notice of any prepayment.
11. Costs and Expenses. Borrower shall pay on demand all reasonable expenses and
costs, including reasonable fees and out-of-pocket expenses of attorneys and
expert witnesses and costs of investigation, incurred by Lender as a result of
any default under this Note or in connection with efforts to collect any amount
due under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Except as expressly provided in the Loan Agreement, presentment,
demand, notice of dishonor, protest, notice of acceleration, notice of intent to
demand or accelerate payment or maturity, presentment for payment, notice of
nonpayment, grace, and diligence in collecting the Indebtedness are waived by
Borrower and all endorsers and guarantors of this Note and all other third party
obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. Borrower agrees to an effective rate of
interest that is the stated rate of interest plus any additional rate of
interest resulting from any other charges or fees that are to be paid by
Borrower to Lender that may be found by a court of competent jurisdiction to be
interest. The amounts, if any, previously paid to Lender in excess of the
permitted amounts shall be applied by Lender to reduce the unpaid principal
balance of this Note. For the purpose of determining whether any applicable law
limiting the amount of interest or other charges permitted to be collected from
Borrower has been violated, all Indebtedness that constitutes interest, as well
as all other charges made in connection with the Indebtedness that constitute
interest, shall be deemed to be allocated and spread ratably over the stated
term of the Note. Unless otherwise required by applicable law, such allocation
and spreading shall be effected in such a manner that the rate of interest so
computed is uniform throughout the stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law; Consent to Jurisdiction; WAIVER OF JURY TRIAL. The provisions
of Section 11.07 of the Loan Agreement (entitled "Choice of Law; Consent to
Jurisdiction; Waiver of Jury Trial") are hereby incorporated into this Note by
this reference to the fullest extent as if the text of such Section were set
forth in its entirety herein.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 11.09 of the Loan Agreement.
20. Security for this Note. Reference is made hereby to the Loan Agreement and
the Security Documents for additional rights and remedies of Lender relating to
the indebtedness evidenced by this Note. Each Security Document shall be
released in accordance with the provisions of the Security Documents.
21. Loan May Not Be Reborrowed. Borrower may not re-borrow any amounts under
this Note which it has previously borrowed and repaid under this Note.
22. Default Under Loan Agreement and Other Loan Documents. The occurrence of an
Event of Default under the Loan Agreement or the Security Instrument shall
constitute an "Event of Default" under this Note in accordance with the Loan
Agreement and the Security Instrument. Upon the occurrence of an Event of
Default under the Loan Agreement or the Security Instrument, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof.
23. Loan Confirmation Instruments; Accounting for Variable Loans. The terms of
the Loan Agreement and this Note govern the repayment, and all other terms
relating to the Variable Loan. However, Borrower shall execute a Loan
Confirmation Instrument to create a physical instrument evidencing each MBS
issued to fund the Variable Loan. The Loan Confirmation Instrument executed by
Borrower in accordance with Section 2.02 of the Loan Agreement shall set forth
the amount, term, Discount, Closing Date and certain other terms of each MBS
issued to fund the Variable Loan. The Loan Confirmation Instrument shall
conclusively establish each of the terms described in the preceding sentence,
absent manifest error. The MBS evidenced by the Loan Confirmation Instrument
does not represent a separate indebtedness from that evidenced by this Note. In
making proof of this Note, no other documents other than this Note shall be
required. In making proof of the amount and terms of the outstanding Variable
Loans under this Note, this Note, the related Loan Confirmation Instruments, and
Lender's records concerning payments made by Borrower under this Note, shall be
conclusive evidence of the terms and outstanding amounts of the Variable Loan,
absent manifest error.
24. Modifications to Note. There are standard modifications to this Note that
are attached as Exhibit B-1 and Exhibit B-2 hereto. In addition, there may be
special modifications to this Note attached as Exhibit B-3 hereto. All such
exhibits are hereby incorporated into this Note as a part hereof.
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
HOUSTON PINES, A CALIFORNIA LIMITED
PARTNERSHIP, a California limited
partnership
By: Angeles Realty Corporation, a
California corporation, its general
partner
By: /s/ Patti K. Fielding
Patti K. Fielding
Executive Vice President
Pay to the order of Fannie Mae, without recourse.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By: /s/ Max W. Foore
Max W. Foore
Vice President
EXHIBIT B-1
GMACCM LOAN AGREEMENT MODIFICATIONS
During any time that the terms, covenants and provisions of that certain Loan
Agreement dated as of November 1, 2002 and more particularly described in the
second paragraph on page 1 of the Note apply to the Variable Loan evidenced by
the Note, paragraphs 3 and 23 of the Note are amended and replaced with the
following substitute paragraphs 3 and 23:
"3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) This Note shall evidence a Variable Loan made from time to time under the
Loan Agreement. Borrower shall not be required to make monthly principal
payments prior to the Fannie Mae Addition Date, but shall make monthly payments
of principal after the Fannie Mae Reassignment Date, if it occurs, as set forth
in Section 1.04(d) of the Loan Agreement.
(b) Borrower shall pay actual interest on the Variable Loan during the period
described in accordance with Section 1.04(a) of the Loan Agreement. Borrower
shall pay interest on its Variable Rate Loan in arrears at a rate equal to LIBOR
Rate plus a number of basis points determined in accordance with Section 2.01 of
the Loan Agreement. For purposes of the previous sentence, the LIBOR Rate shall
be reset every ninety (90) days commencing on the date that is ninety (90) days
after the Initial Closing Date. On the date the Variable Loan is funded,
Borrower shall pay interest in advance from the date of funding through May 31,
2003. On July 1, 2003 and on the first (1st) day of each calendar month
thereafter, Borrower shall pay interest in arrears calculated for the actual
number of days since the first (1st) day of the previous calendar month.
(c) If not sooner paid, the entire principal amount of the Variable Loan shall
be due and payable in accordance with Section 1.02 of the Loan Agreement.
(d) Borrower shall not pay any Discount.
23. Loan Confirmation Instruments; Accounting for Variable Loans. The
terms of the Loan Agreement and this Note govern the repayment, and all other
terms relating to the Variable Loan. However, Borrower shall execute one or a
series of Loan Confirmation Instruments to create a physical instrument
evidencing the terms of the Variable Loan. The Loan Confirmation Instrument or
series of Loan Confirmation Instruments executed by Borrower in accordance with
Section 2.02 of the Loan Agreement shall set forth the amount, term, the
interest rate spread over the LIBOR Rate Closing Date and certain other terms
related to the funding the Variable Loan. The Loan Confirmation Instrument shall
conclusively establish each of the terms described in the preceding sentence,
absent manifest error. The variable terms evidenced by the Loan Confirmation
Instrument do not represent a separate indebtedness from that evidenced by this
Note. In making proof of this Note, no other documents other than this Note
shall be required. In making proof of the amount and terms of the outstanding
Variable Loans under this Note, this Note, the related Loan Confirmation
Instruments, and Lender's records concerning payments made by Borrower under
this Note, shall be conclusive evidence of the terms and outstanding amounts of
the Variable Loan, absent manifest error."
During any time that the terms, covenants and provisions of that certain Amended
and Restated Loan Agreement dated as of September 16, 2002 and more particularly
described in the second paragraph on page 1 of the Note apply to the Variable
Loan evidenced by the Note, this Exhibit B-1 shall not apply and paragraphs 3
and 23 of the Note shall not be amended or replaced with the provisions set
forth in this Exhibit B-1.
EXHIBIT B-2
AIMCO MODIFICATIONS
The following modifications are made to the text of the Note that precedes this
Exhibit:
1. Section 9(b)(4) is modified by deleting "or" at the end thereof.
2. Section 9(b)(5) is modified to read as follows:
"(5) failure to apply Rents, first, to the payment of reasonable operating
expenses (other than Property management fees that are not currently
payable pursuant to the terms of an Assignment of Management Agreement or
any other agreement with Lender executed in connection with the Loan) and
then to amounts ("Debt Service Amounts") payable under this Note, the
Security Instrument or any other Loan Document (except that Borrower will
not be personally liable (i) to the extent that Borrower lacks the legal
right to direct the disbursement of such sums because of a bankruptcy,
receivership or similar judicial proceeding, or (ii) with respect to Rents
that are distributed in any calendar quarter if Borrower has paid all
operating expenses and Debt Service Amounts for such calendar quarter to
date); or"
3. A new Section 9(b)(6) is added following Section 9(b)(5), stating as
follows:
"(6) failure to pay when due any water and sewer charges, fire, hazard or
other insurance premiums and ground rents owing from time to time in
connection with the Mortgaged Property."
EXHIBIT B-3
SPECIAL MODIFICATIONS
NONE
Exhibit 10.18(b)
Forest River Apartments
GUARANTY
This Guaranty (the "Guaranty") is made and entered into as of the 16th day
of May, 2003 by AIMCO PROPERTIES, L.P., a Delaware limited partnership (the
"Guarantor"), for the benefit of GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation ("Lender").
RECITALS
A. Lender has agreed to execute both (i) that certain Amended and Restated Loan
Agreement, dated as of September 16, 2002, by and among AIMCO Properties, L.P.,
a Delaware limited partnership, certain borrowers signatory thereto and Lender
and (ii) that certain Loan Agreement dated as of November 1, 2002, by and among
certain borrowers signatory thereto and Lender (as amended, supplemental or
otherwise modified or amended and restated from time to time, the "Loan
Agreement"), pursuant to which, inter alia, Lender has agreed, subject to the
terms, conditions and limitations of the Loan Agreement, to make a loan to
HOUSTON PINES, A CALIFORNIA LIMITED PARTNERSHIP, a California limited
partnership (the "Borrower") from time to time loan to be evidenced by the Note
(the "Loan"). Terms used herein not defined herein have the definition given
them in the Loan Agreement.
B. The repayment of the Loan and all of the Obligations of the Borrower under
the Loan Agreement or the other Loan Documents are guaranteed by this Guaranty
to the extent of Borrower's personal liability as provided in Section 9 of the
Note evidencing the Loan, and except for such obligations described herein,
Guarantor shall have no liability in connection with, or responsibility to
perform, under or in accordance with the Loan Agreement or other Loan Documents.
C. Guarantor owns, directly or indirectly, an ownership interest in the Borrower
and will receive a direct and material benefit from the Loans to the Borrower.
D. Lender is willing to make the Loan to the Borrower only if Guarantor agrees
to enter into this Guaranty.
NOW, THEREFORE, in order to induce Lender to make the Loan to Borrower,
and in consideration thereof, Guarantor hereby agrees as follows:
Section 1. Definitions. All capitalized terms used but not defined in this
Guaranty shall have the meanings ascribed to such terms in the Loan Agreement.
The following terms shall have the meaning set forth below for purposes of this
Guaranty:
"Material Adverse Effect" means, with respect to any circumstance, act,
condition or event of whatever nature (including any adverse determination in
any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, or circumstance or circumstances, whether or not
related, a material adverse change in or a materially adverse effect upon the
present or future ability of the Guarantor, to the extent specifically referred
to in the applicable provision of that Guaranty, to perform the Guaranteed
Obligations.
"Net Worth" means, as of any date of determination and without double
counting any item, the sum of the capital stock or other capital equity
interests and additional paid-in capital plus retained earnings (or minus
accumulated deficits) of the Guarantor, the REIT and their respective
Subsidiaries on a consolidated basis determined in conformity with GAAP.
"REIT" means Apartment Investment and Management Company, a Maryland
corporation.
"Subsidiary" means, with respect to the REIT, the Guarantor or an
Affiliate of either of them, a corporation, partnership, joint venture, limited
liability company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled, directly
or indirectly, through one or more intermediaries, or both, by the REIT, the
Guarantor or an Affiliate of either of them.
Section 2. Guaranty of Payment. Guarantor irrevocably, absolutely and
unconditionally guarantees to Lender all of the following (collectively, the
"Guaranteed Obligations"): the due and punctual payment when due, whether at
maturity or earlier, by reason of acceleration or otherwise, at all times, of
all amounts for which Borrower is personally liable under Section 9 of the Note.
