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EXHIBIT 10.8
PAYMENT GUARANTY
THIS PAYMENT GUARANTY (this "GUARANTY") is made and entered
into as of this 8th day of May 1998, by AIMCO PROPERTIES, L.P., a Delaware
limited partnership (the "Guarantor"), for the benefit of FEDERAL NATIONAL
MORTGAGE ASSOCIATION, a corporation duly organized and existing under the
Federal National Mortgage Association Charter Act, 12 U.S.C. Section 1716 et.
seq. ("FANNIE MAE"), with reference to the following facts:
R E C I T A L S
A. Reference is made to the following agreements, and
the transactions described therein:
1. That certain Second Amended and Restated
Master Reimbursement Agreement (Pool- 1 Properties) dated as of
September 1, 1997 (the "AMBASSADOR POOL-1 MRA"), the Multifamily Notes,
Multifamily Deeds of Trust, Assignments of Rents and Security
Agreements, and Multifamily Mortgages, Assignments of Rents and
Security Agreements described therein, and the indentures and other
bond documents, servicing agreements, swap and other hedge agreements,
pledge agreements, security agreements, cash management agreements and
other collateral agreements executed in connection therewith (such
instruments, as the same have been or may be amended, supplemented, or
otherwise modified or amended and restated from time to time in
accordance with their respective terms, are referred to collectively
herein as the "AMBASSADOR POOL-1 TRANSACTION DOCUMENTS"), executed by
Ambassador VIII, L.P., a Delaware limited partnership ("AMBASSADOR
POOL-1 BORROWER");
2. That certain Master Reimbursement Agreement
(Pool-2 Properties) dated as of December 1, 1996 (the "AMBASSADOR
POOL-2 MRA"), the Multifamily Notes, Multifamily Deeds of Trust,
Assignments of Rents and Security Agreements, and Multifamily
Mortgages, Assignments of Rents and Security Agreements described
therein, and the indentures and other bond documents, servicing
agreements, swap and other hedge agreements, pledge agreements,
security agreements, cash management agreements and other collateral
agreements executed in connection therewith (such instruments, as the
same have been or may be amended, supplemented, or
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otherwise modified or amended and restated from time to time in
accordance with their respective terms, are referred to collectively
herein as the "AMBASSADOR POOL-2 TRANSACTION DOCUMENTS" and, together
with the Ambassador Pool-1 Transaction Documents, the "AMBASSADOR
DOCUMENTS"), executed by Ambassador I, L.P., an Illinois limited
partnership ("AMBASSADOR POOL-2 BORROWER");
3. Those certain Multifamily Notes, Multifamily
Deeds of Trust Assignments of Rents and Security Agreements, and
Multifamily Mortgages, Assignments of Rents and Security Agreements
relating to or encumbering the Properties (hereinafter defined)
described on Schedule 1 attached to this Guaranty and by this reference
incorporated herein, and the servicing agreements, swap and other hedge
agreements, pledge agreements, security agreements, cash management
agreements and other collateral agreements executed in connection
therewith (such instruments, as the same have been or may be amended,
supplemented, or otherwise modified or amended and restated from time
to time in accordance with their respective terms, are referred to
collectively herein as the "AIMCO POOL I TRANSACTION DOCUMENTS"),
executed by AIMCO/Brandywine, L.P., a Delaware limited partnership
("AIMCO POOL I BORROWER");
4. That certain Master Reimbursement Agreement
dated as of July 1, 1996 (the "AIMCO POOL II MRA"), and the Multifamily
Notes, Multifamily Deeds of Trust, Assignments of Rents and Security
Agreements, and Multifamily Mortgages, Assignments of Rents and
Security Agreements described therein, and the indentures and other
bond documents, servicing agreements, swap and other hedge agreements,
pledge agreements, security agreements, cash management agreements and
other collateral agreements executed in connection therewith (such
instruments, as the same have been or may be amended, supplemented, or
otherwise modified or amended and restated from time to time in
accordance with their respective terms, are referred to collectively
herein as the "AIMCO POOL II TRANSACTION DOCUMENTS"), executed by OTC
Apartments Limited Partnership, a Florida limited partnership ("AIMCO
POOL II BORROWER");
5. Those certain Multifamily Notes, Multifamily
Deeds of Trust, Assignments of Rents and Security Agreements, and
Multifamily Mortgages, Assignments of Rents and Security Agreements
relating to or encumbering the Properties described on Schedule 2
attached to this Guaranty
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and by this reference incorporated herein, and the servicing
agreements, swap and other hedge agreements, pledge agreements,
security agreements, cash management agreements and other collateral
agreements executed in connection therewith (such instruments, as the
same have been or may be amended, supplemented, or otherwise modified
or amended and restated from time to time in accordance with their
respective terms, are referred to collectively herein as the "AIMCO
POOL III TRANSACTION DOCUMENTS"), executed by AIMCO Properties Finance
Partnership, L.P., a Delaware limited partnership ("AIMCO POOL III
BORROWER");
6. Those certain Multifamily Notes, Multifamily
Deeds of Trust, Assignments of Rents and Security Agreements, and
Multifamily Mortgages, Assignments of Rents and Security Agreements
relating to or encumbering the Properties described on Schedule 3
attached to this Guaranty and by this reference incorporated herein,
and the servicing agreements, swap and other hedge agreements, pledge
agreements, security agreements, cash management agreements and other
collateral agreements executed in connection therewith (such
instruments, as the same have been or may be amended, supplemented, or
otherwise modified or amended and restated from time to time in
accordance with their respective terms, are referred to collectively
herein as the "AIMCO POOL IV TRANSACTION DOCUMENTS"), executed by the
entities identified on Schedule 3 (collectively, "AIMCO POOL IV
BORROWERS"); and
7. That certain Master Credit Facility Agreement
dated as of February 4, 1998, and the Multifamily Notes, Multifamily
Deeds of Trust, Assignments of Rents and Security Agreements, and
Multifamily Mortgages, Assignments of Rents and Security Agreements
described therein, and the servicing agreements, swap and other hedge
agreements, pledge agreements, security agreements, cash management
agreements and other collateral agreements executed in connection
therewith (such instruments, as the same have been or may be amended,
supplemented, or otherwise modified or amended and restated from time
to time in accordance with their respective terms, are referred to
collectively herein as the "AIMCO CREDIT FACILITY TRANSACTION
DOCUMENTS"), executed by, among other entities, AIMCO/Bluffs, L.L.C., a
Delaware limited liability company, AIMCO Chesapeake, L.P., a Delaware
limited partnership, AIMCO Elm Creek, L.P., a Delaware limited
partnership, AIMCO Lakehaven, L.P., a Delaware limited
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partnership, and AIMCO Los Arboles, L.P., a Delaware limited
partnership (such entities collectively, "AIMCO CREDIT FACILITY
PARTIES").
B. Pursuant to that certain Agreement and Plan of Merger
dated as of December 23, 1997 (as the same has been or may be amended,
supplemented, or otherwise modified or amended and restated from time to time),
by and between Apartment Investment and Management Company, a Maryland
corporation ("AIMCO REIT"), and Ambassador Apartments, Inc., a Maryland
corporation ("AMBASSADOR"), AIMCO REIT and Ambassador intend to consummate a
transaction in which (i) Ambassador would merge with and into AIMCO REIT (with
AIMCO REIT being the surviving corporation), and (ii) Guarantor (which is the
operating partnership of AIMCO REIT) and Ambassador Apartments, L. P., a
Delaware limited partnership ("AMBASSADOR OP") (which is the operating
partnership of Ambassador), will effect a business combination in which, through
one or more steps, Guarantor will become a 98.9% limited partner and the 1 %
general partner in Ambassador OP, and AIMCO Holdings, L.P., a Delaware
corporation ("HOLDINGS"), will be a .1% limited partner in Ambassador OP
(collectively, the "PROPOSED MERGER"). As required by the provisions of the
Ambassador Documents, AIMCO REIT, Guarantor, Ambassador, Ambassador OP and
Borrowers (defined below) have requested Fannie Mae's consent to the Proposed
Merger. After reviewing the information regarding the Proposed Merger provided
by AIMCO REIT, Guarantor, Ambassador, Ambassador OP and Borrowers, Fannie Mae
has notified AIMCO REIT, Guarantor, Ambassador, Ambassador OP and Borrowers that
it is willing to consent to the Proposed Merger only if Guarantor agrees to
guaranty the obligations of the Borrowers under the Transaction Documents
(hereinafter defined).
