<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- --------------------
Commission File Number 1-13232
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 84-1259577
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1873 S. Bellaire Street, Suite 1700, Denver, Colorado 80222-4348
- ------------------------------------------------------ -----------
(Address of principal executive offices) (Zip Code)
(303) 757-8101
----------------------------------------------------
(Registrant's telephone number, including area code)
Not applicable
-----------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
-- -- -----
<TABLE>
<S> <C>
The number of shares of Class A Common Stock outstanding as of May 7, 1998: 41,344,072
The number of shares of Class B Common Stock outstanding as of May 7, 1998: 162,500
</TABLE>
1
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
-----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1998
(unaudited) and December 31, 1997 3
Consolidated Statements of Income for the Three Months
Ended March 31, 1998 and 1997 (unaudited) 4
Consolidated Statements of Cash Flow for the Three
Months Ended March 31, 1998 and 1997 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 16
Item 3. Quantitative and Qualitative Disclosures about Market
Risk 25
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 26
Item 2. Changes in Securities 27
Item 6. Exhibits and Reports on Form 8-K 27
Signatures 29
</TABLE>
2
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Consolidated Balance Sheets
As of March 31, 1998 and December 31, 1997
(In Thousands, Except Share Data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Real Estate, net of accumulated depreciation of $215,724 and $153,285 $ 1,537,646 $ 1,503,922
Property held for sale 35,824 6,284
Investments held for sale 23,759 22,144
Investments in and notes receivable from unconsolidated subsidiaries 88,775 84,459
Investments in and notes receivable from unconsolidated real estate partnerships 245,682 212,150
Cash and cash equivalents 35,948 37,088
Restricted cash 31,186 24,229
Accounts receivable 24,586 28,656
Deferred financing costs 14,367 12,793
Goodwill, net of accumulated amortization of $2,087 and $522 123,634 125,239
Other assets 59,064 43,546
------------ ------------
Total assets $ 2,220,471 $ 2,100,510
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured notes payable $ 697,036 $ 681,421
Secured tax-exempt bond financing 73,560 74,010
Secured short-term financing 40,900 53,099
------------ ------------
Total indebtedness 811,496 808,530
------------ ------------
Accounts payable, accrued and other liabilities 82,809 88,170
Resident security deposits and prepaid rents 10,023 10,213
------------ ------------
Total liabilities 904,328 906,913
------------ ------------
Commitments and contingencies - -
Minority interests in other partnerships 36,128 36,335
Minority interest in AIMCO Operating Partnership 124,952 111,962
Stockholder's equity
Class A Common Stock, $.01 par value, 150,000,000 shares
authorized, 41,308,545 and 40,418,789 shares issued and outstanding 413 403
Class B Common Stock, $.01 par value, 425,000 shares authorized,
authorized, 162,500 shares issued and outstanding 2 2
Non-voting preferred stock, $0.01 par value, 9,250,000 shares
authorized, none issued and outstanding - -
Class B Cumulative Convertible Preferred Stock, $.01 par value,
750,000 shares authorized, 750,000 shares issued and outstanding 75,000 75,000
Class C Cumulative Preferred Stock, $.01 par value, 2,760,000 shares
authorized, 2,400,000 shares issued and outstanding 60,000 60,000
Class D Cumulative Preferred Stock, $.01 par value, 4,600,000 shares
authorized, 4,200,000 and 0 shares issued and outstanding 105,000 -
Treasury Stock (6,001) -
Additional paid-in capital 998,000 977,601
Notes due on common stock purchases (41,608) (35,095)
Distributions in excess of earnings (33,900) (30,928)
Unrealized loss on investments (1,843) (1,683)
------------ ------------
Total stockholders' equity 1,155,063 1,045,300
------------ ------------
Total liabilities and stockholders' equity $ 2,220,471 $ 2,100,510
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Consolidated Statements of Income
For the Three Months Ended March 31, 1998 and 1997
(In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues $ 71,336 $ 38,040
Property operating expenses (26,309) (14,456)
Owned property management expense (2,132) (1,321)
--------- ---------
Income from property operations before depreciation 42,895 22,263
Depreciation (13,977) (7,455)
--------- ---------
Income from property operations 28,918 14,808
--------- ---------
SERVICE COMPANY BUSINESS
Management fees and other income 4,821 2,444
Management and other expenses (1,961) (1,420)
Corporate overhead allocation (147) (147)
Amortization of management company goodwill (1,717) (237)
Other assets depreciation and amortization (3) (88)
--------- ---------
Income from service company business 993 552
Minority interests in service company business (1) (1)
--------- ---------
Company's share of income from service company business 992 551
--------- ---------
General and administrative expenses (1,974) (351)
Interest expense (15,441) (9,452)
Interest income 6,076 507
Minority interests in other partnerships (582) (369)
Equity in losses of unconsolidated partnerships (653) -
Equity in earnings of unconsolidated subsidiaries 4,068 -
--------- ---------
Income from operations 21,404 5,694
Extraordinary item - early extinguishment of debt - (269)
Gain on disposition of properties 2,526 -
--------- ---------
Income before minority interest in AIMCO Operating Partnership 23,930 5,425
Minority interest in AIMCO Operating Partnership (2,288) (841)
--------- ---------
Net income $ 21,642 $ 4,584
--------- ---------
--------- ---------
Net income attributable to preferred shareholders $ 3,681 $ -
--------- ---------
--------- ---------
Net income attributable to common shareholders $ 17,961 $ 4,584
--------- ---------
--------- ---------
Basic earnings per common share $ 0.44 $ 0.28
--------- ---------
--------- ---------
Diluted earnings per common share $ 0.43 $ 0.28
--------- ---------
--------- ---------
Weighted average common shares outstanding 41,128 16,454
--------- ---------
--------- ---------
Weighted average common shares and common share
equivalents outstanding 41,310 16,586
--------- ---------
--------- ---------
Dividends paid per common share $ 0.5625 $ 0.4625
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Three Months Ended March 31, 1998 and 1997
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
-------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $21,642 $ 4,584
-------- -------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 15,872 8,405
Gain on disposition of properties (3,276) -
Minority interest in Operating Partnership 2,288 841
Minority interests in other partnerships (582) 369
Equity in losses of unconsolidated partnerships 2,673 -
Equity in earnings of unconsolidated subsidiaries (4,068) -
(Increase) decrease from changes in operating assets:
Restricted cash (6,957) 5,408
Accounts receivable 4,070 (969)
Other assets (11,352) 9,082
Increase (decrease) from changes in operating liabilities:
Accounts payable, accrued and other liabilities (10,459) (2,051)
Resident security deposits and prepaid rents (190) 307
-------- -------
Total adjustments (11,981) 21,392
-------- -------
Net cash provided by operating activities 9,661 25,976
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of real estate 11,207 -
Purchase of real estate (6,804) (628)
Advances to unconsolidated real estate partnerships (36,092) -
Purchase of general and limited partnership interests (5,790) -
Additions to property held for sale (1,874) -
Capital replacements (2,790) (986)
Initial capital expenditures (3,289) (973)
Construction in progress and capital enhancements (1,743) (2,122)
Purchase of office equipment and leasehold improvements (120) (294)
Proceeds from sale of property held for sale 270 -
-------- -------
Net cash used in investing activities (47,025) (5,003)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Class A Common Stock,
net of underwriting and offering costs 9,636 51,463
Proceeds from issuance of Class D Preferred Stock,
net of underwriting and offering costs 100,294 -
Principal repayments received on notes due from Officers on
Class A Common Stock purchases 5,783 -
Repurchase of common stock (5,982)
Repayments on secured notes payable (27,830) -
Net borrowings (repayments) on the Company's revolving credit facilities 7,400 (33,300)
Principal repayments on secured notes payable (3,926) (1,175)
Principal repayments on secured tax-exempt bond financing (450) (346)
Repayments on secured short-term financing (19,099) (30,752)
Payment of loan costs, net of proceeds from interest rate hedge (2,041) (148)
Payment of common stock dividends (23,248) (7,183)
Payment of distributions to minority interest in Operating Partnership (2,928) (1,171)
Payment of preferred stock dividends (1,385) -
-------- -------
Net cash provided by (used in) financing activities 36,224 (22,612)
-------- -------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,140) (1,639)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 37,088 13,170
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $35,948 $11,531
-------- -------
-------- -------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Consolidated Statements of Cash Flow
(In Thousands Except Share and Operating Partnership Unit Data)
<TABLE>
<CAPTION>
<S> <C>
NON CASH INVESTING AND FINANCING ACTIVITIES
PURCHASE OF REAL ESTATE
Secured notes payable assumed in connection with purchase of real estate $ 46,971
Issuance of 499,506 AIMCO Operating Partnership Units ("OP Units") in connection
with the purchase of real estate 16,423
Delayed issuance of 166,503 OP Units in connection with the purchase of real
estate. 5,474
---------
$ 68,868
---------
---------
</TABLE>
REDEMPTION OF OPERATING PARTNERSHIP UNITS
During the three months ended March 31, 1998 and 1997, 167,445 and 543,794
OP Units with recorded values of $3,184 and $8,431, respectively, were
redeemed in exchange for an equal number of shares of Class A Common Stock.
PROPERTY HELD FOR SALE
During the three months ended March 31, 1998, the Company entered into
contracts to sell two apartment communities with a net book value of $27.9
million. These assets were reclassified to Property held for sale.
RECEIPT OF NOTES PAYABLE FROM OFFICERS
During the three months ended March 31, 1998, the Company received notes
payable from officers for a total of $12.3 million in connection with the
sale of 336,030 shares of Class A Common Stock.
See accompanying notes to consolidated financial statements.
6
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements
March 31, 1998 (Unaudited)
NOTE 1 - ORGANIZATION
Apartment Investment and Management Company, a Maryland corporation
incorporated on January 10, 1994 ("AIMCO" and together with its
subsidiaries and other controlled entities, the "Company") owns a
majority of the ownership interests in AIMCO Properties, L.P. (the
"AIMCO Operating Partnership") through its wholly owned subsidiaries
AIMCO-GP, Inc. and AIMCO-LP, Inc. The Company held an 88% interest
in the Operating Partnership as of March 31, 1998. AIMCO-GP, Inc. is
the sole general partner of the AIMCO Operating Partnership.
At March 31, 1998, AIMCO had 41,308,545 shares of Class A Common
Stock outstanding and the Operating Partnership had 5,728,938
Partnership Common Units ("OP Units") outstanding, for a combined
total of 47,037,483 shares and OP Units outstanding.
As of March 31, 1998, the Company, through its subsidiaries, owned
or controlled 41,886 units in 153 apartment communities and had an
equity interest in 75,109 units in 480 apartment communities. In
addition, the Company managed 67,665 units in 356 apartment
communities for third parties and affiliates, bringing the total
owned and managed portfolio to 184,660 units in 989 apartment
communities. The apartment communities are located in 42 states,
the District of Columbia and Puerto Rico.
NOTE 2 - BASIS OF PRESENTATION
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the
accounts of AIMCO, the AIMCO Operating Partnership, majority owned
subsidiaries and controlled real estate limited partnerships.
Interests held by limited partners in real estate partnerships
controlled by the Company are reflected as Minority Interests in
Other Partnerships.
All significant intercompany balances and transactions have been
eliminated in consolidation.
INVESTMENTS IN UNCONSOLIDATED SUBSIDIARIES
The Company has investments in numerous subsidiaries. Investments in
entities in which the Company does not have control are accounted for
under the equity method. Under the equity method, the Company's
pro-rata share of the earnings or losses of the entity for the
periods being presented is included in equity in earnings from
unconsolidated subsidiaries (see Note 5).
INVESTMENTS IN AND NOTES RECEIVABLE FROM REAL ESTATE PARTNERSHIPS
The Company owns general and limited partnership interests in
numerous partnerships that own multi-family apartment properties.
Investments in real estate partnerships in which the Company does not
have control are accounted for under the equity method. Under the
equity method, the Company's pro-rata share of the earnings or losses
of the entity for the periods being presented is included in equity
in losses from unconsolidated partnerships (see Note 6).
EARNINGS PER SHARE
Earnings per share for the three months ended March 31, 1997 have
been restated to comply with Statement of Financial Accounting
Standard No. 128, EARNINGS PER SHARE (see Note 15).
7
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 2 - BASIS OF PRESENTATION (CONTINUED)
The accompanying unaudited consolidated financial statements of the
Company as of March 31, 1998 and for the three months ended March
31, 1998 and 1997 have been prepared in accordance with generally
accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments considered necessary for a fair presentation have been
included and all such adjustments are of a recurring nature.
The consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes
thereto included in the Annual Report on Form 10-K/A for the year
ended December 31, 1997. It should be understood that accounting
measurements at interim dates inherently involve greater reliance
on estimates than at year-end. The results of operations for the
interim periods presented are not necessarily indicative of the
results for the entire year.
Certain reclassifications have been made to prior period financial
statements to conform with the current period presentation.
NOTE 3 - REAL ESTATE
During the three months ended March 31, 1998, the Company purchased
seven apartment communities containing 2,277 apartment units, as
described below:
<TABLE>
<CAPTION>>
Date Number
Acquired Property Location of Units
-------- -------- -------- --------
<S> <C> <C> <C>
1/98 Crossings at Bell Amarillo, TX 160
2/98 Steeplechase Tyler, TX 484
3/98 Casa Anita Phoenix, AZ 224
3/98 San Marina Phoenix, AZ 399
3/98 Cobble Creek Tuscon, AZ 301
3/98 Rio Cancion Tuscon, AZ 379
3/98 Sundown Village Tuscon, AZ 330
-----
2,277
-----
-----
</TABLE>
The aggregate consideration paid by the Company of $75.6 million
consisted of $6.8 million in cash, 666,009 OP Units valued at $21.8
million and the assumption of $47.0 million of secured long-term
indebtedness. The cash portions of the acquisitions were funded with
borrowings under the Company's revolving credit facilities.
In January 1998, the Company sold the Sun Valley Apartments, an
apartment community containing 430 apartment units located in Salt
Lake City, Utah, for $11.5 million, less selling costs of $0.3
million. The Company recognized a $3.3 million gain on the sale.
As of March 31, 1998, the Company's management has indicated its
intent to sell the Rillito Village and Village Park properties.
Accordingly, the underlying assets of these properties have been
reclassified from real estate to property held for sale on the
consolidated balance sheet.
8
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 4 - INVESTMENT IN AMBASSADOR APARTMENTS, INC.
In September 1997, the Company acquired 886,600 shares of common
stock ("Ambassador Common Stock") of Ambassador Apartments, Inc.
("Ambassador") for $19.9 million in cash. The shares acquired
represented 8.4% of the shares of Ambassador Common Stock
outstanding as of the date of the purchase. Ambassador is a
self-administered and self-managed real estate investment trust
("REIT") engaged in the ownership and management of garden-style
apartment properties leased primarily to middle income tenants. As
of March 31, 1998, Ambassador owned 52 apartment communities with a
total of 15,728 units located in Arizona, Colorado, Florida,
Georgia, Illinois, Tennessee and Texas, and managed one property
containing 252 units for an unrelated third party. As of March 31,
1998, the fair market value of the Ambassador stock was $18.2
million. Accordingly, the Company has recognized an unrealized
loss on the Ambassador investment of $1.7 million, which is
included as a component of stockholders' equity.
On December 23, 1997, AIMCO and Ambassador entered into an
Agreement and Plan of Merger (the "Ambassador Merger Agreement")
which provides for the merger of Ambassador with and into AIMCO,
with AIMCO being the surviving corporation (the "Ambassador
Merger"). The Ambassador Merger Agreement also provides that,
unless otherwise agreed, the parties will use their reasonable best
efforts to effect a business combination of Ambassador Apartments,
L.P., a Delaware limited partnership (the "Ambassador Operating
Partnership"), and the AIMCO Operating Partnership. Subsequent to
the execution of the Ambassador Merger Agreement, the AIMCO Operating
Partnership and Ambassador Operating Partnership entered into an
Agreement and Plan of Merger (the "OP Merger Agreement) with AIMCO
MergerSub, L.P., a Delaware limited partnership and 99.9% owned
subsidiary partnership of the AIMCO Operating Partnership
("MergerSub"), pursuant to which MergerSub will be merged with and
into the Ambassador Operating Partnership, with the Ambassador
Operating Partnership surviving (the "OP Merger).
On May 8, 1998, holders of a majority of the outstanding shares of
Ambassador Common Stock voted to approve the merger with AIMCO (see
Note 16).
NOTE 5 - INVESTMENT IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED SUBSIDIARIES
In order to satisfy certain requirements of the Internal Revenue
Service Code applicable to AIMCO's status as a REIT, certain assets
of the Company are held through corporations (the "Unconsolidated
Subsidiaries") in which the AIMCO Operating Partnership holds
non-voting preferred stock that represents a 95% economic interest,
and certain officers and/or directors hold, directly or indirectly,
all of the voting common stock, representing a 5% economic
interest. As a result of the controlling interest in the
Unconsolidated Subsidiaries held by others, the Company accounts
for its interest in the Unconsolidated Subsidiaries on the equity
method. As of March 31, 1998, the Unconsolidated Subsidiaries
included Property Asset Management Services, Inc., AIMCO/NHP
Holdings, Inc. ("ANHI"), AIMCO/NHP Properties, Inc., NHP Property
Management Company and NHP A&R Services, Inc.
As of March 31, 1998, the Company's investment in the
Unconsolidated Subsidiaries totaled $88.8 million, which consisted
of a $50.0 million note receivable from, and $38.8 million of
preferred stock of, the Unconsolidated Subsidiaries.
9
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 6 - INVESTMENT IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED REAL ESTATE
PARTNERSHIPS
AIMCO/NHP Partners, L.P. ("ANPLP") owns general and limited
partnership interests in partnerships that own conventional and
affordable apartment units. ANPLP's ownership interests in these
partnerships range from 1% to 100%, and the provisions of the
partnership agreements give ANPLP varying degrees of control.
The Company owns a 99% limited partnership interest in ANPLP.
A limited liability company owned by certain officers of the Company
is the 1% general partner of ANPLP. Based on the provisions of the
partnership agreement for ANPLP, the Company does not possess
control of the partnership. As of March 31, 1998, the Company's
investment in unconsolidated partnerships, including ANPLP, totaled
$245.7 million.
The following table provides selected combined financial information
for both the Company's unconsolidated subsidiaries and unconsolidated
real estate partnerships as of and for the three months ended March
31, 1998 (in thousands):
<TABLE>
<CAPTION>
<S> <C>
Real estate, net of accumulated depreciation $2,127,306
Management contracts 50,514
Goodwill 44,799
Other Assets 480,416
Total assets 2,705,305
Secured notes payable 2,855,886
Accounts payable and accrued liabilities 678,770
Stockholders' and partners' equity (829,351)
Total liabilities and stockholders' equity 2,705,305
Rental and other property revenues $186,765
Property operating expenses (107,774)
Depreciation expense (24,955)
Service company revenues 20,779
Service company expenses (12,335)
Interest expense, net (52,737)
Net income 7,873
</TABLE>
NOTE 7 - SECURED NOTES PAYABLE
During the three months ended March 31, 1998, the Company assumed
$47.0 million in notes payable secured by first trust deeds in
connection with the purchase of seven apartment communities (see Note
3).
The following table summarizes the Company's secured notes payable as
of March 31, 1998 and December 31, 1997, all of which are non-recourse
to the Company (in thousands):
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
Fixed rate, fully-amortizing notes $604,882 $561,056
Fixed rate, non-amortizing notes 78,274 106,424
Floating rate, non-amortizing notes 13,880 13,941
---------- ---------
Total $697,036 $681,421
---------- ---------
---------- ----------
</TABLE>
10
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 8 - SECURED TAX-EXEMPT BOND FINANCING
The following table summarizes the Company's secured tax-exempt bond
financing at March 31, 1998 and December 31, 1997 (in thousands):
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
-------------- -----------------
<S> <C> <C>
7.0% fully-amortizing bonds due July 2016 $46,191 $46,498
6.9% fully-amortizing bonds due July 2016 9,465 9,529
4.2% interest only bonds due July 2016 5,917 5,958
6.0% interest only bonds due September 1998 5,287 5,325
5.4% interest only bonds due December 2002 6,700 6,700
------- -------
Total $73,560 $74,010
------- -------
------- -------
</TABLE>
NOTE 9 - SECURED SHORT-TERM FINANCING
The Company utilizes a variety of secured short-term financing
instruments to manage its working capital needs and to fund real
estate investments, including variable rate revolving credit
facilities, as well as various fixed and floating rate term loans.
In January 1998, the Company replaced its previous revolving credit
facility with a new $50 million unsecured revolving credit facility
with Bank of America National Trust and Savings Association ("Bank
of America") and BankBoston, N.A. (the "BOA Credit Facility"). The
AIMCO Operating Partnership is the borrower under the BOA Credit
Facility, but all obligations thereunder are guaranteed by AIMCO
and certain subsidiaries. The interest rate under the BOA Credit
Facility is based on either LIBOR or Bank of America's reference
rate, at the election of the Company, plus an applicable margin
(the "Margin"). The Margin ranges between 0.6% and 1.0% in the case
of LIBOR-based loans, and between 0% and 0.5% in the case of loans
based on Bank of America's reference rate, depending upon the
credit rating of the AIMCO Operating Partnership's senior
unsubordinated unsecured long-term indebtedness. The BOA Credit
Facility expires on January 26, 2000 unless extended for successive
one-year periods, at the discretion of the lenders. The BOA
Credit Facility provides for the conversion of the revolving
facility into a three-year term loan. The availability of funds to
the Company under the BOA Credit Facility is subject to certain
borrowing base restrictions and other customary restrictions,
including compliance with financial and other covenants thereunder.
The Company had outstanding borrowings under the BOA Credit
Facility of $4.0 million as of March 31, 1998.
On May 8, 1998, the Company increased its borrowing capacity under
the BOA Credit Facility to $125.0 million for a six-month period
(see Note 16).
In February 1998, the AIMCO Operating Partnership, as borrower, and
AIMCO and certain single asset wholly-owned subsidiaries of the
AIMCO Operating Partnership (the "Owners"), as guarantors, entered
into a five year $50 million secured credit facility agreement (the
"WMF Credit Facility") with Washington Mortgage Financial Group,
Ltd. ("Washington Mortgage"), which provides for the conversion of
all or a portion of such revolving credit facility to a base loan
facility. At the AIMCO Operating Partnership's request, the
commitment amount may be increased to an amount not to exceed $250
million, subject to the consent of Washington Mortgage and FNMA in
their sole and absolute discretion. The AIMCO Operating
Partnership and affiliates have pledged their ownership interests
in the Owners as security for its obligations under the WMF Credit
Facility. The guarantees of the Owners are secured by assets of
the Owners, including four apartment properties and two mortgage
notes. The interest rate on each
11
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 9 - SECURED SHORT-TERM FINANCING (CONTINUED)
advance is determined by investor bids for FNMA mortgage-backed
securities, plus a margin presently equal to 0.5%. The maturity date
of each advance under the revolving portion of the WMF Credit Facility
is a date between three and nine months from the closing date of the
advance, as selected by the AIMCO Operating Partnership. Advances
under the base facility mature at a date, selected by the AIMCO
Operating Partnership, between ten and twenty years from the date of
the advance. The Company had outstanding borrowings under the WMF
Credit Facility of $36.9 million as of March 31, 1998.
NOTE 10 - INTEREST RATE LOCK AGREEMENTS
In September 1997, the Company entered into an interest rate lock
agreement with a major investment banking company, having a notional
principal amount of $75.0 million, in anticipation of refinancing
certain floating rate indebtedness. The interest rate lock agreement
fixed the ten-year treasury rate at 6.294%. An unrealized loss of
approximately $3.5 million relating to the hedge has been deferred as
of March 31, 1998. On April 30, 1998, the Company refinanced certain
mortgage indebtedness relating to four real estate partnerships. As a
result of the refinancing, the Company reduced the notional value of
the interest rate lock agreement to $44.9 million, and realized losses
of approximately $1.4 million, which were deferred and will be
amortized over the life of the refinanced debt. The remaining amount
of the interest rate lock agreement has been split into separate
agreements with notional amounts equal to $6.9 million and $38.0
million, which fix the ten-year treasury rates at 6.319% and 6.337%,
and mature on May 15, 1998 and May 29, 1998, respectively.
NOTE 11 - COMMITMENTS
On March 17, 1998, AIMCO, the AIMCO Operating Partnership and Insignia
Financial Group, Inc. ("Insignia") and its subsidiary, Insignia/ESG,
Inc. entered into a definitive merger agreement (the "Insignia Merger
Agreement"), pursuant to which Insignia will be merged (the "Insignia
Merger") with and into AIMCO, with AIMCO being the surviving
corporation. Upon the completion of the merger, the Company will
assume property management of approximately 192,000 apartment units,
consisting of 115,000 units owned by partnerships which will be
controlled by AIMCO and 77,000 units owned by third parties. In
addition, the Company will acquire an approximate 61% ownership
interest in Insignia Properties Trust ("IPT"), which owns a 32%
weighted average general and limited partnership interest in
approximately 51,000 apartment units. The total consideration to be
paid in the merger of approximately $810.0 million consists of
approximately $303.0 million of AIMCO preferred stock, the assumption
of approximately $307.0 million of mortgage indebtedness, the
assumption of approximately $150.0 million of indebtedness represented
by preferred convertible securities of an Insignia subsidiary, and
the payment of a $50.0 million special dividend to Insignia
shareholders. The Company has agreed to offer to acquire the
outstanding shares of beneficial interest in IPT not held by Insignia
at a price of at least $13.25 per IPT share, or approximately $100.0
million.
Consummation of the Insignia Merger is subject to the affirmative vote
of the holders of two-thirds of the outstanding shares of Insignia
common stock, the approval of all appropriate governmental and
regulatory authorities and other customary conditions. The Insignia
Merger is expected to be consummated during the third quarter of 1998.
12
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 12 - MINORITY INTERESTS IN OTHER PARTNERSHIPS
Interests held by limited partners (other than the Company) in real
estate partnerships controlled by the Company are reflected as
Minority Interests in Other Partnerships. Net income is allocated
based on the percentage interest owned by these limited partners in
each respective real estate partnership.
NOTE 13 - MINORITY INTEREST IN OPERATING PARTNERSHIP
The AIMCO Operating Partnership's income for each period is allocated
between the Company and the outside limited partners, whose
interests are represented by OP Units, based on their respective
weighted-average ownership percentage in the Operating Partnership for
the period. The Company records the issuance of OP Units and the
assets acquired in purchase transactions based on the market price of
the Company's Class A Common Stock immediately prior to the date of
execution of the purchase contract. The holders of the OP Units
receive distributions, pro-rated from the date of admittance, in an
amount equivalent to the dividends paid to holders of Class A Common
Stock. During 1998, the weighted-average ownership interest in the
AIMCO Operating Partnership held by the OP Unit holders was 11.4%. At
March 31, 1998, the ownership interest of the OP Unit holders was
12.2%.
After holding the OP Units for one year, the limited partners have the
right to redeem their OP Units for cash. Notwithstanding that right,
AIMCO may elect to acquire some or all of the OP Units tendered for
redemption in exchange for shares of Class A Common Stock in lieu of
cash.
In January 1998, the AIMCO Operating Partnership agreed to sell
15,000 Class I High Performance Partnership Units (the "High
Performance Units") to 12 members of the Company's senior management
and 3 of its independent directors for $2.1 million in cash. The
High Performance Units have nominal value unless the Company's total
return, defined as dividend income plus share price appreciation,
over the three year period ending December 31, 2000, is at least 30%
and exceeds the industry average by at least 15%. At the conclusion
of the three year period, if the Company's total return satisfies
these criteria, the holders of the High Performance Units will
receive distributions and allocations of income and loss from the
AIMCO Operating Partnership in the same amounts and at the same
times as would holders of a number of OP Units equal to the quotient
obtained by dividing (i) the products of (a) 15% of the amount by
which the Company's cumulative total return over the three year
period exceeds the greater of 115% of a peer group index or 30%,
multiplied by (b) the weighted average market value of the Company's
outstanding common stock and OP Units, by (ii) the market value of
one share of Class A Common Stock at the end of the three year
period. The three year measurement period will be shortened in the
event of a change of control of the Company. Unlike OP Units, the
High Performance Units are not redeemable or convertible into Class A
Common Stock.
NOTE 14 - STOCKHOLDERS' EQUITY
On February 19, 1998, AIMCO issued 4,200,000 shares of 8 3/4% Class D
Cumulative Preferred Stock, par value $0.01 per share ("Class D
Preferred Stock") in a public offering. Holders of the Class D
Preferred Stock are entitled to receive, when, as and if declared by
the Board of Directors, annual cash dividends equal to $2.1875 per
share. The Class D Preferred Stock is senior to the Class A Common
Stock, and ranks on a parity with the Class B Preferred Stock and
Class C Preferred Stock as to dividends and upon liquidation. Upon
any liquidation, dissolution or winding up of AIMCO, before payment or
distributions by AIMCO shall be made to any holders of Class A Common
Stock, the holders of the Class D Preferred Stock shall be entitled to
receive a liquidation preference of $25 per share, plus accrued and
unpaid dividends. The net proceeds of $100.3 million were used to
repay indebtedness under the BOA Credit Agreement.
13
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 14 - STOCKHOLDERS' EQUITY (CONTINUED)
During the three months ended March 31, 1998, the Company sold 336,030
shares of Class A Common Stock to certain members of the Company's
management, at an average price of $36.61 per share. In payment for
the stock, such members of management executed notes payable to AIMCO
totaling $12.3 million, which bear interest at a fixed rate of 7.0%
per annum, payable quarterly, and are due in ten years. The notes are
secured by the stock purchased and are recourse as to 25% of the
original amount borrowed.
In March 1998, the Company repurchased 163,600 shares of Class A
Common Stock on the open market for $6.0 million, or an average price
of $36.55 per share.
NOTE 15 - EARNINGS PER SHARE
The following table illustrates the calculation of basic and diluted
earnings per share for the three months ended March 31, 1998 and 1997
(in thousands, except per share data):
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
NUMERATOR:
Net income $21,642 $4,584
Preferred stock dividends (3,681) -
------- -------
Numerator for basic and diluted earnings per share - income
attributable to common shareholders $17,961 $4,584
------- -------
------- -------
DENOMINATOR:
Denominator for basic earnings per share - weighted average
number of shares of common stock outstanding 41,128 16,454
Effect of dilutive securities 182 132
------- -------
Denominator for dilutive earnings per share 41,310 16,586
------- -------
------- -------
BASIC EARNINGS PER COMMON SHARE:
Operations $0.38 $0.30
Gain on disposition of properties 0.06 -
Extraordinary item - (0.02)
------- -------
Total $0.44 $0.28
------- -------
------- -------
DILUTED EARNINGS PER COMMON SHARE:
Operations $0.37 $0.30
Gain on disposition of properties 0.06 -
Extraordinary item - (0.02)
------- -------
Total $0.43 $0.28
------- -------
------- -------
</TABLE>
NOTE 16 - SUBSEQUENT EVENTS
ARBOR STATION ACQUISITION
On April 15, 1998, the Company purchased Arbor Station, a 264-unit
apartment community located in Montgomery, Alabama. Total
consideration paid of $11.4 million was comprised of $9.9 million in
cash, and 38,237 OP units valued at $1.5 million.
14
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Notes to Consolidated Financial Statements (continued)
NOTE 16 - SUBSEQUENT EVENTS (CONTINUED)
DIVIDEND DECLARED
On April 16, 1998, the AIMCO Board of Directors declared a cash
dividend of $0.5625 per share of AIMCO Class A Common Stock for the
quarter ended March 31, 1998, payable on May 14, 1998 to stockholders
of record on May 7, 1998.
HEATHER RIDGE ACQUISITION
On April 30, 1998, the Company purchased Heather Ridge II, a 72-unit
apartment community located in Arlington, Texas. Total consideration
paid of $2.0 million was comprised of $0.8 million in cash and the
assumption of $1.2 million in mortgage indebtedness.
INCREASE IN UNSECURED REVOLVING CREDIT FACILITY
On May 8, 1998, the Company increased its borrowing capacity under the
BOA Credit Facility to $125.0 million for a six-month period. At the
conclusion of the six-month period, the maximum borrowing capacity
returns to its original $50.0 million. The interest rate to be
applied to the incremental borrowings is based on either LIBOR plus a
margin of 0.9% or the aforementioned Bank of America reference rate.
The additional borrowing capacity will be used to facilitate the
closing of the Ambassador and Insignia mergers.
AMBASSADOR MERGER
On May 8, 1998, holders of a majority of the outstanding shares of
Ambassador Common Stock voted to approve the merger with AIMCO. The
Ambassador Merger was completed the same day. Pursuant to the
Ambassador Merger Agreement, all outstanding shares of Ambassador
Common Stock were converted into AIMCO Class A Common Stock, at a
conversion ratio of 0.553, resulting in the issuance of up to
6,578,833 shares of AIMCO Class A Common Stock. Concurrently, all
outstanding options to purchase Ambassador Common Stock were converted
into options to purchase AIMCO Class A Common Stock, at the same
conversion ratio, or cash. Contemporaneously with the consummation of
the Ambassador Merger, the OP Merger was consummated, each outstanding
unit of limited partnership interest in the Ambassador Operating
Partnership was converted into the right to receive 0.553 AIMCO OP
Units, and as a result. the Ambassador Operating Partnership became a
99.9% owned subsidiary partnership of the AIMCO Operating Partnership.
15
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
As of March 31, 1998, the Company owned or managed 184,660 apartment units,
comprised of 41,886 units in 153 apartment communities owned or controlled by
the Company (the "Owned Properties"), 75,109 units in 480 apartment communities
in which the Company has an equity interest (the "Equity Properties") and 67,665
units in 356 apartment communities which the company manages for third parties
and affiliates (the "Managed Properties" and together with the Owned
Properties and Equity Properties, the "AIMCO Properties"). The apartment
communities are located in 42 states, the District of Columbia and Puerto Rico.
The following discussion contains forward-looking statements that are subject to
significant risks and uncertainties. There are several important factors that
could cause actual results to differ materially from the results anticipated by
the forward-looking statements contained in the following discussion. Such
factors and risks include, but are not limited to: financing risks, including
the risk that the Company's cash flow from operations may be insufficient to
meet required payments of principal and interest on its debt; real estate risks,
including variations of real estate values and the general economic climate in
local markets and competition for tenants in such markets; acquisition and
development risks, including failure of such acquisitions to perform in
accordance with projections; and possible environmental liabilities, including
costs which may be incurred due to necessary remediation of contamination of
properties presently owned or previously owned by the Company. In addition, the
Company's continued qualification as a REIT involves the application of highly
technical and complex provisions of the Internal Revenue Code. Readers should
carefully review the financial statements and the notes thereto, as well as the
risk factors described in documents the Company files from time to time with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 TO THE THREE MONTHS ENDED
MARCH 31, 1997
NET INCOME
The Company recognized net income of $21.6 million for the three months ended
March 31, 1998, compared to $4.6 million for the three months ended March 31,
1997. The increase in net income of $17.0 million, or 370.6% was primarily
the result of the significant increase in the number of owned properties and
investments in unconsolidated subsidiaries and real estate partnerships
during 1997 (the "1997 Acquisitions"), including the acquisition of NHP
properties, and the purchase of seven properties in the first quarter of 1998
(the "1998 Acquisitions"). The increase in net income is partially offset by
the sale of five properties in 1997 (the "1997 Sold Properties") and one
property in 1998 (the "1998 Sold Property"), increased real estate
depreciation, increased goodwill amortization and increased interest expense
associated with indebtedness which was assumed or incurred in connection with
the acquisitions described above. These factors are discussed in more detail
in the following paragraphs.
RENTAL PROPERTY OPERATIONS
Rental and other property revenues from the Company's Owned Properties
totaled $71.3 million for the three months ended March 31, 1998, compared to
$38.0 million for the three months ended March 31, 1997, an increase of $33.3
million, or 87.6%. Rental and other property revenues consisted of the
following (in thousands):
16
<PAGE>
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, 1998 March 31, 1997
------------------ ------------------
<S> <C> <C>
"Same store" properties $45,473 $34,117
1997 Acquisitions 22,023 -
1998 Acquisitions 326 -
1997 Sold Properties - 1,201
1998 Sold Property 99 520
Properties in lease-up after the completion
of an expansion or renovation 3,415 2.202
----------- ------------
Total $71,336 $38,040
----------- ------------
----------- -------------
</TABLE>
Property operating expenses, consisting of on-site payroll costs, utilities
(net of reimbursements received from tenants), contract services, turnover
costs, repairs and maintenance, advertising and marketing, property taxes and
insurance, totaled $26.3 million for the three months ended March 31, 1998,
compared to $14.5 million for the three months ended March 31, 1997, an
increase of $11.8 million or 81.4%. Operating expenses consisted of the
following (in thousands):
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, 1998 March 31, 1997
------------------ ------------------
<S> <C> <C>
"Same store" properties $16,612 $13,090
1997 Acquisitions 8,439 -
1998 Acquisitions 164 -
1997 Sold Properties - 535
1998 Sold Property 111 187
Properties in lease-up after the completion
of an expansion or renovation 983 644
-------- ---------
Total $26,309 $14,456
-------- ---------
-------- ---------
</TABLE>
Owned property management expenses, representing the costs of managing the
Company's Owned Properties, totaled $2.1 million for the three months ended
March 31, 1998, compared to $1.3 million for the three months ended March 31,
1997, an increase of $0.8 million, or 61.5%. The increase resulted from the
acquisition of properties in 1997 and 1998.
SERVICE COMPANY BUSINESS
The Company's share of income from the service company business was $1.0
million for the three months ended March 31, 1998, compared to $0.6 million
for the three months ended March 31, 1997. The increase in income of $0.4
million was due to increased revenues from the acquisition of partnership
interests, which provide for certain partnership and administrative fees, and
the acquisition of a captive insurance subsidiary in connection with the
acquisition of the NHP Real Estate Companies in June 1997. The increase in
revenues was offset by the loss of commercial asset management revenues as a
result of the scheduled termination of asset management contracts at March
31, 1997.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased from $0.4 million for the three
months ended March 31, 1997 to $2.0 million for the three months ended March
31, 1998, a 400.0% increase. The increase is primarily due to additional
corporate costs and additional employee salaries associated with the purchase
of NHP in December 1997.
17
<PAGE>
INTEREST EXPENSE
Interest expense, which includes the amortization of deferred financing
costs, totaled $15.4 million for the three months ended March 31, 1998,
compared to $9.5 million for the three months ended March 31, 1997, an
increase of $5.9 million, or 62.1%. The increase consists of the following
(in thousands):
<TABLE>
<S> <C>
Interest expense on secured short-term and long-term
indebtedness incurred in connection with the 1997
Acquisitions $5,945
Interest expense on secured and unsecured short-term
and long-term indebtedness incurred in connection
with the 1998 Acquisitions 86
Decrease in interest expense on the Company's other
indebtedness due to principal amortization (42)
------
Total increase $5,989
------
------
</TABLE>
INTEREST INCOME
Interest income totaled $6.1 million for the three months ended March 31,
1998, compared to $0.5 million for the three months ended March 31, 1997.
The increase of $5.6 million is primarily due to interest earned on loans
made by the Company to partnerships in which the Company acts as the general
partner.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had $35.9 million in cash and cash
equivalents. In addition, the Company had $31.2 million of restricted cash
primarily consisting of reserves and impounds held by lenders for capital
expenditures, property taxes and insurance. The Company's principal demands
for liquidity include normal operating activities, payments of principal and
interest on outstanding debt, capital improvements, acquisitions of or
investments in properties, dividends paid to its stockholders and
distributions paid to minority limited partners in the Operating Partnership.
The Company considers its cash provided by operating activities, and funds
available under its credit facilities, to be adequate to meet short-term
liquidity demands. The Company utilizes its revolving credit facilities for
general corporate purposes and to fund investments on an interim basis.
In January 1998, the Company replaced its previous $100 million revolving
credit facility with a new $50 million unsecured credit facility with Bank of
America and BankBoston, N.A. (the "BOA Credit Facility"). The AIMCO
Operating Partnership is the borrower under the BOA Credit Facility, but all
obligations thereunder are guaranteed by AIMCO and certain subsidiaries. The
interest rate under the BOA Credit Facility is based on either LIBOR or Bank
of America's reference rate, at the election of the Company, plus an
applicable margin (the "Margin"). The Margin ranges between 0.6% and 1.0% in
the case of LIBOR-based loans, and between 0% and 0.5% in the case of loans
based on Bank of America's reference rate, depending upon the credit rating
of the AIMCO Operating Partnership's senior unsubordinated unsecured
long-term indebtedness. The BOA Credit Facility expires on January 26, 2000
unless extended for successive one-year periods, at the discretion of the
lenders. The BOA Credit Facility provides for the conversion of the
revolving facility into a three-year term loan. The availability of funds to
the Company under the BOA Credit Facility is subject to certain borrowing
base restrictions and other customary restrictions, including compliance with
financial and other covenants thereunder. The Company had outstanding
borrowings under the BOA Credit Facility of $4.0 million as of March 31, 1998.
On May 8, 1998, the Company increased its borrowing capacity under the BOA
Credit Facility to $125.0 million for a six-month period. At the conclusion
of the six-month period, the maximum borrowing capacity returns to its
original $50.0 million. The interest rate to be applied to the incremental
borrowings is based on either LIBOR plus a margin of 0.9% or the
aforementioned Bank of America reference rate.
18
<PAGE>
In February 1998, the AIMCO Operating Partnership, as borrower, and AIMCO and
certain single asset wholly-owned subsidiaries of the AIMCO Operating
Partnership (the "Owners"), as guarantors, entered into a five year $50
million secured credit facility agreement (the "WMF Credit Facility") with
Washington Mortgage Financial Group, Ltd. ("Washington Mortgage"), which
provides for the conversion of all or a portion of such revolving credit
facility to a base loan facility. The WMF Credit Facility provides that all
the rights of Washington Mortgage are assigned to the Federal National
Mortgage Association ("FNMA"), but FNMA does not assume Washington Mortgage's
obligations under the WMF Credit Facility. At the AIMCO Operating
Partnership's request, the commitment amount may be increased to an amount
not to exceed $250 million, subject to the consent of Washington Mortgage and
FNMA in their sole and absolute discretion. The AIMCO Operating Partnership
and affiliates have pledged their ownership interests in the Owners as
security for its obligations under the WMF Credit Facility. The guarantees
of the Owners are secured by assets of the Owners, including four apartment
properties and two mortgage notes. Advances to the AIMCO Operating
Partnership under the WMF Credit Facility are funded with the proceeds of the
sale to investors of FNMA mortgage-backed securities that are secured by the
advance and an interest in the collateral. The interest rate on each advance
is determined by investor bids for such mortgage-backed securities, plus a
margin presently equal to 0.5%. The maturity date of each advance under the
revolving portion of the WMF Credit Facility is a date between three and nine
months from the closing date of the advance, as selected by the AIMCO
Operating Partnership. Advances under the base facility mature at a date,
selected by the AIMCO Operating Partnership, between ten and twenty years
from the date of the advance. Subject to certain conditions, the AIMCO
Operating Partnership has the right to add or substitute collateral. The
WMF Credit Facility requires the Company to maintain a ratio of debt to gross
asset value of no more than 0.55 to 1.0, and interest coverage ratio of at
least 2.25 to 1.0, and a debt service coverage ratio of at least 2.0 to 1.0,
imposes minimum net worth requirements and also provides other financial
covenants and interest coverage ratio requirements that are specifically
related to the collateral. The Company had outstanding borrowings under the
WMF Credit Facility of $36.9 million as of March 31, 1998.
In September 1997, the Company entered into an interest rate lock agreement
with a major investment banking company, having a notional principal amount
of $75.0 million, in anticipation of refinancing certain floating rate
indebtedness. The interest rate lock agreement fixed the ten-year treasury
rate at 6.294%. An unrealized loss of approximately $3.5 million relating to
the hedge has been deferred as of March 31, 1998. On April 30, 1998, the
Company refinanced certain mortgage indebtedness relating to four real estate
partnerships. As a result of the refinancing, the Company reduced the
notional value of the interest rate lock agreement by $30.1 million, and
realized losses of approximately $1.4 million, which were deferred and will
be amortized over the life of the refinanced debt. The remaining interest
rate lock agreement of $44.9 million was split into separate agreements with
notional amounts of $6.9 million and $38.0 million, which fix the ten-year
treasury rates at 6.319% and 6.337%, and mature on May 15, 1998 and May 29,
1998, respectively.
From time to time, the Company has offered to acquire and, in the future, may
offer to acquire the unaffiliated limited partnership interests in certain
limited partnerships whose general partnership interests were acquired by the
Company, including certain partnerships acquired in 1996 and certain
partnerships in which the NHP Real Estate Companies own interests. Any such
acquisitions will require funds to pay the purchase price for such interests.
Cash payments made in connection with such acquisitions totaled $5.8 million
for the three months ended March 31, 1998.
The Company expects to meet its short-term liquidity requirements as well as
property acquisitions, refinancings of short-term debt, and tender offers,
with long-term, fixed rate, fully amortizing debt, secured or unsecured
indebtedness, the issuance of debt securities, OP Units or equity securities
and cash generated from operations. In April 1997, the Company filed a shelf
registration statement with the SEC that registered $1.0 billion of
securities for sale on a delayed or continuous basis. The shelf registration
statement was declared effective in May 1997. Since that time, the Company
has issued common and preferred stock and received net proceeds of $580.6
million.
19
<PAGE>
As of March 31, 1998, 94% of the Company's Owned Properties and 56% of its
total assets were encumbered by debt, and the Company had total outstanding
indebtedness of $811.5 million, all of which was secured by Owned Properties
and other assets. The Company's indebtedness is comprised of $696.5 million
of secured long-term financing, $37.4 million in secured short-term
financing, $73.6 million of secured tax-exempt bonds and $4.0 million
outstanding under its unsecured revolving credit facility As of March 31,
1998, approximately 7% of the Company's indebtedness bears interest at
variable rates. General Motors Acceptance Corporation has made 89 loans (the
"GMAC Loans"), with an aggregate outstanding principal balance of $386.9
million as of March 31, 1998 to property owning partnerships of the Company,
each of which is secured by the underlying Owned Property of such
partnership. Certain GMAC Loans are cross-collateralized with certain other
GMAC Loans. Other than certain GMAC Loans, none of the Company's debt is
subject to cross-collateralization provisions. At March 31, 1998 the
weighted average interest rate on the Company's consolidated indebtedness was
8.0% with a weighted average maturity of 9.0 years.
CAPITAL EXPENDITURES
For the three months ended March 31, 1998, the Company spent $2.8 million for
capital replacements and $3.3 million for initial capital expenditures. In
addition, the Company spent an aggregate of $1.7 million for capital
enhancements and the renovation of four properties owned by the Company.
These expenditures were funded by working capital reserves, borrowings under
the previous and new credit facilities and net cash provided by operating
activities. The Company budgets $300 per apartment unit per annum for
capital replacements, or $2.9 million for the three months ended March 31,
1998. The Company has $2.4 million of budgeted but unspent amounts remaining
from prior periods that can be used for future capital replacements. The
Company expects to incur initial capital expenditures and capital
enhancements (spending to increase a property's revenue potential including
renovations, developments and expansions) of approximately $50.0 million
during the balance of the year ended December 31, 1998. Initial capital
expenditures and capital enhancements will be funded with cash from operating
activities and borrowings under the Company's revolving credit facilities.
FUNDS FROM OPERATIONS
The Company measures its economic profitability based on Funds From
Operations ("FFO"). The Company's management believes that FFO provides
investors with an understanding of the Company's ability to incur and service
debt and make capital expenditures. The Board of Governors of the National
Association of Real Estate Investment Trusts ("NAREIT") defines FFO as net
income (loss), computed in accordance with generally accepted accounting
principles, excluding gains and losses from debt restructuring and sales of
property, plus real estate related depreciation and amortization (excluding
amortization of financing costs), and after adjustments for unconsolidated
partnerships and joint ventures. The Company calculates FFO in a manner
consistent with the NAREIT definition, which includes adjustments for
minority interest in the AIMCO Operating Partnership, plus amortization of
management company goodwill, the non-cash deferred portion of the income tax
provision for unconsolidated subsidiaries and less the payment of dividends
on preferred stock. FFO should not be considered as an alternative to net
income or net cash flows from operating activities, as calculated in
accordance with GAAP, as an indication of the Company's performance or as a
measure of liquidity. FFO is not necessarily indicative of cash available to
fund future cash needs. In addition, there can be no assurance that the
Company's basis for computing FFO is comparable with that of other real
estate investment trusts.
20
<PAGE>
For the three months ended March 31, 1998 and 1997, FFO was as follows (amounts
in thousands):
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
OPERATING ACTIVITIES
Income before minority interest in Operating Partnership $23,930 $5,425
Extraordinary item - 269
Gain loss on disposition of properties (2,526) -
Real estate depreciation, net of minority interests in
other partnerships 12,779 6,581
Amortization of goodwill 2,389 237
Equity in earnings of other partnerships:
Real estate depreciation 2,301 -
Equity in earnings of unconsolidated subsidiaries:
Real estate depreciation 890 -
Deferred income taxes 309 -
Amortization of recoverable amount of management
contracts 1,379 -
Class C Preferred Stock dividend (1,332) -
Class D Preferred Stock dividend (1,032) -
------- -------
Funds From Operations (FFO) $39,087 $12,512
------- -------
------- -------
Weighted average common shares, common share
equivalents, preferred stock convertible into common
stock and OP Units outstanding 49,069 19,626
------- -------
------- -------
</TABLE>
For the three months ended March 31, 1998 and 1997, net cash flows were as
follows (amounts in thousands):
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Cash provided by operating activities $ 9,661 $25,976
Cash flow used in investing activities (47,025) (5,003)
Cash flow provided by (used in) financing activities 36,224 (22,612)
</TABLE>
CONTINGENCIES
HUD ENFORCEMENT AND LIMITED DENIALS OF PARTICIPATION
A significant number of affordable units included in the AIMCO Properties are
subject to regulation by the U.S. Department of Housing and Urban Development
("HUD"). Under its regulations, HUD has the authority to suspend or deny
property owners and managers from participation in HUD programs with respect
to additional assistance within a geographic region through imposition of a
Limited Denial of Participation ("LDP") by any HUD office or nationwide for
violations of HUD regulatory requirements. In March 1997, HUD announced its
intention to step up enforcement against property owners and managers who
violate their agreements with HUD, and, in July 1997, HUD announced the
creation of a new department-wide enforcement division. Three HUD field
offices recently issued three LDPs to NHP Incorporated, a company acquired by
AIMCO in December 1997 ("NHP"), as a result of physical inspections and
mortgage defaults at four properties owned by NHP-related companies (two of
which properties are managed by NHP). One LDP was subsequently withdrawn and
another was terminated in December 1997 after a reinspection of the property.
The one remaining LDP, unless lifted, suspends NHP's ability to manage or
acquire additional HUD-assisted properties in eastern Missouri until June 24,
1998. The Company has proposed a settlement agreement with HUD which
includes aggregate payments to HUD of approximately $485,000 and withdrawal
of the LDP as of its date of issuance. Because an LDP is prospective, existing
HUD agreements are not affected, so an LDP is not expected to result
21
<PAGE>
in the loss of management service revenue from or to otherwise affect
properties that the Company currently manages in the subject regions. If HUD
were to disapprove the Company as property manager for one or more affordable
properties, the Company's ability to obtain property management revenues from
new affordable properties may be impaired.
HUD monitors the performance of properties with HUD-insured mortgage loans.
HUD also monitors compliance with applicable regulations, and takes
performance and compliance into account in approving management of
HUD-assisted properties. In this regard, since July 1988, 29 HUD-assisted
properties owned or managed by the NHP or NHP-related companies have
defaulted on non-recourse HUD-insured mortgage loans. Eight of these 29
properties are also currently managed by the Company. An additional six
properties owned or managed by NHP have received unsatisfactory performance
ratings. As a result of the defaults and unsatisfactory ratings, the
national HUD office must review any application by the Company to act as
property manager for additional HUD-assisted properties. The national HUD
office has consistently approved NHP's applications to manage new properties,
and the Company received HUD clearance to acquire its interests in NHP and
the NHP-related companies. The Company believes that it enjoys a good
working relationship with HUD and that the national office will continue to
apply the clearance process to large management portfolios such as the
Company's with discretion and flexibility. While there can be no assurance,
the Company believes that the unsatisfactory reviews and the mortgage
defaults will not have a material impact on its results of operations or
financial condition.
In October 1997, NHP received a subpoena from the Inspector General of HUD
(the "Inspector General") requesting documents relating to any arrangement
whereby NHP or any of its affiliates provides or has provided compensation to
owners of HUD multifamily projects in exchange for or in connection with
property management of a HUD project. The Company believes that other owners
and managers of HUD projects have received similar subpoenas. Documents
relating to certain of the Company's acquisitions of property management
rights for HUD projects, may be responsive to the subpoena. The Company is
in the process of complying with the subpoena and has provided certain
documents to the Inspector General, without conceding that they are
responsive to the subpoena. The Company believes that its operations are in
compliance, in all material respects, with all laws, rules and regulations
relating to HUD-assisted or HUD-insured properties. Effective February 13,
1998, counsel for the Company and the U.S. Attorney for the Northern District
of California entered into a Tolling Agreement related to certain civil
claims the government may have against the Company. Although no action has
been initiated against the Company or, to the Company's knowledge, any owner
of a HUD property managed by the Company, if any such action is taken in the
future, it could ultimately affect existing arrangements with respect to HUD
projects or otherwise have a material adverse effect on the Company's results
of operations.
ENVIRONMENTAL
Under Federal, state and local environmental laws and regulations, a current
or previous owner or operator of real property may be required to investigate
and clean up a release of hazardous substances at such property, and may,
under such laws and common law, be held liable for property damage and other
costs incurred by third parties in connection with such releases. The
liability under certain of these laws has been interpreted to be joint and
several unless the harm is divisible or there is a reasonable basis for
allocation of responsibility. The failure to remediate the property properly
may also adversely affect the owner's ability to sell or rent the property or
to borrow using the property as collateral. In connection with its
ownership, operation or management of the AIMCO Properties, the Company could
be potentially liable for environmental liabilities or costs associated with
its properties or properties it may in the future acquire or manage.
22
<PAGE>
Certain Federal, state and local laws and regulations govern the removal,
encapsulation or disturbance of asbestos-containing materials ("ACMs") when
those materials are in poor condition or in the event of building remodeling,
renovation or demolition; impose certain worker protection and notification
requirements and govern emissions of and exposure to asbestos fibers in the
air. These laws also impose liability for a release of ACMs and my enable
third parties to seek recovery from owners or operators of real properties
for personal injury associated with ACMs. In connection with the ownership,
operation or management of properties, the Company could be potentially
liable for those costs. There are ACMs at certain of the Owned Properties,
and there may be ACMs at certain of the other AIMCO Properties. The Company
has developed and implemented operations and maintenance programs, as
appropriate, that establish operating procedures with respect to the ACMs at
most of the Owned Properties, and intends to develop and implement, as
appropriate, such programs at AIMCO Properties that do not have such
programs.
Certain of the Company's Owned Properties, and some of the other AIMCO
Properties, are located on or near properties that contain or have contained
underground storage tanks or on which activities have occurred which could
have released hazardous substances into the soil or groundwater. There can be
no assurances that such hazardous substances have not been released or have
not migrated, or in the future will not be released or will not migrate, onto
the AIMCO Properties. Such hazardous substances have been released at
certain Owned Properties and, in at least one case, have migrated from an
off-site location onto AIMCO's property. In addition, the Company's
Montecito property in Austin, Texas, is located adjacent to, and may be
partially on, land that was used as a landfill. Low levels of methane and
other landfill gas have been detected at Montecito. The City of Austin (the
"City"), the former landfill operator, has assumed responsibility for
conducting all investigation and remedial activities to date associated with
the methane and other landfill gas. The remediation of the landfill gas is
now substantially complete and the Texas Natural Resources Conservation
Commission ("TNRCC") has preliminarily approved the methane gas remediation
efforts. Final approval of the site and the remediation process is
contingent upon the results of continued methane gas monitors to confirm the
effectiveness of the remediation efforts. Should further actionable levels
of methane gas be detected, a proposed contingency plan of passive methane
gas venting may be implemented by the City. The City has also conducted
testing at Montecito to determine whether, and to what extent, groundwater
has been impacted. Based on test reports received to date by the Company,
the groundwater does not appear to be contaminated at actionable levels. The
Company has not incurred, and does not expect to incur, liability for the
landfill investigation and remediation; however, the Company has relocated
some of its tenants and has installed a venting system according to the
TNRCC's specifications under the buildings slabs, in connection with the
present raising of four of its buildings in order to install stabilizing
piers thereunder, at a total cost of approximately $550,000, which is
primarily the cost for the restabilization. The restabilization was
substantially completed as of January 1998. The City will be responsible for
monitoring the conditions of Montecito.
All of the Owned Properties were subject to Phase I or similar environmental
audits by independent environmental consultants prior to acquisition. The
audits did not reveal, nor is the Company aware of, any environmental
liability relating to such properties that would have a material adverse
effect on the Company's business, assets or results of operations. However,
such audits involve a number of judgements and it is possible that such
audits did not reveal all environmental liabilities or that there are
material environmental liabilities of which the Company is unaware. In
addition, the Managed Properties may not have been subject to Phase I or
similar environmental audits by independent environmental consultants. While
the Company is not aware of any environmental liability that it believes
would have a material adverse effect on its business, financial condition or
results of operations relating to the Managed Properties, for which audits
are not available, there can be no assurance that material environmental
liabilities of which the Company is unaware do not exist at such properties.
23
<PAGE>
In October 1997, NHP received a letter ("the EPA Letter") from the U.S.
Department of Justice ("DOJ") which stated that the U.S. Environmental
Protections Agency ("EPA") has requested that the DOJ file a lawsuit against
NHP alleging, among other things, that NHP violated the Clean Air Act, the
National Recycling and Emissions Reduction Programs and associated
regulations in connection with the employment of certain unlicensed
personnel, maintenance and disposal of certain refrigerants, and
record-keeping practices at two properties. A settlement in principle
between NHP and the EPA has been reached whereby NHP agreed to pay a fine of
$99,900, permit the EPA to audit the maintenance records and technical
staffing at 40 NHP properties and continue to provide training to all
maintenance workers with respect to the disposal of refrigerants. A formal
settlement agreement is expected to be executed in 1998.
LEGISLATIVE ACTION REGARDING PROPOSED HUD REORGANIZATION AND RESTRUCTURING OF
HUD PROGRAMS
The Company owns and/or manages approximately 44,000 units that are
subsidized under Section 8 of the United States Housing Act of 1937, as
amended ("Section 8"). These subsidies are generally provided pursuant to
project-based Housing Assistance Payment Contracts ("HAP Contracts") between
HUD and the owners of the properties or, with respect to a limited number of
units managed by the Company, pursuant to vouchers received by tenants. On
October 27, 1997, the President of the United States signed into law the
Multifamily Assisted Housing Reform and Affordability Act of 1997 (the "1997
Housing Act"). Under the 1997 Housing Act, the mortgage financing and HAP
Contracts of certain properties assisted under Section 8, with rents above
market levels and financed with HUD-insured mortgage loans, will be
restructured by reducing subsidized rents to market levels, thereby reducing
rent subsidies, and lowering required debt service payments as needed to
ensure financial viability at the reduced rents and subsidy levels. The 1997
Housing Act retains project-based subsidies for most properties (properties
in rental markets with limited supply, properties serving the elderly and
certain other properties).
The 1997 Housing Act phases out project-based subsidies on selected
properties serving families not located in the rental markets with limited
supply, converting such subsidies to a tenant-based subsidy. Under a tenant
based system, rent vouchers would be issued to qualified tenants who then
could elect to reside at a property of their choice, provided the tenant has
the financial ability to pay the difference between the selected property's
monthly rent and the value of the voucher, which would be established based
on HUD's regulated fair market rent for the relevant geographical areas. The
1997 Housing Act provides that properties will begin the restructuring
process in Federal fiscal year 1999 (beginning October 1, 1998), and that HUD
will issue final regulations implementing the 1997 Housing Act on or before
October 27, 1998. Congress has elected to renew HAP Contracts expiring
before October 1, 1998 for one year terms, generally at existing rents, so
long as the properties remain in compliance with the HAP Contracts. While
the Company does not expect the provisions of the 1997 Housing Act to result
in a significant number of tenants relocating from properties managed by the
Company, there can be no assurance that the provisions will not significantly
affect the Company's management portfolio. Furthermore, there can be no
assurance that other changes in Federal housing subsidy will not occur. Any
such changes could have an adverse effect on the Company's property
management revenues.
INFLATION
Substantially all of the leases at the Company's apartment properties are for a
period of six months or less, allowing, at the time of renewal, for adjustments
in the rental rate and the opportunity to re-lease the apartment unit at the
prevailing market rate. The short-term nature of these leases generally serves
to minimize the risk to the Company of the adverse effect of inflation and the
Company does not believe that inflation has had a material adverse impact on its
revenues.
24
<PAGE>
LITIGATION
See "PART II. OTHER INFORMATION - Item 1. Legal Proceedings," elsewhere in this
report for a discussion of certain legal proceedings.
In addition, the Company is a party to various legal actions resulting from its
operating activities. These actions are routine litigation and administrative
proceedings arising in the ordinary course of business, some of which are
covered by liability insurance, and none of which are expected to have a
material adverse effect on the consolidated financial condition or results of
operations of the Company.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
25
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In November 1996, the Company acquired (the "English Acquisition")
certain partnerships interests, real estate and related assets owned
by J.W. English, a Houston, Texas-based real estate syndicator and
developer, and certain affiliated entities (collectively, the "J.W.
English Companies"). In the English Acquisition, the Company
purchased all of the general and limited partnership interests in 22
limited partnerships which act as the general partner to 31 limited
partnerships (the "English Partnerships") that own 22 mulitfamily
apartment properties and other assets and interests related to the
J.W. English Companies and assumed management of the properties owned
by the English Partnerships. The Company made separate tender offers
(the "English Tender Offers") to the limited partners of 25 of the
English Partnerships (the "Tender Offer English Partnerships").
In November 1996, purported limited partners of certain of the Tender
Offer English Partnerships filed a class action lawsuit against the
Company and J.W. English in the U.S. District Court for the Northern
District of California (the "Federal Action"), alleging among other
things, that the Company conspired with J.W. English to breach his
fiduciary duty to the plaintiffs, and that the offering materials used
by the Company in connection with the English Tender Offers contained
misleading statements or omissions. The Federal Action was
voluntarily dismissed, without prejudice, in favor of another
purported class action filed in May 1997 by limited partners of
certain of the Tender Offer English Partnerships and six additional
English Partnerships. Two complaints were filed in Superior Court of
the State of California (the "California Actions") against the Company
and the J.W. English Companies, alleging, among other things, that the
consideration the Company offered in the English Tender Offers was
inadequate and designed to benefit the J.W. English Companies at the
expense of the limited partners, that certain misrepresentations and
omissions were made in connection with the English Tender Offers, that
the Company receives excessive fees in connection with its management
of the properties owned by the English Partnerships, that the Company
continues to refuse to liquidate the English Partnerships and that the
English Acquisition violated the partnership agreements governing the
English Partnerships and constituted a breach of fiduciary duty.
In addition to unspecified compensation and exemplary damages, the
original complaints in the California Actions sought an accounting, a
constructive trust on the assets and monies acquired by the English
defendants in connection with the English Acquisition, a court order
removing the Company from management of the English Partnerships
and/or ordering disposition of the properties and attorneys fees,
expert fees and other costs. The Company intends to vigorously defend
itself in connection with these actions. The Company believes it is
entitled to indemnity from the J.W. English Companies, subject to
certain exceptions. Failure by the Company to prevail in the
California Actions or to receive indemnification could have a material
adverse effect on the Company's financial condition and results of
operations.
26
<PAGE>
On August 4, 1997, the Company filed demurrers to both complaints in
the California Actions. At a hearing on the demurrers on January 9,
1998, the court granted the Company's demurrers to each of the three
causes of action against it in the two complaints, with leave to
amend. On February 25, 1998, the plaintiffs filed a consolidated
amended class and derivative complaint for damages (the
"Consolidated Amended Complaint"). The Consolidated Amended
Complaint has added as defendants the general partners of the
English Partnerships and dropped certain defendants, including AIMCO/
PAM Properties, L.P. The Consolidated Amended Complaint seeks
compensatory and punitive damages and alleges six causes of action
for breach of fiduciary duty (two separate causes of action), for an
accounting, breach of the implied covenant of good faith and fair
dealing, and for inducing breach of contract. Plaintiffs have also
added allegations of alleged wrongful conduct in connection with the
Company's second group of tender offers commenced in late 1997. On
March 27, 1998, the Company filed demurrers on behalf of the AIMCO
defendants. On May 22, 1998, the Court will hold a hearing on the
Company's demurrers.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In February 1998, AIMCO issued 4,200,000 shares of Class D 83/4%
Cumulative Preferred Stock ("Class D Preferred Stock"), par value
$0.01 per share, in a public offering. The Class D Preferred Stock
ranks prior to AIMCO Class A Common Stock, and ranks on a parity with
the outstanding shares of AIMCO Class B Preferred Stock and AIMCO
Class C Preferred Stock with respect to the payment of dividends and
the distribution of amounts upon liquidation, dissolution or winding
up. The Class D Preferred Stock has an aggregate liquidation value of
$105.0 million. Holders of the Class D Preferred Stock are entitled
to receive, when, as and if declared by the Board of Directors, annual
cash dividends equal to 83/4% of the $25 liquidation preference, or
$0.546875 per share per quarter.
Holders of the Class D Preferred Stock, voting as a class with the
holders of all AIMCO capital stock that ranks on a parity with the
Class D Preferred Stock with respect to the payment of dividends or
upon liquidation, dissolution, winding up or otherwise ("Parity
Stock"), will be entitled to elect two directors of AIMCO if six
quarterly dividends (whether or not consecutive) on the Class D
Preferred Stock or any Parity Stock are in arrears. In addition, the
affirmative vote of the holders of 66-2/3% of the outstanding shares
of Class D Preferred Stock will be required to amend AIMCO's Charter
in any manner that would adversely affect the rights of the holders of
Class D Preferred Stock, and to approve the issuance of any capital
stock that ranks senior to the Class D Preferred Stock
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. The following exhibits are filed with this report(1):
<TABLE>
<CAPTION>
Exhibit
Number Description
- -------- ------------
<S> <C>
2.1 Amended and Restated Agreement and Plan of Merger, dated as of
March 17, 1998, by and among Apartment Investment and Management
Company, AIMCO Properties, L.P., Insignia Financial Group,
Inc., and Insignia/ESG Holdings, Inc. (incorporated by
reference to the Company's Current Feport on Form 8-K, dated
March 17, 1998)
3.1 Charter (Exhibit 3.1 to the Company's Annual Report on
Form 10-K/A for the period ended December 31, 1997, is incorporated
herein by this reference)
3.2 Bylaws (Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q
for the quarterly period ended September 30, 1997, is
incorporated herein by this reference)
27
<PAGE>
10.1 Credit Agreement (Unsecured Revolver-to-Term Facility), dated
January 26, 1998, by and among Bank of America National Trust
and Savings Association ("Bank of America") and BankBoston, N.A.
10.2 Payment Guaranty dated as of January 26, 1998, by Apartment
Investment and Management Company, AIMCO-GP, Inc., AIMCO-LP,
Inc., AIMCO Holdings, L.P., AIMCO Holdings QRS, Inc., AIMCO
Somerset, Inc., AIMCO Properties Finance Corp., and AIMCO/OTC
QRS, Inc. in favor of Bank of America
10.3 Payment Guaranty, dated as of January 26, 1998, by Property
Asset Management Services, L.P., NHP Management Company,
Property Asset Management Services-California, L.L.C. in favor
of Bank of America
10.4 First Amendment to Credit Agreement, dated as of May 8, 1998,
by and among AIMCO Properties, L.P., the financial
institutions listed on the signature pages thereof and Bank of
America
10.5 Payment Guaranty, dated as of May 8, 1998, by Ambassador II,
L.P. in favor of Bank of America
10.6 Master Credit Facility Agreement, dated as of February 4, 1998,
by and among Apartment Investment and Management Company,
AIMCO Properties, L.P., AIMCO/Bluffs, L.L.C., AIMCO
Chesapeake, L.P., AIMCO Elm Creek, L.P., AIMCO Lakehaven,
L.P., AIMCO Los Arboles, L.P., and Washington Mortgage
Financial Group, Ltd
10.7 Guaranty, dated as of February 4, 1998, by Apartment
Investment and Management Company, for the benefit of
Washington Mortgage Financial Group, Ltd
10.8 Third Amendment to the Second Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P., dated as of
February 19, 1998, by AIMCO-GP, Inc. (Exhibit 10.36 to the
Company's Annual Report on Form 10-K/A for the period ended
December 31, 1997, is incorporated herein by this reference)
10.9 Fourth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of AIMCO Properties, L.P., dated as of March
25, 1998, by AIMCO-GP, Inc.
10.10 Contribution Agreement, dated January 31, 1998, by and between
Apartment Investment and Management Company and Terry Considine
and Peter K. Kompaniez (Exhibit 2.1 to the Company's Current
Report on Form 8-K dated February 3, 1998, and is incorporated
herein by this reference)
10.11 Indemnification Agreement, dated March 17, 1998, by and between
Apartment Investment and Management Company and Insignia/ESG,
Inc. (incorporated by reference to the Company's Current Report
on Form 8-K, dated March 17, 1998)
10.12 Amendment No. 1 to the Apartment Investment and Management
Company 1997 Stock Award and Incentive Plan
10.13 Apartment Investment Management Company 1998 Incentive
Compensenation Plan
27.1 Financial Data Schedule
</TABLE>
- ------------
(1) Schedules and supplemental materials to the exhibits have been
omitted but will be provided to the SEC upon request.
(b) REPORTS ON FORM 8-K. During the quarter for which this report is filed,
the Company filed the following Reports on Form 8-K:
Current Report on Form 8-K, dated January 31, 1998, relating to
Apartment Investment and Management Company's entering into a
Contribution Agreement with the stockholders of CK Services, Inc.
Current Report on Form 8-K, dated March 17, 1998, and Amendment
No. 1 thereto filed April 8, 1998, relating to the proposed
merger of Insignia Financial Group, Inc. with and into Apartment
Investment and Management Company
During the quarter for which this report is filed, the Company
filed Amendment No. 1 to its Current Report on Form 8-K, dated
December 31, 1997, filed February 6, 1998, relating to the
proposed merger of Ambassador Apartments, Inc. with and into
Apartment Investment and Management Company
28
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
Date: May 15, 1998 /s/ Troy D. Butts
---------------------------
Troy D. Butts
Senior Vice President and
Chief Financial Officer
(duly authorized officer and principal
financial officer)
29
<PAGE>
Credit Agreement
(Unsecured Revolver-to-Term Facility)
among
AIMCO Properties, L.P.,
a Delaware limited partnership,
Bank of America National Trust and Savings Association,
as the Agent, initial Lender and Issuing Lender
and
BankBoston, N.A.
as the Documentation Agent and an initial Lender
January 26, 1998
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I.
DEFINITIONS . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . . . . 30
(a) Defined Terms . . . . . . . . . . . . . . . . . . . . . . . 30
(b) The Agreement . . . . . . . . . . . . . . . . . . . . . . . 30
(c) Certain Common Terms. . . . . . . . . . . . . . . . . . . . 30
(d) Performance; Time . . . . . . . . . . . . . . . . . . . . . 31
(e) Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 31
(f) Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(g) Captions. . . . . . . . . . . . . . . . . . . . . . . . . . 31
(h) Independence of Provisions. . . . . . . . . . . . . . . . . 31
(i) Sophisticated Parties . . . . . . . . . . . . . . . . . . . 31
1.3 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . 31
(a) GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(b) Fiscal Year; Quarter. . . . . . . . . . . . . . . . . . . . 32
ARTICLE II.
THE FACILITY. . . . . . . . . . . . . 32
2.1 Amounts and Terms of Commitments. . . . . . . . . . . . . . . . . . 32
(a) Revolving Loans . . . . . . . . . . . . . . . . . . . . . . 32
(i) Revolving Loans. . . . . . . . . . . . . . . . . . . 32
(ii) Letters of Credit. . . . . . . . . . . . . . . . . . 32
(iii) Limits on Revolving Loans and Letters of Credit. . . 33
(iv) Extension of Revolver Maturity Date; Conversion. . . 34
(b) Revolving Credit Usage. . . . . . . . . . . . . . . . . . . 35
(c) Amounts and Terms of Term Loan. . . . . . . . . . . . . . . 35
2.2 Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
2.3 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . 36
(a) Borrowing Notice. . . . . . . . . . . . . . . . . . . . . . 36
(i) Designation of Interest Rate . . . . . . . . . . . . 36
(ii) Timing of Notice . . . . . . . . . . . . . . . . . . 36
(iii) Contents of Notice . . . . . . . . . . . . . . . . . 36
(b) Notice to Lenders . . . . . . . . . . . . . . . . . . . . . 36
(c) Funding of Commitment . . . . . . . . . . . . . . . . . . . 37
2.4 Conversion and Continuation Elections . . . . . . . . . . . . . . . 37
(a) Conversion/Continuation Notice. . . . . . . . . . . . . . . 37
i
<PAGE>
(i) Designation of Interest Rate . . . . . . . . . . . . 37
(ii) Timing of Notice . . . . . . . . . . . . . . . . . . 37
(iii) Contents of Notice . . . . . . . . . . . . . . . . . 38
(b) Automatic Conversions . . . . . . . . . . . . . . . . . . . 38
(i) Default; Event of Default. . . . . . . . . . . . . . 38
(ii) Failure to Provide Notice. . . . . . . . . . . . . . 38
(iii) Failure to Maintain Minimum Loss . . . . . . . . . . 38
(c) Notice to Lenders . . . . . . . . . . . . . . . . . . . . . 38
2.5 Optional Prepayments; Optional Reductions of the Revolving
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . 38
2.6 Mandatory Prepayments of Loans; Mandatory Amortization and
Reductions . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(a) Total Available Commitment. . . . . . . . . . . . . . . . . 39
(b) Amortization. . . . . . . . . . . . . . . . . . . . . . . . 39
2.7 Application of Proceeds . . . . . . . . . . . . . . . . . . . . . . 39
2.8 Repayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
2.9 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(b) Payment Dates . . . . . . . . . . . . . . . . . . . . . . . 40
(c) Default Rates . . . . . . . . . . . . . . . . . . . . . . . 40
(d) Limitations for Applicable Law. . . . . . . . . . . . . . . 40
2.10 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
(a) Arrangement Fee . . . . . . . . . . . . . . . . . . . . . . 40
(b) Administrative Agency Fees. . . . . . . . . . . . . . . . . 41
(c) Commitment Fees . . . . . . . . . . . . . . . . . . . . . . 41
(d) Conversion Fee. . . . . . . . . . . . . . . . . . . . . . . 41
(e) Unencumbered Asset Pool Adjustment Fee. . . . . . . . . . . 41
(f) Letter of Credit Fees . . . . . . . . . . . . . . . . . . . 41
(g) Extension Fee . . . . . . . . . . . . . . . . . . . . . . . 42
(h) Accrued Fees. . . . . . . . . . . . . . . . . . . . . . . . 42
2.11 Computation of Fees and Interest. . . . . . . . . . . . . . . . . . 42
(a) Computation Period. . . . . . . . . . . . . . . . . . . . . 42
(b) Notice. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(c) Detail of Calculation . . . . . . . . . . . . . . . . . . . 42
2.12 Payments by Borrower. . . . . . . . . . . . . . . . . . . . . . . . 42
(a) Terms of Payments . . . . . . . . . . . . . . . . . . . . . 42
(b) Business Days . . . . . . . . . . . . . . . . . . . . . . . 43
(c) Reliance of Agent on Payments by Borrower . . . . . . . . . 43
2.13 Unencumbered Asset Pool; Additions and Exclusions of Properties . . 43
(a) Unencumbered Asset Pool . . . . . . . . . . . . . . . . . . 43
(i) Request for Total Available Commitment Increase. . . 43
(ii) Acceptance of Qualified Properties . . . . . . . . . 43
(iii) Conditions to Inclusion of Proposed Properties in
Unencumbered Asset Pool. . . . . . . . . . . . . . . 45
(A) Acceptances. . . . . . . . . . . . . . . . . 45
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(B) Officers' Certificate. . . . . . . . . . . . 45
(b) Exclusion of Property From the Unencumbered Asset Pool. . . 45
2.14 Payments by Lenders to Agent. . . . . . . . . . . . . . . . . . . . 46
(a) Reliance of Agent on Payments by the Lenders. . . . . . . . 46
(b) Obligations of Agent; Lender. . . . . . . . . . . . . . . . 46
2.15 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . 46
2.16 Participation Purchased by Lenders in the Letter of Credit
Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . 48
3.1 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
3.2 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3.3 Increased Costs and Reduction of Return . . . . . . . . . . . . . . 52
3.4 Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . 53
3.5 Inability to Determine Rates. . . . . . . . . . . . . . . . . . . . 53
3.6 Certificates of Lenders . . . . . . . . . . . . . . . . . . . . . . 54
3.7 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IV.
CONDITIONS PRECEDENT. . . . . . . . . . . 54
4.1 Conditions of Effectiveness . . . . . . . . . . . . . . . . . . . . 54
(a) Conditions to Effectiveness . . . . . . . . . . . . . . . . 54
(i) Credit Agreement and Notes . . . . . . . . . . . . . 54
(ii) REIT Guaranty Documents. . . . . . . . . . . . . . . 54
(iii) Subordination Agreements . . . . . . . . . . . . . . 54
(iv) Resolutions; Incumbency. . . . . . . . . . . . . . . 54
(v) Organization Documents . . . . . . . . . . . . . . . 55
(vi) Certificate. . . . . . . . . . . . . . . . . . . . . 55
(vii) Documentation regarding the NHP Incorporated
Acquisition. . . . . . . . . . . . . . . . . . . . . 55
(viii) Legal Opinions . . . . . . . . . . . . . . . . . . . 55
(ix) Costs; Expenses; Fees. . . . . . . . . . . . . . . . 56
(x) Other Documents. . . . . . . . . . . . . . . . . . . 56
(b) Deferred Conditions . . . . . . . . . . . . . . . . . . . . 56
4.2 Conditions to Each Loan . . . . . . . . . . . . . . . . . . . . . . 56
(a) Borrowing Notice. . . . . . . . . . . . . . . . . . . . . . 56
(b) Other Documents . . . . . . . . . . . . . . . . . . . . . . 56
(c) Total Available Commitment. . . . . . . . . . . . . . . . . 56
(d) Representations and Warranties. . . . . . . . . . . . . . . 56
(e) No Existing Default . . . . . . . . . . . . . . . . . . . . 56
(f) No Material Adverse Effect. . . . . . . . . . . . . . . . . 57
(g) No Future Advance Notice. . . . . . . . . . . . . . . . . . 57
(h) Continuing Representations. . . . . . . . . . . . . . . . . 57
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4.3 Conversion Conditions . . . . . . . . . . . . . . . . . . . . . . . 57
(a) Representations and Warranties. . . . . . . . . . . . . . . 57
(b) No Existing Default . . . . . . . . . . . . . . . . . . . . 57
(c) Outstanding Amount. . . . . . . . . . . . . . . . . . . . . 57
(d) No Material Adverse Effect. . . . . . . . . . . . . . . . . 57
(e) Certificate . . . . . . . . . . . . . . . . . . . . . . . . 57
(f) Evidence regarding Total Available Commitment . . . . . . . 57
(g) Conversion Fee. . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE V.
REPRESENTATIONS AND WARRANTIES . . . . . . . . 58
5.1 Existence and Power . . . . . . . . . . . . . . . . . . . . . . . . 58
(a) Organization. . . . . . . . . . . . . . . . . . . . . . . . 58
(b) Power and Authority . . . . . . . . . . . . . . . . . . . . 58
(c) Due Qualification . . . . . . . . . . . . . . . . . . . . . 58
(d) Compliance with Legal Requirements. . . . . . . . . . . . . 58
5.2 Authorization; No Conflict. . . . . . . . . . . . . . . . . . . . . 58
(a) Organization Documents. . . . . . . . . . . . . . . . . . . 58
(b) Contractual Obligations . . . . . . . . . . . . . . . . . . 59
(c) Requirements of Law . . . . . . . . . . . . . . . . . . . . 59
5.3 Governmental Authorization. . . . . . . . . . . . . . . . . . . . . 59
5.4 Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.6 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . 59
5.7 Subsidiaries; Interests in Other Entities;
Changes in Organizational Structure . . . . . . . . . . . . . . . 60
5.8 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . 60
5.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
5.10 ERISA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 60
(a) Schedule 5.10 . . . . . . . . . . . . . . . . . . . . . . . 60
5.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 62
(a) Environmental Laws. . . . . . . . . . . . . . . . . . . . . 62
(b) Environmental Permits . . . . . . . . . . . . . . . . . . . 62
(c) Orders. . . . . . . . . . . . . . . . . . . . . . . . . . . 62
(d) Hazardous Materials . . . . . . . . . . . . . . . . . . . . 63
5.12 Regulated Entities. . . . . . . . . . . . . . . . . . . . . . . . . 63
5.13 Use of Proceeds; Margin Regulations . . . . . . . . . . . . . . . . 63
5.14 REIT and Tax Status; Stock Exchange Listing . . . . . . . . . . . . 63
5.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
5.16 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.17 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.18 Not a "Foreign Person." . . . . . . . . . . . . . . . . . . . . . . 64
5.19 Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.20 Property Documents. . . . . . . . . . . . . . . . . . . . . . . . . 64
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5.21 Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5.22 Violation of Laws; Permits. . . . . . . . . . . . . . . . . . . . . 65
5.23 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.24 Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
5.25 Year 2000 Compliance. . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE VI.
AFFIRMATIVE COVENANTS. . . . . . . . . . . 66
6.1 Financial Information . . . . . . . . . . . . . . . . . . . . . . . 66
(a) Annual Financial Statements . . . . . . . . . . . . . . . . 66
(b) Quarterly Financial Statements. . . . . . . . . . . . . . . 66
(c) Quarterly Operating Statements for Unencumbered Asset Pool;
Management Entities . . . . . . . . . . . . . . . . . . . 66
(d) Borrower Plans and Projections. . . . . . . . . . . . . . . 67
6.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . 67
(a) Accounting Certificates . . . . . . . . . . . . . . . . . . 67
(b) Officers' Certificates. . . . . . . . . . . . . . . . . . . 67
(c) Periodic Reports and Filings; Press Releases. . . . . . . . 67
(d) Accountants' Reports. . . . . . . . . . . . . . . . . . . . 67
(e) Other Information . . . . . . . . . . . . . . . . . . . . . 67
(f) Organizational Chart. . . . . . . . . . . . . . . . . . . . 68
6.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
(a) Default; Event of Default . . . . . . . . . . . . . . . . . 68
(b) Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 68
(c) Environmental Matters . . . . . . . . . . . . . . . . . . . 68
(d) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
(e) Material Adverse Effects. . . . . . . . . . . . . . . . . . 69
(f) Excluded Properties . . . . . . . . . . . . . . . . . . . . 69
(g) Material Transactions or Occurrences. . . . . . . . . . . . 69
(h) Failure to Qualify as a REIT. . . . . . . . . . . . . . . . 69
(i) Accounting Changes. . . . . . . . . . . . . . . . . . . . . 69
(j) Legal Compliance. . . . . . . . . . . . . . . . . . . . . . 69
(k) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . 69
6.4 Preservation of Existence, Etc. . . . . . . . . . . . . . . . . . . 70
6.5 Maintenance of Property . . . . . . . . . . . . . . . . . . . . . . 70
6.6 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
6.7 Payment of Obligations. . . . . . . . . . . . . . . . . . . . . . . 70
6.8 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . 71
6.9 Environmental Laws. . . . . . . . . . . . . . . . . . . . . . . . . 71
6.10 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 71
6.11 Maintenance of REIT Status; Stock Exchange Listing. . . . . . . . . 71
6.12 Inspection of Property and Books and Records. . . . . . . . . . . . 71
6.13 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 72
(a) Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 72
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(b) Further Acts. . . . . . . . . . . . . . . . . . . . . . . . 72
(c) Additional Guaranties . . . . . . . . . . . . . . . . . . . 72
6.14 Communication with Accountants. . . . . . . . . . . . . . . . . . . 72
6.15 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
6.16 Covenants Relating to Unencumbered Asset Pool Properties. . . . . . 73
(a) Maintenance . . . . . . . . . . . . . . . . . . . . . . . . 73
(b) Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . 73
(c) Material Agreements . . . . . . . . . . . . . . . . . . . . 73
(d) Management Contracts. . . . . . . . . . . . . . . . . . . . 73
(e) Construction. . . . . . . . . . . . . . . . . . . . . . . . 73
(f) Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE VII.