This Guaranty shall be an unconditional guaranty of payment and performance and
not of collection, and is in no way conditioned upon any attempt by Lender to
pursue or exhaust any remedy against Borrower. This Guaranty is a continuing
guaranty which shall remain in full force and effect until all of the Guaranteed
Obligations have been paid and performed in full; and Guarantor shall not be
released from any obligations to Lender under this Guaranty as long as any
amount payable by the Borrower to Lender, or any obligation by the Borrower,
under the Loan Documents is not performed, satisfied, settled or paid in full.
Section 3. Form of Payment. All payments under this Guaranty shall be made
to Lender in immediately available funds, without reduction by any recoupment,
set-off, counterclaim or cross-claim against Lender.
Section 4. Guarantor's Obligations are Absolute. The obligations of
Guarantor under this Guaranty shall be absolute and unconditional, shall not be
subject to any counterclaim, set-off, recoupment, deduction, or defense based
upon any claim Guarantor may have against Lender or Borrower and shall remain in
full force and effect without regard to, and shall not be released, discharged
or terminated or in any other way affected by, any circumstance or condition
(whether or not Guarantor shall have any knowledge or notice thereof),
including, without limitation:
(a) any amendment or modification of, or extension of time for payment of any of
the principal of, interest on or other amounts payable under the Loan Documents;
(b) any exercise or non-exercise by Lender of any right, power or remedy under
or in respect of the Loan Documents, or any waiver, consent, forbearance,
indulgence or other action, inaction or omission by Lender under or in respect
of the Loan Documents;
(c) any assignment, sale or other transfer of Borrower's interest in all or any
part of the real or personal property which at any time constitutes collateral
for the payment of the Guaranteed Obligations, including, without limitation, a
conveyance of such property by Borrower to Lender by deed in lieu of
foreclosure;
(d) any bankruptcy, insolvency, reorganization, adjustment, dissolution,
liquidation or other like proceeding involving or affecting Borrower or Lender
or their respective properties or creditors, or any action taken with respect to
the Loan Documents by any trustee or receiver of Borrower or Lender, or by any
court, in any such proceeding;
(e) any invalidity or unenforceability, in whole or in part, of any term or
provision of the Loan Documents or Borrower's incapacity or lack of authority to
enter into the Loan Documents;
(f) any release, compromise, settlement or discharge with respect to all or any
portion of Borrower's obligations under the Loan Documents;
(g) any acceptance of additional or substituted collateral for payment of the
Guaranteed Obligations or any release or subordination of any collateral held at
any time by Lender as security for the payment of the Guaranteed Obligations; or
(h) any resort to Guarantor for payment of all or any portion of the Guaranteed
Obligations, whether or not Lender shall have resorted to any collateral
securing the Guaranteed Obligations, if any, or shall have proceeded to pursue
or exhaust its remedies against Borrower (or any other Person) primarily or
secondarily liable for the Guaranteed Obligations.
No exercise, delay in exercise or non-exercise by Lender of any right hereby
given it, no dealing by Lender with Borrower, Guarantor or any other Person, no
change, impairment or suspension of any right or remedy of Lender, and no act or
thing which, but for this provision, could act as a release or exoneration of
the liabilities of Guarantor hereunder, shall in any way affect, decrease,
diminish or impair any of the obligations of Guarantor hereunder or give
Guarantor or any other Person any recourse or defense against Lender.
Section 5. Waiver. Guarantor unconditionally waives the following:
(a) notice of acceptance of this Guaranty and notice of any of the matters
referred to in Section 4 hereof;
(b) all notices which may be required by statute, rule of law or otherwise to
preserve intact any rights which Lender may have against Guarantor under this
Guaranty, including, without limitation, any demand, proof or notice of
non-payment of any of the principal of, interest on or other amounts payable
under the Loan Documents, and notice of any failure on the part of Borrower to
perform and comply with any covenant, agreement, term or condition of the Loan
Documents;
(c) any right to the enforcement, assertion or exercise of any right, power or
remedy conferred upon Lender in the Loan Documents or otherwise;
(d) any requirement that Lender act with diligence in enforcing its rights under
the Loan Documents or this Guaranty;
(e) any right to require Lender to proceed against or exhaust its recourse
against Borrower or any security or collateral held by Lender, if any, at any
time for the payment of the Guaranteed Obligations or to pursue any other remedy
in its power before being entitled to payment from Guarantor under this Guaranty
or before proceeding against Guarantor;
(f) any failure by Lender to file or enforce a claim against the estate (either
in administration, bankruptcy or any other proceeding) of Borrower or any other
Person;
(g) any defense based upon an election of remedies by Lender which destroys or
otherwise impairs the subrogation rights of Guarantor or the right of Guarantor
(after payment of the Guaranteed Obligations) to proceed against Borrower for
reimbursement, or both;
(h) any defense based upon any taking, modification or release of any collateral
for the Guaranteed Obligations, if any, or any failure to perfect any security
interest in, or the taking of, or failure to take any other action with respect
to, any collateral securing payment of the Guaranteed Obligations, if any;
(i) any defense based upon the addition, substitution or release, in whole or in
part, of any Person(s), including, without limitation, another guarantor,
primarily or secondarily liable for or in respect of the Guaranteed Obligations;
(j) any rights or defenses based upon an offset by Guarantor against any
obligation now or hereafter owed to Guarantor by Borrower; and
(k) all other notices which may or might be lawfully waived by Guarantor;
it being the intention hereof that Guarantor shall remain liable as principal,
to the extent set forth in this Guaranty, until the payment and performance in
full of the Guaranteed Obligations, notwithstanding any act, omission or thing
which might otherwise operate as a legal or equitable discharge of Guarantor
other than the payment and performance in full of the Guaranteed Obligations. No
delay by Lender in exercising any rights and/or powers hereunder or in taking
any action to enforce Borrower's obligations under the Loan Documents shall
operate as a waiver as to such rights or powers or in any manner prejudice any
and all of Lender's rights and powers hereunder against Guarantor. The intention
of Guarantor under this Guaranty is that, so long as any of the Guaranteed
Obligations remains unsatisfied, the obligations of Guarantor hereunder shall
not be discharged except by performance and then only to the extent of such
performance. Guarantor agrees that Guarantor's obligations hereunder shall not
be affected by any circumstances, whether or not referred to in this Guaranty,
which might constitute a legal or equitable discharge of a surety or guarantor.
Section 6. Election of Remedies. This Guaranty may be enforced from time
to time, as often as occasion therefor may arise, and without any requirement
that Lender must first pursue or exhaust any remedies available to it against
Borrower under the Loan Documents or against any other Person or resort to any
collateral at any time held by it for performance of the Guaranteed Obligations,
if any, or any other source or means of obtaining payment of any of the
Guaranteed Obligations.
Section 7. Representations and Warranties of Guarantor. Guarantor hereby
represents and warrants to the Lender as follows:
(a) Due Organization; Qualification. Guarantor is qualified to transact business
and is in good standing in the State in which it is organized and in each other
jurisdiction in which such qualification and/or standing is necessary to the
conduct of its business and where the failure to be so qualified would adversely
affect the validity of, the enforceability of, or the ability of Guarantor to
perform the Guaranteed Obligations.
(b) Power and Authority. Guarantor has the requisite power and authority (i) to
own its properties and to carry on its business as now conducted and as
contemplated to be conducted in connection with the performance of the
Guaranteed Obligations, and (ii) to execute and deliver this Guaranty and to
carry out the transactions contemplated by this Guaranty.
(c) Due Authorization. The execution, delivery and performance of this Guaranty
has been duly authorized by all necessary action and proceedings by or on behalf
of Guarantor, and no further approvals or filings of any kind, including any
approval of or filing with any Governmental Authority, are required by or on
behalf of Guarantor as a condition to the valid execution, delivery and
performance by Guarantor of this Guaranty.
(d) Valid and Binding Obligations. This Guaranty has been duly authorized,
executed and delivered by Guarantor and constitutes the legal, valid and binding
obligations of Guarantor, enforceable against Guarantor in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles
affecting the enforcement of creditors' rights generally or by equitable
principles or by the exercise of discretion by any court.
(e) Non-contravention: No Liens. Neither the execution and delivery of this
Guaranty, nor the fulfillment of or compliance with the terms and conditions of
this Guaranty nor the payment or performance of the Guaranteed Obligations:
(i) does or will conflict with or result in any breach or violation of any
Applicable Law enacted or issued by any Governmental Authority or other
agency having jurisdiction over Guarantor, any of the Mortgaged Properties
or any other portion of the Collateral or assets of Guarantor, or any
judgment or order applicable to Guarantor or to which Guarantor is
subject;
(ii) does or will conflict with or result in any material breach or
violation of, or constitute a default under, any of the terms, conditions
or provisions of Guarantor's Organizational Documents, any indenture,
existing agreement or other instrument to which Guarantor is a party or to
which Guarantor, any of the Mortgaged Properties or any other portion of
the Collateral or other assets of Guarantor is subject; or
(iii) does or will require the consent or approval of any creditor of
Guarantor, any Governmental Authority or any other Person except such
consents or approvals which have already been obtained.
(f) Pending Litigation or Other Proceedings. Since the date of the most recent
financial statements delivered to Lender pursuant to Section 8(b) of this
Guaranty, there is no pending or, to the best knowledge of guarantor, threatened
action, suit, proceeding or investigation, at law or in equity, before any
court, board, body or official of any Governmental Authority or arbitrator
which, if decided adversely to Guarantor, would have, or may reasonably be
expected to have, a Material Adverse Effect on Guarantor. Guarantor is not in
default with respect to any order of any Governmental Authority to any extent
which would have, or may reasonably be expected to have, a Material Adverse
Effect on Guarantor.
(g) Solvency. Guarantor is not insolvent and will not be rendered insolvent by
the transaction contemplated by this Guaranty and after giving effect to such
transaction, Guarantor will not be left with an unreasonably small amount of
capital with which to engage in its business or undertakings, nor will Guarantor
have incurred, have intended to incur, or believe that it has incurred, debts
beyond its ability to pay such debts as they mature. Guarantor did not receive
less than a reasonably equivalent value in exchange for incurrence of the
Guaranteed Obligations. There (i) is no contemplated, pending or, to the best of
Guarantor's knowledge, threatened bankruptcy, reorganization, receivership,
insolvency or like proceeding, whether voluntary or involuntary, affecting
Guarantor and (ii) has been no assertion or exercise of jurisdiction over
Guarantor by any court empowered to exercise bankruptcy powers.
(h) No Contractual Defaults. There are no material defaults by Guarantor or, to
the knowledge of Guarantor, by any other Person under any contract to which
Guarantor is a party other than defaults which do not have, and are not
reasonably be expected to have, a Material Adverse Effect on Guarantor. Neither
Guarantor nor, to the knowledge of Guarantor, any other Person, has received
notice or has any knowledge of any existing circumstances in respect of which it
could receive any notice of default or breach in respect of any contracts, which
default would have, or which may reasonably be expected to have, a Material
Adverse Effect on Guarantor.
(i) Representations True and Correct. The representations and warranties made by
Guarantor in this Guaranty are true, complete and correct in all material
respects as of the Initial Closing Date and do not contain any untrue statement
of material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading.
(j) ERISA. Guarantor is in compliance in all material respects with all
applicable provisions of ERISA and has not incurred any liability to the PBGC on
a Plan under Title LV of ERISA. None of the assets of Guarantor constitute plan
assets (within the meaning of Department of Labor Regulation ss. 2510.3-101) of
any employee benefit plan subject to Title I of ERISA.
(k) Financial Information. The financial statements of Guarantor which have been
furnished to the Lender are complete and accurate in all material respects and
present fairly the financial condition of Guarantor, as of its date in
accordance with GAAP, applied on a consistent basis. Since the date of the most
recent of such financial statements no event has occurred which would have, or
may reasonably be expected to have a Material Adverse Effect on Guarantor,
except as disclosed in any filings made by Guarantor or its affiliates with the
United States Securities and Exchange Commission ("SEC"). Guarantor has no
material contingent obligations which are not otherwise disclosed in its most
recent financial statements except as disclosed in any filings made by Guarantor
or its affiliates with the SEC.