C. Guarantor has (or by virtue of the Proposed Merger will
have) an indirect ownership interest in, or is otherwise financially interested
in, each of Borrowers, and will receive a direct and material benefit from
Fannie Mae's consent to the Proposed Merger.
NOW THEREFORE, in order to induce Fannie Mae to consent to the
Proposed Merger and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Guarantor hereby agrees as follows:
1. DEFINITIONS. As used in this Guaranty, the following terms
shall have the respective meanings set forth below:
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"AFFILIATE", as applied to any person or entity, means a
person or entity directly or indirectly controlling, controlled by or under
common control with the subject person or entity (and, for purposes of this
definition, "control", including the terms "controlling", "controlled by" and
"under common control with", as applied to any person or entity, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such person or entity, whether
through the ownership of voting securities, partnership interests or by
contract or otherwise).
"AMBASSADOR POOL-3 MRA" means that certain Master
Reimbursement Agreement (Pool-3 Property) dated as of December 1, 1996 (as the
same has been or may be amended, supplemented or otherwise modified or amended
and restated from time to time in accordance with its terms), by and between
Williamsburg Limited Partnership, an Illinois limited partnership ("WLP"), and
Fannie Mae.
"BORROWER" means, individually, the Ambassador Pool-I
Borrower, the Ambassador Pool-2 Borrower, the AIMCO Pool I Borrower, the AIMCO
Pool II Borrower, the AIMCO Pool III Borrower, each of the AIMCO Pool IV
Borrowers, and each of the AIMCO Credit Facility Parties, and the term
"BORROWERS" means, collectively, all of such entities. Notwithstanding the
foregoing, the terms "Borrower" and "Borrowers" shall not include or be deemed
to refer to any of the foregoing entities from and after the date on which (i)
all of the Properties owned by any such entity have been released from the lien
of the Transaction Documents relating to those Properties in accordance with
the terms thereof, (ii) all of the Properties owned by any such entity have
been transferred to one or more third parties which are not Affiliates of such
Borrower, AIMCO or Guarantor, and such third party has assumed that Borrower's
obligations under the Transaction Documents relating to those Properties in
accordance with the terms thereof, or (iii) Fannie Mae has sold or assigned all
of its interest in the Transaction Documents applicable to such Borrower. "Debt
Service" means the scheduled principal, interest, trustee's fees, remarketing
fees, and all other amounts payable monthly by a Borrower under its respective
Transaction Documents.
"EXCESS CASH FLOW" means, at any time and from time to time
with respect to each Pool then owned by the Borrowers, an amount equal to Gross
Cash Flow for such Pool, less (i) Operating Expenses for such Pool payable by
the respective Borrower, (ii) Debt Service for such Pool payable by the
respective Borrower, and (iii) expenditures for such Pool made or to be made by
the respective
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Borrower in accordance with the Transaction Documents for items that would be
treated as capital expenses under GAAP consistently applied.
"GAAP" means generally accepted accounting principles in
effect in the United States from time to time.
"GRANTOR EXCESS CASH FLOW" has the meaning given such term
in the Pledge and LOC Agreement.
"GROSS CASH FLOW" means, for any period, with respect to
each Pool then owned by the Borrowers, all gross rents collected from or on
behalf of tenants at the Properties in such Pool (other than unforfeited tenant
security deposits), any other income, receipts or reserves (but only to the
extent such reserves were included as Operating Expenses at the time they were
set aside) derived from such Properties (including from the use or operation
thereof) without regard to its source, including tenant reimbursements for
utilities, services and supplies, security deposit forfeitures, parking rents or
fees, concessions and vending fees and laundry income and proceeds from rental
interruption insurance but excluding (i) insurance proceeds, damages, claims and
rights of action and the right thereto under any insurance policies insuring and
relating to any portion of such Properties with respect to any damage to, or
destruction or loss of, all or any portion of such Properties, whether by fire
or other cause (other than proceeds from rental interruption insurance), (ii)
proceeds of any action or proceeding for the taking of such Properties, or any
part thereof or interest therein, for public or quasi-public use under the power
of eminent domain, by reason of any public improvement or condemnation
proceeding, or in any other similar manner, or the conveyancing of such
Properties under the threat or contemplation of any such action or proceeding,
(iii) if any such Property is one of the Properties described in the Ambassador
Pool-1 MRA, the Ambassador Pool-2 MRA or the AIMCO Pool II MRA, proceeds from
the sale of the Related Bonds (as defined in the respective MRA), if any, (iv)
the unearned portion of prepaid rent, (v) other refundable items, (vi) interest
on any account established for the deposit of refundable items, and (vii)
proceeds from the sale or other disposition of all or any portion of such
Properties.
"GUARANTY PERIOD" means the period commencing on the date
hereof and ending ninety-one (91) days after the first date on which (i) all
indebtedness governed by the terms of the Ambassador Documents (including, by
virtue of the cross-default and cross-collateralization provisions in the
Ambassador Documents, the indebtedness governed by the Ambassador Pool-3 MRA)
has been indefeasibly discharged and satisfied in full and (ii) the credit
facility governed by the terms of the Credit Facility Transaction Documents is
terminated and all indebtedness thereunder has been indefeasibly discharged and
satisfied in full; provided, however, if an "Event of Default" under any of the
Transaction Documents exists at
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the time the events described in the foregoing clauses (i) and (ii) have
occurred, the Guaranty Period shall continue until such time as that Event of
Default has been cured pursuant to the applicable Transaction Document.
"LETTER OF CREDIT" means the letter of credit issued to
Fannie Mae concurrently herewith pursuant to the Pledge and LOC Agreement.
"MASTER LOCKBOX" means the lockbox established pursuant to
the Master Lockbox Agreement.
"MASTER LOCKBOX AGREEMENT" means that certain Master Cash
Management, Security, Pledge and Assignment Agreement to be entered into by and
among Guarantor, Fannie Mae and Master Servicer in accordance with the
provisions of the Term Sheet, as such agreement may be amended, supplemented,
or otherwise modified or amended and restated from time to time in accordance
with its terms.
"MASTER SERVICER" means the independent contractor engaged
to service the Master Lockbox and the Master Lockbox Agreement for Fannie Mae,
and any replacement or successor thereto engaged by Fannie Mae.
"MATERIAL ADVERSE EFFECT" as applied to Guarantor means 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, that could reasonably be expected to have a material adverse
change in or a materially adverse effect upon any of (i) the business,
operations, property or condition (financial or otherwise) of Guarantor, (ii)
the present or future ability of Guarantor to perform its obligations under this
Guaranty, the Pledge and LOC Agreement or any document executed in accordance
with the Term Sheet, (iii) the validity, priority, perfection or enforceability
of this Guaranty, the Pledge and LOC Agreement or any document executed in
accordance with the Term Sheet, or (iv) the value of, or Fannie Mae's ability to
have recourse against, any collateral for the Guaranteed Obligations.