NEGATIVE COVENANTS . . . . . . . . . . . 74
7.1 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
(a) Existing Liens. . . . . . . . . . . . . . . . . . . . . . . 74
(b) Certain Liens . . . . . . . . . . . . . . . . . . . . . . . 74
(c) Tax Liens . . . . . . . . . . . . . . . . . . . . . . . . . 74
(d) Bankers Liens . . . . . . . . . . . . . . . . . . . . . . . 74
(e) Other Statutory Liens . . . . . . . . . . . . . . . . . . . 74
(f) Employment-Related Liens. . . . . . . . . . . . . . . . . . 75
(g) Judgment Liens. . . . . . . . . . . . . . . . . . . . . . . 75
(h) Easements, Etc. . . . . . . . . . . . . . . . . . . . . . . 75
(i) Liens Securing Financing. . . . . . . . . . . . . . . . . . 75
7.2 Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(a) Existing or Contemplated Indebtedness . . . . . . . . . . . 75
(b) Certain Indebtedness. . . . . . . . . . . . . . . . . . . . 76
(c) Accounts Payable. . . . . . . . . . . . . . . . . . . . . . 76
(d) Contingent Obligations. . . . . . . . . . . . . . . . . . . 76
(e) Intra-Company Debt. . . . . . . . . . . . . . . . . . . . . 76
(f) Additional Indebtedness . . . . . . . . . . . . . . . . . . 76
(g) REIT Indebtedness . . . . . . . . . . . . . . . . . . . . . 76
7.3 Contingent Obligations. . . . . . . . . . . . . . . . . . . . . . . 77
(a) Ordinary Course Endorsements. . . . . . . . . . . . . . . . 77
(b) Rate Contracts. . . . . . . . . . . . . . . . . . . . . . . 77
(c) Letter of Credit Reimbursement Obligations. . . . . . . . . 77
(d) Exceptions to Nonrecourse Guaranties. . . . . . . . . . . . 77
7.4 Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . 77
(a) Existing Leases . . . . . . . . . . . . . . . . . . . . . . 77
(b) Ordinary Course Leases. . . . . . . . . . . . . . . . . . . 77
7.5 Disposition of Properties . . . . . . . . . . . . . . . . . . . . . 77
7.6 Consolidations and Mergers. . . . . . . . . . . . . . . . . . . . . 78
7.7 Liquidations; Material Organization Changes; New Subsidiaries . . . 79
7.8 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
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7.9 Restricted Payments and Demands . . . . . . . . . . . . . . . . . . 80
7.10 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . 80
7.11 Special Covenants Relating to the REIT. . . . . . . . . . . . . . . 81
7.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.13 Taxation of Borrower. . . . . . . . . . . . . . . . . . . . . . . . 81
7.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
7.15 Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . 82
7.16 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . 82
7.17 Accounting Changes. . . . . . . . . . . . . . . . . . . . . . . . . 82
7.18 Transfers of Non-Owned Interests in the Management Entities . . . . 82
ARTICLE VIII.
EVENTS OF DEFAULT. . . . . . . . . . . . 83
8.1 Event of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 83
(a) Non-Payment . . . . . . . . . . . . . . . . . . . . . . . . 83
(b) Representation or Warranty. . . . . . . . . . . . . . . . . 83
(c) Specific Defaults . . . . . . . . . . . . . . . . . . . . . 83
(d) Other Defaults. . . . . . . . . . . . . . . . . . . . . . . 83
(e) Cross-Default . . . . . . . . . . . . . . . . . . . . . . . 83
(f) Bankruptcy or Insolvency. . . . . . . . . . . . . . . . . . 84
(g) Involuntary Proceedings . . . . . . . . . . . . . . . . . . 84
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
(i) Monetary Judgments. . . . . . . . . . . . . . . . . . . . . 85
(j) Non-monetary Judgments. . . . . . . . . . . . . . . . . . . 85
(k) Guaranty Documents. . . . . . . . . . . . . . . . . . . . . 86
(l) Material Adverse Effect . . . . . . . . . . . . . . . . . . 86
(m) Ownership . . . . . . . . . . . . . . . . . . . . . . . . . 86
(n) Material Licenses or Permits. . . . . . . . . . . . . . . . 87
(o) Environmental Liens . . . . . . . . . . . . . . . . . . . . 87
(p) Intra-Company Debt. . . . . . . . . . . . . . . . . . . . . 87
(q) Preferred Stock . . . . . . . . . . . . . . . . . . . . . . 87
8.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
(a) Termination of Commitment . . . . . . . . . . . . . . . . . 87
(b) Acceleration. . . . . . . . . . . . . . . . . . . . . . . . 87
(c) Obligations under Letters of Credit . . . . . . . . . . . . 88
(d) Other Remedies. . . . . . . . . . . . . . . . . . . . . . . 88
8.3 Rights Not Exclusive. . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE IX.
THE AGENT. . . . . . . . . . . . . . 88
9.1 Appointment and Authorization . . . . . . . . . . . . . . . . . . . 88
9.2 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . . 89
9.3 Liability of Agent. . . . . . . . . . . . . . . . . . . . . . . . . 89
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9.4 Reliance by Agent . . . . . . . . . . . . . . . . . . . . . . . . . 90
(a) Generally . . . . . . . . . . . . . . . . . . . . . . . . . 90
(b) Conditions Precedent. . . . . . . . . . . . . . . . . . . . 90
9.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.6 Credit Decision . . . . . . . . . . . . . . . . . . . . . . . . . . 90
9.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 91
9.8 Agent in Individual Capacity. . . . . . . . . . . . . . . . . . . . 92
9.9 Successor Agents. . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE X.
MISCELLANEOUS. . . . . . . . . . . . . 93
10.1 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . 93
(a) Generally . . . . . . . . . . . . . . . . . . . . . . . . . 93
(b) Matters Requiring Unanimous Consent . . . . . . . . . . . . 93
(c) Matters Requiring Agents' Consent . . . . . . . . . . . . . 94
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
(a) Delivery. . . . . . . . . . . . . . . . . . . . . . . . . . 94
(b) Receipt . . . . . . . . . . . . . . . . . . . . . . . . . . 94
(c) Reliance. . . . . . . . . . . . . . . . . . . . . . . . . . 94
10.3 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . 94
10.4 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 95
(a) Facility Expenses . . . . . . . . . . . . . . . . . . . . . 95
(b) Enforcement Expenses. . . . . . . . . . . . . . . . . . . . 95
(c) Property Diligence Expenses . . . . . . . . . . . . . . . . 95
10.5 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
10.6 Marshalling; Payments Set Aside . . . . . . . . . . . . . . . . . . 96
10.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 96
10.8 Assignments, Participations, etc. . . . . . . . . . . . . . . . . . 96
(a) Assignments . . . . . . . . . . . . . . . . . . . . . . . . 96
(b) Rights of Assignee. . . . . . . . . . . . . . . . . . . . . 97
(c) Replacement Notes . . . . . . . . . . . . . . . . . . . . . 97
(d) Participations. . . . . . . . . . . . . . . . . . . . . . . 97
(e) Assignments to Federal Reserve Bank . . . . . . . . . . . . 98
10.9 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
10.10 Notification of Addresses, Lending Offices, Etc . . . . . . . . . . 98
10.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.13 No Third Parties Benefited. . . . . . . . . . . . . . . . . . . . . 99
10.14 Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.15 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
10.16 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . 99
10.17 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
(a) Mandatory Arbitration . . . . . . . . . . . . . . . . . . . 100
(b) Provisional Remedies, Self-Help and Foreclosure . . . . . . 100
viii
<PAGE>
10.18 Notice of Claims; Claims Bar. . . . . . . . . . . . . . . . . . . . 100
10.19 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.20 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.21 Exculpation of Lenders. . . . . . . . . . . . . . . . . . . . . . . 101
10.22 Relationship. . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
10.23 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . 101
ix
<PAGE>
SCHEDULES
Schedule 1.1A Initial Unencumbered Asset Pool Properties
Schedule 1.1B Intra-Borrower Indebtedness
Schedule 2.1(a)(i) Revolving and Term Commitments of the Lenders
Schedule 4.1(a)(vii) NHP Acquisition Documents
Schedule 5.5 Litigation
Schedule 5.7 Organizational Chart
Schedule 5.9 Existing Tax Sharing Agreement
Schedule 5.10 ERISA Disclosures
Schedule 5.11 Environmental Disclosures
Schedule 5.26 Non-Guarantor Subsidiaries
Schedule 7.2 Indebtedness
EXHIBITS
Exhibit A Initial Unencumbered Asset Pool Properties
Exhibit B Borrowing Notice
Exhibit C Form of Revolver to Term Certificate
Exhibit D Form of Note
Exhibit E Conversion/Continuation Notice
Exhibit F1 Form of Payment Guaranty
Exhibit F2 Form of Payment Guaranty
Exhibit G Form of Letter of Credit
Exhibit H Unencumbered Asset Pool Certificate
Exhibit I Opinion Requirements
Exhibit J Compliance Certificate
Exhibit K Assignment and Acceptance
Exhibit L Subordination Agreement
</TABLE>
x
<PAGE>
DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Adjusted EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agent-Related Persons. . . . . . . . . . . . . . . . . . . . . . . . . 2
Aggregate Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 2
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Apartment Property Cap Rate. . . . . . . . . . . . . . . . . . . . . . 2
Applicable Base Rate Margin. . . . . . . . . . . . . . . . . . . . . . 2
Applicable LC Fee. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Applicable LIBOR Margin. . . . . . . . . . . . . . . . . . . . . . . . 3
Applicable Margin. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assignee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Assignment and Acceptance. . . . . . . . . . . . . . . . . . . . . . . 4
Assumed Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . 4
Attorney Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bankruptcy Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Base Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Base Rate Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BofA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Borrowing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Capital Adequacy Regulation. . . . . . . . . . . . . . . . . . . . . . 4
Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Lease Obligations. . . . . . . . . . . . . . . . . . . . . . . 5
Carrying Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Commitment Percentage. . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated EBITDA-to-Fixed Charges Ratio . . . . . . . . . . . . . . 7
Consolidated EBITDA-to-Interest Ratio. . . . . . . . . . . . . . . . . 7
Consolidated Fixed Charges . . . . . . . . . . . . . . . . . . . . . . 7
Consolidated Interest Expense. . . . . . . . . . . . . . . . . . . . . 7
Consolidated Scheduled Amortization. . . . . . . . . . . . . . . . . . 7
Consolidated Total Indebtedness. . . . . . . . . . . . . . . . . . . . 7
Consolidated Unsecured Interest Incurred . . . . . . . . . . . . . . . 7
xi
<PAGE>
Contingent Obligation. . . . . . . . . . . . . . . . . . . . . . . . . 7
Contractual Obligation . . . . . . . . . . . . . . . . . . . . . . . . 8
Controlled Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Conversion Conditions. . . . . . . . . . . . . . . . . . . . . . . . . 8, 57
Conversion Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Conversion Option. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Conversion/Continuation Notice . . . . . . . . . . . . . . . . . . . . 8
Credit Rating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
D&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Disposition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Domestic Lending Office. . . . . . . . . . . . . . . . . . . . . . . . 9
Due Diligence Package. . . . . . . . . . . . . . . . . . . . . . . . . 9
EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Eligible Assignee. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Environmental Claims . . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Permits. . . . . . . . . . . . . . . . . . . . . . . . . 10, 62
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ERISA Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Estimated Remediation Cost . . . . . . . . . . . . . . . . . . . . . . 11
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Extension Request. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Funds Rate . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Federal Reserve Board. . . . . . . . . . . . . . . . . . . . . . . . . 12
Finance Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Finance Subsidiary Loan. . . . . . . . . . . . . . . . . . . . . . . . 12
FNMA/Washington Mortgage Documents . . . . . . . . . . . . . . . . . . 11
Form 10-K filing . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Form 10-Q filing . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Form 1001. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 50
Form 4224. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 50
Funds From Operations. . . . . . . . . . . . . . . . . . . . . . . . . 12
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . 13
GP Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Gross Asset Value. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Guarantor Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 13
Guaranty Obligation. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Hazardous Materials. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Historical Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Imputed Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 15
Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
xii
<PAGE>
Indemnified Liabilities. . . . . . . . . . . . . . . . . . . . . . . . 15
Indemnified Person . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Initial Unencumbered Asset Pool. . . . . . . . . . . . . . . . . . . . 15
Insolvency Proceeding. . . . . . . . . . . . . . . . . . . . . . . . . 16
Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Interest Payment Date. . . . . . . . . . . . . . . . . . . . . . . . . 16
Interest Period. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Intra-Company Debt . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Intra-Company Loan Subordination Agreement . . . . . . . . . . . . . . 17
Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Investment Grade Credit Rating . . . . . . . . . . . . . . . . . . . . 17
IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Issuing Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Knowledge of Borrower. . . . . . . . . . . . . . . . . . . . . . . . . 17
Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Lender Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Lending Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Letter of Credit Liability . . . . . . . . . . . . . . . . . . . . . . 18
LIBO Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
LIBOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
LIBOR Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management Company Attributable Interest Expense . . . . . . . . . . . 19
Management Entity. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . 19
Maximum Unsecured Indebtedness . . . . . . . . . . . . . . . . . . . . 19
Moody's. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Multiemployer Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Net Issuance Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 20
Net Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . 20
Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
NHP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Non-Guarantor Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 21, 65
Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Notice of Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
NYSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Ordinary Course of Business. . . . . . . . . . . . . . . . . . . . . . 21
Organizational Chart . . . . . . . . . . . . . . . . . . . . . . . . . 21
Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . 22
xiii
<PAGE>
Other Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 49
Outside Period Letter of Credit. . . . . . . . . . . . . . . . . . . . 22
Outstanding Amount . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Payment Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Permitted Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . 22, 75
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22, 74
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Pricing Conversion Date. . . . . . . . . . . . . . . . . . . . . . . . 22
Pro Forma Revolver Debt Service. . . . . . . . . . . . . . . . . . . . 23
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Property Liability . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Qualified Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Qualified Property . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Qualified Wholly-Owned Subsidiary. . . . . . . . . . . . . . . . . . . 23
Rate Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Reference Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
REIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
REIT Guaranty Documents. . . . . . . . . . . . . . . . . . . . . . . . 24
REIT Status. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Reportable Event . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Requirement of Law . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Requisite Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Reserve Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Responsible Officer. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Restricted Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25, 32
Revolver DSC Principal Limit . . . . . . . . . . . . . . . . . . . . . 26
Revolver DSC Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Revolver Maturity Date . . . . . . . . . . . . . . . . . . . . . . . . 26
Revolver to Term Certificate . . . . . . . . . . . . . . . . . . . . . 6, 25
Revolving Commitment . . . . . . . . . . . . . . . . . . . . . . . . . 25
Revolving Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26, 32
S&P. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Scheduled Amortization . . . . . . . . . . . . . . . . . . . . . . . . 26
SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SEC Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Solvent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Stabilized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 48
Term Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 35
xiv
<PAGE>
Term Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27, 35
Term Loan Maturity Date. . . . . . . . . . . . . . . . . . . . . . . . 27
Total Available Commitments. . . . . . . . . . . . . . . . . . . . . . 28
Total Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 28
U.S. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
UCC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Unencumbered Asset Pool. . . . . . . . . . . . . . . . . . . . . . . . 29
Unencumbered Asset Pool NOI. . . . . . . . . . . . . . . . . . . . . . 29
Unencumbered Asset Pool NOI to Unsecured Interest Incurred Rat . . . . 29
Unencumbered Asset Pool Value. . . . . . . . . . . . . . . . . . . . . 29
Unencumbered Management Entity Value . . . . . . . . . . . . . . . . . 29
Unfunded Pension Liabilities . . . . . . . . . . . . . . . . . . . . . 29
United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Units. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Unqualified Property . . . . . . . . . . . . . . . . . . . . . . . . . 30
Wholly-Owned Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
xv
<PAGE>
CREDIT AGREEMENT
(Unsecured Revolver-To-Term Facility)
This CREDIT AGREEMENT is entered into as of January 26, 1998, among
AIMCO PROPERTIES, L.P., a Delaware limited partnership (the "Borrower"), the
lenders from time to time party to this Agreement (the "Lenders"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as one of the Lenders
and as the Issuing Lender, BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Agent (the "Agent"), and BANKBOSTON, N.A., as one of the Lenders
and the Documentation Agent.
RECITAL
BofA made available to Borrower a secured revolver-to-term credit
facility in the aggregate principal amount of up to $100,000,000 pursuant to
that certain Credit Agreement, dated as of May 5, 1997, by and between BofA, as
a lender and the agent, the other lenders party thereto and Borrower. The
entire outstanding principal balance under such Credit Agreement is being
refinanced and the letters of credit issued thereunder in the amount of $614,739
will be rolled into letters of credit hereunder in accordance with Section
2.1(a)(ii).
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
1.1 DEFINED TERMS. In addition to the terms defined elsewhere in
this Agreement, the following terms have the following meanings:
"ADJUSTED EBITDA" means, for any period of determination, for any
Person, such Person's EBITDA (or as applicable, its pro-rata share of EBITDA)
less the aggregate amount of such Person's Imputed Capital Expenditures.
Adjusted EBITDA with respect to any Unqualified Property will take into account
the Person's pro-rata share of Imputed Capital Expenditures.
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of five percent
(5%) or more of the equity of a Person shall, for the purposes of this
Agreement, be deemed to control the other Person. In no event shall any Lender
be deemed an "Affiliate" of Borrower.
1
<PAGE>
"AGENT" means Bank of America National Trust and Savings Association,
in its capacity as Agent, and any successor Agent appointed hereunder.
"AGENT-RELATED PERSONS" is defined in Section 9.3.
"AGGREGATE COMMITMENT" means the combined Commitments of the Lenders.
As of the Closing Date the Aggregate Commitment is $50,000,000.
"AGREEMENT" means this Credit Agreement, as amended, supplemented or
modified from time to time.
"APARTMENT PROPERTY CAP RATE" means (a) initially, 9.6% and (b) on
each anniversary date of the Revolver Maturity Date and for each year
thereafter, as applicable, shall change to the national average capitalization
rate for Class B apartment properties as published in the then current CB
Commercial Investor Survey or if the survey is no longer published, an
equivalent survey selected by Agent.
"APPLICABLE BASE RATE MARGIN" means, with respect to Base Rate Loans,
on any date of determination, the applicable spread set forth below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BBB/
Baa2 to Non
BBB+/ BBB- Investment
Credit Rating A/A2 A-/A3 Baa1 /Baa3 Grade
- --------------------------------------------------------------------------------
Applicable Base Rate 0 0 0 50 50
Margin (bps)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Any change in Borrower's Credit Rating causing it to move into a different Level
on the table will immediately change the Applicable Base Rate Margin. If
Borrower's Credit Rating is such that the Rating Agencies' ratings are split
between a higher and a lower range on the table, the Applicable Base Rate Margin
will be based upon the lower of such two Credit Ratings. If only one Rating
Agency provides a Credit Rating for Borrower, then the Applicable Base Rate
Margin will be based on the spread in Level 5.
2
<PAGE>
"APPLICABLE LC FEE" means, on any date of determination, the following
annual fee, as applicable, which shall be due and payable as provided in Section
2.10(f):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BBB/
Baa2 to Non
BBB+/ BBB- Investment
Credit Rating A/A2 A-/A3 Baa1 /Baa3 Grade
- --------------------------------------------------------------------------------
Annual Fee (bps) 65 75 85 105 105
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Any change in Borrower's Credit Rating causing it to move into a different Level
on the table will immediately change the Applicable LC Fee. If Borrower's
Credit Rating is such that the Rating Agencies' ratings are split between a
higher and a lower range on the table, the Applicable LC Fee will be based upon
the lower of such two Credit Ratings. If only one Rating Agency provides a
Credit Rating for Borrower, then the Applicable LC Fee will be based on the
spread in Level 5.
"APPLICABLE LIBOR MARGIN" means, with respect to LIBOR Loans, on any
date during an Interest Period, the applicable spread set forth below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BBB/
Baa2 to Non
BBB+/ BBB- Investment
Credit Rating A/A2 A-/A3 Baa1 /Baa3 Grade
- --------------------------------------------------------------------------------
Applicable LIBOR Margin (bps) 60 70 80 100 100
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Any change in Borrower's Credit Rating causing it to move into a different Level
on the table will immediately change the Applicable LIBOR Margin. If Borrower's
Credit Rating is such that the Rating Agencies' ratings are split between a
higher and a lower range on the table, the Applicable LIBOR Margin will be based
upon the lower of such two Credit Ratings. If only one Rating Agency sets
Borrower's Credit Rating, then the Applicable LIBOR Margin will be based on the
spread in Level 5.
"APPLICABLE MARGIN" means (a), with respect to Base Rate Loans, the
Applicable Base Rate Margin, and (b) with respect to LIBOR Loans, the Applicable
LIBOR Margin.
"ASSIGNEE" is defined in Section 10.8(a).
"ASSIGNMENT AND ACCEPTANCE" is defined in Section 10.8(a).
3
<PAGE>
"ASSUMED INTEREST RATE" means, on any date of determination, an annual
rate equal to the yield on U.S. Treasury obligations having a maturity of seven
(7) years from such date of determination (or the closest maturity date
thereafter), plus two percent (2.00%). For any fiscal quarter, the Assumed
Interest Rate will be based on the yield on such U.S. Treasury obligations as
published for the last Business Day of the preceding fiscal quarter, except on
the Conversion Date, in which case the Assumed Interest Rate will be based on
the yield on such obligations as published for the Business Day prior to the
date Borrower delivers its request for conversion under Section 4.3.
"ATTORNEY COSTS" means all reasonable fees and disbursements of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (12
U.S.C. Section 101, ET. SEQ.), as amended from time to time.
"BASE RATE" means the higher of: (a) the annual rate of interest
publicly announced from time to time by the Reference Lender as its "reference"
rate (the "reference" rate is a rate set based upon various factors, including
the Reference Lender's costs and desired return, general economic conditions,
and other factors, and is used as a reference point for pricing some loans); any
change in the reference rate shall take effect on the day specified in the
public announcement of such change; or (b) one-half of one percent (0.5%) per
annum above the latest Federal Funds Rate.
"BASE RATE LOAN" means a Loan that bears interest based on the Base
Rate.
"BOFA" means Bank of America National Trust and Savings Association,
other than in its capacity as the Agent hereunder.
"BORROWING NOTICE" means a written notice (including notice via
facsimile confirmed immediately by a telephone call) from Borrower to Agent in
accordance with Section 2.3 and substantially in the form of EXHIBIT B.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial lenders are authorized or required by law to close in
New York City or the city in which the Agent's office charged with
administration of the Loans is located; except in cases in which it relates to
any LIBOR Loan, in which cases "Business Day" means such a day on which dealings
are carried on in the London dollar interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central lender or other Governmental Authority having
jurisdiction, or any other law, rule or regulation, whether or not having the
force of law, regarding capital adequacy of any Lender or of any corporation
controlling a Lender.
4
<PAGE>
"CAPITAL EXPENDITURES" means, for any period and with respect to any
Person, the aggregate of all expenditures by such Person for the acquisition or
leasing of fixed or capital assets or additions to equipment (including
replacements, capitalized repairs and improvements during such period) which
should be capitalized under GAAP on a consolidated balance sheet of such Person.
For the purpose of this definition, the purchase price of equipment which is
purchased simultaneously with the trade-in of existing equipment owned by such
Person or with insurance proceeds shall be included in Capital Expenditures only
to the extent of the gross amount of such purchase price, less the credit
granted by the seller of such equipment for such equipment being traded in at
such time, or the amount of such proceeds, as the case may be.
"CAPITAL LEASE" means any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
"CAPITAL LEASE OBLIGATIONS" means, with respect to any Person, the
amount at which such Person's obligations under Capital Leases are required to
be carried on the balance sheet of such Person in accordance with GAAP.
"CARRYING VALUE" means, with respect to any asset or liability of any
Person, the amount at which such asset or liability has been recorded or, in
accordance with GAAP, should have been recorded, in the books of account of such
Person, as reduced by any reserves or write-downs which have been announced, set
aside or taken or, in accordance with GAAP, should have been set aside or taken,
with respect thereto; PROVIDED, HOWEVER, that, if more than one method of
recording the amount of any asset or liability, or the setting aside or taking
of any reserves or write-downs with respect thereto, is permitted under GAAP,
the permitted method actually used shall be controlling for purposes of
determining Carrying Value, provided that such method is used in a manner
consistent with prior periods.
"CASH EQUIVALENTS" means:
(a) securities issued or fully guaranteed or insured by the
United States Government or any agency thereof and backed by the full faith and
credit of the United States having maturities of not more than six months from
the date of acquisition;
(b) certificates of deposit, time deposits, demand deposits,
eurodollar time deposits, repurchase agreements, reverse repurchase agreements,
or bankers' acceptances, having in each case a tenor of not more than three (3)
months, issued by the Agent, or by any U.S. commercial bank (or any branch or
agency of a non-U.S. bank licensed to conduct business in the U.S.) having
combined capital and surplus of not less than $100,000,000 whose short-term
securities are rated at least A-1 by S&P and P-1 by Moody's; PROVIDED, HOWEVER,
such Investments may not be made in amounts in excess of $1,000,000 with any
lender that is owed Indebtedness in excess of $1,000,000 by Borrower, the REIT
or any Subsidiary (other than the Obligations) unless such bank waives in
writing (in form and substance satisfactory to the Requisite Lenders) its right
to set-off such Investment against such Indebtedness;
5
<PAGE>
(c) demand deposits on deposit in accounts maintained at
commercial banks having membership in the FDIC and in amounts not exceeding the
maximum amounts of insurance thereunder; and
(d) commercial paper of an issuer rated at least A-1 by S&P or
P-1 by Moody's and in either case having a tenor of not more than three (3)
months.
"CERCLA" is defined in the definition of "Environmental Laws".
"CLASS B" means, with respect to any rental apartment property, that
such apartment property is generally recognized as a Class B property in
accordance with prevailing national real estate industry standards, pursuant to
prevailing appraisal methods and procedures.
"CLOSING DATE" means the date on which all conditions precedent to the
effectiveness of this Agreement in Section 4.1(a) are satisfied or waived by all
Lenders. The Closing Date shall occur no later than January 26, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder.
"COMMITMENT" means, with respect to a Lender, that Lender's Revolving
Commitment (during the term of the Revolver) or Term Commitment (during the term
of the Term Loan), as applicable.
"COMMITMENT PERCENTAGE" means, as to any Lender, the percentage
equivalent of such Lender's Commitment divided by the Aggregate Commitment.
"COMPLIANCE CERTIFICATE" means a certificate signed by at least two
Responsible Officers and delivered to Agent and each Lender pursuant to Section
6.2 and substantially in the form of EXHIBIT J.
"CONSOLIDATED EBITDA" means, for any period, and without double
counting any item, the sum of the Adjusted EBITDA for Borrower, the REIT and
their respective Subsidiaries for such period on a consolidated basis PLUS the
Borrower's pro-rata share of aggregate EBITDA for each of the Management
Entities.
"CONSOLIDATED EBITDA-TO-FIXED CHARGES RATIO" means, for any period of
determination, the ratio computed as follows:
Consolidated EBITDA-to-Fixed [Consolidated EBITDA minus Imputed
Capital Expenditures]
Charges Ratio = divided by
Consolidated Fixed Charges
"CONSOLIDATED EBITDA-TO-INTEREST RATIO" means, for any period of
determination, the ratio computed as follows:
6
<PAGE>
Consolidated EBITDA-to-Interest Ratio= [Consolidated EBITDA minus Imputed
Capital Expenditures]
divided by
Consolidated Interest Expense
"CONSOLIDATED FIXED CHARGES" means, for any period of determination,
the sum of the Consolidated Interest Expense for such period, plus Consolidated
Scheduled Amortization for such period, plus dividends accrued (whether or not
declared or payable) on the REIT's preferred Stock during such period plus any
cumulative unpaid dividends on such preferred Stock carried over to such period
from a prior period, excluding, however, any cumulative unpaid dividends from
preferred Stock in any of the Management Entities, plus the aggregate amount of
expenses in connection with the issuance of bonds and related matters, any
scheduled principal amortization in respect of any Indebtedness, plus payments
into sinking funds in respect of any Indebtedness.
"CONSOLIDATED INTEREST EXPENSE" means, for any period of
determination, and without double counting any item, the sum of the Interest
Expense for Borrower, the REIT and their respective Subsidiaries for such period
on a consolidated basis, excluding (a) amounts expended for amortization of loan
costs and (b) the amount of any Management Company Attributable Interest
Expense.
"CONSOLIDATED SCHEDULED AMORTIZATION" means, for any period of
determination, and without double counting any item, the sum of the Scheduled
Amortization for Borrower, the REIT and their respective Subsidiaries for such
period on a consolidated basis.
"CONSOLIDATED TOTAL INDEBTEDNESS" means as of any date, and without
double counting any item, the aggregate amount of Total Indebtedness for
Borrower, the REIT and their respective Subsidiaries as of such date.
"CONSOLIDATED UNSECURED INTEREST" means, for any period of
determination, Consolidated Interest Expense incurred in respect of any
Unsecured Debt for such period.
"CONTINGENT OBLIGATION" means, as to any Person, (a) any Guaranty
Obligation of that Person, and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person, (i) in respect of any letter
of credit or similar instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings, (ii) as a
partner or joint venturer in any partnership or joint venture, (iii) to purchase
any materials, supplies or other Property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other Property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other Property is ever made or tendered, or such services are ever
performed or tendered, or (iv) incurred pursuant to any Rate Contract. Except
as provided in the definition of "Total Indebtedness" below, the amount of any
Contingent Obligation shall (subject, in the case of Guaranty Obligations, to
the last sentence of the definition of "Guaranty Obligation") be deemed equal to
the maximum reasonably anticipated liability in respect thereof.
7
<PAGE>
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
mortgage, deed of trust, indenture, or other instrument, document or agreement
to which such Person is a party or by which it or any of its Property is bound.
"CONTROLLED GROUP" means Borrower and all Persons (whether or not
incorporated) under common control or treated as a single employer with Borrower
pursuant to Section 414(b), (c), (m) or (o) of the Code.
"CONVERSION/CONTINUATION NOTICE" means a notice given by Borrower to
the Agent pursuant to Section 2.4, in substantially the form of EXHIBIT E.
"CONVERSION CONDITIONS" is defined in Section 4.3.
"CONVERSION DATE" means the date (a) on which all Conversion
Conditions are satisfied and the Revolver is converted into the Term Loan or (b)
pursuant to Section 2.1(a)(iv)(2), Borrower elects the Conversion Option. The
Conversion Date will be set forth in the certificate delivered to and approved
by the Agent pursuant to Section 4.3(e) below.
"CREDIT RATING" means, with respect to any Person, the lowest rating
assigned by a Rating Agency to the Person's senior unsubordinated, unsecured and
non-credit enhanced long term indebtedness; provided, however, that in all
events, if a Person's senior unsubordinated long term indebtedness is only rated
by one Rating Agency, then it shall be deemed to have a Credit Rating below
Investment Grade.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured) constitute an Event of
Default.
"DESIGNATED ENTITY" means Borrower and any of its Subsidiaries that
owns any Unencumbered Asset Pool Property or is a Management Entity.
"DISPOSITION" means the sale, lease, conveyance, transfer or other
disposition of (whether in one or a series of transactions) any Property,
including accounts and notes receivable (with or without recourse) and
sale-leaseback transactions, but otherwise excluding Permitted Liens.
"DOCUMENTATION AGENT" means, as of the Closing Date, BankBoston, N.A.,
an initial Lender. Documentation Agent shall have no responsibilities or duties
in addition to those of a Lender as provided under this Agreement.
"DOMESTIC LENDING OFFICE" means, with respect to each Lender, the
office of that Lender designated as such on the signature pages hereto or such
other office of a Lender as it may from time to time specify in writing to
Borrower and the Agent.
8
<PAGE>
"DUE DILIGENCE PACKAGE" means, with respect to any Property added to
the Unencumbered Asset Pool after the Closing Date, the due diligence and
underwriting materials customarily prepared by or for Borrower (or its
Subsidiaries) in connection with the acquisition of the Property, which due
diligence and underwriting materials shall be in the same format as prior Due
Diligence Packages previously delivered to Agent.
"D&P" means Duff & Phelps Credit Rating Co.
"EBITDA" means, for any period, the sum determined in accordance with
GAAP, of the following, for any Person on a consolidated basis (in the case of
Borrower or the REIT, before deducting for minority interests in Borrower)
(a) the net income (or net loss) of such Person during such Period PLUS (b) all
amounts treated as expenses for depreciation, Interest Expense and the
amortization of intangibles of any kind to the extent included in the
determination of such net income (or loss), PLUS (c) all accrued taxes on or
measured by income to the extent included in the determination of such net
income (or loss); PROVIDED, HOWEVER, that net income (or loss) shall be computed
for these purposes without giving effect to extraordinary losses or
extraordinary gains.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank or savings and loan
association or savings bank organized under the laws of the United States, or
any state thereof, and having a combined capital and surplus of at least
$500,000,000, (b) a commercial bank organized under the laws of any other
country which is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country, and
having a combined capital and surplus of at least $500,000,000, provided that
such commercial bank is acting through a branch or agency located in the country
in which it is organized or another country which is also a member of the OECD,
(c) any Lender Affiliate, and (d) any other person which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds and lease finance companies in each case with a capital and surplus
of at least $500,000,000; provided, however, that in no event may an Affiliate
of Borrower be an Eligible Assignee.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law or for release or injury
to the environment or threat to public health, personal injury (including
sickness, disease or death), property damage, natural resources damage, or
otherwise alleging liability or responsibility for damages (punitive or
otherwise), cleanup, removal, remedial or response costs, restitution, civil or
criminal penalties, injunctive relief, or other type of relief, resulting from
or based upon (a) the presence, placement, discharge, emission or release
(including intentional and unintentional, negligent and non-negligent, sudden or
non-sudden, accidental or non-accidental placement, spills, leaks, discharges,
emissions or releases) of any Hazardous Material at, in, or from Property,
whether or not owned by Borrower, or (b) any other circumstances forming the
basis of any violation, or alleged violation, of any Environmental Law.
9
<PAGE>
"ENVIRONMENTAL LAWS" means all federal, state or local laws, statutes,
common law duties, rules, regulations, ordinances and codes, together with all
administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authorities, in each case
relating to environmental, health, safety and land use matters; including the
Comprehensive Environmental Response, Compensation and Liability Act of 1980
("CERCLA"), the Hazardous Material Transportation Act, the Federal Water
Pollution Control Act, the Clean Air Act, the Federal Water Pollution Control
Act of 1972, the Solid Waste Disposal Act, the Federal Resource Conservation and
Recovery Act, the Occupational Safety and Health Act, the Toxic Substances
Control Act and the Emergency Planning and Community Right-to-Know Act, each as
amended or supplemented, and any analogous future or present local, municipal,
state or federal statutes and regulations promulgated pursuant thereto, each as
in effect as of the date of any determination.
"ENVIRONMENTAL PERMITS" is defined in Section 5.11(b).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with Borrower within the meaning of Section
414(b), 414(c) or 414(m) of the Code.
"ERISA EVENT" means (a) a Reportable Event with respect to a Qualified
Plan or a Multiemployer Plan; (b) a withdrawal by Borrower or any ERISA
Affiliate from a Qualified Plan subject to Section 4063 of ERISA during a plan
year in which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA); (c) a complete or partial withdrawal by Borrower or any ERISA Affiliate
from a Multiemployer Plan; (d) the filing of a notice of intent to terminate,
the treatment of a plan amendment as a termination under Section 4041 or 4041A
of ERISA or the commencement of proceedings by the PBGC to terminate a Qualified
Plan or Multiemployer Plan subject to Title IV of ERISA; (e) a failure by
Borrower or any member of the Controlled Group to make required contributions to
a Qualified Plan or Multiemployer Plan when due; (f) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Qualified Plan or Multiemployer Plan pursuant to Section 4042 of ERISA; (g) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon Borrower or any ERISA
Affiliate; (h) an application for a funding waiver or an extension of any
amortization period pursuant to Section 412 of the Code with respect to any
Plan; (i) a non-exempt prohibited transaction occurs with respect to any Plan
for which Borrower or any Subsidiary of Borrower may be directly or indirectly
liable; or (j) a violation of the applicable requirements of Section 404 or 405
of ERISA or the exclusive benefit rule under Section 401(a) of the Code by any
fiduciary or disqualified person with respect to any Plan for which Borrower or
any member of the Controlled Group may be directly or indirectly liable.
"ESTIMATED REMEDIATION COST" means all costs associated with
performing work to remediate contamination of real property or groundwater,
including engineering and other
10
<PAGE>
professional fees and expenses, costs to remove, transport and dispose of
contaminated soil, costs to "cap" or otherwise contain contaminated soil, and
costs to pump and treat water and monitor water quality.
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 8.1.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as
amended, and regulations promulgated thereunder from time to time.
"EXTENSION REQUEST" means a written request from Borrower to Agent to
extend the Revolver Maturity Date as provided in Section 2.1(a)(iv)(1).
"FNMA/WASHINGTON MORTGAGE FACILITY DOCUMENTS" means all documents
relating to credit facilities in an amount up to $50,000,000 secured by
Properties not in the Unencumbered Asset Pool now or hereafter provided to
Borrower for general partnership purposes including (i) a Master Credit Facility
Agreement, to be entered into by, among Borrower, GP-Corp, AIMCO-LP, Inc., a
Delaware corporation, and certain other parties and Washington Mortgage
Financial Group, Ltd. and substantially in the form of the Master Credit
Facility Agreement delivered to Agent on January 8, 1998 (ii) all amendments,
extensions and renewals of any of the foregoing.
"FEDERAL FUNDS RATE" means, for any period, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If
on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that
day by each of three (3) leading brokers of Federal funds transactions in New
York City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any successor thereof.
"FINANCE SUBSIDIARY" means AIMCO Properties Finance Partnership, L.P.,
a Delaware limited partnership.
"FINANCE SUBSIDIARY LOAN" means, collectively, (i) the loan in the
amount of $95,387,690 made by the Finance Subsidiary to the REIT on or around
September 12, 1995, as evidenced by that certain Promissory Note, dated as of
September 12, 1995, executed by the
11
<PAGE>
REIT, in favor of the Finance Subsidiary, which loan has been assumed by
Borrower pursuant to that certain Redemption Agreement, dated as of April 15,
1996, between the REIT and Borrower, among others, and (ii) the loan in the
amount of $3,000,000 made by the Finance Subsidiary to the REIT on or around
September 6, 1995, as evidenced by that certain Promissory Note, dated as of
September 6, 1995, executed by the REIT, in favor of the Finance Subsidiary.
"FORM 10-K FILING" means a Form 10-K filing required to be filed under
the applicable rules and regulations of the SEC.
"FORM 10-Q FILING" means a Form 10-Q filing required to be filed under
the applicable rules and regulations of the SEC.
"FORM 1001" is defined in Section 3.1(f)(i).
"FORM 4224" is defined in Section 3.1(f)(i).
"FUNDS FROM OPERATIONS" means, with respect to Borrower, the REIT, and
their Subsidiaries on a consolidated basis, net income calculated in accordance
with GAAP, excluding gains or losses from debt restructuring and sales of
property, plus real estate depreciation and amortization, plus amortization
associated with the purchase of property management companies, and after
adjustments for unconsolidated partnerships and joint ventures (with adjustments
for unconsolidated partnerships and joint ventures calculated to reflect funds
from operations on the same basis), as interpreted by the National Association
of Real Estate Investment Trusts in its March, 1995, White Paper on Funds From
Operations.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such other entity as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"GP CORP" means AIMCO-GP, Inc., a Delaware corporation. GP Corp is a
Wholly-Owned Subsidiary of the REIT and is the general partner of Borrower.
"GROSS ASSET VALUE" means, with respect to Borrower, the REIT and
their respective Subsidiaries on a consolidated basis, and without double
counting any item, the sum of: (a) Borrower's, REIT's, or their respective
Subsidiaries' Adjusted EBITDA in respect of
12
<PAGE>
Qualified Properties for the prior four calendar quarter period through the end
of the most recent quarter, capitalized at the Apartment Property Cap Rate, PLUS
(b) Borrower's, REIT's, or their respective Subsidiaries' share of Adjusted
EBITDA in respect of Unqualified Properties for the prior four calendar quarter
period through the end of the most recent quarter, capitalized at the Apartment
Property Cap Rate, PLUS (c) an amount equal to the EBITDA of the Management
Entities from the commencement of the prior calendar quarter period annualized
and then multiplied by 8.0, PLUS (d) all cash (including Restricted Cash) and
the fair market value of all Cash Equivalents held as of the last day of such
quarter. For purposes of the definition of Gross Asset Value with respect to
any Stabilized Property which has been owned for fewer than four Calendar
Quarters, Adjusted EBITDA shall be adjusted in respect of such Property by
annualizing the Net Operating Income for the one, two or three preceding
Stabilized calendar quarters, as applicable.
"GUARANTOR SUBSIDIARIES" means AIMCO Holdings QRS, Inc., a Delaware
corporation, AIMCO/OTC QRS, Inc., a Delaware corporation, AIMCO Holdings, L.P.,
a Delaware limited partnership, AIMCO-GP, Inc., a Delaware corporation,
AIMCO-LP, Inc., a Delaware corporation, AIMCO Properties Finance Corp., a
Delaware corporation, AIMCO Somerset, Inc., a Delaware corporation, NHP
Management Company, a District of Columbia corporation, Property Asset
Management Services, L.P., a Delaware limited partnership, Property Asset
Management Services, Inc., a Delaware corporation, and Property Asset Management
Services-CA, LLC, a California limited liability company, together with such
other Persons that execute and deliver to the Agent for the ratable benefit of
the Lenders a guaranty of the Obligations in the form of EXHIBIT F1 if the
Person is a qualified REIT subsidiary or EXHIBIT F2 if the Person is not a
qualified REIT subsidiary.
"GUARANTY OBLIGATION" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligation") of
another Person (the "primary obligor"), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any Property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase securities, other Properties or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof. Except as set forth in the
definition of "Total Indebtedness" below, the amount of any Guaranty Obligation
shall be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof.
"HAZARDOUS MATERIALS" means (i) all those substances which are
regulated by, or which may form the basis of liability under, any Environmental
Law, including all substances identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous
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constituent, special waste, hazardous substance, hazardous material, or toxic
substance, or petroleum or petroleum-derived substance or waste, (ii) any other
materials or pollutants that (a) pose a hazard to any Property of Borrower or to
Persons on or about such Property or (b) cause such Property to be in violation
of any Environmental Laws, (iii) asbestos in any form which is or could become
friable, urea formaldehyde foam insulation, electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million, and (iv) any other chemical, material,
substance, or waste, exposure to which is prohibited, limited, or regulated by
any Governmental Authority or may or could pose a hazard to the health and
safety of the owners, occupants, or any Persons surrounding the relevant
Property.
"HISTORICAL VALUE" means the purchase price of any Qualified Property
(including improvements) and ordinary related purchase transaction costs, plus
the cost of subsequent Capital Improvements made by Borrower or any Wholly Owned
Subsidiary, less any provision for losses, all as determined in accordance with
GAAP. If the Qualified Property is purchased as part of a group of properties,
the Historical Value shall be calculated based upon a reasonable allocation of
the aggregate purchase price by Borrower or any Wholly Owned Subsidiary for all
purposes, consistent with GAAP.
"IMPUTED CAPITAL EXPENDITURES" means, for any four (4) consecutive
quarter period, an amount equal to the average number of apartment units owned
by Borrower or the REIT or their Wholly Owned Subsidiaries during such period,
multiplied by (a) with respect to the units in Class A or B market-rate
apartment projects, an amount equal to $300 per apartment unit, and (b) with
respect to the units in Class C or affordable or rent-restricted apartment
projects, an amount equal to $400 per apartment unit. With respect to apartment
units in any Unqualified Property, the calculation of Imputed Capital
Expenditures shall include the number of such units which is proportionate to
the ownership interest of Borrower or its Wholly Owned Subsidiaries in the
Unqualified Property. For any period of less than four (4) consecutive
quarters, the amount of Imputed Capital Expenditures will be appropriately
prorated.
"INDEBTEDNESS" of any Person means without duplication, (a) all
indebtedness for borrowed money, (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services, (c) all
reimbursement obligations with respect to surety bonds, letters of credit,
bankers' acceptances and similar instruments (in each case, to the extent
material or noncontingent), (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of Properties, (e) all indebtedness created
or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to Properties acquired by the
Person (even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of such
properties), (f) all Capital Lease Obligations, (g) all net obligations with
respect to Rate Contracts, (h) all obligations (other than, in the case of the
REIT, the obligation to acquire Units in exchange for shares of common Stock of
the REIT) to purchase, redeem, or acquire any Stock of such Person or its
Affiliates that, by its terms or by the terms of any security into which it is
convertible or exchangeable, is, or upon the happening of any event or the
passage of time would be, required to be redeemed or repurchased
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by such Person or its Affiliates, including at the option of the holder, in
whole or in part, or has, or upon the happening of an event or passage of time
would have, a redemption or similar payment due, before the date which is the
one (1) year anniversary of the then effective Revolver Maturity Date (i) all
indebtedness referred to in clauses (a) through (h) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in Properties (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (j) all
Guaranty Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (h) above.
"INDEMNIFIED LIABILITIES" is defined in Section 10.5.
"INDEMNIFIED PERSON" is defined in Section 10.5.
"INITIAL UNENCUMBERED ASSET POOL" means the Properties designated on
EXHIBIT A.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case as undertaken under U.S. Federal, State or foreign
law.
"INTEREST EXPENSE" means, for any period, gross interest expense
incurred for the period (including all commissions, discounts, fees and other
charges in connection with standby letters of credit and similar instruments),
including any amounts as capitalized interest, for Borrower, the REIT and their
respective Subsidiaries and the portion of the upfront costs and expenses for
Rate Contracts entered into by Borrower, the REIT and their respective
Subsidiaries (to the extent not included in gross interest expense) fairly
allocated to such Rate Contracts as expenses for such period, as determined in
accordance with GAAP; provided, that, all interest expense accrued by Borrower,
the REIT and their respective Subsidiaries during such period, even if not
payable on or before the Maturity Date, shall be included within "Interest
Expense." Notwithstanding the foregoing, interest accrued under any
Intra-Company Debt shall not be included within "Interest Expense" for any
purposes hereof.
"INTEREST PAYMENT DATE" means, with respect to any Base Rate Loan and
any LIBOR Loan, the first day of each month.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, the period
commencing on the Business Day on which the Loan is disbursed or on the Pricing
Conversion Date on which the Loan is continued as or converted to the LIBO Rate
and ending on the date one (1), two (2), three (3) or six (6) months thereafter,
as selected by Borrower in its Borrowing Notice or Conversion/Continuation
Notice; PROVIDED that:
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(a) if any Interest Period would otherwise end on a day that is
not a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Business Day;
(b) any Interest Period that begins on the last Business Day of
a calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on the
last Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period for any Loan shall extend beyond the
Revolver Maturity Date or after the Conversion Date, the Term Loan Maturity
Date.
"INTRA-COMPANY DEBT" means Indebtedness (whether book-entry or
evidenced by a term, demand or other note or other instrument) owed by Borrower,
the REIT or any of their respective Subsidiaries to Borrower, the REIT or any of
their respective Subsidiaries.
"INTRA-COMPANY LOAN SUBORDINATION AGREEMENT" means a Subordination
Agreement, in the form attached hereto as Exhibit L, with respect to
Intra-Company Debt (including the Finance Subsidiary Loan), in favor of the
Agent for the ratable benefit of the Lenders, and entered into by each of the
"Lenders" designated on SCHEDULE 1.1B and Borrower.
"INVESTMENT" means (a) any purchase or acquisition of any capital
stock, equity interest, asset, obligation or other security of or any interest
in, any Person, (b) any advance, loan, extension of credit or capital
contribution to any Person, (c) any purchase, lease, or other acquisition of
Property for investment purposes or for the purpose of resale or leasing to
another Person, and (d) any contingent or other agreement to do any of the
foregoing.
"INVESTMENT GRADE CREDIT RATING" means that Borrower's Credit Rating
from at least two Rating Agencies is at least BBB- (or its equivalent) or
better.
"IRS" means the Internal Revenue Service.
"ISSUING LENDER" means BofA, in its capacity as issuer of Letters of
Credit.
"KNOWLEDGE OF BORROWER" means the actual knowledge (after reasonable
inquiry) of any of the officers of Borrower or the REIT and each other Person
with executive responsibility for any aspect of Borrower's or the REIT's
business.
"LENDER" means each of the lenders party to this Agreement, and
includes BofA in its individual capacity.
"LENDER AFFILIATE" means a Person that is engaged primarily in the
business of commercial lending and is a Subsidiary of a Lender or of a Person of
which a Lender is a Subsidiary.
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"LENDING OFFICE" means, with respect to any Lender, the office or
offices of the Lender specified as its "Lending Office" opposite its name on the
signature pages hereto, or such other office or offices of the Lender as it may
from time to time specify in writing to Borrower and the Agent.
"LETTER OF CREDIT" means any letter of credit issued pursuant hereto
by the Issuing Lender for the account of Borrower for general corporate
purposes. Each Letter of Credit shall be for a term of not more than one year
from the date of issuance thereof, but shall in any event expire prior to the
one year anniversary of the Revolver Maturity Date.
"LETTER OF CREDIT LIABILITY" means, as of any date of determination,
all then existing liabilities of Borrower to the Issuing Lender in respect of
Letters of Credit, whether such liability is contingent or fixed, and shall
consist in principal amount of the sum of (a) the available amount under all
Letters of Credit (the determination of such amount to assume compliance with
all conditions for drawing) and (b) the aggregate amount which has then been
paid by, and not been reimbursed by Borrower to, the Issuing Lender under all
Letters of Credit.
"LIBO RATE" means, for each Interest Period for any LIBOR Loan, an
interest rate per annum (rounded upward to the nearest 1/100th of 1%) determined
pursuant to the following formula:
LIBO Rate = LIBOR
---------------------------
1.00 - Reserve Percentage
Where,
(i) "LIBOR" means the per annum rate of interest, rounded
upward, if necessary, to the nearest 1/16th of one percent (0.0625%), at which
the Reference Lender's London branch, London, England, would offer U.S. dollar
deposits in amounts and for periods comparable to those of the applicable LIBOR
Loan and Interest Period to major banks in the London U.S. dollar inter-bank
market at approximately 11:00 a.m., London time, on the first Business Day after
the Borrowing Notice or Conversion/Continuation Notice for such LIBOR Loan is
delivered to the Agent; and
(ii) "RESERVE PERCENTAGE" means the total of the maximum
reserve percentages from time to time for determining the reserves to be
maintained by member banks of the Federal Reserve System for Eurocurrency
Liabilities, as defined in Federal Reserve Board Regulation D, whether or not
applicable to any Lender. The Reserve Percentage shall be expressed in decimal
form and rounded upward, if necessary, to the nearest 1/100th of one percent,
and shall include marginal, emergency, supplemental, special and other reserve
percentages.
"LIBOR LOAN" means a Loan that bears interest based on the LIBO Rate.
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"LIEN" means any mortgage, deed of trust, security agreement, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preference, priority or other security interest or
preferential arrangement of any kind or nature whatsoever (including those
created by, arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a Capital Lease, any
financing lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable law)
and any contingent or other agreement to provide any of the foregoing.
"LOAN" or "LOANS" means any Revolver or Term Advance, as applicable.
"LOAN DOCUMENTS" means this Agreement, the Notes, the REIT Guaranty
Documents, and all other documents delivered to the Agent or the Lenders in
connection therewith.
"MANAGEMENT COMPANY ATTRIBUTABLE INTEREST EXPENSE" means, for any
period of determination, that portion of Interest Expense which is solely
attributable to borrowings under this Agreement in respect of the amounts
determined pursuant to clause (Z) of the definition of Total Available
Commitments. Management Company Attributable Interest Expense shall be set
forth in each Compliance Certificate and shall be an amount equal to the
aggregate amount of Interest Expense for such period multiplied by a fraction,
the numerator of which is the lesser of (A) $12.5 million and (B) the amount
calculated under clause (Z) of the definition of Total Available Commitments for
such period, and the denominator of which is an amount equal to the aggregate
outstanding principal amount of Unsecured Debt of Borrower, the REIT and their
respective Subsidiaries for such period.
"MANAGEMENT ENTITY" means any Subsidiary of Borrower or the REIT which
is primarily engaged in the business of managing multifamily apartment projects
or other real estate projects, including, without limitation, the following:
NHP Management Company, a District of Columbia corporation, Property Asset
Management Services, L.P., a Delaware limited partnership, Property Asset
Management Services, Inc., a Delaware corporation, and Property Asset Management
Services-CA, LLC, a California limited liability company.
"MARGIN STOCK" means "margin stock" as such term is defined from time
to time in Regulation G, T, U or X of the Federal Reserve Board.
"MATERIAL ADVERSE EFFECT" means a material adverse change in, or a
material adverse effect upon, any of (a) the assets, operations, business,
condition (financial or otherwise), or prospects of Borrower, the REIT and their
respective Subsidiaries, taken as a whole, (b) the ability of Borrower, the REIT
and their respective Subsidiaries to perform under any Loan Document and avoid
any Event of Default, or (c) the ability of the REIT and the Subsidiaries party
thereto to perform under the REIT Guaranty Documents.
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"MAXIMUM UNSECURED INDEBTEDNESS" means, as of any date of
determination, the aggregate amount of Unsecured Debt of Borrower on a
consolidated basis, which amount shall not exceed an amount equal to the sum of
(i) the amount set forth in clause (a)(W) of the definition of the Total
Available Commitments, minus (ii) the amount set forth in clause (a)(X) of the
definition of Total Available Commitments, minus (iii) the aggregate outstanding
principal amount of the Revolver or Term Loan.
"MOODY'S" means Moody's Investors Service, a Delaware corporation, and
its successors and assigns.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the meaning
of Section 4001(a)(3) of ERISA) and to which any member of the Controlled Group
makes, is making, or is obligated to make contributions or, during the preceding
three calendar years, has made, or been obligated to make, contributions.
"NET ISSUANCE PROCEEDS" means, in respect of any issuance of Stock,
Units or Indebtedness by Borrower, the REIT or any of their respective
Subsidiaries, the proceeds in cash or Cash Equivalents (or, for purposes of
Section 7.16(a), in the case of any issuance of Units in exchange for Property,
the fair market value of the Property so acquired) received by Borrower, the
REIT or any of their respective Subsidiaries upon or substantially
simultaneously with such issuance, net of (a) the direct costs of such issuance
then payable by the recipient of such proceeds (excluding amounts payable to
Borrower, the REIT or any Affiliate of Borrower or the REIT) (b) sales, use and
other taxes paid or payable by such recipient as a result thereof, and (c) in
the case of the issuance of indebtedness secured by any Property the portion of
such proceeds used to repay Indebtedness previously incurred and secured by the
same Property.
"NET OPERATING INCOME" means for any period, as to any Property
(a) all gross revenues received from the operation of such Property during such
period (including, without limitation, payments received from insurance on
account of business or rental interruption and condemnation proceeds from any
temporary use or occupancy, in each case to the extent attributable to the
period for which such Net Operating Income is being determined, but excluding
any proceeds from the sale or other disposition of any part or all of such
Property; or from any financing or refinancing of such Property; or from any
condemnation of any part or all of such Property (except for temporary use or
occupancy); or on account of a casualty to the property (other than payments
from insurance on account of business or rental interruption); or any security
deposits paid under leases of all or a part of such Property, unless forfeited
by tenants; and similar items or transactions the proceeds of which under GAAP
are deemed attributable to capital), MINUS (b) all reasonable and customary
property maintenance and repair costs, leasing and administrative costs,
management fees assumed to be four percent (4%) of gross receipts (whether or
not actually paid pursuant to a separate management contract or otherwise) and
real estate taxes and insurance premiums actually paid by Borrower during such
period with respect to such Property (exclusive of Capital Expenditures). There
shall be no deduction for any expense not involving a cash expenditure, such as
depreciation.
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"NET WORTH" means at any time the Gross Asset Value minus all
liabilities (as determined in accordance with GAAP) of Borrower, the REIT and
their respective Subsidiaries, inclusive of their respective shares of
Indebtedness of any unconsolidated subsidiaries. Notwithstanding the foregoing,
the liabilities of the REIT shall include the redemption amount payable under
any preferred Stock of the REIT which is optionally or mandatorily redeemable at
any time on or prior to one year after the Revolver Maturity Date (or, if
Borrower elects to convert the Revolver into the Term Loan, on or prior to one
year after the Term Loan Maturity Date).
"NHP/LEHMAN FINANCING" means those certain 27 mortgage loans in the
aggregate principal amount of approximately $92,000,000 made by Lehman Brothers
Holdings Inc. d/b/a Lehman Capital, a division of Lehman Brothers Holdings Inc.,
to the following entities: the Borrower, Castle Rock Joint Venture, a Texas
joint venture; The Crossings II Limited Partnership, a Georgia limited
partnership; National Housing Partnership Realty Fund IV, a Maryland limited
partnership; P.A.C. Land II Limited Partnership, an Ohio limited partnership;
SAHF II Limited Partnership, a Delaware limited partnership; TAHF II Limited
Partnership, a Delaware limited partnership; and West Lake Arms Limited
Partnership, a Delaware limited partnership.
"NON-GUARANTOR SUBSIDIARIES" is defined in Section 5.26.
"NOTE" means a promissory note of Borrower payable to the order of a
Lender in substantially the form of EXHIBIT D.
"NOTICE OF LIEN" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or other Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"NYSE" means the New York Stock Exchange.
"OBLIGATIONS" means all Loans, and other Indebtedness, advances,
debts, liabilities, obligations, covenants and duties owed by Borrower, the REIT
or any of their respective Subsidiaries to the Agent, any Lender, or any other
Person required to be indemnified under any Loan Document, of any kind or
nature, present or future, whether or not evidenced by any note, guaranty or
other instrument, arising under this Agreement or under any other Loan Document,
whether or not for the payment of money, whether arising by reason of an
extension of credit, loan, guaranty, indemnification or in any other manner,
whether direct or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising and however
acquired.
"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving a Person, the ordinary course of such Person's business, substantially
as intended to be conducted by any such Person as of the Closing Date, and
undertaken by such Person in good faith and not for purposes of evading any
covenant or restriction in any Contractual Obligation of such Person.
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"ORGANIZATIONAL CHART" means the list of Subsidiaries attached as
SCHEDULE 5.7 hereto showing the REIT, Borrower, all of their Subsidiaries and
their interests in the Management Entities and any unconsolidated subsidiaries
to the extent such Persons' Indebtedness is taken into account in the
calculation of Net Worth, as the same may be modified pursuant hereto.
"ORGANIZATIONAL DOCUMENTS" means: (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any supplementary
articles, certificate of determination or instrument relating to the rights of
preferred shareholders, and all duly adopted resolutions of the board of
directors (or any committee thereof) of such corporation; (b) for any
partnership, the partnership agreement, the certificate and/or statement of
partnership and all duly adopted authorizations of the partners thereof; (c) for
any limited liability company, the articles of organization and operating
agreement therefor and duly adopted authorizations or resolutions of the members
thereof; and (d) for any trust, the declaration or agreement of trust.
"OTHER TAXES" is defined in Section 3.1(b).
"OUTSTANDING AMOUNT" means, as of any date of determination, the
aggregate principal amount of all outstanding Loans (including, without
limitation, the aggregate Letter of Credit Liability).
"OUTSIDE PERIOD LETTER OF CREDIT" means any Letter of Credit having an
expiry date which is after the Revolver Maturity Date.
"PARTICIPANT" is defined in Section 10.8(d).
"PAYMENT OFFICE" means the address for payments set forth on the
signature page hereto in relation to the Agent or such other address as the
Agent may from time to time specify in accordance with Section 10.2.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED INDEBTEDNESS" is defined in Section 7.2.
"PERMITTED LIENS" is defined in Section 7.1.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, limited liability company, unincorporated
association, joint venture or governmental authority.
"PLAN" means an employee benefit plan (defined in Section 3(3) of
ERISA) which Borrower or any member of the Controlled Group sponsors or
maintains or to which Borrower or any member of the Controlled Group makes, is
making or is obligated to make contributions, and includes any Multiemployer
Plan or Qualified Plan.
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"PRICING CONVERSION DATE" means each date on which Borrower elects to
(a) convert a Base Rate Loan to a LIBOR Loan or a LIBOR Loan to a Base Rate Loan
or (b) continue an existing LIBOR Loan for an additional Interest Period.
"PRO FORMA REVOLVER DEBT SERVICE" means, as of any date of
determination, the sum of annual pro forma payments of principal and interest
which would be due (based on a monthly repayment schedule) on an initial
principal sum equal to the Revolver DSC Principal Limit based on a mortgage
constant calculated upon the Assumed Interest Rate at such time and a
twenty-five (25) year amortization period.
"PROPERTY" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"PROPERTY LIABILITY" means, with respect to any Unencumbered Asset
Pool Property, the aggregate amount of the loss, damage or other liability or
reduction in value associated with such Property as a result of any
Environmental Claims or other adverse defect, condition, hazard, condemnation,
violation or other circumstance with respect to such Property which shall be
disclosed in each Compliance Certificate required to be delivered by Borrower
under this Agreement.
"QUALIFIED MANAGEMENT ENTITY" means, on any date of determination, a
Management Entity (a) in which Borrower or its Subsidiaries owns at least a 95%
interest in the capital and profits thereof, (b) which is a Guarantor
Subsidiary, and (c) which is controlled, directly or indirectly, by (i) Peter K.
Kompaniez, (ii) Terry S. Considine, (iii) any Person controlled by Peter K.
Kompaniez and Terry S. Considine, (iv) any other Person reasonably satisfactory
to the Requisite Lenders, or (v) any combination of the foregoing clauses
(i)-(iv).
"QUALIFIED PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and which
any member of the Controlled Group sponsors, maintains, or to which it makes, is
making or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least five (5)
plan years, but excluding any Multiemployer Plan.
"QUALIFIED PROPERTY" means a Property comprising a multifamily
apartment project which is 100% owned in fee simple title directly or indirectly
by Borrower and its Wholly Owned Subsidiaries.
"QUALIFIED WHOLLY-OWNED SUBSIDIARY" means any Wholly-Owned Subsidiary
which, immediately prior to the transfer of Property thereto pursuant to Section
2.13(a)(ii), has no assets and no liabilities, and is, or will become, a
Guarantor Subsidiary.
"RATE CONTRACTS" means interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot and
forward contracts and other
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agreements or arrangements designed to provide protection against fluctuations
in interest or currency exchange rates.
"RATING AGENCY" means any of S&P, Moody's or D&P.
"RECOURSE" means, with respect to any Indebtedness or Guaranty
Obligation of any Person, that such Indebtedness or Guaranty Obligation is
recourse to the assets and/or properties of such Person; provided, however, that
with respect to nonrecourse Indebtedness secured by real property which contains
limitations to the nonrecourse nature of the obligation, such limited
nonrecourse obligations shall not be deemed "Recourse" if and to the extent the
nonrecourse exceptions are for liability of such Person for any of the following
under any applicable loan documentation: (a) fraud, waste, material
misrepresentation, or wilful misconduct; (b) indemnification with respect to
environmental matters or failure to comply with Hazardous Materials laws; (c)
failure to maintain required insurance policies; (d) misapplication of insurance
proceeds, condemnation awards and tenant security deposits; (e) breach of
covenants relating to unpermitted transfers or encumbrances of real property or
other collateral; (f) misappropriation or misapplication of property income; (g)
breach of covenants relating to unpermitted transfers of interests in a Person;
(h) failure to deliver books and records; (i) failure to pay transfer fees or
changes; or (j) other matters substantially the same as those set forth in
clauses (a) through (i) above. An obligation of a Person that is without
Recourse to the assets and/or properties of such Person but becomes Recourse
upon the occurrence of the events or circumstances described in clauses (a)
through (i) above shall not be considered a "Recourse" obligation unless such
events or circumstances have occurred.
"REFERENCE LENDER" means BofA.
"REIT" means Apartment Investment and Management Company, a Maryland
corporation.
"REIT GUARANTY DOCUMENTS" means a guaranty of the Obligations, in the
form of EXHIBIT F1 and EXHIBIT F2 attached hereto, and any documents relating to
the guaranty as the Agent requires, duly executed by the REIT and the Guarantor
Subsidiaries, together with the guaranties delivered pursuant to Section 6.13(c)
and Section 7.7(c).
"REIT STATUS" means, with respect to any Person, (a) the qualification
of such Person as a real estate investment trust under Sections 856 through 860
of the Code, and (b) the applicability to such Person and its shareholders of
the method of taxation provided for in Sections 857 ET SEQ. of the Code.
"REPORTABLE EVENT" means any of the events set forth in section
4043(b) of ERISA or the regulations thereunder, a withdrawal from a Plan
described in section 4063 of ERISA, a cessation of operations described in
section 4068(f) of ERISA, an amendment to a Plan necessitating the posting of
security under section 401(a)(29) of the Code, or a failure to make when due a
payment required by section 412(m) of the Code and section 302(e) of ERISA.
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"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its Property or to which the Person or any of its Property is subject.
"REQUISITE LENDERS" means, as of any date of determination, (a) if
there is only one Lender hereunder having a minimum Commitment of $5,000,000,
that Lender, and (b) if there are two (2) or more Lenders hereunder each having
a minimum Commitment of $5,000,000, then two (2) or more Lenders (for purposes
of counting Lenders, BofA and all affiliates of BofA collectively count as one
Lender, and in order to qualify as one of the two (2) necessary Lenders, a
Lender must hold a minimum Commitment of $5,000,000), holding at least sixty-six
and two-thirds percent (66-2/3%) of the outstanding balance of the Loans, or, if
there are no Loans outstanding, having at least sixty-six and two-thirds percent
(66-2/3%) of the Aggregate Commitment.
"RESPONSIBLE OFFICER" means, in relation to the REIT, the Chief
Executive Officer, or the President or any Executive Vice President or Senior
Vice President of the REIT, and, in relation to Borrower, the Chief Executive
Officer or any Vice President of GP Corp, in its capacity as the general partner
of Borrower, and/or any other officer of the REIT or GP Corp having
substantially the same authority and responsibility, or, with respect to
financial matters, the Chief Financial Officer or the Treasurer of the REIT or
GP Corp, respectively, or any other officer having substantially the same
authority and responsibility.
"RESTRICTED CASH" means any cash pledged by Borrower, the REIT or any
of their respective Subsidiaries to other lenders, as indicated in the line item
for "restricted cash" in the REIT's balance sheet from time to time.
"REVOLVER" is defined in Section 2.1(a).
"REVOLVER TO TERM CERTIFICATE" means a certificate signed by at least
two Responsible Officers in connection with the conversion of the Revolver into
the Term Facility, substantially in the form attached hereto as Exhibit C.
"REVOLVING COMMITMENT" means, with respect to any Lender, the amount
set forth opposite a Lender's name in SCHEDULE 2.1(a)(i), which may be reduced
or increased as a result of one or more assignments pursuant to Section 10.8,
and which includes a Lender's participation in the Letter of Credit Liability.
"REVOLVER DSC RATIO" means the ratio determined for each fiscal
quarter during the term of the Revolver by dividing Unencumbered Asset Pool NOI
for the period from the commencement of the then current year through the end of
the most recent quarter by the aggregate Pro Forma Revolver Debt Service for
such period.
"REVOLVER DSC PRINCIPAL LIMIT" shall mean the principal balance which,
if it were outstanding under the Revolver, would produce a Revolver DSC Ratio
equal to 1.75 to 1.0.,
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determined for any fiscal quarter based on the Revolver DSC Ratio for the period
from the beginning of the then current year through the end of the most recent
quarter.
"REVOLVER MATURITY DATE" means the maturity date of the Revolver which
shall be January 26, 2000, unless extended to January 26, 2001, and then
extended thereafter for successive one year periods, in each case as provided in
Section 2.1(a)(i), subject, however, to earlier acceleration pursuant to the
provisions of the Loan Documents.
"REVOLVING LOAN" is defined in Section 2.1(a).
"S&P" shall mean Standard & Poor's Ratings Group and its successors
and assigns.
"SCHEDULED AMORTIZATION" means, with respect to any Person, the sum,
as of any date of determination, of the current portion (I.E., such portion as
is scheduled to be paid by the obligor thereof within twelve (12) months from
the date of determination) of all regularly scheduled amortization payments due
on such Person's long-term fully amortizing mortgage Indebtedness (exclusive of
balloon payments).
"SEC" means the Securities and Exchange Commission, or any successor
thereto.
"SEC REPORT" means all filings on Form 10-K, Form 10-Q or Form 8-K
with the SEC made by the REIT pursuant to the Exchange Act and delivered to
Agent prior to the date hereof.
"SOLVENT" means, as to any Person at any time, that (a) the fair value
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the
Property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its Property and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"STABILIZED" means, with respect to any Qualified Property and as of
any date of determination, the date on which the occupancy level is at least
eighty-five percent (85%) for the most recent complete quarter.
"STOCK" means all shares, options, warrants, interests, participations
or other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether
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voting or nonvoting, including common stock, preferred stock, perpetual
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the SEC under the
Exchange Act).
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture, trust or other business entity of which more than
fifty percent (50%) of the Stock or other equity or beneficial interests (in the
case of Persons other than corporations) is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof (regardless of whether such Stock or other interests are
entitled to voting rights). As of the date hereof, the Organizational Chart
lists all of the Subsidiaries of the REIT and Borrower.
"TAXES" is defined in Section 3.1(a).
"TERM ADVANCE" is defined in Section 2.1(c).
"TERM COMMITMENT" means, with respect to any Lender, the amount set
forth opposite the Lender's name in SCHEDULE 2.1(a)(i), which amount may be
reduced or increased as a result of one or more assignments pursuant to Section
10.8.
"TERM LOAN" is defined in Section 2.1(c).
"TERM LOAN MATURITY DATE" means the date which is three (3) years
after the Conversion Date, unless earlier accelerated as provided in the Loan
Documents.
"TOTAL AVAILABLE COMMITMENTS" means an amount which shall not exceed
the lesser of the Aggregate Commitment or an amount determined as follows:
(a) prior to the Conversion Date and for any period of determination,
an amount equal to the sum of:
(W) the lesser of
(A) the aggregate principal amount of Loans that could have
been outstanding during the most recent prior four quarters, as to which a
Compliance Certificate has been delivered, in order for the ratio of
Unencumbered Asset Pool Value to Unsecured Debt for such period to equal 1.75:1,
and
(B) the Revolver DSC Principal Limit for the period in
question;
LESS (X) the aggregate amount of all Property Liabilities
(without double counting any Property Liabilities which have previously been
taken into account in calculating Unencumbered Asset Pool Value) and subject to
the provisions of Section 2.13(a)(i));
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LESS (Y) the aggregate amount of all Unsecured Debt of Borrower
(on a consolidated basis);
PLUS (Z) an amount equal to 20% of Unencumbered Management Entity
Value; provided, however, that in no event may more than 25% of Total Available
Commitments ever be attributed to Unencumbered Management Entity Value;
(b) on and after the Conversion Date, an amount equal to the
outstanding balance of the Revolver on the Conversion Date (as reduced by the
aggregate amount of applicable amortization payments required under Section
2.6(b)).
"TOTAL INDEBTEDNESS" means as of any date of determination and in
respect of any Person, all outstanding Indebtedness, and in the case of clause
(iii) below, Indebtedness available to be drawn, of a Person, and shall include,
without limitation: (i) such Person's share of the Indebtedness of any
partnership or joint venture in which such Person directly or indirectly holds
any interest; (ii) any Recourse or contingent obligations, directly or
indirectly, of such Person with respect to any Indebtedness of such partnership
or joint venture in excess of its proportionate share and (iii) such Person's
liability in respect of letters of credit, whether such liability is contingent
or fixed (such liability to be determined on the assumption that all conditions
for drawing upon such letters of credit have been complied with).
Notwithstanding the foregoing, Intra-Company Debt shall be excluded from the
calculation of "Total Indebtedness" but shall not otherwise be excluded as
Indebtedness for any other purpose hereof.
"UNENCUMBERED ASSET POOL" means the Initial Unencumbered Asset Pool
which are not subject to or affected by any Liens, Indebtedness, negative
pledges (other than the negative pledge given under Section 7.1 of this
Agreement) or Liens on any partnership or ownership interests in Borrower or its
Wholly Owned Subsidiaries, including such other Property as may be included
within the Unencumbered Asset Pool in accordance with Section 2.13 and excluding
any Property which is no longer included in the Unencumbered Asset Pool in
accordance with Section 2.13 and the other terms of this Agreement.
"UNENCUMBERED ASSET POOL NOI" means, for any period, with respect to
the Unencumbered Asset Pool, the sum of (X) aggregate Net Operating Income
during the preceding four quarters (annualized in the case of Properties that
have been Stabilized for only one, two or three preceding calendar quarters),
MINUS (Y) the aggregate amount of Capital Expenditures for all such Properties
for the corresponding periods in an amount equal to $300 per apartment unit per
annum in each of such Properties, during such period, or annualized period, as
applicable.
"UNENCUMBERED ASSET POOL NOI TO UNSECURED INTEREST RATIO" means, for
any period of determination, the ratio computed as follows:
Unencumbered Asset Pool NOI [Unencumbered Asset Pool NOI]
to Unsecured Interest Ratio = divided by
Consolidated Unsecured Interest
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"UNENCUMBERED ASSET POOL VALUE" means, for any period of
determination, with respect to the Properties in the Unencumbered Asset Pool, an
amount equal to the sum of (i) Unencumbered Asset Pool NOI divided by the
Apartment Cap Rate, plus (ii) the Historical Value of any Qualified Properties
which have not been owned for a full calendar quarter; provided, however that in
no event may more than twenty-five percent (25%) of Unencumbered Asset Pool
Value be attributed to Historical Value.
"UNENCUMBERED MANAGEMENT ENTITY VALUE" means, as of any date of
determination, an amount equal to (X) Borrower's proportionate share of the
aggregate EBITDA from all Qualified Management Entities for the most recent
complete calendar quarter, as annualized, multiplied by (Y) 8.0.
"UCC" means the Uniform Commercial Code as in effect in any relevant
jurisdiction.
"UNFUNDED PENSION LIABILITIES" means the excess of a Plan's benefit
liabilities under section 4001 (a)(16) of ERISA, over the current value of that
Plan's assets, determined in accordance with the assumptions used by the Plan's
actuaries for funding the Plan pursuant to section 412 for the applicable plan
year.
"UNITED STATES" and "U.S." each mean the United States of America.
"UNITS" means the units of limited partnership interest in Borrower
issued and outstanding from time to time.
"UNSECURED DEBT" means Indebtedness (other than the Loans) which is
not secured by any Lien.
"UNQUALIFIED PROPERTY" means the Property comprising a multifamily
apartment project the fee simple interest in which is not 100% owned or leased,
directly or indirectly, by Borrower and/or its Wholly Owned Subsidiaries.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of Borrower or the REIT
one hundred percent (100%) of the Stock or other equity or other beneficial
interests (in the case of Persons other than corporations) is owned directly or
indirectly by (A) Borrower and/or (B) the REIT; provided, however, that where
such term is qualified with respect to a specific Person (e.g., "Wholly Owned
Subsidiary of the REIT") such term means a Subsidiary one hundred percent (100%)
of the Stock or other equity or other beneficial interests (in the case of
Persons other than corporations) is owned directly or indirectly by the
specified Person.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) DEFINED TERMS. Unless otherwise specified herein or therein, all
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other
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document made or delivered pursuant hereto. The meaning of defined terms shall
be equally applicable to the singular and plural forms of the defined terms.
Terms (including uncapitalized terms) not otherwise defined herein but defined
in the UCC shall have the meanings set forth therein.
(b) THE AGREEMENT. The words "hereof", "herein", "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section, schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) CERTAIN COMMON TERMS.
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) The term "ratably" means, at any time that Loans may be
outstanding, in accordance with the amount of the outstanding Loans of the
respective Lenders; and, at any time that no Loans are outstanding, in
accordance with the outstanding Commitments of the respective Lenders.
(d) PERFORMANCE; TIME. Whenever any performance obligation hereunder
(other than a payment obligation) is stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including." If any provision of this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
(e) CONTRACTS. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) LAWS. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(g) CAPTIONS. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
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(h) INDEPENDENCE OF PROVISIONS. The parties acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
(i) SOPHISTICATED PARTIES. The parties acknowledge that each of them
has been represented by counsel in the preparation and negotiation of this
Agreement, that each of them is sophisticated in the transactions described
herein and that there shall be no presumption against any party drafting this
Agreement or the Loan Documents in the interpretation or construction of any of
the terms thereof.
1.3 ACCOUNTING PRINCIPLES.
(a) GAAP. Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied. Notwithstanding anything to the
contrary contained herein, all financial covenants applicable to Borrower and
the REIT hereunder shall be calculated based upon the EBITDA, Interest Expense,
Scheduled Amortization, Net Worth, Total Indebtedness, Gross Asset Value, and
other accounting items of the REIT, before any adjustment for the minority
interest attributable to the holders of limited partner interests in Borrower.
(b) FISCAL YEAR; QUARTER. References herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of Borrower.
ARTICLE II.
THE FACILITY
2.1 AMOUNTS AND TERMS OF COMMITMENTS.
(a) REVOLVING LOANS.
(i) REVOLVING LOANS. Each Lender severally agrees, on
the terms and conditions hereinafter set forth, to make loans to Borrower (each
such loan, a "Revolving Loan" and all such loans collectively, the "Revolver")
from time to time on any Business Day during the period from the Closing Date to
the earlier of the Conversion Date or the Revolver Maturity Date. The aggregate
amount of the Revolver will not exceed the lesser of the Lender's Revolving
Commitment or such Lender's Commitment Percentage of the Total Available
Commitment.
(ii) LETTERS OF CREDIT. If Borrower is in compliance with
the conditions for the making of Revolving Loans, Borrower may request on or
before the Revolver
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Maturity Date, through a Borrowing Notice, the Issuing Lender to deliver from
time to time Letters of Credit. Upon such request, the Issuing Lender shall
promptly issue the requested Letter of Credit in a form approved by the Issuing
Lender; provided that the maximum Letter of Credit Liability at any one time
outstanding may not exceed $5,000,000. Each Letter of Credit must have an
expiry date not later than the one year anniversary of its issuance, unless
otherwise agreed on by Issuing Lender, but in no event shall the expiry date be
later than one year after the Revolver Maturity Date. Each drawing under a
Letter of Credit is payable in full upon the date thereof by Borrower, without
notice or demand of any kind. Except with respect to an Outside Period Letter
of Credit which is drawn upon after the Revolver Maturity Date, Borrower may
obtain, in accordance with the conditions applicable to advances of the
Revolving Loans, a Revolving Loan in the amount drawn on a Letter of Credit to
reimburse BofA as the Issuing Lender for such amount. Other than draws on an
Outside Period Letter of Credit after the Revolver Maturity Date, Borrower's
liability to reimburse Issuing Lender for amounts drawn under Letters of Credit
is included within the terms "Revolving Loan" and "Loan" for all purposes of
this Agreement, and any amounts drawn shall bear interest until paid in full
(whether out of the proceeds of a Revolving Loan otherwise permitted hereunder
or otherwise) at the Base Rate plus the Applicable Base Rate Margin, subject to
Section 2.9(c). Amounts drawn on an Outside Period Letter of Credit after the
Revolver Maturity Date are due and payable by Borrower to Agent immediately and
shall accrue interest until paid at the Base Rate plus three percent (3%).
Borrower's obligations to repay drawings under any Letter of Credit and all
other amounts payable to Issuing Lender, Agent or any other Lender hereunder
shall be absolute, irrevocable and unconditional under any and all circumstances
whatsoever and irrespective of any set-off, counterclaim or defense to payment
which Borrower may have or have had against Issuing Lender, Agent or any other
Lender (except such as may arise out of Issuing Lender's, Agent's or any other
Lender's gross negligence or willful misconduct hereunder) or any other Person,
including, without limitation, any setoff, counterclaim or defense based upon or
arising out of:
(A) Any lack of validity or enforceability of this
Agreement or any of the other Loan Documents or such Letter of Credit;
(B) Any amendment or waiver of or any consent to or
departure from the terms of such Letter of Credit or the Loan Documents;
(C) The existence of any claim, setoff, defense or other
right which Borrower or any other Person may have at any time against, any
beneficiary or any transferee of such Letter of Credit (or any Person for whom
any such beneficiary or any such transferee may be acting), Issuing Lender,
Agent or any other Lender or any other Person, whether in connection with such
Letter of Credit, the Loan Documents or any unrelated transaction;
(D) Any demand, statement or any other document presented
under such Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect, or any statement therein being untrue or inaccurate
in any respect whatsoever or any variations in
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punctuation, capitalization, spelling or format of the drafts or any statements
presented in connection with any drawing under such Letter of Credit;
(E) The surrender or impairment of any security for the
performance or observance of any of the terms of such Letter of Credit or the
Loan Documents; and
(F) The failure, for any reason, of any Lender to fund
advances to Borrower hereunder for any purpose.
Nothing contained herein shall constitute a waiver of any rights or remedies of
Borrower against Issuing Lender, Agent or any other Lender arising out of the
gross negligence or willful misconduct of Issuing Lender, Agent or any such
other Lender.
(iii) LIMITS ON REVOLVING LOANS AND LETTERS OF CREDIT.
Notwithstanding anything to the contrary set forth herein, after giving effect
to any Revolving Loan and after the issuance of any Letter of Credit, in no
event shall the Outstanding Amount exceed the Total Available Commitment.
Within the limitations set forth in this Section 2.1(a), and subject to the
other terms and conditions hereof, Borrower may borrow or request Letters of
Credit to be issued under this Section 2.1(a), repay or prepay pursuant to
Section 2.5 or otherwise cause Letters of Credit to be cancelled or to expire
undrawn and reborrow (subject to the limitations set forth hereinbelow) or
request additional Letters of Credit to be issued pursuant to this Section 2.1.
(iv) EXTENSION OF REVOLVER MATURITY DATE; CONVERSION.
(1) Borrower may request successive one year
extensions of the Revolver Maturity Date by delivery of an Extension Request to
Agent at least 60 days before the applicable Revolver Maturity Date. Agent
shall notify the Lenders of the Extension Request and each Lender shall notify
Agent at least 30 days before the Revolver Maturity Date if such Lender accepts
or rejects the request in each Lender's sole discretion. If all Lenders timely
accept the Extension Request, the Revolver Maturity Date will be extended for
one year, otherwise the Revolver Maturity Date will not be extended. As a
condition to the extension of the Revolver Maturity Date, Borrower shall have
paid, to the Agent for the ratable benefit of the Lenders then party hereto, the
extension fee set forth in Section 2.10(g).
(2) If the Borrower delivers an Extension Request as
provided in Section 2.1(a)(iv)(1), and any Lender (a "Rejecting Lender") shall
not have notified the Agent on or prior to the date which is thirty (30) days
prior to the Revolver Maturity Date that it accepts such request, then Agent,
upon request of Borrower, may reallocate each Rejecting Lender's Commitment
among some or all of the remaining Lenders consenting to such reallocation. If
the Revolving Commitments of a Rejecting Lender are reallocated among the
remaining Lenders pursuant to this Section, then the Rejecting Lender shall
assign to each remaining Lender such portion of such Rejecting Lender's
commitments as has been reallocated to such remaining Lender in consideration of
payment to such Rejecting Lender of all amounts
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owing to Rejecting Lender with respect to all or such portion of the Commitment
so assigned, and Borrower shall, concurrently with such reallocation and
assignment, in exchange for Rejecting Lenders' existing Notes, issue new Notes
hereunder to remaining Lenders in order to reflect their respective revised
Commitments, which shall be automatically adjusted to reflect such reallocation.
The Notes received by the remaining Lenders in exchange for such new Notes shall
be endorsed with a legend stating that such Notes have been exchanged for new
Notes and returned to Borrower.
If any Rejecting Lender's Revolving Commitment is not reallocated as
provided for in the immediately preceding paragraph, then within 10 days after
Agent notifies Borrower that the Extension Request has been rejected, at
Borrower's request, one or more commercial banking institutions (a "New Lender")
which otherwise qualifies as an Eligible Assignee may become a party to this
Agreement as a Lender to replace all or any portion of such Rejecting Lender's
unallocated Revolving Commitment for the purpose of extending Revolving
Commitments to Borrower as provided herein with the consent of Agent. Each New
Lender shall execute a copy of this Agreement, and, at Agent's request, such
Rejecting Lender shall assign all or such portion of its Revolving Commitment to
such New Lender in consideration of payment to it of all amounts owing to such
Rejecting Lender with respect to all or such portion of its Revolving Commitment
so assigned, whereupon such New Lender shall replace such Rejecting Lender to
the extent of such assignment, and such New Lender shall become a "Lender" for
all purposes with respect to the Revolving Commitments and Revolving Loans under
this Agreement, and appropriate adjustments shall be made to this Agreement,
including the Commitment Percentages with respect to each Lender, in order to
give effect to the addition of such New Lender.
Notwithstanding anything to the contrary contained in this Section
2.1(a)(iv)(2), if following the procedures set forth above in this Section
2.1(a)(iv)(2), aggregate Revolving Commitments of remaining Lenders and New
Lenders are less than the Revolving Commitments immediately prior to the
Extension Request, the Extension Request will be deemed rejected by all Lenders;
provided, however, that in such event and not later than ten (10) days after the
Agent has notified the Borrower that the Extension Request has been rejected, if
(x) no Default has then occurred and is continuing, provided that if the Agent
shall have actual notice of such Default, it shall have provided notice thereof
to Borrower and (y) no Event of Default has then occurred and is continuing,
Borrower may notify Agent that it elects both to terminate the Revolver as of
the Revolver Maturity Date then in effect and effective as of the Conversion
Date to maintain its Loans then outstanding as Term Loans pursuant to Section
2.1(c) (the "Conversion Option"); provided, however, that Borrower shall have
delivered to Agent a Revolver to Term Certificate as a condition precedent to
the Conversion Option and paid to Agent, for the ratable benefit of the Lender,
the conversion fee as provided in Section 2.10(d).