(l) Accuracy of Information. No information, statement or report furnished in
writing to the Lender by Guarantor concerning the Guarantor in connection with
this Guaranty or any other Loan Document or in connection with the consummation
of the transactions contemplated hereby and thereby contains any material
misstatement of fact or omits to state a material fact necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading as of the date made, except to the extent that such
misstatements and omissions when considered in the totality of such information,
statements and reports furnished by Guarantor are not materially misleading in
the aggregate; provided, however, the foregoing representation and warranty
shall not apply to any information, statement or report prepared by any third
party.
(m) No Conflicts of Interest. To the best knowledge of Guarantor, no member,
officer, agent or employee of the Lender has been or is in any manner
interested, directly or indirectly, in that Person's own name, or in the name of
any other Person, in the Guarantor (other than through the ownership of publicly
traded shares of common stock of affiliates of the Guarantor or limited
partnership units of Guarantor), the Loan Documents, or any Mortgaged Property,
in any contract for property or materials to be furnished or used in connection
with such Mortgaged Property or in any aspect of the transactions contemplated
by the Loan Documents.
(n) Governmental Approvals. To the best of Guarantor's knowledge, no
Governmental Approval not already obtained or made is required for the execution
and delivery of this Guaranty or the performance of the terms and provisions
hereof by Guarantor.
(o) Governmental Orders. Guarantor is not presently under any cease or desist
order or other orders of a similar nature, temporary or permanent, of any
Governmental Authority which would have the effect of preventing or hindering
performance of its duties hereunder, nor are there any proceedings presently in
progress or to its knowledge contemplated which would, if successful, lead to
the issuance of any such order.
(p) No Reliance. Guarantor acknowledges, represents and warrants that it
understands the nature and structure of the transactions contemplated by this
Guaranty and the other Loan Documents; that it is familiar with the provisions
of all of the documents and instruments relating to such transactions; that it
understands the risks inherent in such transactions, including the risk of loss
of all or any of the Mortgaged Properties; and that it has not relied on the
Lender or Fannie Mae for any guidance or expertise in analyzing the financial or
other consequences of the transactions contemplated by this Guaranty or any
other Loan Document or otherwise relied on the Lender or Fannie Mae in any
manner in connection with interpreting, entering into or otherwise in connection
with this Guaranty, any other Loan Document or any of the matters contemplated
hereby or thereby.
(q) Compliance with Applicable Law. Guarantor is in compliance with Applicable
Law, including all Governmental Approvals, if any, except for such items of
noncompliance that, singly or in the aggregate, have not had and are not
reasonably expected to cause, a Material Adverse Effect on Guarantor.
(r) Contracts with Affiliates. Except for the management agreement relating to
each of the Mortgaged Properties or in the ordinary course of business and on
terms which are no less favorable to the Guarantor than would be obtained in a
corporate arms-length transaction with an unrelated third party, Guarantor has
not entered into and is not a party to any material contract, lease or other
agreement with any Affiliate of Guarantor for the provision of any service,
materials or supplies relating to any Mortgaged Property.
Section 8. Affirmative Covenants of Guarantor. Guarantor agrees and
covenants with the Lender that, at all times during the Term of this Guaranty:
(a) Maintenance of Existence. Guarantor shall maintain its existence and
continue to be a limited partnership organized under the laws of the state of
its organization. Guarantor shall continue to be duly qualified to do business
in each jurisdiction in which such qualification is necessary to the conduct of
its business and where the failure to be so qualified would adversely affect the
validity of, the enforceability of, or the ability to perform, its obligations
under this Guaranty.
(b) Financial Statements; Accountants' Reports: Other Information. The Guarantor
shall keep and maintain at all times complete and accurate books of accounts and
records in sufficient detail to correctly reflect all of the Guarantor's
financial transactions and assets. In addition, the Guarantor shall furnish, or
cause to be furnished, to the Lender the following:
(i) So long as Guarantor is a reporting company under the Securities
and Exchange Act of 1934 (the "`34 Act"), promptly upon their becoming
available, copies of (A) all 10K's, 10Q's, 8K's, annual reports and proxy
statements, and all replacement, substitute or similar filings or reports
required to be filed after the date of this Guaranty by the SEC or other
Governmental Authority exercising similar functions, and (B) all press
releases and other statements made available generally by Guarantor to the
public concerning material developments in the business of Guarantor.
(ii) In the event Guarantor is not a reporting company under the
'34 Act,
(A) Annual Financial Statements. As soon as available, and in
any event within 90 days after the close of its fiscal year during
the Term of this Agreement, the audited balance sheet of Guarantor
as of the end of such fiscal year, the audited statement of income,
equity and retained earnings of Guarantor for such fiscal year and
the audited statement of cash flows of Guarantor for such fiscal
year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the
prior fiscal year, prepared in accordance with GAAP, consistently
applied, and accompanied by a certificate of Guarantor's
independent certified public accountants to the effect that such
financial statements have been prepared in accordance with GAAP,
consistently applied, and that such financial statements fairly
present the results of its operations and financial condition for
the periods and dates indicated with such certification to be free
of exceptions and qualifications as to the scope of the audit or as
to the going concern nature of the business.
(B) Quarterly Financial Statements. As soon as available, and
in any event within 45 days after each of the first three fiscal
quarters of each fiscal year during the Term of this Agreement, the
unaudited balance sheet of Guarantor as of the end of such fiscal
quarter, the unaudited statement of income and retained earnings of
Guarantor and the unaudited statement of cash flows of Guarantor
for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the
previous fiscal year, accompanied by a certificate of a member of
Senior Management (which certificate shall be without personal
liability to such officer) stating that such financial statements
have been prepared in accordance with GAAP, consistently applied,
and fairly present the results of its operations and financial
condition for the periods and dates indicated subject to year end
adjustments in accordance with GAAP.
(iii) [Left blank intentionally]
(iv) Other Reports. Promptly upon receipt thereof, all schedules,
financial statements or other similar reports delivered by the Guarantor
pursuant to the Loan Documents or reasonably requested by the Lender with
respect to the Guarantor's business affairs or condition (financial or
otherwise) subject to the confidentiality covenant set forth below.
After the providing by Guarantor of any statement, report or other
information on a collective basis to Standard & Poor's, Moody's Investors
Service, Duff & Phelps, Fitch and/or any other rating agency, and/or
after providing any statement, report or other information on a
collective basis to the banks or other institutions providing unsecured
lines of credit and loans to Guarantor, Guarantor shall promptly furnish
such statement, report or other information to Lender.
As used in this Paragraph (iv), the phrase "on a collective basis"
means as provided to a group as a whole as opposed to an individual
basis, e.g.., providing information to a rating agency or to a bank to
respond to a particular request of such rating agency or bank.
The Lender agrees to treat all Information received by it (I) under
this Paragraph (iv) as confidential and (II) which Guarantor requests in
writing to the Persons at the Lender who receive any Information
regarding Guarantor that such information be treated as confidential;
provided, however, that such Information may be disclosed (A) as required
by law, (B) to officers, directors, employees, agents, partners,
attorneys, auditors, accountants, engineers and other consultants of the
Lender, or its successors or assigns, who need to know such Information,
provided such Persons are instructed to treat such Information
confidentially, (C) by the Lender to any successor or assign of such
Person, (D) to any federal or state regulatory authority having
jurisdiction over the Lender, or its successors or assigns, (E) to any
other Person to which such delivery or disclosure may be necessary or
appropriate (w) in compliance with any law, rule, regulation or order
applicable to the Lender, or its successors or assigns, (x) in response
to any subpoena or other legal process or information investigative
demand, or (y) in connection with any litigation to which the Lender, or
its successors or assigns, is a party. Guarantor agrees that Information
subject to this Paragraph (iv) does not include information which (I) was
publicly known, or otherwise known to the Lender, or its successors or
assigns, at the time of disclosure, (II) subsequently becomes publicly
known through no act of or omission by the Lender or its successors or
assigns, other than through disclosure by Guarantor or by any other
Person in violation of this Paragraph (iv) or any other confidentiality
arrangement and the Lender, or its successors or assigns, has knowledge
of such violation; provided, however, that in the event the disclosing
Person shall reasonably endeavor to notify Guarantor thereof as soon as
possible after such disclosure has been made and Guarantor shall be
afford an opportunity to seek protective orders, or such other
confidential treatment of such Information as Guarantor may deem
reasonable.
(v) Certification. All certifications required to be delivered
pursuant to this Section 8(b) shall run directly to and be for the benefit
of Lender and Fannie Mae.
(c) Maintain Licenses. Guarantor shall procure and maintain in full force and
effect all licenses, Permits, charters and registrations which are material to
the conduct of its business and shall abide by and satisfy all terms and
conditions of all such licenses, Permits, charters and registrations.
(d) Access to Records; Discussions With Senior Management. To the extent
permitted by law, Guarantor shall permit the Lender to:
(i) inspect Guarantor's books and records related to the Borrower
and the Mortgaged Property;
(ii) discuss Guarantor's affairs, finances and accounts with
Guarantor's Senior Management or, provided that Senior Management of
Guarantor has been given the opportunity by Lender to be a party to such
discussions, property managers and independent public accountants;
(iii) provided that Senior Management of Guarantor has been given
the opportunity by Lender to be a party to such discussions, discuss the
Mortgaged Properties' conditions, operations or maintenance with the
managers of such Mortgaged Properties and the officers and employees of
Guarantor; and
(iv) receive any other information that the Lender deems reasonably
necessary or relevant in connection with the Guaranty, any Loan Document
or the Guaranteed Obligations.
Notwithstanding the foregoing, prior to an Event of Default or Potential Event
of Default, all inspections shall be conducted at reasonable times during normal
business hours and upon reasonable notice to the Guarantor.
(e) Inform the Lender of Material Events. Guarantor shall promptly, but in any
event within five (5) Business Days, inform the Lender in writing of any of the
following (and shall deliver to the Lender copies of any related written
communications, complaints, orders, judgments and other documents relating to
the following) of which Guarantor has actual knowledge:
(i) Defaults. The occurrence of any Event of Default or any
Potential Event of Default under any Loan Document;
(ii) Bankruptcy Proceedings. The commencement of any proceedings by
or against Guarantor under any applicable bankruptcy, reorganization,
liquidation, insolvency or other similar law now or hereafter in effect or
of any proceeding in which a receiver, liquidator, trustee or other
similar official is sought to be appointed for it;
(iii) Accounting Changes. Any material change in Guarantor's
accounting policies or financial reporting practices; and
(iv) Restructuring of Guarantor. Any restructuring or reorganization
of any Guarantor.
(f) ERISA. Guarantor shall at all times remain in compliance in all material
respects with all applicable provisions of ERISA and similar requirements of the
PBGC.
(g) Further Assurances. Provided they do not materially increase the Guaranteed
Obligations of Guarantor, Guarantor, at the request of the Lender, but without
incurring any liability beyond the Guaranteed Obligations, shall execute and
deliver and, if necessary, file or record such statements, documents,
agreements, UCC financing and continuation statements and such other instruments
and take such further action as the Lender from time to time may request as
reasonably necessary, desirable or proper to carry out more effectively the
purposes of this Guaranty or any of the other Loan Documents or to subject the
Collateral to the lien and security interests of the Loan Documents or to
evidence, perfect or otherwise implement, to assure the lien and security
interests intended by the terms of the Loan Documents or in order to exercise or
enforce its rights under the Loan Documents.
(h) Monitoring Compliance. Upon the request of the Lender, but without incurring
any liability beyond the Guaranteed Obligations, from time to time, Guarantor
shall promptly provide to the Lender such documents, certificates and other
information as may be deemed reasonably necessary to enable the Lender to
perform its functions under the Servicing Agreement as the same relates to the
Guarantor.