"OPERATING EXPENSES" means, for any period, with respect to
each Pool then owned by the Borrowers, the aggregate of all direct, ordinary,
normal, recurring and necessary expenses thereof including, without
duplication, (a) all real estate and personal property taxes, water, sewer and
vault charges and all other taxes, levies, assessments, common charges and
other similar charges, general and special, ordinary and extraordinary,
foreseen and unforeseen, of every kind and nature whatsoever, which at any time
may be assessed, levied or
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imposed by, in each case, any state or other political subdivision thereof (or
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government) or any other person,
upon the Properties in such Pool or the rents or the ownership, use, occupancy
or enjoyment thereof, and any interest, costs or penalties with respect to any
of the foregoing, (b) property and liability insurance premiums, (c) wages,
salaries and benefits of personnel employed on site to manage, lease, maintain
and operate such Properties, (d) costs or expenses of utility services to such
Properties and to tenant spaces to the extent payable by the respective
Borrower, (e) costs and expenses of providing security services to such
Properties, if any, (D costs or expenses of in-house or outside service
arrangements for landscaping, janitorial, window washing and cleaning, trash,
debris, make ready units, cable and satellite television and other services,
(g) expenses of maintaining, repairing and cleaning the grounds, parking,
amenities, exterior and interior spaces of such Properties, (h) expenses of
repairing and maintaining in good operable condition the mechanical,
structural, electrical, elevator, heating, ventilating, air conditioning and
plumbing systems, (i) property management fees payable to parties other than
the respective Borrower, (j) administrative expenses including advertising
incurred at the site of such Properties, (k) legal fees associated with lease
documentation and tenant matters and legal, accounting and other professional
fees relating to the operation of such Properties, (l) the replacement and
repair amount with respect to such Properties, (m) costs for water and sewage
fees, and (n) any other items that are treated as noncapital expenses under
GAAP. All of the foregoing (including the impositions described under clause
(a) above) shall be computed on an accrual basis and in accordance with GAAP
consistently applied. For the purposes of calculating Excess Cash Flow, (i) the
management fees included in Operating Expenses with respect to each Pool shall
be equal to the lesser of four percent (4%) of the Gross Cash Flow of such Pool
or the actual fees payable under the terms of the management agreements
approved by Fannie Mae, and (ii) any fees or expenses paid to in-house or
Affiliate service providers shall not exceed the amount that would be payable
to an outside third-party service provider in an arms-length transaction for
the materials or services in question. In addition, Operating Expenses shall
exclude (i) Debt Service, (ii) depreciation and amortization, (iii) all legal,
accounting and professional fees not included in clause (k) above, and (iv)
items that would be treated as capital expenses under GAAP consistently
applied.
"PLEDGE AND LOC AGREEMENT" means that certain Pledge and
Security Agreement and Agreement Regarding Letter of Credit of even date
herewith, by and between Guarantor and Fannie Mae, as~te same may be amended,
supplemented or otherwise modified or amended and restated from time to time in
accordance with its terms.
"POOL" means, individually, each of the following pools of
Properties: (i) all of the Properties owned by the Ambassador Pool-1 Borrower,
(ii) all of the Properties owned by the Ambassador Pool-2 Borrower, (iii) all
of the Properties owned by the AIMCO Pool l
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Borrower, (iv) all of the Properties owned by the AIMCO Pool II Borrower, (v)
all of the Properties owned by the AIMCO Pool III Borrower, (vi) all of the
Properties owned by AIMCO/RALS, L.P. (one of the AIMCO Pool IV Borrowers),
(vii) the Property owned by AIMCO/Woodlands-Tyler, L.P. (the other AIMCO Pool
IV Borrower), and (viii) all of the Properties owned by the AIMCO Credit
Facility Parties, and the term "Pools" means, collectively, all of such Pools.
"PROPERTY" means, individually, each of the multifamily
residential properties now or hereafter encumbered by any of the Transaction
Documents, and the term
"PROPERTIES" means, collectively, all of such Properties.
Notwithstanding the foregoing, the terms "Property" and "Properties" shall not
include or be deemed to refer to any Property from and after the date on which
(i) such Property has been released from the lien of the Transaction Documents
relating to such Property in accordance with the terms thereof, (ii) such
Property has been transferred to a third party which is not an Affiliate of the
Borrower which owns that Property, AIMCO or Guarantor, and such third party has
assumed that Borrower's obligations under the Transaction Documents relating to
such Property in accordance with the terms thereof, or (iii) Fannie Mae has
sold or assigned all of its interest in the Transaction Documents applicable to
such Property.
"SERVICERS" means, collectively, the independent contractors
engaged to service the respective Transaction Documents and the loans evidenced
thereby for Fannie Mae, and any replacements or successors engaged by Fannie
Mae.
"TERM SHEET" means the global Agreement Term Sheet attached
to this Guaranty as Exhibit A and by this reference incorporated herein.
"TRANSACTION DOCUMENT" means, individually, each of the
Ambassador Documents, each of the AIMCO Pool I Transaction Documents, each of
the AIMCO Pool Il Transaction Documents, each of the AIMCO Pool III Transaction
Documents, each of the AIMCO Pool IV Transaction Documents, and each of the
AIMCO Credit Facility Transaction Documents, and the term "Transaction
Documents" means, collectively, all of such agreements.
"TRIGGERING EVENT" means the occurrence of one or more of
the following:
(i) an "Event of Default" under
any of the Transaction Documents, provided, however, that
with respect to the AIMCO Pool I Transaction Documents, the
AIMCO Pool III Transaction Documents and the AIMCO Pool IV
Transaction Documents only, an Event of Default thereunder
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not relating to the payment of money shall not constitute a
Triggering Event hereunder unless and until the specified
Event of Default shall not have been cured on or before the
date that is thirty (30) days after delivery of written
notice to the applicable Borrower of the occurrence of such
Event of Default;
(ii) a breach by Guarantor with
respect to its covenant to establish the Master Lockbox, and
deliver the other documents and take the other steps
described in the Term Sheet, in accordance with Section 24
hereof; and
(iii) a breach by Guarantor of any
of its obligations under this Guaranty, the Pledge and LOC
Agreement or the Master Lockbox Agreement, subject to any
applicable notice and grace period hereunder or thereunder.
2. GUARANTY.
2.1 GUARANTEED OBLIGATIONS.
(a) Subject to the express limitations
set forth in subsection 2.2, Guarantor irrevocably, absolutely and
unconditionally guarantees to Fannie Mae, as primary obligor and not
merely as surety, the full, due and punctual payment of all
obligations of each of the Borrowers to Fannie Mae when the same shall
become due (whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise, including amounts that
would become due but for the operation of the automatic stay under
Section 362(a) of the United States Bankruptcy Code (the "BANKRUPTCY
CODE"), 11 U.S.C. Section 362(a)), now or hereafter made, incurred or
created, whether absolute or contingent, liquidated or unliquidated
and however arising under or in connection with the respective
Transaction Documents to which such Borrower is a party (collectively,
the "BORROWER OBLIGATIONS"), including (i) those obligations arising
under successive transactions under such Transaction Documents which
shall either continue the respective Borrower Obligations or from time
to time renew them after they have been satisfied and (ii) interest
which, but for the filing of a petition in bankruptcy with respect to
the respective Borrower, would have accrued on such Borrower
Obligations, whether or not a claim is allowed against such Borrower
for such interest in the related bankruptcy proceeding. This Guaranty
is an unconditional guaranty of payment and not of collection, and is
in no way conditioned upon any attempt by Fannie Mae to collect from
Borrowers or any of them. This Guaranty is a continuing guaranty which
shall remain in full force and effect during and until the expiration
of the Guaranty Period, and Guarantor shall not be released from any
obligations to Fannie Mae under this Guaranty prior to the expiration
of the
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Guaranty Period. Guarantor's obligations under this Section are
referred to in this Guaranty as the "GUARANTEED OBLIGATIONS".