(b) REVOLVING CREDIT USAGE. Borrower shall use the proceeds of
all Revolving Loans and all Letters of Credit for general partnership purposes,
including, without limitation, acquisitions of multi-family apartment projects
and other real estate assets, Investments in Persons engaged primarily in the
business of owning or managing real estate
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assets and other Investments permitted hereunder, Capital Expenditures and
redevelopment projects.
(c) AMOUNTS AND TERMS OF TERM LOAN. Each Lender severally
agrees, on the terms and conditions hereinafter set forth, and provided all
Conversion Conditions have been satisfied, to continue or convert loans to
Borrower (each such loan, a "Term Advance" and all such loans collectively the
"Term Loan") from time to time on any Business Day from the Conversion Date to
the Term Loan Maturity Date, in an aggregate amount not to exceed at any time
the Term Commitment; provided, however, that after giving effect to any Term
Advance, the Outstanding Amount shall not exceed the then applicable Total
Available Commitment. Once repaid or prepaid, Borrower may not reborrow any
Term Advance.
2.2 NOTE. Each Loan will be evidenced by a Note dated the Closing
Date payable to the order of the applicable Lender in the amount of its
Commitment. The date, amount and maturity of each Loan and the amount of each
principal payment will be endorsed by the applicable Lender on the schedules
annexed to the Note. Borrower irrevocably authorizes each Lender to endorse its
Note, and each Lender's record will be conclusive absent manifest error;
PROVIDED, HOWEVER, that a Lender's failure to make, or an error in making, a
notation thereon shall not affect Borrower's obligations under this Agreement or
under any Note.
2.3 PROCEDURE FOR BORROWING.
(a) BORROWING NOTICE. Each Loan shall be made in accordance
with the terms of a Borrowing Notice delivered by Borrower to Agent, as follows:
(i) DESIGNATION OF INTEREST RATE. Borrower may elect
that a Loan be made as a LIBOR Loan or a Base Rate Loan; PROVIDED that, unless
the Agent otherwise agrees in writing, Borrower may not elect that a Loan be
made as a LIBOR Loan, if in addition to such Loan there will be more than five
(5) LIBOR Loans outstanding.
(ii) TIMING OF NOTICE. Each Borrowing Notice must be
submitted to and received by Agent before 9:00 a.m. (California time) as
follows: (A) for LIBOR Loans, at least three (3) Business Days before a
specified borrowing date; (B) for Base Rate Loans, at least one (1) Business Day
before a specified borrowing date; and (C) for a Letter of Credit, at least five
(5) Business Days before the proposed issuance date.
(iii) CONTENTS OF NOTICE. Each Borrowing Notice must
include the following information:
(A) an exact amount for the Loan (LIBOR Loans must be
in a minimum amount of $1,000,000 with additional increments of $100,000 and
there are no restrictions on the amount of Base Rate Loans);
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(B) if the Loan is a LIBOR Loan, the applicable
Interest Period (if no Interest Period is specified for a requested LIBOR Loan,
the Loan will be made as a Base Rate Loan); and
(C) in the case of a proposed Letter of Credit, a
completed letter of credit application on the Issuing Lender's standard form
substantially in the form of EXHIBIT G.
(b) NOTICE TO LENDERS. When Agent receives a Borrowing Notice
in conformity with Section 2.3(a), it shall promptly notify each Lender thereof
and of the amount of such Lender's Commitment Percentage of the requested Loan
and in the case of a Letter of Credit it shall notify each Lender promptly upon
the issuance together with such Lender's participation in the requested Letter
of Credit.
(c) FUNDING OF COMMITMENT. Each Lender shall fund the amount of
its Commitment Percentage of the requested Loan to Agent, for Borrower's
account, at the Payment Office by 9:00 a.m. (California time) on the specified
borrowing date in funds immediately available to Agent. Unless any applicable
condition in Article IV is not satisfied, Agent will then make the amounts
received from the Lenders available to Borrower as directed in written payment
instructions from Borrower.
(d) FREQUENCY OF BORROWINGS. No more than four (4) Borrowing
Notices may be given in any calendar month.
2.4 CONVERSION AND CONTINUATION ELECTIONS.
(a) CONVERSION/CONTINUATION NOTICE. Each conversion or
continuation of an outstanding Base Rate Loan or LIBOR Loan shall be made upon
the irrevocable written notice (including notice via facsimile confirmed
immediately by a telephone call) of Borrower in the form of a
Conversion/Continuation Notice, as follows:
(i) DESIGNATION OF INTEREST RATE. Borrower shall have
the right to make the following elections with respect to the conversion or
continuation of any outstanding Base Rate Loan or LIBOR Loan: (A) to convert, on
any Business Day, any Base Rate Loan, in a minimum principal amount of
$1,000,000 or an integral multiple of $100,000 in excess thereof, into a LIBOR
Loan; or (B) to convert, on the last day of any Interest Period with respect to
a LIBOR Loan (or, on any other day of any Interest Period, upon payment of any
loss or expense incurred or sustained by any Lender with respect to the early
termination of such LIBOR Loan prior to the last day of the Interest Period as
provided in Section 3.4), such LIBOR Loan into a Base Rate Loan; or (C) to
continue, on the last day of any Interest Period with respect to a LIBOR Loan
(or, on any other day of any Interest Period, upon payment any loss or expense
incurred or sustained by any Lender with respect to the early termination of
such LIBOR Loan prior to the last day of the Interest Period as provided in
Section 3.4), such LIBOR Loan (or any part thereof in a minimum principal amount
of $1,000,000 or an integral multiple of $100,000 in excess thereof) for a
subsequent Interest Period; PROVIDED, that unless the Agent shall otherwise
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agree in writing, Borrower may not elect to have any outstanding LIBOR Loan or
Base Rate Loan (or any portion thereof) continued as or converted into a LIBOR
Loan if (A) a Default or Event of Default shall exist, (B) after giving effect
to such continuation or conversion there shall be more than five different LIBOR
Loans outstanding or the outstanding principal amount of any LIBOR Loans shall
have been reduced, by payment, prepayment, or partial conversion to less than
$1,000,000.
(ii) TIMING OF NOTICE. Each Conversion/Continuation
Notice shall be submitted to and received by the Agent prior to 9:00 a.m.
(California time): (A) at least three (3) Business Days prior to the Pricing
Conversion Date of any outstanding Loan to be converted into or continued as a
LIBOR Loan; and (B) at least one (1) Business Day prior to the Pricing
Conversion Date of any outstanding Loan to be converted into or continued as a
Base Rate Loan.
(iii) CONTENTS OF NOTICE. The Conversion/Continuation
Notice shall set forth the following information with respect to the Loan
subject thereto:(A) the Pricing Conversion Date, which shall be a Business
Day;(B) the amount of the LIBOR Loan or Base Rate Loan to be converted or
continued;(C) whether such Loan is to be converted into/continued as a LIBOR
Loan or a Base Rate Loan; and (D) if such Loan (or any portion thereof) is to be
converted into/continued as a LIBOR Loan, the applicable Interest Period.
(b) AUTOMATIC CONVERSIONS. Any outstanding LIBOR Loan shall
automatically convert to a Base Rate Loan, effective on the last day of the
applicable Interest Period, if as of such date:
(i) DEFAULT; EVENT OF DEFAULT. A Default or Event of
Default shall exist;
(ii) FAILURE TO PROVIDE NOTICE. Borrower shall have
failed to submit a Conversion/Continuation Notice for such Loan in compliance
with the terms of Section 2.4(a); or
(iii) FAILURE TO MAINTAIN MINIMUM LOSS. If the aggregate
outstanding principal amount of LIBOR Loans having the same Interest Period
shall have been reduced, by payment, prepayment, or partial conversion to be
less than $1,000,000.
(c) NOTICE TO LENDERS. Upon receipt of a
Conversion/Continuation Notice conforming with the terms of Section 2.4(a), or
an automatic conversion pursuant to Section 2.4(b), the Agent shall promptly
notify each Lender thereof. All conversions and continuations shall be made pro
rata according to the respective outstanding principal amounts of the Loans
converted or continued.
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2.5 OPTIONAL PREPAYMENTS; OPTIONAL REDUCTIONS OF THE REVOLVING
COMMITMENT.
(a) Subject to Section 3.4, Borrower may, at any time and from
time to time, ratably prepay Loans in whole or in part, in an aggregate minimum
amount of $1,000,000 or an integral multiple of $100,000 in excess thereof, upon
(a) at least three (3) Business Days' prior notice, if the Loans to be prepaid
are LIBOR Loans, and (b) at least one Business Day's prior notice, if the Loans
to be prepaid are Base Rate Loans. Such notice of prepayment shall specify
(i) the amount of such prepayment, (ii) the date of such prepayment, which shall
be a Business Day, and (iii) whether such prepayment is of LIBOR Loans, Base
Rate Loans, or any combination thereof. Such notice shall not thereafter be
revocable by Borrower and the Agent shall promptly notify each Lender thereof
and of such Lender's Commitment Percentage of such prepayment. If a prepayment
notice is given, the payment amount specified therein shall be due and payable
on the date specified therein, together with accrued interest to such date on
the amount prepaid and any amounts required to be paid pursuant to Section 3.4.
(b) At any time prior to the Conversion Date, Borrower may, upon
not less than five (5) Business Days' prior notice to Agent, terminate the
aggregate Revolving Commitment of all Lenders or permanently reduce the
aggregate Revolving Commitment of all Lenders by an aggregate minimum amount of
$1,000,000 or an integral multiple of $100,000 in excess thereof; PROVIDED that
no such termination or reduction shall be permitted if, after giving effect
thereto and to any prepayments of the Loans made on the effective date thereof,
the Outstanding Amount would exceed the amount of the Total Available Commitment
and, PROVIDED, FURTHER, that once reduced in accordance with this Section
2.5(b), the aggregate Revolving Commitment of all Lenders may not be increased.
Any reduction of the aggregate Revolving Commitment of all Lenders shall be
applied to each Lender's Revolving Commitment in accordance with such Lender's
Revolving Commitment Percentage. If the Revolving Commitments are terminated in
their entirety, all accrued commitment fees under Section 2.10(c) to, but not
including, the effective date of such termination shall be payable on the
effective date of such termination.
2.6 MANDATORY PREPAYMENTS OF LOANS; MANDATORY AMORTIZATION AND
REDUCTIONS.
(a) TOTAL AVAILABLE COMMITMENT. If at any time the Outstanding
Amount exceeds the then applicable Total Available Commitment, Borrower shall
immediately prepay Loans (or cause Letters of Credit to be cancelled) in an
amount sufficient to reduce the Outstanding Amount to the then applicable Total
Available Commitment.
(b) AMORTIZATION. On the last Business Day of each March, June,
September and December following the Conversion Date, Borrower shall repay or
prepay Loans in an aggregate amount equal to one twelfth (1/12th) of the initial
outstanding balance of the Term Loan as of the Conversion Date.
2.7 APPLICATION OF PROCEEDS. Unless otherwise instructed by
Borrower, any prepayments pursuant to Section 2.5 or Section 2.6 made (i) on a
day other than the last day of an
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Interest Period for any Loan shall be applied first to any Base Rate Loans then
outstanding and then to any LIBOR Loans then outstanding, in the inverse order
of such LIBOR Loans' stated maturities and (ii) on the last day of an Interest
Period for any LIBOR Loan shall be applied first to such maturing LIBOR Loan,
then to any Base Rate Loans outstanding, and then to any other LIBOR Loans then
outstanding, in the inverse order of such LIBOR Loans' stated maturities.
2.8 REPAYMENT. Subject to Section 2.6, unless the Revolver has
been converted into the Term Loan, Borrower shall repay all Obligations on the
Revolver Maturity Date and, if the Revolver has been converted into the Term
Loan, shall repay all Obligations on the Term Loan Maturity Date.
2.9 INTEREST.
(a) RATES. Subject to Section 2.9(c), each Loan shall bear
interest on the outstanding principal amount thereof from the date such Loan is
made until the date such Loan becomes due, at a rate per annum equal to the LIBO
Rate or the Base Rate, as the case may be, PLUS the Applicable Margin.
(b) PAYMENT DATES. Interest on each Loan shall be payable
in arrears on each Interest Payment Date and the Revolver Maturity Date or, if
the Revolver has been converted into the Term Loan, the Term Loan Maturity Date.
Interest shall also be payable on the date of any prepayment of Loans pursuant
to Section 2.5 or Section 2.6 for the portion of the Loans so prepaid. During
the existence of any Event of Default, interest shall be payable on demand.
(c) DEFAULT RATES. While any Event of Default exists or
after acceleration and during the continuation thereof, and after as well as
before any entry of judgment thereon, Borrower shall pay interest (after as well
as before judgment to the extent permitted by law) on all outstanding
Obligations at a rate per annum which is determined by increasing the Applicable
Margin then in effect by three percent (3%) per annum; PROVIDED, HOWEVER, that,
on and after the expiration of the Interest Period applicable to any LIBOR Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
the outstanding Obligations shall, during the continuation of such Event of
Default or after acceleration and during the continuation thereof, bear interest
at a fluctuating rate per annum equal to the Base Rate plus three percent (3%).
(d) LIMITATIONS FOR APPLICABLE LAW. Anything herein to the
contrary notwithstanding, payments of interest shall not be required for any
period for which interest is computed hereunder, to the extent (but only to the
extent) that contracting for or receiving such payments by the respective Lender
would be contrary to the provisions of any law applicable to such Lender
limiting the highest rate of interest which may be lawfully contracted for,
charged or received by such Lender, and in such event Borrower shall pay such
Lender interest at the highest rate permitted by applicable law.
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2.10 FEES.
(a) ARRANGEMENT FEE. Upon the due execution and delivery of this
Agreement by Borrower, the Agent and each of the Lenders which are the initial
Lenders party to this Agreement, Borrower shall pay to BofA an arrangement fee
as set forth in a separate letter agreement between Borrower and BofA.
(b) ADMINISTRATIVE AGENCY FEES. Borrower shall pay to BofA such
administrative agency fees as are set forth in a separate letter agreement
between Borrower and BofA.
(c) COMMITMENT FEES. Commencing on the date hereof and up to the
Conversion Date, Borrower shall pay to the Agent for the account of each Lender
ratably a commitment fee on the average daily unused portion of such Lender's
Commitment Percentage of the Aggregate Commitment (exclusive of the average
daily undrawn available amount of all Letters of Credit outstanding), regardless
of whether or not such Aggregate Commitment is available to be advanced
hereunder, equal to 0.1875% per annum. Such commitment fee shall accrue from
the Closing Date to the earlier of the Conversion Date or the Revolver Maturity
Date and shall be due and payable in arrears quarterly on the first Business Day
of each April, July, October and January with respect to the prior calendar
quarter, commencing on the first Business Day of April, 1998, on the Revolver
Maturity Date, and on any other date on which the Revolver is paid in full and
the Commitment permanently terminated.
(d) CONVERSION FEE. On the Conversion Date, Borrower shall pay to
the Agent for the account of each Lender then a party to this Agreement ratably
a conversion fee equal to 0.50% of the original balance of the Term Loan as of
the Conversion Date.
(e) UNENCUMBERED ASSET POOL ADJUSTMENT FEE. Without limiting
Borrower's obligations to pay costs and expenses under Section 2.13 and 10.4,
upon the addition of a project to the Unencumbered Asset Pool on or after the
date hereof, Borrower shall pay to the Agent for the ratable benefit of the
Lenders an Unencumbered Asset Pool Property adjustment fee in the amount of
$2,000 per property for each such Property added to the Unencumbered Asset Pool
on or after the date hereof after the first five (5) approved Properties.
(f) LETTER OF CREDIT FEES.
(i) Borrower shall pay to Agent for the Issuing Lender's
sole benefit an issuance fee in the amount of 0.25% of the initial face amount
of each Letter of Credit, before issuance thereof.
(ii) Borrower shall pay to Agent for the ratable benefit
of the Lenders an annual fee in an amount equal to the Applicable LC Fee.
(iii) The Applicable LC Fee will accrue when each Letter of
Credit is issued until the expiration or cancellation thereof, and shall be due
and payable in arrears
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quarterly on the first Business Day of each April, July, October and January, on
the Revolver Maturity Date, and on any other date on which the Revolver is paid
in full and the Revolving Commitment permanently terminated.
(g) EXTENSION FEE. Within one week of the notification by the Agent
to Borrower that an Extension Request has been accepted pursuant to Section
2.1(a)(iv)(1), Borrower shall pay to Agent for the ratable benefit of the
Lenders an extension fee equal to 0.15% of the Commitment.
(h) ACCRUED FEES. Borrower ratifies and confirms its agreement to
pay all accrued but unpaid fees under the Previous Credit Agreement, which
obligation shall be paid promptly upon demand by the Agent and shall not be
superseded by this Agreement.
2.11 COMPUTATION OF FEES AND INTEREST.
(a) COMPUTATION PERIOD. All computations of fees and interest
under this Agreement shall be made on the basis of a 360-day year and actual
days elapsed. Interest and fees shall accrue during each period for which
interest or fees are computed from the first day thereof to the last day
thereof.
(b) NOTICE. The Agent shall, with reasonable promptness, notify
Borrower and the Lenders of each determination of a LIBO Rate, PROVIDED that no
failure to do so shall relieve Borrower of any obligation hereunder. Any change
in the interest rate on a Loan resulting from a change in the Reserve Percentage
(as defined in the definition of "LIBO Rate") shall become effective as of the
opening of business on the day on which such change becomes effective. The
Agent shall with reasonable promptness notify Borrower and the Lenders of the
effective date and the amount of each such change, PROVIDED that no failure to
do so shall relieve Borrower of any obligation hereunder. Each determination of
an interest rate by the Agent pursuant to any provision of this Agreement shall
be conclusive and binding on Borrower and the Lenders in the absence of manifest
error.
(c) DETAIL OF CALCULATION. The Agent shall, at the request of
Borrower or any Lender, deliver to Borrower or such Lender, as the case may be,
a statement showing the quotations used by the Agent in determining any interest
rate.
2.12 PAYMENTS BY BORROWER.
(a) TERMS OF PAYMENTS. All payments (including prepayments) to
be made by Borrower on account of principal, interest, fees and other amounts
required hereunder shall be made without setoff or counterclaim and shall,
except as otherwise expressly provided herein, be made to the Agent for the
ratable account of the Lenders at the Payment Office, in dollars and in
immediately available funds, no later than 9:00 a.m. (California time) on the
date specified herein. The Agent shall promptly distribute to each Lender such
Lender's Commitment Percentage (or other applicable share as expressly provided
herein) of such principal, interest, fees or other amounts (in like funds as
received). Any payment which is received by the Agent
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later than 9:00 a.m. (California time) shall be deemed to have been received on
the immediately succeeding Business Day, and any applicable interest or fee
shall continue to accrue.
(b) BUSINESS DAYS. Whenever any payment under this Agreement
becomes due on a day other than a Business Day, the payment will be made on the
next succeeding Business Day, and the extension of time included in the
computation of interest or fees, as applicable; subject to the provisions set
forth in the defined term Interest Period.
(c) RELIANCE OF AGENT ON PAYMENTS BY BORROWER. Unless the Agent
shall have received notice from Borrower prior to the date on which any payment
is due to the Lenders hereunder that Borrower will not make such payment in
full, the Agent may assume that Borrower has made such payment in full to the
Agent on such date, and the Agent may (but shall not be required to), in
reliance upon such assumption, cause to be distributed to each Lender on such
due date the amount then due such Lender. If and to the extent Borrower shall
not have made such payment in full to the Agent, each Lender shall repay to the
Agent on demand such amount distributed to such Lender, together with interest
thereon for each day from the date such amount is distributed to such Lender
until the date such Lender repays such amount to the Agent, at the Federal Funds
Rate as in effect for each such day.
2.13 UNENCUMBERED ASSET POOL; ADDITIONS AND EXCLUSIONS OF PROPERTIES.
(a) UNENCUMBERED ASSET POOL. As of the Closing Date, the
Unencumbered Asset Pool consists of the Initial Unencumbered Asset Pool and each
Property therein is a Class B or better apartment project. Additional
Properties, which in all cases must be Class B or better apartment projects, may
be offered by Borrower and shall be included in the Unencumbered Asset Pool only
in accordance with the following (and any other applicable terms and conditions
contained in this Agreement):
(i) REQUEST FOR TOTAL AVAILABLE COMMITMENT INCREASE.
Borrower from time to time may request that Qualified Properties that have been
Stabilized be included in the Unencumbered Asset Pool by written request to the
Agent.
(ii) ACCEPTANCE OF QUALIFIED PROPERTIES. The Lenders may
in their sole discretion, and after performing such due diligence as the Lenders
desire in their sole discretion, accept or reject any Qualified Property which
is Stabilized offered as an addition to the Unencumbered Asset Pool, unless the
Qualified Property is a Class B or better apartment project, in which case the
Lenders must be reasonable in their acceptance or rejection of such Qualified
Property; provided, however that if Borrower then has an Investment Grade Credit
Rating and no Default or Event of Default has occurred and is continuing, then
the Lenders shall accept any Qualified Property which is a Class B or better
apartment project and Stabilized as an addition to the Unencumbered Asset Pool
unless Agent or any Lender reasonably determines that the Property is in
violation of applicable Environmental Laws. Borrower shall at its expense
provide the Agent and the Lenders with the following due diligence materials and
information with respect to any project offered as an addition to the
Unencumbered Asset Pool, at least thirty (30) days prior to the delivery by
Borrower of a Borrowing Notice relating to the project:
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(A) the Due Diligence Package;
(B) written advice relating to such lien and judgment
searches as the Agent shall have requested of Borrower with respect to such
Property;
(C) an environmental site assessment with respect to
such Property, dated as of a recent date, prepared by a qualified firm
acceptable to the Agent, identifying any conditions or operations on such
property that are not in compliance with any Environmental Laws and any
Hazardous Materials located thereon, showing Estimated Remediation Costs, if
any, and stating that there are no conditions on such property or other items
requiring further investigation or remediation, and any follow-on or
supplemental report required by the Agent, together with the Agent's standard
form Environmental Questionnaire and Disclosure Statement completed by Borrower;
(D) if required by the Agent, a report regarding
structural, siding, engineering, seismic and code/legal compliance (including
compliance with the Americans With Disabilities Act) matters;
(E) current, certified rent roll and other reports of
the financial and operating results (for the most recent 12-month period) and
projections for the property setting forth in such format as the Agent may
require the information relevant to such property necessary to calculate the
Revolver DSC Principal Limit;
(F) if required by Agent, copies of the standard lease
form and the property management agreement and other material operating
agreements or contracts relating to the property;
(G) if required by the Agent, evidence of the zoning,
subdivision and entitlements status of the property, including, without
limitation, copies of the certificate of occupancy and any other material
permits, licenses or approvals required for the property;
(H) a copy of the purchase and sale agreement(s) by
which Borrower or such Wholly-Owned Subsidiary has acquired the property;
(I) such other items as the Agent may reasonably
request.
Borrower acknowledges that the review of the due diligence materials described
in this Section 2.13(a)(ii) will require advance notice to the Agent and the
Lenders, and Borrower agrees to provide as much advance notice as possible to
achieve timely review of such materials.
(iii) CONDITIONS TO INCLUSION OF PROPOSED PROPERTIES IN
UNENCUMBERED ASSET POOL. Each of the following conditions must be satisfied (or
waived by the
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Agent in writing) prior to the Lenders' acceptance of any Qualified Property
into the Unencumbered Asset Pool:
(A) ACCEPTANCES. The Lenders shall have agreed to
accept the apartment project offered by Borrower for inclusion into the
Unencumbered Asset Pool as provided in Section 2.13(a)(ii), and Agent shall have
so notified Borrower in writing. Any such acceptance shall be subject to the
satisfaction of the other conditions set forth in this Section 2.13(a)(iii).
(B) OFFICERS' CERTIFICATE. Borrower shall have
delivered to the Agent a certificate of two Responsible Officers substantially
in the form of EXHIBIT H confirming (i) that all conditions precedent set forth
in this Section 2.13(a)(iii) (other than those based solely upon the approval of
the Agent or the Lenders) have been satisfied with respect to such project;
(ii) that all financial and operating information delivered to the Agent
pursuant to Section 2.13(a)(ii), subject to audit, is complete and correct to
the knowledge of Borrower and setting forth in detail the calculation of the
Revolver DSC Principal Limit; (iii) Borrower's purchase price for the property,
upon which the Agent and the Lenders are entitled to rely; and (iv) that the
Person owning the proposed project has incurred no Indebtedness other than as
permitted under Sections 7.2(a) through (h) inclusive.
(b) EXCLUSION OF PROPERTY FROM THE UNENCUMBERED ASSET POOL. Any
Property will automatically have a value of zero for purposes of calculating the
Total Available Commitment and will be excluded from the Unencumbered Asset Pool
if, after the date the Property enters the Unencumbered Asset Pool,
(i) a material adverse change in the environmental
condition of the Property from that described in the materials described in
Section 2.13(a)(ii) occurs that is not adequately remediated in accordance with
all applicable Environmental Laws within thirty (30) days after demand from
Agent to Borrower, or such Property shall incur Property Liabilities in excess
of 10% of the value of such Property; and
(ii) immediately upon any sale, transfer or encumbrance of
such Property (or of the beneficial, stock, equity, membership or partnership
interest in the owner of such Property, other than to Borrower or one of its
Qualified Wholly Owned Subsidiaries; provided, however, that prior to any
transfer to any Qualified Wholly-Owned Subsidiary, Borrower shall have received
the prior written consent of the Agent, which consent shall not be unreasonably
withheld or delayed); and
(iii) at the end of the calendar quarter in which any such
Property ceases to be Stabilized, as set forth in the Compliance Certificate for
such calendar quarter.
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2.14 PAYMENTS BY LENDERS TO AGENT.
(a) RELIANCE OF AGENT ON PAYMENTS BY THE LENDERS. Unless Agent
has received notice from a Lender on the Closing Date or, with respect to each
borrowing after the Closing Date, at least one Business Day prior to the date of
any proposed borrowing, that such Lender will not make available to the Agent
for the account of the Company the amount of that Lender's Commitment Percentage
of the Loan to be funded on such date, Agent may assume that each Lender has
made such amount available to the Agent on the borrowing date, and Agent may
(but shall not be required to), in reliance upon such assumption, make available
to the Company a corresponding amount on such date. If and to the extent any
Lender shall not have made its full amount available to Agent and Agent in such
circumstances has made available to the Company such amount, that Lender shall
on the next Business Day following the date of such borrowing make such amount
available to the Agent, together with interest at the Federal Funds Rate for and
determined as of each day during such period. A certificate of Agent submitted
to any Lender with respect to amounts owing under this Section 2.14(a) shall be
conclusive, absent manifest error. If such amount is so made available, such
payment to the Agent shall constitute such Lender's Loan (as of the date of the
borrowing) for all purposes of this Agreement. If such amount is not made
available to the Agent on the next Business Day following the borrowing date,
the Agent shall notify Borrower of such failure to fund and, upon demand by the
Agent, Borrower shall pay such amount to the Agent for the Agent's account,
together with interest thereon for each day elapsed since the date of such
borrowing, at a rate per annum equal to the interest rate applicable at the time
to the Loans comprising such borrowing, and Borrower may exercise any rights and
remedies it may have against the Lender that so failed to fund.
(b) OBLIGATIONS OF AGENT; LENDER. The failure of any Lender to
make any Loan on any date of borrowing shall not relieve any other Lender of any
obligation hereunder to make a Loan on the date of such borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Loan to be
made by such other Lender on the date of any borrowing.
2.15 SHARING OF PAYMENTS, ETC. If, other than as expressly
contemplated elsewhere herein, any Lender shall obtain on account of the Loans
made by it any payment (whether voluntary, involuntary, through exercise of any
right of setoff, or otherwise) in excess of its Commitment Percentage of
payments on account of the Loans obtained by all the Lenders, such Lender shall
forthwith (a) notify the Agent of such fact, and (b) purchase from the other
Lenders such participations in the Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid thereto together with a percentage (calculated by
dividing (i) the amount of such paying Lender's required repayment by (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this Section 2.15 may, to the fullest extent
permitted by law, exercise all of such purchasing Lender's rights of payment
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(including the right of setoff, but subject to Section 10.9) with respect to
such participation as fully as if such purchasing Lender were the direct
creditor of Borrower in the amount of such participation. The Agent shall keep
records (which shall be conclusive and binding in the absence of manifest error)
of participations purchased pursuant to this Section 2.15 and shall in each case
notify the Lenders following any such purchases.
2.16 PARTICIPATION PURCHASED BY LENDERS IN THE LETTER OF CREDIT
LIABILITY.
(a) On the date of the issuance of each Letter of Credit (and
with respect to the letters of credit previously issued under the Credit
Agreement described in Recital A, on the Closing Date), the Issuing Lender shall
be deemed irrevocably and unconditionally to have sold and transferred to each
Lender (other than the Issuing Lender) and each Lender shall be deemed to have
irrevocably and unconditionally purchased and received from the Issuing Lender,
an undivided interest and participation, to the extent of such Lender's
Commitment Percentage in effect from time to time, in such Letter of Credit and
all Letter of Credit Liability with respect thereto. The Revolving Commitment
of each Lender hereunder shall include that Lender's share of the Letter of
Credit Liability.
(b) In the event that any reimbursement obligation under this
Agreement is not paid when due to the Issuing Lender with respect to any Letter
of Credit, the Issuing Lender shall promptly notify the Agent to that effect,
and the Agent shall promptly notify each Lender (other than the Issuing Lender)
of the amount of such reimbursement obligation and each Lender other than the
Issuing Lender shall immediately pay to the Agent for distribution to the
Issuing Lender, in lawful money of the United States and in same day funds, an
amount equal to such Lender's Commitment Percentage then in effect of the amount
of such unpaid reimbursement obligation.
(c) The obligation of each Lender other than the Issuing Lender
to make payments under subsection (b) above shall be unconditional and
irrevocable and shall be made under all circumstances, including, without
limitation, following the occurrence of any Default or any Event of Default or
any of the circumstances referred to in Section 2.1(a)(ii) hereof.
(d) Prior to the occurrence of any Event of Default, the Agent
shall promptly distribute to each Lender its Commitment Percentage (or other
applicable share as expressly provided herein) of all amounts received on
account of the obligations of Borrower to repay amounts drawn under any Letter
of Credit (in like funds as received). Following the occurrence of an Event of
Default, all amounts received by the Agent on account of such obligations shall
be disbursed by the Agent as follows:
(i) First, to the payment of expenses incurred by the
Agent in the performance of its duties and enforcement of its rights under the
Loan Documents, including, without limitation, all costs and expenses of
collection, attorneys' fees, court costs and foreclosure expenses;
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(ii) Then, to the Lenders, pro rata in accordance with
their respective Commitment Percentages until all outstanding reimbursement
obligations for drawings on such Letter of Credit and interest accrued thereon
have been paid in full; and
(iii) Then, and if but only if there remains any available
amount which has not been drawn under such Letter of Credit, to the Agent to
hold as cash collateral for the obligation of Borrower to reimburse any future
drawings on such Letter of Credit, Borrower hereby granting to the Agent, for
the pro rata, PARI PASSU benefit of the Lenders, a security interest therein
which will be of first priority and hereby irrevocably agreeing that amounts so
held may be applied from time to time in reimbursement of drawings on such
Letter of Credit as the same may occur, until the expiration of such Letter of
Credit and payment in full of all amounts due with respect to any drawing
thereon.
(e) If any payment received from Borrower on account of any
reimbursement obligation with respect to any Letter of Credit and distributed to
a Lender under Section 2.16(d) hereof is thereafter recovered from the Issuing
Lender, each Lender which received such distribution shall, upon demand by the
Agent, repay to the Issuing Lender such Lender's ratable share of the amount so
recovered together with an amount equal to such Lender's ratable share
(according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered) of any interest of other amount
paid or payable by the Issuing Lender in respect of the total amount so
recovered.
ARTICLE III.
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 TAXES.
(a) Subject to Section 3.1(g), all payments by Borrower to Agent
or the Lenders under this Agreement will be made free and clear of the following
(collectively, "Taxes"), and without deduction or withholding for, any and all
present or future taxes, levies, imposts, deductions, charges or withholdings,
and all liabilities with respect thereto, excluding such taxes (including income
taxes or franchise taxes) as are imposed on or measured by the recipient's net
income by the jurisdiction under the laws of which the recipient is organized or
maintains a Lending Office, or otherwise does business, or any political
subdivision thereof.
(b) In addition, Borrower shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery,
recordation or registration of, or otherwise with respect to, this Agreement or
any other Loan Documents (collectively, "Other Taxes").
(c) Borrower shall indemnify and hold harmless the Agent and
each Lender for the full amount of Taxes or Other Taxes (including any Taxes or
Other Taxes
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imposed by any jurisdiction on amounts payable under this Section 3.1) paid by
the Agent or such Lender and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
unless and except to the extent any such Taxes or Other Taxes were imposed
solely as a result of the gross negligence or willful misconduct of Agent or
such Lender. Payment under this indemnification shall be made within thirty
(30) days from the date the Agent or any Lender makes written demand therefor.
(d) If Borrower shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to the
Agent or any Lender, then, subject to Section 3.1(g):
(i) the sum payable shall be increased as necessary so
that, after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.1) the Agent or such Lender, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions been made;
(ii) Borrower shall make such deductions; and
(iii) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(e) Within 30 days after the date of any payment by Borrower of
Taxes or Other Taxes, Borrower shall furnish to the Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Agent.
(f) Each Lender which is a foreign Person (i.e., a Person other
than a United States Person for United States Federal income tax purposes)
agrees that:
(i) such Lender shall, no later than the Closing Date
(or, in the case of a Lender which becomes a party hereto pursuant to Section
10.8 after the Closing Date, the date upon which such Lender becomes a party
hereto), deliver to Borrower through the Agent two (2) accurate and complete
signed originals of Internal Revenue Service Form 4224 or any successor thereto
("Form 4224"), or two (2) accurate and complete signed originals of Internal
Revenue Service Form 1001 or any successor thereto ("Form 1001"), as
appropriate, in each case indicating that the Lender is on the date of delivery
thereof entitled to receive payments of principal, interest and fees under this
Agreement free from withholding of United States Federal income tax;
(ii) if at any time such Lender makes any changes
necessitating a new form, such Lender shall with reasonable promptness deliver
to Borrower through the Agent in replacement for, or in addition to, the forms
previously delivered by such Lender hereunder, two (2) accurate and complete
signed originals of Form 4224, or two (2) accurate and complete signed originals
of Form 1001, as appropriate, in each case indicating that such Lender is on the
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date of delivery thereof entitled to receive payments of principal, interest and
fees under this Agreement free from withholding of United States Federal income
tax;
(iii) such Lender shall, before or promptly after the
occurrence of any event (including the passing of time but excluding any event
mentioned in (ii) above) requiring a change in or renewal of the most recent
Form 4224 or Form 1001 previously delivered by such Lender, deliver to Borrower
through the Agent two (2) accurate and complete original signed copies of Form
4224 or Form 1001, as appropriate, in replacement of the forms previously
delivered by such Lender; and
(iv) such Lender shall, promptly upon Borrower's
reasonable request to that effect, deliver to Borrower such other forms or
similar documentation as may be required from time to time by any applicable
law, treaty, rule or regulation in order to establish such Lender's tax status
for withholding purposes.
(g) Borrower shall not be required to pay any additional amounts
in respect of United States Federal or state income tax pursuant to Section
3.1(d) to any Lender or any duly appointed assignee for the account of any
Lending Office of such Lender or assignee:
(i) if the obligation to pay such additional amounts
arises as a result of a failure by such Lender or assignee to comply with its
obligations under Section 3.1(f) in respect of such Lending Office;
(ii) if such Lender or assignee shall have delivered to
Borrower a Form 4224 in respect of such Lending Office pursuant to Section
3.1(f), and such Lender or assignee shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income tax in
respect of payments by Borrower hereunder for any reason other than a change in
United States law or regulations or in the official interpretation of such law
or regulations by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the date
of delivery of such Form 4224; or
(iii) if such Lender or assignee shall have delivered to
Borrower a Form 1001 in respect of such Lending Office pursuant to Section
3.1(f), and such Lender or assignee shall not at any time be entitled to
reduction, partial exemption or exemption from deduction or withholding of
United States federal income tax in respect of payments by Borrower hereunder
for the account of such Lending Office for any reason other than a change in
United States law or regulations or any applicable tax treaty or regulations or
in the official interpretation of such law, treaty or regulations by any
governmental authority charged with the interpretation or administration thereof
(whether or not having the force of law) after the date of delivery of such Form
1001.
(h) If, at any time, Borrower requests any Lender to deliver any
forms or other documentation pursuant to Section 3.1(f)(iv), then Borrower
shall, on demand of such Lender, through the Agent reimburse such Lender for any
costs and expenses (including Attorney
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Costs) reasonably incurred by such Lender in the preparation or delivery of such
forms or other documentation.
(i) If Borrower is required to pay additional amounts to the
Agent or any Lender pursuant to Section 3.1(d), then such Lender shall use its
reasonable best efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by Borrower which may thereafter accrue if such change in the
judgment of such Lender is not otherwise disadvantageous to such Lender.
3.2 ILLEGALITY.
(a) If any Lender shall determine that the introduction of any
Requirement of Law or any change therein or in the interpretation or
administration thereof has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for such Lender or its
Lending Office to make LIBOR Loans, then, on notice thereof by such Lender to
Borrower through the Agent, the obligation of such Lender to make LIBOR Loans
shall be suspended until such Lender shall have notified the Agent and Borrower
that the circumstances giving rise to such determination no longer exist.
(b) If any Lender shall reasonably determine that it is unlawful
to maintain any LIBOR Loan, Borrower shall notify Lender that Borrower shall
either (i) prepay in full all LIBOR Loans of such lender then outstanding,
together with interest accrued thereon, or (ii) elect to convert in accordance
with Section 2.4 all LIBOR Loans then outstanding, after payment to such Lender
of all interest accrued thereon, into Base Rate Loans, either on the last day of
the Interest Period thereof if such Lender may lawfully continue to maintain
such LIBOR Loans to such day, or immediately if such Lender may not lawfully
continue to maintain such LIBOR Loans, together with any amounts required to be
paid in connection therewith pursuant to Section 3.4.
(c) If the obligation of any Lender to make or maintain LIBOR
Loans has been terminated, Borrower may elect, by giving notice to such Lender
through the Agent, that all Loans which would otherwise be made by such Lender
as LIBOR Loans shall instead be made as Base Rate Loans.
3.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender shall determine that, due to either (i) the
introduction of or any change in or in the interpretation of any Requirement of
Law or (ii) the compliance with any guideline or request from any central bank
or other Governmental Authority (whether or not having the force of law), there
shall be any increase in the cost to such Lender of agreeing to make or of
making, funding or maintaining any LIBOR Loans hereunder, then Borrower shall be
liable for, and shall from time to time, upon written demand therefor by such
Lender (with a copy of such demand to the Agent), which demand shall set forth
the basis of such increased cost in reasonable detail, pay to the Agent for the
account of such Lender, such additional amounts as are sufficient to compensate
such Lender for such increased costs.
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(b) If any Lender shall have reasonably determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or
(iv) compliance with any Capital Adequacy Regulation by such Lender (or its
Lending Office) or any corporation controlling such Lender, effects or would
effect an increase in the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender (taking
into consideration such Lender's or such corporation's policies with respect to
capital adequacy and such Lender's desired return on capital), then, upon
written demand of such Lender (with a copy to the Agent), which demand shall set
forth in reasonable detail the basis for any such increase in required capital,
Borrower shall immediately pay to such Lender, from time to time as specified by
such Lender, additional amounts sufficient to compensate such Lender for such
increase.
(c) If any Lender shall have determined that any of the events
described in Section 3.3(a) or Section 3.3(b) effects or would effect an
increase in cost or reduction of return resulting in additional Obligations
hereunder, such Lender shall, with reasonable promptness, notify Borrower and
the Agent of such determination, PROVIDED that no failure to do so shall relieve
Borrower of any Obligation hereunder.
3.4 FUNDING LOSSES. Borrower agrees to reimburse each Lender for,
and to hold each Lender harmless from, any loss or expense that such Lender
sustains or incurs as a consequence of:
(a) the failure of Borrower to make any required payment or
prepayment of principal of any LIBOR Loan or Base Rate Loan (including payments
to be made after any acceleration thereof);
(b) the failure of Borrower to borrow, continue or convert a
Loan after Borrower has given (or is deemed to have given) a Borrowing Notice or
a Conversion/Continuation Notice;
(c) the failure of Borrower to make any prepayment after
Borrower has given a notice in accordance with Section 2.5;
(d) the prepayment of a LIBOR Loan on a day which is not the
last day of the Interest Period with respect thereto; or
(e) the conversion of any LIBOR Loan to a Base Rate Loan on a
day that is not the last day of the Interest Period with respect thereto;
such amount or amounts to include an amount equal to the excess, if any, of
(a) the amount of interest that would have accrued on the amount not paid, not
borrowed, not prepaid, prepaid, or converted for the period from the date of
such failure to pay, failure to borrow, failure to prepay, prepayment, or
conversion to the last day of then current Interest Period (or in the case of a
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failure to borrow, the Interest Period which would have commenced on the date of
such failure) at the interest rate applicable to that LIBOR Loan, over (b) the
amount of interest that would accrue to the Lender on such amount at the LIBO
Rate in effect on such date by placing such amount on deposit for a comparable
period with leading lenders in the London interbank market.
3.5 INABILITY TO DETERMINE RATES. If the Agent shall have determined
that for any reason adequate and reasonable means do not exist for ascertaining
the LIBO Rate for any requested Interest Period with respect to a proposed LIBOR
Loan or that the LIBO Rate applicable pursuant to Section 2.9(a) for any
requested Interest Period with respect to a proposed LIBOR Loan does not
adequately and fairly reflect the cost to Lenders of funding such Loan, the
Agent will forthwith give notice of such determination to Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or maintain LIBOR
Loans hereunder shall be suspended until the Agent revokes such notice in
writing. Upon receipt of such notice, Borrower may revoke any Borrowing Notice
or Conversion/Continuation Notice then submitted by it. If Borrower does not
revoke such notice, the Lenders shall make, convert or continue the Loans, as
proposed by Borrower, in the amount specified in the applicable notice submitted
by Borrower, but such Loans shall be made, converted or continued as Base Rate
Loans instead of LIBOR Loans.
3.6 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation pursuant to this Article III shall deliver to Borrower (with a copy
to the Agent) a certificate setting forth in reasonable detail a summary of the
basis of such demand and the amount payable to such Lender hereunder.
3.7 SURVIVAL. The agreements and obligations of Borrower in this
Article III shall survive the payment of all other obligations.
ARTICLE IV.
CONDITIONS PRECEDENT
4.1 CONDITIONS OF EFFECTIVENESS.
(a) CONDITIONS TO EFFECTIVENESS. The effectiveness of this
Agreement is subject to the condition that the Agent shall have received, on or
before the Closing Date, the following, in the case of agreements, documents and
other instruments, in form and substance satisfactory to the Agent in its sole
discretion, and with respect to legal opinions satisfactory to each Lender and
their respective counsel in their sole discretion and in sufficient copies for
each Lender:
(i) CREDIT AGREEMENT AND NOTES. This Agreement executed
by Borrower, the Agent and each of the Lenders, and a Note executed by Borrower
in favor of each of the Lenders; the Notes shall be dated the Closing Date;
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(ii) REIT GUARANTY DOCUMENTS. The REIT Guaranty Documents
executed by the REIT and the Guarantor Subsidiaries;
(iii) SUBORDINATION AGREEMENTS. Such subordination
agreements relating to the Intra-Company Debt and the Finance Subsidiary Loan as
the Requisite Lenders may require, in form and substance satisfactory to the
Requisite Lenders.
(iv) RESOLUTIONS; INCUMBENCY.
(A) Certified copies of the resolutions of the boards
of directors of the REIT, Borrower, GP Corp and, if required by Agent, the other
corporations party (whether directly or as general partners) to the Loan
Documents, their execution, delivery and performance thereof, including, in the
case of GP Corp, a resolution approving and authorizing in its capacity as the
general partner of Borrower the execution, delivery and performance by Borrower
of this Agreement and the other Loan Documents to be delivered hereunder and the
borrowing of the Loans;
(B) A certificate of the Secretary or Assistant
Secretary of the REIT, Borrower, GP Corp and, if required by Agent, the other
corporations party (whether directly or as general partners) to the Loan
Documents certifying the names and true signatures of the officers of such
Persons authorized to execute and deliver, as applicable, this Agreement and all
other Loan Documents to be delivered hereunder;
(v) ORGANIZATION DOCUMENTS. Each of the following
documents:
(A) certified copies of the Organizational Documents
of the REIT, Borrower and, if requested by the initial Lender, any Subsidiary
thereof as in effect on the Closing Date, and, in the case of corporate or
limited liability company articles or a certificate of limited partnership,
certified as of a recent date by the secretary of state of the state of
organization; and
(B) a good-standing certificate for the REIT, Borrower
and, if requested by Agent, any Subsidiary thereof, from the secretary of state
of the state of organization of the same as of a recent date;
(vi) CERTIFICATE. A certificate signed by a duly
authorized Responsible Officer, dated as of the Closing Date, stating that:
(A) the representations and warranties of Borrower and
the REIT contained in Article V hereof and of Borrower, the REIT and their
Subsidiaries contained in the Loan Documents are true and correct on and as of
such date, as though made on and as of such date;
(B) no Default or Event of Default exists or would
result from the initial borrowing;
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(C) since December 31, 1996, no act, omission, change
or occurrence which would have a Material Adverse Effect shall have occurred;
and
(D) all conditions precedent set forth in this Section
4.1 have been satisfied (other than those based solely on the approval of the
Agent, the Lenders, or the Requisite Lenders);
(vii) DOCUMENTATION REGARDING THE NHP INCORPORATED
ACQUISITION. In connection with the acquisition of NHP Incorporated, a Delaware
corporation, Borrower has provided Agent with the documents listed on Schedule
1.1C attached hereto.
(viii) LEGAL OPINIONS. The Agent shall have received
favorable opinions of counsel to Borrower and the parties signatory to the REIT
Guaranty Documents, and addressed to the Agent and the Lenders which complies
with the opinion requirements set forth on EXHIBIT I in a form approved by
Agent;
(ix) COSTS; EXPENSES; FEES. To the extent demand has been
made therefor, payment of all costs, expenses, and accrued and unpaid fees
(including legal fees and expenses) to the extent then due and payable on the
Closing Date, including any arising under Sections 2.10, 3.1 and 10.4; and
(x) OTHER DOCUMENTS. Such other approvals, opinions, or
documents as the Agent or the Requisite Lenders may reasonably request.
(b) DEFERRED CONDITIONS. Any agreement by the Lenders to defer the
delivery of any of the items described in Section 4.1 above because a particular
item to be delivered is not available on the Closing Date shall not be deemed an
election by the Lenders to waive the delivery of such items; to the contrary,
all parties agree that Borrower shall be responsible, and Borrower hereby
covenants, to deliver to the Lenders no later than ten (10) Business Days after
the date this Agreement becomes effective, all of the items to be delivered by
Borrower as described in Section 4.1 which were not delivered to the Agent or
the Lenders on or prior to the Closing Date.
4.2 CONDITIONS TO EACH LOAN. The obligation of each Lender to make
any Loan (including its first Loan) is subject to the satisfaction of the
following conditions precedent:
(a) BORROWING NOTICE. The Agent shall have received in the case
of a Loan (with, in the case of the first Loan only, a copy for each Lender) a
Borrowing Notice or Conversion/Continuation Notice in compliance with the terms
of Section 2.3 or Section 2.4, as applicable;
(b) OTHER DOCUMENTS. The Agent shall have received such other
approvals, opinions and documents as the Agent or any Lender may reasonably
request;
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(c) TOTAL AVAILABLE COMMITMENT. The Outstanding Amount shall
not, as a result of the making, continuation or conversion of such Loan, exceed
the Total Available Commitment;
(d) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Borrower, the REIT and their respective Subsidiaries
contained in the Loan Documents, including Article V of this Agreement, shall be
true and correct on and as of the date such Loan is made, with the same effect
as if made on and as of such date;
(e) NO EXISTING DEFAULT. No Default or Event of Default shall
exist or shall result from the making, continuation or conversion of such Loan;
(f) NO MATERIAL ADVERSE EFFECT. No act, omission, change,
occurrence or event which has a Material Adverse Effect shall have occurred
since the Closing Date; and
(g) NO FUTURE ADVANCE NOTICE. Neither the Agent nor any Lender
shall have received from Borrower, the REIT or any Subsidiary thereof, any
notice that the REIT Guaranty Documents will no longer guaranty future Loans to
be made under this Agreement.
(h) CONTINUING REPRESENTATIONS. Each Borrowing Notice and
Conversion/Continuation Notice submitted by Borrower hereunder shall constitute
a representation and warranty by Borrower hereunder, as of the date of such
notice and as of the date of the making, continuation or conversion of the
corresponding Loan, that the applicable conditions in this Section 4.2 have been
satisfied.
4.3 CONVERSION CONDITIONS. Borrower may convert the Revolver into
the Term Loan on any Revolver Maturity Date upon at least 90 days prior written
notice to Agent. Before any conversion of the Revolver is effective, the
following conditions (collectively, the "Conversion Conditions") must be
satisfied:
(a) REPRESENTATIONS AND WARRANTIES. All representations,
warranties and certifications of Borrower, the REIT and their respective
Subsidiaries in the Loan Documents or delivered pursuant thereto shall be true
and correct on and as of the Conversion Date, before and after giving effect to
the conversion, as though made on such date;
(b) NO EXISTING DEFAULT. No Default or Event of Default shall
have occurred and be continuing as of the date such notice is given or as of the
Conversion Date or would result from such conversion;
(c) OUTSTANDING AMOUNT. The Outstanding Amount of the Term Loan
upon the Conversion Date shall not exceed the Total Available Commitment and the
only Letters of Credit outstanding shall be Outside Period Letters of Credit
with an expiry date not later than one year from the Revolver Maturity Date;
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(d) NO MATERIAL ADVERSE EFFECT. No act, omission, change,
occurrence or event which has a Material Adverse Effect shall have occurred
since the Closing Date;
(e) CERTIFICATE. Agent shall have received and approved the
Revolver to Term Certificate.
(f) EVIDENCE REGARDING TOTAL AVAILABLE COMMITMENT. Borrower
shall have delivered to the Agent, and the Agent and the Requisite Lenders shall
have approved such rent rolls, operating statements and other financial
materials relating to the Unencumbered Asset Pool and Unencumbered Management
Entity Value as may be necessary to determine the Total Available Commitment;
and
(g) CONVERSION FEE. Borrower shall have paid, on or prior to
the Conversion Date, to the Agent for the ratable benefit of the Lenders then
party hereto the conversion fee set forth in Section 2.10(d) above.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to the Agent and each Lender that:
5.1 EXISTENCE AND POWER. Borrower is a Delaware limited partnership,
the REIT is a Maryland corporation, and each of Borrower, the REIT and each
Management Entity and Subsidiary:
(a) ORGANIZATION. Is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization;
(b) POWER AND AUTHORITY. Has the power and authority and all
governmental licenses, authorizations, consents and approvals to own its
Properties, to carry on its business and to execute, deliver, and perform its
obligations under, the Loan Documents to which it is a party;
(c) DUE QUALIFICATION. Is duly qualified as a foreign
corporation, partnership, trust or other organization, and licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of its Properties or the conduct of its business requires such
qualification, except, with respect to Persons that are not Designated Entities,
where a failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect; and
(d) COMPLIANCE WITH LEGAL REQUIREMENTS. Is in substantial
compliance with all material Requirements of Law applicable to it.
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5.2 AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by Borrower, the REIT and any of their Subsidiaries of this
Agreement, and any other Loan Document to which such Person is party, have been
duly authorized by all necessary partnership, corporate or other organizational
action, and do not and will not:
(a) ORGANIZATION DOCUMENTS. Contravene the terms of any of such
Person's Organizational Documents;
(b) CONTRACTUAL OBLIGATIONS. Conflict with, or result in any
breach or contravention of, or the creation of any Lien (other than pursuant to
Section 2.16(d)(iii)) under, any document evidencing any Contractual Obligation
to which such Person is a party or any order, injunction, writ or decree of any
Governmental Authority to which such Person or its Properties are subject; or
(c) REQUIREMENTS OF LAW. Violate any material Requirement of
Law applicable to it.
5.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, Borrower, the
REIT, or any of their Subsidiaries of this Agreement or any other Loan Document.
5.4 BINDING EFFECT. This Agreement and each other Loan Document to
which Borrower, the REIT, or any of their Subsidiaries is a party constitute the
legal, valid and binding obligations of such Person, enforceable against such
Person in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles relating
to enforceability.
5.5 LITIGATION. Except as disclosed in SCHEDULE 5.5, there are no
actions, suits, proceedings, claims or disputes pending, or to the Knowledge of
Borrower, threatened or contemplated, at law, in equity, in arbitration or
before any Governmental Authority, against Borrower, the REIT, any Management
Entity, any of their Subsidiaries or any of their respective Properties, which
(a) purport to affect or pertain to this Agreement, or any other Loan Document,
or any of the transactions contemplated hereby or thereby, or (b) if determined
adversely to any such Person, would reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order or any other
order of any nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery and performance of this
Agreement or any other Loan Document, or directing that the transactions
provided for herein or therein not be consummated as herein or therein provided.
5.6 TITLE TO PROPERTIES. Borrower, the REIT and each of their
Subsidiaries have good record and marketable title in fee simple to or a valid
leasehold interest in all Unencumbered Asset Pool Properties, subject to no
Liens. Borrower, the REIT and their
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Subsidiaries have good record and marketable title to, or a valid leasehold
interest in, all of their other Properties and all other real property necessary
or used in the ordinary conduct of their business, taken as a whole, subject to
no Liens, other than Permitted Liens, except for such defects in title as could
not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect.
5.7 SUBSIDIARIES; INTERESTS IN OTHER ENTITIES; CHANGES IN
ORGANIZATIONAL STRUCTURE. Neither Borrower, nor the REIT, nor any of their
respective Subsidiaries has any interest in any corporation, partnership or
other entity, except as disclosed in the Organizational Chart and except for
interests acquired after the date of this Agreement in compliance with Sections
7.6, 7.7 and 7.8 hereof.
5.8 FINANCIAL CONDITION. All financial statements of the REIT
delivered by Borrower or the REIT hereunder: (a) were prepared in accordance
with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (b) are complete, accurate and fairly
present the financial condition of the REIT as of the dates thereof and results
of operations for the periods covered thereby. All Form 10-K filings and Form
10-Q filings delivered by Borrower or the REIT show all material indebtedness
and other liabilities, direct or contingent, of Borrower and its Subsidiaries,
including liabilities for taxes, material commitments and Contingent Obligations
which are required to be disclosed therein under the SEC rules and regulations.
Since December 31, 1996, there has been no act, omission, change or event which
has had a Material Adverse Effect.
5.9 TAXES. Borrower and its Subsidiaries have filed all Federal and
other material tax returns and reports required to be filed. Except as
disclosed in the SEC Report, (i) all tax returns filed by Borrower and its
Subsidiaries are complete and correct in all material respects; (ii) Borrower
and its Subsidiaries have paid all Federal and other material taxes,
assessments, fees and other governmental charges for which they are liable and
that are due and payable and have fully satisfied any taxes, assessments, fees,
and other governmental charges levied or imposed upon them or their Properties,
income or assets or otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP and no Notice of Lien has
been filed or recorded; (iii) there is no proposed tax assessment against
Borrower or any of its Subsidiaries which would, if the assessment were made,
have a Material Adverse Effect; and (iv) Borrower and its Subsidiaries have no
primary, secondary or other liability for taxes of any kind arising with respect
to any individual, trust, corporation, partnership or other entity as to which
Borrower or any of its Subsidiaries is directly or indirectly liable for taxes
of any kind incurred by such individual or entity either as a transferee, or
pursuant to Treasury Regulations section 1.1502-6, or pursuant to any other
Requirement of Law. Neither Borrower nor any of its Affiliates is (nor has it
ever been) a party to any tax sharing agreement other than as disclosed on
SCHEDULE 5.9.
5.10 ERISA COMPLIANCE.
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(a) SCHEDULE 5.10 lists all Plans and separately identifies
Plans intended to be Qualified Plans and Multiemployer Plans. All written
descriptions thereof provided to the Agent and the Lenders are true and complete
in all material respects.
(b) Each Qualified Plan, and to the best knowledge of Borrower
each Multiemployer Plan, is in compliance in all material respects with the
applicable provisions of ERISA, the Code and other Federal or state law,
including all requirements under the Code or ERISA for filing reports (which are
true and correct in all material respects as of the date filed), and benefits
have been paid in accordance with the provisions of the Plan.
(c) Each Qualified Plan and, and to the best knowledge of
Borrower, Multiemployer Plan has been determined by the IRS to qualify under
Section 401 of the Code, and the trusts created thereunder have been determined
to be exempt from tax under the provisions of Section 501 of the Code, and to
the best knowledge of Borrower nothing has occurred which would cause the loss
of such qualification or tax-exempt status.
(d) Except as disclosed in SCHEDULE 5.10, neither Borrower nor
any ERISA Affiliate has any outstanding liability under Title IV of ERISA with
respect to any Qualified Plan maintained or sponsored by Borrower or any ERISA
Affiliate, nor to the best knowledge of Borrower, with respect to any
Multiemployer Plan to which Borrower or any ERISA Affiliate contributes or is
obligated to contribute.
(e) Except as disclosed in SCHEDULE 5.10, no Qualified Plan
subject to Title IV of ERISA, and to the best knowledge of Borrower, no
Multiemployer Plan has any Unfunded Pension Liability.
(f) Except as disclosed in SCHEDULE 5.10, no member of the
Controlled Group has ever represented, promised or contracted (whether in oral
or written form) to any current or former employee (either individually or to
employees as a group) that such current or former employee(s) would be provided,
at any cost to any member of the Controlled Group, with life insurance or
employee welfare plan benefits (within the meaning of section 3(1) of ERISA)
following retirement or termination of employment. To the extent that any
member of the Controlled Group has made any such representation, promise or
contract, such member has expressly reserved the right to amend or terminate
such life insurance or employee welfare plan benefits with respect to claims not
yet incurred.
(g) Members of the Controlled Group have complied in all
material respects with the notice and continuation coverage requirements of
Section 4980B of the Code.
(h) Except as disclosed in SCHEDULE 5.10, no ERISA Event has
occurred or is reasonably expected to occur with respect to any Qualified Plan,
or, to the best knowledge of Borrower, any Multiemployer Plan.
(i) There are no pending or, to the Knowledge of Borrower,
threatened claims, actions or lawsuits, other than routine claims for benefits
in the usual and ordinary
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course, asserted or instituted against (i) any Plan maintained or sponsored by
Borrower or its assets, (ii) any member of the Controlled Group with respect to
any Qualified Plan, or (iii) any fiduciary with respect to any Plan for which
Borrower may be directly or indirectly liable, through indemnification
obligations or otherwise.
(j) Except as disclosed in SCHEDULE 5.10, neither Borrower nor
any ERISA Affiliate has incurred nor reasonably expects to incur (i) any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan or (ii) any liability under
Title IV of ERISA (other than premiums due and not delinquent under Section 4007
of ERISA) with respect to a Plan.
(k) Except as disclosed in SCHEDULE 5.10, neither Borrower nor
any ERISA Affiliate has transferred any Unfunded Pension Liability to a Person
other than Borrower or an ERISA Affiliate or otherwise engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
(l) No member of the Controlled Group has engaged, directly or
indirectly, in a non-exempt prohibited transaction (as defined in Section 4975
of the Code or Section 406 of ERISA) in connection with any Plan which could
reasonably be expected to have a Material Adverse Effect.
5.11 ENVIRONMENTAL MATTERS.
(a) ENVIRONMENTAL LAWS. Except as disclosed in SCHEDULE 5.11 or
in the SEC Report, the operations and Properties of Borrower, the REIT, the
Management Entities and their Subsidiaries comply in all respects with all
Environmental Laws, except such non-compliance affecting (i) any Property in the
Unencumbered Asset Pool as would not (if enforced in accordance with
Environmental Laws) result in liability in excess of 10% of the value of such
Property or (ii) all other Properties as would not result in liability which
could reasonably be expected to result in a Material Adverse Effect.
(b) ENVIRONMENTAL PERMITS. Except as described in SCHEDULE 5.11
or in the SEC Report, Borrower, the REIT, the Management Entities and their
Subsidiaries have obtained and maintained all material licenses, permits,
authorizations and registrations required under any Environmental Law
("Environmental Permits"). All such Environmental Permits are in good standing,
and each such Person is in compliance with all terms and conditions thereof,
except, with respect to Persons that are not Designated Entities, where the
failure to be in compliance could reasonably be expected to have a Material
Adverse Effect.
(c) ORDERS. Except as specifically disclosed in SCHEDULE 5.11
or in the SEC Report, there are no outstanding written orders from or agreements
with any Governmental Authority nor any judicial or docketed administrative
proceedings respecting any Environmental Law, Environmental Claim or Hazardous
Material to which Borrower, the REIT, any Management Entity, any of their
Subsidiaries, or any of such Person's Properties or operations, is
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subject with respect to any Unencumbered Asset Pool Property, or with respect to
any other Property that could reasonably be expected to have a Material Adverse
Effect.
(d) HAZARDOUS MATERIALS. Except as disclosed in SCHEDULE 5.11
or in the SEC Report, there are no Hazardous Materials or other conditions or
circumstances existing with respect to any Property, or arising from operations
prior to the Closing Date, that would reasonably be expected to give rise to
Environmental Claims for any such condition, circumstance or Property with
respect to any Unencumbered Asset Pool Property, or with respect to any other
Property, that could reasonably be expected to have a Material Adverse Effect.
In addition, (i) there are not located on the Properties underground storage
tanks (x) that are not properly registered or permitted under applicable
Environmental Laws, or (y) that are leaking or emitting Hazardous Materials
whether on-or off-site, and (ii) Borrower, the REIT, the Management Entities and
their Subsidiaries have notified all of their employees of the existence, if
any, of any health hazard arising from the conditions of their employment to the
extent required under any Environmental Laws and have met all notification
requirements under Title III of CERCLA and all other Environmental Laws, in each
case with respect to any Unencumbered Asset Pool Property, or with respect to
any other Property that could reasonably be expected to have a Material Adverse
Effect.
5.12 REGULATED ENTITIES. None of Borrower, the REIT, any Management
Entity, or any of their Subsidiaries is (a) an "investment company" within the
meaning of the Investment Company Act of 1940; or (b) subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code, or any other Federal
or state statute or regulation limiting its ability to incur Indebtedness.
5.13 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans
are intended to be and shall be used solely for the purposes set forth in and
permitted by Sections 2.1(b) and Section 6.10, and are intended to be and shall
be used in compliance with Section 7.12.
5.14 REIT AND TAX STATUS; STOCK EXCHANGE LISTING. The REIT currently
has REIT Status and has maintained REIT Status on a continuous basis since its
formation. Borrower is not an association taxable as a corporation under the
Code. The shares of Common Stock of the REIT are listed on the NYSE.
5.15 INSURANCE. Borrower, the REIT, the Management Entities, their
Subsidiaries and the Properties are insured with financially sound and reputable
insurance companies, in such amounts, with such deductibles and covering such
risks as are customarily carried by companies engaged in similar businesses and
owning similar Properties in localities where Borrower and the Management
Entities operate.
5.16 NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of any Obligations by Borrower. Neither Borrower, nor
the REIT, nor any Management Entity, nor any of their Subsidiaries is in default
under or with respect to any
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Contractual Obligation in any respect which, individually or together with all
such other defaults, would reasonably be expected to have a Material Adverse
Effect.
5.17 FULL DISCLOSURE. None of the representations or warranties made
by Borrower, the REIT, the Management Entity or any Subsidiary in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in each exhibit, report, statement or
certificate furnished by or on behalf of any such Person in connection with the
Loan Documents, contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading. There is no fact, to the Knowledge of Borrower, which materially
and adversely affects the business, operations, properties, assets or condition
(financial or otherwise) of Borrower, the REIT, the Management Entities, and the
Subsidiaries, taken as a whole, that has not been disclosed herein, in the SEC
Reports, or in other documents, certificates and statements furnished to the
Agent and each Lender hereunder or pursuant hereto. The copies of all documents
delivered to the Agent and/or the Lenders from time to time in connection with
this Agreement are and shall be true and complete copies of the originals
thereof and have not been or shall not be amended except as disclosed to the
Agent and/or the Lenders, as applicable.
5.18 NOT A "FOREIGN PERSON." Neither Borrower nor any Wholly-Owned
Subsidiary which owns a Property in the Unencumbered Asset Pool is a "foreign
person" within the meaning of Section 1445(f)(3) of the Code.
5.19 DEFECTS. Except as disclosed to and approved in writing by the
Requisite Lenders, to the Knowledge of Borrower, there exist no material defects
that would make any Property in the Unencumbered Asset Pool unsuitable for the
present or contemplated use thereof. Except as disclosed to and approved in
writing by the Requisite Lenders, to the Knowledge of Borrower, there are no
abnormal hazards, including but not limited to earth movement or slippage,
affecting any Property in the Unencumbered Asset Pool.
5.20 PROPERTY DOCUMENTS. Prior to including any Property in the
Unencumbered Asset Pool, Borrower has delivered to the Agent, copies of all
easement agreements, reciprocal easement agreements, management agreements,
service contracts, and other agreements, instruments and documents and all
amendments thereof (whether or not recorded) which affect in any material
respect such Property (except apartment leases).
5.21 CONDEMNATION. No condemnation proceeding involving any Property
in the Unencumbered Asset Pool or any portion thereof or parking facility used
in connection therewith has been commenced or, to the Knowledge of Borrower, is
contemplated by any Governmental Authority, nor has any portion of any Property
in the Unencumbered Asset Pool or any parking facility used in connection
therewith been damaged due to fire or other casualty.
5.22 VIOLATION OF LAWS; PERMITS. None of the Properties in the
Unencumbered Asset Pool are being operated in violation of (a) any Requirements
of Law or (b) any building permits, restrictions of record, or any agreement
affecting any such property or part thereof, or (c)
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any judgment, decree or order applicable to such property. To the Knowledge of
Borrower, all governmental permits (including, without limitation, building
permits and certificates of occupancy) necessary under applicable Requirements
of Law to lawfully construct, own, lease, occupy, use and operate each Property
in the Unencumbered Asset Pool and the improvements thereon, including, but not
limited to, all applicable zoning laws, ordinances and regulations, have been
obtained.
5.23 UTILITIES. Each Property in the Unencumbered Asset Pool has
adequate water, gas, telephone, electrical supply, storm and sanitary sewerage
facilities and means of access to and from public streets or highways.
5.24 LEASES. Except for apartment leases and other Permitted
Exceptions, there are no leases affecting any Property in the Unencumbered Asset
Pool. No rent has been collected more than one month in advance under any such
apartment lease for a Property in the Unencumbered Asset Pool other than in the
Ordinary Course of Business. No such lease or any interest therein is subject
to any present assignment or pledge. All rent due to date under each such lease
has been collected in the Ordinary Course of Business and no concession has been
granted to any lessee in the form of a waiver, release, reduction, discount or
other alteration of rent due or to become due, other than in the Ordinary Course
of Business. The interest of the lessee under each such lease is as lessee
only, with no options to purchase or rights of first refusal.
5.25 YEAR 2000 COMPLIANCE. Borrower has conducted a comprehensive
review and assessment of its computers systems and applications and made inquiry
of Borrower's key suppliers and vendors with respect to the so-called "year 2000
problem" (the risk that computer applications may not be able to properly
perform date-sensitive functions after December 31, 1999) and, based on that
review and inquiry, Borrower does not believe that the "year 2000 problem" will
result in a material adverse change in the ability of Borrower and its
Subsidiaries to manage and operate their properties and pay and perform their
obligations hereunder.
5.26 NON-GUARANTOR SUBSIDIARIES. All of the Wholly-Owned Subsidiaries
of the REIT, other than those listed on Schedule 5.26 and their non-corporate
Subsidiaries (each a "Non-Guarantor Subsidiary," and collectively, the
"Non-Guarantor Subsidiaries"), are Guarantor Subsidiaries. The Non-Guarantor
Subsidiaries collectively have a net worth, calculated in accordance with GAAP
(which may be less than fair market value), that is less than $10,000,000. The
Borrower currently expects that the assets of the Non-Guarantor Subsidiaries
shall be transferred from the REIT to the Borrower as soon as practicable,
consistent with relevant legal requirements, with prudent business practices and
with Contractual Obligations, and that the Non-Guarantor Subsidiaries may be
dissolved and liquidated.
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ARTICLE VI.
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that, so long as any Lender shall have
any Commitment hereunder, or any Loan or other obligation shall remain unpaid or
unsatisfied, unless the Requisite Lenders waive compliance in writing:
6.1 FINANCIAL INFORMATION. Borrower shall deliver to the Agent and
to each Lender, in form and detail satisfactory to the Agent and the Lenders:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
later than ninety (90) days after the end of each fiscal year, a copy of the
audited consolidated balance sheet of the REIT as of the end of such year and
the related consolidated statements of operations, stockholders' equity (where
applicable) and cash flows for such fiscal year, setting forth in each case in
comparative form the figures for the previous year, including the REIT's SEC
Form 10-K for such period, and accompanied by the unqualified opinion of a
nationally-recognized independent public accounting firm stating that such
consolidated financial statements present fairly the financial position for the
periods indicated, in conformity with GAAP, and applied on a basis consistent
with prior years;
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, but
not later than forty-five (45) days after the end of each of the first three (3)
fiscal quarters of each year, a copy of the unaudited consolidated balance sheet
of the REIT as of the end of such quarter and the related consolidated
statements of operations, stockholders' equity (where applicable) and cash flows
for the period commencing on the first day and ending on the last day of such
quarter, including the REIT's SEC Form 10-Q for such period, and accompanied by
a certificate signed by at least two (2) Responsible Officers stating that such
financial statements are complete and correct and present fairly the financial
position for the periods indicated, in conformity with GAAP for interim
financial statements, and applied on a basis consistent with prior quarters;
(c) QUARTERLY OPERATING STATEMENTS FOR UNENCUMBERED ASSET POOL;
MANAGEMENT ENTITIES. As soon as available, but not later than forty-five (45)
days after the end of each calendar quarter, a quarterly operating statement for
each Property in the Unencumbered Asset Pool and for each Management Entity (in
a format and with such detail as the Agent as previously delivered to Agent by
Borrower); and
(d) BORROWER PLANS AND PROJECTIONS. Not less than ninety (90)
days after the beginning of each fiscal year, copies of (A) Borrower's business
plan for the current and the succeeding two (2) fiscal years, (B) Borrower's
annual budgets (including capital expenditure budgets) and projections for each
Property in the Unencumbered Asset Pool; and (C) Borrower's financial
projections for the current and the succeeding two (2) fiscal years, as prepared
by Borrower's Chief Financial Officer and in a format and with such detail as
the Agent may require.
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6.2 CERTIFICATES; OTHER INFORMATION. Borrower shall furnish to the
Agent with sufficient copies for each Lender:
(a) ACCOUNTING CERTIFICATES. Concurrently with the delivery of
the financial statements referred to in Section 6.1(a), a certificate of the
independent certified public accountants reporting on such financial statements
stating that, in making the examination necessary therefor, no knowledge was
obtained of any Default or Event of Default, except as specified in such
certificate;
(b) OFFICERS' CERTIFICATES. Concurrently with the delivery of
the financial statements referred to in Sections 6.1(a) and 6.1(b) above, a
Compliance Certificate (i) stating that, to the best of such officers'
knowledge, each of Borrower, the REIT and their respective Subsidiaries, during
such period, has observed or performed all of its covenants and other
agreements, and satisfied every condition contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that such
officers have no knowledge of any Default or Event of Default except as
specified in such certificate; (ii) showing in detail the calculations
supporting such statement for such period in respect of the covenants in Section
7.9 and 7.16; (iii) showing in detail the calculation of the Total Available
Commitments for such period on an asset-by-asset basis (including appropriate
detail with respect to Unencumbered Management Entity Value);
(c) PERIODIC REPORTS AND FILINGS; PRESS RELEASES. Promptly
after the same are sent or released, copies of all reports, proxy statements and
financial statements which the REIT sends to its shareholders and copies of all
press releases made by Borrower and the REIT, promptly after the same are filed,
copies of all financial statements and regular, periodical or special reports
which the REIT may make to, or file with, the SEC or any successor or similar
Governmental Authority and promptly after the same are received, copies of any
reports prepared by analysts for or with respect to Borrower or the REIT,
(d) ACCOUNTANTS' REPORTS. Promptly after the same are received,
copies of all reports which the independent certified public accountants of
Borrower or the REIT deliver to Borrower or the REIT; and
(e) OTHER INFORMATION. Promptly, such additional financial and
other information as the Agent may from time to time reasonably request.
(f) ORGANIZATIONAL CHART. Upon the request of Agent, any
subsequent revisions to the Organizational Chart.
6.3 NOTICES. Borrower shall promptly (and in no event later than ten
(10) days after Borrower has reason to know of the same) notify the Agent and
each Lender of:
(a) DEFAULT; EVENT OF DEFAULT. The occurrence of any Default or
Event of Default, and of the occurrence or existence of any event or
circumstance that is likely to become a Default or Event of Default. Each
notice under this Section 6.3(a) shall describe with
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particularity the clause or provision of this Agreement or other Loan Documents
that have been breached or violated.
(b) LITIGATION. The commencement of, or any material
development in, any litigation, arbitration or proceeding affecting Borrower,
the REIT, any Management Entity or any Subsidiary (i) in which the amount of
damages claimed is $2,000,000 or more, (ii) in which injunctive or similar
relief is sought and which, if adversely determined, would reasonably be
expected to have a Material Adverse Effect, (iii) in which the relief sought is
an injunction or other stay of the performance of any Loan Document or (iv)
required to be reported to the SEC pursuant to the Exchange Act;
(c) ENVIRONMENTAL MATTERS. (i) Any and all material
enforcement, cleanup, removal or other governmental or regulatory actions
instituted, completed or threatened against Borrower, the REIT, any Management
Entity or any of their Subsidiaries or any of their Properties pursuant to any
Environmental Laws, (ii) all other material Environmental Claims, and (iii) any
environmental or similar condition on any real property adjoining or in the
vicinity of the Properties of Borrower, the REIT, any Management Entity or any
of their Subsidiaries that could reasonably be anticipated to cause such
Properties (or any portion thereof) to be subject to any material restrictions
on ownership, occupancy, transferability or use under any Environmental Laws;
provided, however, that with respect to any Property which is not in the
Unencumbered Asset Pool, only to the extent any of the foregoing could
reasonably be expected to have a Material Adverse Effect.
(d) ERISA. The occurrence of any of the following ERISA events
affecting Borrower or any member of its Controlled Group, together with a copy
of any notice with respect to such event that may be required to be filed with
any Governmental Authority and any notice delivered by a Governmental Authority
to Borrower or any member of its Controlled Group with respect to such event:
(i) an ERISA Event where the aggregate liability is
likely to exceed $1,000,000;
(ii) the adoption of any new Plan that is subject to Title
IV of ERISA or Section 412 of the Code by any member of the Controlled Group;
(iii) the adoption of any amendment to a Plan that is
subject to Title IV of ERISA or Section 412 of the Code, if such amendment
results in a material increase in benefits or unfunded liabilities; or
(iv) the commencement of contributions by any member of
the Controlled Group to any Plan that is subject to Title IV of ERISA or Section
412 of the Code;
(e) MATERIAL ADVERSE EFFECTS. The occurrence of any act,
omission, change or event which has a Material Adverse Effect subsequent to the
date of the most recent
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audited financial statements of Borrower and the REIT delivered to the Agent
pursuant to Section 6.1(a);
(f) EXCLUDED PROPERTIES. The occurrence of any event or
circumstance that causes, or is likely to cause, any Qualified Property to be
excluded from the Unencumbered Asset Pool pursuant to Section 2.13(b) above;
(g) MATERIAL TRANSACTIONS OR OCCURRENCES. The consummation of
any material Investment or Disposition, of any material issuance of Stock of the
REIT (other than upon the tender of any Units for redemption or upon the
conversion of any shares of the REIT's Class B Common Stock into shares of the
REIT's Class A Common Stock) or Units, of any incurrence of material
Indebtedness or of any other material transaction entered into, by Borrower, the
REIT, any Management Entity or any of their Subsidiaries; and change in any
executive officer of the REIT;
(h) FAILURE TO QUALIFY AS A REIT. The failure of the REIT to
maintain REIT Status or of any existing Subsidiary of the REIT to maintain its
status as a qualified REIT subsidiary under the Code, if and to the extent
required by applicable law;
(i) ACCOUNTING CHANGES. Any material change in Borrower's or
the REIT's accounting policies or financial reporting practices;
(j) LEGAL COMPLIANCE. Any material notice received from any
Governmental Authority asserting that any Property in the Unencumbered Asset
Pool is not in compliance with any Requirements of Law; and
(k) CROSS-DEFAULT. Any notice received by Borrower, the REIT,
any Management Entity or any of their Subsidiaries of any default under any
Indebtedness or Guaranty Obligation described in Section 8.1(e). Each notice
pursuant to this section shall be accompanied by a written statement, signed by
at least two (2) Responsible Officers of Borrower or the REIT, setting forth
details of the occurrence referred to therein and the provisions of this
Agreement affected, and stating what action Borrower or the REIT proposes to
take with respect thereto.
6.4 PRESERVATION OF EXISTENCE, ETC. Borrower shall, and shall cause
the REIT, the Management Entities and each of their Subsidiaries to, (a)
preserve and maintain in full force and effect its partnership, corporate or
other organizational existence and good standing under the laws of its state or
jurisdiction of organization, and (b) preserve and maintain in full force and
effect all rights, privileges, qualifications, permits, licenses and franchises
necessary or desirable in the normal conduct of its business; provided, however,
with respect to any Person that is not a Designated Entity, then only to the
extent that the failure to do any of the foregoing could reasonably be expected
to have a Material Adverse Effect.
6.5 MAINTENANCE OF PROPERTY. Borrower shall maintain, and shall
cause the REIT, the Management Entities and each of their Subsidiaries to
maintain, and preserve all of
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their Properties, including Properties in the Unencumbered Asset Pool, in good
working order and condition in accordance with Borrower's past practices,
ordinary wear and tear excepted.
6.6 INSURANCE. Borrower shall maintain, and shall cause the REIT,
the Management Entities and each of their Subsidiaries to maintain, with
financially sound and reputable independent insurers, insurance with respect to
their Properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or a similar business, of such
types and in such amounts as are customarily carried under similar circumstances
by such other Persons; including liability insurance specifically insuring
Borrower and its Wholly Owned Subsidiaries from any tort, legal or other
liability resulting from their participation as general partners in partnerships
which own Property; workers' compensation insurance, public liability and
property and casualty insurance (which amount shall not be reduced in the
absence of 30 days' prior notice to the Agent). Upon the request of the Agent,
Borrower shall furnish such Agent, with sufficient copies for each Lender, at
reasonable intervals (but not more than the twice per calendar year) a
certificate signed by at least two (2) Responsible Officers of Borrower (and, if
requested by such Agent, any insurance broker of Borrower or the REIT) setting
forth the nature and extent of all insurance maintained by Borrower, the REIT,
the Management Entities and each of their Subsidiaries in accordance with this
Section 6.6 (and which, in the case of a certificate of a broker, was placed
through such broker).
6.7 PAYMENT OF OBLIGATIONS. Borrower shall, and shall cause the
REIT, the Management Entities and each of their Subsidiaries to, pay and
discharge as the same shall become due and payable and otherwise comply with,
all their respective obligations and liabilities, including (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
Properties, unless the same are being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by Borrower or such Person, (b) all lawful claims which, if unpaid, would by law
become a Lien upon its Properties, including Properties constituting the
Unencumbered Asset Pool, (c) all Indebtedness, as and when due and payable, but
subject to any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness, and (d) payment and/or performance of all
Contractual Obligations (including any payments of preferred stock dividends);
provided, however, with respect to any Person that is not a Designated Entity,
then only to the extent the failure to do any of the foregoing could reasonably
be expected to have a Material Adverse Effect.
6.8 COMPLIANCE WITH LAWS. Borrower shall comply, and shall cause the
REIT, the Management Entities and each of their Subsidiaries to comply, in all
material respects, with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business, including, without limitation, all
securities laws and regulations.
6.9 ENVIRONMENTAL LAWS. Borrower shall, and shall cause the REIT,
the Management Entities and each of their Subsidiaries to, conduct its
operations and keep and maintain its Properties in compliance in all material
respects with all Environmental Laws. Upon the written request of the Agent or
any Lender, Borrower shall submit, and cause the REIT, the
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Management Entities and each of their Subsidiaries to submit, to the Agent and
the Lenders, at Borrower's sole cost and expense, at reasonable intervals, a
report providing an update of the status of any environmental, health or safety
compliance, hazard or liability issue identified in any notice or report
required pursuant to Section 6.3(c) that could, individually or in the
aggregate, result in liability in excess of (a) $1,000,000 with respect to any
Property in the Unencumbered Asset Pool or (b) $10,000,000 with respect to any
other Properties.
6.10 USE OF PROCEEDS. Borrower shall use the proceeds of the
Revolving Loans solely in accordance with Section 2.1(b) above.
6.11 MAINTENANCE OF REIT STATUS; STOCK EXCHANGE LISTING. Borrower
shall cause the REIT at all times to maintain its REIT Status and to maintain
its common Stock listing on the NYSE, the American Stock Exchange, or Nasdaq
Stock Exchange.
6.12 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. Borrower shall
maintain, and shall cause the REIT, the Management Entities and each of their
Subsidiaries to maintain, proper books of record and account, in which full,
true and correct entries in conformity with GAAP consistently applied shall be
made of all financial transactions and matters involving the Properties and
business of Borrower, the REIT, the Management Entities and each of their
Subsidiaries. Borrower shall permit, and shall cause the REIT, the Management
Entities and each of their Subsidiaries to permit, representatives of the Agent
or any Lender to visit and inspect any of their respective Properties, to
conduct audits of the Unencumbered Asset Pool, to examine their respective
corporate, financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective directors, officers, and independent public accountants, all at
the expense of Borrower and at any time during normal business hours and as
often as may be reasonably desired, upon no less than forty-eight (48) hours
advance notice to Borrower; PROVIDED, HOWEVER, when an Event of Default exists,
the Agent or any Lender may visit and inspect at the expense of Borrower such
Properties at any time during business hours and without advance notice.
6.13 FURTHER ASSURANCES.
(a) FULL DISCLOSURE. Borrower will ensure that all other
written information, exhibits and reports furnished to any Agent or Lender by
Borrower, the REIT, any Management Entity or any of their Subsidiaries do not
contain any untrue statement of a material fact and do not and will not omit to
state any material fact or any fact necessary to make the statements contained
therein not misleading in light of the circumstances in which made, and will
promptly disclose to the Agent and the Lenders and correct any defect or error
that may be discovered therein or in any Loan Document or in the execution,
acknowledgment or recordation thereof.
(b) FURTHER ACTS. Promptly upon request by the Agent or the
Requisite Lenders, Borrower shall (and shall cause the REIT, each Management
Entity and each of their Subsidiaries to) do, execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register, any and all such
further acts, deeds, conveyances, security agreements, mortgages,
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deeds of trust, assignments, estoppel certificates, financing statements and
continuations thereof, termination statements, notices of assignment, transfers,
certificates, assurances and other instruments that the Agent or such Lenders,
as the case may be, may reasonably require from time to time in order (i) to
carry out more effectively the purposes of this Agreement or any other Loan
Document, and (ii) to better assure, convey, grant, assign, transfer, preserve,
protect and confirm to the Agent and Lenders the rights granted or now or
hereafter intended to be granted under any Loan Document, or any other document
executed in connection herewith or therewith.
(c) ADDITIONAL GUARANTIES. Promptly upon the formation by the
REIT of any Wholly-Owned Subsidiary of the REIT which is a qualified REIT
subsidiary under the Code, the REIT shall cause such Wholly-Owned Subsidiary to
deliver to the Agent for the ratable benefit of the Lenders a guaranty of the
Obligations in the form attached hereto as EXHIBIT F1; provided, however, solely
with respect to any such Wholly-Owned Subsidiary that does not own a Property in
the Unencumbered Asset Pool, such guaranty will not be required only if such
Wholly-Owned Subsidiary is prohibited from issuing such guaranty under its
then-current financing arrangements. Prior to or concurrently with any EBITDA
of a Management Entity being included in Unencumbered Management Entity Value,
Borrower shall cause each such Management Entity to deliver to the Agent for the
ratable benefit of the Lenders a guaranty of the Obligations in the form
attached hereto as EXHIBIT F2.
6.14 COMMUNICATION WITH ACCOUNTANTS. While any Event of Default is
continuing, Borrower authorizes the Agent and any Lender to communicate directly
with Borrower's independent accountants and authorizes such accountants to
disclose to such Persons any and all financial statements and other information
of any kind, including the substance of any oral information or conversation
that such accountants may have with respect to the business, financial condition
and other affairs of Borrower.
6.15 SOLVENCY. Borrower shall at all times be, and shall cause the
REIT, each Management Entity and each of their Subsidiaries to be, Solvent.
6.16 COVENANTS RELATING TO UNENCUMBERED ASSET POOL PROPERTIES.
Borrower hereby agrees as follows:
(a) MAINTENANCE. Borrower shall maintain each Unencumbered
Asset Pool Property in good order and condition in accordance with Borrower's
past practices.