Section 9. Negative Covenants of Guarantor.
(a) Liquidation. Guarantor shall not dissolve or liquidate in whole or in
part.
(b) Principal Place of Business. Guarantor shall not change its principal
place of business or the location of its books and records without first giving
10 days' prior written notice to the Lender.
Section 10. Financial Covenants. Guarantor agrees and covenants with the
Lender that, at all times during the Term of this Guaranty, the Net Worth of the
REIT, the Guarantor and the Subsidiaries on a consolidated basis shall not be
below $1,500,000,000.
Section 11. Expenses. Guarantor agrees to pay all reasonable costs and
out-of-pocket expenses, including court costs and expenses and the reasonable
fees and disbursements of legal counsel, incurred by or on behalf of Lender in
connection with the enforcement of Guarantor's obligations under this Guaranty
or the protection of Lender's rights under this Guaranty. The covenants
contained in this Section shall survive the payment of the Guaranteed
Obligations.
Section 12. Condition of Borrower. Guarantor is fully aware of the
financial condition of Borrower and is executing and delivering this Guaranty
based solely upon Guarantor's own independent investigation of all matters
pertinent hereto and is not relying in any manner upon any representation or
statement made by Lender. Guarantor represents and warrants that Guarantor is in
a position to obtain, and Guarantor hereby assumes full responsibility for
obtaining, any additional information concerning Borrower's financial condition
and any other matters pertinent hereto as Guarantor may desire and Guarantor is
not relying upon or expecting Lender to furnish to Guarantor any information now
or hereafter in Lender's possession concerning the same or any other matter. By
executing this Guaranty, Guarantor knowingly accepts the full range of risks
encompassed within a contract of this type, which risks Guarantor acknowledges.
Section 13. Further Assurances. Guarantor agrees at any time and from time
to time upon request by Lender to take, or cause to be taken, any action and to
execute and deliver any additional documents which, in the reasonable opinion of
Lender, may be necessary in order to assure to Lender the full benefits of this
Guaranty, so long as any such action does not materially increase Guarantor's
Guaranteed Obligations hereunder or materially decrease its rights hereunder.
Section 14. Subordination. Guarantor hereby irrevocably and
unconditionally agrees that any claims, direct or indirect, Guarantor may have
by subrogation or other form of reimbursement, against Borrower or to any
security or any interest therein, by virtue of this Guaranty or as a consequence
of any payment made by Guarantor pursuant to this Guaranty, shall be fully
subordinated in time and right of payment to the payment in full of the
Guaranteed Obligations and all other obligations of Guarantor to Lender under
this Guaranty.
Section 15. No Subrogation. Guarantor shall not have any right of
subrogation against Borrower by reason of any payment by Guarantor under this
Guaranty until such time as all of the Guaranteed Obligations have been
satisfied in full. Nothing in the foregoing shall affect any claim which any
Guarantor has against Borrower under the terms of the Organizational Documents
of the Borrower.
Section 16. Insolvency and Liability of Borrower. So long as any of the
Guaranteed Obligations is unpaid and this Guaranty is in effect, and to the
extent not prohibited by the applicable bankruptcy court, Guarantor agrees to
file all claims against Borrower in any bankruptcy or other proceeding in which
the filing of claims is required by law in connection with indebtedness owed by
Borrower to Guarantor and to assign to Lender all rights of Guarantor thereunder
up to the lesser of (i) the amount of such indebtedness or (ii) the amount of
the Guaranteed Obligations. In all such cases the Person or Persons authorized
to pay such claims shall pay to Lender the full amount thereof to the full
extent necessary to pay the Guaranteed Obligations, and Guarantor hereby assigns
to Lender all of Guarantor's rights to all such payments to which Guarantor
would otherwise be entitled. Notwithstanding the foregoing, and except to the
extent that any sums owed by Borrower to Lender under the Loan Documents shall
have been fully satisfied thereby, the liability of Guarantor hereunder shall in
no way be affected by
(a) the release or discharge of Borrower in any creditors', receivership,
bankruptcy or other proceedings; or
(b) the impairment, limitation or modification of the liability of Borrower or
the estate of Borrower in bankruptcy resulting from the operation of any present
or future provisions of the Bankruptcy Code or other statute or from the
decision in any court.
Section 17. Preferences, Fraudulent Conveyances, Etc. If Lender is
required to refund, or voluntarily refunds, any payment received from Borrower
because such payment is or may be avoided, invalidated, declared fraudulent, set
aside or determined to be void or voidable as a preference, fraudulent
conveyance, impermissible setoff or a diversion of trust funds under the
bankruptcy laws or for any similar reason, including, without limitation, any
judgment, order or decree of any court or administrative body having
jurisdiction over Lender or any of its property, or any settlement or compromise
of any claim effected by Lender with Borrower or other claimant (a "Rescinded
Payment"), then Guarantor's liability to Lender shall continue in full force and
effect, or Guarantor's liability to Lender shall be reinstated, as the case may
be, with the same effect and to the same extent as if the Rescinded Payment had
not been received by Lender (but only to the extent such Rescinded Payment was
part of the Guaranteed Obligations hereunder), notwithstanding the cancellation
or termination of any Note or any of the other Loan Documents. In addition,
Guarantor shall pay, or reimburse Lender for, all expenses (including all
reasonable attorneys' fees, court costs and related disbursements) incurred by
Lender in the defense of any claim that a payment received by Lender in respect
of all or any part of the Guaranteed Obligations from Guarantor must be
refunded. The provisions of this Section shall survive the termination of this
Guaranty and any satisfaction and discharge of Borrower by virtue of any
payment, court order or any federal or state law.
Section 18. Waiver. Neither this Guaranty nor any term hereof may be
changed, waived, discharged or terminated except by an instrument in writing
signed by Lender and Guarantor expressly referring to this Guaranty and to the
provisions so changed or limited. No such waiver shall extend to or affect any
obligation not expressly waived or impair any right consequent thereon. No
course of dealing or delay or omission on the part of Lender in exercising any
right under this Guaranty shall operate as a waiver thereof or otherwise by
prejudice thereto.
Section 19. Notices. All notices or other communications hereunder shall
be sufficiently given and shall be deemed given when sent in the manner
prescribed by the Loan Agreement addressed to the parties as follows:
As to the Guarantor: AIMCO
Stanford Place 3
4582 South Ulster St. Parkway
Suite 1100
Denver, Colorado 80237
Attn: Senior Vice President-Debt & Securities
with a copy to: Jackson Walker, L.L.P.
112 E. Pecan, Suite 2100
San Antonio, Texas 78205
Attn: Eileen E. Sommer
If to Lender or Fannie Mae:
As provided in the Loan Agreement.
Section 20. Assignability by Lender. Lender may, without notice to
Guarantor, assign or transfer the Loans and the Loan Documents, in whole or in
part. In such event, each and every immediate and successive assignee,
transferee or holder of all or any part of the Loans and the Loan Documents
shall have the right to enforce this Guaranty, by legal action or otherwise, as
fully as if such assignee, transferee, or holder were by name specifically given
such right and power in this Guaranty. Lender shall have an unimpaired right to
enforce this Guaranty for its benefit as to so much of the Loans and the Loan
Documents as Lender has not sold, assigned or transferred.
Section 21. Guarantor Bound by Judgment Against Borrower. Guarantor shall
be conclusively bound, in any jurisdiction, by the judgment in any action by
Lender against Borrower in connection with the Loan Documents (wherever
instituted) as if Guarantor were a party to such action even if not so joined as
a party.
Section 22. Governing Law. The provisions of Section 11.06 of the Loan
Agreement (entitled Choice of Law; Consent to Jurisdiction; Waiver of Jury
Trial) are hereby incorporated into this Agreement by this reference to the
fullest extent as if the text of such Section were set forth in its entirety
herein.
Section 23. Invalid Provisions. If any provision of this Guaranty or the
application thereof to Guarantor or any circumstance in any jurisdiction whose
laws govern this Guaranty shall, to any extent, be invalid or unenforceable
under any applicable statute, regulation or rule of law, then such provision
shall be deemed inoperative to the extent of such invalidity or unenforceability
and shall be deemed modified to conform to such statute, regulation or rule or
law. The remainder of this Guaranty and the application of any such invalid or
unenforceable provision to parties, jurisdictions or circumstances other than
those to whom or to which it is held invalid or unenforceable, shall not be
affected by such invalidity or unenforceability nor shall such invalidity or
unenforceability affect the validity or enforceability of any other provision of
this Guaranty.
Section 24. General Provisions. This Guaranty shall be binding upon the
respective successors and assigns of Guarantor, and shall inure to the benefit
of Lender and its successors and assigns, including, without limitation, each
successive holder of the Note. The descriptive headings of the Sections of the
Guaranty have been inserted herein for convenience of reference only and shall
not define or limit the provisions hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as of
the day and year first above written.
AIMCO PROPERTIES, L.P., a Delaware
limited partnership
By: AIMCO-GP, Inc., a Delaware
corporation, its general partner
By: /s/ Patti K. Fielding
Patti K. Fielding
Executive Vice President
STATE OF COLORADO, City and County of Denver, ss:
On this 15th day of May, 2003, I, Cathleen M. O'Donnell, a Notary Public
in and for said county and in said state, hereby certify that Patti K. Fielding
whose name as Executive Vice President of AIMCO-GP, Inc., a Delaware
corporation, general partner of AIMCO Properties, L.P., a Delaware limited
partnership signed to the foregoing conveyance, and who is known to me,
acknowledged before me that, being informed of the contents of the conveyance,
she as such limited partnership and with full authority, executed the same
voluntarily for and as the act of said limited partnership on the date the same
bears date.
Given under my hand and seal of office.
My commission expires: 8/02/2006 /s/ Cathleen M. O'Donnell
Notary Public
Exhibit 10.18(c)
Forest River Apartments
COMPLETION/REPAIR AND SECURITY AGREEMENT
THIS COMPLETION/REPAIR AND SECURITY AGREEMENT (this "Agreement") is made
as of this 16th day of May, 2003, by HOUSTON PINES, A CALIFORNIA LIMITED
PARTNERSHIP, a California limited partnership ("Borrower"), and GMAC COMMERCIAL
MORTGAGE CORPORATION, a California corporation, its successors, transferee and
assigns ("Lender").
RECITALS:
A. This Agreement is being executed in connection with Lender's making a
mortgage loan to Borrower in the original principal amount of $4,810,000.00 (the
"Loan"). The proceeds of the Loan will be used to finance a multifamily project
known as Forest River Apartments, and located in Gadsden (Etowah County),
Alabama (the "Property").
B. The Loan is evidenced by a Multifamily Note (including any addenda, the
"Note"), dated the date of this Agreement, made by Borrower and is secured by,
among other things, a Multifamily Mortgage, Assignment of Rents and Security
Agreement (including any Riders, the "Security Instrument"), dated the date of
this Agreement, granting a first lien on the Property. The Note, Security
Instrument, this Agreement and all other documents executed in connection with
the Loan are collectively referred to as the "Loan Documents".
C. Lender requires as a condition of making the Loan that Borrower deposit
with Lender the Deposit (as defined below) as additional security for all of the
Borrower's obligations under the Loan Documents.
NOW, THEREFORE, in consideration of the above and the mutual promises
contained in this Agreement, the receipt and sufficiency of which are
acknowledged, Borrower and Lender agree as follows:
1. Deposits to the Completion/Repair
(a) Borrower agrees to deposit with Lender the sum of $145,156.00 (the
"Deposit") upon execution of this Agreement. The Deposit represents 125 percent
of the estimated cost to complete the "Repairs" (defined in Section 2 below).
(b) Lender shall deposit the Deposit in an account (the "Collateral Account")
which meets the standards for custodial accounts as required by Lender from time
to time. Lender shall not be responsible for any losses resulting from
investment of the Collateral Account or for obtaining any specific level or
percentage of earnings on such investment. (The Deposit, and all other funds
from time to time in the Collateral Account are collectively referred to as the
"Collateral Account Funds".) All investment earnings on funds in the Collateral
Account shall be added to and become part of the Collateral Account Funds.
