GUARANTY AGREEMENT
(Apartment Investment and Management Company)
WHEREAS, the execution of this Guaranty Agreement is a condition to
borrowing from BANK UNITED, a federal savings bank successor by name change to
Bank United of Texas, a federal savings bank ("Lender"), making a loan, as
may be from time to time modified, extended and renewed, to Castle Rock
Joint Venture, a Texas joint venture ("Borrower"), the aggregate principal
amount of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), evidenced by that
certain Promissory Note described below.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the undersigned, Apartment Investment and
Management Company, a Maryland corporation (the "Guarantor"), hereby
irrevocably and unconditionally guarantees to Lender the prompt payment and
performance of the Guaranteed Obligations (hereinafter defined), this
Guaranty Agreement being upon the following terms:
1. The term "Guaranteed Obligations," as used herein, includes: (a)
that certain Promissory Note dated June 12, 1996, as modified by that certain
Modification of Loan Agreement and Loan Documents of even date herewith, in the
original principal amount of $5,000,000.00, executed by Borrower and payable to
the order of Lender (the "Note"); (b) interest on any of the indebtedness
described in (a) preceding; (c) any renewal or extension of the indebtedness
described in (a) through (b) preceding, or any part thereof; (d) all other
obligations of Borrower to Lender under that certain Loan Agreement dated June
12, 1996, as modified by that certain Modification of Loan Agreement and Loan
Documents of even date herewith (the "Loan Agreement"); and (e) and all
other obligations of Borrower to Lender under the Loan Documents as that term is
described in the Loan Agreement, including, but not limited to, the Deed of
Trust as that term is defined in the Loan Agreement.
2. This instrument shall be an absolute, continuing, irrevocable,
and unconditional guaranty, of payment and performance and not a guaranty of
collection, and Guarantor shall remain liable on its obligations hereunder until
the payment and performance in full of the Guaranteed Obligations (other
than contingent obligations under indemnification provisions of the Loan
Documents), unless otherwise provided herein.
3. If Guarantor becomes liable for any indebtedness owing by Borrower to
Lender by endorsement or otherwise, other than under this Guaranty Agreement,
such liability shall not be in any manner impaired or affected hereby, and the
rights of Lender hereunder shall be cumulative of any and all other rights that
Lender may ever have against Guarantor. The exercise by Lender of any right or
remedy hereunder or under any other instrument, or at law or in
equity, shall not preclude the concurrent or subsequent exercise of any other
right or remedy.
4. In the Event of Default (as that term is defined in the Loan
Agreement) by Borrower in payment or performance of the Guaranteed
Obligations, or any part thereof, when such Guaranteed Obligations becomes due,
whether by its terms, by acceleration, or otherwise, Guarantor shall promptly
pay the amount due thereon to Lender upon written demand in lawful money of the
United States and it shall not be necessary for Lender, in order to enforce such
payment by Guarantor, first to institute suit or exhaust its remedies
against Borrower or others liable on such Guaranteed Obligations, or to
enforce any rights against any collateral which shall ever have been given to
secure such Guaranteed Obligations.