(b) LEASES. Borrower shall not enter into any lease of any
Unencumbered Asset Pool Property other than apartment leases or other ordinary
course leases consistent with past practice and having terms of less than one (1
) year on market terms. Borrower shall deliver to the Agent a copy of the
standard lease forms utilized for the Unencumbered Asset Pool Properties from
time to time.
(c) MATERIAL AGREEMENTS. Borrower shall obtain the prior
written approval of the Agent and the Requisite Lenders prior to entering into
any reciprocal easement or
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similar agreement, ground lease or any other material agreement affecting any
Unencumbered Asset Pool Property.
(d) MANAGEMENT CONTRACTS. Borrower shall obtain and shall cause
its Affiliates to obtain the prior written approval of the Agent and the
Requisite Lenders prior to entering into any property management agreement with
a Person other than Borrower, one of the Management Entities, or any of their
Subsidiaries, or replacing the property manager for any Unencumbered Asset Pool
Property with a Person other than Borrower, one of the Management Entities, or
any of their Subsidiaries. Borrower shall cause all property management
contracts affecting Unencumbered Asset Pool Properties to permit termination of
the manager (whether such manager is one of the Management Entities or
otherwise) by the owner within thirty days' written notice, without penalty, and
Borrower shall not permit the management fee payable under any such property
management agreement to exceed four percent (4%) of gross receipts from such
property per fiscal year.
(e) CONSTRUCTION. Borrower shall obtain the prior written
approval of the Agent and the Requisite Lenders prior to entering into any major
construction or renovation affecting a Unencumbered Asset Pool Property and
shall discharge all mechanic's liens resulting from any such construction or
renovation.
(f) LIENS. Borrower shall keep each Unencumbered Asset Pool
Property at all times free and clear of all Liens (unless such Liens are bonded
and thereby released of record in a manner satisfactory to the Agent), except
for Permitted Exceptions or other matters approved by the Agent and the
Requisite Lenders.
ARTICLE VII.
NEGATIVE COVENANTS
Borrower hereby covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Loan or other Obligation shall remain
unpaid or unsatisfied, unless the Requisite Lenders waive compliance in writing:
7.1 LIENS. Neither Borrower, nor the REIT, nor any Management
Entity, nor any of their Subsidiaries shall, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its Property, whether now owned or hereafter acquired, other than the
following ("Permitted Liens"):
(a) EXISTING LIENS. Liens on the Borrower's Properties or its
Subsidiaries securing Indebtedness described in Schedule 7.2 or any renewal,
extension or refinancing thereof permitted under Section 7.2(a) below;
(b) CERTAIN LIENS. Liens created under any Loan Documents;
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(c) TAX LIENS. Liens for taxes, fees, assessments or other
governmental charges which are not delinquent or remain payable without penalty,
or to the extent that non-payment thereof is permitted by Section 6.7, provided
that no Notice of Lien has been filed or recorded;
(d) BANKERS LIENS. Liens arising solely by virtue of any
statutory or common-law provision relating to banker's liens, rights of setoff
or similar rights and remedies as to deposit accounts or other funds maintained
with a creditor depository institution; PROVIDED that (i) such deposit account
is not a dedicated cash collateral account and is not subject to restrictions
against access by the depositor in excess of those set forth by regulations
promulgated by the Federal Reserve Board, and (ii) such deposit account is not
intended by the depositor to provide collateral to the depository institution;
(e) OTHER STATUTORY LIENS. Carriers', warehousemen's,
mechanics', landlords', materialmen's, repairmen's or other similar Liens
arising in the Ordinary Course of Business, against Properties other than the
Unencumbered Asset Pool Properties, which are not delinquent or remain payable
without penalty or which are being contested in good faith and by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the Property subject thereto;
(f) EMPLOYMENT-RELATED LIENS. Liens (other than any Lien
imposed by ERISA) consisting of pledges or deposits required in the Ordinary
Course of Business in connection with workers' compensation, unemployment
insurance and other social security legislation;
(g) JUDGMENT LIENS. Liens against Properties other than the
Unencumbered Asset Pool Properties consisting of judgment or judicial attachment
liens, provided that the enforcement of such Liens is effectively stayed or
bonded;
(h) EASEMENTS, ETC. Liens against Properties other than the
Unencumbered Asset Pool Properties consisting of easements, rights-of-way,
restrictions and other similar title exceptions incurred in the Ordinary Course
of Business which do not in any case materially detract from the value of the
Property subject thereto or interfere with the ordinary conduct of the
businesses of Borrower, the REIT and the Subsidiaries; and
(i) LIENS SECURING FINANCING. Liens securing Indebtedness
permitted under Section 7.2(f) or (g) on real and personal properties not a part
of the Unencumbered Asset Pool and not constituting ownership interests in
Borrower or any of the Subsidiaries of Borrower or the REIT.
Except with respect to specific property encumbered to secure payment of
particular Permitted Indebtedness, neither Borrower nor any of its Subsidiaries
shall enter into any agreement prohibiting the creation or assumption of any
Lien upon any of its Properties included in the Unencumbered Asset Pool or any
stock or assets, whether now owned or hereafter acquired. Except as provided in
this Agreement or with respect to particular Permitted
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Indebtedness and acquisition agreements,Borrower will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (A) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Borrower or any
other Subsidiary of Borrower, (B) repay or prepay any Indebtedness owed by such
Subsidiary to Borrower or any other Subsidiary of Borrower, (C) make loans or
advances to Borrower or any other Subsidiary of Borrower, or (D) transfer any of
its property or assets to Borrower or any other Subsidiary of Borrower.
7.2 INDEBTEDNESS. Neither Borrower, nor the REIT, nor any Management
Entity, nor any of their Subsidiaries shall create, incur, assume, suffer to
exist, or otherwise become or remain directly or indirectly liable with respect
to, any Indebtedness whether Unsecured Debt or otherwise, except the following
("Permitted Indebtedness"):
(a) EXISTING OR CONTEMPLATED INDEBTEDNESS. Indebtedness of
Borrower and its Subsidiaries outstanding on the Closing Date and described in
SCHEDULE 7.2, including the Indebtedness evidenced or to be evidenced by the
FNMA/Washington Mortgage Facility Documents and the NHP/Lehman Financing or any
renewal, refinancing or extension thereof; provided, however, that any such
renewal, refinancing or extension (i) shall not increase the principal balance
thereof or otherwise materially modify the terms thereof, (ii) shall not cause
the financial or other material covenants, when taken as a whole, to be
significantly more restrictive than (A) those existing in the applicable credit
documentation prior to such renewal, refinancing or extension or (B) the
comparable covenants in this Agreement, and (iii) other than with respect to
Indebtedness evidenced or to be evidenced by the FNMA/Washington Mortgage
Facility Documents, shall have a maturity or weighted-average life not prior to
the maturity of Borrower's obligations under this Agreement;
(b) CERTAIN INDEBTEDNESS. Indebtedness incurred pursuant to
this Agreement;
(c) ACCOUNTS PAYABLE. Accounts payable to trade creditors for
goods and services and current operating liabilities (not the result of the
borrowing of money) incurred in the Ordinary Course of Business in accordance
with customary terms and paid within the specified time, unless contested in
good faith by appropriate proceedings and reserved for in accordance with GAAP;
(d) CONTINGENT OBLIGATIONS. Indebtedness consisting of
Contingent Obligations permitted by Section 7.3;
(e) INTRA-COMPANY DEBT. Intra-Company Debt, provided that, if
the Borrower, the REIT, or a Guarantor Subsidiary is the obligor thereunder, the
obligor thereof shall have subordinated the repayment of such Intra-Company Debt
to the repayment of the Obligations pursuant to a subordination agreement in
form and substance approved by the Requisite Lenders;
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(f) ADDITIONAL INDEBTEDNESS. Indebtedness of Borrower or a
Subsidiary of Borrower that does not own any Unencumbered Asset Pool Property
for borrowed money owed to a non-Affiliate of Borrower which is not Unsecured
Debt, is not otherwise Recourse to any Borrower or any Subsidiary of Borrower
and is otherwise on such terms and in such amount that, upon incurring such
Indebtedness, Borrower will be in compliance with the terms of Section 7.16
below; and
(g) REIT INDEBTEDNESS. Indebtedness of the REIT which is on
such terms and in such amount that, upon the incurrence of such Indebtedness,
Borrower will be in compliance with the terms of Section 7.16 below.
(h) OTHER UNSECURED INDEBTEDNESS. Unsecured Debt of Borrower,
the REIT and any of their Subsidiaries (other than the Management Entities) in
an aggregate principal amount which does not exceed the Maximum Unsecured
Indebtedness.
Nothing contained in this Section 7.2 shall be deemed to excuse any lack of
compliance by Borrower, the REIT, or any Subsidiary with the terms of Section
7.16 below.
7.3 CONTINGENT OBLIGATIONS. Neither Borrower, nor the REIT, nor any
of their Subsidiaries shall create, incur, assume or suffer to exist any
Contingent Obligations except:
(a) ORDINARY COURSE ENDORSEMENTS. Endorsements for collection
or deposit in the Ordinary Course of Business;
(b) RATE CONTRACTS. Unsecured Rate Contracts entered into by
Borrower with respect to variable rate Indebtedness permitted hereunder;
(c) LETTER OF CREDIT REIMBURSEMENT OBLIGATIONS. Reimbursement
obligations of Borrower or of Subsidiaries that do not own Unencumbered Asset
Pool Properties under letters of credit provided that such obligations are on
such terms and in such amounts that, upon incurring such obligations and
assuming that all conditions for drawing on such letters of credit have been
complied with, Borrower will be in compliance with the terms of Section 7.16
below; and
(d) EXCEPTIONS TO NONRECOURSE GUARANTIES. Contingent
Obligations of the REIT, Borrower and their Subsidiaries consisting of
"exceptions to nonrecourse" guaranties of nonrecourse Indebtedness otherwise
permitted under Section 7.2 or of other Indebtedness permitted under Section
7.2.
7.4 LEASE OBLIGATIONS. Neither Borrower, nor the REIT, nor any of
their Subsidiaries shall create or suffer to exist any obligations for the
payment of rent for any Property under a lease or agreement to lease that is not
a Capital Lease, except for:
(a) EXISTING LEASES. Leases in existence on the Closing Date
(and any renewal, extension or refinancing thereof); or
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(b) ORDINARY COURSE LEASES. Leases entered into after the
Closing Date in the Ordinary Course of Business and at market rates and terms.
7.5 DISPOSITION OF PROPERTIES. Neither Borrower, nor the REIT, nor
any of their Subsidiaries shall, directly or indirectly:
(a) make any Disposition of any Unencumbered Asset Pool Property
or enter into any agreement to do so, provided, however, so long as no Default
or Event of Default is then continuing, Borrower may sell or refinance a
Property in the Unencumbered Asset Pool by paying to the Agent for distribution
to the Lenders an amount equal to the amount which would be required to be paid
to the Lenders so that the Outstanding Amount of the Loans immediately after
such sale or refinance would not exceed the Total Available Commitment
(calculated without including the Property so sold or refinanced);
(b) make any Disposition of its interest in any Management
Entity, or enter into any agreement to do so; or
(c) make any Disposition of any Unencumbered Asset Pool
Property, or enter into any agreement to do so, unless in the case of this
clause (c) such Disposition is at fair market value, and at the time of the
Disposition no Event of Default exists.
7.6 CONSOLIDATIONS AND MERGERS. Neither Borrower, nor the REIT, nor
any of their Subsidiaries shall merge or consolidate with or into, or convey,
transfer, lease or otherwise dispose of (whether in one transaction or in a
series of transactions) all or substantially all of its Properties (whether now
owned or hereafter acquired) to or in favor of, any Person, except as follows:
(a) Subsidiaries of Borrower or of the REIT may merge or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of any of their Properties (whether now owned or hereafter acquired) to or
in favor of, Borrower or another Subsidiary of Borrower or of the REIT;
(b) Subsidiaries of the REIT may merge, consolidate with or
into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of any of
their Properties (whether now owned or hereafter acquired) to or in favor of the
REIT; and
(c) Borrower, the REIT or any Subsidiary may merge, or
consolidate with another Person provided that no Default or Event of Default has
occurred and is continuing and each of the following conditions are satisfied:
(i) at the inception of the transaction, Borrower, the REIT or Subsidiary are
intended to be and will be the surviving Person after the consummation of the
contemplated transaction; (ii) to the best of Borrower's knowledge, prior to the
consummation of the transaction, the transaction will not cause Borrower to be
in breach of the representations and warranties of this Agreement and the other
Loan Documents; (iii) the transaction will not cause Borrower to be in breach of
the covenants of this Agreement and the
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other Loan Documents, including financial covenants after the consummation
thereof; and (iv) Borrower provides Agent with a pro-forma Compliance
Certificate which demonstrates that after the consummation of the proposed
transaction the Borrower will be in compliance with the financial covenants of
this Agreement.
Notwithstanding the foregoing, no Subsidiary shall merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its Properties (whether now owned or hereafter acquired) to or in favor
of another Subsidiary if such transaction would result in a violation of any
covenant in this Agreement.
7.7 LIQUIDATIONS; MATERIAL ORGANIZATION CHANGES; NEW SUBSIDIARIES.
(a) Neither Borrower, nor the REIT, nor any Designated Entity or
Guarantor Subsidiary, shall liquidate, wind-up or dissolve, or amend its
Organizational Documents in any respect which is, in the opinion of the
Requisite Lenders, materially adverse to the interests of the Lenders. Without
limiting the foregoing, under no circumstances (i) shall the Organizational
Documents of the REIT and Borrower be changed so as to eliminate the
transferability of Units of Borrower for common Stock in the REIT on a
one-to-one basis (subject to adjustment as provided in the Organizational
Documents of the Borrower) or (ii) shall the Organizational Documents of a
Qualified Management Entity be changed so as to eliminate or reduce any
obligation to pay preferred stock dividends, without the prior consent of the
Requisite Lenders.
(b) Neither the REIT nor any Subsidiary shall issue any
preferred Stock; provided however, the REIT or any Subsidiary may issue
preferred Stock provided that: (i) if such Stock has any mandatory redemption
feature or has a redemption feature which is exercisable at the option of the
holder thereof, then the face amount of such Stock shall be deemed Unsecured
Debt for all purposes of this Agreement; and (ii) any distributions with respect
thereto shall comply with the provisions of this Agreement (including, without
limitation, Section 7.9).
(c) No Subsidiary shall own or acquire an Unencumbered Asset
Pool Property unless such Subsidiary is a Wholly-Owned Subsidiary in which
Borrower owns at least a 98% interest (either directly or indirectly) and in
which the REIT owns not more than a 2% interest (either directly or indirectly
other than through its interest in Borrower and its Subsidiaries) and such
Subsidiary shall have delivered a guaranty of the Obligations to the Agent in
form and substance acceptable to the Agent.
(d) In no event shall Borrower cause or permit any change in the
organizational structure of Borrower, the REIT or any of their respective
Subsidiaries from that which is reflected in the Organizational Chart which is,
in the reasonable opinion of the Requisite Lenders, adverse to any Designated
Entity, without the prior written consent of the Lenders, except for mergers
permitted under Section 7.6, and changes in the equity structure of
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Subsidiaries and the formation or acquisition of Subsidiaries in accordance with
this Section 7.7 and Section 7.8.
7.8 INVESTMENTS. Neither Borrower, nor the REIT, nor any Management
Entity, nor any of their Subsidiaries shall directly or indirectly own or
acquire any assets or make any Investments (or incur any Contractual Obligation
or enter into any letter of intent to make any Investments) other than:
(i) cash and Cash Equivalents;
(ii) multi-family apartment projects in fee simple or
leasehold interests therein or partnership, joint venture interests or other
Investments (including capital contributions or partner loans) in Persons that
own multi-family apartment projects;
(iii) ownership interests in Management Entities, provided
in each case the same are engaged in managing multi-family apartment projects;
(iv) Indebtedness listed on SCHEDULE 7.2;
(v) other assets not described elsewhere in this
Section 7.8, including any Investments consisting of Intra-Company Debt not
otherwise permitted herein, provided that the aggregate Carrying Value of such
interests shall not at any time exceed fifteen percent (15%) of the Carrying
Value of the total assets owned by Borrower, the REIT, and their Subsidiaries.
7.9 RESTRICTED PAYMENTS AND DEMANDS.
(a) Neither Borrower nor the REIT shall declare or make, or
permit any of their respective Subsidiaries to declare or make, any distribution
of any Properties, including cash, rights, obligations, or partnership interests
or units, on account of any partnership interests, Units or Stock, or purchase,
redeem or otherwise acquire for value any of its partnership interests, Units or
Stock, now or hereafter outstanding to any Person other than Borrower, the REIT
or a Wholly-Owned Subsidiary (all of the foregoing, collectively,
"distributions"), except (a) for the exchange of common Stock of the REIT for
Units; (b) that if no Default or Event of Default exists under Section 8.1(a) or
under Section 8.1(c) as a result of a breach of Section 7.16, the REIT, Borrower
and all such Subsidiaries may make distributions during any twelve (12) month
period in an amount in the aggregate which does not exceed the greater of 80% of
Funds From Operations for such period or such amount as may be necessary to
maintain REIT Status.
(b) Under no circumstances shall the REIT or Borrower (i) permit
any Subsidiary to make a demand under any Intra-Company Debt which is payable
upon demand at any time after the Conversion Date, or (ii) permit any payment to
be made with respect to Intra-Company Debt while any Event of Default is
continuing.
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7.10 TRANSACTIONS WITH AFFILIATES. Neither Borrower, nor the REIT,
nor any Management Entity, nor any of their Subsidiaries shall enter into any
transaction with any Affiliate of Borrower or of any such Person (other than a
Wholly-Owned Subsidiary or a Management Entity), except (a) as expressly
permitted by this Agreement or (b) in the Ordinary Course of Business and
pursuant to the reasonable requirements of the business of Borrower or such
Person; in each case (a) and (b), upon fair and reasonable terms no less
favorable to such Person than would obtain in a comparable arm's-length
transaction with a Person not such an Affiliate.
7.11 SPECIAL COVENANTS RELATING TO THE REIT. The REIT shall not, nor
shall Borrower cause or permit the REIT to:
(a) Make any disposition of or encumber, pledge or hypothecate,
whether directly or indirectly, all or any portion of its interest in Borrower
or any Subsidiary which owns an Unencumbered Asset Pool Property at any time or
any rights to distributions or dividends therefrom other than to Borrower or a
Wholly-Owned Subsidiary;
(b) At any time and for any reason, fail to own, either directly
or through one or more Wholly-Owned Subsidiaries of the REIT, more than 50% of
the aggregate outstanding partnership interests in Borrower;
(c) Fail for any reason whatsoever, whether voluntarily or
involuntarily, either directly or through one or more Wholly-Owned Subsidiaries
of the REIT, to be the sole general partner of Borrower at any time;
(d) Use Net Issuance Proceeds for any purpose other than to make
capital contributions to GP Corp and LP Corp immediately upon the receipt
thereof by the REIT for immediate contribution thereof to Borrower;
(e) Cease to have its Common Stock listed on the NYSE, the
American Stock Exchange, or the Nasdaq Stock Exchange; or
(f) Cease to have REIT Status or fail to comply with the
requirements of the Code relating to qualified REIT subsidiaries in respect of
its ownership of any Subsidiary of the REIT to the extent required under the
Code and applicable law.
7.12 USE OF PROCEEDS. Borrower shall not use any portion of the Loan
proceeds, directly or indirectly, (a) to purchase or carry Margin Stock, (b) to
repay or otherwise refinance indebtedness of Borrower or others incurred to
purchase or carry Margin Stock, (c) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (d) for any purpose other than those
permitted by Section 6.10, or (e) to finance all or any portion of the costs of
acquiring any Person in a transaction which is considered "hostile" by Agent or
generally prevailing investment banking standards.
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7.13 TAXATION OF BORROWER. Borrower shall at all times be taxed as a
partnership under the Code and not as an association taxable as a corporation.
7.14 ERISA. Borrower shall not and shall not permit the REIT, or any
of their Subsidiaries to, (a) terminate any Plan subject to Title IV of ERISA so
as to result in any material (in the opinion of the Agent) liability to Borrower
or any ERISA Affiliate (i.e., $1,000,000 or more), (b) permit to exist any ERISA
Event or any other event or condition, which presents the risk of a material (in
the opinion of the Agent) liability to any member of the Controlled Group, (c)
make a complete or partial withdrawal (within the meaning of ERISA Section 4201
) from any Multiemployer Plan so as to result in any material (in the opinion of
the Agent) liability to Borrower or any ERISA Affiliate, (d) enter into any new
Plan or modify any existing Plan so as to increase its obligations thereunder
which could result in any material (in the opinion of the Agent) liability to
any member of the Controlled Group, or (e) permit the present value of all
nonforfeitable accrued benefits under any Plan (using the actuarial assumptions
utilized by the PBGC upon termination of a Plan) materially (in the opinion of
the Agent) to exceed the fair market value of Plan assets allocable to such
benefits, all determined as of the most recent valuation date for each such
Plan.
7.15 Intentionally Omitted.
7.16 FINANCIAL COVENANTS.
(a) Borrower shall not permit the Net Worth of the REIT and its
Subsidiaries on a consolidated basis to be less at any time than an amount equal
to (X) $746,000,000 plus (Y) 75% of the Net Issuance Proceeds of all issuances
of Stock or Units after the Closing Date.
(b) Borrower shall not permit the ratio of Consolidated Total
Indebtedness to Gross Asset Value to exceed 0.55-to-1.00 at any time.
(c) Borrower shall not permit the Consolidated
EBITDA-to-Interest Ratio computed for any fiscal quarter or year to be less than
2.25-to-1.00.
(d) Borrower shall not permit the Consolidated EBITDA-to-Fixed
Charges Ratio computed for any fiscal quarter or year to be less than
2.00-to-1.00.
(e) Borrower shall not permit the Unencumbered Asset Pool NOI to
Unsecured Interest Ratio computed for any fiscal quarter or year to be less than
1.75-to-1.00.
7.17 ACCOUNTING CHANGES. Neither Borrower nor the REIT shall make any
significant change in accounting treatment or reporting practices, except as
required by GAAP, or change its fiscal year.
7.18 TRANSFERS OF NON-OWNED INTERESTS IN THE MANAGEMENT ENTITIES. In
no event shall all or any portion of the interests in the Management Entities or
any rights therein that
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are not held directly or indirectly by Borrower be sold, transferred,
encumbered, hypothecated, voluntarily or involuntarily, without the prior
written consent of the Requisite Lenders, except for transfers by Executive
Officers resulting from the death or disability of any such Executive Officer or
occurring after such Executive Officer is no longer an employee of Borrower, the
REIT, or any of their Subsidiaries.
ARTICLE VIII.
EVENTS OF DEFAULT
8.1 EVENT OF DEFAULT. Any of the following shall constitute an
"Event of Default":
(a) NON-PAYMENT. Borrower, the REIT, or any Subsidiary shall
fail to pay, (i) when and as required to be paid herein, any amount of principal
of any Loan, or (ii) within five days after the same shall become due, any
amount of interest on any Loan or any fee or other amount payable hereunder or
pursuant to any other Loan Document; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty
by Borrower, the REIT, any Management Entity or any Subsidiary made or deemed
made herein, in any Loan Document, or in any certificate, document or financial
or other statement by Borrower, the REIT, any Management Entity or any
Subsidiary, or any Responsible Officer, furnished at any time under this
Agreement, or in or under any Loan Document, shall prove to have been incorrect
in any material respect on or as of the date made or deemed made; or
(c) SPECIFIC DEFAULTS. Borrower, the REIT, any of their
Subsidiaries or any Management Entity shall fail to perform or observe any term,
covenant or agreement contained in Section 6.6, Section 6.10, Section 6.11
and/or in Article VII; or
(d) OTHER DEFAULTS. Borrower, the REIT, any of their
Subsidiaries or any Management Entity shall fail to perform or observe any other
term or covenant contained in this Agreement or any Loan Document, and such
default shall continue uncured for a period of 20 days after the earlier of (i)
the date upon which a Responsible Officer knew or received written notice of
such failure or (ii) the date upon which written notice thereof is given to
Borrower by Agent or any Lender; or
(e) CROSS-DEFAULT.
(i) Borrower, the REIT, any of their Subsidiaries or any
Management Entity or shall fail, after any applicable cure period:
(A) to make any payment when due (and which failure is
continuing) in respect of any Indebtedness or Guaranty Obligation (1) which is
Recourse to the assets of Borrower or any Designated Entity, or (2) (X) which is
Recourse to the assets of any
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Person which is not a Designated Entity or (Y) which is not Recourse to the
assets of Borrower or its Subsidiaries and, in either case, which exceeds
$15,000,000 individually or in the aggregate (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) (other than a payment
with respect to Intra-Company Debt where the obligee has not commenced pursuing
its remedies); or
(B) to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Guaranty Obligation, if the
effect of such failure, event or condition is to cause, or to permit the holder
or holders of such Indebtedness or the beneficiary or beneficiaries of such
Indebtedness (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause, such Indebtedness to be declared to be
due and payable prior to its stated maturity, or such Guaranty Obligation to
become payable or cash collateral in respect thereof to be demanded; or
(C) to perform or observe any condition or covenant of
the Intra-Company Loan Subordination Agreement;
(D) to perform or observe any condition or covenant
under any Indebtedness which is Recourse to the assets of any Designated Entity
within any applicable cure or grace periods.
(It is being understood that, for purposes of clauses (A) and (B) above, no
failure by the REIT to pay or perform any obligation with respect to an
Intra-Company Loan shall be deemed a breach or default hereunder if such failure
to pay or perform is in compliance with the Intra-Company Loan Subordination
Agreement); or
(ii) an "Event of Default" as such term is defined in the
FNMA/Washington Mortgage Facility Documents occurs and is continuing; or
(f) BANKRUPTCY OR INSOLVENCY. Borrower, the REIT, any of their
Subsidiaries or any Management Entity shall (i) become insolvent, or generally
fail to pay, or admit in writing its inability to pay, its debts as they become
due, subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily cease to conduct its business in the ordinary
course; (iii) commence any Insolvency Proceeding with respect to itself; or (iv)
take any action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any Insolvency Proceeding
shall be commenced or filed against Borrower, the REIT, any of their
Subsidiaries, or any Management Entity or any writ, judgment, warrant of
attachment, execution or similar process, shall be issued or levied against a
substantial part of such Person's Properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within sixty (60) days after commencement, filing or levy; (ii) Borrower, the
REIT or any of their Subsidiaries shall admit the material allegations of a
petition against it in any Insolvency Proceeding, or an order for relief
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(or similar order under non-U.S. law) is ordered in any Insolvency Proceeding;
or (iii) Borrower, the REIT, any of their Subsidiaries or any Management Entity
shall acquiesce in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its Property or business;
or
(h) ERISA. (i) A member of the Controlled Group shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under a
Multiemployer Plan; (ii) Borrower or an ERISA Affiliate shall fail to satisfy
its contribution requirements under Section 412(c)(11) of the Code, whether or
not it has sought a waiver under Section 412(d) of the Code; (iii) in the case
of an ERISA Event involving the withdrawal from a Plan of Borrower or any ERISA
Affiliate which is a "substantial employer" (as defined in Section 4001 (a)(2)
or Section 4062(e) of ERISA), the withdrawing employer's proportionate share of
that Plan's Unfunded Pension Liabilities is more than $5,000,000; (iv) in the
case of an ERISA Event involving the complete or partial withdrawal of Borrower
or an ERISA Affiliate from a Multiemployer Plan, the withdrawing employer has
incurred a withdrawal liability in an aggregate amount exceeding $5,000,000; (v)
in the case of an ERISA Event not described in clause (iii) or (iv), the
Unfunded Pension Liabilities of the relevant Plan or Plans exceed $5,000,000;
(vi) a Plan that is intended to be qualified under Section 401 (a) of the Code
shall lose its qualification, and the loss can reasonably be expected to impose
on members of the Controlled Group liability (for additional taxes, to Plan
participants, or otherwise) in the aggregate amount of $5,000,000 or more; (vii)
the commencement or increase of contributions to, or the adoption of or the
amendment of a Plan by, a member of the Controlled Group shall result in a net
increase in unfunded liabilities to the Controlled Group in excess of
$5,000,000; (viii) any member of the Controlled Group engages in or otherwise
becomes liable for a non-exempt prohibited transaction and the initial tax or
additional tax under section 4975 of the Code relating thereto might reasonably
be expected to exceed $5,000,000; (ix) a violation of section 404 or 405 of
ERISA or the exclusive benefit rule under section 401 (a) of the Code if such
violation might reasonably be expected to expose a member or members of the
Controlled Group to monetary liability in excess of $5,000,000; (x) any member
of the Controlled Group is assessed a tax under section 4980B of the Code in
excess of $5,000,000; or (xi) the occurrence of any combination of events listed
in clauses (iii) through (x) that involves a potential liability, net increase
in aggregate Unfunded Pension Liabilities, unfunded liabilities, or any
combination thereof, in excess of $5,000,000.
(i) MONETARY JUDGMENTS. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against Borrower, the REIT, any of
their Subsidiaries or any Management Entity involving individually or in the
aggregate a liability (not fully covered by insurance) of $5,000,000 or more,
and the same shall remain unvacated and unstayed pending appeal for a period of
thirty (30) days after the entry thereof; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree shall be rendered against Borrower, the REIT, any of their Subsidiaries
or any Management Entity that has or would reasonably be expected to have a
Material Adverse Effect, and there shall be any period of ten (10) consecutive
days during which a stay of enforcement of such judgment or order, by reason of
a pending appeal or otherwise, shall not be in effect; or
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(k) GUARANTY DOCUMENTS.
(i) Any provision of any Guaranty Document shall for any
reason (other than pursuant to the terms thereof) cease to be valid and binding
on or enforceable against Borrower or other Person party thereto (except to the
extent that the same results solely from an act or omission of the Agent or the
Lenders), or Borrower or such Person shall so state in writing or bring an
action to limit its obligations or liabilities thereunder; or
(ii) Any party to a Guaranty Document (other than the
Agent or Lenders) shall fail to perform or observe any term or covenant
contained in such Guaranty Document, and such failure shall continue uncured for
a period of 20 days after the earlier of (A) the date upon which a Responsible
Officer of Borrower knew or received written notice of such failure or (B) the
date upon which written notice thereof is given to Borrower by the Agent, or any
other event or condition shall occur or exist under a Guaranty Document that
constitutes an "Event of Default" as defined therein; or
(iii) The REIT or any Guarantor Subsidiary shall fail to
perform or observe (A) any term, covenant or agreement in Section 1, 9, or 12(a)
through (g), inclusive, of the guaranty in the REIT Guaranty Documents or
incorporated from Sections 6.6, 6.10 and 6.11 and Article VII of the Credit
Agreement into Section 12(h) of such guaranty, or (B) any other term, covenant
or agreement in the REIT Guaranty Documents, and such failure shall continue
unremedied for a period of 20 days after the earlier of (I) the date upon which
a Responsible Officer knew or received written notice of such failure or (II)
the date upon which written notice thereof is given to Borrower or the REIT (or
any Subsidiary party thereto) by the Agent; or the REIT Guaranty Documents shall
for any reason be partially (including with respect to future advances) or
wholly revoked or invalidated, or otherwise cease to be in full force and
effect; or the REIT (or any Subsidiary party thereto) shall contest in any
manner the validity or enforceability thereof or deny that the REIT (or any
Subsidiary party thereto) has any further liability or obligation thereunder.
(l) MATERIAL ADVERSE EFFECT. There shall occur any act,
omission, change, occurrence or event which has a Material Adverse Effect; or
(m) OWNERSHIP. (i) Any Person, or a group of related Persons,
shall acquire (a) beneficial ownership of in excess of 50% of the outstanding
voting Stock of the REIT or other voting interest having ordinary voting power
to elect a majority of the directors, managers or trustees of the REIT
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency)
or (b) all or substantially all of the Properties of Borrower or the REIT, or
(ii) a majority of the Board of Directors of the REIT, at any time, shall be
composed of Persons other than (a) Persons who were members of the Board of
Directors on the date of this Agreement, or (b) Persons who subsequently become
members of the Board of Directors and who either (x) are appointed or
recommended for election with the affirmative vote of a majority of the
directors in office as of the date of this Agreement or (y) are appointed or
recommended for election with the affirmative vote of a majority of the Board of
Directors of the REIT then in office; or
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(n) MATERIAL LICENSES OR PERMITS. Borrower, the REIT, or any of
their Subsidiaries shall lose, through suspension, termination, impoundment,
revocation, failure to renew or otherwise, any license or permit material, in
each case, to the Designated Entities, taken as a whole; or
(o) ENVIRONMENTAL LIENS. Borrower, the REIT, or any of their
Subsidiaries or any of their respective properties shall become subject to one
or more Liens for costs or damages in excess of (i) with respect to any Property
in the Unencumbered Asset Pool, $1,000,000 individually or in the aggregate or
(ii) with respect to any other Property, $5,000,000, individually or in the
aggregate, and in each case under any Environmental Law and such Liens shall
remain in place for thirty (30) days after the creation thereof, or any
Unencumbered Asset Pool Property shall become subject to one or more Liens in
any amount under any Environmental Law and such Liens shall remain in place for
thirty (30) days after the creation thereof; or
(p) INTRA-COMPANY DEBT. If at any time after the incurrence of
any Intra-Company Debt, Borrower, the REIT, or any Wholly-Owned Subsidiary is
not the holder of such Intra-Company Debt; or if any modification or amendment
with respect to the payment terms of any Intra-Company Debt is entered into
without the prior written consent of the Requisite Lenders; or if, at any time
after the Conversion Date, the holder of any Intra-Company Debt demands any
payment whatsoever thereon; or
(q) PREFERRED STOCK. If at any time there shall occur any event
which would permit the holders of any class of preferred Stock of the REIT to
elect more than one director to the Board of Directors of the REIT.
8.2 REMEDIES.
If any Event of Default occurs, the Agent shall, at the request
of, or may, with the consent of, the Requisite Lenders:
(a) TERMINATION OF COMMITMENT. Declare the Commitment of each
Lender to make Loans to be terminated, whereupon such Commitments shall
forthwith be terminated;
(b) ACCELERATION. Declare (i) the unpaid principal amount of
all outstanding Loans and all interest accrued and unpaid thereon, and (ii) all
other amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived;
(c) OBLIGATIONS UNDER LETTERS OF CREDIT. Declare forthwith due
and payable all obligations of Borrower with respect to the Letters of Credit,
including, without limitation, all unreimbursed drawings under the Letters of
Credit and the aggregate contingent obligation of Borrower to reimburse Agent
and Lenders for the available amount which could at any time be drawn under the
Letters of Credit (even if such amount is not then able to be drawn
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pursuant to the terms of the Letters of Credit), without presentment, demand,
protest, notice of dishonor, notice of intent to demand or to accelerate
payment, notice of acceleration or notice of any other kind, all of which are
hereby expressly waived, and upon such declaration the same shall become
immediately due and payable, and Agent (upon the request or with the consent of
Requisite Lenders) may enforce all obligations of Borrower with respect to the
Letters of Credit to Agent and the Lenders under the Loan Documents and exercise
any and all other remedies granted to Agent and the Lenders at law, in equity or
otherwise. In addition, Agent (upon the request or with the consent of
Requisite Lenders) may: (i) exercise any remedy available to Agent or the
Lenders under any Loan Document; and/or (ii) take whatever action at law or in
equity may appear necessary or appropriate to collect any amount due or
thereafter to become due or to enforce performance and observance of all
Obligations of Borrower with respect to the Letters of Credit. Any amounts
delivered by Borrower on account of the aggregate contingent obligation of
Account Party to reimburse Lenders for the available amount which could at any
time be drawn under the Letters of Credit shall be held by the Agent as cash
collateral for the Obligations with respect to the Letters of Credit; and
(d) OTHER REMEDIES. Exercise on behalf of itself and the
Lenders all rights and remedies available to it and the Lenders under the Loan
Documents or applicable law; PROVIDED, HOWEVER, that upon the occurrence of any
event specified in Section 8.1(f) or 8.1(g) (in the case of clause (i) of
Section 8.1 (g) upon the expiration of the sixty (60)-day period mentioned
therein), the Commitment of each Lender to make Loans shall automatically
terminate, and the unpaid principal amount of all outstanding Loans and interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder as
aforesaid shall automatically become due and payable without further act of any
Agent or Lender.
8.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement
and the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE IX.
THE AGENT
9.1 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints, designates and authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, Agent shall not have any duties or responsibilities except those
expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist on the part of
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Agent. Notwithstanding anything to the contrary herein, Issuing Lender shall
act on behalf of the Lenders with respect to the Letters of Credit (and all
conditions precedent applicable to the issuance or extension thereof), until
such time and except for so long as the Agent may elect to act for the Issuing
Lender with respect thereto; PROVIDED, HOWEVER, that the Issuing Lender shall
have all of the benefits and immunities (i) for acts taken or omissions suffered
by the Issuing Lender in connection with Letters of Credit as fully as if the
term "Agent", as used in this Article IX, included the Issuing Lender with
respect to such acts or omissions, and (ii) as additionally provided in this
Agreement with respect to the Issuing Lender.
9.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.3 LIABILITY OF AGENT. The Agent, its respective Affiliates, or
their respective officers, directors, employees, agents, or attorneys-in-fact
(all of the foregoing being collectively referred to as the "Agent-Related
Persons") shall not (a) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other Loan
Document (except for its own gross negligence or willful misconduct), or (b) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by Borrower, the REIT, any Management Entity or
Subsidiary or any Affiliate of any such Person, or any officer thereof,
contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent under or in connection with, this Agreement or any
other Loan Document, or for the value of any property in the Unencumbered Asset
Pool or the validity, effectiveness, genuineness, enforceability or sufficiency
of this Agreement, any other Loan Document, or for any failure of Borrower, the
REIT or any other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or performance of
any of the agreements contained in, or conditions of, this Agreement or any
other Loan Document, or to inspect the Properties, books or records of Borrower,
the REIT, any Management Entity or Subsidiary or Affiliates thereof.
9.4 RELIANCE BY AGENT.
(a) GENERALLY. The Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to Borrower),
independent accountants and other experts selected by the Agent. The Agent
shall be fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such advice
or concurrence of the Requisite Lenders as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the
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Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refinancing from acting, under this
Agreement or any other Loan Document in accordance with a request or consent of
the Requisite Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(b) CONDITIONS PRECEDENT. For purposes of determining
compliance with the conditions specified in Sections 4.1 and 4.2 (as to the
initial borrowing hereunder), each Lender that has executed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to such Lender, unless an officer of the Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the initial borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or such Lender shall not have made available
to the Agent the Lender's ratable portion of such borrowing.
9.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default as shall be
requested by the Requisite Lenders in accordance with Article VIII; PROVIDED,
HOWEVER, that unless and until the Agent shall have received any such request,
it may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of the Lenders.
9.6 CREDIT DECISION. Each Lender expressly acknowledges that none of
the Agent-Related Persons has made any representation or warranty to such Lender
and that no act by the Agent hereinafter taken, including any review of the
affairs of Borrower, the REIT, any Management Entity or Subsidiary, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that such Lender has, independently and
without reliance upon the Agent and based on such documents and information as
such Lender has deemed appropriate, made its own appraisal of and investigation
into the business, prospects, operations, Properties, financial and other
condition and creditworthiness of Borrower, the REIT, any Management Entity or
Subsidiary, and all applicable lender regulatory laws relating to the
transactions contemplated thereby, and made its own decision to enter into this
Agreement and extend credit to Borrower hereunder. Each Lender also represents
that it will, independently and without reliance upon the Agent and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, Properties, financial and other condition and
creditworthiness of Borrower, the REIT, the Management Entities and the
Subsidiaries. Except
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for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Agent, Agent shall have no duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, Properties, financial and other
condition or creditworthiness of Borrower, the REIT, the Management Entities and
the Subsidiaries which may come into the possession of any of the Agent-Related
Persons.
9.7 INDEMNIFICATION. The Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrower
and without limiting the obligation of Borrower to do so) ratably from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind
whatsoever which may at any time (including at any time following the repayment
of the Loans) be imposed on, incurred by or asserted against any such Person in
any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such Person
under or in connection with any of the foregoing; PROVIDED, HOWEVER, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand (to the extent the
Agent is not reimbursed upon demand by Borrower, unless the Agent is legally
restricted from making such demand upon Borrower, in which case demand need not
be made upon Borrower) for its ratable share of any costs or out-of-pocket
expenses (including Attorney Costs) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement,
any other Loan Document, or any document contemplated by or referred to herein
to the extent that the Agent is not reimbursed for such expenses by or on behalf
of Borrower. Without limiting the generality of the foregoing, if the IRS or
any authority of the United States or other jurisdiction asserts a claim that
the Agent did not properly withhold tax from amounts paid to or for the account
of any Lender (because the appropriate form was not delivered or was not
properly executed, or because such Lender failed to notify the Agent of a change
in circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section 9.7,
together with all costs, expenses and attorneys' fees (including allocated costs
for in-house legal services). The obligation of the Lenders in this Section
shall survive the payment of all Obligations.
9.8 AGENT IN INDIVIDUAL CAPACITY. BofA (and any other Lender that
may hereafter serve as Agent) and each of their respective Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory or other business with, Borrower, the REIT, the Management
Entities and the Subsidiaries and Affiliates as though BofA (or any other such
Lender) were not the agent hereunder and without notice to the Lenders. With
respect to its
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Loans, BofA (and any other Lender that may hereafter serve as Agent), shall have
the same rights and powers under this Agreement as any other Lender and may
exercise the same as though each of them were not an agent, and the terms
"Lender" and "Lenders" shall include BofA (and any other Lender that may
hereafter serve as Agent), in its individual capacity.
9.9 SUCCESSOR AGENTS. The Agent may resign as Agent upon 30 days'
notice to the Lenders. The Requisite Lenders may at any time remove the Agent
by written notice to that effect to be effective on such date as the Requisite
Lenders designate. If the Agent shall resign or be removed under this
Agreement, the Requisite Lenders shall appoint from among the Lenders a
successor Agent for the Lenders, which successor Agent shall, if no Default or
Event of Default exists hereunder, be subject to the approval of Borrower, which
approval shall not be unreasonably withheld. If no successor Agent is appointed
prior to the effective date of the resignation of the retiring Agent, the
retiring Agent shall appoint, after consulting with the Lenders and Borrower, a
successor Agent. Upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights, powers and
duties of the retiring Agent, and the term "Agent" shall mean such successor
Agent, and the retiring Agent's rights, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX and Sections 10.4 and 10.5 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement.
ARTICLE X.
MISCELLANEOUS
10.1 AMENDMENTS AND WAIVERS.
(a) GENERALLY. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure therefrom, shall be effective unless the same shall be in writing and
signed by the Requisite Lenders, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) MATTERS REQUIRING UNANIMOUS CONSENT. Notwithstanding the
terms of Section 10.1(a), no amendment or waiver of any provision of this
Agreement or any other Loan Document, no agreement to forebear from acting upon
any departure by Borrower therefrom, and no consent with respect to any
departure by Borrower therefrom, shall be effective to do any of the following,
unless the same is in writing and signed by all the Lenders:
(i) change the Commitment of any Lender (other than
ratable changes as contemplated by this Agreement;
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(ii) postpone or delay any date fixed for any payment of
principal, interest, fees or other amounts due hereunder or under any Loan
Document whether by acceleration or otherwise;
(iii) reduce the principal of, or the rate of interest
specified herein on, any Loan, or any fees or other amounts payable hereunder or
under any Loan Document;
(iv) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Loans required for the Lenders or any
of them to take any action hereunder;
(v) amend or waive Section 2.1(a)(iv) (Extension of
Revolver Maturity Date; Conversion), Section 2.13 (Unencumbered Asset Pool;
Additions, Substitutions and Exclusions of Properties), Section 2.15 (Sharing of
Payments, Etc.), Section 3.1 (Taxes), Section 3.2 (Illegality), Section 3.3
(Increased Costs and Reduction of Return), Section 4.3 (Conversion Conditions),
Section 6.10 (Use of Proceeds), Section 7.16 (Financial Covenants), Section 8.2
(Remedies), Section 10.15 (Governing Law and Jurisdiction) or this Section 10.1
(or the related definitions thereto);
(vi) release any guarantor from liability under the REIT
Guaranty Documents.
(c) MATTERS REQUIRING AGENTS' CONSENT. Notwithstanding the
terms of Section 10.1(a), no amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure by Borrower therefrom, shall be effective to affect the rights or
duties of the Agent under this Agreement or any other Loan Document, unless the
same is in writing and signed by the Agent.
10.2 NOTICES.
(a) DELIVERY. All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed or delivered, (i) if to
Borrower, to its address specified on the signature pages hereof, (ii) if to any
Lender, to its Domestic Lending Office, and (iii) if to Agent, to its address
specified on the signature pages hereof; or, as to Borrower or the Agent, to
such other address as shall be designated by such party in a written notice to
the other parties, and as to each other party, at such other address as shall be
designated by such party in a written notice to Borrower and the Agent.
(b) RECEIPT. All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to the
telegraph company, transmitted by telecopier, confirmed by telex answerback or
delivered to the cable company, respectively, or if
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delivered, upon delivery, except that notices pursuant to Article II or VIII
shall not be effective until actually received by the Agent.
(c) RELIANCE. Borrower acknowledges and agrees that any
agreement of the Agent and the Lenders under Article II to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of Borrower. The Agent and the Lenders shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by Borrower to give
such notice, and the Agent and the Lenders shall not have any liability to
Borrower or any other Person on account of any action taken or not taken by the
Agent and the Lenders in reliance upon such telephonic or facsimile notice. The
obligation of Borrower to repay the Loans shall not be affected in any way or to
any extent by any failure by the Agent and the Lenders to receive written
confirmation of any telephonic or facsimile notice or the receipt by the Agent
and the Lenders of a confirmation which is at variance with the terms understood
by the Agent and the Lenders to be contained in the telephonic or facsimile
notice.
10.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any Agent or Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
10.4 COSTS AND EXPENSES. Borrower shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) FACILITY EXPENSES. Pay or reimburse the Agent on demand for
all costs and expenses incurred in connection with the development, preparation
or delivery of, and any amendment, supplement, waiver or modification to, this
Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, the consummation of the transactions contemplated hereby
and thereby, and any proposal for additions to the Unencumbered Asset Pool
Properties, and the syndication of this Agreement to other Lenders, as well as
all costs of the Agent and the Issuing Lender in connection with the issuance of
Letters of Credit (including, without limitation, title insurance premiums and
charges, survey costs, recording costs and taxes, travel and due diligence
expenses incurred by representatives of the Agent, and the reasonable Attorney
Costs incurred by the Agent with respect thereto, and with respect to the
Letters of Credit, amendment fees, drawing fees, check fees, foreign currency
fees, and other fees and costs the Issuing Lender normally charges in connection
therewith);
(b) ENFORCEMENT EXPENSES. Pay or reimburse the Agent and
Lenders on demand for all reasonable costs and expenses incurred by them in
connection with the enforcement, attempted enforcement, or preservation of any
rights or remedies (including in connection with any "workout" or restructuring
regarding the Loans) under this Agreement, any other Loan Document, and any such
other documents, including reasonable Attorney Costs incurred by the Agent and
Lender; and
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(c) PROPERTY DILIGENCE EXPENSES. Pay or reimburse the Agent on
demand for all audits, environmental inspections and reviews (including the
allocated costs of such internal services), search and filing costs, fees and
expenses, incurred or sustained by the Agent in connection with the matters
referred to under paragraphs (a) and (b) of this Section.
10.5 INDEMNITY. Borrower shall indemnify and hold harmless the Agent,
each Lender and each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") from and
against and pay them for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including Attorney Costs) of any kind or nature whatsoever with respect to the
execution, delivery, enforcement, performance and administration of this
Agreement and any other Loan Documents, or the transactions contemplated hereby
and thereby, and with respect to any investigation, litigation or proceeding
related to this Agreement or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "Indemnified Liabilities'); PROVIDED, that Borrower shall have
no obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence or willful misconduct of such
Indemnified Person. The agreements in this Section 10.5 shall survive payment
of all other Obligations.
10.6 MARSHALLING; PAYMENTS SET ASIDE. Neither the Agent nor any
Lender shall be under any obligation to marshall any assets in favor of Borrower
or any other Person or against or in payment of any or all of the Obligations.
To the extent that Borrower makes a payment or payments to the Agent or any
Lender, or the Agent or any Lender enforces its Liens or exercises its rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party in connection with any Insolvency Pending, or
otherwise, then to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been made or such enforcement or setoff
had not occurred.
10.7 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Agent and each Lender, which may be withheld in their
sole and absolute discretion.
10.8 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) ASSIGNMENTS. Subject to the further provisions of this
Section 10.8(a), any Lender may, with the written consent of the Agent, which
consent shall not be unreasonably withheld, at any time assign and delegate to
one or more Eligible Assignees (provided that no written consent of the Agent
shall be required in connection with any assignment and delegation by a Lender
to a Lender Affiliate of such Lender) (each an "Assignee") all, or any ratable
part of all, of the Loans, the Letter of Credit Liability, the
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Commitments and the other rights and obligations of such Lender hereunder, in a
minimum amount of $5,000,000 and in additional increments of $250,000; PROVIDED,
HOWEVER, that Borrower and the Agent may continue to deal solely and directly
with such Lender in connection with the interest so assigned to an Assignee
until (A) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have been
given to Borrower and the Agent by such Lender and the Assignee; (B) such Lender
and its Assignee shall have delivered to Borrower and the Agent an Assignment
and Acceptance in the form of EXHIBIT K ("Assignment and Acceptance") together
with any Note or Notes subject to such assignment; (C) such Lender shall have
paid to the Agent, for its own account, an assignment fee in the amount of
$1500, if the Assignee is a Lender (without giving effect to the Assignment),
and $3000 in all other cases; and (D) such Lender shall have delivered to the
Agent such documents as may be required by Section 3.1(f). Any such assignment
requiring the approval of the Agent shall also require the approval of Borrower
(such approval not to be unreasonably withheld or delayed), provided that
Borrower's failure to approve or disapprove such assignment within five days
after receiving written notice thereof shall be deemed approval by Borrower of
such assignment, and provided further, that no such approval from Borrower shall
be required during the continuation of a Default or Event of Default.
(b) RIGHTS OF ASSIGNEE. From and after the date that the Agent
notifies the assignor Lender that the Agent has received an executed Assignment
and Acceptance and payment of the assignment fee specified in Section 10.8(a),
(i) the Assignee thereunder shall, subject to Section 10.8(a), be a party hereto
and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, shall have the rights and
obligations of a Lender under the Loan Documents, and (ii) the assignor Lender
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Loan Documents.
(c) REPLACEMENT NOTES. Within thirty (30) Business Days after
its receipt of notice by the Agent that the Agent has received an executed
Assignment and Acceptance and payment of the processing fee, Borrower shall
execute and deliver to the Agent, new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor Lender has retained a portion of its
Loans and its Commitment, replacement Notes in the principal amount of the Loan
retained by the assignor Lender (such Notes to be in exchange for, but not in
payment of, the Notes held by such Lender). Immediately upon each Assignee's
making its payment under the Assignment and Acceptance, this Agreement shall be
deemed to be amended to the extent, but only to the extent, necessary to reflect
the addition of the Assignee and the resulting adjustment of the Commitments
arising therefrom. The Commitment allocated to each Assignee shall reduce such
Commitment of the assigning Lender, PRO TANTO.
(d) PARTICIPATIONS. Any Lender may at any time sell to one or
more commercial lenders (a "Participant") participating interests in any Loans,
Letter of Credit Liability and Commitment of that Lender and the other interests
of that Lender (the "originating Lender") hereunder and under the other Loan
Documents; PROVIDED, HOWEVER, that (i) the originating Lender's obligations
under this Agreement shall remain unchanged, (ii) the
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originating Lender shall remain solely responsible for the performance of such
obligations, (iii) Borrower and the Agent shall continue to deal solely and
directly with the originating Lender in connection with the originating Lender's
rights and obligations under this Agreement and the other Loan Documents, (iv)
no Lender shall transfer or grant any participating interest under which the
Participant shall have rights to approve any amendment to, or any consent or
waiver with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent as
described in the FIRST PROVISO to Section 10.1; and (v) Borrower shall have
approved the transfer or grant of any participating interest in any Loan, Letter
of Credit Liability and Commitment of the originating Lender to a Participant
that has not theretofore previously held a participating interest therein (such
approval not to be unreasonably withheld or delayed), provided that Borrower's
failure to approve or disapprove in writing such Participant within five days
after receiving written notice thereof shall be deemed approval by Borrower of
such transfer or grant to such Participant, and provided further, that no such
approval from Borrower shall be required during the continuation of a Default or
Event of Default. In the case of any such participation, the Participant shall
not have any rights under this Agreement, or any of the other Loan Documents,
and all amounts payable by Borrower hereunder shall be determined as if such
Lender had not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been declared or shall
have become due and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement.
(e) ASSIGNMENTS TO FEDERAL RESERVE BANK. Notwithstanding any
other provision contained in this Agreement or any other Loan Document to the
contrary, any Lender may assign all or any portion of the Loans or Notes held by
it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Loans or Notes made by
Borrower to or for the account of the assigning and/or pledging Lender in
accordance with the terms of this Agreement shall satisfy Borrower's obligations
hereunder in respect of such assigned Loans or Notes to the extent of such
payment. No such assignment shall release the assigning Lender from its
obligations hereunder.
10.9 SETOFF. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists, each Lender is authorized at any
time and from time to time, without prior notice to Borrower, any such notice
being waived by Borrower to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held by, and other indebtedness at any time owing to, such
Lender to or for the credit or the account of Borrower against any and all
obligations owing to such Lender, now or hereafter existing, irrespective of
whether the Agent or such Lender shall have made demand under this Agreement or
any Loan Document and whether such obligations may be contingent or unmatured.
Each Lender agrees to promptly notify Borrower and the Agent after any such
setoff and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice shall not affect the validity of such setoff and
application. The rights of each
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Lender under this Section 10.9 are in addition to the other rights and remedies
(including other rights of setoff) that such Lender may have. NOTWITHSTANDING
THE FOREGOING, NO LENDER SHALL EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF
SETOFF, BANKER'S LIEN, OR THE LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF
BORROWER, THE REIT, ANY MANAGEMENT ENTITY OR ANY SUBSIDIARY HELD OR MAINTAINED
BY ANY LENDER, WITHOUT THE PRIOR WRITTEN CONSENT OF THE REQUISITE LENDERS.
10.10 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each
Lender shall notify the Agent in writing of any changes in the address to which
notices to such Lender should be directed, of addresses of its Offshore Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Agent shall
reasonably request.
10.11 COUNTERPARTS. This Agreement may be executed by one or more
of the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with Borrower and the Agent.
10.12 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 NO THIRD PARTIES BENEFITED. This Agreement is made and
entered into for the sole protection and legal benefit of Borrower, the Agent
and the Lenders, and their permitted successors and assigns, and no other Person
shall be a direct or indirect legal beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement or any of
the other Loan Documents. No Agent or Lender shall have any obligation to any
Person not a party to this Agreement or the other Loan Documents.
10.14 TIME. Time is of the essence of each term and provision of
this Agreement and each of the other Loan Documents.
10.15 GOVERNING LAW. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
COLORADO; PROVIDED THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS
ARISING UNDER FEDERAL LAW.
10.16 WAIVER OF JURY TRIAL. BORROWER, THE AGENT, AND THE LENDERS
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS
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CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. SUBJECT TO
SECTION 10.17 BELOW, BORROWER, THE AGENT, AND THE LENDERS EACH AGREE THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.
WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
10.17 ARBITRATION.
(a) MANDATORY ARBITRATION. Any controversy or claim between or
among the parties arising out of or relating to this Agreement, the Loan
Documents, and any claim based on or arising from an alleged tort, shall at the
request of any party be determined by arbitration. The arbitration shall be
conducted in Los Angeles, California, in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association (the "AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision of this Section 10.17 shall limit the right of any party to this
Agreement to exercise self-help remedies such as setoff, foreclosure against or
sale of any real or personal property collateral or security, or to obtain
provisional or ancillary remedies from a court of competent jurisdiction before,
after, or during the pendency of any arbitration or other proceeding. The
exercise of a remedy does not waive the right of either party to resort to
arbitration.
10.18 NOTICE OF CLAIMS; CLAIMS BAR. BORROWER HEREBY AGREES THAT
IT SHALL GIVE PROMPT WRITTEN NOTICE TO THE AGENT OF ANY CLAIM OR CAUSE OF ACTION
IT BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR ALLEGE AGAINST THE AGENT OR ANY
LENDER, WHETHER SUCH CLAIM IS BASED IN LAW OR EQUITY, ARISING UNDER OR RELATED
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR TO THE LOANS, OR ANY
ACT OR OMISSION TO ACT BY THE AGENT OR ANY LENDER WITH RESPECT HERETO OR
THERETO, AND
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THAT IF BORROWER SHALL FAIL TO GIVE SUCH PROMPT NOTICE TO THE AGENT WITH REGARD
TO ANY SUCH CLAIM OR CAUSE OF ACTION, BORROWER SHALL BE DEEMED TO HAVE WAIVED,
AND SHALL BE FOREVER BARRED FROM BRINGING OR ASSERTING, SUCH CLAIM OR CAUSE OF
ACTION IN ANY ARBITRATION OR ANY SUIT, ACTION OR PROCEEDING IN ANY COURT OR
BEFORE ANY GOVERNMENTAL AGENCY.
10.19 ENTIRE AGREEMENT. This Agreement, together with the other
Loan Documents, embodies the entire agreement and understanding between
Borrower, the Agent and the Lenders. Accordingly, this Agreement, together with
the other Loan Documents, supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, except for any prior arrangements made with respect
to the payment by Borrower of (or any indemnification for) any fees, costs,
expenses, liabilities, damages or claims payable to or incurred (or to be
incurred) by or on behalf of the Agent or the Lenders.
10.20 INTERPRETATION. This Agreement, together with the other
Loan Documents, is the result of negotiations between and has been reviewed by
counsel to the Agent, the Lenders and Borrower and other parties, and is the
product of all parties hereto. Accordingly, this Agreement and the other Loan
Documents shall not be construed against the Lenders or the Agent merely because
of the Agent's or Lender's involvement in the preparation of such documents and
agreements.
10.21 EXCULPATION OF LENDERS. No Lender undertakes or assumes any
responsibility or duty to Borrower or any third party to select, review,
inspect, examine, supervise, pass judgment upon or inform Borrower or any third
party of the existence, quality, adequacy or suitability of: (a) any
environmental report, or (b) any other matters or items, including, but not
limited to, engineering, soils and seismic reports which are contemplated in the
Loan Documents. Any such selection, review, inspection, examination and the
like is solely for the purpose of protecting the Lenders' security and
preserving the Lenders' rights under the Loan Documents, and shall not render
any Lender liable to Borrower or any third party for the existence, sufficiency,
accuracy, completeness or legality thereof. No Lender owes any duty of care to
protect or inform Borrower or any third party against negligent, faulty,
inadequate or defective building or construction or the existence of any
environmentally hazardous condition affecting any Property.
10.22 RELATIONSHIP. Nothing herein contained shall in any manner
be construed as creating any relationship between the Agent and the Lenders, on
the one hand, and Borrower, on the other hand, other than as creditor and
debtor. Borrower agrees to indemnify, protect, defend and hold the Agent and
each Lender harmless from and against any and all losses, liabilities, damages,
and costs and expenses (including, but not limited to, reasonable attorneys'
fees and disbursements, including reasonably allocated costs of in-house
counsel) resulting from any other construction of the parties' relationship.
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10.23 CONFIDENTIALITY. Agent and each Lender shall keep all
information delivered under Section 6.1(d) confidential in accordance with this
Section 10.23 and shall hold all other non-public information obtained pursuant
to the requirements of this Agreement which has been identified as confidential
by Borrower in accordance with Agent's and such Lender's customary procedures
for handling confidential information of this nature and in accordance with safe
and sound banking practices, it being understood and agreed by Borrower that in
any event Agent or a Lender may make disclosures reasonably required by any bona
fide assignee, transferee or participant in connection with the contemplated
assignment or transfer by Agent or such Lender of any Loans or any participation
therein or as required or requested by any governmental agency or representative
thereof or pursuant to legal process.
[SIGNATURE PAGES S-1 THROUGH S-5 ATTACHED]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first written above.
BORROWER
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO -GP, Inc., a Delaware
corporation, its general partner
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
Notices to be sent to:
1873 South Bellaire Street
17th Floor
Denver, Colorado 80222
Attention: Peter K. Kompaniez,
Vice President
Facsimile: (303) 757-8735
S-1
<PAGE>
B OF A
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Lender and as the Issuing Lender
By: /s/ Kelly M. Allred
--------------------------------
Name: Kelly M. Allred
------------------------------
Title: Vice President
-----------------------------
Notices to be sent to:
Bank of America National Trust
and Savings Association
CRES #1357
555 South Flower Street, 6th Floor
Los Angeles, CA 90071
Attention: M. Harvey
Telephone: 213/228-4013
Facsimile: 213/228-5389
Payments to be made to:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
333 S. Beaudry Ave.
Loan Accounting Dept #1503
Los Angeles, CA 90017
ABA #: 121 000 358
Credit Account #: 15031-00407
Attention: Unit Representative
Ref: AIMCO Unsecured Revolver
S-2
<PAGE>
AGENT
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: /s/ Kelly M. Allred
--------------------------------
Name: Kelly M. Allred
------------------------------
Title: Vice President
-----------------------------
Notices to be sent to:
Bank of America National Trust and
Savings Association
CRES #1357
555 South Flower Street, 6th Floor
Los Angeles, CA 90071
Attention: M. Harvey
Telephone: 213/228-4013
Facsimile: 213/228-5389
Payments to be made to:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
ABA #: 121 000 358
Credit Account #: 15031-00407
Attention: Unit Representative
Ref: AIMCO Unsecured Revolver
S-3
<PAGE>
BANKBOSTON, N.A.
BANKBOSTON, N.A.
By: /s/ Kathleen M. Ahern
--------------------------------
Name: Kathleen M. Ahern
Title: Vice President
Notices to be sent to:
BankBoston, N.A.
100 Federal Street
Mail Stop 01-32-04
Boston, MA 02110
Attention: Deborah Washburn
Telephone: (617) 434-3188
Facsimile: (617) 434-0645
Payments to be made to:
BANKBOSTON, N.A.
ABA #: 011-000-390
Credit Account #: N/A
Attention: Linda Wheeler/CLS
Ref: AIMCO Unsecured Revolver
S-4
<PAGE>
PAYMENT GUARANTY
This Payment Guaranty ("Guaranty") is made as of January 26, 1998, by
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation, AIMCO-GP,
INC., a Delaware corporation, AIMCO-LP, INC., a Delaware corporation, AIMCO
HOLDINGS, L.P., a Delaware limited partnership, AIMCO HOLDINGS QRS, INC., a
Delaware corporation, AIMCO SOMERSET, INC., a Delaware corporation, AIMCO
Properties Finance Corp., a Delaware corporation, and AIMCO/OTC QRS, INC., a
Delaware corporation (each of the foregoing is referred to herein as
"Guarantor") in favor of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
("BofA"), as the agent for itself and the lenders ("Lenders") from time to time
party to the Credit Agreement (as hereinafter defined) (in such capacity, the
"Agent").
FACTUAL BACKGROUND
Guarantor is executing this Guaranty to induce the Lenders to make a
$50,000,000 unsecured revolver to term credit facility available to AIMCO
Properties L.P., a Delaware limited partnership (the "Borrower") in accordance
with the Credit Agreement (the "Credit Agreement"), dated of even date herewith,
by and among Borrower, BofA (as Agent and as a Lender) and the other Lenders
from time to time party thereto. Capitalized terms used but not defined herein
will have the meanings set forth in the Credit Agreement. As used herein, the
term "Facility" shall refer individually to each of the credit facilities
available to the Borrower under the Credit Agreement.
GUARANTY
1. GUARANTY OF LOAN. Guarantor absolutely, unconditionally and
irrevocably guaranties to Agent and the Lenders the full payment of the
Indebtedness (as hereinafter defined), and unconditionally agrees to pay to
Agent and the Lenders the full amount of the Indebtedness. This is a guaranty
of payment, not of collection. If Borrower defaults in the payment when due of
the Indebtedness or any part of it, Guarantor will in lawful money of the United
States pay to Agent and the Lenders, on demand, all sums due and owing on the
Indebtedness, including all interest, charges, fees and other sums, costs and
expenses.
2. LOAN. In this Guaranty, the term "Indebtedness" is broadly
defined to mean and include all primary, secondary, direct, indirect, fixed and
contingent obligations of Borrower to pay principal, interest, prepayment
charges, breakage costs, late charges, loan fees and any other fees, charges,
sums, costs and expenses which may be owing at any time under the Loan Documents
(as such term is defined in the Credit Agreement), and shall include, without
<PAGE>
limitation, all liabilities and obligations of the Borrower with respect to
Letters of Credit issued under the Credit Agreement, as any or all of such
obligations may from time to time be modified, amended, extended or renewed.
If the amount outstanding under the Indebtedness is determined by a court of
competent jurisdiction or in any arbitration proceeding described in Section
10.17 of the Credit Agreement, that determination shall be conclusive and
binding on Guarantor, regardless of whether Guarantor was a party to the
proceeding in which the determination was made or not.
3. RIGHTS OF AGENT AND THE LENDERS. Guarantor authorizes Agent or
any Lender to perform any or all of the following acts at any time in its sole
discretion, all without notice to Guarantor and without affecting Guarantor's
obligations under this Guaranty:
(a) Agent or the Requisite Lenders may alter any terms of the
Indebtedness or any part of it, including renewing, compromising, extending or
accelerating, or otherwise changing the time for payment of, or increasing or
decreasing the rate of interest on, the Indebtedness or any part of it.
(b) Agent or any Lender may take and hold security for the
Indebtedness or this Guaranty, accept additional or substituted security for
either, and subordinate, exchange, enforce, waive, release, compromise, fail to
perfect and sell or otherwise dispose of any such security in accordance with
the terms of the Indebtedness.
(c) Agent or any Lender may direct the order and manner of any
sale of all or any part of any security now or later to be held for the
Indebtedness or this Guaranty, and Agent or any Lender may also bid at any such
sale.
(d) Agent or any Lender may apply any payments or recoveries
from Borrower, Guarantor or any other source, and any proceeds of any security,
to Borrower's obligations under the Loan Documents in such manner, order and
priority as Agent or such Lender may elect, whether or not those obligations are
guarantied by this Guaranty or secured at the time of the application.
(e) Agent or any Lender may release Borrower of its liability
for the Indebtedness or any part of it.
(f) Agent or any Lender may substitute, add or release any one
or more Guarantors, other guarantors or endorsers.
(g) In addition to the Indebtedness, Agent or any Lender may
extend other credit to Borrower, and may take and hold security for the credit
so extended, all without affecting Guarantor's liability under this Guaranty.
<PAGE>
4. GUARANTY TO BE ABSOLUTE. Guarantor expressly agrees that until
the Indebtedness is paid and performed in full and each and every term, covenant
and condition of this Guaranty is fully performed, Guarantor shall not be
released by or because of:
(a) Any act or event which might otherwise discharge, reduce,
limit or modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or
other act or omission of Agent or any Lender, or its failure to proceed promptly
or otherwise as against Borrower, Guarantor or any security;
(c) Any action, omission or circumstance which might increase
the likelihood that Guarantor may be called upon to perform under this Guaranty
or which might affect the rights or remedies of Guarantor as against Borrower;
(d) Any dealings occurring at any time between Borrower and
Agent or any Lender, whether relating to the Indebtedness or otherwise; or
(e) Any action of Agent or any Lender described in Section 3
above.
Guarantor hereby acknowledges that absent this Section 4,
Guarantor might have a defense to the enforcement of this Guaranty as a result
of one or more of the foregoing acts, omissions, agreement, waivers or matters.
Guarantor hereby expressly waives and surrenders any defense to its liability
under this Guaranty based upon any of the foregoing acts, omissions, agreements,
waivers or matters. It is the purpose and intent of this Guaranty that the
obligations of Guarantor under it shall be absolute and unconditional under any
and all circumstances.
5. GUARANTOR'S WAIVERS. Guarantor waives:
(a) All statutes of limitations as a defense to any action or
proceeding brought against Guarantor by Agent or any Lender, to the fullest
extent permitted by law;
(b) Any right it may have to require Agent or any Lender to
proceed against Borrower, proceed against or exhaust any security held from
Borrower, or pursue any other remedy in Agent's or any Lender's power to pursue;
(c) Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of Borrower;
(d) Any defense based on: (i) any legal disability of Borrower,
(ii) any release, discharge, modification, impairment or limitation of the
liability of Borrower to Agent or any Lender from any cause, whether consented
to by Agent or any Lender or arising by operation of law or from any bankruptcy
or other voluntary or involuntary proceeding, in or out of court,
<PAGE>
for the adjustment of debtor-creditor relationships ("Insolvency Proceeding"),
and (iii) any rejection or disaffirmance of the Indebtedness, or any part of it,
or any security held for it, in any such Insolvency Proceeding;
(e) Any defense based on any action taken or omitted by Agent or
any Lender in any Insolvency Proceeding involving Borrower, including any
election to have Agent's or that Lender's claim allowed as being secured,
partially secured or unsecured, any extension of credit by Lender to Borrower in
any Insolvency Proceeding, and the taking and holding by Agent or any Lender of
any security for any such extension of credit;
(f) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness, and demands and notices of every kind except for any
demand or notice by Agent or any Lender to Guarantor expressly provided for in
Section 1;
(g) Any defense based on or arising out of any defense that
Borrower may have to the payment or performance of the Indebtedness or any part
of it; and
(h) Any defense based on or arising out of any action of Agent
or any Lender described in Sections 3 or 4 above.
6. WAIVERS OF SUBROGATION AND OTHER RIGHTS.
(a) During the existence of an Event of Default by Borrower,
Agent or any Lender, without prior notice to or consent of Guarantor, may elect
to: (i) foreclose either judicially or nonjudicially against any real or
personal property security it may hold for the Indebtedness, (ii) accept a
transfer of any such security in lieu of foreclosure, (iii) compromise or adjust
the Indebtedness or any part of it or make any other accommodation with Borrower
or Guarantor, or (iv) exercise any other remedy against Borrower or any
security. No such action by Agent or any Lender shall release or limit the
liability of Guarantor, who shall remain liable under this Guaranty after the
action, even if the effect of the action is to deprive Guarantor of any
subrogation rights, rights of indemnity, or other rights to collect
reimbursement from Borrower for any sums paid to Agent or any Lender, whether
contractual or arising by operation of law or otherwise. Guarantor expressly
agrees that under no circumstances shall it be deemed to have any right, title,
interest or claim in or to any real or personal property to be held by Agent or
any Lender or any third party after any foreclosure or transfer in lieu of
foreclosure of any security for the Indebtedness.
(b) Regardless of whether Guarantor may have made any payments
to Lender, Guarantor hereby waives: (i) all rights of subrogation, all rights of
indemnity, and any other rights to collect reimbursement from Borrower for any
sums paid to Agent or any Lender, whether contractual or arising by operation of
law (including the United States Bankruptcy Code or any successor or similar
statute) or otherwise, (ii) all rights to enforce any remedy that Lender
<PAGE>
may have against Borrower, and (iii) all rights to participate in any security
now or later to be held by Agent or any Lender for the Indebtedness, in each
case until the full and indefeasible payment and performance of all
Indebtedness, and all obligations of the Guarantors hereunder.
(c) Guarantor waives all rights and defenses arising out of an
election of remedies by the Agent or any Lender, even though that election of
remedies may affect Guarantor's rights of subrogation and reimbursement against
the Borrower by the operation of law or otherwise. In addition, Guarantor
waives all rights and defenses that Guarantor may have because the Borrower's
indebtedness is secured by real property. This means, among other things:
(1) Agent and the Lenders may collect from Guarantor without
first foreclosing on any real or personal property collateral pledged by the
Borrower.
(2) If Agent forecloses on any real property collateral pledged
by the Borrower:
(A) The amount of the indebtedness may be reduced only by
the price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
(B) Agent and the Lenders may collect from Guarantor even
if Agent or any Lender, by foreclosing on the real property collateral, has
destroyed or affected any right Guarantor may have to collect from the Borrower.
This is an unconditional and irrevocable waiver of any rights and
defenses Guarantor may have because the Borrower's indebtedness is secured by
real property.
<PAGE>
7. REVIVAL AND REINSTATEMENT. If Agent or any Lender is required to
pay, return or restore to Borrower or any other person any amounts previously
paid on the Indebtedness because of any Insolvency Proceeding of Borrower, any
stop notice or any other reason, the obligations of Guarantor shall be
reinstated and revived and the rights of Agent and such Lender shall continue
with regard to such amounts, all as though they had never been paid.
8. INFORMATION REGARDING OWNER. Before signing this Guaranty,
Guarantor investigated the financial condition and business operations of
Borrower and such other matters as Guarantor deemed appropriate to assure itself
of Borrower's ability to discharge its obligations under the Loan Documents.
Guarantor assumes full responsibility for that due diligence, as well as for
keeping informed of all matters which may affect Borrower's ability to pay and
perform its obligations to the Agent and the Lenders. Neither Agent nor any
Lender has any duty to disclose to Guarantor any information which such party
may have or receive about Borrower's financial condition, business operations,
or any other circumstances bearing on its ability to perform.
9. SUBORDINATION. Any rights of Guarantor, whether now existing or
later arising, to receive payment on account of any indebtedness (including
interest) owed to it by Borrower or any Subsidiary thereof or to receive any
payment from Borrower or any such Subsidiary other than those payments or
distributions permitted under Sections 7.9(b) and 7.10 of the Credit Agreement
shall at all times be subordinate as to lien and time of payment and in all
other respects to the full and prior repayment of the Indebtedness. Guarantor
shall not be entitled to enforce or receive payment of any sums hereby
subordinated until the Indebtedness has been paid and performed in full and any
such sums received in violation of this Guaranty shall be received by Guarantor
in trust for the Agent and the Lenders.
10. FINANCIAL INFORMATION. Guarantor shall keep true and correct
financial books and records, using generally accepted accounting principles
consistently applied, or such other accounting principles as the Requisite
Lenders in their reasonable judgment may find acceptable from time to time.
Guarantor represents, warrants and covenants to Agent and the Lenders that all
financial information with respect to the Guarantor delivered or to be delivered
to Agent and the Lenders by the Borrower with respect to Guarantor under Section
6.1 of the Credit Agreement is or shall be true and correct and fairly presents
or will fairly present the financial position of the Guarantor for the
applicable period. Guarantor shall promptly provide Agent and the Lenders with
any additional audited financial information that Guarantor may obtain, and such
other information concerning its affairs and properties as Agent or any Lender
may reasonably request, including, without limitation, signed copies of any tax
returns if requested by Agent or the Lenders.
<PAGE>
11. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents
and warrants that:
(a) All financial statements delivered to Agent or the Lenders
were or will be prepared in accordance with generally accepted accounting
principles, or such other accounting principles as may be acceptable to the
Requisite Lenders at the time of their preparation, consistently applied;
(b) There has been no material adverse change in Guarantor's
financial condition since the dates of the statements most recently furnished to
Agent and the Lenders; and
(c) All representations and warranties given on behalf of or
with respect to Guarantor contained in Article V of the Credit Agreement and in
any other Loan Document or certification made in connection with the Credit
Agreement are true and correct.
12. COVENANTS OF GUARANTOR. Guarantor covenants and agrees that it
shall comply with and perform all covenants given on behalf of or with respect
to Guarantor (whether expressly or as a Subsidiary) contained in Articles VI and
VII of the Credit Agreement and in all other Loan Documents.
13. INTENTIONALLY OMITTED.
14. REFERENCE AND ARBITRATION.
(a) MANDATORY ARBITRATION. Any controversy or claim between or
among the parties, including those arising out of or relating to this Guaranty
or the Loan Documents and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The arbitration
shall be conducted in Los Angeles, California, in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Guaranty, and under the Commercial Rules of the American
Arbitration Association (the "AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision of this Section 14 shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration.
<PAGE>
15. AUTHORIZATION; NO VIOLATION. Guarantor is authorized to execute,
deliver and perform under this Guaranty, which is a valid, binding, and
enforceable obligation of Guarantor in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditor's rights generally. The
execution, delivery and performance of this Guaranty are not in violation of any
applicable law, regulation or ordinance, or any order or ruling of any court or
governmental agency applicable to the Guarantor. The Guaranty does not conflict
with, or constitute a breach or default under, any agreement to which Guarantor
is a party.
16. ADDITIONAL AND INDEPENDENT OBLIGATIONS. Guarantor's obligations
under this Guaranty are in addition to its obligations under any future
guaranties, each of which shall remain in full force and effect until it is
expressly modified or released in a writing signed by Agent and consented to by
the Lenders. Guarantor's obligations under this Guaranty are independent of
those of Borrower on the Indebtedness. Agent or the Lenders may bring a
separate action, or commence a separate arbitration proceeding against Guarantor
without first proceeding against Borrower, any other person or any security that
Agent or any Lender may hold, and without pursuing any other remedy. None of
Agent's or any Lender's rights under this Guaranty shall be exhausted by any
action by Agent or any Lender until the Indebtedness has been paid and performed
in full in cash.
17. NO WAIVER; CONSENTS; CUMULATIVE REMEDIES. Each waiver by Agent
or the Lenders must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from Agent's or any Lender's
delay in exercising or failure to exercise any right or remedy against Borrower,
Guarantor or any security. Consent by Agent or the Lenders to any act or
omission by Borrower or Guarantor shall not be construed as a consent to any
other or subsequent act or omission, or as a waiver of the requirement for
Agent's or the Lenders' consent to be obtained in any future or other instance.
All remedies of Agent and each Lender against Borrower and Guarantor are
cumulative.
18. NO RELEASE. Except as otherwise provided in Section 1, Guarantor
shall not be released, in whole or in part, from its obligations under this
Guaranty except by a writing signed by Agent and all the Lenders.
19. HEIRS, SUCCESSORS AND ASSIGNS; PARTICIPATIONS. The terms of this
Guaranty shall bind and benefit the heirs, legal representatives, successors and
assigns of Agent, the Lenders and Guarantor; provided, however, that Guarantor
may not assign this Guaranty, or assign or delegate any of its rights or
obligations under this Guaranty, without the prior written consent of Agent in
each instance. Without notice to or the consent of Guarantor, Agent and any
Lender may disclose any and all information in its possession concerning
Guarantor, this Guaranty and any security for this Guaranty to any actual or
prospective purchaser of any securities issued or to be issued by Agent or such
Lender, and to any actual or prospective purchaser or assignee of any
participation or other interest in the Indebtedness and this Guaranty.
20. NOTICES.
<PAGE>
(a) DELIVERY. All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed or delivered to its
address specified on the signature pages hereof, or to such other address as
shall be designated by such party in a written notice to the other party.
(b) RECEIPT. All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to the
telegraph company, transmitted by telecopier, confirmed by telex answerback or
delivered to the cable company, respectively, or if delivered, upon delivery.
(c) RELIANCE. Agent and each Lender shall be entitled to rely on the
authority of any person purporting to be a person authorized by Guarantor to
give such notice, and neither Agent nor any Lender shall have any liability to
Guarantor or any other person on account of any action taken or not taken by
Agent or such Lender in reliance upon such telephonic or facsimile notice. The
obligation of Guarantor hereunder shall not be affected in any way or to any
extent by any failure by Lender to receive written confirmation of any
telephonic or facsimile notice or the receipt by Agent or a Lender of a
confirmation which is at variance with the terms understood by Agent or such
Lender to be contained in the telephonic or facsimile notice.
21. RULES OF CONSTRUCTION. In this Guaranty, the word "Borrower"
includes both the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations of the
named Borrower on the Indebtedness. The word "person" includes any individual,
company, trust or other legal entity of any kind. If this Guaranty is executed
by more than one person, the word "Guarantor" includes all such persons. The
word "include(s)" means "include(s), without limitation," and the word
"including" means "including, but not limited to." When the context and
construction so require, all words used in the singular shall be deemed to have
been used in the plural and vice versa. No listing of specific instances, items
or matters in any way limits the scope or generality of any language of this
Guaranty. All headings appearing in this Guaranty are for convenience only and
shall be disregarded in construing this Guaranty.
22. GOVERNING LAW. This Guaranty shall be governed by, and construed
in accordance with, the laws of the State of Colorado, without regard to its
choice of law rules.
23. COSTS AND EXPENSES. If any lawsuit or arbitration is commenced
which arises out of, or which relates to this Guaranty, the Loan Documents or
the Indebtedness, the prevailing party shall be entitled to recover from each
other party such sums as the court or arbitrator may adjudge to be reasonable
attorneys' fees (including allocated costs for services of in-house counsel) in
the action or proceeding, in addition to costs and expenses otherwise allowed by
law. In all other situations, including any Insolvency Proceeding, Guarantor
agrees to pay all of the Agent's and each Lender's costs and expenses, including
attorneys' fees (including allocated costs for services of the Agent's and each
Lender's in-house counsel) which may be
<PAGE>
incurred in any effort to collect or enforce the Indebtedness or any part of it
or any term of this Guaranty. Without limiting any rights of the Agent or
Lenders under the Credit Agreement, all amounts of any kind due and payable
under this Guaranty (whether for principal, interest, and other costs under the
Indebtedness, or for costs, fees, and expenses for which the Guarantors are
directly responsible hereunder, or otherwise) shall accrue interest from the
time the Agent or the Lenders make demand therefor hereunder until paid in full
in cash to such Agent or the Lenders at the Base Rate, as defined in the Credit
Agreement, plus three (3%) percentage points, except to the extent that any such
amounts are then accruing interest under the Indebtedness, in which case such
Base Rate plus 3% interest rate shall not be applied if the effect would be to
compound the interest to which such obligations are subject to under the
Indebtedness.
24. CONSIDERATION. Guarantor acknowledges that it expects to benefit
from Lenders' extension of the Facility to Borrower because of its relationship
to Borrower, because such Facility is essential to the business of the Borrower
and because a portion of the Indebtedness will be available for the Borrower to
pay certain expenses intended to be incurred by Guarantor in connection with the
conduct by Guarantor of its business. Guarantor is executing this Guaranty in
consideration of these anticipated benefits.
25. INTEGRATION; MODIFICATIONS. This Guaranty (a) integrates all the
terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor, Agent and the Lenders as the final expression of
the agreement with respect to the terms and conditions set forth in this
Guaranty and as the complete and exclusive statement of the terms agreed to by
Guarantor, Agent and the Lenders. No representation, understanding, promise or
condition shall be enforceable against any party hereto unless it is contained
in this Guaranty. This Guaranty may not be modified except in a writing signed
by both Agent (with the consent of the Requisite Lenders) and Guarantor. No
course of prior dealing, usage of trade, parol or extrinsic evidence of any
nature shall be used to supplement, modify or vary any of the terms hereof. As
between Agent and the Lenders only, nothing contained in this Guaranty shall
alter the rights and obligations among Agent and the Lenders set forth in the
Credit Agreement.
26. MISCELLANEOUS. The illegality or unenforceability of one or more
provisions of this Guaranty shall not affect any other provision. Time is of
the essence in the performance of this Guaranty by Guarantor. The obligations
of each Guarantor under this Guaranty shall be joint and several.
[Rest of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Guaranty as of the date on the first page.
Guarantors:
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY,
a Maryland corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice Chairman
AIMCO-GP, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
AIMCO-LP, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
AIMCO HOLDINGS, LP,
a Delaware limited partnership
By: AIMCO HOLDINGS QRS, INC.,
a Delaware corporation,
General Partner
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
<PAGE>
AIMCO HOLDINGS QRS, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
Address Where Notices to Guarantors are
to be Sent:
AIMCO SOMERSET, INC., 1873 South Bellaire Street
a Delaware corporation 17th Floor
Denver, Colorado 90071
By: /s/ Peter K. Kompaniez Address Where Notices to Agent are to be
--------------------------- Sent:
Peter K. Kompaniez BANK OF AMERICA NATIONAL TRUST
Vice President AND SAVINGS ASSOCIATION
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Att'n: Manager - Unit #1357
AIMCO PROPERTIES Addresses Where Notices to the Lenders
FINANCE CORP., are to be sent:
a Delaware corporation Per the Credit Agreement
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
<PAGE>
AIMCO/OTC QRS, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
<PAGE>
PAYMENT GUARANTY
This Payment Guaranty ("Guaranty") is made as of January 26, 1998, by
Property Asset Management Services, Inc., a Delaware corporation, Property Asset
Management Services, L.P., a Delaware limited partnership, NHP Management
Company, a District of Columbia corporation, and Property Asset Management
Services-California, L.L.C., a California limited liability company (each of the
foregoing is referred to herein as "Guarantor") in favor of BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as the agent for itself and the
lenders ("Lenders") from time to time party to the Credit Agreement (as
hereinafter defined) (in such capacity, the "Agent").
FACTUAL BACKGROUND
The Lenders intend to make a $50,000,000 unsecured revolver to term
credit facility available to AIMCO Properties L.P., a Delaware limited
partnership (the "Borrower") in accordance with the Credit Agreement (the
"Credit Agreement"), dated of even date herewith, by and among Borrower, BofA
(as Agent and as a Lender) and the other Lenders from time to time party
thereto. In connection with the Credit Agreement, the Borrower has obtained
this Guaranty from the Guarantors, and the Guarantors have provided this
Guaranty in return for Borrower's payment of a guarantee fee. Capitalized terms
used but not defined herein will have the meanings set forth in the Credit
Agreement. As used herein, the term "Facility" shall refer individually to each
of the credit facilities available to the Borrower under the Credit Agreement.