2. Additional Security. Borrower assigns to Lender all of Borrower's interest in
the Deposit, the Collateral Account Funds and the Collateral Account as
additional security for all of Borrower's obligations under the Loan Documents;
provided, however Lender shall make disbursements from the Collateral Account in
accordance with the terms of this Agreement. Except as otherwise provided in
Sections 4(h) and 6.2 of this Agreement, Lender shall make disbursements from
the Collateral Account to reimburse Borrower for the costs of those repairs and
improvements to the Property described on Exhibit A to this Agreement (the
"Repairs") in accordance with the terms of this Agreement.
3. Agreement to Complete Repairs. Borrower shall commence the Repairs
immediately following the execution of this Agreement (or as soon thereafter as
weather reasonably shall permit) and shall at all times thereafter diligently
pursue the completion of all Repairs. Borrower shall complete all Repairs no
later than twelve (12) months after the date of this Agreement (the "Completion
Period"), unless another date for completion of such Repair is set forth on
Exhibit A, in which case Borrower shall complete such Repair no later than the
date specified on Exhibit A. All Repairs shall be made in a good and workmanlike
manner and shall be completed free and clear of any mechanic's or materialman's
liens and encumbrances. Borrower shall pay all costs necessary for completion of
the Repairs without regard to the sufficiency of the funds in the Collateral
Account.
4. Disbursements from the Collateral Account.
(a) Upon written request from Borrower and satisfaction of the requirements set
forth in Sections 4 and 5 of this Agreement, Lender shall disburse to Borrower
amounts from the Collateral Account to reimburse Borrower for the actual cost of
each Repair (but not exceeding 125 percent of the original estimated cost of
such Repair as set forth on Exhibit A, unless Lender has agreed to reimburse
Borrower for such excess cost pursuant to Section 4(h)) upon completion of such
Repairs (or, upon the partial completion of any Repairs made pursuant to Section
4(e) below). Notwithstanding the preceding, Lender shall not be required to
disburse any amounts which would cause the amount of funds remaining in the
Collateral Account after any disbursement (other than with respect to the final
disbursement) to be less than 125 percent of the then current estimated cost of
completing all remaining Repairs. In no event shall Lender be obligated to
disburse Collateral Account Funds if a default exists under this Agreement or if
an event shall have occurred and then be existing that with notice and/or the
lapse of time would constitute a default or an Event of Default under any of the
Loan Documents.
(b) Each request for disbursement from the Collateral Account shall be made on a
form provided or approved by Lender and shall specify (i) the specific Repairs
for which payment is requested, (ii) the quantity and price of each item
purchased, if the Repair includes the purchase or replacement of specific items
(such as appliances), (iii) the price of all materials (grouped by type or
category) used in any Repair other than the purchase or replacement of specific
items, and (iv) the cost of all contracted labor or other services involved in
the Repairs for which such request for disbursement is made. Borrower shall
certify that the Repairs covered by the requisition have been completed in a
good and workmanlike manner and in accordance with any plans and specifications
previously approved by Lender and that all such Repairs are in compliance with
all applicable laws, ordinances, rules and regulations of any governmental
authority, agency or instrumentality having jurisdiction over the Property. Each
request for reimbursement shall include copies of invoices for all items or
materials purchased and all labor or services provided and, unless Lender has
agreed to issue joint checks as described below in connection with a particular
Repair, shall include evidence of payment satisfactory to Lender.
(c) Unless Lender has agreed to issue joint checks in connection with a
particular Repair, Borrower shall pay all invoices prior to submitting a request
for disbursement from the Collateral Account. Lender, at its option, may issue
joint checks, payable to Borrower and the supplier, materialman, mechanic,
subcontractor or other party to whom payment is due in connection with a Repair
described in Section 4(e).
(d) Except as provided in Section 4(e), each request for disbursement shall be
made only after completion of the Repair for which disbursement is requested.
Borrower shall provide Lender evidence satisfactory to Lender in its reasonable
judgment, of completion, as provided in Sections 5.1 and 5.2 below.
(e) If the cost of a Repair exceeds $2,500.00 and the contractor performing a
Repair requires periodic payments pursuant to the terms of a written contract,
Lender at its discretion may approve in writing periodic payments for work
performed under such contract. A request for disbursement from the Collateral
Account may be made after completion of a portion of the work under such
contract, provided (i) the contract requires payment upon completion of such
portion of the work, (ii) all other conditions for disbursement under this
Agreement have been met, (iii) the materials for which the request for
disbursement has been made are on site at the Property and are properly secured
or have been installed in the Property, (iv) the remaining funds in the
Collateral Account designated for such Repair are, in Lender's judgment,
sufficient to complete that Repair and (v) if required by Lender, each
contractor or subcontractor receiving payments under such Contract shall have
provided a waiver of liens with respect to amounts which have been previously
paid to that contractor or subcontractor.
(f) Borrower shall not make a request for disbursement from the Collateral
Account more frequently than once in any month. Other than in connection with
the final request for disbursement, Borrower shall not request disbursements
from the Collateral Account in an amount of less than $10,000.00.
(g) Lender shall disburse to Borrower all remaining Collateral Account Funds
(less all amounts which may have been applied by Lender as permitted by this
Agreement) upon Borrower's completion of all Repairs to the satisfaction of
Lender on or before the expiration of the Completion Period, provided that (i)
there is no default or Event of Default under any of the Loan Documents which
has not been cured to Lender's satisfaction, (ii) Lender has received evidence
required by Section 5.3 below that there are no mechanic's or materialmen's
liens, and (iii) Lender has received all cost and architectural information
required by Lender.
(h) In the event Borrower requests a disbursement from the Collateral Account to
reimburse Borrower for labor or materials other than Repairs specified on
Exhibit A, or for a Repair to the extent the cost of such Repair exceeds 125
percent of the estimated cost of such Repair as set forth on Exhibit A (in
either case, an "Additional Cost Item"), Borrower shall disclose in writing to
Lender why Lender should make a disbursement from the Collateral Account to
reimburse Borrower for such Additional Cost Item. If Lender determines that (i)
such Additional Cost Item is of the type intended to be covered by this
Agreement, (ii) the costs for such Additional Cost Item are reasonable, (iii)
the amount of funds in the Collateral Account is sufficient to pay the
Additional Cost Item and 125 percent of the then current estimated cost of
completing all remaining Repairs and (iv) all other conditions for disbursement
under this Agreement have been met, Lender shall disburse Collateral Account
Funds for such Additional Cost Item; provided, however, that Lender, in its
discretion, may refuse to disburse Collateral Account Funds for any item other
than a Repair described on Exhibit A or for costs of a Repair in excess of 125
percent of the original estimated cost of such Repair as set forth on Exhibit A.
Even if Lender determines that the payment of an Additional Cost Item may be
appropriate, Lender may withhold disbursing Collateral Account Funds for such
Additional Cost Item until all of the conditions have been satisfied for the
disbursement of Collateral Account Funds pursuant to Sections 4 and 5.
5. Performance of Repairs.
5.1. Workmanlike Completion
(a) Lender shall have the right to approve all contracts or work orders with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials in connection with the Repairs. Upon Lender's
request, Borrower shall assign any contract or subcontract to Lender.
(b) In the event Lender determines in its sole discretion that any Repair has
not been begun as agreed in Section 3 above, is not being performed in a
workmanlike or timely manner, or has not been completed in a workmanlike manner
within the Completion Period (or such other completion date as may be set forth
on Exhibit A), Lender shall have the option to withhold disbursements for such
nonsatisfactory Repair, proceed under existing contracts or contract with third
parties to make or complete such Repair and to apply the funds in the Collateral
Account toward the labor and materials necessary to make or complete such Repair
without providing any prior notice to Borrower and to exercise any and all other
remedies available to Lender upon a default pursuant to Section 6.1 hereof.
(c) In order to facilitate Lender's completion or making of the Repairs under
Section 5.1 (b) above, Lender shall have the right to enter onto the Property
and perform any and all work and labor necessary to make or complete the Repairs
and employ watchmen to protect the Property from damage. All sums so expended by
Lender pursuant to this Section 5 or pursuant to any other provision of this
Agreement, shall be deemed to have been advanced to Borrower and shall be
secured by the Security Instrument. Borrower hereby constitutes and appoints
Lender its true and lawful attorney-in-fact with full power of substitution to
complete or undertake the Repairs in the name of Borrower. Borrower empowers
said attorney-in-fact as follows: (i) to use any of the funds in the Collateral
Account which have not been disbursed for the purpose of making or completing
the Repairs; (ii) to make such additions, changes and corrections to the Repairs
as shall be necessary or desirable to complete the Repairs; (iii) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purposes; (iv) to pay, settle or compromise all bills and
claims for materials and work performed in connection with the Repairs or as may
be necessary or desirable for the completion of the Repairs, or for clearance of
title; (v) to execute all applications and certificates in the name of Borrower
which may be required by any of the contract documents; (vi) to prosecute and
defend all actions or proceedings in connection with the Property or the
rehabilitation and repair of the Property; and (vii) to do any and every act
which Borrower might do in its own behalf to fulfill the terms of this
Agreement.
It is further understood and agreed that this power of attorney, which shall be
deemed to be a power coupled with an interest, cannot be revoked. Borrower
specifically agrees that all power granted to Lender under this Agreement may be
assigned by Lender to Lender's successors or assigns as holder of the Note.
(d) Nothing in this Section 5.1 shall: (i) make Lender responsible for making or
completing the Repairs; (ii) require Lender to expend funds to make or complete
any Repair; (iii) obligate Lender to proceed with the Repairs; or (iv) obligate
Lender to demand from Borrower additional sums to make or complete any Repair.
5.2. Entry onto Property; Inspections
(a) Borrower shall permit Lender or Lender's representatives (including an
independent person such as an engineer, architect or inspector) or third parties
making Repairs pursuant to Section 5.1(b) of this Agreement, to enter onto the
Property during normal business hours (subject to the rights of tenants under
their leases) to inspect the progress of any Repairs and all materials being
used in connection with such Repairs, to examine all plans and shop drawings
relating to such Repairs which are or may be kept at the Property, to inspect
all books, contracts, subcontracts and records of Borrower with respect to the
Property, and to complete the Repairs pursuant to Section 5.1(b). Borrower
agrees to cause all contractors and subcontractors to cooperate with Lender,
Lender's representatives, and such other persons described above in connection
with inspections and Repairs made pursuant to this Section 5.2 and Section
5.1(b).
(b) Lender may inspect the Property in connection with any Repair prior to
disbursing Collateral Account Funds for such Repair. If the cost of a Repair
equals or exceeds $10,000.00, Lender shall inspect the Property prior to
disbursing Collateral Account Funds for such Repair. Borrower shall pay Lender a
reasonable inspection fee not exceeding $300.00 for each such inspection. Prior
to disbursing any amounts from the Collateral Account for a Repair, Lender may
require an inspection and/or certificate of completion by an appropriate
independent qualified professional (such as an architect, engineer, or
inspector, depending on the nature of the Repair) selected by Lender. Borrower
shall pay all reasonable fees and expenses charged by such engineer, architect,
inspector or other person inspecting the Property, and all other reasonable
fees, costs and expenses relating to such inspections.
5.3. Lien-Free Completion
(a) Borrower covenants and agrees that each of the Repairs and all materials,
equipment, fixtures, or any other item comprising a part of any Repair shall be
constructed, installed or completed, as applicable, free and clear of any
mechanic's, materialman's or other liens (except for liens existing on the date
of this Agreement which have been previously approved in writing by Lender).