5. Guarantor hereby agrees that its obligations under this Guaranty
Agreement shall not be released, diminished, impaired, reduced, or affected by
the occurrence of any reason or event, including, without limitation, one or
more of the following events, whether or not with notice to or the consent of
Guarantor: (a) the taking or accepting of collateral as security for any or all
of the Guaranteed Obligations or the release, surrender, exchange, or
subordination of any collateral now or hereafter securing any or all of the
Guaranteed Obligations; (b) any partial release of the liability of Guarantor
hereunder, or the release of any other guarantor from liability for any or
all of the Guaranteed Obligations; (c) any disability of Borrower, or the
dissolution, insolvency, or bankruptcy of Borrower, Guarantor, or any party at
any time liable for the payment of any or all of the Guaranteed Obligations;
(d) any renewal, extension, modification, waiver, amendment, or
rearrangement of any or all of the Guaranteed Obligations or any
instrument, document, or agreement evidencing, securing, or otherwise relating
to any or all of the Guaranteed Obligations that would increase Guarantor's
liability; (e) any adjustment, indulgence, forbearance, waiver, or compromise
that may be granted or given by Lender to Borrower, Guarantor, or any other
party ever liable for any or all of the Guaranteed Obligations; (f) any neglect,
delay, omission, failure, or refusal of Lender to take or prosecute any action
for the collection of any of the Guaranteed Obligations or to foreclose or take
or prosecute any action in connection with any instrument, document, or
agreement evidencing, securing, or otherwise relating to any or all of the
Guaranteed Obligations; (g) the unenforceability or invalidity of any or all
of the Guaranteed Obligations or any instrument, document, or agreement
evidencing, securing, or otherwise relating to any or all of the Guaranteed
Obligations; (h) any payment by Borrower to Lender is determined by a
court to constitute a preference under the bankruptcy laws or if for any
other reason Lender is required to refund such payment or pay the amount thereof
to someone else; (i) the settlement or compromise of any of the Guaranteed
Obligations; (j) the failure of Lender to perfect or
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continue any security interest or lien securing any or all of the Guaranteed
Obligations; or (k) the failure of Lender to preserve, protect, maintain, or
insure any collateral securing any or all of the Guaranteed Obligations.
6. Guarantor represents and warrants to Lender as follows:
(a) Guarantor has the power and authority to execute, deliver and
perform its obligations under this Guaranty Agreement and this
Guaranty Agreement constitutes the legal, valid and binding obligation of
Guarantor, enforceable against Guarantor in accordance with its terms,
except as limited by bankruptcy, insolvency, or other laws of general
application relating to the enforcement of creditor's rights.
(b) To Guarantor's knowledge, the execution, delivery, and
performance by Guarantor of this Guaranty Agreement do not and will not
violate Guarantor's bylaws, any law or any order of any court, governmental
authority or arbitrator and do not and will not conflict with, result
in a breach of, or constitute a default under, or result in the
imposition of any lien upon any assets of Guarantor pursuant to the
provisions of any indenture, mortgage, deed of trust, security agreement,
franchise, permit, license, or other instrument or agreement to which
Guarantor or its properties is bound.
(c) No authorization, approval, or consent of, and no filing or
registration with, any court, governmental authority, or third party is
necessary for the execution, delivery, or performance by Guarantor of
this Guaranty Agreement or the validity or enforceability thereof.
(d) All of Guarantor's federal income tax returns for tax year 1995
and all prior years have been filed and the resulting reported tax
liability has been paid in full.
7. Guarantor covenants and agrees that, as long as the Guaranteed
Obligations or any part thereof is outstanding (other than contingent
obligations under indemnification provisions of the Loan Documents):
(a) Guarantor will furnish to Lender as soon as available,
and in any event on or before April 15, with respect to the preceding
calendar year, beginning with the calendar year ending December 31,
1996, and annually thereafter a copy of the financial statements of
Guarantor for such fiscal year, including, without limitation,
balance sheets (reflecting, without limitation, all contingent
liabilities), income statements, statements of changes in financial
position (reflecting, without limitation, cash flow changes), and (ii)
sixty (60) days after filing, a copy of
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Guarantor's United States income tax return form, as filed with the
Internal Revenue Service, together with any and all exhibits and schedules
filed in connection therewith. The financial statements and tax return
shall be accompanied by a certificate of Guarantor to Lender stating that
no default under this Guaranty Agreement and no event which with notice or
lapse of time or both would be a default under this Guaranty
Agreement, or if in Guarantor's opinion a default has occurred, stating in
reasonable detail the nature of any such default.
(b) Guarantor will furnish promptly to Lender written notice of the
occurrence of any default under this Guaranty Agreement or an Event of
Default under the Loan Documents of which Guarantor has knowledge.
(c) Guarantor will furnish promptly to Lender such additional
information concerning the financial condition of Guarantor as may be
required by any law, statute or directive of any governmental agency or
authority having jurisdiction over Lender.