GUARANTY
1. GUARANTY OF LOAN. Guarantor absolutely, unconditionally and
irrevocably guaranties to Agent and the Lenders the full payment of the
Indebtedness (as hereinafter defined), and unconditionally agrees to pay to
Agent and the Lenders the full amount of the Indebtedness. This is a guaranty
of payment, not of collection. If Borrower defaults in the payment when due of
the Indebtedness or any part of it, Guarantor will in lawful money of the United
States pay to Agent and the Lenders, on demand, all sums due and owing on the
Indebtedness, including all interest, charges, fees and other sums, costs and
expenses.
2. LOAN. In this Guaranty, the term "Indebtedness" is broadly
defined to mean and include all primary, secondary, direct, indirect, fixed and
contingent obligations of Borrower to pay principal, interest, prepayment
charges, breakage costs, late charges, loan fees and any other fees, charges,
sums, costs and expenses which may be owing at any time under the Loan Documents
(as such term is defined in the Credit Agreement), and shall include, without
limitation, all liabilities and obligations of the Borrower with respect to
Letters of Credit issued
<PAGE>
under the Credit Agreement, as any or all of such obligations may from time to
time be modified, amended, extended or renewed. If the amount outstanding under
the Indebtedness is determined by a court of competent jurisdiction or in any
arbitration proceeding described in Section 10.17 of the Credit Agreement, that
determination shall be conclusive and binding on Guarantor, regardless of
whether Guarantor was a party to the proceeding in which the determination was
made or not.
3. RIGHTS OF AGENT AND THE LENDERS. Guarantor authorizes Agent or
any Lender to perform any or all of the following acts at any time in its sole
discretion, all without notice to Guarantor and without affecting Guarantor's
obligations under this Guaranty:
(a) Agent or the Requisite Lenders may alter any terms of the
Indebtedness or any part of it, including renewing, compromising, extending or
accelerating, or otherwise changing the time for payment of, or increasing or
decreasing the rate of interest on, the Indebtedness or any part of it.
(b) Agent or any Lender may take and hold security for the
Indebtedness or this Guaranty, accept additional or substituted security for
either, and subordinate, exchange, enforce, waive, release, compromise, fail to
perfect and sell or otherwise dispose of any such security in accordance with
the terms of the Indebtedness.
(c) Agent or any Lender may direct the order and manner of any
sale of all or any part of any security now or later to be held for the
Indebtedness or this Guaranty, and Agent or any Lender may also bid at any such
sale.
(d) Agent or any Lender may apply any payments or recoveries
from Borrower, Guarantor or any other source, and any proceeds of any security,
to Borrower's obligations under the Loan Documents in such manner, order and
priority as Agent or such Lender may elect, whether or not those obligations are
guarantied by this Guaranty or secured at the time of the application.
(e) Agent or any Lender may release Borrower of its liability
for the Indebtedness or any part of it.
(f) Agent or any Lender may substitute, add or release any one
or more Guarantors, other guarantors or endorsers.
(g) In addition to the Indebtedness, Agent or any Lender may
extend other credit to Borrower, and may take and hold security for the credit
so extended, all without affecting Guarantor's liability under this Guaranty.
4. GUARANTY TO BE ABSOLUTE. Guarantor expressly agrees that until
the Indebtedness is paid and performed in full and each and every term, covenant
and condition of this Guaranty is fully performed, Guarantor shall not be
released by or because of:
<PAGE>
(a) Any act or event which might otherwise discharge, reduce,
limit or modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or
other act or omission of Agent or any Lender, or its failure to proceed promptly
or otherwise as against Borrower, Guarantor or any security;
(c) Any action, omission or circumstance which might increase
the likelihood that Guarantor may be called upon to perform under this Guaranty
or which might affect the rights or remedies of Guarantor as against Borrower;
(d) Any dealings occurring at any time between Borrower and
Agent or any Lender, whether relating to the Indebtedness or otherwise; or
(e) Any action of Agent or any Lender described in Section 3
above.
Guarantor hereby acknowledges that absent this Section 4,
Guarantor might have a defense to the enforcement of this Guaranty as a result
of one or more of the foregoing acts, omissions, agreement, waivers or matters.
Guarantor hereby expressly waives and surrenders any defense to its liability
under this Guaranty based upon any of the foregoing acts, omissions, agreements,
waivers or matters. It is the purpose and intent of this Guaranty that the
obligations of Guarantor under it shall be absolute and unconditional under any
and all circumstances.
5. GUARANTOR'S WAIVERS. Guarantor waives:
(a) All statutes of limitations as a defense to any action or
proceeding brought against Guarantor by Agent or any Lender, to the fullest
extent permitted by law;
(b) Any right it may have to require Agent or any Lender to
proceed against Borrower, proceed against or exhaust any security held from
Borrower, or pursue any other remedy in Agent's or any Lender's power to pursue;
(c) Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of Borrower;
(d) Any defense based on: (i) any legal disability of Borrower,
(ii) any release, discharge, modification, impairment or limitation of the
liability of Borrower to Agent or any Lender from any cause, whether consented
to by Agent or any Lender or arising by operation of law or from any bankruptcy
or other voluntary or involuntary proceeding, in or out of court, for the
adjustment of debtor-creditor relationships ("Insolvency Proceeding"), and (iii)
any rejection or disaffirmance of the Indebtedness, or any part of it, or any
security held for it, in any such Insolvency Proceeding;
<PAGE>
(e) Any defense based on any action taken or omitted by Agent or
any Lender in any Insolvency Proceeding involving Borrower, including any
election to have Agent's or that Lender's claim allowed as being secured,
partially secured or unsecured, any extension of credit by Lender to Borrower in
any Insolvency Proceeding, and the taking and holding by Agent or any Lender of
any security for any such extension of credit;
(f) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness, and demands and notices of every kind except for any
demand or notice by Agent or any Lender to Guarantor expressly provided for in
Section 1;
(g) Any defense based on or arising out of any defense that
Borrower may have to the payment or performance of the Indebtedness or any part
of it; and
(h) Any defense based on or arising out of any action of Agent
or any Lender described in Sections 3 or 4 above.
6. WAIVERS OF SUBROGATION AND OTHER RIGHTS.
(a) During the existence of an Event of Default by Borrower,
Agent or any Lender, without prior notice to or consent of Guarantor, may elect
to: (i) foreclose either judicially or nonjudicially against any real or
personal property security it may hold for the Indebtedness, (ii) accept a
transfer of any such security in lieu of foreclosure, (iii) compromise or adjust
the Indebtedness or any part of it or make any other accommodation with Borrower
or Guarantor, or (iv) exercise any other remedy against Borrower or any
security. No such action by Agent or any Lender shall release or limit the
liability of Guarantor, who shall remain liable under this Guaranty after the
action, even if the effect of the action is to deprive Guarantor of any
subrogation rights, rights of indemnity, or other rights to collect
reimbursement from Borrower for any sums paid to Agent or any Lender, whether
contractual or arising by operation of law or otherwise. Guarantor expressly
agrees that under no circumstances shall it be deemed to have any right, title,
interest or claim in or to any real or personal property to be held by Agent or
any Lender or any third party after any foreclosure or transfer in lieu of
foreclosure of any security for the Indebtedness.
(b) Regardless of whether Guarantor may have made any payments
to Lender, Guarantor hereby waives: (i) all rights of subrogation, all rights of
indemnity, and any other rights to collect reimbursement from Borrower for any
sums paid to Agent or any Lender, whether contractual or arising by operation of
law (including the United States Bankruptcy Code or any successor or similar
statute) or otherwise, (ii) all rights to enforce any remedy that Lender may
have against Borrower, and (iii) all rights to participate in any security now
or later to be held by Agent or any Lender for the Indebtedness, in each case
until the full and indefeasible payment and performance of all Indebtedness, and
all obligations of the Guarantors hereunder.
<PAGE>
(c) Guarantor waives all rights and defenses arising out of an
election of remedies by the Agent or any Lender, even though that election of
remedies may affect Guarantor's rights of subrogation and reimbursement against
the Borrower by the operation of law or otherwise. In addition, Guarantor
waives all rights and defenses that Guarantor may have because the Borrower's
indebtedness is secured by real property. This means, among other things:
(1) Agent and the Lenders may collect from Guarantor without
first foreclosing on any real or personal property collateral pledged by the
Borrower.
(2) If Agent forecloses on any real property collateral pledged
by the Borrower:
(A) The amount of the indebtedness may be reduced only by
the price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
(B) Agent and the Lenders may collect from Guarantor even
if Agent or any Lender, by foreclosing on the real property collateral, has
destroyed or affected any right Guarantor may have to collect from the Borrower.
This is an unconditional and irrevocable waiver of any rights and
defenses Guarantor may have because the Borrower's indebtedness is secured by
real property.
7. REVIVAL AND REINSTATEMENT. If Agent or any Lender is required to
pay, return or restore to Borrower or any other person any amounts previously
paid on the Indebtedness because of any Insolvency Proceeding of Borrower, any
stop notice or any other reason, the obligations of Guarantor shall be
reinstated and revived and the rights of Agent and such Lender shall continue
with regard to such amounts, all as though they had never been paid.
8. INFORMATION REGARDING OWNER. Before signing this Guaranty,
Guarantor investigated the financial condition and business operations of
Borrower and such other matters as Guarantor deemed appropriate to assure itself
of Borrower's ability to discharge its obligations under the Loan Documents.
Guarantor assumes full responsibility for that due diligence, as well as for
keeping informed of all matters which may affect Borrower's ability to pay and
perform its obligations to the Agent and the Lenders. Neither Agent nor any
Lender has any duty to disclose to Guarantor any information which such party
may have or receive about Borrower's financial condition, business operations,
or any other circumstances bearing on its ability to perform.
9. SUBORDINATION. Any rights of Guarantor, whether now existing or
later arising, to receive payment on account of any indebtedness (including
interest) owed to it by Borrower or any Subsidiary thereof or to receive any
payment from Borrower or any such Subsidiary other than those payments or
distributions permitted under Sections 7.9(b) and 7.10 of the Credit Agreement
shall at all times be subordinate as to lien and time of payment and in all
<PAGE>
other respects to the full and prior repayment of the Indebtedness. Guarantor
shall not be entitled to enforce or receive payment of any sums hereby
subordinated until the Indebtedness has been paid and performed in full and any
such sums received in violation of this Guaranty shall be received by Guarantor
in trust for the Agent and the Lenders.
10. FINANCIAL INFORMATION. Guarantor shall keep true and correct
financial books and records, using generally accepted accounting principles
consistently applied, or such other accounting principles as the Requisite
Lenders in their reasonable judgment may find acceptable from time to time.
Guarantor represents, warrants and covenants to Agent and the Lenders that all
financial information with respect to the Guarantor delivered or to be delivered
to Agent and the Lenders by the Borrower with respect to Guarantor under Section
6.1 of the Credit Agreement is or shall be true and correct and fairly presents
or will fairly present the financial position of the Guarantor for the
applicable period. Guarantor shall promptly provide Agent and the Lenders with
any additional audited financial information that Guarantor may obtain, and such
other information concerning its affairs and properties as Agent or any Lender
may reasonably request, including, without limitation, signed copies of any tax
returns if requested by Agent or the Lenders.
<PAGE>
11. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents
and warrants that:
(a) All financial statements delivered to Agent or the Lenders
were or will be prepared in accordance with generally accepted accounting
principles, or such other accounting principles as may be acceptable to the
Requisite Lenders at the time of their preparation, consistently applied;
(b) There has been no material adverse change in Guarantor's
financial condition since the dates of the statements most recently furnished to
Agent and the Lenders; and
(c) All representations and warranties given on behalf of or
with respect to Guarantor contained in Article V of the Credit Agreement and in
any other Loan Document or certification made in connection with the Credit
Agreement are true and correct.
12. COVENANTS OF GUARANTOR. Guarantor covenants and agrees that it
shall comply with and perform all covenants given on behalf of or with respect
to Guarantor (whether expressly or as a Subsidiary) contained in Articles VI and
VII of the Credit Agreement and in all other Loan Documents.
13. INTENTIONALLY OMITTED.
14. REFERENCE AND ARBITRATION.
(a) MANDATORY ARBITRATION. Any controversy or claim between or
among the parties, including those arising out of or relating to this Guaranty
or the Loan Documents and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The arbitration
shall be conducted in Los Angeles, California, in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Guaranty, and under the Commercial Rules of the American
Arbitration Association (the "AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision of this Section 14 shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration.
<PAGE>
15. AUTHORIZATION; NO VIOLATION. Guarantor is authorized to execute,
deliver and perform under this Guaranty, which is a valid, binding, and
enforceable obligation of Guarantor in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditor's rights generally. The
execution, delivery and performance of this Guaranty are not in violation of any
applicable law, regulation or ordinance, or any order or ruling of any court or
governmental agency applicable to the Guarantor. The Guaranty does not conflict
with, or constitute a breach or default under, any agreement to which Guarantor
is a party.
16. ADDITIONAL AND INDEPENDENT OBLIGATIONS. Guarantor's obligations
under this Guaranty are in addition to its obligations under any future
guaranties, each of which shall remain in full force and effect until it is
expressly modified or released in a writing signed by Agent and consented to by
the Lenders. Guarantor's obligations under this Guaranty are independent of
those of Borrower on the Indebtedness. Agent or the Lenders may bring a
separate action, or commence a separate arbitration proceeding against Guarantor
without first proceeding against Borrower, any other person or any security that
Agent or any Lender may hold, and without pursuing any other remedy. None of
Agent's or any Lender's rights under this Guaranty shall be exhausted by any
action by Agent or any Lender until the Indebtedness has been paid and performed
in full in cash.
17. NO WAIVER; CONSENTS; CUMULATIVE REMEDIES. Each waiver by Agent
or the Lenders must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from Agent's or any Lender's
delay in exercising or failure to exercise any right or remedy against Borrower,
Guarantor or any security. Consent by Agent or the Lenders to any act or
omission by Borrower or Guarantor shall not be construed as a consent to any
other or subsequent act or omission, or as a waiver of the requirement for
Agent's or the Lenders' consent to be obtained in any future or other instance.
All remedies of Agent and each Lender against Borrower and Guarantor are
cumulative.
18. NO RELEASE. Except as otherwise provided in Section 1, Guarantor
shall not be released, in whole or in part, from its obligations under this
Guaranty except by a writing signed by Agent and all the Lenders.
19. HEIRS, SUCCESSORS AND ASSIGNS; PARTICIPATIONS. The terms of this
Guaranty shall bind and benefit the heirs, legal representatives, successors and
assigns of Agent, the Lenders and Guarantor; provided, however, that Guarantor
may not assign this Guaranty, or assign or delegate any of its rights or
obligations under this Guaranty, without the prior written consent of Agent in
each instance. Without notice to or the consent of Guarantor, Agent and any
Lender may disclose any and all information in its possession concerning
Guarantor, this Guaranty and any security for this Guaranty to any actual or
prospective purchaser of any securities issued or to be issued by Agent or such
Lender, and to any actual or prospective purchaser or assignee of any
participation or other interest in the Indebtedness and this Guaranty.
20. NOTICES.
<PAGE>
(a) DELIVERY. All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed or delivered to its
address specified on the signature pages hereof, or to such other address as
shall be designated by such party in a written notice to the other party.
(b) RECEIPT. All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to the
telegraph company, transmitted by telecopier, confirmed by telex answerback or
delivered to the cable company, respectively, or if delivered, upon delivery.
(c) RELIANCE. Agent and each Lender shall be entitled to rely on the
authority of any person purporting to be a person authorized by Guarantor to
give such notice, and neither Agent nor any Lender shall have any liability to
Guarantor or any other person on account of any action taken or not taken by
Agent or such Lender in reliance upon such telephonic or facsimile notice. The
obligation of Guarantor hereunder shall not be affected in any way or to any
extent by any failure by Lender to receive written confirmation of any
telephonic or facsimile notice or the receipt by Agent or a Lender of a
confirmation which is at variance with the terms understood by Agent or such
Lender to be contained in the telephonic or facsimile notice.
21. RULES OF CONSTRUCTION. In this Guaranty, the word "Borrower"
includes both the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations of the
named Borrower on the Indebtedness. The word "person" includes any individual,
company, trust or other legal entity of any kind. If this Guaranty is executed
by more than one person, the word "Guarantor" includes all such persons. The
word "include(s)" means "include(s), without limitation," and the word
"including" means "including, but not limited to." When the context and
construction so require, all words used in the singular shall be deemed to have
been used in the plural and vice versa. No listing of specific instances, items
or matters in any way limits the scope or generality of any language of this
Guaranty. All headings appearing in this Guaranty are for convenience only and
shall be disregarded in construing this Guaranty.
22. GOVERNING LAW. This Guaranty shall be governed by, and construed
in accordance with, the laws of the State of Colorado, without regard to its
choice of law rules.
23. COSTS AND EXPENSES. If any lawsuit or arbitration is commenced
which arises out of, or which relates to this Guaranty, the Loan Documents or
the Indebtedness, the prevailing party shall be entitled to recover from each
other party such sums as the court or arbitrator may adjudge to be reasonable
attorneys' fees (including allocated costs for services of in-house counsel) in
the action or proceeding, in addition to costs and expenses otherwise allowed by
law. In all other situations, including any Insolvency Proceeding, Guarantor
agrees to pay all of the Agent's and each Lender's costs and expenses, including
attorneys' fees (including allocated costs for services of the Agent's and each
Lender's in-house counsel) which may be
<PAGE>
incurred in any effort to collect or enforce the Indebtedness or any part of it
or any term of this Guaranty. Without limiting any rights of the Agent or
Lenders under the Credit Agreement, all amounts of any kind due and payable
under this Guaranty (whether for principal, interest, and other costs under the
Indebtedness, or for costs, fees, and expenses for which the Guarantors are
directly responsible hereunder, or otherwise) shall accrue interest from the
time the Agent or the Lenders make demand therefor hereunder until paid in full
in cash to such Agent or the Lenders at the Base Rate, as defined in the Credit
Agreement, plus three (3%) percentage points, except to the extent that any such
amounts are then accruing interest under the Indebtedness, in which case such
Base Rate plus 3% interest rate shall not be applied if the effect would be to
compound the interest to which such obligations are subject to under the
Indebtedness.
24. COVENANT. Each Guarantor hereby agrees that it will make
dividend payments on its outstanding preferred stock with its excess cash to the
extent such cash is not required by the Guarantor for its business, consistent
with prudent business practices and its cash requirements.
25. INTEGRATION; MODIFICATIONS. This Guaranty (a) integrates all the
terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor, Agent and the Lenders as the final expression of
the agreement with respect to the terms and conditions set forth in this
Guaranty and as the complete and exclusive statement of the terms agreed to by
Guarantor, Agent and the Lenders. No representation, understanding, promise or
condition shall be enforceable against any party hereto unless it is contained
in this Guaranty. This Guaranty may not be modified except in a writing signed
by both Agent (with the consent of the Requisite Lenders) and Guarantor. No
course of prior dealing, usage of trade, parol or extrinsic evidence of any
nature shall be used to supplement, modify or vary any of the terms hereof. As
between Agent and the Lenders only, nothing contained in this Guaranty shall
alter the rights and obligations among Agent and the Lenders set forth in the
Credit Agreement.
26. MISCELLANEOUS. The illegality or unenforceability of one or more
provisions of this Guaranty shall not affect any other provision. Time is of
the essence in the performance of this Guaranty by Guarantor. The obligations
of each Guarantor under this Guaranty shall be joint and several.
[Rest of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Guaranty as of the date on the first page.
Guarantors:
PROPERTY ASSET MANAGEMENT
SERVICES, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
--------------------------------
Name: Address Where Notices to Guarantors are
------------------------- to be Sent:
Its: 1873 South Bellaire Street
-------------------------- 17th Floor
Denver, Colorado 90071
PROPERTY ASSET
MANAGEMENT SERVICES, L.P., Address Where Notices to Agent are to be
a Delaware limited liability Sent:
company BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Att'n: Manager - Unit #1357
By: /s/ Peter K. Kompaniez
--------------------------------
Name: Addresses Where Notices to the Lenders
------------------------- are to be sent:
Its: Per the Credit Agreement
--------------------------
NHP MANAGEMENT COMPANY,
a District of Columbia corporation
By: /s/ Peter K. Kompaniez
--------------------------------
Name:
-------------------------
Its:
--------------------------
<PAGE>
PROPERTY ASSET MANAGEMENT SERVICES-CALIFORNIA, L.L.C.,
a California limited liability company
By: /s/ Peter K. Kompaniez
--------------------------------
Name:
-------------------------
Its:
--------------------------
<PAGE>
AIMCO PROPERTIES, L.P.
FIRST AMENDMENT
TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated
as of May 8, 1998 (the "Amendment Effective Date") and entered into by and among
AIMCO PROPERTIES, L.P., a Delaware limited partnership ("BORROWER"), the
financial institutions listed on the signature pages hereof ("LENDERS") and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for Lenders
("AGENT"), and BANKBOSTON, N.A. as one of the Lenders and the Documentation
Agent and is made with reference to that certain Credit Agreement dated as of
January 26, 1998, (as amended by this Amendment, the "CREDIT AGREEMENT"), by and
among Borrower, Lenders and Agent. Capitalized terms used in this Amendment
without definition are used as defined in the Credit Agreement. The Guarantor
Subsidiaries set forth on pages S-6 through S-9 are only a party to this
Amendment for the purposes of Section 5 and are not a party to the Credit
Agreement.
RECITAL
WHEREAS, Borrower and Lenders desire to amend the Credit Agreement to
(a) provide for an increase in the Aggregate Commitment to $125,000,000 until
November 1, 1998 and thereafter reduce the Aggregate Commitment to $50,000,000,
(b) increase the maximum amount of Unencumbered Management Entity Value from
$12,500,000 to $50,000,000 until November 1, 1998 and thereafter reduce such
maximum amount to $12,500,000, (c) modify certain of the financial covenants
contained in the Credit Agreement and (d) make certain other amendments as more
specifically set forth below;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT
1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING
TO DEFINED TERMS
A. Subsection 1.1 of the Credit Agreement is hereby amended by
adding thereto the following definitions, which shall be inserted into
subsection 1.1 in the proper alphabetical order:
1
<PAGE>
"AMBASSADOR POOL PORTFOLIO" means the aggregate Indebtedness in respect of
individual Properties in the original principal amount of $203,580,000 secured
by or issued in connection in with the following reimbursement agreements: (a)
Amended and Restated Master Reimbursement Agreement, dated as of December 1,
1996, by and between Federal National Mortgage Association ("Fannie Mae") and
Ambassador VIII, L.P., as amended and assigned; and (b) Master Reimbursement
Agreement (Pool-2 Properties), dated as of December 1, 1996, by and between
Fannie Mae and Ambassador I, L.P., as amended and assigned.
"CEDAR CREEK PROPERTY" means that certain Qualified Property comprised of a
392 unit apartment project and related properties, situated in San Antonio,
Texas.
"FNMA/WASHINGTON CONDITION" means the date on which the Lenders shall have
determined that FNMA Washington Mortgage Facility Documents shall have been
amended or modified to conform the financial and other covenants of the AIMCO
Parties (as defined in the FNMA/Washington Mortgage Facility Documents) to the
covenants of Borrower set forth in Section 7.16 of the Credit Agreement, the
determination of such conformity shall be made by Lenders in their sole
discretion.
"MARKETABLE SECURITIES" means the securities of any Person which securities
are treated by such Person as "marketable securities" in accordance with GAAP
and which are quoted on the New York Stock Exchange, American Stock Exchange or
the Nasdaq National Market. On any date of determination, the value of any
Marketable Securities shall be determined in accordance with GAAP.
"REDUCTION DATE" means November 1, 1998.
"TRANCHE A" means the portion of the Aggregate Commitments available under
the Credit Agreement prior to May 8, 1998, in an amount not to exceed
$50,000,000.
"TRANCHE B" means the $75,000,000 portion of the Aggregate Commitments
which is made available from and after May 8, 1998 and which may only be
borrowed if Tranche A is fully disbursed. Availability under Tranche B shall
terminate on the Business Day prior to the Reduction Date.
B. SUBSECTION 1.1 of the Credit Agreement is hereby further amended
by deleting each of the following definitions:
(a) Aggregate Commitment;
(b) Applicable Margin;
(c) Commitment Percentage;
(d) Consolidated EBITDA;
2
<PAGE>
(e) Consolidated-EBITDA-to-Fixed Charges Ratio;
(f) Consolidated EBITDA-to-Interest Ratio;
(g) Consolidated Interest Expense;
(h) Consolidated Total Indebtedness;
(i) EBITDA;
(j) FNMA/Washington Mortgage Facility Documents;
(k) Gross Asset Value;
(l) Guarantor Subsidiaries;
(m) Net Operating Income; and
(n) Unencumbered Asset Pool NOI.
therefrom in their entirety and substituting the following therefor:
"AGGREGATE COMMITMENT" means the combined Commitments of the Lenders in
respect of Tranche A and Tranche B which is $125,000,000; provided, however,
that in all events and from and after the Reduction Date, the Aggregate
Commitment shall only include the Commitments of the Lenders in respect of
Tranche A, the amount of which shall not exceed $50,000,000.
"APPLICABLE MARGIN" means (a), with respect to Base Rate Loans, the
Applicable Base Rate Margin, and (b) with respect to LIBOR Loans, the Applicable
LIBOR Margin; provided, however, that with respect to the portion of any LIBOR
Loan funded in respect of Tranche B, the Applicable LIBOR Margin shall not apply
and instead the applicable spread for purposes of the Applicable Margin shall be
90 basis points.
"COMMITMENT PERCENTAGE" means, as to any Lender, (a) with respect to
Tranche A, the percentage equivalent of such Lender's Commitment, divided by the
total Commitments set forth in Schedule 2.1(a)(i) under Tranche A, (b) with
respect to Tranche B, the percentage equivalent of such Lender's Commitment,
divided by the total Commitments set forth in Schedule 2.1(a)(i) under Tranche
B, and (c) with respect to the Aggregate Commitment, the percentage equivalent
of such Lender's Commitment divided by the Aggregate Commitment.
"CONSOLIDATED EBITDA" means, for any period, and without double counting
any item, the sum of the Adjusted EBITDA for the Borrower, the REIT and their
respective Subsidiaries for such period on a consolidated basis, PLUS the
Borrower's pro-rata share of
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aggregate EBITDA for each of the Management Entities, PLUS the Borrower's
pro-rata share of Adjusted EBITDA in respect of any unconsolidated Person.
"CONSOLIDATED EBITDA-TO-FIXED CHARGES RATIO" means for any period of
determination, the ratio computed as follows:
Consolidated EBITDA-to-Fixed [Consolidated EBITDA]
Charges Ratio= divided by
Consolidated Fixed Charges
"CONSOLIDATED EBITDA-TO-INTEREST RATIO" means for any period of
determination, the ratio computed as follows:
Consolidated EBITDA-to-Interest [Consolidated EBITDA]
Ratio= divided by
Consolidated Interest Expense
"CONSOLIDATED INTEREST EXPENSE" means for any period of determination, and
without double counting any item, an amount equal to (a) the sum of the Interest
Expense for the Borrower, the REIT and their proportionate share of the Interest
Expense of their respective Subsidiaries for such period plus the Borrower's
pro-rata share of Interest Expense in respect of any unconsolidated Person,
excluding amounts expended for amortization of loan costs, plus (b), only for
purposes of calculating the Unencumbered Asset Pool NOI-to-Unsecured-Interest
Ratio, the amount of any Management Company Attributable Interest Expense.
"CONSOLIDATED TOTAL INDEBTEDNESS" means as of any date, and without double
counting any item, the aggregate amount of Total Indebtedness for Borrower, the
REIT and their respective Subsidiaries as of such date, plus the Borrower's
pro-rata share of Total Indebtedness in respect of any unconsolidated Person.
"EBITDA" means, for any period, the sum determined in accordance with GAAP,
of the following, for any Person (in the case of Borrower or the REIT, before
deducting for minority interests in Borrower) (a) the net income (or net loss)
of such Person during such Period PLUS (b) all consolidated amounts, plus
Borrower's pro-rata share of unconsolidated amounts, treated as expenses for
depreciation, Interest Expense and the amortization of intangibles of any kind
to the extent included in the determination of such net income (or loss), PLUS
(c) all accrued taxes on or measured by income to the extent included in the
determination of such net income (or loss); PROVIDED, HOWEVER, that net income
(or loss) shall be computed for these purposes without giving effect to (i)
extraordinary losses or extraordinary gains (including gains or losses from the
sale of Properties) and (ii) any amortization of capitalized financing expenses
or charges related to restructuring of Indebtedness.
"FNMA/WASHINGTON MORTGAGE FACILITY DOCUMENTS" means all documents relating
to credit facilities in an amount up to $50,000,000 secured by Properties not in
the Unencumbered Asset Pool now or hereafter provided to Borrower for general
partnership
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purposes including (i) a Master Credit Facility Agreement, dated as of February
4, 1998, by and among the REIT, the Borrower, AIMCO/Bluffs, L.L.C., AIMCO
Chesapeake, L.P., AIMCO Elm Creek, L.P., AIMCO Lakehaven, L.P., AIMCO Los
Arboles, L.P. and Washington Mortgage Financial Group, Ltd. and (ii) all
amendments, extensions and renewals of any of the foregoing, including any of
the foregoing necessary to satisfy the FNMA/Washington Condition.
"GROSS ASSET VALUE" means, with respect to Borrower, the REIT and their
respective Subsidiaries on a consolidated basis, and without double counting any
item, the sum of: (a) Borrower's, REIT's, or their respective Subsidiaries'
Adjusted EBITDA in respect of Qualified Properties for the prior four calendar
quarter period through the end of the most recent quarter, capitalized at the
Apartment Property Cap Rate, PLUS (b) Borrower's, REIT's, or their respective
Subsidiaries' share of Adjusted EBITDA in respect of Unqualified Properties for
the prior four calendar quarter period through the end of the most recent
quarter, capitalized at the Apartment Property Cap Rate, PLUS (c) an amount
equal to the EBITDA of the Management Entities from the commencement of the
prior calendar quarter period annualized and then multiplied by 8.0, PLUS
(d) all cash (including Restricted Cash) and the fair market value of all Cash
Equivalents held as of the last day of such quarter, PLUS (e) from and after the
satisfaction of the FNMA/Washington Condition, the amount of Marketable
Securities owned by such Person; provided, however, that no more than
$25,000,000 of Marketable Securities shall be included in the calculation of
Gross Asset Value. For purposes of the definition of Gross Asset Value with
respect to any Stabilized Property which has been Stabilized and owned for fewer
than four calendar quarters, Adjusted EBITDA shall be adjusted in respect of
such Property by annualizing the Net Operating Income from the date on which the
Property was Stabilized and owned through the date of determination. In the
case of any Property which has been owned for less than one calendar quarter,
Adjusted EBITDA shall be adjusted in respect of such Property by annualizing the
Net Operating Income for the immediately prior, complete calendar quarter,
notwithstanding that during such period the Stabilized Property was not owned by
Borrower.
"GUARANTOR SUBSIDIARIES" means AIMCO Holdings QRS, Inc., a Delaware
corporation, AIMCO/OTC QRS, Inc., a Delaware corporation, AIMCO Holdings, L.P.,
a Delaware limited partnership, AIMCO-GP, Inc., a Delaware corporation,
AIMCO-LP, Inc., a Delaware corporation, AIMCO Properties Finance Corp., a
Delaware corporation, AIMCO Somerset, Inc., a Delaware corporation, NHP
Management Company, a District of Columbia corporation, Property Asset
Management Services, L.P., a Delaware limited partnership, Property Asset
Management Services, Inc., a Delaware corporation, Property Asset Management
Services-CA, LLC, a California limited liability company, and Ambassador II,
L.P., a Delaware limited partnership, together with such other Persons that
execute and deliver to the Agent for the ratable benefit of the Lenders a
guaranty of the Obligations in the form of EXHIBIT F1 if the Person is a
qualified REIT subsidiary or EXHIBIT F2 if the Person is not a qualified REIT
subsidiary.
"NET OPERATING INCOME" means, for any period, as to any Property (a) all
gross revenues received from the operation of such Property during such period
(including, without
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limitation, payments received from insurance on account of business or rental
interruption and condemnation proceeds from any temporary use or occupancy, in
each case to the extent attributable to the period for which such Net Operating
Income is being determined, but excluding any proceeds from the sale or other
disposition of any part or all of such Property; or from any financing or
refinancing of such Property; or from any condemnation of any part or all of
such Property (except for temporary use or occupancy); or on account of a
casualty to the property (other than payments from insurance on account of
business or rental interruption); or any security deposits paid under leases of
all or a part of such Property, unless forfeited by tenants; and similar items
or transactions the proceeds of which under GAAP are deemed attributable to
capital), MINUS (b) all reasonable and customary property maintenance and repair
costs, leasing and administrative costs, management fees assumed to be four
percent (4%) of gross receipts (whether or not actually paid pursuant to a
separate management contract or otherwise) and real estate taxes and insurance
premiums actually paid by Borrower or, to the extent applicable for purposes of
calculating Net Operating Income, the applicable prior owner of such Property
during such period with respect to such Property (exclusive of Capital
Expenditures). There shall be no deduction for any expense not involving a cash
expenditure, such as depreciation.
"UNENCUMBERED ASSET POOL NOI" means, for any period, with respect to the
Unencumbered Asset Pool, the sum of (X) (1) aggregate Net Operating Income
during the preceding four calendar quarters (or, if such Properties were
Stabilized, Qualified Properties for at least one calendar quarter but less than
four calendar quarters the annualized aggregate Net Operating Income from the
date such Properties became Stabilized, Qualified Properties), plus (2), in the
case of Properties which have been Qualified Properties for less than one
calendar quarter, the annualized aggregate Net Operating Income for the
preceding calendar quarter immediately preceding the quarter in which it became
a Qualified Property plus (3), in the case of the Cedar Creek Property, until
such time as it becomes a Stabilized Property for at least one calendar quarter,
the annualized aggregate Net Operating Income during the calendar quarter ending
March 31, 1998, MINUS (Y) the aggregate amount of Capital Expenditures for all
such Properties for the corresponding periods in an amount equal to $300 per
apartment unit per annum in each of such Properties, during such period, or
annualized period, as applicable.
C. Subsection 1.1 of the Credit Agreement is hereby further amended
by deleting clause (Z) from the definition of Total Available Commitments" and
substituting the following clause (Z):
PLUS (Z) an amount equal to 20% of Unencumbered Management Entity
Value; provided, however, that such amount shall not exceed $50,000,000 and
provided, further, however, that from and after the Reduction Date such amount
shall not exceed $12,500,000;
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1.2 AMENDMENTS TO SECTION 7: BORROWER'S NEGATIVE COVENANTS
A. Section 7.2 of the Credit Agreement is hereby amended by deleting
therefrom subsection 7.2(a) and substituting the following:
(a) EXISTING OR CONTEMPLATED INDEBTEDNESS. Indebtedness of Borrower
and its Subsidiaries outstanding on the Closing Date and described in
SCHEDULE 7.2, including (1) the Indebtedness evidenced or to be evidenced
by the FNMA/Washington Mortgage Facility Documents and the NHP/Lehman
Financing or any renewal, refinancing or extension thereof; provided,
however, that any such renewal, refinancing or extension (i) shall not
increase the principal balance thereof or otherwise materially modify the
terms thereof, (ii) shall not cause the financial or other material
covenants, when taken as a whole, to be significantly more restrictive than
(A) those existing in the applicable credit documentation prior to such
renewal, refinancing or extension or (B) the comparable covenants in this
Agreement, and (iii) other than with respect to Indebtedness evidenced or
to be evidenced by the FNMA/Washington Mortgage Facility Documents, shall
have a maturity or weighted-average life not prior to the maturity of
Borrower's obligations under this Agreement and (2) Indebtedness disclosed
on Schedule 7.2(a);
B. Section 7.3 of the Credit Agreement is hereby amended by adding
thereto the following as subsection 7.3(e):
(e) PERMITTED CONTINGENT OBLIGATIONS. Contingent Obligations
specifically described on Schedule 7.3.
C. Section 7.16 of the Credit Agreement is hereby amended by
deleting therefrom subsection 7.16(d) and substituting the following:
(d) Borrower shall not permit the Consolidated EBITDA-to-Fixed
Charges Ratio computed for any fiscal quarter or year to be less than
2.00-to-1.00 unless and until the FNMA/Washington Condition occurs, in
which event such Ratio shall not be less than 1.85-to-1.00 until the
Reduction Date, whereupon such Ratio shall not be less than 2.00-to-1.00.
1.3 SUBSTITUTION OF SCHEDULES
SCHEDULE 2.1(a)(i): LENDERS' COMMITMENTS. SCHEDULE 2.1(a)(i) to the
Credit Agreement is hereby deleted from the Credit Agreement and replaced with
the substituted Schedule 2.1(a)(i)-1 attached hereto and from and after the
Reduction Date Schedule 2.1(a)(i)-1 shall be replaced with Schedule 2.1(a)(i)-2
attached hereto.
SCHEDULE 7.2: PERMITTED INDEBTEDNESS. Schedule 7.2 is hereby amended
by adding thereto the items set forth in Schedule 7.2(a) attached hereto.
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SCHEDULE 7.3: CONTINGENT OBLIGATIONS. Schedule 7.3 is hereby added to
the Credit Agreement.
1.4 UNENCUMBERED ASSET POOL; ADDITIONS AND EXCLUSIONS OF PROPERTIES
SECTION 2.13 of the Credit Agreement is hereby amended by adding
thereto the following as subsection 2.13(c):
(c) CEDAR CREEK PROPERTY. Notwithstanding any contrary
provision of this Section 2.13, if the Cedar Creek Property is a Qualified
Property it shall be added to the Unencumbered Asset Pool, notwithstanding that
it is not a Stabilized Property; provided, however, that if the Cedar Creek
Property fails to qualify as a Stabilized Property by September 30, 1998, then
thereafter it shall be excluded from the Unencumbered Asset Pool.
1.5 AMOUNT AND TERMS OF COMMITMENTS
SECTION 2.1(a)(i) is hereby amended by deleting the entire subsection
and replacing it with the following:
(i) REVOLVING LOANS. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make loans to the Borrower (each such loan,
a "Revolving Loan" and all such loans collectively, the "Revolver") from time to
time on any Business Day during the period from the Closing Date to the earlier
of the Conversion Date or the Revolver Maturity Date. The aggregate amount of
the Revolver will not exceed the lesser of the Lender's Revolving Commitment or
such Lender's Commitment Percentage (in each case in respect of Tranche A and/or
Tranche B, as applicable) of the Total Available Commitment.
SECTION 2.1(a)(ii): LETTER OF CREDIT is hereby amended by (a)
deleting the reference therein to $5,000,000 and replacing it with the amount of
$25,000,000 and (b) adding the following sentence to the end of such subsection:
In no event may any Letter of Credit be issued in respect of borrowing
availability under Tranche B.
1.6 OPTIONAL PREPAYMENTS OF LOANS
SECTION 2.5 is hereby amended by adding the following subsection (c)
thereto:
(c) ALLOCATION OF PAYMENTS BETWEEN TRANCHES.
Any payments received under this Section 2.5 shall first be
applied to reduce the Outstanding Amount in respect of Loans funded from Tranche
B and only when the Outstanding Amount of Loans funded from Tranche B has been
reduced to zero, then to the Outstanding Amount in respect of Loans funded from
Tranche A.
1.7 MANDATORY PREPAYMENTS OF LOANS
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SECTION 2.6 is hereby amended by adding the following subsection (c)
thereto:
(c) ALLOCATION OF PAYMENTS BETWEEN TRANCHES.
Any payments received under this Section 2.6 shall first be
applied to reduce the Outstanding Amount in respect of Loans funded from Tranche
B and only when the Outstanding Amount of Loans funded from Tranche B has been
reduced to zero, then to the Outstanding Amount in respect of Loans funded from
Tranche A.
1.8 SECTION 2.10 FEES
SECTION 2.10(c) COMMITMENT FEES is hereby amended by adding the
following to the end of such subsection:
Notwithstanding any other provision of this Section 2.10(c), for
purposes of calculating the commitment fee in respect of the
Tranche B portion of the Aggregate Commitment, such portion shall
be deemed to be available from and after May 8, 1998.
1.9 AMENDMENT TO SECTION 6: AFFIRMATIVE COVENANTS.
SECTION 6 is hereby amended by adding the following subsection
6.17 thereto:
(c) REFINANCE OF AMBASSADOR POOL PORTFOLIO.
Borrower shall refinance not less than 50% of the aggregate
outstanding Indebtedness in respect of the Ambassador Pool
Portfolio on or before May 1, 1999. The refinancing of the
applicable Properties shall comply with all of the applicable
covenants and provisions of the Credit Agreement and, in all
events, such Properties (including cashflow therefrom) shall not
be cross-collateralized to or cross-defaulted to each other or to
any other Properties in connection with all or any portion of
such refinancing.
1.10 AMENDMENTS TO SECTION 8: APPLICATION OF PAYMENTS
A. SECTION 8.2 of the Credit Agreement is hereby amended to add the
following provision as Section 8.2(e):
(e) If the Loans are accelerated as provided in Section 8.2(b), or if
an Event of Default described in Sections 8.1(a), (f) or (g) occurs and is
continuing, then any amounts received by Agent either on account of such
accelerated amounts or during the pendency of such Events of Default, shall be
distributed to the Lenders pro rata in the proportion their respective
Commitment Percentages under Tranche A and/or Tranche B bears to the
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Aggregate Commitments. All other payments, including those received prior to
acceleration or the occurrence and continuation of an Event of Default described
in Sections 8.1(a), (f) or (g), shall be applied as provided in Sections 2.5(c)
or 2.6(c), as applicable.
SECTION 2. ADDITIONAL NOTES
Borrower agrees to execute and deliver to Agent for Lenders an
additional Note (each an "ADDITIONAL NOTE" and collectively the "ADDITIONAL
NOTES"), in the form of the Note with appropriate insertions, to evidence Loans
in excess of the Aggregate Commitment as in effect prior to May 8, 1998. Each
of the parties hereto hereby acknowledges and agrees that each Additional Note
is a Note for all purposes under the Credit Agreement and the other Loan
Documents and that the loans evidenced by the Additional Notes shall constitute
Loans for all purposes under the Credit Agreement and the other Loan Documents.
Loans in respect of Tranche A or Tranche B shall be evidenced by separate Notes,
notwithstanding that the same Lender may be making such Loans.
SECTION 3. CONDITIONS TO EFFECTIVENESS
This Amendment shall become effective on May 8, 1998, if each of the
following conditions are satisfied:
A. Borrower has delivered to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated as of May 8,
1998:
1. A good standing certificate from the Secretary of State of
the State of organization of the REIT and Borrower and each of the
Guarantor Subsidiaries, each dated a recent date prior to or on May 8,
1998;
2. A certificate of the secretary of the REIT certifying that
except as disclosed therein, the Organizational Documents of the REIT,
Borrower and, the Guarantor Subsidiaries have not been modified in any
material respect since January 26, 1998.
3. Resolutions and certificates conforming to the requirements
of Sections 4.1(iv)(A) and (B) of the Credit Agreement authorizing and
approving the Amendment and the other documents to be delivered hereunder
and the borrowing of the Loans in respect of Tranche B; and
4. Executed copies of this Amendment and the Additional Notes
and any required guaranties from the additional Guarantor Subsidiaries.
B. Lenders and their respective counsel shall have received
originally executed copies of one or more favorable written opinions of counsel
for Borrower and the
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Guarantor Subsidiaries in form and substance satisfactory to Agent and its
counsel, dated as of the Amendment Effective Date with respect to the validity,
binding effect and enforceability of the Credit Agreement and due authorization,
execution and delivery thereof, and as to such other matters as Agent acting on
behalf of Lenders may reasonably request.
C. Concurrently with the due execution and delivery of this
Agreement by Borrower, the Agent and each of the Lenders which are the initial
Lenders party to the Credit Agreement, Borrower shall pay to BofA an arrangement
fee in respect of Tranche B as set forth in a separate letter agreement dated as
of May 8, 1998 between Borrower and BofA.
D. Borrower shall pay all amounts which it is required to pay
pursuant to Section 6(B) of this Amendment.
SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:
A. CORPORATE POWER AND AUTHORITY. Borrower has all requisite
corporate power and authority to enter into this Amendment and any other
agreements, guaranties or other operative documents to be delivered by Borrower
pursuant to the Amendment, to issue the Additional Notes and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement.
B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the Additional Notes and the performance of the Credit Agreement
and the issuance, delivery and payment of the Additional Notes have been duly
authorized by all necessary corporate action on the part of Borrower and the
other parties delivering any of such documents, as the case may be.
C. NO CONFLICT. The execution and delivery by Borrower and the
Guarantor Subsidiaries of this Amendment and the performance by Borrower of the
Credit Agreement and the issuance, delivery and payment of the Additional Notes
by Borrower do not and will not (i) violate any provision of any law or any
governmental rule or regulation applicable to Borrower or any of its
Subsidiaries, their respective Organizational Documents or any order, judgment
or decree of any court or other agency of government binding on Borrower, the
REIT or any of their Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Borrower, the REIT or any of their Subsidiaries,
(iii) result in or require the creation or imposition of any Lien upon any of
the properties or assets of Borrower, the REIT or any of their Subsidiaries, or
(iv) require any approval of stockholders or any approval or
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consent of any Person under any Contractual Obligation of Borrower, the REIT or
any of their Subsidiaries.
D. GOVERNMENTAL CONSENTS. The execution and delivery by Borrower
and the Guarantor Subsidiaries of this Amendment and the performance by Borrower
and the Guarantor Subsidiaries of the Credit Agreement and the issuance,
delivery and payment of the Additional Notes by Borrower do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by, any federal, state or other governmental authority or
regulatory body.
E. BINDING OBLIGATION. This Amendment and the Credit Agreement have
been duly executed and delivered by Borrower and the Guarantor Subsidiaries, as
applicable, and are, and the Additional Notes, when executed and delivered, will
be the legally valid and binding obligations of Borrower and the Guarantor
Subsidiaries, as applicable, enforceable against Borrower and/or the Guarantor
Subsidiaries, as applicable, in accordance with their respective terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or limiting creditors' rights generally or by equitable
principles relating to enforceability.
F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 5 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the date hereof to the same extent as though made on and
as of that date, except Section 5.5 and other representations and warranties
solely to the extent such representations and warranties specifically relate to
an earlier date, in which case they were true, correct and complete in all
material respects on and as of such earlier date.
G. ABSENCE OF DEFAULT. No event has occurred and is continuing or
will result from the consummation of the transactions contemplated by this
Amendment that would constitute an Event of Default or a Default.
SECTION 5. ACKNOWLEDGEMENT AND CONSENT
Guarantor Subsidiaries are party to the Guaranties, in each case as
amended through the date hereof, pursuant to which Guarantor Subsidiaries have
guarantied the Obligations. Nothing in this Section 5 shall be construed to
make the Guarantor Subsidiaries a party to the Credit Agreement or to create any
obligation in respect thereof except pursuant to each Guaranty.
Each Guarantor Subsidiary hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement effected pursuant to this Amendment. Each
Guarantor Subsidiary hereby confirms that each Guaranty to which it is a party
or otherwise bound will continue to guaranty or secure, as the case may be, to
the fullest extent possible the payment and performance of all of the
"Indebtedness" (as defined in the applicable Guaranty), including
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without limitation the payment and performance of all such "Indebtedness," as
the case may be, in respect of the Obligations of Borrower now or hereafter
existing under or in respect of the Credit Agreement and the Notes defined
therein. Without limiting the generality of the foregoing, each Guarantor
Subsidiary hereby acknowledges and confirms the understanding and intent of such
party that, upon the effectiveness of this Amendment, and as a result thereof,
the definition of "Obligations" contained in the Credit Agreement includes the
obligations of Borrower under the Additional Notes.
Each Guarantor Subsidiary acknowledges and agrees that any Guaranty to
which it is a party or otherwise bound shall continue in full force and effect
and that all of its obligations thereunder shall be valid and enforceable and
shall not be impaired or limited by the execution or effectiveness of this
Amendment. Each Guarantor Subsidiary represents and warrants that all
representations and warranties contained in the Credit Agreement and the
Guaranty to which it is a party or otherwise bound are true, correct and
complete in all material respects on and as of the Amendment Effective Date to
the same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case they were true, correct and complete in all material respects on and as of
such earlier date.
Each Guarantor Subsidiary other than Borrower acknowledges and agrees
that (i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Guarantor Subsidiary is not required by the terms of the Credit
Agreement or any other Loan Document to consent to the amendments to the Credit
Agreement effected pursuant to this Amendment and (ii) nothing in the Credit
Agreement, this Amendment or any other Loan Document shall be deemed to require
the consent of such Guarantor Subsidiary to any future amendments to the Credit
Agreement.
SECTION 6. MISCELLANEOUS
A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS.
(i) On and after the Amendment Effective Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein"
or words of like import referring to the Credit Agreement, and each
reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Credit Agreement, as amended
by this Amendment.
(ii) Except as specifically amended by this Amendment, the Credit
Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
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(iii) The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any
provision of, or operate as a waiver of any right, power or remedy of Agent
or any Lender under, the Credit Agreement or any of the other Loan
Documents.
B. FEES AND EXPENSES. Borrower acknowledges that all costs, fees
and expenses incurred by Agent and its counsel with respect to this Amendment
and the documents and transactions contemplated hereby shall be for the account
of Borrower.
C. HEADINGS. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.
D. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document. This Amendment shall become
effective upon the execution of a counterpart hereof by Borrower and the
Requisite Lenders, and receipt by Borrower and Agent of written, facsimile or
telephonic notification of such execution and authorization of delivery thereof.
[Signatures on Attached Pages S-1 through S-8]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first written above.
BORROWER
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO -GP, Inc., a Delaware
corporation, its general partner
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
Notices to be sent to:
1873 South Bellaire Street
17th Floor
Denver, Colorado 80222
Attention: Peter K. Kompaniez,
Vice President
Facsimile: (303) 757-8735
S-1
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B OF A
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as a Lender and as the Issuing Lender
By: /s/ Mary Bowman
---------------------------
Name: Mary Bowman
Title: Vice President
Notices to be sent to:
Bank of America National Trust
and Savings Association
CRES #1313
555 South Flower Street, 6th Floor
Los Angeles, CA 90071
Attention: M. Harvey
Telephone: 213/228-4013
Facsimile: 213/228-5389
Payments to be made to:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
333 S. Beaudry Ave.
Loan Accounting Dept #1503
Los Angeles, CA 90017
ABA #: 121 000 358
Credit Account #: 15033-00401
Attention: Unit Representative
Ref: AIMCO Unsecured Revolver
S-2
<PAGE>
AGENT
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By: /s/ Mary Bowman
---------------------------
Name: Mary Bowman
Title: Vice President
Notices to be sent to:
Bank of America National Trust and
Savings Association
CRES #1313
555 South Flower Street, 6th Floor
Los Angeles, CA 90071
Attention: M. Harvey
Telephone: 213/228-4013
Facsimile: 213/228-5389
Payments to be made to:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
ABA #: 121 000 358
Credit Account #: 15033-00401
Attention: Unit Representative
Ref: AIMCO Unsecured Revolver
S-3
<PAGE>
BANKBOSTON, N.A., LENDER AND
DOCUMENTATION AGENT
BANKBOSTON, N.A.
By: /s/ Kathleen M. Ahern
---------------------------
Name: Kathleen M. Ahern
Title: Vice President
Notices to be sent to:
BankBoston, N.A.
100 Federal Street
Mail Stop 01-32-04
Boston, MA 02110
Attention: Andrea Martingnetti
Telephone: (617) 434-2835
Facsimile: (617) 434-0645
Payments to be made to:
BANKBOSTON, N.A.
ABA #: 011-000-390
Credit Loan #: 1102655
Attention: Linda Wheeler/CLS
Ref: AIMCO Unsecured Revolver
S-4
<PAGE>
NATIONSBANK, N.A.
By: /s/ Will T. Bowers, Jr.
---------------------------
Name: Will T. Bowers, Jr.
Title: Vice President
Notices to be sent to:
NationsBank, N.A.
901 Main Street, Dallas, TX 75202
Attn: Will Bowers, Vice President
Telephone: 214-508-0276
Facsimile: 214-508-0276
Payments to be made to:
ABA No.: 111 000 025
Account No.: Credit GL #136621105 2
At: NationsBank Texas Credit
Support Real Estate
Credit
Reference: Aimco Properties, L.P.
Note #5404751
Attn: Betty Bowers
S-5
<PAGE>
GUARANTOR SUBSIDIARIES
Address Where Notices to Guarantors are
to be Sent:
1873 South Bellaire Street
17th Floor
Denver, Colorado 90071
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY,
a Maryland corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice Chairman
AIMCO-GP, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
AIMCO-LP, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
S-6
<PAGE>
AIMCO HOLDINGS, LP,
a Delaware limited partnership
By: AIMCO HOLDINGS QRS, INC.,
a Delaware corporation,
General Partner
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
AIMCO HOLDINGS QRS, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
AIMCO SOMERSET, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
AIMCO PROPERTIES FINANCE CORP.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
S-7
<PAGE>
AIMCO PROPERTIES
FINANCE PARTNERSHIP, L.P.,
a Delaware limited partnership
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
AIMCO/OTC QRS, INC.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Peter K. Kompaniez
Vice President
PROPERTY ASSET MANAGEMENT SERVICES,
INC., a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Name:
Its:
PROPERTY ASSET MANAGEMENT SERVICES, L.P.
By: /s/ Peter K. Kompaniez
---------------------------
Name:
Its:
NHP MANAGEMENT COMPANY,
a District of Columbia corporation
By: /s/ Peter K. Kompaniez
---------------------------
Name:
Its:
S-8
<PAGE>
PROPERTY MANAGEMENT SERVICES-CALIFORNIA,
LLC, a California limited liability
company
By: /s/ Peter K. Kompaniez
---------------------------
Name:
Its:
AMBASSADOR II, L.P.,
a Delaware limited liability company
By: AMBASSADOR II, Inc.,
a Delaware corporation
By: /s/ Peter K. Kompaniez
---------------------------
Name:
Its:
S-9
<PAGE>
PAYMENT GUARANTY
This Payment Guaranty ("Guaranty") is made as of May 8, 1998, by
Ambassador II, L.P., a Delaware limited partnership ("Guarantor") in favor of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as the agent
for itself and the lenders ("Lenders") from time to time party to the Credit
Agreement (as hereinafter defined) (in such capacity, the "Agent").
FACTUAL BACKGROUND
The Lenders intend to make a $125,000,000 unsecured revolver to term
credit facility available to AIMCO Properties L.P., a Delaware limited
partnership (the "Borrower") in accordance with the Credit Agreement (the
"Credit Agreement"), dated as of January 26, 1998, amended as of the date
herewith, by and among Borrower, BofA (as Agent and as a Lender) and the other
Lenders from time to time party thereto. In connection with the Credit
Agreement, the Borrower has obtained this Guaranty from the Guarantor, and the
Guarantor has provided this Guaranty in return for Borrower's payment of a
guarantee fee. Capitalized terms used but not defined herein will have the
meanings set forth in the Credit Agreement. As used herein, the term "Facility"
shall refer individually to each of the credit facilities available to the
Borrower under the Credit Agreement.
GUARANTY
1. GUARANTY OF LOAN. Guarantor absolutely, unconditionally and
irrevocably guaranties to Agent and the Lenders the full payment of the
Indebtedness (as hereinafter defined), and unconditionally agrees to pay to
Agent and the Lenders the full amount of the Indebtedness. This is a guaranty
of payment, not of collection. If Borrower defaults in the payment when due of
the Indebtedness or any part of it, Guarantor will in lawful money of the United
States pay to Agent and the Lenders, on demand, all sums due and owing on the
Indebtedness, including all interest, charges, fees and other sums, costs and
expenses.
2. LOAN. In this Guaranty, the term "Indebtedness" is broadly
defined to mean and include all primary, secondary, direct, indirect, fixed and
contingent obligations of Borrower to pay principal, interest, prepayment
charges, breakage costs, late charges, loan fees and any other fees, charges,
sums, costs and expenses that may be owing at any time under the Loan Documents
(as such term is defined in the Credit Agreement), and shall include, without
limitation, all liabilities and obligations of the Borrower with respect to
Letters of Credit issued under the Credit Agreement, as any or all of such
obligations may from time to time be modified, amended, extended or renewed. If
the amount outstanding under the Indebtedness is determined by a court of
competent jurisdiction or in any arbitration proceeding described in Section
10.17
1
<PAGE>
of the Credit Agreement, that determination shall be conclusive and binding on
Guarantor, regardless of whether Guarantor was a party to the proceeding in
which the determination was made or not.
3. RIGHTS OF AGENT AND THE LENDERS. Guarantor authorizes Agent or
any Lender to perform any or all of the following acts at any time in its sole
discretion, all without notice to Guarantor and without affecting Guarantor's
obligations under this Guaranty:
(a) Agent or the Requisite Lenders may alter any terms of the
Indebtedness or any part of it, including renewing, compromising, extending or
accelerating, or otherwise changing the time for payment of, or increasing or
decreasing the rate of interest on, the Indebtedness or any part of it.
(b) Agent or any Lender may take and hold security for the
Indebtedness or this Guaranty, accept additional or substituted security for
either, and subordinate, exchange, enforce, waive, release, compromise, fail to
perfect and sell or otherwise dispose of any such security in accordance with
the terms of the Indebtedness.
(c) Agent or any Lender may direct the order and manner of any
sale of all or any part of any security now or later to be held for the
Indebtedness or this Guaranty, and Agent or any Lender may also bid at any such
sale.
(d) Agent or any Lender may apply any payments or recoveries
from Borrower, Guarantor or any other source, and any proceeds of any security,
to Borrower's obligations under the Loan Documents in such manner, order and
priority as Agent or such Lender may elect, whether or not those obligations are
guarantied by this Guaranty or secured at the time of the application.
(e) Agent or any Lender may release Borrower of its liability
for the Indebtedness or any part of it.
(f) Agent or any Lender may substitute, add or release any one
or more Guarantors, other guarantors or endorsers.
(g) In addition to the Indebtedness, Agent or any Lender may
extend other credit to Borrower, and may take and hold security for the credit
so extended, all without affecting Guarantor's liability under this Guaranty.
4. GUARANTY TO BE ABSOLUTE. Guarantor expressly agrees that until
the Indebtedness is paid and performed in full and each and every term, covenant
and condition of this Guaranty is fully performed, Guarantor shall not be
released by or because of:
2
<PAGE>
(a) Any act or event which might otherwise discharge, reduce,
limit or modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or
other act or omission of Agent or any Lender, or its failure to proceed promptly
or otherwise as against Borrower, Guarantor or any security;
(c) Any action, omission or circumstance that might increase the
likelihood that Guarantor may be called upon to perform under this Guaranty or
that might affect the rights or remedies of Guarantor as against Borrower;
(d) Any dealings occurring at any time between Borrower and
Agent or any Lender, whether relating to the Indebtedness or otherwise; or
(e) Any action of Agent or any Lender described in Section 3
above.
Guarantor hereby acknowledges that absent this Section 4,
Guarantor might have a defense to the enforcement of this Guaranty as a result
of one or more of the foregoing acts, omissions, agreement, waivers or matters.
Guarantor hereby expressly waives and surrenders any defense to its liability
under this Guaranty based upon any of the foregoing acts, omissions, agreements,
waivers or matters. It is the purpose and intent of this Guaranty that the
obligations of Guarantor under it shall be absolute and unconditional under any
and all circumstances.
5. GUARANTOR'S WAIVERS. Guarantor waives:
(a) All statutes of limitations as a defense to any action or
proceeding brought against Guarantor by Agent or any Lender, to the fullest
extent permitted by law;
(b) Any right it may have to require Agent or any Lender to
proceed against Borrower, proceed against or exhaust any security held from
Borrower, or pursue any other remedy in Agent's or any Lender's power to pursue;
(c) Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of Borrower;
(d) Any defense based on: (i) any legal disability of Borrower,
(ii) any release, discharge, modification, impairment or limitation of the
liability of Borrower to Agent or any Lender from any cause, whether consented
to by Agent or any Lender or arising by operation of law or from any bankruptcy
or other voluntary or involuntary proceeding, in or out of court, for the
adjustment of debtor-creditor relationships ("Insolvency Proceeding"), and (iii)
any
3
<PAGE>
rejection or disaffirmance of the Indebtedness, or any part of it, or any
security held for it, in any such Insolvency Proceeding;
(e) Any defense based on any action taken or omitted by Agent or
any Lender in any Insolvency Proceeding involving Borrower, including any
election to have Agent's or that Lender's claim allowed as being secured,
partially secured or unsecured, any extension of credit by Lender to Borrower in
any Insolvency Proceeding, and the taking and holding by Agent or any Lender of
any security for any such extension of credit;
(f) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurring of new
or additional indebtedness, and demands and notices of every kind except for any
demand or notice by Agent or any Lender to Guarantor expressly provided for in
Section 1;
(g) Any defense based on or arising out of any defense that
Borrower may have to the payment or performance of the Indebtedness or any part
of it; and
(h) Any defense based on or arising out of any action of Agent
or any Lender described in Sections 3 or 4 above.
6. WAIVERS OF SUBROGATION AND OTHER RIGHTS.
(a) During the existence of an Event of Default by Borrower,
Agent or any Lender, without prior notice to or consent of Guarantor, may elect
to: (i) foreclose either judicially or nonjudicially against any real or
personal property security it may hold for the Indebtedness, (ii) accept a
transfer of any such security in lieu of foreclosure, (iii) compromise or adjust
the Indebtedness or any part of it or make any other accommodation with Borrower
or Guarantor, or (iv) exercise any other remedy against Borrower or any
security. No such action by Agent or any Lender shall release or limit the
liability of Guarantor, who shall remain liable under this Guaranty after the
action, even if the effect of the action is to deprive Guarantor of any
subrogation rights, rights of indemnity, or other rights to collect
reimbursement from Borrower for any sums paid to Agent or any Lender, whether
contractual or arising by operation of law or otherwise. Guarantor expressly
agrees that under no circumstances shall it be deemed to have any right, title,
interest or claim in or to any real or personal property to be held by Agent or
any Lender or any third party after any foreclosure or transfer in lieu of
foreclosure of any security for the Indebtedness.
(b) Regardless of whether Guarantor may have made any payments
to Lender, Guarantor hereby waives: (i) all rights of subrogation, all rights of
indemnity, and any other rights to collect reimbursement from Borrower for any
sums paid to Agent or any Lender, whether contractual or arising by operation of
law (including the United States Bankruptcy Code
4
<PAGE>
or any successor or similar statute) or otherwise, (ii) all rights to enforce
any remedy that Lender may have against Borrower, and (iii) all rights to
participate in any security now or later to be held by Agent or any Lender for
the Indebtedness, in each case until the full and indefeasible payment and
performance of all Indebtedness, and all obligations of the Guarantors
hereunder.
(c) Guarantor waives all rights and defenses arising out of an
election of remedies by the Agent or any Lender, even though that election of
remedies may affect Guarantor's rights of subrogation and reimbursement against
the Borrower by the operation of law or otherwise. In addition, Guarantor
waives all rights and defenses that Guarantor may have because the Borrower's
indebtedness is secured by real property. This means, among other things:
(1) Agent and the Lenders may collect from Guarantor without
first foreclosing on any real or personal property collateral pledged by the
Borrower.
(2) If Agent forecloses on any real property collateral pledged
by the Borrower:
(A) The amount of the indebtedness may be reduced only by
the price for which that collateral is sold at the foreclosure sale, even if the
collateral is worth more than the sale price.
(B) Agent and the Lenders may collect from Guarantor even
if Agent or any Lender, by foreclosing on the real property collateral, has
destroyed or affected any right Guarantor may have to collect from the Borrower.
This is an unconditional and irrevocable waiver of any rights and
defenses Guarantor may have because the Borrower's indebtedness is secured by
real property.
7. REVIVAL AND REINSTATEMENT. If Agent or any Lender is required to
pay, return or restore to Borrower or any other person any amounts previously
paid on the Indebtedness because of any Insolvency Proceeding of Borrower, any
stop notice or any other reason, the obligations of Guarantor shall be
reinstated and revived and the rights of Agent and such Lender shall continue
with regard to such amounts, all as though they had never been paid.
5
<PAGE>
8. INFORMATION REGARDING OWNER. Before signing this Guaranty,
Guarantor investigated the financial condition and business operations of
Borrower and such other matters as Guarantor deemed appropriate to assure itself
of Borrower's ability to discharge its obligations under the Loan Documents.
Guarantor assumes full responsibility for that due diligence, as well as for
keeping informed of all matters that may affect Borrower's ability to pay and
perform its obligations to the Agent and the Lenders. Neither Agent nor any
Lender has any duty to disclose to Guarantor any information which such party
may have or receive about Borrower's financial condition, business operations,
or any other circumstances bearing on its ability to perform.
9. SUBORDINATION. Any rights of Guarantor, whether now existing or
later arising, to receive payment on account of any indebtedness (including
interest) owed to it by Borrower or any Subsidiary thereof or to receive any
payment from Borrower or any such Subsidiary other than those payments or
distributions permitted under Sections 7.9(b) and 7.10 of the Credit Agreement
shall at all times be subordinate as to lien and time of payment and in all
other respects to the full and prior repayment of the Indebtedness. Guarantor
shall not be entitled to enforce or receive payment of any sums hereby
subordinated until the Indebtedness has been paid and performed in full and any
such sums received in violation of this Guaranty shall be received by Guarantor
in trust for the Agent and the Lenders.
10. FINANCIAL INFORMATION. Guarantor shall keep true and correct
financial books and records, using generally accepted accounting principles
consistently applied, or such other accounting principles as the Requisite
Lenders in their reasonable judgment may find acceptable from time to time.
Guarantor represents, warrants and covenants to Agent and the Lenders that all
financial information with respect to the Guarantor delivered or to be delivered
to Agent and the Lenders by the Borrower with respect to Guarantor under Section
6.1 of the Credit Agreement is or shall be true and correct and fairly presents
or will fairly present the financial position of the Guarantor for the
applicable period. Guarantor shall promptly provide Agent and the Lenders with
any additional audited financial information that Guarantor may obtain, and such
other information concerning its affairs and properties as Agent or any Lender
may reasonably request, including, without limitation, signed copies of any tax
returns if requested by Agent or the Lenders.
11. GUARANTOR'S REPRESENTATIONS AND WARRANTIES. Guarantor represents
and warrants that:
(a) All financial statements delivered to Agent or the Lenders
were or will be prepared in accordance with generally accepted accounting
principles, or such other accounting principles as may be acceptable to the
Requisite Lenders at the time of their preparation, consistently applied;
6
<PAGE>
(b) There has been no material adverse change in Guarantor's
financial condition since the dates of the statements most recently furnished to
Agent and the Lenders; and
(c) All representations and warranties given on behalf of or
with respect to Guarantor contained in Article V of the Credit Agreement and in
any other Loan Document or certification made in connection with the Credit
Agreement are true and correct.
12. COVENANTS OF GUARANTOR. Guarantor covenants and agrees that it
shall comply with and perform all covenants given on behalf of or with respect
to Guarantor (whether expressly or as a Subsidiary) contained in Articles VI and
VII of the Credit Agreement and in all other Loan Documents.
13. INTENTIONALLY OMITTED.
14. REFERENCE AND ARBITRATION.
(a) MANDATORY ARBITRATION. Any controversy or claim between or
among the parties, including those arising out of or relating to this Guaranty
or the Loan Documents and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The arbitration
shall be conducted in Los Angeles, California, in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Guaranty, and under the Commercial Rules of the American
Arbitration Association (the "AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision of this Section 14 shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration.
15. AUTHORIZATION; NO VIOLATION. Guarantor is authorized to execute,
deliver and perform under this Guaranty, which is a valid, binding, and
enforceable obligation of Guarantor in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, or similar laws affecting creditor's rights generally. The
execution, delivery and performance of this Guaranty are not in violation of any
applicable law, regulation or ordinance, or any order or ruling of any court or
governmental agency applicable to
7
<PAGE>
the Guarantor. The Guaranty does not conflict with, or constitute a breach or
default under, any agreement to which Guarantor is a party.
16. ADDITIONAL AND INDEPENDENT OBLIGATIONS. Guarantor's obligations
under this Guaranty are in addition to its obligations under any future
guaranties, each of which shall remain in full force and effect until it is
expressly modified or released in a writing signed by Agent and consented to by
the Lenders. Guarantor's obligations under this Guaranty are independent of
those of Borrower on the Indebtedness. Agent or the Lenders may bring a
separate action, or commence a separate arbitration proceeding against Guarantor
without first proceeding against Borrower, any other person or any security that
Agent or any Lender may hold, and without pursuing any other remedy. None of
Agent's or any Lender's rights under this Guaranty shall be exhausted by any
action by Agent or any Lender until the Indebtedness has been paid and performed
in full in cash.
17. NO WAIVER; CONSENTS; CUMULATIVE REMEDIES. Each waiver by Agent
or the Lenders must be in writing, and no waiver shall be construed as a
continuing waiver. No waiver shall be implied from Agent's or any Lender's
delay in exercising or failure to exercise any right or remedy against Borrower,
Guarantor or any security. Consent by Agent or the Lenders to any act or
omission by Borrower or Guarantor shall not be construed as a consent to any
other or subsequent act or omission, or as a waiver of the requirement for
Agent's or the Lenders' consent to be obtained in any future or other instance.
All remedies of Agent and each Lender against Borrower and Guarantor are
cumulative.
18. NO RELEASE. Except as otherwise provided in Section 1, Guarantor
shall not be released, in whole or in part, from its obligations under this
Guaranty except by a writing signed by Agent and all the Lenders.
19. HEIRS, SUCCESSORS AND ASSIGNS; PARTICIPATIONS. The terms of this
Guaranty shall bind and benefit the heirs, legal representatives, successors and
assigns of Agent, the Lenders and Guarantor; provided, however, that Guarantor
may not assign this Guaranty, or assign or delegate any of its rights or
obligations under this Guaranty, without the prior written consent of Agent in
each instance. Without notice to or the consent of Guarantor, Agent and any
Lender may disclose any and all information in its possession concerning
Guarantor, this Guaranty and any security for this Guaranty to any actual or
prospective purchaser of any securities issued or to be issued by Agent or such
Lender, and to any actual or prospective purchaser or assignee of any
participation or other interest in the Indebtedness and this Guaranty.
8
<PAGE>
20. NOTICES.
(a) DELIVERY. All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed or delivered to its
address specified on the signature pages hereof, or to such other address as
shall be designated by such party in a written notice to the other party.
(b) RECEIPT. All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to the
telegraph company, transmitted by telecopier, confirmed by telex answerback or
delivered to the cable company, respectively, or if delivered, upon delivery.
(c) RELIANCE. Agent and each Lender shall be entitled to rely on the
authority of any person purporting to be a person authorized by Guarantor to
give such notice, and neither Agent nor any Lender shall have any liability to
Guarantor or any other person on account of any action taken or not taken by
Agent or such Lender in reliance upon such telephonic or facsimile notice. The
obligation of Guarantor hereunder shall not be affected in any way or to any
extent by any failure by Lender to receive written confirmation of any
telephonic or facsimile notice or the receipt by Agent or a Lender of a
confirmation which is at variance with the terms understood by Agent or such
Lender to be contained in the telephonic or facsimile notice.
21. RULES OF CONSTRUCTION. In this Guaranty, the word "Borrower"
includes both the named Borrower and any other person who at any time assumes or
otherwise becomes primarily liable for all or any part of the obligations of the
named Borrower on the Indebtedness. The word "person" includes any individual,
company, trust or other legal entity of any kind. If this Guaranty is executed
by more than one person, the word "Guarantor" includes all such persons. The
word "include(s)" means "include(s), without limitation," and the word
"including" means "including, but not limited to." When the context and
construction so require, all words used in the singular shall be deemed to have
been used in the plural and vice versa. No listing of specific instances, items
or matters in any way limits the scope or generality of any language of this
Guaranty. All headings appearing in this Guaranty are for convenience only and
shall be disregarded in construing this Guaranty.
22. GOVERNING LAW. This Guaranty shall be governed by, and construed
in accordance with, the laws of the State of Colorado, without regard to its
choice of law rules.
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<PAGE>
23. COSTS AND EXPENSES. If any lawsuit or arbitration is commenced
which arises out of, or which relates to this Guaranty, the Loan Documents or
the Indebtedness, the prevailing party shall be entitled to recover from each
other party such sums as the court or arbitrator may adjudge to be reasonable
attorneys' fees (including allocated costs for services of in-house counsel) in
the action or proceeding, in addition to costs and expenses otherwise allowed by
law. In all other situations, including any Insolvency Proceeding, Guarantor
agrees to pay all of the Agent's and each Lender's costs and expenses, including
attorneys' fees (including allocated costs for services of the Agent's and each
Lender's in-house counsel) which may be incurred in any effort to collect or
enforce the Indebtedness or any part of it or any term of this Guaranty.
Without limiting any rights of the Agent or Lenders under the Credit Agreement,
all amounts of any kind due and payable under this Guaranty (whether for
principal, interest, and other costs under the Indebtedness, or for costs, fees,
and expenses for which the Guarantors are directly responsible hereunder, or
otherwise) shall accrue interest from the time the Agent or the Lenders make
demand therefor hereunder until paid in full in cash to such Agent or the
Lenders at the Base Rate, as defined in the Credit Agreement, plus three (3%)
percentage points, except to the extent that any such amounts are then accruing
interest under the Indebtedness, in which case such Base Rate plus 3% interest
rate shall not be applied if the effect would be to compound the interest to
which such obligations are subject to under the Indebtedness.
24. COVENANT. Each Guarantor hereby agrees that it will make
dividend payments on its outstanding preferred stock with its excess cash to the
extent such cash is not required by the Guarantor for its business, consistent
with prudent business practices and its cash requirements.
25. INTEGRATION; MODIFICATIONS. This Guaranty (a) integrates all the
terms and conditions mentioned in or incidental to this Guaranty, (b) supersedes
all oral negotiations and prior writings with respect to its subject matter, and
(c) is intended by Guarantor, Agent and the Lenders as the final expression of
the agreement with respect to the terms and conditions set forth in this
Guaranty and as the complete and exclusive statement of the terms agreed to by
Guarantor, Agent and the Lenders. No representation, understanding, promise or
condition shall be enforceable against any party hereto unless it is contained
in this Guaranty. This Guaranty may not be modified except in a writing signed
by both Agent (with the consent of the Requisite Lenders) and Guarantor. No
course of prior dealing, usage of trade, parol or extrinsic evidence of any
nature shall be used to supplement, modify or vary any of the terms hereof. As
between Agent and the Lenders only, nothing contained in this Guaranty shall
alter the rights and obligations among Agent and the Lenders set forth in the
Credit Agreement.
10
<PAGE>
26. MISCELLANEOUS. The illegality or unenforceability of one or more
provisions of this Guaranty shall not affect any other provision. Time is of
the essence in the performance of this Guaranty by Guarantor.
[Rest of Page Intentionally Left Blank]
11
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Guaranty as of the date on the first page.
Guarantor:
AMBASSADOR II, L.P.,
a Delaware limited partnership
By: /s/ Peter K. Kompaniez
--------------------------------
Name: Address Where Notices to Guarantor are
------------------------- to be Sent:
Its: 1873 South Bellaire Street
-------------------------- 17th Floor
Denver, Colorado 90071
Address Where Notices to Agent are to be
Sent:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Att'n: Manager - Unit #1357
Addresses Where Notices to the Lenders
are to be sent:
Per the Credit Agreement
S-1
<PAGE>
MASTER CREDIT FACILITY AGREEMENT
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
AIMCO PROPERTIES, L.P.,
AIMCO/BLUFFS, L.L.C., AIMCO CHESAPEAKE, L.P., AIMCO ELM CREEK, L.P., AIMCO
LAKEHAVEN, L.P. and AIMCO LOS ARBOLES, L.P.,
collectively, as AIMCO Parties,
and
WASHINGTON MORTGAGE FINANCIAL GROUP, LTD.,
as Lender
Dated as of
February 4, 1998
<PAGE>
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II THE CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . 34
2.01. The Credit Facility . . . . . . . . . . . . . . . . . . . . . . . 34
2.01(a) Establishment of the Credit Facility. . . . . . . . . . 34
2.01(b) Establishment of the Base Facility. . . . . . . . . . . 34
2.01(c) Establishment of Revolving Facility . . . . . . . . . . 34
2.02. Limitations on Commitment to Make Advances. . . . . . . . . . . . 35
2.02(a) Limitations on Base Facility Credit Commitment. . . . . 35
2.02(b) Limitations on Revolving Facility Credit
Commitment. . . . . . . . . . . . . . . . . . . . . . . 36
2.02(c) Limitations on any Advance. . . . . . . . . . . . . . . 37
2.03. Determination and Confirmation of Interest Rate and Other
Terms of Each Advance . . . . . . . . . . . . . . . . . . . . . . 37
2.03(a) Quote . . . . . . . . . . . . . . . . . . . . . . . . . 37
2.03(b) Rate Setting. . . . . . . . . . . . . . . . . . . . . . 38
2.03(c) Rate Confirmation . . . . . . . . . . . . . . . . . . . 38
2.03(d) Coupon Rate . . . . . . . . . . . . . . . . . . . . . . 39
2.03(e) Advance Confirmation Instrument . . . . . . . . . . . . 40
ARTICLE III INITIAL ADVANCE . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.01. Request . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.02. Conditions Precedent to Initial Advance . . . . . . . . . . . . . 41
ARTICLE IV FUTURE ADVANCES . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.01. Procedure for Obtaining Future Advances . . . . . . . . . . . . . 42
4.02. Conditions Precedent to Future Advances . . . . . . . . . . . . . 42
ARTICLE V CONVERSION OF REVOLVING FACILITY CREDIT COMMITMENT TO BASE
FACILITY CREDIT COMMITMENT. . . . . . . . . . . . . . . . . . . . 43
5.01. Right to Convert. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.02. Procedure for Obtaining Conversion. . . . . . . . . . . . . . . . 43
5.03. Limitations on Right to Convert . . . . . . . . . . . . . . . . . 44
5.04. Conditions Precedent to Conversion. . . . . . . . . . . . . . . . 44
5.05. Interest Rate of Base Facility Advances After Conversion. . . . . 45
ARTICLE VI ADDITIONS OF COLLATERAL . . . . . . . . . . . . . . . . . . . . . 45
6.01. Right to Add Collateral . . . . . . . . . . . . . . . . . . . . . 45
i
<PAGE>
6.02. Procedure for Adding Collateral . . . . . . . . . . . . . . . . . 46
6.03. Conditions Precedent to Addition of an Additional
Mortgaged Property to the Collateral Pool . . . . . . . . . . . . 47
6.04. Other Types of Collateral . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VII RELEASES OF COLLATERAL. . . . . . . . . . . . . . . . . . . . . . 49
7.01. Right to Obtain Releases of Collateral. . . . . . . . . . . . . . 49
7.02. Procedure for Obtaining Releases of Collateral. . . . . . . . . . 49
7.03. Conditions Precedent to Release of Collateral Release
Property from the Collateral. . . . . . . . . . . . . . . . . . . 51
ARTICLE VIII EXPANSION OF CREDIT FACILITY. . . . . . . . . . . . . . . . . . . 53
8.01. Right to Increase Maximum Credit Commitment . . . . . . . . . . . 53
8.02. Procedure for Obtaining Increases in Maximum Credit
Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
8.03. Limitations on Right to Increase Maximum Credit Commitment. . . . 54
8.04. Conditions Precedent to Increase in Maximum Credit
Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
8.05. Interest Rate of Advances After Increase in Maximum Credit
Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE IX COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY . . . . . . 55
9.01. Right to Complete or Partial Termination of
Revolving Facility. . . . . . . . . . . . . . . . . . . . . . . . 55
9.02. Procedure for Complete or Partial Termination of
Revolving Facility. . . . . . . . . . . . . . . . . . . . . . . . 55
9.03. Conditions Precedent to Complete or Partial Termination
of Revolving Facility . . . . . . . . . . . . . . . . . . . . . . 56
9.04. Complete Termination of Revolving Facility Upon Expiration
of Revolving Facility . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X TERMINATION OF CREDIT FACILITY. . . . . . . . . . . . . . . . . . 56
10.01. Right to Terminate Credit Facility. . . . . . . . . . . . . . . . 56
10.02. Procedure for Terminating Credit Facility . . . . . . . . . . . . 56
10.03. Conditions Precedent to Termination of Credit Facility. . . . . . 57
ARTICLE XI GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS. . . . . . . . . . . 58
(a) Payment of Expenses. . . . . . . . . . . . . . . . . . . . . 58
(b) No Material Adverse Change . . . . . . . . . . . . . . . . . 58
(c) No Default . . . . . . . . . . . . . . . . . . . . . . . . . 58
(d) No Insolvency. . . . . . . . . . . . . . . . . . . . . . . . 58
(e) No Untrue Statements . . . . . . . . . . . . . . . . . . . . 59
(f) Representations and Warranties . . . . . . . . . . . . . . . 59
(g) No Condemnation or Casualty. . . . . . . . . . . . . . . . . 59
(h) Delivery of Closing Documents. . . . . . . . . . . . . . . . 59
(i) Delivery of Closing Documents Relating to Initial
Advance Request, Collateral Addition Request or
Credit Facility Expansion Request. . . . . . . . . . . . . . 59
(j) Delivery of Property-Related Documents . . . . . . . . . . . 60
ii
<PAGE>
ARTICLE XII REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . 61
12.01. Representations and Warranties of the AIMCO Parties . . . . . . . 61
12.02. Representations and Warranties of the Owners. . . . . . . . . . . 67
12.03. Representations and Warranties of the Lender. . . . . . . . . . . 72
ARTICLE XIII COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
13.01. Affirmative Covenants of the AIMCO Parties. . . . . . . . . . . . 73
13.01(a) Compliance with Agreements; No Amendments . . . . . . . 73
13.01(b) Maintenance of Existence. . . . . . . . . . . . . . . . 73
13.01(c) Maintenance of REIT Status. . . . . . . . . . . . . . . 74
13.01(d) Financial Statements; Accountants' Reports; Other
Information . . . . . . . . . . . . . . . . . . . . . . 74
13.01(e) Certificate of Compliance . . . . . . . . . . . . . . . 77
13.01(f) Maintain Licenses . . . . . . . . . . . . . . . . . . . 77
13.01(g) Access to Records; Discussions With Officers and
Accountants . . . . . . . . . . . . . . . . . . . . . . 78
13.01(h) Inform the Lender of Material Events. . . . . . . . . . 78
13.01(i) Single-Purpose Entities . . . . . . . . . . . . . . . . 80
13.01(j) Inspection. . . . . . . . . . . . . . . . . . . . . . . 80
13.01(k) Compliance with Applicable Laws . . . . . . . . . . . . 80
13.01(l) Warranty of Title . . . . . . . . . . . . . . . . . . . 81
13.01(m) Defense of Actions. . . . . . . . . . . . . . . . . . . 81
13.01(n) Property Management; Maintenance of Properties. . . . . 82
13.01(o) Additions to the Mortgaged Properties . . . . . . . . . 82
13.01(p) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 83
13.01(q) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 83
13.01(r) Further Assurances. . . . . . . . . . . . . . . . . . . 84
13.01(s) Monitoring Compliance . . . . . . . . . . . . . . . . . 84
13.01(t) Leases. . . . . . . . . . . . . . . . . . . . . . . . . 84
13.01(u) Appraisals. . . . . . . . . . . . . . . . . . . . . . . 84
13.01(v) Expenses. . . . . . . . . . . . . . . . . . . . . . . . 84
13.01(w) Ownership . . . . . . . . . . . . . . . . . . . . . . . 85
13.01(x) Publicly Held REIT. . . . . . . . . . . . . . . . . . . 86
13.01(y) Change in Senior Management . . . . . . . . . . . . . . 86
13.01(z) Date-Down Endorsements. . . . . . . . . . . . . . . . . 87
13.01(aa) Disposition of Lakehaven Notes. . . . . . . . . . . . . 87
13.01(bb) Strategic Plan. . . . . . . . . . . . . . . . . . . . . 88
13.01(cc) Increased Costs and Reduction of
Return . . . . . . . . . . . . . . . . . . . . . . . . 88
13.02 Negative Covenants of the AIMCO Parties . . . . . . . . . . . . . 89
13.02(a) Other Activities. . . . . . . . . . . . . . . . . . . . 89
iii
<PAGE>
13.02(b) Compliance with the Loan Documents. . . . . . . . . . . 90
13.02(c) Value of Security . . . . . . . . . . . . . . . . . . . 90
13.02(d) Zoning. . . . . . . . . . . . . . . . . . . . . . . . . 90
13.02(e) Liens . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.02(f) Sale. . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.02(g) Indebtedness. . . . . . . . . . . . . . . . . . . . . . 90
13.02(h) Single-Purpose Entity . . . . . . . . . . . . . . . . . 90
13.02(i) Principal Place of Business . . . . . . . . . . . . . . 90
13.02(j) Frequency of Requests . . . . . . . . . . . . . . . . . 91
13.02(k) Change in Property Management . . . . . . . . . . . . . 91
13.02(l) Shelf Condominiums. . . . . . . . . . . . . . . . . . . 91
13.02(m) Restrictions on Ownership
Distributions . . . . . . . . . . . . . . . . . . . . . 91
13.02(n) Status as a Public Real Estate Investment Trust . . . . 91
13.02(o) Lines of Business . . . . . . . . . . . . . . . . . . . 92
13.02(p) Limitation on Unimproved Real
Property . . . . . . . . . . . . . . . . . . . . . . . 92
13.02(q) Limitation on Unimproved Real Property and New
Construction. . . . . . . . . . . . . . . . . . . . . . 92
13.02(r) No Encumbrance of Collateral Release Property . . . . . 92
13.02(s) No Further Pledge of Lakehaven Notes or Foreclosure
of Lakehaven Property . . . . . . . . . . . . . . . . . 92
13.03. Financial Covenants of the AIMCO Parties. . . . . . . . . . . . . 93
13.03(a) Financial Definitions . . . . . . . . . . . . . . . . . 93
13.03(b) Compliance with Debt Service Coverage Ratios. . . . . . 99
13.03(c) Compliance with Loan to Value Ratios. . . . . . . . . . 99
13.03(d) Compliance with Concentration Test. . . . . . . . . . . 99
13.03(e) Compliance with REIT's Net Worth Test . . . . . . . . . 99
13.04. Covenants of the Lender . . . . . . . . . . . . . . . . . . . . .100
13.04(a) Cap Rates . . . . . . . . . . . . . . . . . . . . . . .100
13.04(b) Valuations. . . . . . . . . . . . . . . . . . . . . . .100
13.04(c) Interest on Cash Collateral . . . . . . . . . . . . . .102
13.04(d) Confidentiality . . . . . . . . . . . . . . . . . . . .102
ARTICLE XIV FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .102
14.01. Fee Definitions . . . . . . . . . . . . . . . . . . . . . . . . .102
14.02. Standby Fee . . . . . . . . . . . . . . . . . . . . . . . . . . .102
14.03. Origination Fees. . . . . . . . . . . . . . . . . . . . . . . . .103
14.04. Due Diligence Fees. . . . . . . . . . . . . . . . . . . . . . . .103
14.05. Document Fees . . . . . . . . . . . . . . . . . . . . . . . . . .104
14.06. Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . .104
iv
<PAGE>
14.07. MBS-Related Costs . . . . . . . . . . . . . . . . . . . . . . . .105
14.08. Other Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . .105
ARTICLE XV CASH MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . .105
ARTICLE XVI EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . .106
16.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . .106
ARTICLE XVII REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .110
17.01. Remedies; Waivers . . . . . . . . . . . . . . . . . . . . . . . .110
17.02. No Remedy Exclusive . . . . . . . . . . . . . . . . . . . . . . .111
17.03. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
17.04. No Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . .112
17.05. Application of Payments . . . . . . . . . . . . . . . . . . . . .112
ARTICLE XVIII RIGHTS OF FANNIE MAE. . . . . . . . . . . . . . . . . . . . . . .112
18.01. Special Pool Purchase Contract. . . . . . . . . . . . . . . . . .112
18.02. Assignment of Rights. . . . . . . . . . . . . . . . . . . . . . .112
18.03. Release of Collateral . . . . . . . . . . . . . . . . . . . . . .113
18.04. Replacement of Lender . . . . . . . . . . . . . . . . . . . . . .113
18.05. Fannie Mae and Lender Fees and Expenses . . . . . . . . . . . . .113
18.06. Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . .114
ARTICLE XIX INSURANCE, REAL ESTATE TAXES. . . . . . . . . . . . . . . . . . .114
19.01. Insurance and Real Estate Taxes . . . . . . . . . . . . . . . . .114
19.02. Replacement Reserves. . . . . . . . . . . . . . . . . . . . . . .114
ARTICLE XX MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . .114
20.01. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . .114
20.02. Amendments, Changes and Modifications . . . . . . . . . . . . . .115
20.03. Payment of Costs, Fees and Expenses . . . . . . . . . . . . . . .115
20.04. Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . .115
20.05. Payments on Business Days . . . . . . . . . . . . . . . . . . . .115
20.06. Choice of Law; Consent to Jurisdiction; Waiver of
Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . .116
20.07. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . .117
20.08. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .117
20.09. Further Assurances and Corrective Instruments . . . . . . . . . .118
20.10. Term of this Agreement. . . . . . . . . . . . . . . . . . . . . .119
20.11. Assignments; Third-Party Rights . . . . . . . . . . . . . . . . .119
20.12. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . .119
v
<PAGE>
20.13. General Interpretive Principles . . . . . . . . . . . . . . . . .119
20.14. Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . .119
20.15. Standards for Decisions, Etc. . . . . . . . . . . . . . . . . . .120
20.16. Decisions in Writing. . . . . . . . . . . . . . . . . . . . . . .120
20.17. Waiver of Conditions. . . . . . . . . . . . . . . . . . . . . . .120
20.18. Contribution Agreement. . . . . . . . . . . . . . . . . . . . . .120
20.19. References to Loan Documents. . . . . . . . . . . . . . . . . . .120
vi
<PAGE>
EXHIBITS
EXHIBIT A - Schedule of Owners
EXHIBIT B - Schedule of Lakehaven Notes and Lakehaven Mortgages
EXHIBIT C - Assignment of Ownership Interests
EXHIBIT D - Base Facility Note
EXHIBIT E - Cash Management Agreement
EXHIBIT F - Compliance Certificate
EXHIBIT G - Sample Facility Debt Service
EXHIBIT H-1 - Lakehaven Note Pledge Agreement (Lakehaven One)
EXHIBIT H-2 - Lakehaven Note Pledge Agreement (Lakehaven Two)
EXHIBIT I - Organizational Certificate
EXHIBIT J - Organizational Chart
EXHIBIT K - Owner Guaranty
EXHIBIT L - REIT Guaranty
EXHIBIT M - Replacement Reserve Agreement
EXHIBIT N - Revolving Credit Endorsement
EXHIBIT O - Revolving Facility Note
EXHIBIT P - Security Instrument for Initial Mortgaged Property
EXHIBIT Q - Tie-In Endorsement
EXHIBIT R-1 - Rate Setting Form (Base Facility)
EXHIBIT R-2 - Rate Setting Form (Revolving Facility)
EXHIBIT S-1 - Rate Confirmation Form (Base Facility)
EXHIBIT S-2 - Rate Confirmation Form (Revolving Facility)
EXHIBIT T - Example of Imputed Interest Formula
EXHIBIT U - Advance Confirmation Instrument
EXHIBIT V-1 - Future Advance Request (Base Facility)
EXHIBIT V-2 - Future Advance Request (Revolving Facility)
EXHIBIT W - Conversion Request
EXHIBIT X - Master Credit Facility Agreement Conversion Amendment
EXHIBIT Y - Collateral Addition Request
EXHIBIT Z - Collateral Addition Description Package
EXHIBIT AA - Collateral Addition Request - Supporting Documents
EXHIBIT BB - Collateral Release Request
EXHIBIT CC - Collateral Release Request - Confirmation of Obligations
EXHIBIT DD - Credit Facility Expansion Request
EXHIBIT EE - Revolving Facility Termination Request
EXHIBIT FF - Revolving Facility Termination Amendment
EXHIBIT GG - Credit Facility Termination Request
EXHIBIT HH - Schedule of Property Management Agreements
vii
<PAGE>
EXHIBIT II - Independent Unit Encumbrances
EXHIBIT JJ - Contribution Agreement
</TABLE>
viii
<PAGE>
MASTER CREDIT FACILITY AGREEMENT
THIS MASTER CREDIT FACILITY AGREEMENT is made as of the 4th day of
February, 1998, by and among (i)(a) APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
a Maryland corporation (the "REIT"), (b) AIMCO PROPERTIES, L.P., a Delaware
limited partnership (the "BORROWER"), (c) 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 partnership and AIMCO LOS ARBOLES, L.P., a
Delaware limited partnership(each of the parties set forth in clause (c) being
referred to as the "INITIAL OWNERS", and, together with such additional Persons
as may agree to be bound by this Agreement in the future as an Owner, being
collectively referred to as the "OWNERS")(the REIT, the Borrower and the Owners
being collectively referred to as the "AIMCO PARTIES" and individually referred
to as an "AIMCO PARTY") and (ii) WASHINGTON MORTGAGE FINANCIAL GROUP, LTD., a
Delaware corporation (the "LENDER").