(b) Prior to each disbursement of amounts from the Collateral Account, Lender
may require Borrower to provide Lender with either (i) a search of title to the
Property effective to the date of the release, or (ii) an endorsement to the
title insurance policy insuring Lender's interest in the Property which updates
the effective date of the policy to the date of the disbursement from the
Collateral Account, which search or title endorsement shows that no mechanic's
or materialmen's liens or other liens (that have not been bonded off to Lender's
satisfaction) have been placed against the Property since the date of
recordation of the Security Instrument and that title to the Property is free
and clear of all liens (other than the lien of the Security Instrument and any
other liens previously approved in writing by the Lender, if any).
(c) In addition, Lender may require Borrower to obtain from any contractor,
subcontractor, or materialman an acknowledgment of payment and release of lien
for work performed and/or materials supplied. Any such acknowledgment and
release shall conform to the requirements of applicable law and shall cover all
work performed and materials (including equipment and fixtures) supplied for the
Property (except for any hold back amounts) through the date covered by the
current request for disbursement from the Collateral Account (or the date
covered by the previous request for disbursement in the event such contractor,
subcontractor or materialman is to be paid by a joint check).
5.4. Compliance with Laws and Insurance Requirements
(a) All Repairs shall comply with all applicable laws, ordinances, rules and
regulations of all governmental authorities having jurisdiction over the
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(b) Borrower represents and warrants that to the best of its knowledge, no
permits or approvals from any agency or authority, other than those previously
obtained and furnished to Lender, are necessary for the commencement and
completion of the Repairs. Borrower shall pay all applicable fees and charges of
such agencies or authorities.
(c) In addition to any insurance required under the other Loan Documents,
Borrower shall provide or cause to be provided workmen's compensation insurance,
builder's risk, and public liability insurance and other insurance required by
applicable law in connection with completing the Repairs. All such policies
shall be issued by companies approved by Lender and shall be in form and amount
satisfactory to Lender. All such policies which can be endorsed with standard
mortgagee clauses making loss payable to Lender or its assigns shall be so
endorsed. The originals of such policies shall be delivered to Lender.
6. Default.
6.1. Default Under This Agreement. If (i) Borrower at any time prior to the
completion of the Repairs abandons or ceases work on any Repair for a period of
more than 20 days, unless such cessation results from causes beyond the control
of Borrower and Borrower is diligently pursuing the reinstitution of work, (ii)
Borrower fails to complete each Repair in a good and workmanlike manner within
the Completion Period (or such other date as may be set forth on Exhibit A),
(iii) a mechanic's or materialman's lien is filed against the Property (unless
such mechanic's or materialman's lien is promptly contested in good faith by
Borrower and is bonded off to the satisfaction of Lender), (iv) Borrower fails
to comply with any provision of this Agreement not specifically addressed by
clauses (i), (ii), or (iii) above, and such failure is not cured within 10 days
of notice of such non-performance or non-compliance, or (v) an Event of Default
occurs under any of the other Loan Documents, such event shall be deemed a
default hereunder and Lender may at its option hold and apply the funds in the
Collateral Account as provided in Section 6.2 of this Agreement. Borrower
understands that a default under this Agreement shall be deemed to be an Event
of Default under the Security Instrument, and that in addition to the remedies
specified in this Agreement, the Lender will be able to exercise all of its
rights and remedies under the Security Instrument.
6.2. Default Under the Other Loan Documents.
(a) If any default or Event of Default shall occur under this Agreement or under
the Security Instrument, Borrower shall immediately lose all of its rights to
receive disbursements of the Collateral Account Funds while such default or
Event of Default shall continue. Upon any such default or Event of Default,
Lender, in its sole and absolute discretion, may use the Collateral Account
Funds (or any portion thereof) for any purpose, including but not limited to (i)
repayment of any indebtedness secured by the Security Instrument and the
prepayment premium applicable upon a full or partial prepayment (as applicable);
provided, however, that such application of funds shall not cure or be deemed to
cure any default or Event of Default; (ii) reimbursement of Lender for any
losses or expenses (including, without limitation, legal fees) suffered or
incurred by Lender as a result of such default or Event of Default; (iii) making
or completing the Repairs as provided in Section 5, or (iv) applying the funds
in connection with exercising any and all rights and remedies available to
Lender at law or in equity or under this Agreement or pursuant to any of the
other Loan Documents.
(b) Nothing in this Agreement or the Security Instrument shall obligate Lender
to apply all or any portion of the Collateral Account Funds on account of any
default or Event of Default by Borrower or to repayment of the indebtedness
evidenced by the Note or in any specific order of priority.
6.3. Borrower's Other Obligations. Nothing contained in this Agreement shall in
any manner whatsoever alter, impair or affect the obligations of Borrower, or
relieve Borrower of any of its obligations to make payments and perform all of
its other obligations required under the Loan Documents.
7. Remedies Cumulative. None of the rights and remedies conferred upon or
reserved to Lender under this Agreement are intended to be exclusive of any
other rights, and each and every such right shall be cumulative and concurrent,
and may be enforced separately, successively or together, and may be exercised
from time to time as often as may be deemed necessary by Lender.
8. Additional Documents. Upon completion of all or any portion of the Repairs
and upon Lender's request, Borrower shall execute and deliver to Lender an
amendment to the security agreement provisions of the Security Instrument and
the original financing statement necessary or desirable to perfect Lender's lien
upon any property for which Collateral Account Funds were expended.
9. Assignment of Collateral Account Funds and this Agreement. Borrower
understands and agrees that, in connection with the anticipated sale or
assignment and delivery of the Loan to Fannie Mae, all of the Lender's interest
in the Collateral Account Funds and this Agreement will be assigned to Fannie
Mae.
10. Indemnification. Borrower agrees to indemnify and hold Lender harmless from
and against any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs or expenses, including litigation costs and
reasonable attorneys' fees, arising from or in any way connected with the
performance of the Repairs or investment of the Collateral Account Funds.
Borrower hereby assigns to Lender all rights and claims Borrower may have
against all persons or entities supplying labor or materials in connection with
Repairs; provided, however, that Lender may not pursue any such right or claim
unless Borrower is in default under this Agreement or an Event of Default shall
have occurred under the Security Instrument.
11. Determinations by Lender. In any instance where the consent or approval of
Lender may be given or is required, or where any determination, judgment or
decision is to be rendered by Lender under this Agreement, the granting,
withholding or denial of such consent or approval and the rendering of such
determination, judgment or decision shall be made or exercised by Lender (or its
designated representative) at its discretion.
12. Borrower's Records. Borrower shall furnish such financial statements,
invoices, records, papers and documents relating to the Property as Lender may
reasonably require from time to time to make the determinations permitted or
required to be made by Lender under this Agreement.
13. Fees and Costs.
(a) Borrower shall pay Lender a one time administrative fee of $50.00 for its
services in administering the Collateral Account and investing the Collateral
Account Funds. Borrower shall pay such fee no later than the date specified in a
bill sent to Borrower.
(b) Borrower shall reimburse Lender within 10 days after demand, all reasonable
fees, charges, costs and expenses incurred by Lender in connection with
collecting, holding and disbursing the funds in the Collateral Account pursuant
to this Agreement and in connection with all inspections made by Lender or
Lender's representatives in carrying out Lender's responsibility to make certain
determinations under this Agreement.
14. Successors and Assigns Bound. This Agreement shall be binding upon Borrower
and Lender and their respective successors and assigns, and shall inure to the
benefit of and may be enforced by the Lender and its successors, transferee and
assigns. Borrower shall not assign any of its rights and obligations under this
Agreement without the prior written consent of Lender.
15. No Third Party Beneficiary. This Agreement is intended solely for the
benefit of Borrower and Lender and their respective successors and assigns, and
no third party shall have any rights or interest in the Collateral Account
Funds, the Collateral Account, this Agreement or any of the other Loan
Documents. Nothing contained in this Agreement shall be deemed or construed to
create an obligation on the part of Lender to any third party nor shall any
third party have a right to enforce against Lender any right that Borrower may
have under this Agreement.
16. Completion of Repairs. Lender's disbursement of Collateral Account Funds or
other acknowledgment of completion of any Repair in a manner satisfactory to
Lender shall not be deemed a certification by Lender that the Repair has been
completed in accordance with applicable building, zoning or other codes,
ordinances, statutes, laws, regulations or requirements of any governmental
authority agency. Borrower shall at all times have the sole responsibility for
insuring that all Repairs are completed in accordance with all such governmental
requirements.
17. No Agency or Partnership. Nothing contained in this Agreement shall
constitute Lender as a joint venturer, partner or agent of Borrower, or render
Lender liable for any debts, obligations, acts, omissions, representations, or
contracts of Borrower.
18. Termination of Completion/Repair Agreement. Upon the earlier of (i)
Borrower's completion of all Repairs to the satisfaction of Lender (provided
Borrower has supplied Lender with evidence satisfactory to Lender of payment of
all Repairs and if requested by Lender, waivers of liens and a title search of
the Property or an endorsement to the mortgagee's title insurance policy), or
(ii) the payment in full of all sums secured by the Security Instrument and
release of the lien of the Security Instrument by Lender (and payment in full of
all Repairs completed or contracted to be performed prior to the date of the
payment described in clause (ii)), Lender shall disburse to Borrower all
remaining Collateral Account Funds.
19. Entire Agreement; Amendment and Waiver. This Agreement contains the complete
and entire understanding of the parties with respect to the matters covered and
no change or amendment shall be valid unless it is made in writing and executed
by the parties to this Agreement. No specific waiver of any of the terms of this
Agreement shall be considered as a general waiver. If any provision of this
Agreement is in conflict with any provision of the Security Instrument regarding
the Collateral Account, the provision contained in this Agreement shall control.
20. Notices. All notices given under this Agreement shall be in writing to the
other party, at the address and in the manner set forth in the Security
Instrument.
21. Severability. The invalidity, illegality, or unenforceability of any
provision of this Agreement pursuant to judicial decree shall not affect the
validity or enforceability of any other provision of this Agreement, all of
which shall remain in full force and effect.
22. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the jurisdiction in which the Property is located.
23. Non-Recourse. This Agreement is being executed in connection with the making
of the Loan pursuant to the terms of the Note. Borrower's liability hereunder
shall be limited to the extent provided in the Note.
24. Capitalized Terms. Any capitalized terms used in this Agreement and not
specifically defined herein, shall have the meanings set forth in the Security
Instrument.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Agreement:
-----
X Exhibit A Repairs
-----
-----
X Exhibit B Modifications
-----
Borrower and Lender have executed this Agreement on the date and year
first written above.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
BORROWER:
HOUSTON PINES, A CALIFORNIA LIMITED
PARTNERSHIP, a California limited
partnership
By: Angeles Realty Corporation, a
California corporation, its general
partner
By: /s/ Patti K. Fielding
Patti K. Fielding
Executive Vice President
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By: /s/ Max W. Foore______________________
Max W. Foore
Vice President
EXHIBIT A
TO THE COMPLETION/REPAIR AND SECURITY AGREEMENT
(Forest River Apartments , Etowah County, Alabama)
$
TOTAL $
@125%/ $
EXHIBIT B
MODIFICATIONS TO THE COMPLETION/REPAIR
AND SECURITY AGREEMENT
The following phrase is inserted at the end of Section 5.3:
"or as otherwise provided in Section 21(b)(6) of the Security
Instrument."
_________________________
Borrower's Initials
Exhibit 10.18(d)
Forest River Apartments
REPLACEMENT RESERVE AND SECURITY AGREEMENT
This REPLACEMENT RESERVE AND SECURITY AGREEMENT (this "Agreement") is made
this 16th day of May, 2003 by HOUSTON PINES, A CALIFORNIA LIMITED PARTNERSHIP, a
California limited partnership ("Borrower"), and GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, its successors, transferees and assigns
("Lender").
RECITALS:
A. This Agreement is being executed in connection with Lender's making a
mortgage loan to Borrower in the original principal amount of $4,810,000.00 (the
"Loan"). The proceeds of the Loan will be used to finance a 248 unit multifamily
project known as Forest River Apartments, and located in Gadsden (Etowah
County), Alabama (the "Property").