(b) In addition to the Ambassador
Documents, reference also is made to the Ambassador Pool-3 MRA between
Fannie Mae and WLP. Guarantor acknowledges that, as of the date
hereof, (i) an "Event of Default" under the Ambassador Pool-1 MRA or
the Ambassador Pool-2 MRA also is an "Event of Default" under the
Ambassador Pool-3 MRA, and vice versa (i. e., such documents are
cross-defaulted), and (ii) the property owned by WLP also is
collateral for the obligations under the Ambassador Documents, and the
properties owned by the Ambassador Pool-1 Borrower and the Ambassador
Pool-2 Borrower also are collateral for the obligations under the
Ambassador Pool-3 MRA (i. e., the Ambassador Documents and the
Ambassador Pool-3 MRA are cross-collateralized). Accordingly, although
the property owned by WLP is not considered a "Property" for purposes
of determining Excess Cash Flow under this Guaranty, and the
obligations of WLP under the Ambassador Pool-3 MRA are not included
within the definition of Borrower Obligations, an "Event of Default"
under the Ambassador Pool-3 MRA will constitute an Event of Default"
under the Ambassador Documents that will (x) be a Triggering Event
under this Guaranty, and (y) entitle Fannie Mae to use Grantor Excess
Cash Flow in the Master Lockbox and proceeds from a draw on the Letter
of Credit to cure such Event of Default.
2.2 LIMITATION ON AMOUNT GUARANTEED.
(a) Notwithstanding any other
provision in this Guaranty to the contrary, but subject to subsection
2.2(b) hereof, the liability of Guarantor to pay and perform the
Borrower Obligations shall be limited to the amount (the "Maximum
Guaranteed Amount") determined at any time and from time to time as the
sum of (i) the cumulative Excess Cash Flow from the Pools from and
after the occurrence and during the continuance of a Triggering Event
plus (ii) an amount equal to the face amount of the Letter of Credit at
such time. As collateral and security for the Maximum Guaranteed
Amount, Guarantor shall (x) cause the Letter of Credit to be issued in
favor of Fannie Mae pursuant to the Pledge and LOC Agreement and (y)
pursuant to Pledge and LOC Agreement, pledge to and for the benefit of
Fannie Mae amounts held in the Master Lockbox, proceeds from a draw on
the Letter of Credit in accordance with Section 2.4 of the Pledge and
LOC Agreement, Guarantor's right to receive Grantor Excess Cash Flow
from entities in which Guarantor is a partner or member, and proceeds
of the foregoing.
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(b) Notwithstanding the first sentence
of subsection 2.2(a), Guarantor's obligations under this Guaranty
shall not be limited to the Maximum Guaranteed Amount, but instead
shall be in the full amount of the Guaranteed Obligations, from and
after the occurrence of any of the following events: (i) Guarantor's
failure to deposit (or cause to be deposited) into the Master Lockbox
all Grantor Excess Cash Flow, as required pursuant to the Master
Lockbox Agreement (including, without limitation, as a result of any
depository bank disbursing Grantor Excess Cash Flow to Guarantor from
and after the date on which Fannie Mae instructs such depository bank
to cease transferring Grantor Excess Cash Flow to Guarantor as a
result of a Triggering Event, rather than depositing such Grantor
Excess Cash Flow into the Master Lockbox); (ii) a challenge by
Guarantor or any of its Affiliates regarding the validity,
enforceability or priority of the security interests granted to Fannie
Mae pursuant to (or in connection with) the Pledge and LOC Agreement
or the Master Lockbox Agreement, or any other action by Guarantor or
any of its Affiliates that impairs the validity, enforceability or
priority of such security interests (including a challenge to
Guarantor's right to receive Grantor Excess Cash Flow or to pledge and
deliver the Grantor Excess Cash Flow to Fannie Mae pursuant to the
Master Lockbox Agreement); (iii) a determination that the
representations and warranties set forth in Section 8(h) hereof were
untrue as of the date hereof, or a breach of the covenants set forth
in Section 23(d) hereof after the date hereof; (iv) from and after the
occurrence and during the continuance of a Triggering Event,
Guarantor's failure to pay or apply to Debt Service and Operating
Expenses amounts disbursed to Guarantor (or to Borrowers or Affiliates
of Guarantor or Borrowers) from the Master Lockbox for the payment of
Debt Service or Operating Expenses; or (v) a challenge by Guarantor
regarding Fannie Mae's right to draw on the Letter of Credit or use
the proceeds therefrom in accordance with the Pledge and LOC
Agreement. If any of the foregoing events occur, and Guarantor
thereafter cures such matter, and Guarantor also cures any other Event
of Default that then may exist under the Transaction Documents,
Guarantor's obligations under this Guaranty from and after such cure
shall once again be limited to the Maximum Guaranteed Amount as
provided in subsection 2.2(a).
(c) Anything contained in this
Guaranty to the contrary notwithstanding, Fannie Mae shall look solely
to Guarantor and the assets of Guarantor (including, without
limitation, the Letter of Credit and the collateral described in the
Pledge and LOC Agreement and the Master Lockbox Agreement) for the
payment of any amount or the performance of any obligation under this
Guaranty, and Fannie Mae shall not look to the partners of Guarantor,
or seek recourse against the partners of Guarantor, for the payment of
any such amount or the performance of any such obligation.
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(d) Anything contained in this
Guaranty to the contrary notwithstanding, if any Fraudulent Transfer
Law (as hereinafter defined) is determined by a court of competent
jurisdiction to be applicable to the obligations of Guarantor under
this Guaranty, such obligations of Guarantor hereunder shall be limited
to a maximum aggregate amount equal to the largest amount that would
not render its obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the
United States Code or any applicable provisions of comparable state law
(collectively, the "FRAUDULENT TRANSFER LAWS"), in each case after
giving effect to all other liabilities of Guarantor, contingent or
otherwise, that are relevant under the Fraudulent Transfer Laws
(specifically excluding, however, any liabilities of Guarantor (i) in
respect of intercompany indebtedness to the Borrowers or Affiliates of
the Borrowers to the extent that such indebtedness would be discharged
in an amount equal to the amount paid by Guarantor hereunder and (ii)
under any guaranty of subordinated indebtedness which guaranty contains
a limitation as to maximum amount similar to that set forth in this
section 2.2(d), pursuant to which the liability of Guarantor hereunder
is included in the liabilities taken into account in determining such
maximum amount), and after giving effect as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer
Laws) of any rights to subrogation, reimbursement, indemnification or
contribution of Guarantor pursuant to applicable law- or pursuant to
the terms of any agreement.
(e) No provision of this subsection
2.2 shall affect any other guaranty or similar agreement executed by
any person or entity in connection with the Borrower Obligations,
release or reduce all or any part of the Borrower Obligations or the
debt evidenced by the Transaction Documents, impair the lien of any
Transaction Documents, or impair the right of Fannie Mae to enforce the
provisions of any Transaction Documents.
3. FORM OF PAYMENT. Subject to the provisions of
subsection 2.2 hereof, in furtherance of the foregoing and not in limitation of
any other right which Fannie Mae may have at law or in equity against Guarantor
by virtue hereof, Guarantor agrees that upon the occurrence and during the
continuance of a Triggering Event, Guarantor will upon demand pay, or cause to
be paid, in cash, to Fannie Mae an amount equal to the sum of the unpaid
principal amount of all Borrower Obligations then due, accrued and unpaid
interest on such Borrower Obligations (including, without limitation, interest
which, but for the filing of a petition in bankruptcy with respect to such
Borrower, would have accrued on such Borrower Obligations, whether or not a
claim is allowed against such Borrower for such interest in the related
bankruptcy proceeding) and all other Guaranteed Obligations then owed to Fannie
Mae as aforesaid. All such payments shall be applied promptly from time to time
by Fannie Mae:
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First, to the payment of the costs and expenses of
any collection or other realization under this Guaranty,
including reasonable compensation to Fannie Mae and its agents
and counsel, and all expenses, liabilities and advances made
or incurred by Fannie Mae in connection therewith; and
Second, to the payment of all other Guaranteed
Obligations in such order as Fannie Mae shall elect.
All payments under this Guaranty shall be made to Fannie Mae in immediately
available funds, without reduction by any recoupment, set-off, counterclaim or
cross-claim against Fannie Mae at such address as directed by Fannie Mae.