RECITALS
A. The REIT is the sole shareholder of AIMCO-GP, Inc., a Delaware corporation,
and AIMCO-LP, Inc., a Delaware corporation.
B. AIMCO-GP, Inc. is a 1% general partner in, and AIMCO-LP, Inc. is an
87% limited partner in, the Borrower.
C. AIMCO Holdings QRS, Inc., a Delaware corporation, is a 2% general
partner in, and the Borrower is a 98% limited partner in, AIMCO Holdings, L.P.,
a Delaware limited partnership.
D. AIMCO Holdings is a 1% general partner in, and the Borrower is a 99%
limited partner in, each Initial Owner (other than AIMCO/Bluffs, L.L.C.). AIMCO
Holdings is a 1% managing member, the Borrower is a 98.42% member and Property
Asset Management Services, L.P., a Delaware limited partnership, is a 0.58%
member, in AIMCO/Bluffs, L.L.C.
E. Each of the Initial Owners (other than AIMCO Lakehaven, L.P.) is the
owner of a certain Multifamily Residential Property (capitalized terms used but
not defined shall have the meanings ascribed to such terms in Article I of this
Agreement), as more particularly described in EXHIBIT A to this Agreement
opposite the name of the Initial Owner.
F. AIMCO Lakehaven, L.P. is the holder of the Lakehaven Notes described
on EXHIBIT B to this Agreement.
1
<PAGE>
G. The Borrower has requested that the Lender establish a $50,000,000
Credit Facility in favor of the Borrower, comprised initially of a $50,000,000
Revolving Facility, all or part of which can be converted to a Base Facility in
accordance with, and subject to, the terms and conditions of this Agreement.
Either or both of the Revolving Facility and the Base Facility may be reduced or
expanded in accordance with, and subject to, the terms, conditions and
limitations of this Agreement.
H. To secure the obligations of the AIMCO Parties under this Agreement
and the other Loan Documents issued in connection with the Credit Facility, the
Initial Owners shall create a Collateral Pool in favor of the Lender. The
Collateral Pool shall be comprised initially of (i) Security Instruments on the
Multifamily Residential Properties owned by the Owners and related Collateral
and (ii) a security interest, pursuant to the Lakehaven Note Pledge Agreements,
of the Lakehaven Notes and certain other related collateral owned by AIMCO
Lakehaven, L.P., as more particularly described in the Lakehaven Note Pledge
Agreements and (iii) certain other property interests, as more particularly
described in this Agreement and the Security Documents.
I. Each of the Security Documents shall be cross-defaulted (i.e., a
default under any Security Document, or under this Agreement, shall constitute a
default under each other Security Document, and this Agreement) and
cross-collateralized (i.e., each Security Document shall secure all of the AIMCO
Parties' obligations under this Agreement and the other Loan Documents issued in
connection with the Credit Facility).
J. Subject to the terms, conditions and limitations of this Agreement,
the Lender has agreed to establish the Credit Facility.
NOW, THEREFORE, the AIMCO Parties and the Lender, in consideration of the
mutual promises and agreements contained in this Agreement, hereby agree as
follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
"ADDITIONAL MORTGAGED PROPERTY" means each Multifamily Residential
Property owned by an Owner (either in fee simple or as tenant under a
ground lease meeting all of the requirements of the DUS Guide) and added to
the Collateral Pool after the Initial Closing Date pursuant to Article VI.
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"ADVANCE" means a loan made by the Lender to the Borrower under the
Credit Facility pursuant to this Agreement.
"ADVANCE CONFIRMATION INSTRUMENT" shall have the meaning set forth in
Section 2.03(e).
"AFFILIATE" or "AFFILIATED" means, when used with reference to a
specified Person, (i) any Person which, directly or indirectly, is in
control of, is controlled by, or is under common control with, the
specified Person. A Person shall be deemed to control another Person if
the controlling Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the other
Person, whether through the ownership of voting securities, by contract or
otherwise. Without limitation, any director, executive officer or
beneficial owner of ten percent (10%) or more of the equity of a Person
shall be deemed to control such Person. In no event shall the Lender be
deemed an "Affiliate" of any AIMCO Party.
"AGGREGATE DEBT SERVICE COVERAGE RATIO FOR THE TRAILING 12 MONTH
PERIOD" means, for any specified date, the ratio (expressed as a
percentage) of--
(a) the sum of--
(1) the aggregate of the Net Operating Income for the Trailing
12 Month Period for the Mortgaged Properties as of the
specified date, and
(2) the aggregate of the Lakehaven Notes Debt Service for the
Trailing 12 Month Period as of the specified date,
TO
(b) the Facility Debt Service on the specified date.
"AGGREGATE DEBT SERVICE COVERAGE RATIO FOR THE TRAILING THREE MONTH
PERIOD" means, for any specified date, the ratio (expressed as a
percentage) of--
(a) the product obtained by multiplying--
(1) the sum of--
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(A) the aggregate of the Net Operating Income for the
Trailing Three Month Period for the Mortgaged
Properties as of the specified date, and
(B) the aggregate of the Lakehaven Notes Debt Service for
the Trailing Three Month Period as of the specified
date,
by
(2) four,
TO
(b) the Facility Debt Service on the specified date.
"AGGREGATE DEBT SERVICE COVERAGE RATIOS" means, as of any specified
date, the Aggregate Debt Service Coverage Ratio for the Trailing Three
Month Period as of the specified date and the Aggregate Debt Service
Coverage Ratio for the Trailing 12 Month Period as of the specified date.
"AGGREGATE DEBT SERVICE COVERAGE RATIO" means, as of any specified date,
either the Aggregate Debt Service Coverage Ratio for the Trailing Three
Month Period as of the specified date or the Aggregate Debt Service
Coverage Ratio for the Trailing 12 Month Period as of the specified date.
"AGGREGATE LOAN TO VALUE RATIO FOR THE TRAILING 12 MONTH PERIOD"
means, for any specified date, the ratio (expressed as a percentage) of--
(a) the Advances Outstanding on the specified date,
TO
(b) the aggregate of the Valuations most recently obtained prior to
the specified date for all of the Mortgaged Properties and the
Lakehaven Notes.
"AGREEMENT" means this Master Credit Facility Agreement, as it may be
amended, supplemented or otherwise modified from time to time, including
all Recitals and Exhibits to this Agreement, each of which is hereby
incorporated into this Agreement by this reference.
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"AIMCO HOLDINGS" means AIMCO Holdings, L.P., a Delaware limited
partnership, the sole general partner or managing member, as applicable, of
each of the Owners.
"AIMCO PARTIES" means the REIT, the Borrower and the Owners.
"AIMCO-RELATED MANAGEMENT AGENT" means a management agent that the
REIT controls, or one or more members of Senior Management controls,
directly or indirectly.
"ALTERATION" shall have the meaning set forth in Section 13.01(o).
"AMORTIZATION PERIOD" means, with respect to each Base Facility
Advance, the period of not less than 20 and not more than 30 years selected
by the Borrower pursuant to the Request for the applicable Base Facility
Advance.
"APPLICABLE LAW" means (a) all applicable provisions of all
constitutions, statutes, rules, regulations and orders of all governmental
bodies, all Governmental Approvals and all orders, judgments and decrees of
all courts and arbitrators, (b) all zoning, building, environmental and
other laws, ordinances, rules, regulations and restrictions of any
Governmental Authority affecting the ownership, management, use, operation,
maintenance or repair of any Mortgaged Property, including the Americans
with Disabilities Act (if applicable), the Fair Housing Amendment Act of
1988 and Hazardous Materials Laws, (c) any building permits or any
conditions, easements, rights-of-way, covenants, restrictions of record or
any recorded or unrecorded agreement affecting or concerning any Mortgaged
Property including planned development permits, condominium declarations,
and reciprocal easement and regulatory agreements with any Governmental
Authority, (d) all laws, ordinances, rules and regulations, whether in the
form of rent control, rent stabilization or otherwise, that limit or impose
conditions on the amount of rent that may be collected from the units of
any Mortgaged Property, and (e) requirements of insurance companies or
similar organizations, affecting the operation or use of any Mortgaged
Property or the consummation of the transactions to be effected by this
Agreement or any of the other Loan Documents.
"APPRAISAL" means an appraisal of a Multifamily Residential Property
conforming to the requirements of Chapter 5 of Part III of the DUS Guide
and performed by an appraiser selected by the Borrower from a list,
furnished by the Lender, of Lender-approved appraisers for the local market
in which the Multifamily Residential Property is located.
"APPRAISED VALUE" means the value set forth in an Appraisal.
"ASSIGNMENT OF OWNERSHIP INTERESTS" means each Collateral Assignment
of Ownership Interests executed by AIMCO Holdings and the Borrower, in the
form attached
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as EXHIBIT C to this Agreement, pursuant to which the Lender is
collaterally assigned all of the Ownership Interests in each of the Owners.
"BANK OF AMERICA" Bank of America National Trust and Savings
Association.
"BANK OF AMERICA FACILITY" means a credit facility established by the
Borrower with Bank of America in an amount up to $100,000,000 pursuant to
the Bank of America Facility Documents.
"BANK OF AMERICA FACILITY DOCUMENTS" means that certain Credit
Agreement dated as of January 26, 1998 by and among the Borrower, Bank of
America and certain other parties, any other documents executed by the
Borrower in connection therewith, and all amendments, extensions and
renewals of any of the foregoing.
"BASE FACILITY" means the agreement of the Lender to make Advances to
the Borrower pursuant to Section 2.01(b)(2).
"BASE FACILITY ADVANCE" shall have the meaning set forth in Section
2.01(b)(2).
"BASE FACILITY AVAILABILITY PERIOD" means the period beginning on the
Initial Closing Date and ending on the 180th day before the last day of the
fifth Loan Year.
"BASE FACILITY CREDIT COMMITMENT" means an amount equal to the
aggregate amount of Revolving Facility Credit Commitment which is converted
to Base Facility Credit Commitment in accordance with, and subject to, the
provisions of Article V, or such greater amount, as the Borrower may elect
in accordance with, and subject to, the provisions of Article VIII, which
amount shall not, in any event, be greater than the amount by which the
Maximum Credit Commitment exceeds the Revolving Facility Credit Commitment.
"BASE FACILITY NOTE" means a promissory note, in the form attached as
EXHIBIT D to this Agreement, which will be issued by the Borrower to the
Lender, concurrently with the funding of each Base Facility Advance, to
evidence the Borrower's obligation to repay such Base Facility Advance.
"BASE FACILITY TERMINATION DATE" means, at any time during which Base
Facility Advances are Outstanding, the latest maturity date for any Base
Facility Advance Outstanding, and, at any time during which Base Facility
Advances are not Outstanding, the Revolving Facility Termination Date.
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"BASE FACILITY TERMINATION FEE" means, with respect to any Credit
Facility Termination Request, the aggregate of all Guarantee Fee and
Servicing Fee Yield Maintenance Amounts (as defined in such Base Facility
Notes) calculated under the Base Facility Notes.
"BORROWER" means AIMCO Properties, L.P., a Delaware limited
partnership.
"BUSINESS DAY" means a day on which Fannie Mae is open for business.
"CAP RATE" means, for each Mortgaged Property, a capitalization rate
selected by the Lender in accordance with Section 13.04 for use in
determining the Valuations.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central lender or other Governmental Authority having
jurisdiction, or any other law, rule or regulation, whether or not having
the force of law, regarding capital adequacy of any lender, including the
Lender, or Fannie Mae.
"CARRYING VALUE" means, with respect to any asset or liability of any
Person, the amount at which such asset or liability has been recorded or,
in accordance with GAAP, should have been recorded, in the books of account
of such Person, as reduced by any reserves or write-downs which have been
announced, set aside or taken or, in accordance with GAAP, should have been
set aside or taken, with respect thereto; PROVIDED, HOWEVER, that, if more
than one method of recording the amount of any asset or liability, or the
setting aside or taking of any reserves or write-downs with respect
thereto, is permitted under GAAP, the permitted method actually used shall
be controlling for purposes of determining Carrying Value, provided that
such method is used in a manner consistent with prior periods.
"CASH COLLATERAL" means (a) cash, (b) Permitted Investments and (c)
letters of credit complying with the requirements of the DUS Guide for
letters of credit.
"CASH MANAGEMENT AGREEMENT" means that certain Cash Management
Security, Pledge and Assignment Agreement between the Borrower, the Initial
Owners and the Lender in the form attached as EXHIBIT E to this Agreement.
"CLOSING DATE" means the Initial Closing Date and each date after the
Initial Closing Date on which the funding or other transaction requested in
a Request is required to occur.
"COLLATERAL" means the Mortgaged Properties and other collateral from
time to time or at any time encumbered by the Security Documents, the
Lakehaven Collateral, the Ownership Interests in the Owners encumbered by
the Assignment of Ownership Interests
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or any other property in which the Lender has been granted a security
interest to secure any of the AIMCO Parties' obligations under the Loan
Documents.
"COLLATERAL ADDITION FEE" means, with respect to an Additional
Mortgaged Property added to the Collateral Pool in accordance with Article
VI, a fee equal to the product obtained by multiplying--
(i) 51 basis points, by
(ii) the increase in the amount of Advances Outstanding which the
Borrower can borrow as a result of the addition of the Additional
Mortgaged Property to the Collateral Pool, as determined by the Lender
in accordance with Section 6.02(c).
"COLLATERAL ADDITION LOAN DOCUMENTS" means an Owner Guaranty from the
Owner of the Additional Mortgaged Property, a Security Instrument covering
an Additional Mortgaged Property and any other documents, instruments or
certificates required by the Lender in connection with the addition of the
Additional Mortgaged Property to the Collateral Pool pursuant to Article
VI.
"COLLATERAL ADDITION REQUEST" shall have the meaning set forth in
Section 6.02(a).
"COLLATERAL POOL" means the aggregate total of the Collateral.
"COLLATERAL RELEASE REQUEST" shall have the meaning set forth in
Section 7.02(a).
"COLLATERAL RELEASE PROPERTY" shall have the meaning set forth in
Section 7.02(a).
"COMPLIANCE CERTIFICATE" means a certificate of the AIMCO Parties in
the form attached as EXHIBIT F to this Agreement.
"CONTINGENT OBLIGATION" means, as to any Person (the "GUARANTEEING
PERSON"), any obligation of (a) the guaranteeing person or (b) another
Person (including any bank under any letter of credit) to induce the
creation of a primary obligation (as defined below) with respect to which
the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing, or in effect guaranteeing,
any indebtedness, lease, dividend or other obligation (the "PRIMARY
OBLIGATIONS") of any third person (the "PRIMARY OBLIGOR") in any manner,
whether directly or indirectly, including any obligation of the
guaranteeing person, whether or not contingent, to (1) purchase any such
primary obligation or any property constituting direct or indirect security
therefor, (2) advance or supply funds for the purchase or payment of any
such primary obligation or to maintain working capital
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or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency of the primary obligor, (3) purchase property, securities
or services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (4) otherwise assure or hold harmless the owner
of any such primary obligation against loss in respect of the primary
obligation, PROVIDED, HOWEVER, that the term "Contingent Obligation" shall
not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Contingent Obligation of
any guaranteeing person shall be deemed to be the lesser of (a) an amount
equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or (b) the maximum
amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Contingent Obligation, unless such
primary obligation and the maximum amount for which such guaranteeing
person may be liable are not stated or determinable, in which case the
amount of such Contingent Obligation shall be such guaranteeing person's
maximum reasonably anticipated liability in respect thereof as determined
by the guaranteeing person in good faith.
"COUPON RATE" shall have the meaning set forth in Section 2.03.
"CREDIT FACILITY" means the Base Facility and the Revolving Facility.
"CREDIT FACILITY EXPANSION LOAN DOCUMENTS" means amendments to the
Revolving Facility Note (if the Revolving Facility Credit Commitment is
increasing) and Security Documents, duly executed and delivered by the
parties thereto (other than the Lender), increasing the amount evidenced or
secured, as applicable, to the amount of the Maximum Credit Commitment, as
expanded in accordance with Article VIII.
"CREDIT FACILITY EXPANSION REQUEST" shall have the meaning set forth
in Section 8.02(a).
"CREDIT FACILITY TERMINATION DATE" means the Base Facility Termination
Date.
"CREDIT FACILITY TERMINATION FEE" means an amount equal to the sum
of--
(i) the Base Facility Termination Fee, if any; and
(ii) the Revolving Facility Termination Fee, if any.
"CREDIT FACILITY TERMINATION REQUEST" shall have the meaning set forth
in Section 10.02.
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"DISCOUNT" means, with respect to any Revolving Facility Advance, an
amount equal to the excess of --
(i) the face amount of the MBS backed by the Revolving Facility
Advance, over
(ii) the gross proceeds to the Lender of the sale of the MBS
backed by the Revolving Facility Advance.
"DISPOSITION" means the sale, lease, conveyance, transfer or other
disposition of (whether in one or a series of transactions) any Property,
including accounts and notes receivable (with or without recourse) and
sale-leaseback transactions, but otherwise excluding Permitted Liens.
"DUS GUIDE" means the Fannie Mae Multifamily Delegated Underwriting
and Servicing (DUS) Guide in effect as of the date hereof, as such Guide
may be amended from time to time, including amendments in the form of
Lender Memos, Guide Updates and Guide Announcements (and, if such Guide is
superseded by a Negotiated Transactions Guide, the term "DUS Guide" as used
in this Agreement means the Negotiated Transactions Guide, as such Guide
may be amended from time to time, including amendments in the form of
Lender Memos, Guide Updates and Guide Announcements). All references to
specific articles and sections of the DUS Guide shall be deemed references
to such articles and sections as they may be amended, modified, updated,
superseded, supplemented or replaced from time to time.
"DUS UNDERWRITING REQUIREMENTS" means the overall underwriting
requirements for Multifamily Residential Properties as set forth in the DUS
Guide.
"ELM CREEK PROPERTY" means the Mortgaged Property described as such on
Exhibit A to this Agreement.
"ENVIRONMENTAL ASSESSMENT" means, with respect to a Multifamily
Residential Property, an assessment and report on environmental conditions
performed in accordance with Section 204 of Part III of the DUS Guide and
Part X of the DUS Guide.
"ENVIRONMENTAL CLAIM" means any notice of violation, claim, demand,
abatement, order or other order or direction (conditional or otherwise) by
any person or entity for any damage, including personal injury (including
sickness, disease or death), tangible or intangible property damage,
contribution, indemnity, indirect or consequential damages, damage to the
environment, pollution, contamination or other adverse effects on the
environment, removal, cleanup or remedial action or for fines, penalties or
restrictions,
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resulting from or based upon (a) the existence or occurrence, or the
alleged existence or occurrence, of a Hazardous Substance Activity or (b)
the violation, or alleged violation, of any Hazardous Materials Laws in
connection with any Multifamily Residential Property.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT" means any event defined to be an "Event of Default"
under Article XVI.
"EVIDENCE OF COMPLIANCE WITH PROPERTY LAWS" means evidence
satisfactory to the Lender of compliance with Section 205 and 206 of Part
III of the DUS Guide.
"FACILITY DEBT SERVICE" means, as of any specified date, the sum of--
(a) the amount of interest and principal amortization, during the 12
month period immediately succeeding the specified date, with
respect to the Advances Outstanding on the specified date, which
shall, for these purposes, be calculated in accordance with
subparagraph (i) or (ii), as applicable:
(i) the interest and principal amortization for each Revolving
Facility Advance shall be determined as if each Revolving
Facility Advance required level monthly payments of
principal and interest (at the Coupon Rate for the Revolving
Facility Advance) in an amount necessary to fully amortize
the original principal amount of the Revolving Facility
Advance over a 30-year period, with such amortization deemed
to commence on the first day of the 12 month period, and
(ii) the interest and principal amortization for each Base
Facility Advance shall be determined on the basis of the
actual interest and principal amortization due under the
Base Facility Note evidencing the Base Facility Advance
(which Base Facility Note shall require level monthly
payments of principal and interest (at the Coupon Rate for
the Base Facility Advance) in an amount necessary to fully
amortize the original principal amount of the Base Facility
Advance over the Amortization Period for the Base Facility
Advance selected by the Borrower in accordance with Section
2.02(a)(4)); and
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(b) the amount of the Standby Fees payable to the Lender pursuant to
Section 14.02 during such 12 month period (assuming, for these
purposes, that the Unused Capacity throughout the 12 month period
is always equal to the amount of Unused Capacity on the specified
date).
EXHIBIT G to this Agreement contains an example of the determination of the
Facility Debt Service.
"FANNIE MAE" means the federally-chartered and stockholder-owned
corporation organized and existing under the Federal National Mortgage
Association Charter Act, 12 U.S.C. Section 1716 ET SEQ.
"FEE PORTION" means, as to any month, with respect to an Advance, an
amount per month equal to the product obtained by multiplying --
(a) the Fee Spread, by
(b) the amount of the Advance on the first day of such month; by
(c) 1/12.
"FEE SPREAD" means, with respect to an Advance, the number of basis
points for the Advance determined in accordance with Sections
2.03(d)(1)(ii), 2.03(d)(2)(ii) or 2.03(d)(3)(ii), as the case may be.
"FINANCIAL COVENANTS" means the covenants set forth in Section 13.03.
"FINANCING LEASE" means any lease of property, real or personal, the
obligations of the lessee in respect of which are required by GAAP to be
capitalized on a balance sheet of the lessee or to be otherwise disclosed
as such in a note to such balance sheet.
"FUTURE ADVANCE" means an Advance made after the Initial Closing Date.
"FUTURE ADVANCE REQUEST" shall have the meaning set forth in Section
4.01(a).
"GAAP" means generally accepted accounting principles in the United
States in effect from time to time, consistently applied.
"GENERAL CONDITIONS" shall have the meaning set forth in Article XI.
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"GEOGRAPHICAL DIVERSIFICATION REQUIREMENTS" means, prior to the
occurrence of an increase in the Maximum Credit Commitment pursuant to
Article VIII, a requirement that the Collateral Pool consist of at least
five Mortgaged Properties (and, for these purposes, the Lakehaven
Properties shall be considered as one Mortgaged Property) located in at
least three states and, upon the occurrence of any increase in the Maximum
Credit Commitment pursuant to Article VIII, such requirements as to the
geographical diversity of the Collateral Pool as the Lender may determine
and notify Borrower of at the time of the increase.
"GOVERNMENT OBLIGATIONS" means direct obligations of, and obligations
on which the full and timely payment of principal and interest is
unconditionally guaranteed by, the full faith and credit of the United
States of America.
"GOVERNMENTAL ACTION" means any pending or, to the actual knowledge of
an AIMCO Party, threatened suit, proceeding, order, or governmental inquiry
or opinion involving any Mortgaged Property that alleges the violation of
any Hazardous Materials Law.
"GOVERNMENTAL APPROVAL" means an authorization, permit, consent,
approval, license, registration or exemption from registration or filing
with, or report to, any Governmental Authority.
"GOVERNMENTAL AUTHORITY" means any court, board, agency, commission,
office or authority of any nature whatsoever for any governmental unit
(federal, state, county, district, municipal, city or otherwise) whether
now or hereafter in existence.
"GROSS REVENUES" means, for any specified period, with respect to any
Multifamily Residential Property, all income in respect of the Multifamily
Residential Property, as determined by the Lender in accordance with the
method described in paragraph 3 of Section 302.02 of Part V of the DUS
Guide, except that for these purposes the financial statements to be used
need not be audited and paragraph (b) of such paragraph 3 shall be taken
into account in the Lender's discretion.
"HAZARDOUS MATERIALS", with respect to any Mortgaged Property, shall
have the meaning given that term in the Security Instrument encumbering the
Mortgaged Property.
"HAZARDOUS MATERIALS LAW", with respect to any Mortgaged Property,
shall have the meaning given that term in the Security Instrument
encumbering the Mortgaged Property.
"HAZARDOUS SUBSTANCE ACTIVITY" means any storage, holding, existence,
release, spill, leaking, pumping, pouring, injection, escaping, deposit,
disposal, dispersal, leaching, migration, use, treatment, emission,
discharge, generation, processing, abatement, removal,
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disposition, handling or transportation of any Hazardous Materials from,
under, into or on any Mortgaged Property in violation of Hazardous
Materials Laws, including the discharge of any Hazardous Materials
emanating from any Mortgaged Property in violation of Hazardous Materials
Laws through the air, soil, surface water, groundwater or property and also
including the abandonment or disposal of any barrels, containers and other
receptacles containing any Hazardous Materials from or on any Mortgaged
Property in violation of Hazardous Materials Laws, in each case whether
sudden or nonsudden, accidental or nonaccidental.
"HIGHEST RATING CATEGORY" means an S&P rating category of "A-1+" for
instruments having a term of one year or less and "AAA" for instruments
having a term greater than one year, and a Moody's rating category of "P-1"
for instruments having a term of one year or less and "Aaa" for instruments
having a term greater than one year.
"IMPOSITIONS" means, with respect to any Mortgaged Property, 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 prior to, at or
after the execution of this Agreement may be assessed, levied or imposed
by, in each case, a Governmental Authority or any other Person upon such
Mortgaged Property or the rents or the ownership, use, occupancy or
enjoyment thereof, and any interest, costs or penalties with respect to any
of the foregoing.
"INDEBTEDNESS" means, with respect to any Person, as of any specified
date, without duplication, all (a) indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services (other
than current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices), (b) other indebtedness
of such Person which is evidenced by a note, bond, debenture or similar
instrument, (c) obligations of such Person under Financing Leases, (d)
obligations of such Person in respect of acceptances (as defined in Article
3 of the Uniform Commercial Code of the Commonwealth of Virginia) issued or
created for the account of such Person, (e) liabilities secured by any Lien
on any property owned by such Person even though such Person has not
assumed or otherwise become liable for the payment of such liabilities and
(f) Contingent Obligations.
"INITIAL ADVANCE" means the Revolving Facility Advance made on the
Initial Closing Date in the amount of $36,900,000.
"INITIAL ADVANCE REQUEST" shall have the meaning set forth in Section
3.01.
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"INITIAL CLOSING DATE" means the date of this Agreement.
"INITIAL MORTGAGED PROPERTIES" means the Multifamily Residential
Properties described on Exhibit A to this Agreement (but shall exclude the
Lakehaven Properties).
"INITIAL OWNERS" shall have the meaning set forth in the first
paragraph of this Agreement.
"INITIAL SECURITY INSTRUMENTS" means the Security Instruments covering
the Initial Mortgaged Properties.
"INITIAL VALUATION" means, when used with reference to specified
Collateral, the Valuation initially performed for the Collateral as of the
date on which the Collateral was added to the Collateral Pool. The Initial
Valuation for each of the Initial Mortgaged Properties and the Lakehaven
Notes is as set forth in Exhibit A to this Agreement.
"INSURANCE POLICIES" means the insurance coverage and insurance
certificates evidencing such insurance required to be maintained pursuant
to the Security Instruments.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended.
"INVESTMENT" means (a) any purchase or acquisition of any capital
stock, equity interest, asset, obligation or other security of or any
interest in, any Person, (b) any advance, loan, extension of credit or
capital contribution to any Person, (c) any purchase, lease, or other
acquisition of Property for investment purposes or for the purpose of
resale or leasing to another Person, and (d) any contingent or other
agreement to do any of the foregoing.
"LAKEHAVEN COLLATERAL" means the Lakehaven Notes and all other
collateral granted to the Lender under the Lakehaven Note Pledge
Agreements, but excluding each Lakehaven Note and other collateral
constituting a Collateral Release Property from and after the date of the
release of the Collateral Release Property from the Collateral Pool.
"LAKEHAVEN I MORTGAGE" means the aggregate of those certain
instruments described as the Lakehaven I Mortgage on Exhibit B to this
Agreement.
"LAKEHAVEN II MORTGAGE" means the aggregate of those certain
instruments described as the Lakehaven II Mortgage on Exhibit B to this
Agreement.
"LAKEHAVEN I NOTE" means that certain promissory note described as the
Lakehaven I Note in Exhibit B to this Agreement.
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"LAKEHAVEN II NOTE" means that certain promissory note described as
the Lakehaven II Note in Exhibit B to this Agreement.
"LAKEHAVEN I PROPERTY" means that real property encumbered by the
Lakehaven I Mortgage.
"LAKEHAVEN II PROPERTY" means that real property encumbered by the
Lakehaven II Mortgage.
"LAKEHAVEN LOAN DOCUMENTS" means the Lakehaven Notes and each of the
other documents or instruments evidencing, governing, securing or executed
in connection with the loans evidenced by the Lakehaven Notes.
"LAKEHAVEN NOTE PLEDGE AGREEMENT" means each Note Pledge Agreement, in
the form attached as EXHIBIT H-1 AND H-2 to this Agreement, by and between
AIMCO Lakehaven, L.P. and the Lender, pursuant to which AIMCO Lakehaven,
L.P. pledges the Lakehaven Notes and certain related collateral to the
Lender.
"LAKEHAVEN NOTES" means the Lakehaven I Note and the Lakehaven II
Note.
"LAKEHAVEN NOTES DEBT SERVICE" means, for any specified period, the
excess of--
(i) the aggregate of the amount of interest (including deferred,
accrued or additional interest, if any) and principal paid
by the Lakehaven Obligors during the specified period with
respect to the Lakehaven Notes Outstanding during the
period,
over
(ii) the amount, if any, of payments paid during the specified
period (excluding any deferred, accrued or additional
interest, if any) which are not scheduled to recur during
the 12 months immediately succeeding the specified period.
"LAKEHAVEN OBLIGOR" means Lakehaven Associates One Limited
Partnership, an Illinois limited partnership, the obligor of the Lakehaven
I Note, or Lakehaven Associates Two Limited Partnership, an Illinois
limited partnership, the obligor of the Lakehaven II Note.
"LAKEHAVEN PROPERTY" means the Lakehaven I Property or the Lakehaven
II Property.
16
<PAGE>
"LEASE" means any lease, any sublease or subsublease, license,
concession or other agreement (whether written or oral and whether now or
hereafter in effect) pursuant to which any Person is granted an exclusive
possessory interest in, or exclusive right to use or occupy all or any
portion of any space in any Mortgaged Property, and every modification,
amendment or other agreement relating to such lease, sublease, subsublease
or other agreement entered into in connection with such lease, sublease,
subsublease or other agreement, and every guarantee of the performance and
observance of the covenants, conditions and agreements to be performed and
observed by the other party thereto. The term "Lease" shall not include
any easement or other encumbrance in which the grantee is not granted an
exclusive right to occupy space in a Mortgaged Property.
"LENDER" shall have the meaning set forth in the first paragraph of
this Agreement.
"LIEN" means any mortgage, deed of trust, charge (whether fixed or
floating), pledge, lien, encumbrance, assignment, hypothecation, security
interest, conditional sale, capital lease or other title retention,
preferential right, trust arrangement or any other encumbrance, security
agreement or arrangement securing any obligation of any Person.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Advance
Confirmation Instruments for the Revolving Facility Advances, each Owner
Guaranty, the REIT Guaranty, the Security Documents, all documents executed
by the AIMCO Parties pursuant to the General Conditions set forth in
Article XI of this Agreement and any other documents executed by an AIMCO
Party from time to time in connection with this Agreement or the
transactions contemplated by this Agreement.
"LOAN YEAR" means the 12-month period from the Initial Closing Date to
and including the last day before the first anniversary of the Initial
Closing Date, and each 12-month period thereafter.
"MAJOR CREDIT FACILITY" means any credit facility in favor of the
Borrower or the REIT in an amount of up to $100,000,000 or more, including
the Bank of America Facility.
"MAJOR CREDIT FACILITY DOCUMENT" means any document evidencing a Major
Credit Facility or otherwise executed by the Borrower or the REIT in
connection with the establishment or maintenance of a Major Credit
Facility, including the Bank of America Facility Documents, and all
amendments, extensions and renewals of any of the foregoing.
"MATERIAL ADVERSE EFFECT" means, with respect to any circumstance,
act, condition or event of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation
or proceeding), whether singly or in conjunction
17
<PAGE>
with any other event or events, act or acts, condition or conditions, or
circumstance or circumstances, whether or not related, and with respect to
any specified Person or Persons, a material adverse change in or a
materially adverse effect upon any of (a) the business, operations,
property or condition (financial or otherwise) of the specified Person or
Persons, (b) the present or future ability of the specified Person or
Persons to perform the Obligations for which it is liable, (c) the
validity, priority, perfection or enforceability of this Agreement or any
other Loan Document or the rights or remedies of the Lender under any Loan
Document, or (d) the value of, or the Lender's ability to have recourse
against, any Mortgaged Property.
"MAXIMUM AGGREGATE LOAN TO VALUE RATIO FOR THE TRAILING 12 MONTH
PERIOD" means an Aggregate Loan to Value Ratio for the Trailing 12 Month
Period equal to 60%.
"MAXIMUM CREDIT COMMITMENT" means, at any time, $50,000,000, or such
greater amount, not to exceed $250,000,000, as the Borrowers may elect in
accordance with, and subject to, the provisions of Article VIII, or such
lesser amount as the Borrowers may elect in accordance with, and subject
to, the provisions of Article IX.
"MBS" means mortgage-backed securities. An MBS which is "backed" by
an Advance means that the MBS is secured by an interest in the Notes and
the Collateral Pool securing the Notes, which interest permits the holder
of the MBS to participate in the Notes and the Collateral Pool to the
extent of the Advance.
"MBS IMPUTED INTEREST RATE" shall have the meaning set forth in
Section 2.03(c).
"MBS ISSUE DATE" is the date on which a Fannie Mae MBS is issued by
Fannie Mae.
"MBS DELIVERY DATE" is the date on which a Fannie Mae MBS is delivered
by Fannie Mae.
"MBS PASS-THROUGH RATE" shall have the meaning set forth in Section
2.03(c).
"MINIMUM AGGREGATE DEBT SERVICE COVERAGE RATIO FOR THE TRAILING 12
MONTH PERIOD" means an Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period of 145%.
"MINIMUM AGGREGATE DEBT SERVICE COVERAGE RATIO FOR THE TRAILING THREE
MONTH PERIOD" means an Aggregate Debt Service Coverage Ratio for the
Trailing Three Month Period of 135%.
18
<PAGE>
"MORTGAGED PROPERTIES" means, collectively, the Initial Mortgaged
Properties and the Additional Mortgaged Properties, but excluding each
Collateral Release Property from and after the date of the release of the
Collateral Release Property from the Collateral Pool.
"MULTIFAMILY RESIDENTIAL PROPERTY" means a residential property,
located in the United States, containing five or more dwelling units in
which not more than twenty percent (20%) of the net rentable area is or
will be rented to non-residential tenants, and conforming to the
requirements of Sections 201 and 203 of Part III of the DUS Guide.
"NET OPERATING INCOME" means, for any specified period, with respect
to any Multifamily Residential Property, the aggregate net income during
such period equal to Gross Revenues during such period less the Operating
Expenses during such period. If a Mortgaged Property is not a part of the
Collateral Pool for the entire specified period, the Net Operating Income
for the Mortgaged Property for the time within the specified period during
which the Mortgaged Property is not a part of the Collateral Pool shall be
the Mortgaged Property's pro forma net operating income determined by the
Lender in accordance with the underwriting procedures set forth in Part III
of the DUS Guide.
"NOTE" means a Base Facility Note or the Revolving Facility Note, as
the context requires.
"NOTICE ADDRESS" means
(a) as to each of the AIMCO Parties:
c/o AIMCO
1873 South Bellaire Street
17th Floor
Denver, Colorado 80222
Attention: Ms. Patricia Heath
Title: Chief Accounting Officer
Telecopy No.: (303) 691-4317
with a copy to:
Skadden, Arps, Slate, Meagher & Flom, LLP
300 South Grand Avenue
Suite 3400
Los Angeles, California 90071
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<PAGE>
Attention: Allan G. Mutchnik, Esq.
Telecopy No.: (213) 687-5600
(b) as to the Lender:
Washington Mortgage Financial Group
1593 Spring Hill Road
Suite 400
Vienna, Virginia 22182
Attention: Ms. Leslie Dixon-Cook
Telecopy No.: (703) 610-1401
with a copy to:
Morgan, Lewis & Bockius LLP
1800 M Street, N.W.
Washington, D.C. 20036-5869
Attention: Gary S. Smuckler, Esq.
Telecopy No.: (202) 467-7176
(c) as to Fannie Mae:
Fannie Mae
3939 Wisconsin Avenue, N.W.
Washington, D.C. 20016-2899
Attention: Vice President for
Multifamily Asset Management
Telecopy No.: (202) 752-5016
20
<PAGE>
with a copy to:
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036-5339
Attention: Gerald L. Mitchell, Esq.
Telecopy No.: (202) 857-6395
"OBLIGATIONS" means the aggregate of the obligations of each of the
AIMCO Parties under this Agreement and the other Loan Documents.
"OPERATING EXPENSES" means, for any period, with respect to any
Multifamily Residential Property, all expenses in respect of the
Multifamily Residential Property, as determined by the Lender in accordance
with the method described in paragraph 3 of Section 302.02 of Part V of the
DUS Guide, including replacement reserves (i) if the Multifamily
Residential Property is a Mortgaged Property, in an amount equal to the
"Monthly Deposits" applicable from time to time to the Multifamily
Residential Property as set forth in the Replacement Reserve Agreement for
the Multifamily Residential Property and (ii) if the Multifamily
Residential Property is not a Mortgaged Property, the amount of "Monthly
Deposits", as reasonably determined by the Lender, which would be required
if the Multifamily Residential Property were a Mortgaged Property. For the
purposes of this definition, (i) any waiver of Monthly Deposits under a
Replacement Reserve Agreement shall be disregarded, and the full amount of
the Monthly Deposit shall be applicable as if the waiver did not exist and
(ii) there shall be no double counting any expenses, including the cost of
any replacements.
"ORGANIZATIONAL CERTIFICATE" means a certificate of the AIMCO Parties
in the form attached as EXHIBIT I to this Agreement.
"ORGANIZATIONAL CHART" means the list of Subsidiaries and Affiliates
of the REIT and other Persons in which the REIT holds, directly or
indirectly, Ownership Interests, attached as EXHIBIT J to this Agreement.
"ORGANIZATIONAL DOCUMENTS" means all certificates, instruments and
other documents pursuant to which an organization is organized or operates,
including, (i) with respect to a corporation, its articles of incorporation
and bylaws, (ii) with respect to a limited partnership, its limited
partnership certificate and partnership agreement, (iii) with respect to a
general partnership or joint venture, its partnership or joint venture
agreement and (iv) with respect to a limited liability company, its
articles of organization and operating agreement.
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<PAGE>
"OUTSTANDING" means, when used in connection with promissory notes,
other debt instruments or Advances, for a specified date, promissory notes
or other debt instruments which have been issued, or Advances which have
been made, to the extent the same have not been repaid as of the specified
date. A Lakehaven Note will only be deemed Outstanding as of any specified
date if it is part of the Collateral Pool as of the specified date.
"OWNER" means the owner (either in fee simple or as tenant under a
ground lease meeting all of the requirements of the DUS Guide) of a
Mortgaged Property or the Lakehaven Notes or any other Collateral approved
by the Lender and for which a Valuation is performed.
"OWNER GUARANTY" means that certain Guaranty executed by each Owner
and attached as EXHIBIT K to this Agreement.
"OWNERSHIP INTERESTS" means, with respect to any entity, any ownership
interests in the entity and any economic rights (such as a right to
distributions, net cash flow or net income) to which the owner of such
ownership interests is entitled.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITS" means all permits, or similar licenses or approvals issued
and/or required by an applicable Governmental Authority or any Applicable
Law in connection with the ownership, use, occupancy, leasing, management,
operation, repair, maintenance or rehabilitation of any Mortgaged Property
or any AIMCO Party's business.
"PERMITTED INVESTMENTS" means:
(i) Government Obligations;
(ii) direct obligations of, and obligations on which the full and
timely payment of principal and interest is unconditionally guaranteed by,
any agency or instrumentality of the United States of America (other than
the Federal Home Loan Mortgage Corporation) or direct obligations of the
World Bank, provided that such obligations are assigned a credit rating by
S&P and Moody's in the Highest Rating Category of S&P and of Moody's;
(iii) obligations of any state or territory of the United States
of America, or obligations of any agency, instrumentality, authority or
political subdivision of such state or territory, or obligations of any
public benefit or municipal corporation the principal of and interest on
which are guaranteed by such state or political subdivision and the
interest on
22
<PAGE>
which is payable on a current basis, and which obligations are rated in the
Highest Rating Category of S&P and of Moody's;
(iv) any written repurchase agreement entered into with a
Qualified Financial Institution whose unsecured short-term obligations are
rated in the Highest Rating Category of S&P and of Moody's;
(v) commercial paper rated in the Highest Rating Category of S&P
and of Moody's;
(vi) (a) interest-bearing negotiable certificates of deposit,
interest-bearing time deposits, interest-bearing savings accounts or
bankers' acceptances, issued by a Qualified Financial Institution whose
unsecured short-term obligations are rated in the Highest Rating Category
of S&P and of Moody's, or (b) interest-bearing negotiable certificates of
deposit, interest-bearing time deposits or interest-bearing savings
accounts, issued by a Qualified Financial Institution, if such deposits or
accounts are fully insured by the Federal Deposit Insurance Corporation;
(vii) money market mutual funds registered under the Investment
Company Act of 1940 that have been rated "AAAm-G" or "AAAm" by S&P and
"Aaa" by Moody's, provided that the portfolio of such money market mutual
fund is limited to obligations described in (x) paragraph (i) above and to
agreements to repurchase such obligations or (y) paragraphs (ii) or (iii)
above and approved in writing by Fannie Mae; and
(viii) any other investment authorized by the laws of any state if
such investments are approved in writing by Fannie Mae;
provided that Permitted Investments shall not include the following:
(1) any investments with a final maturity or any agreements with a term
greater than 365 days from the date of the investment (except
(a) obligations that provide for the optional or mandatory tender, at par,
by the holder of such obligations at least once within 365 days of the date
of purchase and (b) agreements or investments listed in paragraphs (vii)
and (viii) above), (2) any obligation (other than obligations described in
paragraphs (i) and (ii) above) with a purchase price greater or less than
the par value of such obligation, (3) mortgage-backed securities, real
estate mortgage investment conduits or collateralized mortgage obligations,
(4) interest-only or principal-only stripped securities, (5) obligations
bearing interest at inverse floating rates, (6) any investment which may be
prepaid or called at a price less than their purchase price prior to stated
maturity, (7) any investment described in paragraph (iv) above with a
Qualified Financial Institution (as defined in clause (d) of the definition
of "Qualified Financial Institution") if the Qualified Financial
Institution does not agree to submit to
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<PAGE>
jurisdiction, venue and service of process in the United States of America
in the repurchase agreement and (8) any investment the interest rate on
which is variable, and is established other than by reference to a single
interest rate index plus a single fixed spread, if any, and which interest
rate moves proportionately with that index; provided further that if any
such investment described in paragraphs (i) through (viii) above is
required to be rated, such rating requirement will not be satisfied if an
"r" highlighter or a "t" highlighter is affixed to its rating or is
otherwise applicable.
"PERMITTED LIENS" means, with respect to a Mortgaged Property, (i) the
Liens shown as exceptions to title to the Mortgaged Property set forth in
the Title Insurance Policy for the Mortgaged Property and approved by the
Lender, (ii) the Security Instrument encumbering the Mortgaged Property and
any other Lien in favor of the Lender, (iii) Liens for taxes, fees,
assessments or other governmental charges which are not delinquent or
remain payable without penalty, (iv) Liens arising solely by virtue of any
statutory or common-law provision relating to banker's liens, rights of
setoff or similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution, provided that such
deposit account is not intended by the depository to provide collateral to
the depository institution, (v) carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Liens which are not
delinquent or remain payable without penalty or which are being contested
in good faith and by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the Property subject
thereto, (vi) Liens (other than any Lien imposed by ERISA consisting of
pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation, (vii) Liens consisting of judgment or judicial
attachment Liens, provided that the enforcement of such Liens is
effectively stayed or bonded and the existence of the Lien does not
constitute an Event of Default under Section 16.01(n), and (viii) any other
Liens approved by the Lender.
"PERSON" means an individual, an estate, a trust, a corporation, a
partnership, a limited liability company or any other organization or
entity (whether governmental or private).
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of
notice or the passage of time, or both, would constitute an Event of
Default.
"PROHIBITED ACTIVITIES OR CONDITIONS", with respect to a Mortgaged
Property, shall have the meaning given that term in the Security Instrument
encumbering the Mortgaged Property.
"PROPERTY" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
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<PAGE>
"QUALIFIED FINANCIAL INSTITUTION" means any of the following having a
senior unsecured debt rating in the Highest Rating Category of S&P and
Moody's, and approved by Fannie Mae: a (a) bank or trust company organized
under the laws of any state of the United States of America, (b) national
banking association, (c) savings bank, a savings and loan association, or
an insurance company or association chartered or organized under the laws
of any state of the United States of America, (d) federal branch or agency
pursuant to the International Banking Act of 1978 or any successor
provisions of law or a domestic branch or agency of a foreign bank which
branch or agency is duly licensed or authorized to do business under the
laws of any state or territory of the United States of America, (e)
government bond dealer reporting to, trading with, and recognized as a
primary dealer by the Federal Reserve Bank of New York, and (f) securities
dealer approved in writing by Fannie Mae the liquidation of which is
subject to the Securities Investors Protection Corporation or other similar
corporation.
"REAL ESTATE ASSETS" shall have the meaning set forth in Section
856(c)(6)(B) of the Internal Revenue Code and the regulations thereunder.
"REIT" means Apartment Investment and Management Company, a Maryland
corporation.
"REIT GUARANTY" means that certain Guaranty executed by the REIT and
attached as EXHIBIT L to this Agreement.
"REIT SUB" means AIMCO-GP, Inc., a Delaware corporation, AIMCO-LP,
Inc., a Delaware corporation or AIMCO Holdings QRS, Inc., a Delaware
corporation.
"RELEASE FEE" means, with respect to each Mortgaged Property or
Lakehaven Note released from the Collateral Pool pursuant to Article VII, a
fee equal to $15,000.
"RELEASE PRICE" shall have the meaning set forth in Section 7.02(c).
"RENT ROLL" means, with respect to any Multifamily Residential
Property, a rent roll prepared and certified by the owner of the
Multifamily Residential Property, on Fannie Mae Form 4243, as set forth in
Exhibit III-3 of the DUS Guide, or on another form approved by the Lender
and containing substantially the same information as Form 4243 requires.
"REPLACEMENT RESERVE AGREEMENT" means a Replacement Reserve and
Security Agreement, in the form attached as EXHIBIT M to this Agreement,
and completed in accordance with the requirements of the DUS Guide.
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<PAGE>
"REQUEST" means a Collateral Addition Request, a Collateral Release
Request, a Conversion Request, a Credit Facility Expansion Request, a
Credit Facility Termination Request, a Future Advance Request, an Initial
Advance Request or a Revolving Facility Termination Request, as the context
requires.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its Property or to which the Person or any of its Property
is subject.
"REVOLVING CREDIT ENDORSEMENT" means an endorsement to a Title
Insurance Policy which contains substantially the same coverages, and is
subject to substantially the same or fewer exceptions (or such other
exceptions as the Lender may approve), as the form attached as EXHIBIT N to
this Agreement.
"REVOLVING FACILITY" means the agreement of the Lender to make
Advances to the Borrower pursuant to Section 2.01(c)(2).
"REVOLVING FACILITY ADVANCE" shall have the meaning set forth in
Section 2.01(c)(2).
"REVOLVING FACILITY AVAILABILITY PERIOD" means the period beginning on
the Revolving Facility Commencement Date and ending on the 90th day before
the Revolving Facility Termination Date.
"REVOLVING FACILITY COMMENCEMENT DATE" means the Initial Closing Date.
"REVOLVING FACILITY CREDIT COMMITMENT" means an amount equal to
$50,000,000, or such greater amount as the Borrower may elect in accordance
with, and subject to, the provisions of Article VIII, or such lesser amount
as the Borrower may elect in accordance with, and subject to, the
provisions of Articles V or IX.
"REVOLVING FACILITY NOTE" means the promissory note, in the form
attached as EXHIBIT O to this Agreement, which has been issued by the
Borrower to the Lender as of the date of this Agreement to evidence the
Borrower's obligation to repay Revolving Facility Advances.
"REVOLVING FACILITY TERMINATION DATE" means the last day of the fifth
Loan Year.
"REVOLVING FACILITY TERMINATION FEE" means, with respect to a
reduction in the Revolving Facility Credit Commitment pursuant to Articles
IX or X which occurs more than
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180 days before the Revolving Facility Termination Date, an amount equal to
the product obtained by multiplying--
(1) the amount of the reduction in the Revolving Facility Credit
Commitment, by
(2) 22 basis points, by
(3) the present value factor calculated using the following formula:
-n
1 - (1 + r)
-----------
r
[r = Yield Rate
n = the number of years,
and any fraction thereof, remaining between
the date on which the reduction in the
Revolving Facility Credit Commitment actually
closes and the Revolving Facility Termination
Date]
The "Yield Rate" means the yield rate on the 5.50% U.S. Treasury Security
due on January 31, 2003 (the "SPECIFIED U.S. TREASURY SECURITY"), as the
Yield Rate is reported in the WALL STREET JOURNAL on the fifth Business Day
preceding, as applicable,(x) the date of the reduction in the Revolving
Facility Credit Commitment, (y) the date of the Complete Revolving Facility
Termination or (z) the date of Lender's acceleration of the unpaid
principal balance of the Revolving Facility Note. In the event that no
Yield Rate is published for the Specified U.S. Treasury Security, then the
nearest equivalent U.S. Treasury Security shall be selected at Lender's
reasonable discretion. If the publication of such Yield Rates in the WALL
STREET JOURNAL is discontinued, Lender shall determine such Yield Rates
from another source selected by Lender. If the reduction in the Revolving
Facility Credit Commitment occurs on or after the 180th day before the
Revolving Facility Termination Date, the Revolving Facility Termination Fee
shall equal $0.
"SECURITY DOCUMENTS" means the Security Instruments, the Assignment of
Ownership Interests, the Cash Management Agreement, the Lakehaven Note
Pledge Agreements, the Replacement Reserve Agreement and any other
documents executed by an AIMCO Party from time to time to secure any of the
AIMCO Parties' obligations under the Loan Documents.
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<PAGE>
"SECURITY INSTRUMENT" means, for each Mortgaged Property, a separate
Multifamily Mortgage, Deed of Trust or Deed to Secure Debt, Assignment of
Leases and Rents and Security Agreement given by an Owner to or for the
benefit of the Lender to secure the obligations of the Owner under its
Owner Guaranty and under the Loan Documents. With respect to each Initial
Mortgaged Property, the Security Instrument shall be in the form attached
as EXHIBIT P to this Agreement, with changes, to the extent applicable, to
conform the Exhibit to the form Security Instrument prescribed by Fannie
Mae and in effect on December 31, 1997 for use in the State in which the
applicable Mortgaged Property is located. With respect to each Additional
Mortgaged Property, the Security Instrument shall be in a form approved by
the Lender.
"SENIOR MANAGEMENT" means (i) the Chief Executive Officer, Chairman of
the Board, Chief Financial Officer, Chief Operating Officer and President
of the REIT, and (ii) in the event an office described in clause (i) is
vacant or does not exist, any other individuals with responsibility for any
of the functions typically performed in a corporation by the Person
occupying the vacant or non-existent office.
"SINGLE-PURPOSE" means, with respect to a Person which is any form of
partnership or corporation or limited liability company, that such Person
at all times since its formation:
(i) has been a duly formed and existing partnership, corporation
or limited liability company, as the case may be;
(ii) has been duly qualified in each jurisdiction in which such
qualification was at such time necessary for the conduct of
its business;
(iii) has complied with the provisions of its organizational
documents and the laws of its jurisdiction of formation in
all material respects;
(iv) has observed all customary formalities regarding its
partnership, corporate or limited liability company
existence, as the case may be;
(v) has accurately maintained its financial statements,
accounting records and other partnership, corporate or
limited liability company documents separate from those of
any other Person;
(vi) except with respect to funds in any common account for
Affiliates of the Borrower, has not commingled its assets or
funds with those of any other Person;
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<PAGE>
(vii) has accurately maintained its own bank accounts, payroll (if
applicable), and books and accounts separate from those of
any other Person;
(viii) except with respect to funds in any common account for
Affiliates of the Borrower, has paid its own liabilities
from its own separate assets;
(ix) except through any management agent which manages its
properties, has identified itself in all dealings with the
public under its own name and as a separate and distinct
entity;
(x) except through any management agent which manages its
properties, has not identified itself as being a division or
a part of any other Person;
(xi) except through any management agent which manages its
properties, has not identified any other Person as being a
division or a part of such Person;
(xii) has been adequately capitalized in light of its contemplated
business operations;
(xiii) has not assumed, guaranteed or become obligated for the
liabilities of any other Person (except in connection with
the Credit Facility or the endorsement of negotiable
instruments in the ordinary course of business) or held out
its credit as being available to satisfy the obligations of
any other Person;
(xiv) has not acquired obligations or securities of any other
Person, including any partner or Affiliate;
(xv) has not made loans or advances to any other Person;
(xvi) has not entered into and was not a party to any transaction
with any Affiliate of such Person, except in the ordinary
course of business and on terms which are no less favorable
to such Person than would be obtained in a comparable
arm's-length transaction with an unrelated third party;
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<PAGE>
(xvii) except through any management agent which manages its
properties, has conducted its own business in its own name;
(xviii) has paid the salaries of its own employees (if any) and
maintained a sufficient number of employees in light of its
contemplated business operations or engaged a management
agent which has maintained a sufficient number of employees
to carry out its contemplated business operations;
(xix) has allocated fairly and reasonably any overhead for shared
office space;
(xx) except for payment of amounts from any common account for
Affiliates of the Borrower, has used separate stationery,
invoices and checks;
(xxi) has not pledged its assets for the benefit of any other
entity or made any loans or advances to any person or
entity;
(xxii) has not engaged in a non-exempt prohibited transaction
described in Section 406 of ERISA or Section 4975 of the
Internal Revenue Code; and
(xxiii) has corrected any known misunderstanding regarding its
separate identity.
"SPECIAL POOL PURCHASE CONTRACT" shall have the meaning set forth in
Section 18.01.
"STANDBY FEE" shall have the meaning set forth in Section 14.01.
"STRATEGIC PLAN" means a written narrative discussing the REIT's and
the Borrower's short and long range plans, including their plans for
operations, mergers, acquisitions and management, and accompanied by
supporting financial projections and schedules.
"SUBSIDIARY" shall have the meaning set forth in Section 13.03(a).
"SURVEYS" means the as-built surveys of the Mortgaged Properties
prepared in accordance with the requirements of Section 113 of the DUS
Guide, or otherwise approved by the Lender.
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"TERM OF THIS AGREEMENT" shall be determined as provided in Section
20.10 to this Agreement.
"TIE-IN ENDORSEMENT" means an endorsement to a Title Insurance Policy
which contains substantially the same coverages, and is subject to
substantially the same or fewer exceptions (or such other exceptions as the
Lender may approve), as the form attached as EXHIBIT Q to this Agreement.
"TITLE COMPANY" means Stewart Title Guaranty Company, 1980 Post Oak
Boulevard, Suite 610, Houston, Texas 77056.
"TITLE INSURANCE POLICIES" means the mortgagee's policies of title
insurance issued by the Title Company from time to time relating to each of
the Security Instruments, conforming to the requirements of Section 111 of
the DUS Guide, together with such endorsements, coinsurance, reinsurance
and direct access agreements with respect to such policies as the Lender
may, from time to time, consider necessary or appropriate, whether or not
required by the DUS Guide, including Revolving Credit Endorsements, if
available, and Tie-In Endorsements, if available, and with a limit of
liability under the policy (subject to the limitations contained in
Sections 6(a)(i) and 6(a)(iii) of the Stipulations and Conditions of the
policy) equal to the following:
(1) For all policies for which a Tie-In Endorsement is
available, an amount equal to 100% of the aggregate Initial Valuations
of all Mortgaged Properties tied-in by the Tie-In Endorsement, except
that if, from time to time, an amount equal to 60% of the then-current
aggregate Valuations of all Mortgaged Properties tied-in by the Tie-In
Endorsement exceeds the limit of liability of the Tie-In Endorsement,
the limit of liability of the Tie-In Endorsement shall be increased to
an amount equal to 75% of the then-current aggregate Valuations of all
Mortgaged Properties tied-in by the Tie-In Endorsement.
(2) For all policies for which a Tie-In Endorsement is not
available, an amount equal to 100% of the Initial Valuation of the
Mortgaged Property, except that if, from time to time, an amount equal
to 60% of the then-current Valuation of the Mortgaged Property exceeds
the limit of liability of the Mortgaged Property, the limit of
liability of the Tie-In Endorsement shall be increased to an amount
equal to 75% of the then-current Valuation of the Mortgaged Property.
(3) Notwithstanding the foregoing, the title insurance for
Mortgaged Properties located in the State of Texas and added to the
Collateral Pool on the same date shall be issued on the same policy,
provided that the cost of title insurance
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premiums for the unitary policy does not materially exceed the cost of
providing separate policies and, for purposes of applying paragraph
(2) only, such Mortgaged Properties shall be considered one Mortgaged
Property.
"TRAILING 12 MONTH PERIOD" means, for any specified date, the 12 month
period ending with the last day of the most recent calendar quarter for
which financial statements have been delivered by the REIT to the Lender
pursuant to Section 13.01(d)(3) or (4).
"TRAILING THREE MONTH PERIOD" means, for any specified date, the three
month period ending with the last day of the most recent calendar quarter
for which financial statements have been delivered by the REIT to the
Lender pursuant to Section 13.01(d)(3) or (4).
"TRANSFER" means a sale, assignment, pledge, transfer or other
disposition (whether voluntary or by operation of law) of, or the granting
or creating of a Lien in, a Mortgaged Property or any Ownership Interests.
"UNIMPROVED REAL PROPERTY" means real property which is not improved
by one or more buildings leased, or held out for lease, to third parties.
"UNITS" means the units of limited partnership interest in Borrower
issued and outstanding from time to time.
"UNUSED CAPACITY" shall have the meaning set forth in Section 14.01.
"VALUATION" means, for any specified date, with respect to each of the
Mortgaged Properties, (a) if an Appraisal of the Mortgaged Property was
more recently obtained than a Cap Rate for the Mortgaged Property, the
Appraised Value of such Mortgaged Property, or (b) if a Cap Rate for the
Mortgaged Property was more recently obtained than an Appraisal of the
Mortgaged Property, the value derived by dividing--
(i) the Net Operating Income of such Mortgaged Property for the
Trailing 12 Month Period, by
(ii) the most recent Cap Rate selected by the Lender pursuant to
Section 13.04.
Notwithstanding the foregoing, any Valuation for a Mortgaged Property
calculated for a date occurring before the first anniversary of the date on
which the Mortgaged Property is owned by the Owner or another Affiliate of
the REIT shall equal the Appraised Value of such Mortgaged Property, unless
the Lender determines that changed market or property conditions warrant
that the value be determined as set forth in the preceding sentence.
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"VALUATION" means, for any specified date, with respect to each Lakehaven
Note, an amount equal to 90% of the least of--
(i) $7,238,736.00 for the Lakehaven I Note and $16,761,264.00
for the Lakehaven II Note,
(ii) the outstanding principal balance of, and all deferred,
accrued or additional interest, if any, on, the Lakehaven
Note as of the specified date, or
(iii) the quotient obtained by dividing--
(A) the Net Operating Income of the Lakehaven I Property or
the Lakehaven II Property, as applicable, for the
Trailing 12 Month Period, by
(B) the most recent Cap Rate selected by the Lender
pursuant to Section 13.04.
ARTICLE II
THE CREDIT FACILITY
SECTION 2.01. THE CREDIT FACILITY.
SECTION 2.01(a) ESTABLISHMENT OF THE CREDIT FACILITY. The Lender
hereby establishes the Credit Facility, which shall be comprised of the
Base Facility and the Revolving Facility.
SECTION 2.01(b) ESTABLISHMENT OF THE BASE FACILITY.
SECTION 2.01(b)(1) ESTABLISHMENT. The Lender hereby establishes
the Base Facility, upon all of the terms of this Agreement.
SECTION 2.01(b)(2) BASE FACILITY CREDIT COMMITMENT. Subject to
the terms, conditions and limitations of this Agreement, the Lender
agrees, from time to time during the Base Facility Availability
Period, after delivery of a Request for an Advance from the Borrower,
to make one or more Advances to the Borrower in accordance with
Section 4.01. Each Advance made to the Borrower pursuant to this
subsection (b)(2) shall be referred to as a "BASE FACILITY ADVANCE."
The Borrower
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may not re-borrow any part of the Base Facility Advance which it has
previously borrowed and repaid.
SECTION 2.01(c) ESTABLISHMENT OF REVOLVING FACILITY.
SECTION 2.01(c)(1) ESTABLISHMENT. The Lender hereby establishes
the Revolving Facility, upon all of the terms of this Agreement.
SECTION 2.01(c)(2) REVOLVING FACILITY CREDIT COMMITMENT.
Subject to the terms, conditions and limitations of this Agreement,
the Lender agrees, from time to time during the Revolving Facility
Availability Period, after delivery of a Request for an Advance from
the Borrower, to make Advances to the Borrower in accordance with
Section 4.01. Each Advance made to the Borrower pursuant to this
subsection (c)(2) shall be referred to as a "REVOLVING FACILITY
ADVANCE." Subject to the terms, conditions and limitations of this
Agreement, the Borrower may re-borrow any amounts under the Revolving
Facility which it has previously borrowed and repaid under the
Revolving Facility.
SECTION 2.02. LIMITATIONS ON COMMITMENT TO MAKE ADVANCES.
SECTION 2.02(a) LIMITATIONS ON BASE FACILITY CREDIT COMMITMENT. The
Lender's obligations to make Base Facility Advances pursuant to Section
2.01(b)(2) are subject to the following limitations:
SECTION 2.02(a)(1) TERM. The Lender shall not be obligated to
make any Base Facility Advances at any time after the expiration of
the Base Facility Availability Period.
SECTION 2.02(a)(2) BASE FACILITY CREDIT COMMITMENT. The sum of
the aggregate amount of Base Facility Advances Outstanding at any time
shall not exceed the Base Facility Credit Commitment.
SECTION 2.02(a)(3) MATURITY DATE OF BASE FACILITY ADVANCES. The
maturity date of each Base Facility Advance shall be a date selected
by the Borrower, which date shall be (i) no earlier than the tenth
anniversary of the date on which the Base Facility Advance is made and
(ii) no later than the 20th anniversary of the date on which the Base
Facility Advance is made, but in no event later than the last day of
the 25th Loan Year.
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SECTION 2.02(a)(4) AMORTIZATION OF BASE FACILITY ADVANCE. The
principal of each Base Facility Advance shall be amortized over the
Amortization Period selected by the Borrower in its Request for the
Base Facility Advance, such that level monthly installments of
principal and interest (at the Coupon Rate for the Base Facility
Advance) shall fully amortize the original principal balance of the
Base Facility Advance over the selected Amortization Period. If the
maturity date of the Base Facility Advance is prior the expiration of
the Amortization Period, the Borrower shall be required to make a
balloon payment of the outstanding principal balance of the Base
Facility Advance on the maturity date of the Base Facility Advance.
SECTION 2.02(b) LIMITATIONS ON REVOLVING FACILITY CREDIT COMMITMENT.
The Lender's obligations to make Revolving Facility Advances pursuant to
Section 2.01(c)(2) are subject to the following limitations:
SECTION 2.02(b)(1) TERM. The Lender shall not be obligated to
make any Revolving Facility Advances at any time after the expiration
of the Revolving Facility Availability Period.
SECTION 2.02(b)(2) REVOLVING FACILITY CREDIT COMMITMENT. The
aggregate amount of Revolving Facility Advances Outstanding at any
time shall not exceed the Revolving Facility Credit Commitment.
SECTION 2.02(b)(3) MATURITY DATE OF REVOLVING FACILITY ADVANCES.
Regardless of the date on which a Revolving Facility Advance is made,
the maturity date of each Revolving Facility Advance shall be a date
selected by the Borrower in its Request for the Revolving Facility
Advance, which date shall occur--
(a) on or after the date which completes three full months
after the Closing Date for such Revolving Facility
Advance;
(b) on or before the date which completes nine full months
after the Closing Date for such Revolving Facility
Advance; and
(c) on the last day of a calendar month.
For these purposes, the year shall be deemed to consist of 12 30-day
months. For example, the date which completes three full months after
September 15 shall be December 15; the date which completes three full
months after November 30 shall be February 28, etc.
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SECTION 2.02(b)(4) PAYMENT OF DISCOUNT AND FEE PORTION. The
Lender shall not be obligated to make any Revolving Facility Advance
unless the Borrower pays to the Lender, in advance, the Fee Portion
for the Revolving Facility Advance allocable to the first full
calendar month of the MBS backed by the Revolving Facility Advance and
the entire Discount for the Revolving Facility Advance. After the
issuance of such a Revolving Facility Advance, the Fee Portion for the
Revolving Facility Advance shall be payable monthly, in advance, on
the first Business Day of the second full calendar month of the MBS
backed by the Revolving Facility Advance, and on the first Business
Day of each calendar month thereafter until the maturity of the MBS,
in accordance with the terms of the Revolving Facility Note.
SECTION 2.02(c) LIMITATIONS ON ANY ADVANCE. The Lender's obligations
to make any Advance are subject to the following additional limitations:
SECTION 2.02(c)(1) MAXIMUM CREDIT COMMITMENT. The sum of the
aggregate amount of Base Facility Advances Outstanding and Revolving
Facility Advances Outstanding at any time shall not exceed the Maximum
Credit Commitment.
SECTION 2.02(c)(2) MINIMUM REQUEST. Each Future Advance Request
shall be in the minimum amount of $5,000,000.
SECTION 2.02(c)(3) SATISFACTION OF CONDITIONS PRECEDENT. All
conditions precedent set forth in Section 4.02 to the making of any
Future Advance must be satisfied on or before the applicable Closing
Date and, within seven days after the date on which the Future Advance
Request is made, the Borrower shall have delivered to the Lender each
of the items described in Sections 4.02(b) and 4.02(c), and Articles
XI(a) and XI(h).
SECTION 2.03. DETERMINATION AND CONFIRMATION OF INTEREST RATE AND OTHER
TERMS OF EACH ADVANCE. The interest rate applicable to each Base Facility
Advance and the imputed interest rate applicable to each Revolving Facility
Advance (the "COUPON RATE" for the Advance) and the other terms of the Advance
shall be determined in accordance with the following procedure:
SECTION 2.03(a) QUOTE. From time to time, at the Borrower's request,
with respect to a proposed Advance, the Lender shall quote to the Borrower
an estimate of the MBS Pass-Through Rate (for a proposed Base Facility
Advance) or MBS Imputed Interest Rate (for a proposed Revolving Facility
Advance) for a Fannie Mae MBS backed by the proposed Advance. The Lender's
quote shall be based on (i) a solicitation of bids from institutional
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investors selected by the Lender and (ii) the proposed terms and amount of
the Advance selected by the Borrower. The quote shall not be binding upon
the Lender.
SECTION 2.03(b) RATE SETTING. If the Borrower satisfies all of the
conditions to the Lender's obligation to make the Advance requested in the
Request for the Advance delivered to the Lender, then the Borrower may
propose a MBS Pass-Through Rate (for a Base Facility Advance) or MBS
Imputed Interest Rate (for a Revolving Facility Advance) by submitting to
the Lender by facsimile transmission a completed and executed document, in
the form attached as EXHIBIT R-1 OR R-2 to this Agreement, as applicable
(the "RATE SETTING FORM"), before 1:00 p.m. Washington, D.C. time on any
Business Day on which the Lender is open for business (the "RATE SETTING
DATE"). The Rate Setting Form (i) contains various factual certifications
required by the Lender and (ii) specifies the amount, term, MBS Issue Date,
Fee Spread, Coupon Rate (the "MAXIMUM ANNUAL COUPON RATE"), Discount (if
the Advance is a Revolving Facility Advance), Price (which, for a Base
Facility Advance, will be in a range between 99-1/2 and 100-1/2), Yield
Maintenance Period (if the Advance is a Base Facility Advance), the
Specified U.S. Treasury Security (if the Advance is a Base Facility
Advance), Amortization Period (if the Advance is a Base Facility Advance)
and Closing Date for the Advance.
SECTION 2.03(c) RATE CONFIRMATION. Within one Business Day after
receipt of the completed and executed Rate Setting Form, the Lender shall
solicit bids from institutional investors selected by the Lender based on
the information in the Rate Setting Form and, provided the actual Coupon
Rate (if such bid were accepted) would be at or below the Maximum Annual
Coupon Rate, shall obtain a commitment (the "MBS COMMITMENT") for the
purchase of a Fannie Mae MBS having the bid terms described in the related
Rate Setting Form (which bid terms shall be from the bidder with the lowest
MBS Pass-Through Rate or the lowest MBS Imputed Interest Rate, as
applicable), and shall immediately deliver to the Borrower by facsimile
transmission a completed document, in the form attached as EXHIBIT S-1 OR
S-2 to this Agreement, as applicable (the "RATE CONFIRMATION FORM")
confirming the amount, term, MBS Issue Date, MBS Delivery Date, MBS
Pass-Through Rate (if the Advance is a Base Facility Advance), MBS Imputed
Interest Rate (if the Advance is a Revolving Facility Advance), Fee Spread,
Coupon Rate, Discount (if the Advance is a Revolving Facility Advance),
Price, Yield Maintenance Period (if the Advance is a Base Facility
Advance), Specified U.S. Treasury Security (if the Advance is a Base
Facility Advance), Amortization Period (if the Advance is a Base Facility
Advance) and Closing Date for the Advance. The term "MBS PASS-THROUGH
RATE" means, for a specified Fannie Mae MBS backed by a Base Facility
Advance, the interest rate per annum (rounded to three places) payable
for the Fannie Mae MBS pursuant to the MBS Commitment. The term
"MBS IMPUTED INTEREST RATE" means, for a specified Fannie Mae
MBS backed by a Revolving Facility Advance, the imputed interest
rate per annum (rounded to three places)
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which the specified Fannie Mae MBS will bear based on the MBS Commitment.
The MBS Imputed Interest Rate shall be calculated in accordance with the
following formula:
1/2
12 [ 6 ( 1 + [ 365 (1 - P) ] / (2 PT) - 1 ) ]
where, P = PRICE
T = TERM (DAYS)
EXHIBIT T to this Agreement contains an example of the foregoing formula.
SECTION 2.03(d) COUPON RATE.
SECTION 2.03(d)(1) REVOLVING FACILITY ADVANCES-GENERAL. Except
as otherwise provided in paragraphs (3) and (4), the Coupon Rate for a
Revolving Facility Advance shall equal the sum of (i) the MBS Imputed
Interest Rate for the Revolving Facility Advance, and (ii) 50 basis
points.
SECTION 2.03(d)(2) BASE FACILITY ADVANCES-GENERAL. Except as
otherwise provided in paragraph (3), the Coupon Rate for any Base
Facility Advance shall equal the sum of (i) the MBS Pass-Through Rate
for the Base Facility Advance, and (ii) a number of basis points
determined by the Lender at the time of the increase in the Base
Facility Credit Commitment to which the Base Facility Advance is
allocable, but in no event more than 50 basis points.
SECTION 2.03(d)(3) INCREASE IN MAXIMUM CREDIT COMMITMENT. In
the event the Base Facility Credit Commitment or the Revolving
Facility Credit Commitment increases pursuant to an increase in the
Maximum Credit Commitment under Article VIII, the Coupon Rate for any
Base Facility Advance or Revolving Facility Advance which is allocable
to the increase shall equal the sum of (i) the MBS Pass-Through Rate
(with respect to any Base Facility Advance) or the MBS Imputed
Interest Rate (with respect to any Revolving Facility Advance), and
(ii) the following:
(A) if the increase in the Maximum Credit Commitment
is made in accordance with Article VIII, and the Closing
Date for the Credit Facility Expansion Request for the
increase in the Maximum
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Credit Commitment occurs prior to the end of the first Loan
Year, a number of basis points determined by the Lender at
the time of the increase in the Maximum Credit Commitment,
but in no event more than 50 basis points; and
(B) in all other cases, a number of basis points
determined by the Lender at the time of the increase in the
Maximum Credit Commitment.
In any case in which the Lender shall determine the number of basis
points, the Lender shall make its determination in good faith using
the then-current pricing methodology for the Fannie Mae product line
under which this Credit Facility is sponsored (or, if there is no
longer such product line, then in accordance with the pricing
methodology in effect when the product line was terminated). The
Lender's identification and application of the applicable methodology
shall be conclusive for all purposes, and, absent manifest error, the
Lender's determination of the number of basis points based on such
identification and application shall also be conclusive for all
purposes.
SECTION 2.03(d)(4) PARTIAL MONTH INTEREST. Notwithstanding
anything to the contrary in this Agreement, if an Advance is not made
on the first day of a calendar month, and the MBS Issue Date for the
MBS backed by the Advance is the first day of the month following the
month in which the Advance is made, the Coupon Rate for the Advance
for the partial month period commencing on the Closing Date for the
Advance and ending on the last day of the calendar month in which the
Closing Date occurs shall be the greater of (i) the Coupon Rate for
the Advance which will be in effect for the period after the partial
month period or (ii) a rate based on the Lender's cost of funds, as
quoted by the Lender's regular warehouse lender, and approved in
advance, in writing, by the Borrower.
SECTION 2.03(e) ADVANCE CONFIRMATION INSTRUMENT. On or before the
Closing Date for a Revolving Facility Advance, the Borrower shall execute
and deliver to the Lender an instrument (the "ADVANCE CONFIRMATION
INSTRUMENT"), in the form attached as EXHIBIT U to this Agreement,
confirming the amount, term, MBS Issue Date, MBS Delivery Date, MBS Imputed
Interest Rate, Fee Spread, Coupon Rate, Discount, Price and Closing Date
for the Advance, and the Borrower's obligation to repay the Advance in
accordance with the terms of the Notes and this Agreement. Upon the
funding of the Revolving Facility Advance, the Lender shall note the date
of funding in the appropriate space at the foot of the Advance Confirmation
Instrument and deliver a copy of the completed Advance Confirmation
Instrument to the Borrower.
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ARTICLE III
INITIAL ADVANCE
SECTION 3.01. REQUEST. The Borrower hereby makes a request (the "INITIAL
ADVANCE REQUEST") for the Lender to make the Initial Advance. If all conditions
contained in Section 3.02 are satisfied, on or before the Initial Closing Date,
the Lender shall make the Initial Advance on the Initial Closing Date, or on
another date selected by the Borrower and approved by the Lender.
SECTION 3.02. CONDITIONS PRECEDENT TO INITIAL ADVANCE. The obligation of
the Lender to make the Initial Advance is subject to the following conditions
precedent:
(a) The delivery to the Title Company, for filing and/or recording in
all applicable jurisdictions, of all applicable Loan Documents required by
the Lender, including duly executed and delivered original copies of the
Initial Security Instruments and UCC-1 Financing Statements covering the
portion of the Collateral comprised of personal property, and other
appropriate instruments, in form and substance satisfactory to the Lender
and in form proper for recordation, as may be necessary in the opinion of
the Lender to perfect the Liens created by the applicable Initial Security
Instruments and any other Loan Documents creating a Lien in favor of the
Lender, and the payment of all taxes, fees and other charges payable in
connection with such execution, delivery, recording and filing; and
(b) The satisfaction of all General Conditions set forth in Article
XI.
ARTICLE IV
FUTURE ADVANCES
SECTION 4.01. PROCEDURE FOR OBTAINING FUTURE ADVANCES.
SECTION 4.01(a) REQUEST. In order to obtain a Future Advance, the
Borrower may from time to time deliver a written request for a Future
Advance (a "FUTURE ADVANCE REQUEST") to the Lender, in the form attached as
EXHIBIT V-1 OR V-2 to this Agreement, as applicable. Each Future Advance
Request shall be accompanied by (and no Future Advance Request shall be
effective unless it is accompanied by) the following:
(i) a designation of the amount of the Future Advance requested; and
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(ii) a designation of the maturity date of the Advance.
SECTION 4.01(b) CLOSING. If all conditions contained in Section
4.02 are satisfied, and the Lender has delivered the Rate Confirmation Form
to the Borrower, the Lender shall make the Future Advance requested in the
Future Advance Request, at a closing to be held at offices designated by
the Lender on a Closing Date selected by the Lender, and occurring not more
than three Business Days after the Lender's receipt of the Future Advance
Request and the Borrower's receipt of the Rate Confirmation Form.