B. The Loan is evidenced by a Multifamily Note (including any addenda, the
"Note"), and is secured by a Multifamily Mortgage, Assignment of Rents and
Security Agreement (including any riders, the "Security Instrument") granting a
lien on the Property. The Note, Security Instrument, this Agreement and all
other documents executed in connection with the Loan are collectively referred
to as the "Loan Documents."
C. Lender requires as a condition to the making of the Loan that Borrower enter
into this Agreement. Lender has initially agreed to either partially or fully
waive its standard requirements that Borrower fund a replacement reserve on the
condition that Borrower agrees that Lender may later impose upon Borrower the
requirement to fund such replacement reserve in accordance with the terms of
this Agreement. All deposits to Lender required by this Agreement shall be
additional security for all of Borrower's obligations under the Loan Documents.
D. Lender intends to sell, transfer and deliver the Note and assign the Security
Instrument and other Loan Documents to Fannie Mae.
AGREEMENT:
NOW, THEREFORE, in consideration of the above and the mutual promises
contained in this Agreement, the receipt and sufficiency of which are
acknowledged, Borrower and Lender agree as follows:
1. Deposits to the Replacement Reserve
(a) Concurrently with the execution of this Agreement, Borrower shall deposit
with Lender the sum of $0.00 (the "Initial Deposit").
(b) Subject to the provisions of Sections 1(e), 2, 10 and 16 of this Agreement,
on each date that a regularly scheduled payment of principal or interest is due
under the Note, Borrower shall deposit with Lender the applicable Monthly
Deposit (as defined in Section 1(c) of this Agreement).
(c) The "Monthly Deposit" required to be made each month during the term of the
Loan is set forth below:
Amount of Monthly Deposit Period
$5,972.67 July 1, 2003, through the date that all amounts
due and payable under the
Note and Security
Instrument have been paid
in full.
(d) Lender shall deposit any Initial Deposit and each Monthly Deposit, as
received, in an interest-bearing account (the "Replacement Reserve") which meets
the standards for custodial accounts as required by Lender from time to time.
(The Initial Deposit, if any, the Monthly Deposits and all other funds in the
Replacement Reserve are referred to collectively as the "Replacement Reserve".)
Lender or a designated representative of Lender shall have the sole right to
make withdrawals from such account. All interest earned on funds in the
Replacement Reserve shall be added to and become part of the Replacement
Reserve. Lender shall not be responsible for any losses resulting from the
investment of the Replacement Reserve or for obtaining any specific level or
percentage of earnings on such investment. If applicable law requires and
provided that no default or Event of Default exists under any of the Loan
Documents, Lender shall pay to Borrower the interest earned on the Replacement
Reserve once each year.
(e) On the date of this Agreement Lender has agreed to partially reduce, defer
or fully waive Borrower's obligation to make full Monthly Deposits to the
Replacement Reserve specified in Section 1(c) and (d) above. Notwithstanding
Sections 1(c) and (d) above, Borrower shall be required to deposit the "Reduced
Monthly Deposit" each month during the term of the Loan as set forth below:
Amount of Monthly Deposit Period
$0.00 July 1, 2003 through the date that all amounts
due and payable under the
Note and Security
Instrument have been paid
in full.
In the event that (i) at any time during the Loan term Lender shall determine
that the Property is not being maintained in accordance with the requirements
set forth in the Security Instrument, or (ii) a default or Event of Default
otherwise occurs under this Agreement or any of the other Loan Documents, then,
upon the earlier of the (x) the date specified by Lender in written notice given
to Borrower by Lender or a designated representative of Lender, or (y) the first
day of the first calendar month after a default or Event of Default under this
Agreement or any of the Loan Documents, Borrower shall commence making the full
Monthly Deposits specified in Section 1(c) of this Agreement or in such written
notice, beginning on such date and continuing on the first day of each calendar
month thereafter during the remaining term of the Loan.
2. Loans with Terms Over 10 Years. If the Loan term exceeds 10 years, then, no
earlier than the 6th month and no later than the 9th month of the year which
commences on the 10th anniversary of the date of this Agreement (and the 20th
anniversary of the date of this Agreement if the Loan term exceeds 20 years), a
physical needs assessment shall be performed on the Property by Lender at the
expense of Borrower, which expense may be paid of out of the Replacement
Reserve. If determined necessary by Lender, after review of the physical needs
assessment, Borrower's required Monthly Deposits to the Replacement Reserve set
forth above shall be adjusted for the remaining Loan term so that the Monthly
Deposits will create a Replacement Reserve that will in Lender's determination,
be sufficient to meet required Replacements (defined below).
3. Replacement Reserve is Additional Security.
(a) Borrower assigns to Lender the Replacement Reserve as additional security
for all of the Borrower's obligations under the Loan Documents; provided,
however, Lender shall make disbursements from the Replacement Reserve in
accordance with the terms of this Agreement.
(b) Except as otherwise provided in Sections 4(f) and 6.1 of this Agreement,
Lender shall make disbursements from the Replacement Reserve to reimburse
Borrower for the costs of those items listed on Exhibit A (the "Replacements")
in accordance with the provisions of Section 4. Lender shall not be obligated to
make disbursements from the Replacement Reserve to reimburse Borrower for the
costs of routine maintenance to the Property or for costs which are to be
reimbursed from funds deposited with Lender pursuant to a Completion/Repair and
Security Agreement or any similar agreement.
4. Disbursements from Replacement Reserve.
(a) Upon written request from Borrower and satisfaction of the requirements set
forth in Sections 4 and 5 of this Agreement, Lender shall disburse to Borrower
amounts from the Replacement Reserve necessary to reimburse Borrower for the
actual approved costs of the Replacements. Lender shall not be obligated to make
disbursements from the Replacement Reserve to reimburse Borrower for the costs
of routine maintenance to the Property or for costs which are to be reimbursed
from funds deposited with Lender pursuant to a Completion/Repair and Security
Agreement or any similar agreement. In no event shall Lender be obligated to
disburse funds from the Replacement Reserve if a default or Event of Default
exists under this Agreement or any of the other Loan Documents.
(b) Each request for disbursement from the Replacement Reserve shall be in a
form specified or approved by Lender and shall include (i) the specific
Replacements for which the disbursement is requested, (ii) the quantity and
price of each item purchased, if the Replacement includes the purchase or
replacement of specific items, (iii) the price of all materials (grouped by type
or category) used in any Replacement other than the purchase or replacement of
specific items, and (iv) the cost of all contracted labor or other services
applicable to each Replacement for which such request for disbursement is made.
With each request, Borrower shall certify that all Replacements have been made
in accordance with all applicable laws, ordinances, and regulations of any
governmental office or authority having jurisdiction over the Property. Each
request for disbursement shall include copies of invoices for all items or
materials purchased and all contracted labor or services provided and, unless
Lender has agreed to issue joint checks pursuant to Section 4(d) in connection
with a particular Replacement, each request shall include evidence satisfactory
to Lender of payment of all such amounts.
(c) Each request for disbursement from the Replacement Reserve shall be made
only after completion of the Replacement for which disbursement is requested.
Borrower shall provide Lender evidence satisfactory to Lender in its reasonable
judgment, of completion.
(d) If the cost of a Replacement exceeds $2,500.00 and the contractor performing
the Replacement requires periodic payments pursuant to the terms of a written
contract, Lender at its discretion may approve in writing periodic payments for
work performed under such contract. A request for reimbursement from the
Replacement Reserve may be made after completion of a portion of the work under
such contract, provided (i) such contract requires payment upon completion of
such portion of work, (ii) the materials for which the request is made are on
site at the Property and are properly secured or have been installed in the
Property, (iii) all other conditions in this Agreement for disbursement have
been satisfied, (iv) funds remaining in the Replacement Reserve are, in Lender's
judgment, sufficient to complete such Replacement and the other Replacements
when required and (v) if required by Lender, each contractor or subcontractor
receiving payments under such contract shall provide a waiver of lien with
respect to amounts which have been paid to that contractor or subcontractor.
(e) Borrower shall not make a request for disbursement from the Replacement
Reserve more frequently than once in any quarter and (except in connection with
the final disbursement) the total cost of all Replacements in any request shall
not be less than $5,000.00.
(f) In the event Borrower requests a disbursement from the Replacement Reserve
to reimburse Borrower for labor or materials for replacements other than the
Replacements specified on Exhibit A, Borrower shall disclose in writing to
Lender why funds in the Replacement Reserve should be used to pay for such
replacements. If Lender determines that such replacements are of the type
intended to be covered by this Agreement, the costs for such replacements are
reasonable, and all other conditions for disbursement under this Agreement have
been met, Lender may at its discretion disburse funds from the Replacement
Reserve.
5. Performance of Replacements.
5.1 Workmanlike Completion
(a) Borrower shall make each Replacement when required in order to keep the
Property in good order and repair and in a good marketable condition and to keep
the Property or any portion thereof from deteriorating. Borrower shall complete
all Replacements in a good and workmanlike manner as soon as practicable
following the commencement of making each such Replacement.
(b) Lender shall have the right to approve all contracts or work orders with
materialmen, mechanics, suppliers, subcontractors, contractors or other parties
providing labor or materials in connection with the Replacements. Upon Lender's
request, Borrower shall assign any contract or subcontract to Lender.
(c) In the event Lender determines in its sole discretion that any Replacement
is not being performed or completed in a workmanlike or timely manner, Lender
shall have the option to withhold disbursement for such unsatisfactory
Replacement, and may proceed under existing contracts or contract with third
parties to complete such Replacement and to apply the Replacement Reserve toward
the labor and materials necessary to complete such Replacement, without
providing any prior notice to Borrower and to exercise any and all other
remedies available to Lender upon a default or Event of Default.
(d) If at any time during the term of the Loan, Lender determines that
replacements not listed on Exhibit A are advisable to keep the Property in good
order and repair and in a good marketable condition, or to prevent deterioration
of the Property (the "Additional Replacements") Lender may send Borrower written
notice of the need for making such Additional Replacements. Borrower shall
promptly commence making such Additional Replacements in accordance with all the
requirements of the Security Instrument. Reimbursement from the Replacement
Reserve for such Additional Replacements shall not be made unless Lender has
determined to do so pursuant to Section 4(f). Except for Section 4, all
references in this Agreement to "Replacements" shall include the "Additional
Replacements."
(e) In order to facilitate Lender's completion or making the Replacements
pursuant to Sections 5(c) and (d) above, Lender is granted the right to enter
onto the Property and perform any and all work and labor necessary to complete
or make the Replacements and employ watchmen to protect the Property from
damage. All sums so expended by Lender shall be deemed to have been advanced to
Borrower and secured by the Security Instrument. For this purpose Borrower
constitutes and appoints Lender its true and lawful attorney-in-fact with full
power of substitution to complete or undertake the Replacements in the name of
Borrower. Borrower empowers said attorney-in-fact as follows: (i) to use any
funds in the Replacement Reserve for the purpose of making or completing the
Replacements; (ii) to make such additions, changes and corrections to the
Replacements as shall be necessary or desirable to complete the Replacements;
(iii) to employ such contractors, subcontractors, agents, architects and
inspectors as shall be required for such purposes; (iv) to pay, settle or
compromise all existing bills and claims which are or may become liens against
the Property, or as may be necessary or desirable for the completion of the
Replacements, or for the clearance of title; (v) to execute all applications and
certificates in the name of Borrower which may be required by any of the
contract documents; (vi) to prosecute and defend all actions or proceedings in
connection with the Property or the rehabilitation and repair of the Property;
and (vii) to do any and every act which Borrower might do in its own behalf to
fulfill the terms of this Agreement.
It is further understood and agreed that this power of attorney, which shall be
deemed to be a power coupled with an interest, cannot be revoked. Borrower
specifically agrees that all power granted to Lender under this Agreement may be
assigned by it to its successors or assigns as holder of the Note.
(f) Nothing in this Section 5 shall make Lender responsible for making or
completing the Replacements, require Lender to expend funds in addition to the
Replacement Reserve to make or complete any Replacement, obligate Lender to
proceed with the Replacements, or obligate Lender to demand from Borrower
additional sums to make or complete any Replacement.