Notwithstanding the foregoing provisions of this Section 3, if Grantor Excess
Cash Flow is then on deposit in the Master Lockbox and otherwise available for
such purpose, Fannie Mae will, at the direction of Guarantor, allow the use of
such Grantor Excess Cash Flow to cure or satisfy the default or event giving
rise to the Triggering Event.
4. GUARANTOR'S OBLIGATIONS ARE ABSOLUTE. Subject
to subsection 2.2 hereof, 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 Fannie Mae or any 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, any Transaction Documents
(except that the liability of Guarantor hereunder shall be deemed to
apply to such documents as so amended or modified or to the payment of
all amounts so extended);
(b) any exercise or non-exercise by
Fannie Mae of any right, power or remedy taken or in respect of any
Transaction Documents, or any waiver, consent, forbearance, indulgence
or other action, inaction or omission by Fannie Mae under or in
respect of any Transaction Documents;
(c) any assignment, sale or other
transfer of any 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
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conveyance of such property by a Borrower to Fannie Mae by deed in
lieu of foreclosure;
(d) any bankruptcy, insolvency,
reorganization, adjustment, dissolution, liquidation or other like
proceeding involving or affecting any Borrower or Fannie Mae or their
respective properties or creditors, or any action taken with respect
to any Transaction Documents by any trustee or receiver of Fannie Mae
or any Borrower, or by any court, in any such proceeding;
(e) any invalidity or
unenforceability, in whole or in part, of any term or provision of any
Transaction Documents or any Borrower's incapacity or lack of authority
to enter into its respective Transaction Documents;
(f) any release, compromise,
settlement or discharge with respect to all or any portion of any
Borrower's obligations under its respective Transaction 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
Fannie Mae as security for the payment of the Guaranteed Obligations;
(h) any resort to Guarantor for
payment of all or any portion of the Guaranteed Obligations, whether or
not Fannie Mae shall have resorted to any collateral securing the
Guaranteed Obligations or shall have proceeded against any Borrower or
any other person or entity primarily or secondarily liable for the
Borrower Obligations, it being intended that Fannie Mae may pursue its
rights hereunder at any time or times; or
(i) any waiver by Fannie Mae of any
breach of any Transaction Documents by any Borrower.
No exercise, delay in exercise or non-exercise by Fannie Mae
of any right hereby given it, no dealing by Fannie Mae with any Borrower,
Guarantor or any other person or entity, no change, impairment or suspension of
any right or remedy of Fannie Mae, 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
or entity any recourse or defense against Fannie Mae.
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5. WAIVER. Guarantor unconditionally waives, for the
benefit of Fannie Mae, 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 to Guarantor which may
be required by statute, rule of law or otherwise to preserve intact
any rights which Fannie Mae may have against Guarantor under this
Guaranty, including without limitation, any demand, proof or notice to
Guarantor of non-payment of any of the principal of, interest on or
other amounts payable under the Transaction Documents, and notice to
Guarantor of any failure on the part of any Borrower to perform and
comply with any covenant, agreement, term or condition of the
applicable Transaction Documents;
(c) any right to the enforcement,
assertion or exercise of any right, power or remedy conferred in any
Transaction Documents or otherwise;
(d) any requirement that Fannie Mae act
with diligence in enforcing its rights under any Transaction Documents
or this Guaranty;
(e) any right to require Fannie Mae to
proceed against or exhaust its recourse against any Borrower, any
guarantor under other guarantees in favor of Fannie Mae with respect
to the Guaranteed Obligations, or any security or collateral held by
Fannie Mae 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 (except as otherwise provided in Section 3 hereof);
(f) any failure by Fannie Mae to file or
enforce a claim against the estate (either in administration,
bankruptcy or any other proceeding) of any Borrower or any other
person or entity;
(g) any defense based upon an election
of remedies by Fannie Mae which destroys or otherwise impairs the
subrogation rights of Guarantor or the right of Guarantor (after
payment of the Guaran- teed Obligations) to proceed against any
Borrower or any other person or entity for reimbursement, or both;
(h) any defense based upon any taking,
modification or release of any collateral for the Guaranteed
Obligations, or any failure to perfect any security
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interest in, or the taking of, or failure to take any other action
with respect to, any collateral securing payment of the Guaranteed
Obligations;
(i) any defense based upon the addition,
substitution or release, in whole or in part, of any person or entity,
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 any Borrower or any other person or entity;
(k) any defense of the statute of
limitations in any action against Guarantor under this Guaranty;
(l) any defense based upon any statute
or rule of law which provides that the obligation of a surety must be
neither larger in amount nor in other respects more burdensome than
that of the principal;
(m) any principles or provisions of law,
statutory or otherwise, which are or might be in conflict with the
terms of this Guaranty and any legal or equitable discharge of
Guarantor's obligations hereunder;
(n) all other notices to Guarantor 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, during and until the expiration of the
Guaranty Period, notwithstanding any act, omission or thing which
might otherwise operate as a legal or equitable discharge of Guarantor
other than the payment in full of the Guaranteed Obligations. No
delay by Fannie Mae in exercising any rights and/or powers hereunder
or in taking any action to enforce any of the Borrower Obligations
shall operate as a waiver as to such rights or powers or in any manner
prejudice any and all of Fannie Mae's rights and powers hereunder
against Guarantor. It is the intention of Guarantor under this
Guaranty that during and until the expiration of the Guaranty Period,
the obligations of Guarantor hereunder shall not be discharged except
by performance and then only to the extent of such performance.
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 Fannie Mae must first exercise any rights against any Borrower
or any other person or entity or exhaust any remedies available to it against
any Borrower under its Transaction Documents or against
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any other person or entity or, except to the extent provided in Section 3
hereof, resort to any collateral at any time held by it for performance of the
Guaranteed Obligations or any other source or means of obtaining payment of any
of the Guaranteed Obligations.
7. EXPENSES. Guarantor agrees to pay all 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 Fannie Mae
or the Servicers in connection with the preparation and negotiation of this
Guaranty and the other documents described in the Term Sheet (and the costs and
out-of-pocket expenses incurred in implementing the various steps described in
the Term Sheet), the enforcement of Guarantor's obligations under this Guaranty
and such other documents, or the protection of Fannie Mae's rights under this
Guaranty and such other documents. The covenant contained in this Section shall
survive the payment and satisfaction in full of the Guaranteed Obligations.
8. REPRESENTATIONS AND WARRANTIES. In order to induce
Fannie Mae to accept this Guaranty and consent to the Proposed Merger,
Guarantor represents and warrants to Fannie Mae as follows:
(a) Guarantor is a duly formed limited
partnership, validly existing and in good standing under the laws of
the State of Delaware, and is qualified as a foreign limited
partnership and, except where the failure to do so could not
reasonably be expected to have a Material Adverse Effect, is in good
standing under the laws of each jurisdiction in which such
qualification and/or standing is necessary to the conduct of its
business. Guarantor has the requisite power and authority to own its
assets and to carry on its business as now conducted and to execute
and deliver this Guaranty and to perform its obligations hereunder.
(b) The execution, delivery and performance of
this Guaranty and the transactions contemplated hereby have been duly
authorized by all necessary action and proceedings by and on behalf of
Guarantor, and no further consents, approvals or filings of any kind,
including any consent or 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.
(c) This Guaranty has been duly authorized,
executed and delivered by Guarantor and constitutes the legal, valid
and binding obligation of Guarantor, enforceable against Guarantor in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
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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.
(d) Guarantor is fully aware of the financial
condition of each of the Borrowers 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 Fannie Mae or
Servicers (except for any agreements or statements expressly made by
Fannie Mae in this Guaranty or in any of the documents executed by
Fannie Mae in accordance with the Term Sheet). Guarantor is in a
position to obtain, and Guarantor hereby assumes full responsibility
for obtaining, any additional information concerning Borrowers'
financial condition and any other matters pertinent hereto as
Guarantor may desire and Guarantor is not relying upon or expecting
Fannie Mae or Servicers to furnish to Guarantor any information now or
hereafter in Fannie Mae's or Servicers' 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.