SECTION 4.02. CONDITIONS PRECEDENT TO FUTURE ADVANCES. The obligation of
the Lender to make Future Advances is subject to the satisfaction of the
following conditions precedent:
(a) With respect to any Future Advances, after giving effect to the
requested Future Advance:
(i) the Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period is not less than the Minimum Aggregate
Debt Service Coverage Ratio for the Trailing Twelve Month Period;
(ii) the Aggregate Debt Service Coverage Ratio for the
Trailing Three Month Period is not less than the Minimum
Aggregate Debt Service Coverage Ratio for the Trailing Three
Month Period;
(iii) the Aggregate Loan to Value Ratio for the Trailing 12
Month Period is not greater than the Maximum Aggregate Loan to
Value Ratio for the Trailing 12 Month Period;
(b) If the Advance is a Base Facility Advance, delivery of a Base
Facility Note, duly executed by the Borrower, in the amount of the Advance,
reflecting all of the terms of the Base Facility Advance;
(c) If the Advance is a Revolving Facility Advance, delivery of the
Advance Confirmation Instrument, duly executed by the Borrower;
(d) For any Title Insurance Policy not containing a Revolving Credit
Endorsement, the receipt by the Lender of an endorsement to the Title
Insurance Policy, amending the effective date of the Title Insurance Policy
to the Closing Date and showing no additional exceptions to coverage other
than the exceptions shown on the Initial Closing Date and other exceptions
approved by the Lender; and
(e) The satisfaction of all General Conditions set forth in Article
XI.
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ARTICLE V
CONVERSION OF REVOLVING FACILITY CREDIT COMMITMENT
TO BASE FACILITY CREDIT COMMITMENT
SECTION 5.01. RIGHT TO CONVERT. Subject to the terms, conditions and
limitations set forth in this Article, the Borrower shall have the right, at any
time or from time to time during the Base Facility Availability Period, to
convert all or a portion of the Revolving Facility Credit Commitment to the Base
Facility Credit Commitment, in which event the Revolving Facility Credit
Commitment shall be reduced by, and the Base Facility Credit Commitment shall be
increased by, the amount of the conversion.
SECTION 5.02. PROCEDURE FOR OBTAINING CONVERSION.
SECTION 5.02(a) REQUEST. In order to obtain a conversion of all or a
portion of the Revolving Facility Credit Commitment to the Base Facility
Credit Commitment, the Borrower may from time to time deliver a written
request for a conversion (a "CONVERSION REQUEST") to the Lender, in the
form attached as EXHIBIT W to this Agreement. Each Conversion Request
shall be accompanied by (and no Conversion Request shall be effective
unless it is accompanied by) the following:
(i) A designation of the amount of the conversion; and
(ii) A designation of any Revolving Facility Advances
Outstanding which will be paid on the Closing Date for the conversion.
SECTION 5.02(b) CLOSING. If none of the limitations contained in
Section 5.03 is violated, and all conditions contained in Section 5.04 are
satisfied, the Lender shall permit the requested conversion, at a closing
to be held at offices designated by the Lender on a Closing Date selected
by the Lender, and occurring within 15 Business Days after the Lender's
receipt of the Conversion Request (or on such other date to which the
Borrower and the Lender may agree), by executing and delivering, all at the
sole cost and expense of the Borrower, an amendment to this Agreement, in
the form attached as EXHIBIT X to this Agreement, together with an
amendment to each Security Document, if determined by the Lender to be
necessary, and other applicable Loan Documents, in form and substance
satisfactory to the Lender, reflecting the change in the Base Facility
Credit Commitment and the Revolving Facility Credit Commitment. The
documents and instruments referred to in the preceding sentence are
referred to in this Article as the "CONVERSION DOCUMENTS."
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SECTION 5.03. LIMITATIONS ON RIGHT TO CONVERT. The right of the Borrower
to convert all or a portion of the Revolving Facility Credit Commitment to the
Base Facility Credit Commitment is subject to the following limitations:
SECTION 5.03(a) CLOSING DATE. The Closing Date shall occur on
or before the expiration of the Base Facility Availability Period.
SECTION 5.03(b) MINIMUM REQUEST. Each Request for a conversion
shall be in the minimum amount of $5,000,000.
SECTION 5.03(c) OBLIGATION TO PREPAY REVOLVING FACILITY
ADVANCES. If, after the conversion, the aggregate amount of all
Revolving Facility Advances Outstanding will exceed the Revolving
Facility Credit Commitment, the Borrower shall be obligated to prepay,
on or before the Closing Date for the conversion, an amount of
Revolving Facility Advances Outstanding which is at least equal to the
amount of the excess.
SECTION 5.04. CONDITIONS PRECEDENT TO CONVERSION. The right of the
Borrower to convert all or a portion of the Revolving Facility Credit Commitment
to the Base Facility Credit Commitment and the obligation of the Lender to
deliver the Conversion Documents on the Closing Date are subject to the
satisfaction of the following conditions precedent on or before the Closing
Date:
(a) after giving effect to the requested conversion:
(i) the Aggregate Debt Service Coverage Ratio for the
Trailing 12 Month Period is not less than the Minimum Aggregate
Debt Service Coverage Ratio for the Trailing 12 Month Period;
(ii) the Aggregate Debt Service Coverage Ratio for the
Trailing Three Month Period is not less than the Minimum
Aggregate Debt Service Coverage Ratio for the Trailing Three
Month Period; and
(iii) the Aggregate Loan to Value Ratio for the Trailing 12
Month Period is not greater than the Maximum Aggregate Loan to
Value Ratio for the Trailing 12 Month Period.
(b) Payment by the Borrower in full of any Revolving Facility
Advances Outstanding which the Borrower is obligated to pay under Section
5.03(c);
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(c) If requested by the Lender, the receipt by the Lender of an
endorsement to each Title Insurance Policy, amending the effective date of
the Title Insurance Policy to the Closing Date and showing no additional
exceptions to coverage other than the exceptions shown on the Initial
Closing Date and other exceptions approved by the Lender;
(d) Receipt by the Lender of one or more counterparts of each
Conversion Document, dated as of the Closing Date, signed by each of the
parties (other than the Lender) who is a party to such Conversion Document;
and
(e) The satisfaction of all General Conditions set forth in Article
XI.
SECTION 5.05. INTEREST RATE OF BASE FACILITY ADVANCES AFTER CONVERSION.
The Coupon Rate for any Base Facility Advance shall equal the rate set forth in
Section 2.03(d)(2) or 2.03(d)(3), as the case may be.
ARTICLE VI
ADDITIONS OF COLLATERAL
SECTION 6.01. RIGHT TO ADD COLLATERAL. Subject to the terms and
conditions of this Article, the Borrower shall have the right, from time to time
during the Term of this Agreement, to add Multifamily Residential Properties to
the Collateral Pool in accordance with the provisions of this Article.
SECTION 6.02. PROCEDURE FOR ADDING COLLATERAL.
SECTION 6.02(a) REQUEST. In order to add a Multifamily Residential
Property or Multifamily Residential Properties to the Collateral Pool, the
Borrower may, not more than once each calendar quarter, deliver a written
request (the "COLLATERAL ADDITION REQUEST") to the Lender, in the form
attached as EXHIBIT Y to this Agreement, to add one or more Additional
Mortgaged Properties to the Collateral Pool. Each Collateral Addition
Request shall be accompanied by (and no Collateral Addition Request shall
be effective unless it is accompanied by) the following:
(i) The information relating to the proposed Additional Mortgaged
Property required by the form attached as EXHIBIT Z to this Agreement (the
"COLLATERAL ADDITION DESCRIPTION PACKAGE"), as amended from time to time to
include information required under the DUS Guide; and
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(ii) The payment of all Additional Collateral Due Diligence Fees
pursuant to Section 14.04(b).
SECTION 6.02(b) ADDITIONAL INFORMATION. The Borrower shall promptly
deliver to the Lender any additional information concerning the proposed
Additional Mortgaged Property that the Lender may from time to time
reasonably request.
SECTION 6.02(c) UNDERWRITING. The Lender shall evaluate the proposed
Additional Mortgaged Property, and shall make underwriting determinations
as to the Aggregate Debt Service Coverage Ratios and the Aggregate Loan to
Value Ratio for the Trailing 12 Month Period applicable to the Collateral
Pool, on the basis of Valuations made with respect to the proposed
Additional Mortgaged Property, and otherwise in accordance with Fannie
Mae's DUS Underwriting Requirements. Within 30 days after receipt of (i)
the Collateral Addition Request for the Additional Mortgaged Property and
(ii) all reports, certificates and documents set forth on EXHIBIT AA to
this Agreement, the Lender shall notify the Borrower whether or not it
shall consent to the addition of the proposed Additional Mortgaged Property
to the Collateral Pool and, if it shall so consent, shall set forth the
Aggregate Debt Service Coverage Ratios and the Aggregate Loan to Value
Ratio for the Trailing 12 Month Period which it estimates shall result from
the addition of the proposed Additional Mortgaged Property to the
Collateral Pool and the amount of any increase in the amount of Advances
Outstanding which the Borrower can borrow as a result of the addition of
the Additional Mortgaged Property to the Collateral Pool (assuming, for
these purposes, that the Borrower elected to increase the Maximum Credit
Commitment, if necessary, so that it could borrow the maximum amount
supported by the Collateral Pool, whether or not Borrower has in fact so
increased, or requested an increase of, the Maximum Credit Commitment). If
the Lender declines to consent to the addition of the proposed Additional
Mortgaged Property to the Collateral Pool, the Lender shall include, in its
notice, a brief statement of the reasons for doing so. Within five
Business Days after receipt of the Lender's notice that it shall consent to
the addition of the proposed Additional Mortgaged Property to the
Collateral Pool, the Borrower shall notify the Lender whether or not it
elects to cause the proposed Additional Mortgaged Property to be added to
the Collateral Pool. If the Borrower fails to respond within the period of
five Business Days, it shall be conclusively deemed to have elected not to
cause the proposed Additional Mortgaged Property to be added to the
Collateral Pool.
SECTION 6.02(d) CLOSING. If, pursuant to subsection (c), the
Lender consents to the addition of the proposed Additional Mortgaged
Property to the Collateral Pool, the Borrower timely elects to cause the
proposed Additional Mortgaged Property to be added to the Collateral Pool
and all conditions contained in Section 6.03 are satisfied, the Lender
shall permit the proposed Additional Mortgaged Property to be added to the
Collateral Pool, at a closing to be held at offices designated by the
Lender on a Closing Date selected by the
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Lender, and occurring within five Business Days after the Lender's receipt
of the Borrower's election (or on such other date to which the Borrower and
the Lender may agree).
SECTION 6.03. CONDITIONS PRECEDENT TO ADDITION OF AN ADDITIONAL MORTGAGED
PROPERTY TO THE COLLATERAL POOL. The right of the Borrower to add an Additional
Mortgaged Property to the Collateral Pool on the Closing Date applicable to the
Additional Mortgaged Property is subject to the satisfaction of the following
conditions precedent on or before the Closing Date:
(a) On the Closing Date for the addition of the
Additional Mortgaged Property to the Collateral Pool:
(i) the Aggregate Debt Service Coverage Ratio for the Trailing
12 Month Period is not less than the Minimum Aggregate Debt Service
Coverage Ratio for the Trailing 12 Month Period;
(ii) the Aggregate Debt Service Coverage Ratio for the Trailing
Three Month Period is not less than the Minimum Aggregate Debt Service
Coverage Ratio for the Trailing Three Month Period; and
(iii) the Aggregate Loan to Value Ratio for the Trailing 12
Month Period is not greater than the Maximum Aggregate Loan to Value
Ratio for the Trailing 12 Month Period.
(b) The payment by the Borrower of the Collateral Addition Fee;
(c) The delivery to the Title Company, with fully executed
instructions directing the Title Company to file and/or record in all
applicable jurisdictions on or before the Closing Date, all applicable
Collateral Addition Loan Documents required by the Lender, including duly
executed and delivered original copies of any Security Instruments and
UCC-1 Financing Statements covering the portion of the Additional Mortgaged
Property comprised of personal property, and other appropriate documents,
all in form and substance substantially the same as the Loan Documents
relating to the Initial Mortgaged Properties (except to the extent required
by the Lender to conform to then-existing requirements for such documents
prescribed by Fannie Mae) and in form proper for recordation, as may be
necessary in the opinion of the Lender to perfect the Lien created by the
applicable additional Security Instrument, and any other Collateral
Addition Loan Document creating a Lien in favor of the Lender, and the
payment of all taxes, fees and other charges payable in connection with
such execution, delivery, recording and filing;
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(d) If required by the Lender, amendments to the Notes and the
Security Documents, reflecting the addition of the Additional Mortgaged
Property to the Collateral Pool and, as to any Security Instrument so
amended, the receipt by the Lender of an endorsement to the Title Insurance
Policy insuring the Security Instrument (other than a Title Insurance
Policy for Mortgaged Properties located in Texas or Florida, unless the
same can be obtained at nominal cost), either (i) amending the effective
date of the Title Insurance Policy to the Closing Date and showing no
additional exceptions to coverage other than the exceptions shown on the
Initial Closing Date and other exceptions approved by the Lender or (ii)
insuring the Lender that the amendment to the Security Instrument has not
invalidated the Title Insurance Policy;
(e) If the Title Insurance Policy for the Additional Mortgaged
Property contains a Tie-In Endorsement, an endorsement to each other Title
Insurance Policy containing a Tie-In Endorsement, adding a reference to the
Additional Mortgaged Property; and
(f) The satisfaction of all General Conditions set forth in Article
XI.
SECTION 6.04. OTHER TYPES OF COLLATERAL. The Borrower may propose to add
to the Collateral Pool additional Collateral other than Multifamily Residential
Properties, but the Lender shall not be obligated to accept any type of
additional Collateral other than Multifamily Residential Properties, and any
acceptance of Collateral other than Multifamily Residential Properties shall be
upon such conditions as the Lender may determine. Notwithstanding the
foregoing, the Lender shall accept Substituted Cash Collateral in accordance
with Section 7.02(d).
ARTICLE VII
RELEASES OF COLLATERAL
SECTION 7.01. RIGHT TO OBTAIN RELEASES OF COLLATERAL. Subject to the
terms and conditions of this Article, the Borrower shall have the right to
obtain a release of Collateral from the Collateral Pool in accordance with the
provisions of this Article.
SECTION 7.02. PROCEDURE FOR OBTAINING RELEASES OF COLLATERAL.
SECTION 7.02(a) REQUEST. In order to obtain a release of Collateral
from the Collateral Pool, the Borrower may, not more than once each
calendar quarter, deliver a written request for the release of the
Collateral from the Collateral Pool (the "COLLATERAL RELEASE REQUEST") to
the Lender, in the form attached as EXHIBIT BB to this Agreement. The
Collateral Release Request shall not result in a termination of all or any
part of the Credit
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Facility. The Borrower may only terminate all or any part of the Credit
Facility by delivering a Revolving Facility Termination Request or Credit
Facility Termination Request pursuant to Articles IX or X. The Collateral
Release Request shall be accompanied by (and the Collateral Release Request
shall not be effective unless it is accompanied by) a designation of the
Collateral to be released from the Collateral Pool, including, if the
Collateral to be released is a Mortgaged Property, the name, address and
location of the Mortgaged Property (the "COLLATERAL RELEASE PROPERTY").
SECTION 7.02(b) CLOSING. If all conditions contained in Section 7.03
are satisfied, the Lender shall cause the Collateral Release Property to be
released from the Collateral Pool, at a closing to be held at offices
designated by the Lender on a Closing Date selected by the Lender, and
occurring within 10 Business Days after the Lender's receipt of the
Collateral Release Request (or on such other date to which the Borrower and
the Lender may agree), by executing and delivering, and causing all
applicable parties to execute and deliver, all at the sole cost and expense
of the Borrower, (i) instruments, in the form customarily used by the
Lender for releases in the jurisdiction governing the perfection of the
security interest being released, releasing the applicable Security
Instrument as a Lien on the Collateral Release Property, and Termination
Statements terminating the UCC-1 Financing Statements perfecting a Lien on
the portion of the Collateral Release Property comprised of personal
property, and such other documents and instruments as the Borrower may
reasonably request evidencing the release of the applicable Collateral from
any lien securing the Obligations (including a termination of any
restriction on the use of any accounts relating to the Collateral Release
Property) and the release and return to the applicable Owner of any and all
escrowed amounts relating thereto, (ii) instruments releasing the security
interest in the Ownership Interests in the Owner of the Collateral Release
Property and (iii) instruments releasing the Owner who owns the Collateral
Release Property from its obligations under this Agreement, the Owner
Guaranty it has executed and any and all other Loan Documents. The
instruments referred to in the preceding sentence are referred to in this
Article as the "COLLATERAL RELEASE DOCUMENTS."
SECTION 7.02(c) RELEASE PRICE. The "RELEASE PRICE" for each
Mortgaged Property means the minimum amount, if any, of Advances
Outstanding which are required to be repaid by the Borrower to the Lender
in connection with the proposed release of the Mortgaged Property, a
Lakehaven Note or other Collateral from the Collateral Pool, so that,
immediately after the release--
(i) the Aggregate Debt Service Coverage Ratio for the Trailing
12 Month Period is not less than the Minimum Aggregate Debt Service
Coverage Ratio for the Trailing 12 Month Period;
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(ii) the Aggregate Debt Service Coverage Ratio for the Trailing
Three Month Period is not less than the Minimum Aggregate Debt Service
Coverage Ratio for the Trailing Three Month Period; and
(iii) the Aggregate Loan to Value Ratio for the Trailing 12
Month Period is not greater than the Maximum Aggregate Loan to Value
Ratio for the Trailing 12 Month Period.
In addition to the Release Price, the Borrower shall pay to the Lender all
associated prepayment premiums and other amounts due under the Notes and
any Advance Confirmation Instruments evidencing the Advances being repaid.
SECTION 7.02(d) APPLICATION OF RELEASE PRICE. The Release Price shall
be applied against the Revolving Facility Advances Outstanding until there
are no further Revolving Facility Advances Outstanding, and thereafter
shall be held by the Lender (or its appointed collateral agent) as
substituted Collateral ("SUBSTITUTED CASH COLLATERAL") in accordance with a
security agreement and other documents in form and substance acceptable to
the Lender (or, at the Borrower's option, may be applied against the
prepayment of Base Facility Advances, so long as the prepayment is
permitted under the Base Facility Note for the Base Facility Advance). Any
portion of the Release Price held as Substituted Cash Collateral may be
released if, immediately after giving effect to the release, each of the
conditions set forth in Section 7.03(a) below shall have been satisfied.
If, on the date on which the Borrower pays the Release Price, Revolving
Facility Advances are Outstanding but are not then due and payable, the
Lender shall hold the payments as additional Collateral for the Credit
Facility, until the next date on which Revolving Facility Advances are due
and payable, at which time the Lender shall apply the amounts held by it to
the amounts of the Revolving Facility Advances due and payable.
SECTION 7.03. CONDITIONS PRECEDENT TO RELEASE OF COLLATERAL RELEASE
PROPERTY FROM THE COLLATERAL. The right of the Borrower to obtain a release of
a Collateral Release Property from the Collateral Pool and the obligation of the
Lender to release a Collateral Release Property from the Collateral Pool by
executing and delivering the Collateral Release Documents on the Closing Date,
are subject to the satisfaction of the following conditions precedent on or
before the Closing Date:
(a) Immediately after giving effect to the requested release:
(i) the Aggregate Debt Service Coverage Ratio for the Trailing 12
Month Period is not less than the Minimum Aggregate Debt Service
Coverage Ratio for the Trailing 12 Month Period;
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(ii) the Aggregate Debt Service Coverage Ratio for the Trailing
Three Month Period is not less than the Minimum Aggregate Debt Service
Coverage Ratio for the Trailing Three Month Period; and
(iii) the Aggregate Loan to Value Ratio for the Trailing 12 Month
Period is not greater than the Maximum Aggregate Loan to Value Ratio
for the Trailing 12 Month Period.
(b) Payment of the Release Price for the Collateral Release Property;
(c) Payment of the Release Fee for the Collateral Release Property;
(d) Receipt by the Lender on the Closing Date of one or more
counterparts of each Collateral Release Document, dated as of the Closing
Date, signed by each of the parties (other than the Lender) who is a party
to such Collateral Release Document;
(e) If required by the Lender, amendments to the Notes and the
Security Documents, reflecting the release of the Collateral Release
Property from the Collateral Pool and, as to any Security Instrument so
amended, the receipt by the Lender of an endorsement to the Title Insurance
Policy insuring the Security Instrument (other than a Title Insurance
Policy for Mortgaged Properties located in Texas or Florida, unless the
same can be obtained at nominal cost), either (i) amending the effective
date of the Title Insurance Policy to the Closing Date and showing no
additional exceptions to coverage other than the exceptions shown on the
Initial Closing Date and other exceptions approved by the Lender or (ii)
insuring the Lender that the amendment to the Security Instrument has not
invalidated the Title Insurance Policy;
(f) If the Lender determines the Collateral Release Property to be
one phase of a project, and one or more other phases of the project are
Mortgaged Properties which will remain in the Collateral Pool (the
"REMAINING MORTGAGED PROPERTIES"), the Lender's determination that the
Remaining Mortgaged Properties can be operated separately from the
Collateral Release Property and any other phases of the project which are
not Mortgaged Properties. In making this determination, the Lender shall
evaluate whether the Remaining Mortgaged Properties comply with the terms
of Sections 203 and 208 of the DUS Guide, which, as of the date of this
Agreement, require, among other things, that a phase which constitutes
collateral for a loan made in accordance with the terms of the DUS Guide
(i) have adequate ingress and egress to existing public roadways, either by
location of the phase on a dedicated, all-weather road or by access to such
a road by means of a satisfactory easement, (ii) have access which is
sufficiently attractive and direct from major thoroughfares to be conducive
to continued good marketing, (iii) have a location which is not (A)
inferior to
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other phases, (B) such that inadequate maintenance of other phases would
have a significant negative impact on the phase, and (C) such that the
phase is visible only after passing through the other phases of the project
and (iv) comply with such other issues as are dictated by prudent practice;
(g) Receipt by the Lender of endorsements to the Tie-In Endorsements
of the Title Insurance Policies, if deemed necessary by the Lender, to
reflect the release;
(h) Receipt by the Lender on the Closing Date of a writing, dated as
of the Closing Date, signed by the AIMCO Parties, in the form attached as
EXHIBIT CC to this Agreement, pursuant to which the AIMCO Parties confirm
that their obligations under the Loan Documents are not adversely affected
by the release of the Collateral Release Property from the Collateral;
(i) The remaining Mortgaged Properties in the Collateral Pool shall
satisfy the then-existing Geographical Diversification Requirements;
(j) Immediately after giving effect to the requested release, the
aggregate Valuations of the Lakehaven Notes shall not exceed 25% of the
aggregate Valuations of all Mortgaged Properties and the Lakehaven Notes;
and
(k) The satisfaction of all General Conditions set forth in Article
XI.
ARTICLE VIII
EXPANSION OF CREDIT FACILITY
SECTION 8.01. RIGHT TO INCREASE MAXIMUM CREDIT COMMITMENT. Subject to the
terms, conditions and limitations of this Article, the Borrower shall have the
right, at any time or from time to time prior to the end of the Revolving
Facility Availability Period, to increase the Maximum Credit Commitment. In the
event the Maximum Credit Commitment increases pursuant to this Article, the Base
Facility Credit Commitment or the Revolving Facility Credit Commitment, or both,
shall increase by amounts selected by the Borrower pursuant to Section 8.02,
provided that the sum of increases, if any, in both collectively shall equal the
amount of the increase in the Maximum Credit Commitment.
SECTION 8.02. PROCEDURE FOR OBTAINING INCREASES IN MAXIMUM CREDIT
COMMITMENT.
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SECTION 8.02(a) REQUEST. In order to obtain an increase in the
Maximum Credit Commitment, the Borrower may from time to time deliver a
written request for an increase (a "CREDIT FACILITY EXPANSION REQUEST") to
the Lender, in the form attached as EXHIBIT DD to this Agreement. Each
Credit Facility Expansion Request shall include the following information:
(i) A designation of the amount of the proposed increase;
(ii) A designation of the increase in the Base Facility Credit
Commitment and the Revolving Facility Credit Commitment; and
(iii) A request that the Lender inform the Borrower of any change
in the Geographical Diversification Requirements.
SECTION 8.02(b) CLOSING. If none of the limitations contained in
Section 8.03 is violated, and all conditions contained in Section 8.04 are
satisfied, the Lender shall permit the requested increase in the Maximum
Credit Commitment, at a closing to be held at offices designated by the
Lender on a Closing Date selected by the Lender, and occurring within 15
Business Days after the Lender's receipt of the Credit Facility Expansion
Request (or on such other date to which the Borrower and the Lender may
agree).
SECTION 8.03. LIMITATIONS ON RIGHT TO INCREASE MAXIMUM CREDIT COMMITMENT.
The Borrower's right to increase the Maximum Credit Commitment is subject to the
following limitations:
SECTION 8.03(1) MAXIMUM CREDIT COMMITMENT. After giving effect
to the proposed increase, the Maximum Credit Commitment shall not
exceed $250,000,000.
SECTION 8.03(2) MINIMUM REQUEST. Each Request for an increase
in the Maximum Credit Commitment shall be in the minimum amount of
$25,000,000.
SECTION 8.04. CONDITIONS PRECEDENT TO INCREASE IN MAXIMUM CREDIT
COMMITMENT. The right of the Borrower to increase the Maximum Credit Commitment
is subject to the written approval of the Lender and Fannie Mae, which approval
may be withheld in the Lender's or Fannie Mae's sole and absolute discretion.
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SECTION 8.05. INTEREST RATE OF ADVANCES AFTER INCREASE IN MAXIMUM CREDIT
COMMITMENT. In the event the Base Facility Credit Commitment or the Revolving
Facility Credit Commitment increases pursuant to an increase in the Maximum
Credit Commitment under this Article, the Coupon Rate for any Base Facility
Advance or Revolving Facility Advance which is allocable to the increase shall
equal the rate set forth in Section 2.03(d)(3).
ARTICLE IX
COMPLETE OR PARTIAL TERMINATION OF REVOLVING FACILITY
SECTION 9.01. RIGHT TO COMPLETE OR PARTIAL TERMINATION OF REVOLVING
FACILITY. Subject to the terms and conditions of this Article, the Borrower
shall have the right to permanently reduce the Revolving Credit Facility
Commitment in accordance with the provisions of this Article.
SECTION 9.02. PROCEDURE FOR COMPLETE OR PARTIAL TERMINATION OF REVOLVING
FACILITY.
SECTION 9.02(a) REQUEST. In order to permanently reduce the
Revolving Facility Credit Commitment, the Borrower may deliver a written
request for the reduction (the "REVOLVING FACILITY TERMINATION REQUEST") to
the Lender, in the form attached as EXHIBIT EE to this Agreement. A
permanent reduction of the Revolving Facility Credit Commitment to $0 shall
be referred to as a "COMPLETE REVOLVING FACILITY TERMINATION." The
Revolving Facility Termination Request shall include the following
information:
(i) A designation of the proposed amount of the reduction in
the Revolving Facility Credit Commitment; and
(ii) Unless there is a Complete Revolving Facility Termination, a
designation by the Borrower of any Revolving Facility Advances which
will be prepaid.
Any release of Collateral, whether or not made in connection with a
Revolving Facility Termination Request, must comply with all conditions to
a release which are set forth in Article VII.
SECTION 9.02(b) CLOSING. If all conditions contained in Section 9.03
are satisfied, the Lender shall permit the Revolving Facility Credit
Commitment to be reduced to the amount designated by the Borrower, at a
closing to be held at offices designated by the Lender on a Closing Date
selected by the Lender, within 15 Business Days after the Lender's receipt
of the Revolving Facility Termination Request (or on such other date to
which the
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Borrower and the Lender may agree), by executing and delivering a
counterpart of an amendment to this Agreement, in the form attached as
EXHIBIT FF to this Agreement, evidencing the reduction in the Revolving
Facility Credit Commitment. The document referred to in the preceding
sentence is referred to in this Article as the "REVOLVING FACILITY
TERMINATION DOCUMENT."
SECTION 9.03. CONDITIONS PRECEDENT TO COMPLETE OR PARTIAL TERMINATION OF
REVOLVING FACILITY. The right of the Borrower to reduce the Revolving Facility
Credit Commitment and the obligation of the Lender to execute the Revolving
Facility Termination Document, are subject to the satisfaction of the following
conditions precedent as of the Closing Date:
(a) Payment by the Borrower in full of all of the Revolving Facility
Advances Outstanding required to be paid in order that the aggregate amount
of all Revolving Facility Advances Outstanding is not greater than the
Revolving Facility Credit Commitment, including any associated prepayment
premiums or other amounts due under the Notes (but if the Borrower is not
required to prepay all of the Revolving Facility Advances, the Borrower
shall have the right to select which of the Revolving Facility Advances
shall be repaid);
(b) Payment by the Borrower of the Revolving Facility Termination
Fee;
(c) Receipt by the Lender of one or more counterparts of the
Revolving Facility Termination Document, dated as of the Closing Date,
signed by each of the parties (other than the Lender) who is a party to
such Revolving Facility Termination Document; and
(d) The satisfaction of all General Conditions set forth in Article
XI.
SECTION 9.04. COMPLETE TERMINATION OF REVOLVING FACILITY UPON EXPIRATION
OF REVOLVING FACILITY. If there has not occurred a Complete Revolving Facility
Termination before the Revolving Facility Termination Date, then, as of the
Revolving Facility Termination Date, the Revolving Facility shall automatically
terminate, without satisfaction of any conditions by the Borrower or the Lender
and without the execution of any further documents.
ARTICLE X
TERMINATION OF CREDIT FACILITY
SECTION 10.01. RIGHT TO TERMINATE CREDIT FACILITY. Subject to the terms
and conditions of this Article, the Borrower shall have the right to terminate
this Agreement and the Credit Facility
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and receive a release of all of the Collateral from the Collateral Pool in
accordance with the provisions of this Article.
SECTION 10.02. PROCEDURE FOR TERMINATING CREDIT FACILITY.
SECTION 10.02(a) REQUEST. In order to terminate this Agreement and
the Credit Facility, the Borrower may deliver a written request for the
termination (the "CREDIT FACILITY TERMINATION REQUEST") to the Lender, in
the form attached as EXHIBIT GG to this Agreement.
SECTION 10.02(b) CLOSING. If all conditions contained in Section
10.03 are satisfied, this Agreement shall terminate, and the Lender shall
cause all of the Collateral to be released from the Collateral Pool, at a
closing to be held at offices designated by the Lender on a Closing Date
selected by the Lender, within 15 Business Days after the Lender's receipt
of the Credit Facility Termination Request (or on such other date to which
the Borrower and the Lender may agree), by executing and delivering, and
causing all applicable parties to execute and deliver, all at the sole cost
and expense of the Borrower, (i) instruments, in the form customarily used
by the Lender for releases in the jurisdictions in which the Mortgaged
Properties are located, releasing (A) all of the Security Instruments as a
Lien on the Mortgaged Properties and (B) all of the other Collateral,(ii)
Termination Statements terminating all of the UCC-1 Financing Statements
filed by the Lender with respect to the Collateral, in the form customarily
used in the jurisdiction governing the perfection of the security interest
being released, (iii) such other documents and instruments as the Borrower
may reasonably request evidencing the release of the Collateral from any
lien securing the Obligations (including a termination of any restriction
on the use of any accounts relating to the Collateral) and the release and
return to the applicable Owner of any and all escrowed amounts relating
thereto, (iv) instruments releasing the security interest in the Ownership
Interests in the Owners, (v) instruments releasing each of the Owners from
its obligations under this Agreement, the Owner Guaranty it has executed
and any and all other Loan Documents and (vi) the Notes, each marked paid
and cancelled. The instruments referred to in the preceding sentence are
referred to in this Article as the "FACILITY TERMINATION DOCUMENTS."
SECTION 10.03. CONDITIONS PRECEDENT TO TERMINATION OF CREDIT FACILITY. The
right of the Borrower to terminate this Agreement and the Credit Facility and to
receive a release of all of the Collateral from the Collateral Pool and the
Lender's obligation to execute and deliver the Facility Termination Documents on
the Closing Date are subject to the satisfaction of the following conditions
precedent as of the Closing Date:
(a) Payment by the Borrower in full of all of the Notes Outstanding
on the Closing Date, including any associated prepayment premiums or other
amounts due under the Notes;
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(b) Payment of the Credit Facility Termination Fee; and
(c) The satisfaction of the General Conditions set forth in Article
XI(a) and XI(d).
ARTICLE XI
GENERAL CONDITIONS PRECEDENT TO ALL REQUESTS
The obligation of the Lender to close the transaction requested in a
Request shall be subject to the following conditions precedent (the "GENERAL
CONDITIONS") in addition to any other conditions precedent set forth in this
Agreement:
(a) PAYMENT OF EXPENSES. The payment by the Borrower of the Lender's
fees and expenses payable in accordance with this Agreement for which the
Lender has presented an invoice on or before the Closing Date for the
Request;
(b) NO MATERIAL ADVERSE CHANGE. There has been no material adverse
change in the financial condition, business or prospects of the Borrower,
the REIT or their respective Subsidiaries, taken as a whole, since the
Initial Closing Date (or, with respect to the conditions precedent to the
Initial Advance, from the condition, business or prospects of the Borrower,
the REIT or their respective Subsidiaries, taken as a whole, reflected in
the financial statements, reports and other information obtained by the
Lender during its review of the AIMCO Parties and the Initial Mortgaged
Properties and Lakehaven Notes and Lakehaven Properties);
(c) NO DEFAULT. There shall exist no Event of Default or Potential
Event of Default on the Closing Date for the Request and, after giving
effect to the transaction requested in the Request, no Event of Default or
Potential Event of Default shall have occurred;
(d) NO INSOLVENCY. No AIMCO Party shall be insolvent (within the
meaning of any applicable federal or state laws relating to bankruptcy or
fraudulent transfers) or will be rendered insolvent by the transactions
contemplated by the Loan Documents, including the making of a Future
Advance, or, after giving effect to such transactions, will be left with an
unreasonably small capital with which to engage in its business or
undertakings, or will have intended to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature or will
have intended to hinder, delay or defraud any existing or future creditor
(and the AIMCO Parties shall provide such information in their possession
as the Lender may request concerning the matters in this subsection (d));
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(e) NO UNTRUE STATEMENTS. The Loan Documents shall not contain any
untrue or misleading statement of a material fact and shall not fail to
state a material fact necessary in order to make the information contained
therein not misleading;
(f) REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by any AIMCO Party in the Loan Documents shall be true and
correct in all material respects on the Closing Date for the Request with
the same force and effect as if such representations and warranties had
been made on and as of the Closing Date for the Request;
(g) NO CONDEMNATION OR CASUALTY. There shall not have occurred, and
there shall not be pending or threatened, any condemnation or other taking,
whether direct or indirect, against any Mortgaged Property or the Lakehaven
Properties and there shall not have occurred any casualty to any
improvements located on any Mortgaged Property or the Lakehaven Properties,
if the condemnation or casualty will have a Material Adverse Effect upon
the REIT, the Borrower and their respective Subsidiaries, taken as a whole;
(h) DELIVERY OF CLOSING DOCUMENTS. The receipt by the Lender of the
following, each dated as of the Closing Date for the Request, in form and
substance satisfactory to the Lender in all respects:
(1) A Compliance Certificate;
(2) An Organizational Certificate; and
(3) With respect to any Request other than a Future Advance
Request, such other documents, instruments, approvals (and,
if requested by the Lender, certified duplicates of
executed copies thereof) and opinions as the Lender may
request;
(i) DELIVERY OF CLOSING DOCUMENTS RELATING TO INITIAL ADVANCE
REQUEST, COLLATERAL ADDITION REQUEST OR CREDIT FACILITY EXPANSION REQUEST.
With respect to the closing of the Initial Advance Request, a Collateral
Addition Request, or a Credit Facility Expansion Request, the receipt by
the Lender of the following, each dated as of the Closing Date for the
Request, in form and substance satisfactory to the Lender in all respects:
(1) Fully executed original copies of each Loan Document required to
be executed in connection with the Request, duly executed and
delivered by the parties thereto (other than the Lender), each of
which shall be in full force and effect; and
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(2) Favorable opinions of counsel to the AIMCO Parties, as to the due
organization and qualification of the AIMCO Parties, the due
authorization, execution, delivery and enforceability of each Loan
Document executed in connection with the Request and such other
matters as the Lender may require.
(j) DELIVERY OF PROPERTY-RELATED DOCUMENTS. With respect to each of
the Mortgaged Properties to be made part of the Collateral Pool on the
Closing Date for the Collateral Addition Request, the receipt by the Lender
of the following, each dated as of the Closing Date for the Collateral
Addition Request, in form and substance satisfactory to the Lender in all
respects:
(1) A favorable opinion of local counsel to the AIMCO Parties or the
Lender as to the enforceability of the Security Document, and any
other Loan Documents, executed in connection with the Request;
(2) A commitment for the Title Insurance Policy applicable to the
Mortgaged Property and a pro forma Title Insurance Policy based on the
Commitment;
(3) The Insurance Policy applicable to the Mortgaged Property;
(4) The Survey applicable to the Mortgaged Property;
(5) Evidence of Compliance with Property Laws applicable to the
Mortgaged Property;
(6) An Appraisal of the Mortgaged Property;
(7) A Replacement Reserve Agreement providing for the establishment
of a replacement reserve account for the Mortgaged Property, to be
pledged to the Lender, in which the Owner shall (unless waived by the
Lender) periodically deposit amounts for replacements for improvements
at the Mortgaged Property and as additional security for the AIMCO
Parties' obligations under the Loan Documents;
(8) If required by the Lender, a Completion/Repair and Security
Agreement with respect to the Mortgaged Property in a form
substantially identical to the Completion/Repair and Security
Agreement executed by the Initial Owners;
(9) An Assignment of Management Agreement in a form substantially
identical to the Assignment of Management Agreement executed by the
Initial Owners on the Initial Closing Date;
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(10) An Operations and Maintenance Agreement in a form substantially
identical to that executed by the Initial Owners on the Initial
Closing Date, and including the O&M Plan for the Mortgaged Property,
if the Lender determines an Operations and Maintenance Plan to be
necessary or desirable;
(11) With respect to a Collateral Addition Request, an amendment to
the Cash Management Agreement executed by the Initial Owners and the
Borrower on the Initial Closing Date, adding the Owner as a party and
adding a Property Account for the Mortgaged Property; and
(12) An Assignment of Leases and Rents, if the Lender determines one
to be necessary or desirable, provided that the provisions of any such
assignment shall be substantively identical to those in the Security
Instrument covering the Collateral, with such modifications as may be
necessitated by applicable state or local law.
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ARTICLE XII
REPRESENTATIONS AND WARRANTIES
SECTION 12.01. REPRESENTATIONS AND WARRANTIES OF THE AIMCO PARTIES. Each
AIMCO Party hereby represents and warrants to the Lender, with respect to
itself, as follows:
SECTION 12.01(a) DUE ORGANIZATION; OWNERSHIP STRUCTURE.
(1) The REIT is qualified to transact business and is in good
standing in the State of Maryland and each other AIMCO Party
is qualified to transact business and is in good standing in
the State of Delaware. Each AIMCO Party is also qualified
to transact business and is in good standing in each other
jurisdiction in which such qualification and/or standing is
necessary to the conduct of its business and where the
failure to be so qualified would adversely affect the
validity of, the enforceability of, or the ability of the
AIMCO Party to perform, the Obligations under this Agreement
and the other Loan Documents. Each Owner of a Mortgaged
Property is qualified to transact business and is in good
standing in the State in which the Mortgaged Property is
located.
(2) The AIMCO Party's principal place of business, principal
office and office where it keeps its books and records as to
the Collateral is
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located at its Notice Address, except that the property
accounting records are kept in its offices in Indianapolis,
Indiana.
SECTION 12.01(b) POWER AND AUTHORITY. The AIMCO Party has the
requisite power and authority (i) to own its properties and to carry on its
business as now conducted and as contemplated to be conducted in connection
with the performance of the Obligations hereunder and under the other Loan
Documents and (ii) to execute and deliver this Agreement and the other Loan
Documents and to carry out the transactions contemplated by this Agreement
and the other Loan Documents.
SECTION 12.01(c) DUE AUTHORIZATION. The execution, delivery and
performance of this Agreement and the other Loan Documents have been duly
authorized by all necessary action and proceedings by or on behalf of the
AIMCO Party, and no further approvals or filings of any kind, including any
approval of or filing with any Governmental Authority, are required by or
on behalf of the AIMCO Party as a condition to the valid execution,
delivery and performance by the AIMCO Party of this Agreement or any of the
other Loan Documents.
SECTION 12.01(d) VALID AND BINDING OBLIGATIONS. This Agreement and
the other Loan Documents have been duly authorized, executed and delivered
by the AIMCO Party and constitute the legal, valid and binding obligations
of the AIMCO Party, enforceable against the AIMCO Party in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws or equitable principles affecting the enforcement of creditors' rights
generally or by equitable principles or by the exercise of discretion by
any court.
SECTION 12.01(e) NON-CONTRAVENTION; NO LIENS. Neither the execution
and delivery of this Agreement and the other Loan Documents, nor the
fulfillment of or compliance with the terms and conditions of this
Agreement and the other Loan Documents nor the payment of the Obligations:
(1) does or will conflict with or result in any breach or violation
of any Applicable Law, rule or regulation enacted or issued by
any Governmental Authority or other agency having jurisdiction
over the AIMCO Party, any of the Mortgaged Properties or any
other portion of the Collateral or other assets of the AIMCO
Party, or any judgment or order applicable to the AIMCO Party or
to which the AIMCO Party, any of the Mortgaged Properties or
other assets of the AIMCO Party 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 upon any AIMCO Party;
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(2) does or will conflict with or result in any material breach or
violation of, or constitute a default under, any of the terms,
conditions or provisions of the AIMCO Party's Organizational
Documents, any indenture, existing agreement or other instrument
to which the AIMCO Party is a party or to which the AIMCO Party,
any of the Mortgaged Properties or any other portion of the
Collateral or other assets of the AIMCO Party are subject;
(3) does or will result in or require the creation of any Lien on all
or any portion of the Collateral or any of the Mortgaged
Properties, except for the Permitted Liens; or
(4) does or will require the consent or approval of any creditor of
the AIMCO Party, any Governmental Authority or any other Person
except such consents or approvals which have already been
obtained.
SECTION 12.01(f) PENDING LITIGATION OR OTHER PROCEEDINGS. Except as
set forth in any filings by the REIT with the Securities and Exchange
Commission, there is no pending or, to the best knowledge of the AIMCO
Party, threatened action, suit, proceeding or investigation, at law or in
equity, before any court, board, body or official of any Governmental
Authority or arbitrator against or affecting any Mortgaged Property or any
other portion of the Collateral or other assets of the AIMCO Party, which,
if decided adversely to the AIMCO Party, would have, or may reasonably be
expected to have, a Material Adverse Effect upon any AIMCO Party. The
AIMCO Party is not in default with respect to any order of any Governmental
Authority.
SECTION 12.01(g) SOLVENCY. The AIMCO Party is not insolvent and will
not be rendered insolvent by the transactions contemplated by this
Agreement or the other Loan Documents and after giving effect to such
transactions, the AIMCO Party will not be left with an unreasonably small
amount of capital with which to engage in its business or undertakings, nor
will the AIMCO Party have incurred, have intended to incur, or believe that
it has incurred, debts beyond its ability to pay such debts as they mature.
The AIMCO Party did not receive less than a reasonably equivalent value in
exchange for incurrence of the Obligations. There (i) is no contemplated,
pending or, to the best of the AIMCO Party's knowledge, threatened
bankruptcy, reorganization, receivership, insolvency or like proceeding,
whether voluntary or involuntary, affecting the AIMCO Party or any of the
Mortgaged Properties and (ii) has been no assertion or exercise of
jurisdiction over the AIMCO Party or any of the Mortgaged Properties by any
court empowered to exercise bankruptcy powers.
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SECTION 12.01(h) RATIOS. As of the date hereof, the Aggregate Debt
Service Coverage Ratio for the Trailing 12 Month Period ending on the
Initial Closing Date is not less than 145%, and the Aggregate Loan to Value
Ratio for the Trailing 12 Month Period is not greater than 60%.
SECTION 12.01(i) NO CONTRACTUAL DEFAULTS. There are no defaults by
the AIMCO Party or, to the knowledge of the AIMCO Party, by any other
Person under any contract to which the AIMCO Party is a party relating to
any Mortgaged Property, including any management, rental, service, supply,
security, maintenance or similar contract, that would permit the
termination of such contract. No AIMCO Party and, to the knowledge of the
AIMCO Party, no other Person, has received notice or has any knowledge of
any existing circumstances in respect of which it could receive any notice
of default or breach in respect of any contracts affecting or concerning
any Mortgaged Property.
SECTION 12.01(j) COMPLIANCE WITH THE LOAN DOCUMENTS. The AIMCO Party
is in compliance with all provisions of the Loan Documents to which it is a
party or by which it is bound. The representations and warranties made by
the AIMCO Party in the Loan Documents are true, complete and correct as of
the Closing Date and do not contain any untrue statement of material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
SECTION 12.01(k) ERISA. The AIMCO Party is in compliance in all
material respects with all applicable provisions of ERISA and has not
incurred any liability to the PBGC on a Plan under Title IV of ERISA. None
of the assets of the AIMCO Party constitute plan assets (within the meaning
of Department of Labor Regulation Section 2510.3-101) of any employee
benefit plan subject to Title I of ERISA.
SECTION 12.01(l) FINANCIAL INFORMATION. The financial projections
relating to the AIMCO Party and delivered to the Lender on or prior to the
date hereof, if any, were prepared on the basis of assumptions believed by
the AIMCO Party, in good faith at the time of preparation, to be reasonable
and the AIMCO Party is not aware of any fact or information that would lead
it to believe that such assumptions are incorrect or misleading in any
material respect; PROVIDED, HOWEVER, that no representation or warranty is
made that any result set forth in such financial projections shall be
achieved. The financial statements of the AIMCO Party which have been
furnished to the Lender are complete and accurate in all material respects
and present fairly the financial condition of the AIMCO Party, as of its
date in accordance with GAAP, and since the date of the most recent of such
financial statements no event has occurred which would have, or may
reasonably be expected to have, a Material Adverse Effect upon the REIT,
the Borrower and their respective Subsidiaries, taken as a
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whole, and there has not been any material transaction entered into by the
AIMCO Party other than transactions in the ordinary course of business.
The AIMCO Party has no material Contingent Obligations which are not
otherwise disclosed in its most recent financial statements.
SECTION 12.01(m) ACCURACY OF INFORMATION. No information, statement
or report furnished in writing to the Lender by the AIMCO Party in
connection with this Agreement or any other Loan Document or in connection
with the consummation of the transactions contemplated hereby and thereby
contains any material misstatement of fact or omits to state a material
fact necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading; and the
representations and warranties of the AIMCO Party and the statements,
information and descriptions contained in the AIMCO Party's closing
certificates, as of the Closing Date, are true, correct and complete in all
material respects, do not contain any untrue statement or misleading
statement of a material fact, and do not omit to state a material fact
required to be stated therein or necessary to make the certifications,
representations, warranties, statements, information and descriptions
contained therein, in light of the circumstances under which they were
made, not misleading; and the estimates and the assumptions contained
herein and in any certificate of the AIMCO Party delivered as of the
Closing Date are reasonable and based on the best information available to
the AIMCO Party.
SECTION 12.01(n) GOVERNMENTAL APPROVALS. No Governmental Approval
not already obtained or made is required for the execution and delivery or
approval, as the case may be, of this Agreement or any other Loan Document
or the performance of the terms and provisions hereof or thereof by the
AIMCO Party.
SECTION 12.01(o) GOVERNMENTAL ORDERS. The AIMCO Party is not
presently under any cease or desist order or other orders of a similar
nature, temporary or permanent, of any Governmental Authority which would
have the effect of preventing or hindering performance of its duties
hereunder, nor are there any proceedings presently in progress or to its
knowledge contemplated which, if successful, could reasonably be expected
to lead to the issuance of any such order.
SECTION 12.01(p) NO RELIANCE. The AIMCO Party acknowledges,
represents and warrants that it understands the nature and structure of the
transactions contemplated by this Agreement and the other Loan Documents,
that it is familiar with the provisions of all of the documents and
instruments relating to such transactions; that it understands the risks
inherent in such transactions, including the risk of loss of all or any of
the Mortgaged Properties; and that it has not relied on the Lender or
Fannie Mae for any guidance or expertise in analyzing the financial or
other consequences of the transactions contemplated by this Agreement or
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any other Loan Document or otherwise relied on the Lender or Fannie Mae in
any manner in connection with interpreting, entering into or otherwise in
connection with this Agreement, any other Loan Document or any of the
matters contemplated hereby or thereby.
SECTION 12.01(q) COMPLIANCE WITH APPLICABLE LAW. The AIMCO Party is
in compliance with Applicable Law, including all Governmental Approvals, if
any, except for such items of noncompliance that, singly or in the
aggregate, have not had, and are not reasonably expected to cause, a
Material Adverse Effect upon any AIMCO Party.
SECTION 12.01(r) CONTRACTS WITH AFFILIATES. Except as otherwise
approved in writing by the Lender, the AIMCO Party has not entered into and
is not a party to any contract, lease or other agreement with any Affiliate
of the AIMCO Party for the provision of any service, materials or supplies
to any Mortgaged Property(including any contract, lease or agreement for
the provision of property management services, cable television services or
equipment, gas, electric or other utilities, security services or
equipment, laundry services or equipment or telephone services or
equipment). The Lender hereby approves the property management agreements
set forth on EXHIBIT HH to this Agreement.
SECTION 12.01(s) LINES OF BUSINESS. The AIMCO Party is not engaged
in any businesses which would cause a breach of its covenants in Section
13.02(o).
SECTION 12.01(t) STATUS AS A REAL ESTATE INVESTMENT TRUST. The REIT
currently qualifies, and is taxed as, a real estate investment trust under
Subchapter M of the Internal Revenue Code, and is not engaged in any
activities which would jeopardize such qualification and tax treatment.
SECTION 12.01(u) YEAR 2000 COMPLIANCE. The Borrower has conducted a
comprehensive review and assessment of its computer systems and
applications and made inquiry of Borrower's key suppliers and vendors with
respect to the so-called "year 2000 problem" (the risk that computer
applications may not be able to properly perform date-sensitive functions
after December 31, 1999) and, based on that review and inquiry, Borrower
does not believe that the "year 2000 problem" will result in a material
adverse change in the ability of Borrower and its Subsidiaries to manage
and operate their properties and pay and perform their obligations
hereunder.
SECTION 12.02. REPRESENTATIONS AND WARRANTIES OF THE OWNERS. Each Owner
hereby represents and warrants to the Lender, with respect to itself, as
follows:
SECTION 12.02(a) TITLE. Each Owner has good, valid, marketable and
indefeasible title to each Mortgaged Property (either in fee simple or as
tenant under a ground lease
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meeting all of the requirements of the DUS Guide), free and clear of all
Liens whatsoever except the Permitted Liens. Each Security Instrument, if
and when properly recorded in the appropriate records, together with any
Uniform Commercial Code financing statements required to be filed in
connection therewith, will create a valid, perfected first lien on the
Mortgaged Property intended to be encumbered thereby (including the Leases
of such Mortgaged Property and the rents and all rights to collect rents
under such Leases), subject only to Permitted Liens. Except for any
Permitted Liens, there are no Liens or claims for work, labor or materials
affecting any Mortgaged Property which are or may be prior to, subordinate
to, or of equal priority with, the Liens created by the Loan Documents.
The Permitted Liens do not have, and may not reasonably be expected to
have, a Material Adverse Effect upon any AIMCO Party.
SECTION 12.02(b) TAXES. Each Owner has filed all property and
similar tax returns required to have been filed by it with respect to each
Mortgaged Property and has paid and discharged, or caused to be paid and
discharged, all installments for the payment of real estate, property or
similar taxes that would otherwise be delinquent, and all other material
Impositions imposed against, affecting or relating to each Mortgaged
Property other than those which have not become delinquent, together with
any fine, penalty, interest or cost for nonpayment pursuant to such returns
or pursuant to any assessment received by it. Each AIMCO Party has no
knowledge of any new proposed tax, levy or other governmental or private
assessment or charge in respect of any Mortgaged Property which has not
been disclosed in writing to the Lender.
SECTION 12.02(c) ZONING. Each Mortgaged Property complies in all
material respects with all Applicable Laws affecting such Mortgaged
Property. Without limiting the foregoing, all material Permits, including
certificates of occupancy, have been issued and are in full force and
effect. Neither the Owner nor, to the knowledge of the Owner, any former
owner of any Mortgaged Property, has received any written notification or
written threat of any actions or proceedings regarding the noncompliance or
nonconformity of any Mortgaged Property with any Applicable Laws or
Permits, nor is the Owner otherwise aware of any such pending actions or
proceedings.
SECTION 12.02(d) LIABILITY FOR HAZARDOUS SUBSTANCES. Except as
disclosed in any Environmental Report delivered to the Lender prior to the
date on which the Owner's Mortgaged Property is added to the Collateral
Pool, or otherwise disclosed in writing by the Owner to the Lender prior to
such date, the Owner of the Mortgaged Property does not have any knowledge
of any liability, contingent or otherwise, in connection with any Hazardous
Substance Activity on or affecting any Mortgaged Property in violation of
Hazardous Materials Laws.
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SECTION 12.02(e) PROHIBITED ACTIVITIES OR CONDITIONS. Except as
disclosed in any Environmental Report delivered to the Lender prior to the
date on which the Owner's Property is added to the Collateral Pool, or
otherwise disclosed in writing by the Owner to the Lender prior to such
date, (i) to the best knowledge of the Owner, no Prohibited Activities or
Conditions exist or have existed at, upon, under or within the Mortgaged
Property that have not been remedied and (ii) no AIMCO Party has at any
time caused or permitted any Prohibited Activities or Conditions to exist
at, upon, under or within the Mortgaged Property.
SECTION 12.02(f) HAZARDOUS MATERIALS LAWS. Except as disclosed in
any Environmental Report delivered to the Lender prior to the date of on
which the Owner's Mortgaged Property is added to the Collateral Pool, or
otherwise disclosed in writing by the Owner to the Lender prior to such
date, (i) no AIMCO Party nor, to the knowledge of the Owner, no other
party, has been or is involved in operations at any Mortgaged Property
which operations could reasonably be expected to lead to (x) the imposition
of liability on an AIMCO Party under any Hazardous Materials Law in effect
as of the date of this Agreement, or on any subsequent or former owner of
the Mortgaged Property, or (y) the creation of a Lien with respect to a
liability on the Mortgaged Property under any Hazardous Materials Law in
effect as of the date hereof; (ii) no AIMCO Party and, to the best
knowledge of the Owner, no predecessor-in-interest with respect to the
Mortgaged Property has permitted any tenant or occupant of the Mortgaged
Property to engage in any activity that could reasonably be expected to
impose a claim or liability under any Hazardous Materials Law in effect as
of the date hereof on such tenant or occupant, on any AIMCO Party or on any
other subsequent or former owner of the Mortgaged Property; and (iii) no
AIMCO Party has received, and the Owner has no knowledge of the issuance
of, any claim, citation or notice of any Governmental Actions.
SECTION 12.02(g) LEASES. Each Owner has delivered to the Lender a
true and correct copy of its form apartment lease for the Mortgaged
Property which it owns, and each Lease with respect to such Mortgaged
Property is in the form thereof, with no material modifications thereto,
except as previously disclosed in writing to the Lender. Except as set
forth in a Rent Roll, no Lease for any unit in any Mortgaged Property (i)
is for a term in excess of one year, including any renewal or extension
period unless such renewal or extension period is subject to termination by
the Owner upon not more than 30 days' written notice, (ii) provides for
prepayment of more than one month's rent, or (iii) was entered into in
other than the ordinary course of business.
SECTION 12.02(h) RENT ROLL. Each Owner has executed and delivered to
the Lender, on behalf of the Lender, a Rent Roll for each Mortgaged
Property, each dated as of and delivered within 60 days prior to the
Initial Closing Date. Each Rent Roll sets forth each
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and every unit subject to a Lease which is in full force and effect as of
the date of such Rent Roll. The information set forth on each Rent Roll is
true, correct and complete as of its date and there has occurred no
Material Adverse Effect upon the REIT, the Borrower or their respective
Subsidiaries, taken as a whole, resulting from a change in the information
shown on any Rent Roll from the date of each such Rent Roll to the Initial
Closing Date. Except as disclosed in the Rent Roll with respect to each
Mortgaged Property or otherwise previously disclosed in writing to the
Lender, no Lease is in effect as of the date of the Rent Roll with respect
to such Mortgaged Property.
SECTION 12.02(i) STATUS OF LANDLORD UNDER LEASES. Except for any
assignment of leases and rents which is a Permitted Lien or which is to be
released in connection with the consummation of the transactions
contemplated by this Agreement, each Owner is the owner and holder of the
landlord's interest under each of the Leases of units in each Mortgaged
Property owned by the Owner and there are no prior outstanding assignments
of the Owner's interest in any such Lease, or any portion of the rents,
additional rents, charges, issues or profits due and payable or to become
due and payable thereunder.
SECTION 12.02(j) ENFORCEABILITY OF LEASES. Each Lease constitutes
the legal, valid and binding obligation of the Owner and, to the knowledge
of the Owner, of each of the other parties thereto, enforceable in
accordance with its terms, subject only to bankruptcy, insolvency,
reorganization or other similar laws relating to creditors' rights
generally, and equitable principles, and except as disclosed in writing to
the Lender, no notice of any default by the Owner which remains uncured has
been sent by any tenant under any such Lease.
SECTION 12.02(k) NO LEASE OPTIONS. All premises demised to tenants
under Leases are occupied by such tenants as tenants only. No Lease
contains any option or right to purchase, right of first refusal or any
other similar provisions. No option or right to purchase, right of first
refusal, purchase contract or similar right exists with respect to any
Mortgaged Property.
SECTION 12.02(l) INSURANCE. Each Owner has delivered to the Lender
true and correct certified copies of all policies of insurance currently in
effect as of the date of this Agreement with respect to the Mortgaged
Property which it owns. Each such insurance policy complies in all
material respects with the requirements set forth in the Loan Documents.
SECTION 12.02(m) TAX PARCELS. Each Mortgaged Property is on one or
more separate tax parcels, and each such parcel (or parcels) is (or are)
separate and apart from any other property.
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SECTION 12.02(n) ENCROACHMENTS. Except as disclosed on the survey
with respect to each Mortgaged Property, none of the improvements located
on any Mortgaged Property encroaches upon the property of any other Person
nor lies outside of the boundaries and building restriction lines of such
Mortgaged Property and no improvement located on property adjoining such
Mortgaged Property lies within the boundaries of or in any way encroaches
upon such Mortgaged Property.
SECTION 12.02(o) INDEPENDENT UNIT. Except for Permitted Liens and as
disclosed on EXHIBIT II to this Agreement, each Mortgaged Property is an
independent unit which does not rely on any drainage, sewer, access,
parking, structural or other facilities located on any Mortgaged Property
not included in such Mortgaged Property or on public or utility easements
for the (i) fulfillment of any zoning, building code or other requirement
of any Governmental Authority that has jurisdiction over such Mortgaged
Property, (ii) structural support, or (iii) the fulfillment of the
requirements of any Lease or other agreement affecting such Mortgaged
Property. Each Owner, directly or indirectly, has the right to use all
amenities, easements, public or private utilities, parking, access routes
or other items necessary or currently used for the operation of each
Mortgaged Property. All public utilities are installed and operating at
each Mortgaged Property and all billed installation and connection charges
have been paid in full. Each Mortgaged Property is either (x) contiguous
to or (y) benefits from an irrevocable unsubordinated easement permitting
access from such Mortgaged Property to a physically open, dedicated public
street, and has all necessary permits for ingress and egress and is
adequately serviced by public water, sewer systems and utilities. No
building or other improvement not located on a Mortgaged Property relies on
any part of the Mortgaged Property to fulfill any zoning requirements,
building code or other requirement of any Governmental Authority that has
jurisdiction over the Mortgaged Property for structural support or to
furnish to such building or improvement any essential building systems or
utilities.
SECTION 12.02(p) CONDITION OF THE MORTGAGED PROPERTIES. Except as
disclosed in any third party report delivered to the Lender prior to the
date on which the Owner's Mortgaged Property is added to the Collateral
Pool, or otherwise disclosed in writing by the Owner to the Lender prior to
such date, each Mortgaged Property is in good condition, order and repair,
subject to ordinary wear and tear, there exists no structural or other
material defects in such Mortgaged Property, whether latent or otherwise,
and the Owner has not received notice from any insurance company or bonding
company of any defects or inadequacies in such Mortgaged Property, or any
part of it, which would adversely affect the insurability of such Mortgaged
Property or cause the imposition of extraordinary premiums or charges for
insurance or of any termination or threatened termination of any policy of
insurance or bond. No claims have been made by any AIMCO Party or, to the
Owner's knowledge, by any other Person, against any contractor, architect
or other party with respect
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to the condition of any Mortgaged Property or the existence of any
structural or other material defect therein. No Mortgaged Property has
been materially damaged by casualty which has not been fully repaired or
for which insurance proceeds have not been received or are not expected to
be received except as previously disclosed in writing to the Lender. There
are no proceedings pending for partial or total condemnation of any
Mortgaged Property except as disclosed in writing to the Lender.
SECTION 12.02(p) LAKEHAVEN NOTES. The Owner of the Lakehaven Notes
makes the same representations and warranties to the Lender with respect to
each Lakehaven Property as the Owner of each Mortgaged Property made with
respect to the Mortgaged Property which it owns, with the same effect as if
the words "Mortgaged Property" in this Agreement referred to each Lakehaven
Property and the word "Owner" included both the Owner of the Lakehaven
Notes and each Lakehaven Obligor.
SECTION 12.03. REPRESENTATIONS AND WARRANTIES OF THE LENDER. The Lender
hereby represents and warrants to the AIMCO Parties as follows:
SECTION 12.03(a) DUE ORGANIZATION. The Lender is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware.
SECTION 12.03(b) POWER AND AUTHORITY. The Lender has the requisite
power and authority to execute and deliver this Agreement and to perform
its obligations under this Agreement.
SECTION 12.03(c) DUE AUTHORIZATION. The execution and delivery by
the Lender of this Agreement, and the consummation by it of the
transactions contemplated thereby, and the performance by it of its
obligations thereunder, have been duly and validly authorized by all
necessary action and proceedings by it or on its behalf.
SECTION 12.03(d) VALID AND BINDING OBLIGATIONS. This Agreement and
the other Loan Documents have been duly authorized, executed and delivered
by the Lender and constitute the legal, valid and binding obligations of
the Lender, enforceable against the Lender in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws or equitable principles affecting the enforcement of creditors' rights
generally or by equitable principles or by the exercise of discretion by
any court.
SECTION 12.03(e) NON-CONTRAVENTION; NO LIENS. Neither the execution
and delivery of this Agreement and the other Loan Documents, nor the
fulfillment of or
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compliance with the terms and conditions of this Agreement and the other
Loan Documents nor the payment of the Obligations:
(1) does or will conflict with or result in any breach or violation
of any Applicable Law, rule or regulation enacted or issued by
any Governmental Authority or other agency having jurisdiction
over the Lender, or any assets of the Lender, or any judgment or
order applicable to the Lender or to which the Lender or assets
of the Lender 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 upon the
financial condition of the Lender;
(2) does or will conflict with or result in any material breach or
violation of, or constitute a default under, any of the terms,
conditions or provisions of the Lender's Organizational
Documents, any indenture, existing agreement or other instrument
to which the Lender is a party or to which the Lender or assets
of the Lender are subject; or
(3) does or will require the consent or approval of any creditor of
the Lender, any Governmental Authority or any other Person except
such consents or approvals which have already been obtained.
ARTICLE XIII
COVENANTS
SECTION 13.01. AFFIRMATIVE COVENANTS OF THE AIMCO PARTIES. Each AIMCO
Party agrees and covenants with the Lender, with respect to itself, that, at all
times during the Term of this Agreement:
SECTION 13.01(a) COMPLIANCE WITH AGREEMENTS; NO AMENDMENTS. The
AIMCO Party shall comply with all the terms and conditions of each Loan
Document to which it is a party or by which it is bound; PROVIDED, HOWEVER,
that the AIMCO Party's failure to comply with such terms and conditions
shall not be an Event of Default until the expiration of the applicable
notice and cure periods, if any, specified in the applicable Loan Document.
SECTION 13.01(b) MAINTENANCE OF EXISTENCE. The AIMCO Party shall
maintain its existence and continue to be a limited partnership, limited
liability company or corporation, as the case may be, organized under the
laws of the state of its organization, duly
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qualified to do business in each jurisdiction in which such qualification
is necessary to the conduct of its business and where the failure to be so
qualified would adversely affect the validity of, the enforceability of, or
the ability to perform, its obligations under this Agreement or any other
Loan Document.
SECTION 13.01(c) MAINTENANCE OF REIT STATUS. At all times during
which the REIT is bound by the terms of this Agreement: (i) the REIT shall
continue to qualify and be taxed as a real estate investment trust under
Subchapter M of the Internal Revenue Code; and (ii) each REIT Sub shall
continue to qualify as a "Qualified REIT Subsidiary" (as defined in
Subchapter M of the Internal Revenue Code) of the REIT.
SECTION 13.01(d) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER
INFORMATION. The AIMCO Party shall keep and maintain at all times complete
and accurate books of accounts and records in sufficient detail to
correctly reflect (x) all of the AIMCO Party's financial transactions and
assets and (y) the results of the operation of each Mortgaged Property and
copies of all written contracts, Leases and other instruments which affect
each Mortgaged Property (including all bills, invoices and contracts for
electrical service, gas service, water and sewer service, waste management
service, telephone service and management services); PROVIDED, HOWEVER,
that the AIMCO Party shall not be required to maintain bills and invoices
for a period of more than 12 months after the date on which the invoice is
paid. In addition, the REIT shall furnish, or cause to be furnished:
SECTION 13.01(d)(1) ANNUAL FINANCIAL STATEMENTS. As soon as
available, and in any event within 90 days after the close of REIT's fiscal
year during the Term of this Agreement, an audited balance sheet of the
REIT and its Subsidiaries, on a consolidated basis, as of the end of such
fiscal year, an audited statement of income, owners' equity and retained
earnings of the REIT and its Subsidiaries, on a consolidated basis, for
such fiscal year and an audited statement of cash flows of the REIT and its
Subsidiaries, on a consolidated basis, for such fiscal year, all in
reasonable detail and stating in comparative form the respective figures
for the corresponding date and period in the prior fiscal year, prepared in
accordance with GAAP, and accompanied by a certificate of the REIT's
independent certified public accountants to the effect that such financial
statements have been prepared in accordance with GAAP, and that such
financial statements fairly present the results of its operations and
financial condition for the periods and dates indicated, with such
certification to be free of exceptions and qualifications as to the scope
of the audit or as to the going concern nature of the business.
SECTION 13.01(d)(2) QUARTERLY FINANCIAL STATEMENTS. As soon as
available, and in any event within 45 days after each of the first three
fiscal quarters of each fiscal year during the Term of this Agreement, an
unaudited balance sheet of the REIT and its
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Subsidiaries, on a consolidated basis, as of the end of such fiscal
quarter, an unaudited statement of income and retained earnings of the
REIT and its Subsidiaries, on a consolidated basis, for the portion of the
fiscal year ended with the last day of such quarter, and an unaudited
statement of cash flows of the REIT and its Subsidiaries, on a consolidated
basis, for the portion of the fiscal year ended with the last day of such
quarter, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the previous
fiscal year, accompanied by a certificate of the controller of the REIT to
the effect that such financial statements have been prepared in accordance
with GAAP, and that such financial statements fairly present the results of
its operations and financial condition for the periods and dates indicated
subject to year end adjustments in accordance with GAAP.
SECTION 13.01(d)(3) QUARTERLY PROPERTY STATEMENTS. On a quarterly
basis within 45 days after the end of each of the first three fiscal
quarters of each fiscal year(or, upon the request of the Lender, within 30
days after the end of each month), a statement of income and expenses of
each Mortgaged Property accompanied by a certificate of the controller of
the REIT to the effect that each such statement of income and expenses
fairly presents the operations of each such Mortgaged Property for the
period indicated.
SECTION 13.01(d)(4) ANNUAL PROPERTY STATEMENTS. On an annual basis
within 45 days of the end of the fiscal year, an annual statement of income
and expenses of each Mortgaged Property accompanied by a certificate of the
controller of the REIT to the effect that each such statement of income and
expenses fairly presents the operations of each such Mortgaged Property for
the period indicated.
SECTION 13.01(d)(5) UPDATED RENT ROLLS. Upon the Lender's request
(but not more than once each calendar month), a current Rent Roll for each
Mortgaged Property, showing the name of each tenant, and for each tenant,
the space occupied, the lease expiration date, the rent payable, the rent
paid and any other information requested by the Lender and in the form
required by the Lender and accompanied by a certificate of the controller
of the REIT to the effect that each such Rent Roll fairly presents the
information required therein.
SECTION 13.01(d)(6) SECURITY DEPOSIT INFORMATION. Upon the Lender's
request (but not more than once each calendar month), an accounting of all
security deposits held in connection with any lease of any part of any
Mortgaged Property, including the name and identification number of the
accounts in which such security deposits are held, the name and address of
the financial institutions in which such security deposits are held and the
name of the person to contact at such financial institution, along with any
authority or release necessary for the Lender to access information
regarding such accounts.
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SECTION 13.01(d)(7) SECURITY LAW REPORTING INFORMATION. So long as
the REIT is a reporting company under the Securities and Exchange Act of
1934, promptly upon their becoming available, (a) copies of all financial
statements, reports and proxy statements so sent or made available
generally by the REIT or any other AIMCO Party, or any of their Affiliates,
to their respective security holders and copies of all press releases made
by the Borrower or the REIT, (b) all regular and periodic reports and all
registration statements (other than the exhibits thereto and any
registration statements on Form S-8 or a similar form) and prospectuses, if
any, filed by the REIT or any other AIMCO Party, or any of their
Affiliates, with the Securities and Exchange Commission or other
Governmental Authorities, and (c) all press releases and other statements
made available generally by the REIT or any AIMCO Party, or any of their
Affiliates, to the public concerning material developments in the business
of the REIT or other AIMCO Party.
SECTION 13.01(d)(8) ACCOUNTANTS' REPORTS. Promptly upon receipt
thereof, copies of any reports or management letters submitted to the AIMCO
Party by its independent certified public accountants in connection with
the examination of its financial statements made by such accountants
(except for reports otherwise provided pursuant to clause (i) above);
PROVIDED, HOWEVER, that the AIMCO Party shall only be required to deliver
such reports and management letters to the extent that they relate to any
AIMCO Party or any Mortgaged Property.
SECTION 13.01(d)(9) BORROWER PLANS AND PROJECTIONS. Not less than 90
days after the beginning of each fiscal year, copies of (1) the Borrower's
business plan for the current and the succeeding two fiscal years, (2) the
Borrower's annual budgets (including capital expenditure budgets) and
projections for each Mortgaged Property; and (3) the Borrower's financial
projections for the current and the succeeding two fiscal years, as
prepared by the Borrower's Chief Financial Officer and in a format and with
such detail as the Lender may require.
SECTION 13.01(d)(10) ANNUAL MARKET STUDIES. Within 30 days after the
Lender's request, market studies of the local metropolitan real estate
market in which each Mortgaged Property is located, in the form of the
standard rental and sales comparable analyses currently performed by the
REIT in the ordinary course of its business.
SECTION 13.01(d)(11) ORGANIZATIONAL CHART. Within 45 days after the
request of the Lender, any subsequent revisions to the Organizational
Chart.
SECTION 13.01(d)(12) OTHER REPORTS. Promptly after delivered, all
reports, filings, communications or correspondence which any AIMCO Party
delivers to any Governmental Authority, and promptly after request by the
Lender, any reports, schedules, financial
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statements or other written information concerning the AIMCO Party's
business affairs or the condition (financial or otherwise) of any of the
Mortgaged Properties which the AIMCO Party prepares in the ordinary course
of its business or which are reasonably requested by the Lender.
The Owner of the Lakehaven Notes shall perform the same agreements and
covenants, or cause the Lakehaven Obligors to perform the same agreements
and covenants, with respect to each Lakehaven Property as the Owner of each
Mortgaged Property agrees and covenants to perform under this Section
13.01(d) with respect to the Mortgaged Property which it owns, with the
same effect as if the words "Mortgaged Property" in this subsection also
referred to each Lakehaven Property and the word "Owner" also included both
the Owner of the Lakehaven Notes and each Lakehaven Obligor. In addition,
the Owner of the Lakehaven Notes shall provide (i) on a quarterly basis
within 45 days after the end of each fiscal quarters of each fiscal
year(or, upon the request of the Lender, within 30 days after the end of
each month), a statement of the Lakehaven Notes Debt Service, categorized
by principal, interest and additional interest payments, and containing
such additional information as the Lender may request, certified by the
Owner of the Lakehaven Notes and Lakehaven Obligors and (ii) promptly after
paid, a copy of the receipts showing the payment of the real estate taxes
and other assessments, and the insurance premiums, for the Lakehaven
Properties.
SECTION 13.01(e) CERTIFICATE OF COMPLIANCE. The AIMCO Party shall
deliver to the Lender concurrently with the delivery of the financial
statements and/or reports required to be delivered pursuant to paragraphs
(d)(1) and (d)(2) above a certificate signed by the controller of the REIT
stating that, to the best of the knowledge of the controller of the REIT
executing such certificate following reasonable inquiry, no Event of
Default or Potential Event of Default has occurred and is continuing, or if
an Event of Default or Potential Event of Default has occurred and is
continuing, specifying the nature thereof.
SECTION 13.01(f) MAINTAIN LICENSES. The AIMCO Party shall procure
and maintain in full force and effect all licenses, Permits, charters and
registrations which are material to the conduct of its business and shall
abide by and satisfy all terms and conditions of all such licenses,
Permits, charters and registrations.
SECTION 13.01(g) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND
ACCOUNTANTS. To the extent permitted by law (including the Securities
Exchange Act of 1934) and in addition to the applicable requirements of the
Security Documents, the AIMCO Party shall permit the Lender:
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(1) to inspect, make copies and abstracts of, and have reviewed or
audited, such of the AIMCO Party's books and records as may
relate to the Obligations or any Mortgaged Property;
(2) to discuss the AIMCO Party's affairs, finances and accounts with
any of the AIMCO Party's officers, partners and employees;
(3) to discuss the AIMCO Party's affairs, finances and accounts with
its independent public accountants, provided that the controller
of the REIT has been given the opportunity by the Lender to be a
party to such discussions; and
(4) to receive any other information that the Lender deems necessary
or relevant in connection with any Advance, any Loan Document or
the Obligations.
Notwithstanding the foregoing, prior to an Event of Default or Potential
Event of Default, all inspections shall be conducted at reasonable times
during normal business hours. Notwithstanding the foregoing, the AIMCO
Party in no event shall be required to disclose any communications or
materials protected by the attorney-client privilege and not waived.
SECTION 13.01(h) INFORM THE LENDER OF MATERIAL EVENTS. The AIMCO
Party shall promptly inform the Lender in writing of any of the following
(and shall deliver to the Lender copies of any related written
communications, complaints, orders, judgments and other documents relating
to the following) of which the AIMCO Party has or obtains actual knowledge:
(1) DEFAULTS. The occurrence of any Event of Default or any
Potential Event of Default under this Agreement or any other Loan
Document;
(2) REGULATORY PROCEEDINGS. The commencement of any rulemaking or
disciplinary proceeding or the promulgation of any proposed or
final rule which would have, or may reasonably be expected to
have, a Material Adverse Effect upon any AIMCO Party;
(3) LEGAL PROCEEDINGS. The commencement or threat of, or amendment
to, any proceedings by or against the AIMCO Party in any Federal,
state or local court or before any Governmental Authority, or
before any arbitrator, which, if adversely determined, would
have, or at the time of determination may reasonably be expected
to have, a Material Adverse Effect upon any AIMCO Party;
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(4) BANKRUPTCY PROCEEDINGS. The commencement of any proceedings by
or against the AIMCO Party under any applicable bankruptcy,
reorganization, liquidation, insolvency or other similar law now
or hereafter in effect or of any proceeding in which a receiver,
liquidator, trustee or other similar official is sought to be
appointed for it;
(5) REGULATORY SUPERVISION OR PENALTY. The receipt of notice from
any Governmental Authority having jurisdiction over the AIMCO
Party that (A) the AIMCO Party is being placed under regulatory
supervision, (B) any license, Permit, charter, membership or
registration material to the conduct of the AIMCO Party's
respective business or the Mortgaged Properties is to be
suspended or revoked or (C) the AIMCO Party is to cease and
desist any practice, procedure or policy employed by the AIMCO
Party, as the case may be, in the conduct of its business, and
such cessation would have, or may reasonably be expected to have,
a Material Adverse Effect upon any AIMCO Party;
(6) ENVIRONMENTAL CLAIM. The receipt of notice from any Governmental
Authority or other Person relating to any Environmental Claim (i)
with respect to any Multifamily Residential Property which, if
decided adversely, would have a Material Adverse Effect on the
Borrower, the REIT and their respective Subsidiaries, taken as a
whole, or (ii) with respect to any Mortgaged Property;
(7) MATERIAL TRANSACTIONS OR OCCURRENCES. The consummation of any
material Investment or Disposition, of any material issuance of
Stock of the REIT (other than upon the tender of any Units for
redemption or upon the conversion of any shares of the REIT's
Class B Common Stock into shares of the REIT's Class A Common
Stock) or Units, of any incurrence of material Indebtedness or of
any other material transaction entered into, by the Borrower, the
REIT, any Management Entity or any of their Subsidiaries; and any
change in any executive officer of the REIT;
(8) MATERIAL ADVERSE EFFECTS. The occurrence of any act, omission,
change or event which has a Material Adverse Effect upon the
REIT, the Borrower or their respective Subsidiaries, taken as a
whole, subsequent to the date of the most recent audited
financial statements of the Borrower and the REIT delivered to
the Lender pursuant to Section 13.01(d); and
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(9) ACCOUNTING CHANGES. Any material change in the Borrower's or the
REIT's accounting policies or financial reporting practices.
SECTION 13.01(i) SINGLE-PURPOSE ENTITIES. Each Owner shall at all
times maintain and conduct itself as a Single-Purpose entity and shall own
no more than one Mortgaged Property.
SECTION 13.01(j) INSPECTION. The AIMCO Party shall permit any Person
designated by the Lender: (i) to make entries upon and inspections of the
Mortgaged Properties; and (ii) to otherwise verify, examine and inspect the
amount, quantity, quality, value and/or condition of, or any other matter
relating to, any Mortgaged Property; PROVIDED, HOWEVER, that prior to an
Event of Default or Potential Event of Default, (i) all such entries,
examinations and inspections shall be conducted at reasonable times during
normal business hours, (ii) if such entries, examinations and inspections
are conducted in the ordinary course of the servicing of the Credit
Facility, the Borrower shall not be required to pay for them and (iii) if
such entries, examinations and inspections are conducted outside of the
ordinary course of the servicing of the Credit Facility, Borrower shall pay
the Lender the amount of the Lender's out-of-pocket costs in conducting the
entries, examinations and inspections.
SECTION 13.01(k) COMPLIANCE WITH APPLICABLE LAWS. The AIMCO Party
shall comply in all material respects with all Applicable Laws now or
hereafter affecting any Mortgaged Property or any part of any Mortgaged
Property or requiring any alterations, repairs or improvements to any
Mortgaged Property. The AIMCO Party shall procure and continuously
maintain in full force and effect, and shall abide by and satisfy, all
material terms and conditions of all Permits.
SECTION 13.01(l) WARRANTY OF TITLE. The AIMCO Party shall warrant
and defend (a) the title to each Mortgaged Property and every part of each
Mortgaged Property, subject only to Permitted Liens, and (b) the validity
and priority of the lien of the applicable Loan Documents, subject only to
Permitted Liens, in each case against the claims of all Persons whatsoever.
The AIMCO Party shall reimburse the Lender for any losses, costs, damages
or expenses (including reasonable attorneys' fees and court costs) incurred
by the Lender if an interest in any Mortgaged Property, other than with
respect to a Permitted Lien, is claimed by others.
SECTION 13.01(m) DEFENSE OF ACTIONS. The AIMCO Party shall appear in
and defend any action or proceeding purporting to affect the security for
this Agreement or the rights or power of the Lender hereunder, and shall
pay all costs and expenses, including the cost of evidence of title and
reasonable attorneys' fees, in any such action or proceeding in which the
Lender may appear. If the AIMCO Party fails to perform any of the
covenants or
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agreements contained in this Agreement, or if any action or proceeding is
commenced that is not diligently defended by the AIMCO Party which affects
in any material respect the Lender's interest in any Mortgaged Property or
any part thereof, including eminent domain, code enforcement or proceedings
of any nature whatsoever under any Applicable Law, whether now existing or
hereafter enacted or amended, then the Lender may, but without obligation
to do so and without notice to or demand upon the AIMCO Party and without
releasing the AIMCO Party from any Obligation, make such appearances,
disburse such sums and take such action as the Lender deems necessary or
appropriate to protect the Lender's interest, including disbursement of
reasonable attorney's fees, entry upon such Mortgaged Property to make
repairs or take other action to protect the security of said Mortgaged
Property, and payment, purchase, contest or compromise of any encumbrance,
charge or lien which in the judgment of the Lender appears to be prior or
superior to the Loan Documents. The Lender shall give the Borrower notice
of any action taken under this subsection reasonably promptly after it has
taken the action. In the event (i) that any Security Document is
foreclosed in whole or in part or that any Loan Document is put into the
hands of an attorney for collection, suit, action or foreclosure, or (ii)
of the foreclosure of any mortgage, deed to secure debt, deed of trust or
other security document prior to or subsequent to any Security Document or
any Loan Document in which proceeding the Lender is made a party or (iii)
of the bankruptcy of the AIMCO Party or an assignment by the AIMCO Party
for the benefit of their respective creditors, the AIMCO Party shall be
chargeable with and agrees to pay all costs of collection and defense,
including reasonable attorneys' fees in connection therewith and in
connection with any appellate proceeding or post-judgment action involved
therein, which shall be due and payable together with all required service
or use taxes.
SECTION 13.01(n) PROPERTY MANAGEMENT; MAINTENANCE OF PROPERTIES. The
AIMCO Party shall continue to operate each Mortgaged Property as a
Multifamily Residential Property, and shall manage or cause to be managed
the operations of each Mortgaged Property in accordance with the applicable
provisions of the Loan Documents. The AIMCO Party (i) shall not commit
waste or permit impairment or deterioration of any Mortgaged Property, (ii)
shall not abandon any Mortgaged Property, (iii) shall restore or repair
promptly and in a good and workmanlike manner all or any part of any
Mortgaged Property to the equivalent of its condition existing immediately
prior to such casualty, or such other lesser condition as the Lender may
approve in writing, in the event of any casualty thereto, whether or not
insurance proceeds are available to cover in whole or in part the costs of
such restoration or repair, (iv) shall keep each Mortgaged Property,
including improvements, fixtures, equipment, machinery and appliances
thereon in good repair and shall replace fixtures, equipment, machinery and
appliances on each Mortgaged Property when necessary to keep such items in
good repair, (v) shall generally operate and maintain each Mortgaged
Property in a manner to ensure maximum rentals and (vi) shall give notice
in writing to the Lender of, and, unless otherwise directed in writing by
the Lender, appear in and defend, any
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action or proceeding purporting to affect any Mortgaged Property, the
security of any Security Document or the rights or powers of the Lender
under any of the Loan Documents. No AIMCO Party shall, and no AIMCO Party
shall grant permission to any tenant or other person to, remove, demolish
or alter any improvement now existing or hereafter erected on any Mortgaged
Property or any fixture, equipment, machinery or appliance in or on any
Mortgaged Property except when incident to the replacement of fixtures,
equipment, machinery and appliances with items of like kind.
SECTION 13.01(o) ADDITIONS TO THE MORTGAGED PROPERTIES. Except as
otherwise provided in the Loan Documents, the AIMCO Party shall have the
right to undertake any alteration, improvement, demolition, removal or
construction (collectively, "ALTERATIONS") to any of the Mortgaged
Properties without the prior consent of the Lender; PROVIDED, HOWEVER, that
in any case, no such Alteration shall be made to any Mortgaged Property
without the prior written consent of the Lender if (i) such Alteration
could reasonably be expected to adversely affect the value of such
Mortgaged Property or its operation as a multifamily housing facility in
substantially the same manner in which it is being operated on the date of
this Agreement, (ii) the construction of such Alteration could reasonably
be expected to result in interference to the occupancy of tenants of such
Mortgaged Property such that tenants in occupancy with respect to five
percent (5%) or more of the Leases would be permitted to terminate their
Leases or to abate the payment of all or any portion of their rent, or
(iii) such Alteration will be completed in more than 12 months from the
date of commencement or in the last year of the Term of this Agreement.
Notwithstanding the foregoing, the AIMCO Party must obtain the Lender's
prior written consent to construct Alterations with respect to the
Mortgaged Property costing in excess of $125,000 and the AIMCO Party must
give prior written notice to the Lender of its intent to construct
Alterations with respect to the Mortgaged Property costing in excess of
$50,000; PROVIDED, HOWEVER, that the preceding requirements shall not be
applicable to Alterations made, conducted or undertaken by an Owner as part
of the Owner's routine maintenance and repair of the Mortgaged Properties
as required by Section 13.01(n) or as otherwise required by the Loan
Documents.
SECTION 13.01(p) ERISA. The AIMCO Party shall at all times remain in
compliance in all material respects with all applicable provisions of ERISA
and similar requirements of the PBGC.