5.2 Entry Onto Property; Inspections.
(a) Borrower shall permit Lender or Lender's representatives (including an
independent person such as an engineer, architect, or inspector) or third
parties making Replacements pursuant to Section 5.1 of this Agreement, to enter
onto the Mortgaged Property during normal business hours (subject to the rights
of tenants under their leases) to inspect the progress of any Replacements and
all materials being used in connection therewith, to examine all plans and shop
drawings relating to such Replacements which are or may be kept at the Property,
and to complete any replacements made pursuant to Section 5.1. Borrower agrees
to cause all contractors and subcontractors reasonably to cooperate with Lender
or Lender's representatives or such other persons described above in connection
with inspections described in this Section 5.2 or the completion of Replacements
pursuant to Section 5.1. (b) Lender may inspect the Property in connection with
any Replacement prior to disbursing funds from the Replacement Reserve. Lender,
at Borrower's expense, also may require an inspection by an appropriate
independent qualified professional selected by Lender and a copy of a
certificate of completion by an independent qualified professional acceptable to
Lender prior to the disbursement of any amounts from the Replacement Reserve.
Borrower shall pay Lender a reasonable inspection fee not exceeding $300.00 for
each such inspection.
5.3 Lien-Free Completion.
(a) Borrower covenants and agrees that each of the Replacements and all
materials, equipment, fixtures, or any other item comprising a part of any
Replacement shall be constructed, installed or completed, as applicable, free
and clear of all mechanic's, materialman's or other liens (except for those
liens existing on the date of this Agreement which have been approved in writing
by Lender).
(b) Prior to each disbursement from the Replacement Reserve, Lender may require
Borrower to provide Lender with a search of title to the Property effective to
the date of the release, which search shows that no mechanic's or materialmen's
liens or other liens of any nature have been placed against the Property since
the date this Agreement (other than liens which Borrower is diligently
contesting in good faith and which have been bonded off to the satisfaction of
Lender) and that title to the Property is free and clear of all liens (other
than the lien of the Security Instrument and any other liens previously approved
in writing by the Lender, if any).
(c) In addition, as a condition to any disbursement, Lender may require Borrower
to obtain from each contractor, subcontractor, or materialman an acknowledgement
of payment and release of lien for work performed and materials supplied. Any
such acknowledgement and release shall conform to the requirements of applicable
law and shall cover all work performed and materials supplied (including
equipment and fixtures) for the Property by that contractor, subcontractor or
materialman through the date covered by the current reimbursement request (or,
in the event that payment to such contractor, subcontractor or materialmen is to
be made by a joint check, the release of lien shall be effective through the
date covered by the previous release of funds request.)
5.4 Compliance with Laws and Insurance Requirements.
(a) All Replacements shall comply with all applicable laws, ordinances, rules
and regulations of all governmental authorities having jurisdiction over the
Property and applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(b) In addition to any insurance required under the Security Instrument,
Borrower shall provide or cause to be provided worker's compensation insurance,
builder's risk, and public liability insurance and other insurance to the extent
required under applicable law in connection with a particular Replacement. All
such policies shall be in form and amount satisfactory to Lender. All such
policies which can be endorsed with standard mortgagee clauses making loss
payable to Lender or its assigns shall be so endorsed. The originals of such
policies shall be delivered to Lender.
6. Default.
6.1 Default Under This Agreement. Borrower shall be in default under this
Agreement if it fails to comply with any provision of this Agreement and such
failure is not cured within 10 days after notice from Lender. Borrower
understands that a default under this Agreement shall be deemed to be an Event
of Default under the Security Instrument, and that in addition to the remedies
specified in this Agreement, Lender shall be able to exercise all of its rights
and remedies under the Security Instrument upon an Event of Default.
6.2 Application of Replacement Reserve Upon Default.
(a) Upon the occurrence of a default under this Agreement or an Event of Default
under the Security Instrument, Borrower shall immediately lose all of its rights
to receive disbursements from the Replacement Reserve unless and until all
amounts secured by the Security Instrument have been paid and the lien of the
Security Instrument has been released by Lender. Upon any such default or Event
of Default, Lender may in its sole and absolute discretion, use the Replacement
Reserve (or any portion thereof) for any purpose, including but not limited to
(i) repayment of any indebtedness secured by the Security Instrument, including
but not limited to principal prepayments and the prepayment premium applicable
to such full or partial prepayment (as applicable); provided, however, that such
application of funds shall not cure or be deemed to cure any default or Event of
Default; (ii) reimbursement of Lender for all losses and expenses (including,
without limitation, reasonable legal fees) suffered or incurred by Lender as a
result of such default or Event of Default; (iii) completion of the Replacement
as provided in Section 5.1, or for any other repair or replacement to the
Property; or (iv) payment of any amount expended in exercising (and exercise)
all rights and remedies available to Lender at law or in equity or under this
Agreement or under any of the other Loan Documents.
(b) Nothing in this Agreement shall obligate Lender to apply all or any portion
of the Replacement Reserve on account of any default or Event of Default by
Borrower or to repayment of the indebtedness secured by the Security Instrument
or in any specific order of priority.
7. Borrower's Other Obligations. Nothing contained in this Agreement shall
alter, impair or affect the obligations of Borrower, or relieve Borrower of any
of its obligations to make payments and perform all of its other obligations
required under the Loan Documents.
8. Remedies Cumulative. None of the rights and remedies conferred upon or
reserved to Lender under this Agreement is intended to be exclusive of any other
rights, and each and every right shall be cumulative and concurrent, and may be
enforced separately, successively or together, and may be exercised from time to
time as often as may be deemed necessary Lender.
9. Enforcement of Agreement. This Agreement is executed by Borrower and Lender
for the benefit of Lender. Borrower understands and agrees that in connection
with the anticipated sale or assignment and delivery of the Loan to Fannie Mae,
this Agreement may be assigned to Fannie Mae.
10. Balance in the Replacement Reserve. The insufficiency of any balance in the
Replacement Reserve shall not abrogate the Borrower's agreement to fulfill all
preservation and maintenance covenants in the Loan Documents. In the event that
the balance of the Replacement Reserve is less than the current estimated cost
to make the Replacements required by the Lender, Borrower shall deposit the
shortage within 10 days of request by Lender. In the event Lender determines
from time to time based on Lender's inspections, that the amount of the Monthly
Deposit is insufficient to fund the cost of likely Replacements and related
contingencies that may arise during the remaining term of the Loan, Lender may
require an increase in the amount of the Monthly Deposits upon 30 days prior
written notice to Borrower.
11. Indemnification. Borrower agrees to indemnify Lender and to hold Lender
harmless from and against any and all actions, suits, claims, demands,
liabilities, losses, damages, obligations and costs and expenses (including
litigation costs and reasonable attorneys' fees and expenses) arising from or in
any way connected with the performance of the Replacements or the holding or
investment of the Replacement Reserve. Borrower assigns to Lender all rights and
claims Borrower may have against all persons or entities supplying labor or
materials in connection with the Replacements; provided, however, that Lender
may not pursue any such right or claim unless a default or Event of Default
exists under this Agreement or the Security Instrument.
12. Determinations by Lender. In any instance in this Agreement where the
consent or approval of Lender may be given or is required, or where any
determination, judgment or decision is to be rendered by Lender under this
Agreement, the granting, withholding or denial of such consent or approval and
the rendering of such determination, judgment or decision shall be made or
exercised by Lender (or its designated representative) at its discretion.
13. Borrower's Records. Borrower shall furnish such financial statements,
invoices, records, papers and documents relating to the Property as Lender may
reasonably require from time to time to make the determinations permitted or
required to be made by Lender under this Agreement.
14. Fees and Expenses.
(a) In addition to any other fees payable by Borrower to Lender in connection
with the Loan, Borrower shall pay Lender an annual fee of $50.00 for its
services in administering the Replacement Reserve and investing the Replacement
Reserve. The annual fee shall be due and payable by Borrower on the date
specified in a statement to Borrower regarding such fee.
(b) Borrower shall pay within 10 days of request from Lender (i) all reasonable
costs and expenses incurred by Lender in connection with collecting, holding and
disbursing the Replacement Reserve pursuant to this Agreement, and (ii) all
reasonable fees, charges, costs and expenses incurred by Lender in connection
with inspections made by Lender or Lender's representatives in carrying out
Lender's responsibility to make certain determinations under this Agreement.
15. Completion of Replacements. Lender's approval of any plans for any
Replacement, release of funds from the Replacement Reserve, inspection of the
Property by Lender or Lender's agents, or other acknowledgment of completion of
any Replacement in a manner satisfactory to Lender shall not be deemed an
acknowledgment or warranty to any person that the Replacement has been completed
in accordance with applicable building, zoning or other codes, ordinances,
statutes, laws, regulations or requirements of any governmental agency.
16. Transfer of Property/Transfer of Interests in Borrower. If a Transfer shall
occur or be contemplated, which Transfer requires the prior written consent of
Lender pursuant to the terms of the Security Instrument, Lender may review the
amount of the Replacement Reserve, the amount of the Monthly Deposits and the
likely repairs and replacements required by the Property and the related
contingencies which may arise during the remaining term of the Loan. Based upon
that review, Lender may require an additional deposit to the Replacement
Reserve, and/or an increase in the amount of the Monthly Deposits as a condition
to Lender's consent to such Transfer. In all events, the transferee shall be
required to assume Borrower's duties and obligations under this Agreement.
17. Termination of Replacement Reserve. After payment in full of all sums
secured by the Security Instrument and release by Lender of the lien of the
Security Instrument, Lender shall disburse to Borrower all amounts remaining in
the Replacement Reserve.
18. Entire Agreement; Amendment and Waiver. This Agreement contains the complete
and entire understanding of the parties with respect to the matters covered and
no change or amendment shall be valid unless it is made in writing and executed
by the parties to this Agreement. No specific waiver or forbearance for any
breach of any of the terms of this Agreement shall be considered as a general
waiver of that or any other term of this Agreement. If any provision of this
Agreement is in conflict with any provision of the Security Instrument regarding
the Replacement Reserve, the provision contained in this Agreement shall
control.
19. Notices. All notices under this Agreement shall be given in writing to the
other party at the address, and in the manner, provided in the Security
Instrument.
20. Severability. The invalidity, illegality, or unenforceability of any
provision of this Agreement pursuant to judicial decree shall not affect the
validity or enforceability of any other provision of this Agreement, all of
which shall remain in full force and effect.
21. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the jurisdiction in which the Property is located.
22. Non-Recourse. This Agreement is being executed in connection with the making
of the Loan pursuant to the terms of the Note. Borrower's liability hereunder
shall be limited to the extent provided in the Note.
23. Capitalized Terms. Any capitalized terms used in this Agreement and not
specifically defined herein, shall have the meanings set forth in the Security
Instrument.
ATTACHED EXHIBITS. The following Exhibits are attached to this
Agreement:
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X Exhibit A Schedule of Work
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X Exhibit B Modifications
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Borrower and Lender have executed this Agreement on the date and year
first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
BORROWER:
HOUSTON PINES, A CALIFORNIA LIMITED
PARTNERSHIP, a California limited
partnership
By: Angeles Realty Corporation, a
California corporation, its general
partner
By: /s/ Patti K. Fielding
Patti K. Fielding
Executive Vice President
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By: /s/ Max W. Foore______________________
Max W. Foore
Vice President
EXHIBIT A
REPLACEMENTS
[Attach and label as Exhibit A a copy of the completed Evaluator's
Summary: Physical Needs Over the Term or a comparable listing prepared by
Lender]
(Page B-1)
EXHIBIT B
MODIFICATIONS
1. Section 1(e) is amended by adding the following subparagraph (iii):
"(iii) at any time during the Loan term Lender shall determine that the
loan to value ratio of the Property is greater than 65%."
2. The following phrase is inserted at the end of Section 5.3:
"or as otherwise provided in Section 21(b)(6) of the Security Instrument."
_______________________
Borrower's Initials