(e) Neither the execution and delivery of this
Guaranty, nor Guarantor's performance of its obligations hereunder:
(i) does or will conflict with or result
in a breach or violation of any law, rule or regulation
enacted or issued by any governmental authority or other
agency having jurisdiction over Guarantor, Borrowers or any of
the Properties, or any judgment or order applicable to
Guarantor, Borrowers or any of the Properties or to which
Guarantor, Borrowers or any of the Properties are subject,
except for such breaches or violations that, singly or in the
aggregate, have not had, and are not reasonably expected to
cause, a Material Adverse Effect; or
(ii) does or will conflict with or result
in a breach or violation of, or constitute a default under,
any of the terms, conditions or provisions of Guarantor's
organizational documents, or, except for any such breach or
violation that could not reasonably be expected to have a
Material Adverse Effect, any indenture, existing agreement or
other instrument to which Guarantor is-a party or to which
Guarantor, Borrowers or any of the Properties are subject.
(f) Guarantor is not insolvent and will not be
rendered insolvent by the execution, delivery and performance of this
Guaranty, nor will Guarantor have
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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 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, any of the Borrowers or any of the Properties, and there
has been no assertion or exercise of jurisdiction over Guarantor,
Borrowers or any of the Properties by any court empowered to exercise
bankruptcy powers.
(g) Guarantor is the owner of (directly or
through one or more subsidiaries) or has a financial interest in
(directly or through one or more subsidiaries), each of the Borrowers,
and Fannie Mae's agreement to the Proposed Merger is of substantial
and material benefit to Guarantor. Guarantor has reviewed and
approved copies of the Transaction Documents and is fully informed of
the remedies Fannie Mae may pursue upon the occurrence of an event of
default under the Transaction Documents.
(h) As of the date hereof, AIMCO REIT's right to
receive Excess Cash Flow is derived solely from the following
interests owned by AIMCO REIT:
(i) AIMCO REIT's indirect ownership of
the .96% general partnership interest in Guarantor (through
AIMCO REIT's ownership of AIMCO-GP, Inc. a Delaware
corporation), and AIMCO REIT's indirect ownership of a limited
partnership interest in Guarantor (through AIMCO REIT's
ownership of AIMCO LP, Inc., a Delaware corporation);
(ii) AIMCO REIT's indirect ownership of a
2% general partnership interest in Holdings (through AIMCO
Holdings QRS, Inc., a Delaware corporation ("QRS"));
(iii) with respect to the AIMCO Pool II
Borrower, AIMCO REIT's ownership of (A) AIMCO/OTC QRS, Inc., a
Delaware corporation ("OTC QRS"), which is the sole general
partner (holding a I % general partnership interest) of such
Borrower, (B) QRS, which is a 2% general partner in Holdings,
which is a general partner or managing member in AIMCO/OTC,
L.L.C., AIMCO/Boardwalk, L.P. and HomeCorp Investments, Ltd.,
each of which is a limited partner in such Borrower, (C)
AIMCO/HIL, L.L.C., which is a general partner of HomeCorp
Investments, Ltd. ("HOMECORP") and (D) Guarantor, which is a
limited partner in such Borrower;
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(iv) with respect to the AIMCO Pool III
Borrower, AIMCO REIT's ownership of (A) AIMCO Properties
Finance Corp., a Delaware corporation ("FINANCE CORP."), which
is the sole general partner (holding a 1 % general partnership
interest) of such Borrower, (B) QRS, which is a 2 % general
partner in Holdings, which is a 1 % managing member in
AIMCO/HIL, L.L.C., which is a general partner in HomeCorp
Investments, Ltd., which is a limited partner in such
Borrower, (C) Holdings, which is a general partner of HomeCorp
which is a limited partner in such Borrower and (D) Guarantor,
which is a limited partner in such Borrower;
(v) with respect to the Ambassador
Pool-1 Borrower, AIMCO REIT's ownership of Ambassador VIII,
Inc., a Delaware corporation, which is the sole general
partner (holding a 1 % general partnership interest) of such
Borrower; and (vi) with respect to the Ambassador Pool-2
Borrower, AIMCO REIT's ownership of (x) Ambassador I, Inc., a
Delaware corporation, which is the sole general partner
(holding a 1 % general partnership interest) of such Borrower,
and (y) AJ One Inc., a Delaware corporation, which is the sole
general partner (holding a 1 % general partnership interest)
in AJ One Limited Partnership, a Delaware limited partnership,
which entity is the sole general partner (holding a 49.6%
general partnership interest) in Jupiter-1, L.P., a Delaware
limited partnership, which entity is the sole limited partner
(holding a 99% limited partnership interest) in such Borrower
9. FURTHER ASSURANCES. Guarantor agrees at any time and
from time to time upon reasonable request by Fannie Mae to take or cause to be
taken any action and to execute and deliver any additional documents which in
the opinion of Fannie Mae may be necessary in order to assure to Fannie Mae the
full benefits of this Guaranty.
10. GUARANTOR'S RIGHTS OF SUBROGATION CONTRIBUTION, ETC.
During the Guaranty Period and for a period of thirteen (13) months after the
expiration thereof, Guarantor hereby waives any claim, right or remedy, direct
or indirect, that Guarantor now has or may hereafter have against any Borrower
or any of their respective assets in connection with this Guaranty or the
performance by Guarantor of its obligations hereunder, in each case whether
such claim, right or remedy arises in equity, under contract, by statute, under
common law or otherwise and including without limitation (a) any right of
subrogation, reimbursement or indemnification that Guarantor now has or may
hereafter have against any Borrower, (b) any right to enforce, or participate
in, any claim, right or remedy that Fannie Mae now has or may hereafter have
against any Borrower, and (c) any benefit of, and any right to participate in,
any collateral or security now or hereafter held by Fannie Mae. In addition,
until the
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expiration of the Guaranty Period, Guarantor shall withhold exercise of any
right of contribution Guarantor may have against any other guarantor of the
Guaranteed Obligations. Guarantor further agrees that, to the extent the waiver
or agreement to withhold the exercise of its rights of subrogation,
reimbursement, indemnification and contribution as set forth herein is found by
a court of competent jurisdiction to be void or voidable for any reason, any
rights of subrogation, reimbursement or indemnification Guarantor may have
against any Borrower or against any collateral or security, and any rights of
contribution Guarantor may have against any such other guarantor, shall be
junior and subordinate to any rights Fannie Mae may have against such Borrower,
to all right, title and interest Fannie Mae may have in any such collateral or
security, and to any right Fannie Mae may have against such other guarantor. If
any amount shall be paid to Guarantor on account of any such subrogation,
reimbursement, indemnification or contribution rights at any time when all
Guaranteed Obligations shall not have been paid in full, such amount shall be
held in trust for Fannie Mae and shall forthwith be paid over to Fannie Mae to
be credited and applied against the Guaranteed Obligations, whether matured or
unmatured, in accordance with the terms hereof.
11. SUBORDINATION OF OTHER OBLIGATIONS. Any indebtedness
of any Borrower now or hereafter held by Guarantor is hereby subordinated in
right of payment to the Guaranteed Obligations, and any such indebtedness of
any Borrower to Guarantor collected or received by Guarantor after an event of
default has occurred and is continuing under any of the Transaction Documents
shall be held in trust for Fannie Mae and shall forthwith be paid over to
Fannie Mae to be credited and applied against the Guaranteed Obligations but
without affecting, impairing or limiting in any manner the liability of
Guarantor under any other provision of this Guaranty.