8. All present and future indebtedness of Borrower to Guarantor is
hereby subordinated to the Guaranteed Obligations. All sums paid to Guarantor by
Borrower following and during the continuation of or resulting in the occurrence
of an Event of Default on account of such present and future indebtedness shall
be held in trust by Guarantor until such Event of Default is cured to Lender's
satisfaction for the benefit of Lender and upon demand shall forthwith be paid
to Lender without affecting the liability of Guarantor under this Guaranty
Agreement except that all such payments shall be applied to the Guaranteed
Obligations. Upon the request of Lender, Guarantor shall execute, deliver, and
endorse to Lender such documents and instruments as Lender deems necessary or
appropriate to perfect, preserve, and enforce its rights hereunder.
9. No amendment or waiver of any provision of this Guaranty Agreement nor
consent to any departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by Lender. No
failure on the part of Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
10. Any acknowledgment or new promise, whether by payment of principal or
interest or otherwise and whether by Borrower or others (including Guarantor),
with respect to any of the Guaranteed Obligations shall, if the statute of
limitations on any of the
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Guaranteed Obligations shall have commenced to run, toll the running of
such statute of limitations and, if the period of such statute of limitations
shall have expired, prevent the operation of such statute of limitations.
11. This Guaranty Agreement is for the benefit of Lender and its
successors and assigns, and in the event of an assignment of the Guaranteed
Obligations, or any part thereof, the rights and benefits hereunder, to the
extent applicable to the Obligations so assigned, may be transferred with such
Obligations. This Guaranty Agreement is binding not only on Guarantor, but on
Guarantor's successors and assigns and personal representatives.
12. Guarantor recognizes that Lender is relying upon this Guaranty
Agreement and the undertakings of Guarantor hereunder in making a loan to
Borrower under the Loan Documents and further recognizes that the execution
and delivery of this Guaranty Agreement is a material inducement to Lender
in entering into the Loan Agreement and the Loan Documents.
13. This Guaranty Agreement is executed and delivered as an incident to a
lending transaction performable in Harris County, Texas, and shall be governed
by and construed in accordance with the laws of the State of Texas. Venue in
any dispute relating to this Guaranty Agreement, whether in federal or state
court, shall be laid in Harris County, Texas.
14. Guarantor shall pay on demand all reasonable attorneys' fees and all
other costs and expenses incurred by Lender in connection with the
preparation, enforcement, or collection of this Guaranty Agreement.
15. Except as herein provided, Guarantor hereby waives promptness,
diligence, demand of payment, notice of acceptance of this Guaranty Agreement,
presentment, notice of protest, notice of dishonor, notice of intent to
accelerate, notice of acceleration, notice of the incurring by Borrower of
additional Obligations, and all other notices and demands with respect to
the Guaranteed Obligations and this Guaranty Agreement.
16. Guarantor acknowledges that this Guaranty Agreement is executed in
connection with the Loan Agreement and that Guarantor is aware of the
Obligations of Borrower and the terms thereunder. Guarantor agrees that
Lender may exercise any and all rights granted to it under the Loan
Documents without affecting the validity or enforceability of this Guaranty
Agreement.
17. Guarantor hereby expressly waives any right to trial by jury in any
action or legal proceeding arising out of or relating to the Loan Documents on
the transactions contemplated thereby or hereby.
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18. Guarantor acknowledges and agrees that the value of the consideration
received and to be received by Guarantor as a result of Borrower and Lender
entering into the Loan Documents and Guarantor executing and delivering
this Guaranty Agreement is reasonably worth at least as much as the liability
and obligation of Guarantor hereunder, and such liability and obligation and the
Loan Documents has benefited or may reasonably be expected to benefit Guarantor
directly or indirectly.
19. Notwithstanding anything herein to the contrary, the liability of
Guarantor for repayment of the portion of the Guaranteed Obligations
consisting of principal evidenced by the Note shall be limited to
$1,000,000.00, together with accrued interest on such amounts in accordance
with the terms of the Note. For purposes of determining Guarantor's obligations
hereunder, all payments made under the Note shall be applied first to accrued,
unpaid interest on the Note, then to the portion of the unpaid principal balance
of the Note that is not guaranteed hereunder, and the balance, if any, to the
portion of the principal balance of the Note that is guaranteed hereunder. If
Lender exercises the power of sale described in the Deed of Trust, as defined in
the Loan Agreement, all proceeds from such sale shall be applied to Lender's
cost of collection, reasonable attorney's fees, court costs and other expenses,
then to accrued, unpaid interest on the Note, then to the portion of the unpaid
principal balance of the Note that is not guaranteed hereunder, and, finally, to
the remaining principal balance of the portion of the Note that is guaranteed
hereunder.