12. INSOLVENCY AND LIABILITY OF BORROWERS. So long as
this Guaranty is in effect, Guarantor agrees to file all claims against the
Borrowers in any bankruptcy or other proceeding in which the filing of claims
is required by law in connection with indebtedness owed by any Borrower to
Guarantor and to assign to Fannie Mae all rights of Guarantor thereunder up to
the amount of such indebtedness. In all such cases the person or entity
authorized to pay such claims shall pay to Fannie Mae the full amount thereof
to the full extent necessary to pay the Guaranteed Obligations and Guarantor
hereby assigns to Fannie Mae 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 any Borrower to Fannie Mae under its
respective Transaction 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 any Borrower in
any creditors', receivership, bankruptcy or other proceedings; or
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(b) the impairment, limitation or modification of
the liability of any Borrower or the estate of any 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.
13. PREFERENCES FRAUDULENT CONVEYANCES ETC. If Fannie Mae
is required to refund, or voluntarily refunds, any payment received from any
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 Fannie Mae or any of its property, or any statement or
compromise of any claim effected by Fannie Mae with any Borrower or any other
claimant (a "RESCINDED PAYMENT"), then Guarantor's liability to Fannie Mae
shall continue in full force and effect (subject to the limitations set forth
in subsection 2.2 hereof), or Guarantor's liability to Fannie Mae shall be
reinstated (subject to the limitations set forth in subsection 2.2 hereof), as
the case may be, with the same effect and to the same extent as if the
Rescinded Payment had not been received by Fannie Mae, notwithstanding the
cancellation or termination of any Transaction Documents. In addition,
Guarantor shall pay, or reimburse Fannie Mae for, all expenses (including all
reasonable attorneys' fees, court costs and related disbursements) incurred by
Fannie Mae in the defense of any claim that a payment received by Fannie Mae in
respect of all or any part of the Guaranteed Obligations must be refunded. The
provisions of this Section shall survive the termination of this Guaranty and
any satisfaction and discharge of the Borrowers by virtue of any payment, court
order or any federal or state law.
14. WAIVER. Neither this Guaranty nor any term hereof
may be changed, waived, discharged or terminated except by an instrument in
writing signed by Fannie Mae 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 on
any obligation not expressly waived. No course of dealing or delay or omission
on the part of Fannie Mae in exercising any right under this Guaranty shall
operate as a waiver thereof otherwise be prejudicial thereto.
15. NOTICES. Any demand or notice required or permitted
to be given by Fannie Mae to Guarantor under this Guaranty shall be given by
certified or registered mail, return receipt requested, or by overnight courier
or by telecopy addressed to the appropriate notice address set forth below. Any
of the parties hereto may, by a notice to the other party specifically
captioned "Notice of Change of Address pursuant to Section 15 of the Payment
Guaranty", designate any further or different address to which subsequent
notices, certificates or other communications shall be sent without any
requirement of execution of any amendment
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to this Guaranty. Any such notice, certificate or communication shall be deemed
to have been given as of the date of actual delivery or the date of failure to
deliver by reason of refusal to accept delivery or changed address of which no
notice was given pursuant to this Section. The notice addresses are as follows:
(a) if to Guarantor:
c/o Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Vice Chairman
Telecopy: (303) 757-8735
with copies to:
Apartment Investment and Management Company
28200 Highway 189
Suite F-240
Lake Arrowhead, California 92352
Attention: Peter K. Kompaniez, President
Telecopy: (909) 336-4826
and
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Allan G. Mutchnik, Esq.
Telecopy: (213) 687-5600
(b) if to Fannie Mae:
if by mail, overnight courier, or telecopy:
Fannie Mae
3900 Wisconsin Avenue, N.W.
Drawer AM
Washington, D.C. 20016
Attention: Director, Multifamily Operations
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Re: AIMCO/Ambassador Payment Guaranty
Telecopy: (202) 752-3542
if by messenger:
Fannie Mae
4000 Wisconsin Avenue, N.W.
Washington, D.C. 2016
Attention: Director, Multifamily Operations
Re: AIMCO/Ambassador Payment Guaranty
in each case, with copies to:
Fannie Mae
3900 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Attention: Vice President, Multifamily Asset
Management
Re: AIMCO/Ambassador Payment Guaranty
Telecopy: (202) 752-5016
and to:
Fannie Mae
3939 Wisconsin Avenue, N.W.
Washington, D.C. 20016
Attention: Vice President, Multifamily Asset
Management
Re: AIMCO/Ambassador Payment Guaranty
Telecopy: (202) 752-4231
and with copies to the applicable Servicer for the Property (or Properties) to
which such notice relates.
16. JURISDICTION CONSENT TO SERVICE WAIVER OF JURY TRIAL.
A. GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF
ANY DISTRICT OF COLUMBIA COURT OR FEDERAL COURT OF THE UNITED
STATES OF AMERICA SITTING IN THE DISTRICT OF COLUMBIA, AND ANY
APPELLATE COURT
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FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR FOR RECOGNITION OR ENFORCEMENT OF
ANY JUDGEMENT, AND EACH OF GUARANTOR AND FANNIE MAE HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH DISTRICT OF COLUMBIA COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF GUARANTOR AND
FANNIE MAE AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS GUARANTY SHALL AFFECT ANY
RIGHT THAT FANNIE MAE MAY OTHERWISE HAVE TO BRING ANY ACTION OR
PROCEEDING RELATING TO THIS GUARANTY AGAINST GUARANTOR OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.
B. GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO
THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY IN ANY DISTRICT OF COLUMBIA OR
FEDERAL COURT. EACH OF GUARANTOR AND FANNIE MAE HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
C. EACH OF GUARANTOR AND FANNIE MAE IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN
SECTION 15. NOTHING IN THIS GUARANTY WILL AFFECT THE RIGHT OF
EITHER GUARANTOR OR FANNIE MAE TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW.
D. GUARANTOR AND FANNIE MAE HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS GUARANTY AND FOR ANY COUNTERCLAIM
THEREIN.
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17. WAIVER OF HOMESTEAD OR EXEMPTION RIGHTS. Guarantor
waives any and all homestead or exemption rights Guarantor may have under or by
virtue of any Constitution or laws of any State of the United States or the
District of Columbia with respect to the liability and obligation arising under
this Guaranty. Guarantor hereby transfers, conveys, and assigns to Fannie Mae a
sufficient amount of any homestead or exemption rights that may be allowed to
Guarantor, including any such homestead or exemption rights that may be set
apart in bankruptcy, to pay the obligations created by this Guaranty in full,
with all costs or collection. Guarantor hereby directs any party having
possession of such homestead of exemption rights, including a trustee in
bankruptcy to deliver to Fannie Mae a sufficient amount of property or money
set apart as exempt to pay Guarantor's obligations arising under this Guaranty.
18. ASSIGNABILITY BY FANNIE MAE. Fannie Mae may, without
notice to Guarantor, assign or transfer any of the Borrower Obligations owed to
Fannie Mae under the Transaction 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 Borrower Obligations under the Transaction 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. Fannie Mae shall have an
unimpaired right to enforce this Guaranty for its benefit as to so much of the
Borrower Obligations under the Transaction Documents as Fannie Mae has not
sold, assigned or transferred.
19. GUARANTOR BOUND BY JUDGMENT AGAINST BORROWER.
Guarantor shall be conclusively bound in any jurisdiction by the judgment in
any action by Fannie Mae against Borrowers (or any of them) in connection with
the Transaction Documents (wherever instituted) as if Guarantor were a party to
such action even if not so joined as a party.