20. In addition to the foregoing, Guarantor shall be personally
liable without limitation to Lender, in the amount of any loss, damage or cost
incurred by Lender resulting from (1) fraud or intentional misrepresentation by
Borrower in connection with obtaining the loan evidenced by the Note or in
complying with Borrower's agreements and any other Loan Documents entered into
by and between Borrower and Lender in connection with the loan
evidenced by the Note. In such event, the "loss" shall be deemed to include but
not be limited to all sums owing from Borrower under the Note, and any other
Loan Documents (as defined in the Loan Agreement); (2) failure to remit to
Lender insurance proceeds, condemnation awards, or other sums or payments
attributable to the Project (as defined in the Loan Agreement) in accordance
with the provisions of the Deed of Trust (as defined in the Loan Agreement),
except to the extent that Borrower did not have the legal right, because of a
bankruptcy, receivership, or similar judicial proceeding, to direct
disbursement of such sums or payments; (3) failure to apply to principal and
interest under the Note, payment of utilities, taxes and assessments, ground
rents, if any, on the Project or other operating expenses or obligations under
the Loan Documents as they become due and payable, or otherwise remit to Lender
all rents, profits, issues, products and income of the Project received during
the existence of an Event of Default under
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the Note or the Loan Documents (including any received or collected by or on
behalf of Borrower during the existence of an Event of Default, except to the
extent that Borrower did not have the legal right, because of a bankruptcy,
receivership or similar judicial proceeding, to direct the disbursement of such
sums); (4) removal of any personalty or fixtures constituting a portion
of the Project; (5) failure to pay or provide a bond in accordance with the law
to discharge any valid mechanics', materialman's or similar lien claimants'
liens arising from work performed or materials furnished in connection with the
Project prior to any sale or foreclosure thereof; (6) Borrower's failure to
deliver to Lender during the existence of an Event of Default under the
Loan Documents and upon demand by Lender, all security deposits received in
connection with the Property (and not returned to tenants or applied to tenants'
defaults); (7) any waste of or damage to the Project caused by the willful or
wanton acts or omissions of Borrower or its agents; (8) any obligation of
Borrower arising under the Environmental Hazards section of the Deed of Trust
and/or the Amended and Restated Certificate and Indemnification Regarding
Hazardous Substances of even date herewith executed by Borrower and Guarantor in
which event, the "loss" shall include all monetary obligations of Borrower
thereunder; or (9) Borrower's failure to pay transfer fees and charges due under
the Deed of Trust, in which event the "loss" shall equal such unpaid fees and
charges.
21. The following shall be the basis for the finder of fact's
determination of the fair market value of the Property (defined in the Loan
Agreement) as of the date of the foreclosure sale in proceedings governed by
Sections 51.003, 51.004, and 51.005 of the Texas Property Code (as amended from
time to time);
(i) The Property shall be valued in an "as is" condition as of
the date of the foreclosure sale, without any assumption or
expectation that the Property will be repaired or improved in any
manner before a resale o the Property after foreclosure;
(ii) The valuation shall be based upon an assumption that the
foreclosure purchaser desires a prompt resale of the Property for cash
promptly (but no later than twelve months) following the foreclosure
sale;
(iii) All reasonable closing costs customarily borne by the
seller in a commercial real estate transaction should be deducted from
the gross fair market value of the Property, including, without
limitation, brokerage commissions, title insurance, a survey of the
Property, tax prorations, attorney's fees, and marketing costs;
(iv) The gross fair market value of the Property shall be further
discounted to account for any estimated
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holding costs associated with maintaining the Property pending sale,
including, without limitation, utilities expenses, property management
fees, taxes and assessments (to the extent not accounted for in
(d)(iii) above, and other maintenance expenses; and
(v) Any expert opinion testimony given or considered
in connection with a determination of the fair market value of the
Property must be given by persons having at least five years
experience in appraising property similar to the Property and who
have conducted and prepared a complete written appraisal of the
Property taking into consideration the factors set forth above.
22. ARBITRATION To the maximum extent not prohibited by law, any
controversy, dispute or claim arising out of, in connection with, or relating to
the Loan Documents or any transaction provided for therein, including but not
limited to any claim based on or arising from an alleged tort or an alleged
breach of any agreement contained in any of the Loan Documents, shall, at the
request of any party to the Loan Documents (either before or after the
commencement of judicial proceedings), be settled by arbitration pursuant to
Title 9 of the United States Code, which the parties hereto acknowledge and
agree applies to the transaction involved herein, and in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"). If Title 9 of the United States Code is inapplicable to any such claim,
dispute or controversy for any reason, such arbitration shall be conducted
pursuant to the Texas General Arbitration Act and in accordance with the
Commercial Arbitration Rules of the AAA. In any such arbitration proceeding:
(i) all statutes of limitations which would otherwise be applicable shall apply;
and (ii) the proceeding shall be conducted in Houston, Texas, by a single
arbitrator, if the amount in controversy is $1,000,000.00 or less, or by a panel
of three arbitrators if the amount in controversy is over
$1,000,000.00. All arbitrators shall be selected by the process of appointment
from a panel pursuant to Section 13 of the AAA Commercial Arbitration
Rules and each arbitrator shall be either an active attorney or retired judge
with an AAA acknowledged expertise in the subject matter of the controversy,
dispute or claim. Any award rendered in any such arbitration proceeding shall
be final and binding, and judgment upon any such award may be entered in any
court having jurisdiction.
If Guarantor or Lender files a proceeding in any court to resolve any such
controversy, dispute or claim, such action shall not constitute a waiver of the
right of such party or a bar to the right of any other party to seek arbitration
under the provisions of this Section of that or any other claim, dispute or
controversy, and the court shall, upon motion of any party to the proceeding,
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direct that such controversy, dispute or claim be arbitrated in accordance with
this Section.
Notwithstanding any of the foregoing, the parties hereto agree that no
arbitrator or panel of arbitrators shall possess or have the power to (i) assess
punitive damages, (ii) dissolve, rescind or reform (except that the arbitrator
may construe ambiguous terms) this Agreement, (iii) enter judgment on the debt
evidenced by the above-described Note, (iv) exercise equitable powers or issue
or enter any equitable remedies or (v) allow discovery of
attorney/client privileged information; the parties hereby further waive, each
to the other, any claims for punitive damages and agree that neither an
arbitrator nor any court shall have the power to assess such damages. The
Commercial Arbitration Rules of the AAA are hereby modified to this extent for
the purpose of arbitration of any dispute, controversy or claim arising out of,
in connection with, or relating to this Agreement.
No provision of, or the exercise of any rights under, this Section shall
limit or impair the right of Lender before, during or after any arbitration
proceeding to: (i) exercise self-help remedies such as setoff or
repossession; (ii) foreclose (judicially or otherwise) any lien on or security
interest in the Property described in the Loan Agreement; or (iii) obtain
emergency relief from a court of competent jurisdiction to prevent the
dissipation, damage, destruction, transfer, hypothecation, pledging or
concealment of assets or of collateral securing any indebtedness, obligation or
guaranty referenced in the Loan Agreement. Such emergency relief may be in the
nature of, but is not limited to: prejudgment attachments, garnishments,
sequestrations, appointments of receivers, or other emergency injunctive relief
to preserve the status quo.
EXECUTED on the date shown below to be effective on the 12th day of
November, 1996.
GUARANTOR:
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY, a Maryland corporation
By: /s/ H. Alcock
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Name: Harry Alcock
---------------------------------
Title: Vice President
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Date: 11/12/96
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THE STATE OF COLORADO
COUNTY OF DENVER
This instrument was acknowledged before me on 12 November, 1996 by Harry
Alcock, VP of Apartment Investment and management Company, a Maryland
Corporation, on behalf of said corporation.
/s/ Alix Kyle
---------------------------------
Notary Public in and for
[SEAL] The State of Colorado
My Commission Expires 1/12/2000
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