20. RELEASE. Promptly after the expiration of the
Guaranty Period, Fannie Mae (or, if any person or entity has succeeded to all
or any portion of Fannie Mae's interest hereunder, then such successor or
assign) shall execute and deliver to Guarantor a release under applicable law
releasing Fannie Mae's interest in this Guaranty and the Pledge and LOC
Agreement, and shall deliver to Guarantor any and all original copies of this
Guaranty then in the custody or possession of Fannie Mae (or such successor or
assign), all without recourse to or any warranty whatsoever by Fannie Mae (or
such successor or assign), and at the cost and expense of Guarantor. Without
in any way limiting the obligations of Fannie Mae and any successor or assign
pursuant to the preceding sentence, Fannie Mae acknowledges that the
satisfaction, termination and/or reconveyance (as applicable) of all of the
Ambassador Documents encumbering the Properties described therein, and the
termination of the credit facility governed by the AIMCO Credit Facility
Transaction Documents, all in accordance with the respective terms of such
documents, and the passing of ninety-one (91) days after all of the foregoing
have
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occurred, shall constitute conclusive evidence of the expiration of the
Guaranty Period (provided that no "Event of Default" then exists under any of
the Transaction Documents).
21. GOVERNING LAW. This Guaranty shall be construed and
enforced in accordance with, and the rights and remedies of the parties hereto
shall be governed by, the laws of the District of Columbia without regard to
conflicts of law, principles, except to the extent that Federal laws may
prevail.
22. INVALID PROVISIONS. Any provision of this Guaranty
that is prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction and the remaining portion of such provision
and all other remaining provisions will be construed to render them enforceable
to the fullest extent. Guarantor and Fannie Mae shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
23. GUARANTOR'S COVENANTS. Guarantor agrees and
covenants with Fannie Mae that, at all times that this Guaranty is in effect:
(a) Guarantor shall at all times preserve and
keep in full force and effect its existence and all rights and
franchises material to its business.
(b) Guarantor shall comply in all material
respects with all applicable laws, rules, regulations and orders, such
compliance to include, without limitation, paying when due all taxes,
assessments and governmental charges imposed upon it or upon any of
its properties or assets or in respect of any of its franchises,
businesses, income or property before any penalty or interest accrues
thereon.
(c) Guarantor shall keep and maintain books of
record and account with respect to its operations in accordance with
generally accepted accounting principles and, to the extent permitted
by law (including, without limitation, the Securities Exchange Act of
1933, as amended), shall permit Fannie Mae and its officers, employees
and authorized agents, to the extent Fannie Mae in good faith deems
necessary for the proper administration of this Guaranty, to examine,
copy and make excerpts from the books and records of Guarantor and its
Affiliates (excluding any and all legally privileged materials) and to
inspect the properties of Guarantor and the Borrowers, both real and
personal, at such reasonable times during normal business hours as
Fannie Mae may request. Fannie Mae covenants, for itself and its
successors, assigns, agents and representa- tives, to (i)
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keep confidential all confidential, proprietary and/or non-public
information, identified in writing as such by Guarantor and provided
by Guarantor or its Affiliates to Fannie Mae or its successors,
assigns, agents or representatives pursuant to, or in connection with,
this Guaranty, and (ii) comply with all applicable securities laws in
connection therewith. Guarantor acknowledges that such information
may be delivered to the successors, assigns, agents and
representatives of Fannie Mae, provided that such successors, assigns,
agents and representatives agree to be bound by the provisions of this
Section 23(c).
(d) Guarantor shall not agree to, permit or
acquiesce in any amendment, modification, supplement or amendment and
restatement (for purposes of this Section 23(d), an "AMENDMENT") of
any of the following agreements:
(i) the partnership agreement for
Holdings, if such Amendment would have the effect of
decreasing Guarantor's partnership interest in, or right to
receive proceeds or distributions with respect to, Holdings to
less than 98 %;
(ii) the partnership agreement for
Ambassador OP, if such Amendment would have the effect of
decreasing Guarantor's partnership interest in, or right to
receive proceeds or distributions with respect to, Ambassador
OP to less than 99.9%;
(iii) (iii) the respective partnership
agreements for the AIMCO Pool I Borrower, the AIMCO Pool II
Borrower and the AIMCO Pool III Borrower, if such Amendment
would have the effect of decreasing Guarantor's partnership
interest in, or right to receive proceeds or distributions
with respect to, such Borrowers to less than 98.42%, 90.7% and
74.27%, respectively, or, with respect to the AIMCO Pool 11
Borrower and the AIMCO Pool III Borrower, if such Amendment
would have the effect of increasing Finance Corp. 's or OTC
QRS' partnership interest in, or right to receive proceeds or
distributions with respect to, such entities to more than 1 %;
(iv) the respective partnership
agreements for the AIMCO Pool IV Borrowers, if such Amendment
would have the effect of decreasing Guarantor's partnership
interest in, or right to receive proceeds or distributions
with respect to, such Borrowers to less than 99% (or, with
respect to the AIMCO Pool IV Borrower which owns the Property
known as Woodlands, to less than 98.42 %);
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(v) the respective partnership or
limited liability company agreements for the AIMCO Credit
Facility Parties, if such Amendment would have the effect of
decreasing Guarantor's partnership interest in, or right to
receive proceeds or distributions with respect to, such
Borrowers to less than 99 % (or, with respect to the AIMCO
Credit Facility Party known as AIMCO Bluffs, L.L.C., to less
than 98.42%);
(vi) the respective partnership
agreements for the Ambassador Pool-Borrower and the Ambassador
Pool-2 Borrower, if such Amendment would have the effect of
decreasing Guarantor s partnership interest in, or right to
receive proceeds or distributions with respect to, such
Borrowers to less than 99 %; or
(vii) the partnership agreement with
respect to any other partner in any of the Borrowers, if such
Amendment would have the effect of decreasing Guarantor's
respective partnership interests in, or right to receive
proceeds or distributions with respect to, such partnerships
to less than the percentages or amounts as they exist as of
the date hereof.
In addition to the foregoing, Guarantor shall not agree to,
permit or acquiesce in (i) any Amendment to the partnership agreement of
AIMCO-GP, Inc., a Delaware corporation ("GP INC."), if such Amendment would
have the effect of permitting GP Inc. to directly or indirectly own any assets
other than partnership interests in Guarantor, or (ii) GP, Inc. directly or
indirectly owning any assets other than partnership interests in Guarantor,
except, in either case, the temporary ownership of other assets in connection
with an acquisition prior to contributing such assets to Guarantor.
24. SATISFACTION OF OTHER MERGER CONDITIONS. Guarantor
shall establish the Master Lockbox and shall execute and deliver, or shall
cause its Affiliates identified in the Term Sheet to execute and deliver, all
of the agreements and documents described in the Term Sheet at the time(s)
specified therein. Guarantor acknowledges that Fannie Mae's consent to the
Proposed Merger is conditioned on Guarantor's agreement to timely comply with
the foregoing covenant, and that Fannie Mae has materially relied on such
covenant. Guarantor's failure to comply with the foregoing covenant shall be a
material default of its obligations under this Guaranty, and in the event of
such a default, Fannie Mae immediately may draw on the Letter of Credit as
provided in the Pledge and LOC Agreement.
25. RIGHTS CUMULATIVE. The rights, powers and remedies
given to Fannie Mae by this Guaranty are cumulative and shall be in addition to
and independent of all rights, powers and remedies given to Fannie Mae by
virtue of any statute or rule of law or in any of the Transaction Documents or
any other agreement between Guarantor and Fannie Mae or between
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any Borrower and Fannie Mae. Any forbearance or failure to exercise, and any
delay by Fannie Mae in exercising, any right, power or remedy hereunder shall
not impair any such right, power or remedy or be construed to be a waiver
thereof, nor shall it preclude the further exercise of any such right, power or
remedy.
26. GENERAL PROVISIONS. This Guaranty shall be binding
upon the respective heirs, legal representatives, successors and assigns of
Guarantor, and shall inure to the benefit of Fannie Mae and its successors and
assigns. The descriptive headings of the sections of this Guaranty have been
inserted herein for convenience of reference only and shall not define or limit
the provisions hereof. Terms used in this Guaranty include the singular as
well as the plural.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be
signed under seal as of the date first above written by its officer duly
authorized.
GUARANTOR:
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, INC.,
a Delaware corporation,
its sole general partner
By: /s/ PATTI K. FIELDING
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