SECTION 13.01(q) TAXES. If any tax, assessment or Imposition (other
than a franchise tax imposed on or measured by, the net income or capital
(including branch profits tax) of the Lender (or any transferee or assignee
thereof, including a participation holder)) ("TAXES") is levied, assessed
or charged by the United States, or any state in the United States, or any
political subdivision or taxing authority thereof or therein upon any of
the Loan
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Documents or the obligations secured thereby, the interest of the Lender in
the Mortgaged Properties, or the Lender by reason of or as holder of the
Loan Documents, the AIMCO Parties shall pay all such Taxes to, for, or on
account of the Lender (or provide funds to the Lender for such payment, as
the case may be) as they become due and payable and shall promptly furnish
proof of such payment to the Lender, as applicable. In the event of
passage of any law or regulation permitting, authorizing or requiring such
Taxes to be levied, assessed or charged, which law or regulation in the
opinion of counsel to the Lender may prohibit the AIMCO Party from paying
the Taxes to or for the Lender, the AIMCO Party shall enter into such
further instruments as may be permitted by law to obligate the AIMCO Party
to pay such Taxes.
SECTION 13.01(r) FURTHER ASSURANCES. The AIMCO Party, at the request
of the Lender, shall execute and deliver and, if necessary, file or record
such statements, documents, agreements, UCC financing and continuation
statements and such other instruments and take such further action as the
Lender from time to time may request as reasonably necessary, desirable or
proper to carry out more effectively the purposes of this Agreement or any
of the other Loan Documents or to subject the Collateral to the lien and
security interests of the Loan Documents or to evidence, perfect or
otherwise implement, to assure the lien and security interests intended by
the terms of the Loan Documents or in order to exercise or enforce its
rights under the Loan Documents.
SECTION 13.01(s) MONITORING COMPLIANCE. Upon the request of the
Lender, from time to time, the AIMCO Party shall promptly provide to the
Lender such documents, certificates and other information as may be deemed
necessary to enable the Lender to perform its functions under the Servicing
Agreement.
SECTION 13.01(t) LEASES. Each unit in each Mortgaged Property will
be leased pursuant to the form lease delivered to, and acceptable to, the
Lender, with no material modifications to such approved form lease, except
as disclosed in writing to the Lender.
SECTION 13.01(u) APPRAISALS. At the time of the addition of a
Mortgaged Property to the Collateral Pool, and at any time and from time to
time thereafter, the Lender shall be entitled to obtain an Appraisal of any
Mortgaged Property. The Borrower shall pay all of the Lender's costs of
obtaining the Appraisal, except that the Borrower shall not be required to
pay for any Appraisal of a Mortgaged Property if, within the 12 month
period immediately preceding the date of the Appraisal, the Lender had
received another Appraisal of the Mortgaged Property. Notwithstanding the
foregoing, the Borrower shall pay all of the Lender's costs of obtaining an
Appraisal obtained pursuant to Section 13.04(b)(2).
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SECTION 13.01(v) EXPENSES.
(1) The Borrower shall pay, or reimburse the Lender for, all costs
and expenses incurred by the Lender, including the legal fees and
expenses of the Lender's outside legal counsel, in connection with the
preparation, review and negotiation of all documents, instruments and
certificates to be executed and delivered in connection with a
Request, the performance by the Lender of any of its obligations with
respect to the Request, the satisfaction of all conditions precedent
to the Borrower's rights or the Lender's obligations with respect to
the Request and all transactions related to any of the foregoing. The
obligations of the Borrower under this subsection shall be absolute
and unconditional, regardless of whether the transaction requested in
the Request actually occurs.
(2) The Borrower shall pay, or reimburse the Lender for, all costs
and expenses, other than those costs and expenses described in
paragraph (1), in connection with a Request, the performance by the
Lender of any of its obligations with respect to the Request, the
satisfaction of all conditions precedent to the Borrower's rights or
the Lender's obligations with respect to the Request and all
transactions related to any of the foregoing, including the cost of
title insurance premiums and applicable recordation and transfer taxes
and charges. The obligations of the Borrower under this subsection
shall be absolute and unconditional, regardless of whether the
transaction requested in the Request actually occurs.
(3) The foregoing expenses shall be in addition to all fees required
under Article XIV payable by the Borrower in connection with a
Request.
SECTION 13.01(w) OWNERSHIP.
(1) The REIT shall own, directly or indirectly, through one or
more intermediaries, all of the Ownership Interests in the REIT Subs.
(2) AIMCO-GP, Inc. shall be the sole general partner of the
Borrower and AIMCO-GP, Inc. and AIMCO-LP, Inc. shall own in the
aggregate at least 65% of the Ownership Interests in the Borrower.
(3) Except with respect to AIMCO/Bluffs, L.L.C., AIMCO Holdings
shall be the sole general partner or managing member of, and the
Borrower shall be the sole limited partner or other member of, each
Owner, and the Borrower shall own at least a 98% limited partnership
interest in, or a 98% membership interest in, each Owner.
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(4) AIMCO Holdings shall be the sole managing member of
AIMCO/Bluffs, L.L.C., owning a 1% membership interest in AIMCO/Bluffs,
L.L.C., and the Borrower and Property Asset Management Services, L.P.,
a Delaware limited partnership, shall be the sole other members of
AIMCO/Bluffs, L.L.C., with the Borrower owning at least a 98%
membership interest in AIMCO/Bluffs, L.L.C.
(5) AIMCO Holdings QRS, Inc., a Delaware corporation, shall be
the sole general partner , owning a 2% general partnership interest
in, and the Borrower shall be the sole limited partner, owning a 98%
limited partnership interest in, AIMCO Holdings.
SECTION 13.01(x) PUBLICLY HELD REIT. The REIT shall give the Lender
notice if it no longer is publicly held. The Lender shall have the right,
upon such notice, to impose such additional reporting and other
requirements as may be required under the DUS Guide.
SECTION 13.01(y) CHANGE IN SENIOR MANAGEMENT.
(1) The Borrower shall give the Lender notice of any change in
the individuals comprising Senior Management if, after the change, one
or more of the members of Senior Management were not members of Senior
Management immediately prior to the change.
(2) Within 30 Business Days after receipt of the Borrower's
notice, the Lender shall have the right to terminate this Agreement
and the Credit Facility by giving a notice of such termination to the
Borrower. In such event, this Agreement and the Credit Facility shall
terminate with the same effect as if the Lender had approved a Credit
Facility Termination Request (including the Borrower's obligation,
pursuant to Section 10.03(a), to pay in full of all of the Notes
Outstanding on the Closing Date, including any associated prepayment
premiums or other charges under the Notes), except that, for these
purposes, the Closing Date shall be the 180th day after the date on
which the Borrower first receives the Lender's termination notice.
(3) If the Lender exercises its termination right pursuant to
paragraph (2), the Borrower shall have a period of 180 days,
commencing with the date on which the Borrower receives the Lender's
termination notice, to request that the Lender rescind its termination
notice. The Borrower may include in its request any undertakings which
it is willing to make in order to obtain such a rescission. The Lender
shall give the Borrower notice of its acceptance or rejection of the
Borrower's request within 30 Business Days after the Borrower makes
the request. If the Lender accepts the request, the Lender shall give
the Borrower a notice that the termination notice shall
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be deemed rescinded and of no further force or effect, and this
Agreement and the Credit Facility shall continue in accordance with,
and subject to the terms, conditions and limitations contained in,
this Agreement.
SECTION 13.01(z) DATE-DOWN ENDORSEMENTS. The Borrower shall pay for
the cost and expenses incurred by the Lender to the Title Company in
obtaining from time to time an endorsement to each Title Insurance Policy
containing a Revolving Credit Endorsement, amending the effective date of
the Title Insurance Policy to the date of the title search performed in
connection with the endorsement, provided that it shall not be liable to
pay for more than one such endorsement in any consecutive 12 month period.
SECTION 13.01(aa) DISPOSITION OF LAKEHAVEN NOTES. The Owner of the
Lakehaven Notes may make a demand under any Lakehaven Note which is a
demand note at any time without consent from the Lender. In the event of
any such demand, the Owner shall give the Lender prompt written notice
thereof, and of any payment of the demand, and the Lender shall have the
right to perform a revised Valuation of the Collateral after payment of the
demand. The Owner of the Lakehaven Notes shall keep the Lender fully
informed about the status of each loan evidenced by a Lakehaven Note and
shall notify the Lender immediately in writing in the event of a default
under any Lakehaven Note. Upon such a default, the Owner of the Lakehaven
Note shall not take any actions (other than, at its option, the giving of a
notice of default) without the approval of the Lender. Within 15 Business
Days after the occurrence of the default, the Owner of the Lakehaven Note
shall give the Lender a detailed written notice setting forth all
reasonable options which the Lender would be entitled to pursue under the
Lakehaven Loan Documents, including, if applicable, the giving of any
notice of default (if one has not already been delivered), any acceleration
of the principal of the Lakehaven Note and any foreclosure of any Lakehaven
Collateral, the relative merits of the options discussed and the options
which the Owner recommends. If the Lender does not disapprove the notice
within 15 Business Days after receipt of the Owner's notice, the Lender
shall be deemed to have approved the Owner's recommendations and the Owner
may implement such recommendations. If the Lender disapproves the Owner's
notice, the Owner shall thereafter take no actions with respect to the
options or its remedies under the Lakehaven Loan Documents, including any
acceleration of the principal of the Lakehaven Note and any foreclosure of
any Lakehaven Collateral without the written direction of the Lender
(except for the giving of a notice of default), and shall take all actions
directed by the Lender in a written direction to the Owner, including the
giving of a notice of default (if one has not already been given), the
acceleration of the Lakehaven Note and the foreclosure of the Lakehaven
Collateral. All actions taken by the Owner of the Lakehaven Note shall be
at the Owner's sole expense, whether or not required by the Lender, and the
Lender shall not be liable to the Owner for any damages or liabilities
resulting from the taking of any actions required by the Lender, or the
failure by the Lender to approve the taking of any actions by
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the Owner of the Lakehaven Note. Upon any foreclosure of the Lakehaven
Property, or other disposition of the Lakehaven Note or the Lakehaven Loan
Documents, or upon the payment in full of the Lakehaven Note, the
disposition or payment in full shall be considered a release of the
Lakehaven Note and the Borrower shall comply with all of the terms and
conditions of Article VII with respect to the release, including the
payment of the Release Price and the Release Fee. None of the provisions
of this Section, and none of the other provisions of this Agreement
relating to a Lakehaven Note or the Lakehaven Collateral, shall apply after
the date on which the Lakehaven Note or the Lakehaven Collateral is
released pursuant to Articles VII or X.
SECTION 13.01(bb) STRATEGIC PLAN. Within 120 days after the end of
each fiscal year of the REIT, and at such other times as there is a
material change in the REIT's or the Borrower's short or long range plans,
including its plans for operations, mergers, acquisitions and management,
the REIT shall deliver to the Lender a Strategic Plan, certified by a
member of Senior Management as true, correct and complete.
SECTION 13.01(cc) INCREASED COSTS AND REDUCTION OF RETURN.
(1) If the Lender or Fannie Mae shall determine that, due to
either (i) the introduction of or any change in or in the
interpretation of any Requirement of Law or (ii) the compliance with
any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any
increase in the cost to the Lender or Fannie Mae of agreeing to make
or of making, funding or maintaining any Advance hereunder, then the
Borrower shall be liable for, and shall from time to time, upon
written demand therefor by the Lender or Fannie Mae, which demand
shall set forth the basis of such increased cost in reasonable detail,
pay to the Lender or Fannie Mae, as applicable, such additional
amounts as are sufficient to compensate the Lender or Fannie Mae for
such increased costs.
(2) If the Lender or Fannie Mae shall have reasonably determined
that (i) the introduction of any Capital Adequacy Regulation, (ii) any
change in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy Regulation by
any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance with any
Capital Adequacy Regulation by the Lender or Fannie Mae, effects or
would effect an increase in the amount of capital required or expected
to be maintained by the Lender or Fannie Mae (taking into
consideration the Lender's or Fannie Mae's policies with respect to
capital adequacy and the Lender's or Fannie Mae's desired return on
capital), then, upon written demand of the Lender or Fannie Mae, which
demand shall set forth in reasonable detail the basis for any such
increase in required
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capital, the Borrower shall immediately pay to the Lender or Fannie
Mae, as applicable, from time to time as specified by the Lender or
Fannie Mae, additional amounts sufficient to compensate the Lender or
Fannie Mae for such increase.
(3) If the Lender or Fannie Mae shall have determined that any
of the events described in subsections (a) or (b) effects or would
effect an increase in cost or reduction of return resulting in
additional Obligations hereunder, the Lender or Fannie Mae, as
applicable, shall, with reasonable promptness, notify the Borrower of
such determination, PROVIDED that no failure to do so shall relieve
the Borrower or any other AIMCO Party of any Obligation hereunder.
SECTION 13.02 NEGATIVE COVENANTS OF THE AIMCO PARTIES. Each AIMCO Party
enters into the covenants and agreements with the Lender set forth in this
Section. Each covenant and agreement shall apply continuously during the Term
of this Agreement:
SECTION 13.02(a) OTHER ACTIVITIES. No Owner shall:
(1) either directly or indirectly sell, transfer, exchange or
otherwise dispose of any of its assets except as permitted
hereunder, by the Security Instruments or the Cash
Management Agreement;
(2) engage in any business or activity other than the ownership,
management and operation of the Mortgaged Properties;
(3) amend its Organizational Documents in any manner without the
prior written consent of the Lender;
(4) dissolve or liquidate in whole or in part;
(5) merge or consolidate with any Person; or
(6) use, or permit to be used, any Mortgaged Property for any
uses or purposes other than as a Multifamily Residential
Property.
SECTION 13.02(b) COMPLIANCE WITH THE LOAN DOCUMENTS. The AIMCO Party
shall not fail to comply with any provision of the Loan Documents to which
it is a party or by which it is bound.
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SECTION 13.02(c) VALUE OF SECURITY. The AIMCO Party shall not take
any action which could reasonably be expected to have any Material Adverse
Effect upon the REIT, the Borrower and their respective Subsidiaries, taken
as a whole.
SECTION 13.02(d) ZONING. No Owner shall initiate or consent to any
zoning reclassification of any Mortgaged Property or seek any variance
under any zoning ordinance or use or permit the use of any Mortgaged
Property in any manner that could result in the use becoming a
nonconforming use under any zoning ordinance or any other applicable land
use law, rule or regulation.
SECTION 13.02(e) LIENS. The AIMCO Party shall not create, incur,
assume or suffer to exist any Lien on (i) any Mortgaged Property or any
part of any Mortgaged Property, except the Permitted Liens or (ii) any
Ownership Interests;
SECTION 13.02(f) SALE. The AIMCO Party shall not Transfer (i) any
Mortgaged Property or any part of any Mortgaged Property without the prior
written consent of the Lender (which consent may be granted or withheld in
the Lender's discretion), or any interest in any Mortgaged Property, other
than (x) as may be permitted by the Loan Documents with respect to such
Mortgaged Property or (y) to enter into Leases for units in a Mortgaged
Property to any tenant in the ordinary course of business, or (ii) any
Ownership Interests, if the Transfer will result in a breach of Section
13.01(w).
SECTION 13.02(g) INDEBTEDNESS. No Owner shall incur or be obligated
at any time with respect to aggregate Indebtedness (other than Advances),
in excess of $100,000.
SECTION 13.02(h) SINGLE-PURPOSE ENTITY. No Owner shall cease at any
time during the term hereof to be a Single-Purpose entity.
SECTION 13.02(i) PRINCIPAL PLACE OF BUSINESS. The AIMCO Party shall
not change its principal place of business or the location of its books and
records, each as set forth in Section 12.01(a), without first giving 30
days' prior written notice to the Lender.
SECTION 13.02(j) FREQUENCY OF REQUESTS. The Borrower shall make all
Requests (other than a Future Advance Request) in any calendar quarter on
the same day in the calendar quarter. Accordingly, once the Borrower makes
one or more Requests (other than a Future Advance Request) in a calendar
quarter, it shall not make any further Requests (other than a Future
Advance Request) in the calendar quarter. The Borrower shall have the
right, subject to the terms, conditions and limitations of this Agreement,
to make a Future Advance Request for a Revolving Facility Advance on any
day until the expiration of the
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Revolving Facility Availability Period and to make a Future Advance Request
for a Base Facility Advance on any day until the expiration of the Base
Facility Availability Period.
SECTION 13.02(k) CHANGE IN PROPERTY MANAGEMENT. There shall not be a
change in the management agent for any Mortgaged Property except to (i) an
AIMCO-Related Management Agent or (ii) a management agent which the Lender
determines is qualified in accordance with the criteria set forth in
Section 701 of the DUS Guide, and the economic terms of the management
agreement for such management agent shall not be on terms less favorable to
the Owner than the management agreement in effect prior to the change in
management agent.
SECTION 13.02(l) SHELF CONDOMINIUMS. None of the Mortgaged
Properties shall be submitted to a condominium regime during the Term of
this Agreement.
SECTION 13.02(m) RESTRICTIONS ON OWNERSHIP DISTRIBUTIONS. No AIMCO
Party shall make any distributions of any nature or kind whatsoever to the
owners of its Ownership Interests as such if, at the time of such
distribution, an Event of Default has occurred and is continuing, except
that the AIMCO Party may make such distributions if they are required to
maintain the REIT's qualification as a real estate investment trust under
Subchapter M of the Internal Revenue Code.
SECTION 13.02(n) STATUS AS A PUBLIC REAL ESTATE INVESTMENT TRUST.
The REIT shall not take or permit any actions which will cause it not to
qualify, and be taxed, as a real estate investment trust under Subchapter M
of the Internal Revenue Code, or which will jeopardize such qualification
or tax treatment and shall not cease to have its common Stock listed on the
New York Stock Exchange, the American Stock Exchange, or the Nasdaq Stock
Exchange.
SECTION 13.02(o) LINES OF BUSINESS. No Owner shall be engaged in any
businesses other than the acquisition, ownership, development,
construction, leasing, financing or management, directly or through
Affiliates, of Multifamily Residential Properties, or the ownership of the
Lakehaven Collateral. No other AIMCO Party shall be engaged in any
businesses other than (i) the acquisition, ownership, development,
construction, leasing, financing or management, directly or through
Affiliates, of Multifamily Residential Properties, and (ii) other
businesses related to Real Estate Assets, provided that the Carrying Value
of the assets owned in such other businesses shall not at any time exceed
15% of the Carrying Value of the total assets owned by REIT, the Borrower
and their respective Subsidiaries, and the conduct of these other
businesses shall not violate the Organizational Documents pursuant to which
the other AIMCO Party is formed.
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SECTION 13.02(p) LIMITATION ON UNIMPROVED REAL PROPERTY. No AIMCO
Party shall permit the value of its Unimproved Real Property to exceed 10%
of the value of all of its Real Estate Assets. Each of the foregoing
values shall be determined by the Lender.
SECTION 13.02(q) LIMITATION ON UNIMPROVED REAL PROPERTY AND NEW
CONSTRUCTION. Subject to the provisions of Section 13.01(o), no AIMCO
Party shall permit the sum of (i) the value of its Unimproved Real Property
and (ii) the value of its Real Estate Assets which are under construction
or subject to substantial rehabilitation to exceed 20% of the value of all
of its Real Estate Assets. Each of the foregoing values shall be
determined by the Lender.
SECTION 13.02(r) NO ENCUMBRANCE OF COLLATERAL RELEASE PROPERTY.
Unless an Owner sells a Collateral Release Property to a Person who is not
an Affiliate of an AIMCO Party substantially simultaneously with the
release of the Collateral Release Property from the Collateral Pool, the
Borrower shall not encumber the Collateral Release Property for a period of
120 days following the release of the Collateral Release Property from the
Collateral Pool.
SECTION 13.02(s) NO FURTHER PLEDGE OF LAKEHAVEN NOTES OR FORECLOSURE
OF LAKEHAVEN PROPERTY. The Owner of the Lakehaven Notes shall not further
pledge or assign the Lakehaven Notes or the other Lakehaven Loan Documents,
and shall not amend, terminate or otherwise change any of the Lakehaven
Loan Documents without the written consent of the Lender.
SECTION 13.03. FINANCIAL COVENANTS OF THE AIMCO PARTIES. The AIMCO Parties
each agrees and covenants with the Lender that, at all times during the Term of
this Agreement:
SECTION 13.03(a) FINANCIAL DEFINITIONS. For all purposes of this
Agreement, the following terms shall have the respective meanings set forth
below:
"ADJUSTED EBITDA" means, for any period of determination, for any
Person, such Person's EBITDA (or as applicable, its pro-rata share of
EBITDA) less the aggregate amount of such Person's Imputed Capital
Expenditures. Adjusted EBITDA with respect to any Unqualified Property
will take into account the Person's pro-rata share of Imputed Capital
Expenditures.
"APARTMENT PROPERTY CAP RATE" means (a) initially, 9.6% and (b) on the
first day of each Loan Year, shall change to the national average
capitalization rate for Class B apartment properties as published in the
then current CB Commercial Investor Survey or, if the survey is no longer
published, an equivalent survey selected by the Lender.
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"CASH EQUIVALENTS" means:
(a) securities issued or fully guaranteed or insured by the United
States Government or any agency thereof and backed by the full faith and
credit of the United States having maturities of not more than six months
from the date of acquisition;
(b) certificates of deposit, time deposits, demand deposits,
eurodollar time deposits, repurchase agreements, reverse repurchase
agreements, or bankers' acceptances, having in each case a tenor of not
more than three (3) months, issued by any U.S. commercial bank (or any
branch or agency of a non-U.S. bank licensed to conduct business in the
U.S.) having combined capital and surplus of not less than $100,000,000
whose short-term securities are rated at least A-1 by S&P and P-1 by
Moody's; PROVIDED, HOWEVER, such Investments may not be made in amounts in
excess of $1,000,000 with any lender that is owed Indebtedness in excess of
$1,000,000 by the Borrower, the REIT or any Subsidiary unless such bank
waives in writing (in form and substance satisfactory to the Lender) its
right to set-off such Investment against such Indebtedness;
(c) demand deposits on deposit in accounts maintained at commercial
banks having membership in the FDIC and in amounts not exceeding the
maximum amounts of insurance thereunder; and
(d) commercial paper of an issuer rated at least A-1 by S&P or P-1 by
Moody's and in either case having a tenor of not more than three (3)
months.
"CONSOLIDATED EBITDA" means, for any period, and without double
counting any item, the sum of the Adjusted EBITDA for the Borrower, the
REIT and their respective Subsidiaries for such period on a consolidated
basis PLUS the Borrower's pro-rata share of aggregate EBITDA for each of
the Management Entities.
"CONSOLIDATED EBITDA-TO-FIXED CHARGES RATIO" means, for any period of
determination, the ratio computed as follows:
Consolidated EBITDA-to-Fixed [Consolidated EBITDA minus Imputed
Capital Expenditures]
Charges Ratio = divided by
Consolidated Fixed Charges
"CONSOLIDATED EBITDA-TO-INTEREST RATIO" means, for any period of
determination, the ratio computed as follows:
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Consolidated EBITDA-to-Interest Ratio= [Consolidated EBITDA minus
Imputed Capital Expenditures]
divided by
Consolidated Interest Expense
"CONSOLIDATED FIXED CHARGES" means, for any period of determination,
the sum of the Consolidated Interest Expense for such period, plus
Consolidated Scheduled Amortization for such period, plus dividends accrued
(whether or not declared or payable) on the REIT's preferred Stock during
such period plus any cumulative unpaid dividends on such preferred Stock
carried over to such period from a prior period, excluding, however, any
cumulative unpaid dividends from preferred Stock in any of the Management
Entities, plus the aggregate amount of expenses in connection with the
issuance of bonds and related matters, any scheduled principal amortization
in respect of any Indebtedness, plus payments into sinking funds in respect
of any Indebtedness.
"CONSOLIDATED INTEREST EXPENSE" means, for any period of
determination, and without double counting any item, the sum of the
Interest Expense for the Borrower, the REIT and their respective
Subsidiaries for such period on a consolidated basis, excluding amounts
expended for amortization of loan costs.
"CONSOLIDATED SCHEDULED AMORTIZATION" means, for any period of
determination, and without double counting any item, the sum of the
Scheduled Amortization for the Borrower, the REIT and their respective
Subsidiaries for such period on a consolidated basis.
"CONSOLIDATED TOTAL INDEBTEDNESS" means as of any date, and without
double counting any item, the aggregate amount of Total Indebtedness for
the Borrower, the REIT and their respective Subsidiaries as of such date.
"EBITDA" means, for any period, the sum determined in accordance with
GAAP, of the following, for any Person on a consolidated basis (in the case
of the Borrower or the REIT, before deducting for minority interests in the
Borrower) (a) the net income (or net loss) of such Person during such
Period PLUS (b) all amounts treated as expenses for depreciation, Interest
Expense and the amortization of intangibles of any kind to the extent
included in the determination of such net income (or loss), PLUS (c) all
accrued taxes on or measured by income to the extent included in the
determination of such net income (or loss); PROVIDED, HOWEVER, that net
income (or loss) shall be computed for these purposes without giving effect
to extraordinary losses or extraordinary gains.
"GROSS ASSET VALUE" means, with respect to the Borrower, the REIT and
their respective Subsidiaries on a consolidated basis, and without double
counting any item, the sum of: (a) the Borrower's, REIT's, or their
respective Subsidiaries' Adjusted EBITDA in respect of Qualified Properties
for the prior four calendar quarter period through the end of
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the most recent quarter, capitalized at the Apartment Property Cap Rate,
PLUS (b) the Borrower's, REIT's, or their respective Subsidiaries' share of
Adjusted EBITDA in respect of Unqualified Properties for the prior four
calendar quarter period through the end of the most recent quarter,
capitalized at the Apartment Property Cap Rate, PLUS (c) an amount equal to
the EBITDA of the Management Entities from the commencement of the prior
calendar quarter period annualized and then multiplied by 6.5, PLUS (d) all
cash (including Restricted Cash) and the fair market value of all Cash
Equivalents held as of the last day of such quarter. For purposes of the
definition of Gross Asset Value with respect to any Stabilized Qualified
Property which has been owned for fewer than four Calendar Quarters,
Adjusted EBITDA shall be adjusted in respect of such Property by
annualizing the Net Operating Income for the one, two or three preceding
Stabilized calendar quarters, as applicable.
"IMPUTED CAPITAL EXPENDITURES" means, for any four (4) consecutive
quarter period, an amount equal to the average number of apartment units
owned by the Borrower or the REIT or their Wholly Owned Subsidiaries during
such period, multiplied by (a) with respect to the units in Class A or B
market-rate apartment projects, an amount equal to $300 per apartment unit,
and (b) with respect to the units in Class C or affordable or
rent-restricted apartment projects, an amount equal to $400 per apartment
unit. With respect to apartment units in any Unqualified Property, the
calculation of Imputed Capital Expenditures shall include the number of
such units which is proportionate to the ownership interest of the Borrower
or its Wholly Owned Subsidiaries in the Unqualified Property. For any
period of less than four (4) consecutive quarters, the amount of Imputed
Capital Expenditures will be appropriately prorated.
"INTEREST EXPENSE" means, for any period, gross interest expense
incurred for the period (including all commissions, discounts, fees and
other charges in connection with standby letters of credit and similar
instruments), including any amounts as capitalized interest, for the
Borrower, the REIT and their respective Subsidiaries and the portion of the
upfront costs and expenses for Rate Contracts entered into by the Borrower,
the REIT and their respective Subsidiaries (to the extent not included in
gross interest expense) fairly allocated to such Rate Contracts as expenses
for such period, as determined in accordance with GAAP; provided, that, all
interest expense accrued by the Borrower, the REIT and their respective
Subsidiaries during such period, even if not payable on or before the
Maturity Date, shall be included within "Interest Expense."
Notwithstanding the foregoing, interest accrued under any Intra-Company
Debt shall not be included within "Interest Expense" for any purposes
hereof.
"INTRA-COMPANY DEBT" means Indebtedness (whether book-entry or
evidenced by a term, demand or other note or other instrument) owed by the
Borrower, the REIT or any of
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their respective Subsidiaries to the Borrower, the REIT or any of their
respective Subsidiaries.
"MANAGEMENT ENTITY" means any Subsidiary of the Borrower or the REIT
which is primarily engaged in the business of managing Multifamily
Residential Properties or other real estate projects, including, without
limitation, the following: NHP Management Company, a District of Columbia
corporation, Property Asset Management Services, L.P., a Delaware limited
partnership, Property Asset Management Services, Inc., a Delaware
corporation and Property Asset Management Services-CA, LLC, a California
limited liability company.
"MOODY'S" means Moody's Investors Service, a Delaware corporation, and
its successors and assigns.
"NET WORTH" means at any time the Gross Asset Value minus all
liabilities (as determined in accordance with GAAP) of the Borrower, the
REIT and their respective Subsidiaries, inclusive of their respective
shares of Indebtedness of any unconsolidated subsidiaries. Notwithstanding
the foregoing, the liabilities of the REIT shall include the redemption
amount payable under any preferred Stock of the REIT which is optionally or
mandatorily redeemable at any time on or prior to one year after the
Revolver Maturity Date (as defined in the Bank of America Facility
Documents)(or, if the Borrower elects to convert the Revolver (as defined
in the Bank of America Facility Documents) into the Term Loan (as defined
in the Bank of America Facility Documents), on or prior to one year after
the Term Loan Maturity Date (as defined in the Bank of America Facility
Documents). Upon the expiration or earlier termination of the Bank of
America Facility Documents, the liabilities of the REIT shall include the
redemption amount payable under any preferred Stock of the REIT which is
mandatorily redeemable at any time on or prior to two years after the date
as of which the Net Worth is being calculated.
"QUALIFIED PROPERTY" means a Property comprising a Multifamily
Residential Property which is 100% owned in fee simple title directly or
indirectly by the Borrower and its Wholly Owned Subsidiaries.
"RATE CONTRACTS" means interest rate and currency swap agreements,
cap, floor and collar agreements, interest rate insurance, currency spot
and forward contracts and other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange
rates.
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"RESTRICTED CASH" means any cash pledged by the Borrower, the REIT or
any of their respective Subsidiaries to other lenders, as indicated in the
line item for "restricted cash" in the REIT's balance sheet from time to
time.
"S&P" means Standard & Poor's Ratings Group and its successors and
assigns.
"SCHEDULED AMORTIZATION" means, with respect to any Person, the sum,
as of any date of determination, of the current portion (I.E., such portion
as is scheduled to be paid by the obligor thereof within 12 months from the
date of determination) of all regularly scheduled amortization payments due
on such Person's long-term fully amortizing mortgage Indebtedness
(exclusive of balloon payments).
"STABILIZED" means, with respect to any Qualified Property and as of
any date of determination, the date on which the occupancy level is at
least eighty-five percent (85%) for the most recent complete quarter.
"STOCK" means all shares, options, warrants, interests, participations
or other equivalents (regardless of how designated) of or in a corporation
or equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, perpetual preferred stock or any other "equity security"
(as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934).
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture, trust or other business entity of which more
than fifty percent (50%) of the Stock or other equity or beneficial
interests (in the case of Persons other than corporations) is owned or
controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof (regardless of whether
such Stock or other interests are entitled to voting rights). As of the
date hereof, the Organizational Chart lists all of the Subsidiaries of the
REIT and the Borrower.
"TOTAL INDEBTEDNESS" means as of any date of determination and in
respect of any Person, all outstanding Indebtedness, and in the case of
clause (iii) below, Indebtedness available to be drawn, of a Person, and
shall include, without limitation: (i) such Person's share of the
Indebtedness of any partnership or joint venture in which such Person
directly or indirectly holds any interest; (ii) any recourse or contingent
obligations, directly or indirectly, of such Person with respect to any
Indebtedness of such partnership or joint venture in excess of its
proportionate share and (iii) such Person's liability in respect of letters
of credit, whether such liability is contingent or fixed (such liability to
be determined on the assumption that all conditions for drawing upon such
letters of credit have been
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complied with). Notwithstanding the foregoing, Intra-Company Debt shall be
excluded from the calculation of "Total Indebtedness" but shall not
otherwise be excluded as Indebtedness for any other purpose hereof.
"UNQUALIFIED PROPERTY" means the Property comprising a Multifamily
Residential Property the fee simple interest in which is not 100% owned or
leased, directly or indirectly, by the Borrower and/or its Wholly Owned
Subsidiaries.
"WHOLLY-OWNED SUBSIDIARY" means a Subsidiary of the Borrower or the
REIT one hundred percent (100%) of the Stock or other equity or other
beneficial interests (in the case of Persons other than corporations) of
which is owned directly or indirectly by (A) the Borrower and/or (B) the
REIT; provided, however, that where such term is qualified with respect to
a specific Person (e.g., "Wholly Owned Subsidiary of the REIT") such term
means a Subsidiary one hundred percent (100%) of the Stock or other equity
or other beneficial interests (in the case of Persons other than
corporations) of which is owned directly or indirectly by the specified
Person.
SECTION 13.03(b) COMPLIANCE WITH DEBT SERVICE COVERAGE RATIOS.
(1) The AIMCO Parties shall at all times maintain the Aggregate
Debt Service Coverage Ratio for the Trailing 12 Month Period so that
it is not less than 145%.
(2) The AIMCO Parties shall at all times maintain the Aggregate
Debt Service Coverage Ratio for the Trailing Three Month Period so
that it is not less than 135%.
SECTION 13.03(c) COMPLIANCE WITH LOAN TO VALUE RATIOS. The AIMCO
Parties shall at all times maintain the Aggregate Loan to Value Ratio for
the Trailing 12 Month Period so that it is not greater than 60%.
SECTION 13.03(d) COMPLIANCE WITH CONCENTRATION TEST.
(1) The AIMCO Parties shall at all times maintain, or cause the
maintenance of, the Collateral so that the aggregate Valuations of any
group of Mortgaged Properties (excluding the Elm Creek Property) and
Lakehaven Properties (and, for these purposes, the Lakehaven
Properties shall be considered as one Multifamily Residential Property
with a Valuation equal to the aggregate Valuation of the Lakehaven
Notes) located within a one mile radius shall not exceed 25% of the
aggregate Valuations of all the Mortgaged Properties and Lakehaven
Notes.
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(2) The AIMCO Parties shall at all times maintain, or cause the
maintenance of, the Collateral so that the Valuation of any one
Mortgaged Property (excluding the Elm Creek Property and the Lakehaven
Notes) shall not exceed 20% of the aggregate Valuations of all
Mortgaged Properties and the Lakehaven Notes.
SECTION 13.03(e) COMPLIANCE WITH REIT'S NET WORTH TEST. The REIT
shall at all times maintain its Net Worth so that it is not less than
$750,000,000.
SECTION 13.03(f) COMPLIANCE WITH REIT'S CONSOLIDATED TOTAL
INDEBTEDNESS TO GROSS ASSET VALUE RATIO. The REIT shall not permit the
ratio of Consolidated Total Indebtedness to Gross Asset Value to exceed 55%
at any time.
SECTION 13.03(g) COMPLIANCE WITH REIT'S CONSOLIDATED EBITDA TO
INTEREST RATIO. The REIT shall not permit the Consolidated EBITDA to
Interest Ratio computed for any fiscal quarter or year to be less than
225%.
SECTION 13.03(h) COMPLIANCE WITH REIT'S CONSOLIDATED EBITDA TO FIXED
CHARGES RATIO. The REIT shall not permit the Consolidated EBITDA to Fixed
Charges Ratio computed for any fiscal quarter or year to be less than 200%.
SECTION 13.04. COVENANTS OF THE LENDER.
SECTION 13.04(a) CAP RATES. The Lender shall determine Cap Rates for
the Mortgaged Properties and Lakehaven Properties approximately once each
year. The Lender shall determine the Cap Rates in its sole and absolute
discretion, on the basis of its internal survey and analysis of cap rates
for comparable sales in the vicinity of the Mortgaged Properties and the
Lakehaven Properties, with such adjustments as the Lender deems appropriate
in its sole and absolute discretion and shall not be obligated to rely on
any information provided by the AIMCO Parties. The Lender shall have the
right to select additional Cap Rates during the year at any time the Lender
determines that changed market or property conditions warrant such action.
SECTION 13.04(b) VALUATIONS.
(1) The Lender shall perform a Valuation for each of the
Mortgaged Properties and the Lakehaven Notes, and a determination of
the Aggregate Debt Service Coverage Ratios and Aggregate Loan to Value
Ratio for the Trailing 12 Month Period (all of which Valuations and
determinations shall be binding and conclusive on the AIMCO Parties,
absent manifest error and except as otherwise provided in paragraph
(2)) once each calendar quarter, within 20 Business Days after
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the AIMCO Parties have delivered to the Lender the reports required in
Section 13.01(d)(1) and (2). The Lender shall have the right to
perform additional Valuations and determinations at other times during
the year (i) in connection with a Request, or (ii) at any time the
Lender determines that changed market or property conditions warrant
such action. The Lender shall deliver to the Borrower a notice
showing the Valuation for each Mortgaged Property and the Lakehaven
Notes, promptly after it is completed.
(2) If the Borrower disagrees with the Lender's Valuation of any
Mortgaged Property or Lakehaven Note, and the Valuation was determined
on the basis of a Cap Rate (under clause (b) (or, for a Lakehaven
Note, clause (iii)) of the definition of "Valuation" rather than on an
Appraisal or other method (under clause (a)(or, for a Lakehaven Note,
clauses(i) or (ii)) of the definition of "Valuation"), the Borrower
shall have the right to substitute for the Cap Rate determined by the
Lender a new Cap Rate based on a cap rate study conducted by an
appraiser, provided the Borrower gives notice to the Lender of its
desire to substitute a new Cap Rate for the Lender's Cap Rate within
15 Business Days after the Borrower receives the Lender's notice of
the Lender's Valuation. In such event, the Borrower and the Lender
shall determine the Cap Rate in accordance with the following
procedure:
(A) the Lender shall give the Borrower a list of Lender-approved
appraisers for the local market in which the the
Multifamily Residential Property is located within 10
Business Days after the date on which the Borrower gives the
Lender its notice;
(B) the Borrower shall select an appraiser within five Business
Days after the date on which the Lender gives the Borrower
the list of Lender-approved appraisers;
(C) the Lender shall engage the appraiser selected by the
Borrower pursuant to clause (B) to perform the cap rate
study within 10 Business Days after the date on which the
Borrower makes its selection; and
(D) the Borrower shall pay all fees and expenses of obtaining
the cap rate study.
If the Borrower elects to substitute a new Cap Rate for the Lender's
Cap Rate, the new Cap Rate shall be used to determine the Valuation
for the Mortgaged Property or Lakehaven Note, and, until the earlier
of (i) the 30th day after the date on which
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the appraiser is engaged by the Lender or (ii) the date on which the
new Cap Rate is determined, the Valuation of the Mortgaged Property or
Lakehaven Note in effect immediately prior to the Lender's Valuation
shall continue to be in effect. In the event the new Cap Rate is not
determined on or before the 30th day after the date on which the
appraiser is engaged by the Lender, then, commencing on such 30th day,
and continuing until the new Cap Rate is determined, the Valuation
based on the Lender's determination of the Cap Rate shall be in
effect.
SECTION 13.04(c) INTEREST ON CASH COLLATERAL. If the Borrower has
posted Substituted Cash Collateral or Cash Collateral with the Lender under
the terms of this Agreement, and no Event of Default has occurred and is
continuing, then the Lender shall pay to the Borrower, at least annually,
all interest accruing on the Substituted Cash Collateral and Cash
Collateral.
SECTION 13.04(d) CONFIDENTIALITY. The Lender covenants, for itself
and its successors, assigns, agents and representatives, to (i) keep
confidential all confidential, proprietary and/or non-public information,
identified as such and provided by the Borrower, the REIT or any other
AIMCO Party to the Lender or its successors, assigns, agents or
representatives pursuant to, or in connection with, this Agreement and (ii)
comply with all applicable securities laws in connection therewith. The
AIMCO Parties acknowledge that such information may be delivered to the
successors, assigns agents and representatives of the Lender, provided that
such successors, assigns, agents and representatives agree to be bound by
the provisions of this Section.
ARTICLE XIV
FEES
SECTION 14.01. FEE DEFINITIONS. For all purposes of this Agreement, the
following terms shall have the respective meanings set forth below:
"STANDBY FEE" means, for each calendar month, the product obtained by
multiplying (i) 1/12, by (ii) 22 basis points, by (iii) the average daily
Unused Capacity during the month.
"UNUSED CAPACITY" means, for any specified date, the excess (if any)
of--
(a) the Maximum Credit Commitment in effect on the specified
date, over
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(b) the aggregate unpaid principal balance of the Advances
Outstanding on the specified date.
SECTION 14.02. STANDBY FEE. Commencing on the 181st day after the Initial
Closing Date (the "STANDBY FEE COMMENCEMENT DATE"), the Borrower shall pay the
Standby Fee to the Lender for each month during the Term of this Agreement, in
arrears, on the first Business Day following the end of the month, except that
the Standby Fee for the last month during the Term of this Agreement shall be
paid on the last day of the Term of this Agreement. If the Standby Fee
Commencement Date is not the first day of a calendar month, the Standby Fee
payable for the calendar month in which the Standby Fee Commencement Date occurs
shall be prorated as of the Standby Fee Commencement Date.
SECTION 14.03. ORIGINATION FEES. The Borrower shall pay to the Lender an
origination fee (the "ORIGINATION FEE") equal to $255,000 (which is equal to the
product obtained by multiplying (i) the Maximum Credit Commitment on the Initial
Closing Date ($50,000,000), by (ii) 51 basis points). The Borrower shall pay
the Origination Fee on the Initial Closing Date.
SECTION 14.04. DUE DILIGENCE FEES.
SECTION 14.04(a) INITIAL DUE DILIGENCE FEES. The Borrower shall pay
to the Lender due diligence fees (including legal fees and expenses
relating to due diligence and the closing of this Agreement and the Initial
Advance) (the "INITIAL DUE DILIGENCE FEES") with respect to the Initial
Mortgaged Properties equal to the product obtained by multiplying --
(1) $16,000 per Initial Mortgaged Property (and, for these
purposes only, the Lakehaven Notes shall be deemed to
constitute two separate Initial Mortgaged Properties), by
(2) the number of Initial Mortgaged Properties.
The Borrower has previously paid to the Lender the Initial Due Diligence
Fees.
SECTION 14.04(b) ADDITIONAL DUE DILIGENCE FEES FOR ADDITIONAL
COLLATERAL. The Borrower shall pay to the Lender additional due diligence
fees (the "ADDITIONAL COLLATERAL DUE DILIGENCE FEES") with respect to each
Additional Mortgaged Property equal to the sum of (i) $1,000 and (ii) the
actual out-of-pocket expenses incurred by the Lender, as determined by the
Lender, in connection with all due diligence activities which the Lender
deems necessary in connection with the addition of the Additional Mortgaged
Property to the Collateral Pool. The Borrower shall pay the Additional
Collateral Due Diligence Fees for
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the Additional Mortgaged Property to the Lender on the date on which it
submits the Collateral Addition Request for the addition of the Additional
Mortgaged Property to the Collateral Pool, except that, if, at such time,
the Lender can only estimate the amount of the Additional Collateral Due
Diligence Fees, the Borrower shall pay such estimate and the Lender shall
reconcile such estimate with the actual expenses once they are known.
SECTION 14.05. DOCUMENT FEES. The Borrower shall pay to the Lender
document certification fees (the "DOCUMENT CERTIFICATION FEES") equal to the
product obtained by multiplying--
(a) $25.00, by
(b) the number of Loan Documents certified by Fannie Mae.
The Borrower shall pay the Document Certification Fees to the Lender on the
Initial Closing Date (with respect to the Loan Documents certified on the
Initial Closing Date) and on each Closing Date thereafter (with respect to the
Loan Documents, if any, certified on the Closing Date). The Borrower shall also
pay to the Lender a monthly document custody fee (the "DOCUMENT CUSTODY FEE")
equal to the product obtained by multiplying--
(a) $2.00, by
(b) the number of Loan Documents held in custody by Fannie Mae during
the month.
The Document Custody Fee shall be paid monthly, in arrears, on the first day of
each month during the Term of this Agreement.
SECTION 14.06. LEGAL FEES AND EXPENSES.
SECTION 14.06(a) INITIAL LEGAL FEES. The Borrower shall pay to the
Lender all actual out-of-pocket legal fees and expenses incurred by the
Lender and by Fannie Mae in connection with the preparation and negotiation
of this Agreement, the other Loan Documents executed on the Initial Closing
Date and the closing of the Initial Advance. The Borrower shall pay the
legal fees and expenses to the Lender on the Initial Closing Date.
SECTION 14.06(b) ADDITIONAL LEGAL FEES AND EXPENSES FOR ADDITIONAL
COLLATERAL. The Borrower shall pay to the Lender, with respect to each
Additional Mortgaged Property, the sum of (i) $8,000, and (ii) the actual
out-of-pocket legal fees and expenses incurred by Fannie Mae (but not the
Lender) in connection with the preparation and negotiation of the
Collateral Addition Loan Documents executed on the Closing Date for the
addition of the Additional Mortgaged Property and the closing of the
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addition of the Additional Mortgaged Property to the Collateral Pool. The
Borrower shall pay the legal fees and expenses to the Lender on the Closing
Date for the addition of the Additional Mortgaged Property to the
Collateral Pool.
SECTION 14.07. MBS-RELATED COSTS. The Borrower shall pay to the Lender,
within 30 days after demand, all fees and expenses incurred by the Lender or
Fannie Mae in connection with the issuance of any MBS backed by an Advance,
including the fees charged by Depository Trust Company and State Street Bank or
any successor fiscal agent or custodian.
SECTION 14.08. OTHER FEES. The Borrower shall pay the following additional
fees and payments, if and when required pursuant to the terms of this Agreement:
(a) The Collateral Addition Fee, pursuant to Section 6.03(b), in
connection with the addition of an Additional Mortgaged Property to the
Collateral Pool pursuant to Article VI;
(b) The Release Price, pursuant to Section 7.03(b), in connection
with the release of a Mortgaged Property from the Collateral Pool pursuant
to Article VII;
(c) The Release Fee, pursuant to Section 7.03(c), in connection with
the release of a Mortgaged Property from the Collateral Pool pursuant to
Article VII;
(d) The Revolving Facility Termination Fee, pursuant to Section
9.03(b) in connection with a complete or partial termination of the
Revolving Facility pursuant to Article IX; and
(e) The Credit Facility Termination Fee, pursuant to Section
10.03(b), in connection with the termination of the Credit Facility
pursuant to Article X.
ARTICLE XV
CASH MANAGEMENT
The Borrower, the Initial Owners and the Lender shall execute the Cash
Management Agreement on the Initial Closing Date.
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ARTICLE XVI
EVENTS OF DEFAULT
SECTION 16.01. EVENTS OF DEFAULT. Each of the following events shall
constitute an "Event of Default" under this Agreement, whatever the reason for
such event and whether it shall be voluntary or involuntary, or within or
without the control of an AIMCO Party, or be effected by operation of law or
pursuant to any judgment or order of any court or any order, rule or regulation
of any Governmental Authority:
SECTION 16.01(a) the occurrence of a default under any Loan Document
beyond any cure period set forth therein; or
SECTION 16.01(b) the failure by any AIMCO Party to pay when due any
amount payable by the AIMCO Party under any Note, any Security Instrument,
this Agreement or any other Loan Document, including any fees, costs or
expenses; or
SECTION 16.01(c) the failure by any AIMCO Party to perform or observe
any covenant set forth in Sections 13.01(a), (b), (c), (f), (g), (h), (j),
(o), (p), (r) to (t) inclusive, (w) to (y) inclusive, (aa) or (bb) or
Sections 13.02(a) to (g) inclusive, or (j) to (s) inclusive; or
SECTION 16.01(d) the failure by any AIMCO Party to perform or observe
any covenant set forth in Sections 13.01(d), (e) or (k) to (m) inclusive,
or Section 13.02(i) within 10 days after receipt of notice from the Lender;
or
SECTION 16.01(e) the failure by any AIMCO Party to perform or observe
any covenant set forth in Section 13.01(i)or Section 13.02(h) within 20
days after receipt of notice from the Lender; or
SECTION 16.01(f) any warranty, representation or other written
statement made by or on behalf of an AIMCO Party contained in this
Agreement, any other Loan Document or in any instrument furnished in
compliance with or in reference to any of the foregoing, is false or
misleading in any material respect on any date when made or deemed made; or
SECTION 16.01(g)(1) any Indebtedness in an aggregate amount in excess
of $1,000,000 incurred or assumed by any Owner, (i) is not paid when due
nor within any applicable grace period in any agreement or instrument
relating to such Indebtedness or (ii) becomes due and payable before its
normal maturity by reason of a default or event of default, however
described, or any other event of default shall occur and continue after the
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applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness or (2) any Indebtedness in an aggregate
amount in excess of the Indebtedness Ceiling Amount incurred or assumed by
any other AIMCO Party, (i) is not paid when due nor within any applicable
grace period in any agreement or instrument relating to such Indebtedness
or (ii) becomes due and payable before its normal maturity by reason of a
default or event of default, however described, or any other event of
default shall occur and continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness
(and, for these purposes, the term "INDEBTEDNESS CEILING AMOUNT" means the
lesser of (i) $5,000,000 or (ii) the lowest amount of Indebtedness of the
REIT or the Borrower a default in the payment of which would result in the
occurrence of an event of default under any Major Credit Facility
Document); or
SECTION 16.01(h) An AIMCO Party shall (A) commence a voluntary case
under the Federal bankruptcy laws (as now or hereafter in effect), (B) file
a petition seeking to take advantage of any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, debt
adjustment, winding up or composition or adjustment of debts, (C) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws,
(D) apply for or consent to, or fail to contest in a timely and appropriate
manner, the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of a substantial part of its
property, domestic or foreign, (E) admit in writing its inability to pay,
or generally not be paying, its debts as they become due, (F) make a
general assignment for the benefit of creditors, (G) assert that the AIMCO
Party has no liability or obligations under this Agreement or any other
Loan Document to which it is a party; or (H) take any action for the
purpose of effecting any of the foregoing; or (ii) a case or other
proceeding shall be commenced against an AIMCO Party in any court of
competent jurisdiction seeking (A) relief under the Federal bankruptcy laws
(as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding upon
or composition or adjustment of debts, or (B) the appointment of a trustee,
receiver, custodian, liquidator or the like of the AIMCO Party, or of all
or a substantial part of the property, domestic or foreign, of the AIMCO
Party and any such case or proceeding shall continue undismissed or
unstayed for a period of 60 consecutive calendar days, or any order
granting the relief requested in any such case or proceeding against the
AIMCO Party (including an order for relief under such Federal bankruptcy
laws) shall be entered; or
SECTION 16.01(i) if any provision of this Agreement or any other Loan
Document or the lien and security interest purported to be created
hereunder or under any Loan Document shall at any time for any reason cease
to be valid and binding in accordance with its terms on any AIMCO Party, or
shall be declared to be null and void, or the validity or enforceability
hereof or thereof or the validity or priority of the lien and security
interest
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created hereunder or under any other Loan Document shall be contested by
any AIMCO Party seeking to establish the invalidity or unenforceability
hereof or thereof, or any AIMCO Party shall deny that it has any further
liability or obligation hereunder or thereunder; or
SECTION 16.01(j) the execution by any Owner of a chattel mortgage or
other security agreement on any materials, fixtures or articles used in the
construction or operation of the improvements located on any Mortgaged
Property or on articles of personal property located therein, or (y) if any
such materials, fixtures or articles are purchased pursuant to any
conditional sales contract or other security agreement or otherwise so that
the ownership thereof will not vest unconditionally in the Owner free from
encumbrances, or (z) if the Owner does not furnish to the Lender upon
request the contracts, bills of sale, statements, receipted vouchers and
agreements, or any of them, under which the Owner claims title to such
materials, fixtures, or articles; or
SECTION 16.01(k) the failure, upon request, to furnish to the Lender
the results of official searches made by any Governmental Authority, or the
failure by any AIMCO Party to comply with any requirement of any
Governmental Authority within 30 days after written notice of such
requirement shall have been given to the AIMCO Party by such Governmental
Authority; provided that, if action is commenced and diligently pursued by
the AIMCO Party within such 30 days, then the AIMCO Party shall have an
additional 30 days to comply with such requirement; or
SECTION 16.01(l) a dissolution or liquidation for any reason (whether
voluntary or involuntary) of any AIMCO Party; or
SECTION 16.01(m) if a REIT Sub shall fail to qualify as a "qualified
REIT subsidiary" or if the REIT shall fail to qualify as a real estate
investment trust under Subchapter M of the Internal Revenue Code; or
SECTION 16.01(n)(1) any judgment against any Owner, any attachment or
other levy against any portion of any Owner's assets with respect to a
claim in an amount in excess of $1,000,000 individually and/or in the
aggregate remains unpaid, unstayed on appeal, undischarged, unbonded, not
fully insured or undismissed for a period of 60 days or (2) any judgment
against any other AIMCO Party, any attachment or other levy against any
portion of any other AIMCO Party's assets with respect to a claim in an
amount in excess of the Judgment Ceiling Amount individually and/or in the
aggregate remains unpaid, unstayed on appeal, undischarged, unbonded, not
fully insured or undismissed for a period of 60 days (and, for these
purposes, the term "JUDGMENT CEILING AMOUNT" means the lesser of (i)
$5,000,000 or (ii) the lowest amount of a judgment against the REIT or the
Borrower a
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default in the payment of which would result in the occurrence of an event
of default under any Major Credit Facility Document); or
SECTION 16.01(o) the failure by any Owner to maintain or cause to be
maintained insurance with respect to each Mortgaged Property or a Lakehaven
Property in accordance with the terms of the Security Instrument with
respect to each such Mortgaged Property or the mortgage securing a
Lakehaven Note; or
SECTION 16.01(p) the failure by any Owner to perform or observe the
covenants with respect to Hazardous Materials or Hazardous Materials Laws
set forth in any Security Instruments or in any other Loan Document
including, the covenants set forth in Paragraph D of the Rider to
Multifamily Instrument constituting a part of each Security Instrument; or
SECTION 16.01(q) the failure by any Owner to cause the Gross Revenues
with respect to any Mortgaged Property or the debt service with respect to
the Lakehaven Notes to be deposited into the applicable Pledgee Account in
accordance with the requirements of the Cash Management Agreement; or
SECTION 16.01(r) the failure of the Borrower to perform or observe
any of the Financial Covenants, which failure shall continue for a period
of 30 days after the date on which the Borrower receives a notice from the
Lender specifying the failure; PROVIDED, HOWEVER, that if the Borrower adds
Cash Collateral to the Collateral Pool, pursuant to documents satisfactory
to the Lender, and in an amount equal to the Minimum Cure Amount (as
hereinafter defined), then such failure shall not constitute an Event of
Default unless such failure is not cured by the Borrower within 90 days
after receipt of notice from the Lender identifying such failure (and, upon
such a cure, any portion of the Cash Collateral may be released if,
immediately after giving effect to the release, each of the conditions set
forth in Section 7.03(a) shall have been satisfied and no Event of Default
then exists). The "MINIMUM CURE AMOUNT" means the minimum amount of
Advances Outstanding which, if repaid, would cure the failure. In
determining whether the Borrower has cured the default within the 90-day
period specified above, the Cash Collateral shall not be taken into
account; or
SECTION 16.01(s) the occurrence of a default, after the expiration of
any applicable grace period, under any Major Credit Facility Document; or
SECTION 16.01(t) the failure by any AIMCO Party to perform or observe
any term, covenant, condition or agreement hereunder, other than as set
forth in subsections (a) through (s) above, or in any other Loan Document,
within 30 days after receipt of notice from the Lender identifying such
failure; PROVIDED, HOWEVER, that if in the Lender's judgment, (i) the
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cure of such failure requires a period in excess of 30 days, (ii) such
failure will not result in a Material Adverse Effect upon the REIT, the
Borrower and their respective Subsidiaries, taken as a whole, and (iii)
corrective action is instituted by the AIMCO Party within such period and
pursued diligently and in good faith, then such failure shall not
constitute an Event of Default unless such failure is not cured by the
AIMCO Party within 60 days after receipt of notice from the Lender
identifying such failure.
ARTICLE XVII
REMEDIES
SECTION 17.01. REMEDIES; WAIVERS.
SECTION 17.01(a) Upon the occurrence and the continuance of an Event
of Default, the Lender shall have the right to pursue any remedies
available to it under any of the Loan Documents.
SECTION 17.01(b) Upon the occurrence and the continuance of an Event
of Default, the Lender shall have the right to pursue all remedies
available to it at law or in equity, including obtaining specific
performance and injunctive relief.
SECTION 17.01(c) The Lender shall have the right, to be exercised in
its complete discretion, to waive any breach hereunder (including the
occurrence of an Event of Default), by a writing setting forth the terms,
conditions, and extent of such waiver signed by the Lender and delivered to
the Borrower. Unless such writing expressly provides to the contrary, any
waiver so granted shall extend only to the specific event or occurrence
which gave rise to the waiver and not to any other similar event or
occurrence which occurs subsequent to the date of such waiver.
SECTION 17.01(d) The Borrower shall pay all fees, costs, charges or
expenses (including the reasonable fees and expenses of attorneys',
accountants and other experts) incurred by the Lender in connection with
the administration or enforcement of, or preservation of rights or remedies
under, this Agreement or any other Loan Documents or in connection with the
foreclosure upon, sale of or other disposition of any Collateral granted
pursuant to the Loan Documents.
SECTION 17.01(e) If any AIMCO Party fails to perform the covenants
and agreements contained in this Agreement or any of the other Loan
Documents, then the Lender at the Lender's option may make such
appearances, disburse such sums and take such
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action as the Lender deems necessary, in its sole discretion, to protect
the Lender's interest, including (i) disbursement of reasonable attorney's
fees, (ii) entry upon the Mortgaged Property to make repairs and
Replacements, (iii) procurement of satisfactory insurance as provided in
paragraph 5 of the Security Instrument encumbering the Mortgaged Property,
and (iv) if the Security Instrument is on a leasehold, exercise of any
option to renew or extend the ground lease on behalf of the Owner and the
curing of any default of the Owner in the terms and conditions of the
ground lease. Any amounts disbursed by the Lender pursuant to this
paragraph (d), with interest thereon, shall become additional indebtedness
of the Borrower secured by the Loan Documents. Unless the Borrower and the
Lender agree to other terms of payment, such amounts shall be immediately
due and payable and shall bear interest from the date of disbursement at
the weighted average of the interest rates of each Advance, as determined
by Lender, unless collection from the Borrower of interest at such rate
would be contrary to applicable law, in which event such amounts shall bear
interest at the highest rate which may be collected from the Borrower under
applicable law. Nothing contained in this paragraph (e) shall require the
Lender to incur any expense or take any action hereunder.
SECTION 17.02. NO REMEDY EXCLUSIVE. Unless otherwise expressly provided,
no remedy herein conferred upon or reserved is intended to be exclusive of any
other available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Loan Documents or existing at law or
in equity.
SECTION 17.03. NO WAIVER. No delay or omission to exercise any right or
power accruing under any Loan Document upon the happening of any Event of
Default or Potential Event of Default shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
SECTION 17.04. NO NOTICE. In order to entitle the Lender to exercise any
remedy reserved to the Lender in this Article, it shall not be necessary to give
any notice, other than such notice as may be required under the applicable
provisions of this Agreement or any of the other Loan Documents.
SECTION 17.05. APPLICATION OF PAYMENTS. Except as otherwise expressly
provided in the Loan Documents, and unless applicable law provides otherwise,
all payments received by the Lender from any of the AIMCO Parties under the Loan
Documents shall be applied by the Lender against any amounts then due and
payable under the Loan Documents by any of the AIMCO Parties, in any order of
priority that the Lender may determine.
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ARTICLE XVIII
RIGHTS OF FANNIE MAE
SECTION 18.01. SPECIAL POOL PURCHASE CONTRACT. The AIMCO Parties
acknowledge that Fannie Mae is entering into an agreement with the Lender (the
"SPECIAL POOL PURCHASE CONTRACT"), pursuant to which, INTER ALIA, (i) the Lender
shall agree to assign all of its rights under this Agreement to Fannie Mae, (ii)
Fannie Mae shall accept the assignment of the rights, (iii) subject to the
terms, limitations and conditions set forth in the Special Pool Purchase
Contract, Fannie Mae shall agree to purchase each Advance issued under this
Agreement by issuing to the Lender a Fannie Mae MBS, in the amount and for a
term equal to the Advance purchased and backed by an interest in the Base
Facility Note or the Revolving Facility Note, as the case may be, and the
Collateral Pool securing the Notes, (iv) the Lender shall agree to assign to
Fannie Mae all of the Lender's interest in the Notes and Collateral Pool
securing the Notes, and (v) the Lender shall agree to service the loans
evidenced by the Notes.
SECTION 18.02. ASSIGNMENT OF RIGHTS. The AIMCO Parties acknowledge and
consent to the assignment to Fannie Mae of all of the rights of the Lender under
this Agreement and all other Loan Documents, including the right and power to
make all decisions on the part of the Lender to be made under this Agreement and
the other Loan Documents, upon and subject to all of the terms and conditions
hereof and thereof, but Fannie Mae, by virtue of this assignment, shall not be
obligated to perform the obligations of the Lender under this Agreement or the
other Loan Documents, except for the obligation to release Collateral to the
Borrower when the Loan Documents require such release.
SECTION 18.03. RELEASE OF COLLATERAL. The AIMCO Parties hereby acknowledge
that, after the assignment of Loan Documents contemplated in Section 18.02, the
Lender shall not have the right or power to effect a release of any Collateral
pursuant to Articles VII or X. The AIMCO Parties acknowledge that the Security
Documents provide for the release of the Collateral under Articles VII and X.
Accordingly, the AIMCO Parties shall not look to the Lender for performance of
any obligations set forth in Articles VII and X, but shall look solely to the
party secured by the Collateral to be released for such performance. The Lender
represents and warrants to the AIMCO Parties that the party secured by the
Collateral shall be subject to the release provisions contained in Articles VII
and X by virtue of this Section. The Lender shall cooperate in any reasonable
manner to effect any release required under this Agreement, but without any
obligation to expend any funds.
SECTION 18.04. REPLACEMENT OF LENDER. At the request of Fannie Mae, the
AIMCO Parties and the Lender shall agree to the assumption by another lender
designated by Fannie Mae, of all of the obligations of the Lender under this
Agreement and the other Loan Documents, and/or
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any related servicing obligations, and, at Fannie Mae's option, the concurrent
release of the Lender from its obligations under this Agreement and the other
Loan Documents, and/or any related servicing obligations, and shall execute all
releases, modifications and other documents which Fannie Mae determines are
necessary or desirable to effect such assumption. Notwithstanding the
foregoing, the AIMCO Parties' obligation to agree to the assumption shall be
conditioned upon the AIMCO Parties' receipt of a certificate from Fannie Mae
which offers the AIMCO Parties two choices of replacement lenders, and certifies
that the two choices are lenders in the DUS Program (or, if the DUS Program no
longer exists at such time, certifies that the two choices are qualified Fannie
Mae servicers). Within 10 Business Days after the date on which the AIMCO
Parties receive Fannie Mae's certificate, the AIMCO Parties shall select one of
the two choices, and the AIMCO Parties' choice shall become the replacement
lender. If the AIMCO Parties fail to make the choice within the 10-Business Day
period, Fannie Mae shall have the right to select the replacement lender from
the two choices, and Fannie Mae's choice shall become the replacement Lender,
without the necessity of further action on the part of any party (other than the
assumption by the replacement Lender of all of the obligations of the Lender
arising on and after the date on which it becomes the replacement Lender).
SECTION 18.05. FANNIE MAE AND LENDER FEES AND EXPENSES. The AIMCO Parties
agree that any provision providing for the payment by any one or more of them of
fees, costs or expenses incurred or charged by the Lender pursuant to this
Agreement shall be deemed to provide for the payment by such AIMCO Party or
AIMCO Parties of all fees, costs and expenses incurred or charged by the Lender
or Fannie Mae in connection with the matter for which fees, costs or expenses
are payable.
SECTION 18.06. THIRD-PARTY BENEFICIARY. The AIMCO Parties hereby
acknowledge and agree that Fannie Mae is a third party beneficiary of all of the
representations, warranties and covenants made by any AIMCO Party to, and all
rights under this Agreement conferred upon, the Lender, and, by virtue of its
status as third-party beneficiary and/or assignee of the Lender's rights under
this Agreement, Fannie Mae shall have the right to enforce all of the provisions
of this Agreement against the AIMCO Parties.
ARTICLE XIX
INSURANCE, REAL ESTATE TAXES AND REPLACEMENT RESERVES
SECTION 19.01. INSURANCE AND REAL ESTATE TAXES. Each Owner shall establish
funds for taxes, insurance premiums and certain other charges for each Mortgaged
Property in accordance with Uniform Covenant 2A of the Security Instrument for
each Mortgaged Property.
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SECTION 19.02. REPLACEMENT RESERVES. Each Owner shall execute the
Replacement Reserve Agreement and shall (unless waived by the Lender) make all
deposits for replacement reserves with respect to the Mortgaged Property which
it owns (or, with respect to the Owner of the Lakehaven Notes, the Lakehaven
Property) in accordance with the terms of the Replacement Reserve Agreement.
ARTICLE XX
MISCELLANEOUS PROVISIONS
SECTION 20.01. COUNTERPARTS. To facilitate execution, this Agreement may
be executed in any number of counterparts. It shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart, but it shall be
sufficient that the signature of, or on behalf of, each party, appear on one or
more counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
SECTION 20.02. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement may
be amended, changed, modified, altered or terminated only by written instrument
or written instruments signed by all of the parties hereto.
SECTION 20.03. PAYMENT OF COSTS, FEES AND EXPENSES.
(a) The Borrower shall pay on demand all costs, expenses and fees of
the Lender pursuant to this Agreement and any of the Loan Documents,
including the reasonable fees and expenses of counsel to the Lender with
respect to defending or participating in any litigation arising from the
administration or enforcement of this Agreement or any of the Loan
Documents. Any such fees and expenses of counsel incurred in enforcing a
judgment under this Agreement shall be recoverable separately from and in
addition to any other amount included in such judgment, and such counsels'
fees and expenses obligation is intended to be severable from the other
provisions of this Agreement and to survive and not be merged into any such
judgment.
(b) The Borrower shall pay on demand all expenses incurred by the
Lender in connection with the preparation and review of this Agreement, the
REIT's Registration Statement, or similar disclosure documents, including
fees payable to any rating agencies, any tax or governmental charge imposed
in connection with the issuance of the Notes and
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the fees and expenses of the Lender's counsel and accountants. The
foregoing shall also include fees and expenses relating to any (i)
amendments, consents or waivers to this Agreement or any of the Loan
Documents (whether or not any such amendments, consents or waivers are
entered into) or (ii) requests to evaluate any substitute or additional
Collateral or the release of any Collateral.
SECTION 20.04. PAYMENT PROCEDURE. All payments to be made to the Lender
pursuant to this Agreement or any of the Loan Documents shall be made in lawful
currency of the United States of America and in immediately available funds by
wire transfer to an account designated by the Lender before 2:00 p.m.
(Washington, D.C. time) on the date when due.
SECTION 20.05. PAYMENTS ON BUSINESS DAYS. In any case in which the date of
payment to the Lender or the expiration of any time period hereunder occurs on a
day which is not a Business Day, then such payment or expiration of such time
period need not occur on such date but may be made on the next succeeding
Business Day with the same force and effect as if made on the day of maturity or
expiration of such period, except that interest shall continue to accrue for the
period after such date to the next Business Day.
SECTION 20.06. CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL. NOTWITHSTANDING ANYTHING IN THE NOTES, THE SECURITY DOCUMENTS OR ANY OF
THE OTHER LOAN DOCUMENTS TO THE CONTRARY, EACH OF THE TERMS AND PROVISIONS, AND
RIGHTS AND OBLIGATIONS OF EACH AIMCO PARTY UNDER THE NOTES, AND EACH AIMCO PARTY
UNDER THE OTHER LOAN DOCUMENTS, SHALL BE GOVERNED BY, INTERPRETED, CONSTRUED AND
ENFORCED PURSUANT TO AND IN ACCORDANCE WITH THE LAWS OF THE STATE OF
VIRGINIA(EXCLUDING THE LAW APPLICABLE TO CONFLICTS OR CHOICE OF LAW) EXCEPT TO
THE EXTENT OF PROCEDURAL AND SUBSTANTIVE MATTERS RELATING ONLY TO (1) THE
CREATION, PERFECTION AND FORECLOSURE OF LIENS AND SECURITY INTERESTS, AND
ENFORCEMENT OF THE RIGHTS AND REMEDIES, AGAINST THE MORTGAGED PROPERTIES, WHICH
MATTERS SHALL BE GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE MORTGAGED
PROPERTY IS LOCATED, (2) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF SECURITY INTERESTS ON PERSONAL PROPERTY (OTHER
THAN DEPOSIT ACCOUNTS), WHICH MATTERS SHALL BE GOVERNED BY THE LAWS OF THE
JURISDICTION DETERMINED BY THE CHOICE OF LAW PROVISIONS OF THE VIRGINIA UNIFORM
COMMERCIAL CODE AND (3) THE PERFECTION, THE EFFECT OF PERFECTION AND
NON-PERFECTION AND FORECLOSURE OF DEPOSIT ACCOUNTS, WHICH MATTERS SHALL BE
GOVERNED BY THE LAWS OF THE JURISDICTION IN WHICH THE DEPOSIT ACCOUNT IS
LOCATED. THE AIMCO PARTIES AGREE THAT ANY CONTROVERSY ARISING UNDER OR IN
RELATION TO THE NOTES, THE SECURITY
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DOCUMENTS OR ANY OTHER LOAN DOCUMENT SHALL BE, EXCEPT AS OTHERWISE PROVIDED
HEREIN, LITIGATED IN VIRGINIA. THE LOCAL AND FEDERAL COURTS AND AUTHORITIES
WITH JURISDICTION IN VIRGINIA SHALL, EXCEPT AS OTHERWISE PROVIDED HEREIN, HAVE
JURISDICTION OVER ALL CONTROVERSIES WHICH MAY ARISE UNDER OR IN RELATION TO THE
LOAN DOCUMENTS, INCLUDING THOSE CONTROVERSIES RELATING TO THE EXECUTION,
JURISDICTION, BREACH, ENFORCEMENT OR COMPLIANCE WITH THE NOTES, THE SECURITY
DOCUMENTS OR ANY OTHER ISSUE ARISING UNDER, RELATING TO, OR IN CONNECTION WITH
ANY OF THE LOAN DOCUMENTS. EACH AIMCO PARTY IRREVOCABLY CONSENTS TO SERVICE,
JURISDICTION, AND VENUE OF SUCH COURTS FOR ANY LITIGATION ARISING FROM THE
NOTES, THE SECURITY DOCUMENTS OR ANY OF THE OTHER LOAN DOCUMENTS, AND WAIVES ANY
OTHER VENUE TO WHICH IT MIGHT BE ENTITLED BY VIRTUE OF DOMICILE, HABITUAL
RESIDENCE OR OTHERWISE. NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE
LENDER FROM BRINGING ANY SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS
AGAINST THE AIMCO PARTIES, AND AGAINST THE COLLATERAL IN ANY OTHER JURISDICTION.
INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY OTHER
JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED
HEREIN THAT THE LAWS OF VIRGINIA SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF THE
AIMCO PARTIES AND THE LENDER AS PROVIDED HEREIN OR THE SUBMISSION HEREIN BY THE
AIMCO PARTIES TO PERSONAL JURISDICTION WITHIN VIRGINIA. EACH AIMCO PARTY (I)
COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE
ARISING UNDER ANY OF THE LOAN DOCUMENTS TRIABLE BY A JURY AND (II) WAIVES ANY
RIGHT TO TRIAL BY JURY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST. THIS WAIVER IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH
ISSUE AS TO WHICH THE RIGHT TO A JURY TRIAL WOULD OTHERWISE ACCRUE. FURTHER,
EACH AIMCO PARTY HEREBY CERTIFIES THAT NO REPRESENTATIVE OR AGENT OF THE LENDER
(INCLUDING, BUT NOT LIMITED TO, THE LENDER'S COUNSEL) HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, TO EACH AIMCO PARTY THAT THE LENDER WILL NOT SEEK TO ENFORCE THE
PROVISIONS OF THIS SECTION. THE FOREGOING PROVISIONS WERE KNOWINGLY, WILLINGLY
AND VOLUNTARILY AGREED TO BY THE AIMCO PARTIES UPON CONSULTATION WITH
INDEPENDENT LEGAL COUNSEL SELECTED BY THE AIMCO PARTIES' FREE WILL.
SECTION 20.07. SEVERABILITY. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
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SECTION 20.08. NOTICES.
SECTION 20.08(a) MANNER OF GIVING NOTICE. Each notice, direction,
certificate or other communication hereunder (hereafter in this Section
referred to collectively as "notices" and referred to singly as a "notice")
which any party is required or permitted to give to the other party
pursuant to this Agreement shall be in writing and shall be deemed to have
been duly and sufficiently given if
(1) personally delivered with proof of delivery thereof (any
notice so delivered shall be deemed to have been received at the time
so delivered),
(2) sent by Federal Express (or other similar overnight courier)
designating morning delivery (any notice so delivered shall be deemed
to have been received on the Business Day it is delivered by the
courier unless delivered earlier by another method prescribed herein),
(3) sent by United States registered or certified mail, return
receipt requested, postage prepaid, at a post office regularly
maintained by the United States Postal Service (any notice so sent
shall be deemed to have been received on the Business Day it is
delivered), or
(4) sent by telecopier or facsimile machine which automatically
generates a transmission report that states the date and time of the
transmission, the length of the document transmitted, and the
telephone number of the recipient's telecopier or facsimile machine
(to be confirmed with a copy thereof sent in accordance with
paragraphs (1), (2) or (3) above within two Business Days) (any notice
so delivered shall be deemed to have been received (i) on the date of
transmission, if so transmitted before 5:00 p.m. (local time of the
recipient) on a Business Day, or (ii) on the next Business Day, if so
transmitted on or after 5:00 p.m. (local time of the recipient) on a
Business Day or if transmitted on a day other than a Business Day),
addressed to the parties at their respective Notice Addresses.
SECTION 20.08(b) CHANGE OF NOTICE ADDRESS. Any party may, by notice
given pursuant to this Section, change the person or persons and/or address
or addresses, or designate an additional person or persons or an additional
address or addresses, for its notices, but notice of a change of address
shall only be effective upon receipt. Each party agrees that it shall not
refuse or reject delivery of any notice given hereunder, that it shall
acknowledge, in writing, receipt of the same upon request by the other
party and that any notice rejected or refused by it shall be deemed for all
purposes of this Agreement to have
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been received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service, the
courier service or telecopier or facsimile machine.
SECTION 20.09. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.
SECTION 20.09(a) FURTHER ASSURANCES. To the extent permitted by law,
the parties hereto agree that they shall, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and
delivered, such supplements hereto and such further instruments as the
Lender or the AIMCO Parties may request and as may be required in the
opinion of the Lender or its counsel to effectuate the intention of or
facilitate the performance of this Agreement or any Loan Document.
SECTION 20.09(b) FURTHER DOCUMENTATION. Without limiting the
generality of subsection (a), in the event any further documentation or
information is required by the Lender to correct patent mistakes in the
Loan Documents, materials relating to the Title Insurance Policies or the
funding of the Advances, the AIMCO Parties shall provide, or cause to be
provided to the Lender, at their cost and expense, such documentation or
information. The AIMCO Parties shall execute and deliver to the Lender
such documentation, including any amendments, corrections, deletions or
additions to the Notes, the Security Instruments or the other Loan
Documents as is required by the Lender.
SECTION 20.09(c) COMPLIANCE WITH INVESTOR REQUIREMENTS. Without
limiting the generality of subsection (a), the AIMCO Parties shall do
anything necessary to comply with the requirements of the Lender in order
to enable the Lender to sell the MBS backed by an Advance; provided,
however, that the AIMCO Parties shall not be required to do anything under
this subsection that has the effect of changing the economic terms of the
transactions described in this Agreement.
SECTION 20.10. TERM OF THIS AGREEMENT. This Agreement shall continue in
effect until the Credit Facility Termination Date.
SECTION 20.11. ASSIGNMENTS; THIRD-PARTY RIGHTS. No AIMCO Party shall
assign this Agreement, or delegate any of its obligations hereunder, without the
prior written consent of the Lender. The Lender may assign its rights and
obligations under this Agreement separately or together, without the AIMCO
Parties' consent, only to Fannie Mae, but may not delegate its obligations under
this Agreement unless required to do so pursuant to Section 18.04.
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SECTION 20.12. HEADINGS. Article and Section headings used herein are for
convenience of reference only, are not part of this Agreement and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Agreement.
SECTION 20.13. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, (i) the terms defined in Article I, Section 13.03, Section
14.01 and elsewhere in this Agreement have the meanings assigned to them in this
Agreement and include the plural as well as the singular, and the use of any
gender herein shall be deemed to include the other genders; (ii) accounting
terms not otherwise defined herein have the meanings assigned to them in
accordance with GAAP; (iii) references herein to "Articles," "Sections,"
"subsections," "paragraphs" and other subdivisions without reference to a
document are to designated Articles, Sections, subsections, paragraphs and other
subdivisions of this Agreement; (iv) a reference to a subsection without further
reference to a Section is a reference to such subsection as contained in the
same Section in which the reference appears, and this rule shall also apply to
paragraphs and other subdivisions; (v) a reference to an Exhibit or a Schedule
without a further reference to the document to which the Exhibit or Schedule is
attached is a reference to an Exhibit or Schedule to this Agreement; (vi) the
words "herein," "hereof," "hereunder" and other words of similar import refer to
this Agreement as a whole and not to any particular provision; and (vii) the
word "including" means "including, but not limited to."
SECTION 20.14. INTERPRETATION. The parties hereto acknowledge that each
party and their respective counsel have participated in the drafting and
revision of this Agreement and the Loan Documents. Accordingly, the parties
agree that any rule of construction which disfavors the drafting party shall not
apply in the interpretation of this Agreement and the Loan Documents or any
amendment or supplement or exhibit hereto or thereto.
SECTION 20.15. STANDARDS FOR DECISIONS, ETC. If the Lender's approval is
required for any matter hereunder, such approval may be granted or withheld in
the Lender's sole and absolute discretion. If the Lender's designation,
determination, selection, estimate, action or decision is required, permitted or
contemplated hereunder, such designation, determination, selection, estimate,
action or decision shall be made in the Lender's sole and absolute discretion.
SECTION 20.16. DECISIONS IN WRITING. Any approval, designation,
determination, selection, action or decision of the Lender must be in writing to
be effective.
SECTION 20.17. WAIVER OF CONDITIONS. Any condition precedent to an
obligation of the Lender under this Agreement may be waived by the Lender in its
sole and absolute discretion, but such waiver must be in writing to be
effective.
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SECTION 20.18. CONTRIBUTION AGREEMENT. On the Initial Closing Date, the
Borrower and the Owners shall execute an Indemnity and Contribution Agreement in
the form attached as EXHIBIT JJ to this Agreement.
SECTION 20.19. REFERENCES TO LOAN DOCUMENTS. Except where the context
otherwise requires, any reference to any Loan Document in this Agreement or in
any other Loan Document shall refer to such Loan Document, as such Loan Document
may be amended, supplemented or otherwise modified from time to time.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
AIMCO PARTIES
THE REIT:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a
Maryland corporation
By: /s/ Patricia K. Heath
-------------------------
Patricia K. Heath
Vice President
THE BORROWER:
AIMCO PROPERTIES, L.P., a Delaware limited
partnership
By: AIMCO-GP, INC., a Delaware corporation, its
sole general partner
By: /s/ Patricia K. Heath
-------------------------
Patricia K. Heath
Assistant Secretary
THE OWNERS:
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AIMCO/BLUFFS, L.L.C., a Delaware limited liability
company
By: AIMCO HOLDINGS, L.P., a Delaware limited
partnership, its managing member
By: AIMCO HOLDINGS QRS, INC., a Delaware
corporation, its sole general partner
By: /s/ Patricia K. Heath
-------------------------
Patricia K. Heath
Assistant Secretary
[Signatures continued on following page]
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AIMCO CHESAPEAKE, L.P., a Delaware limited
partnership
By: AIMCO HOLDINGS, L.P., a Delaware limited
partnership, its sole general partner
By: AIMCO HOLDINGS QRS, INC., a Delaware
corporation, its sole general partner
By: /s/ Patricia K. Heath
-------------------------
Patricia K. Heath
Assistant Secretary
AIMCO ELM CREEK, L.P., a Delaware limited
partnership
By: AIMCO HOLDINGS, L.P., a Delaware limited
partnership, its sole general partner
By: AIMCO HOLDINGS QRS, INC., a
Delaware corporation, its sole
general partner
By: /s/ Patricia K. Heath
-------------------------
Patricia K. Heath
Assistant Secretary
AIMCO LOS ARBOLES, L.P., a Delaware limited
partnership
By: AIMCO HOLDINGS, L.P., a Delaware limited
partnership, its sole general partner
By: AIMCO HOLDINGS QRS, INC., a Delaware
corporation, its sole general partner
By: /s/ Patricia K. Heath
-------------------------
Patricia K. Heath
Assistant Secretary
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[Signatures continued on following page]
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AIMCO LAKEHAVEN, L.P., a Delaware limited
partnership
By: AIMCO HOLDINGS, L.P., a Delaware limited
partnership, its sole general partner
By: AIMCO HOLDINGS QRS, INC., a Delaware
corporation, its sole general partner
By: /s/ Patricia K. Heath
-------------------------
Patricia K. Heath
Assistant Secretary
Lender WASHINGTON MORTGAGE FINANCIAL GROUP,
LTD., A DELAWARE CORPORATION
By: /s/ G. Scott Carter
--------------------------------
Name: G. Scott Carter
Title: Vice President
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GUARANTY
(APARTMENT INVESTMENT AND MANAGEMENT COMPANY)
This Guaranty (the "Guaranty") is made and entered into as of the 4th day
of February, 1998, by APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland
corporation ("Guarantor"), for the benefit of WASHINGTON MORTGAGE FINANCIAL
GROUP, LTD., a Delaware corporation ("Lender"), whose address is 1593 Spring
Hill Road, Suite 400, Vienna, Virginia 22182.
RECITALS
A. Lender has agreed to execute that certain Master Credit Facility
Agreement, dated the same date as this Guaranty (as amended from time to time,
the "Master Agreement"), pursuant to which, inter alia, Lender has agreed,
subject to the terms, conditions and limitations of the Master Agreement, to
loan to AIMCO Properties, L.P., a Delaware limited partnership ("Borrower") from
time to time Revolving Facility Advances and Base Facility Advances (each a
"Loan" and, collectively, the "Loans") to be evidenced by the Revolving Facility
Note and the Base Facility Notes, respectively.
B. The repayment of the Revolving Facility Advances and the Base Facility
Advances, and all of the other obligations of any AIMCO Parties under the Master
Agreement or the other Loan Documents are guaranteed by Guaranties executed by
each Owner (each, an "Owner Guaranty") and by this Guaranty.
C. Guarantor owns 100% of the Ownership Interests in AIMCO-GP, Inc., a
Delaware corporation and 100% of the Ownership Interests in AIMCO-LP, Inc., a
Delaware corporation. AIMCO-GP, Inc. owns a 1% Ownership Interest as sole
general partner in Borrower and AIMCO-LP, Inc. owns a 87% Ownership Interest as
limited partner in Borrower, and Guarantor is an Affiliate of each of the other
AIMCO Parties. Guarantor will receive a direct and material benefit from the
Loans to Borrower.
D. Lender is willing to make the Loans to Borrower only if Guarantor
agrees to guaranty all obligations of Borrower and the other AIMCO Parties under
the Loan Documents.
NOW, THEREFORE, in order to induce Lender to make the Loans to Borrower,
and in consideration thereof, Guarantor hereby agrees as follows:
1. DEFINITIONS. All capitalized terms used but not defined in this
Guaranty, including, without limitation, the terms the "Loan Documents" and
the "AIMCO Parties" shall have the meanings ascribed to such terms in the
Master Agreement. The term "Notes" shall mean,
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collectively, the Base Facility Notes and the Revolving Facility Note, as
amended from time to time. Any and all references in the following Sections
below to the term "AIMCO Parties" shall be deemed to exclude Guarantor.
2. GUARANTY OF PAYMENT. Guarantor irrevocably, absolutely and
unconditionally guarantees to Lender all of the following (collectively, the
"Guaranteed Obligations"):
(1) The due and punctual payment of all principal of, interest on and
other amounts which become due and payable by Borrower under, the Base
Facility Notes, and all renewals, extensions, modifications, amendments and
restatements of the Base Facility Notes, including, without limitation, all
Base Facility Advances made from time to time to Borrower and the interest
accruing on such Base Facility Advances;
(2) The due and punctual payment of all principal of, interest on and
other amounts which become due and payable by Borrower under, the Revolving
Facility Note (and all Advance Confirmation Instruments issued in
connection therewith) and all renewals, extensions, modifications,
amendments and restatements of the Revolving Facility Note (and all Advance
Confirmation Instruments issued in connection therewith), including,
without limitation, all Revolving Facility Advances made from time to time
to Borrower and the imputed interest accruing on such Revolving Facility
Advances;
(3) The due and punctual payment of all amounts which become due and
payable by any of the AIMCO Parties under the Master Agreement or any other
Loan Documents from time to time executed by any of the AIMCO Parties; and
(4) The due and punctual performance of all the obligations of any of
the AIMCO Parties under the Master Agreement, and all of the obligations of
any of the AIMCO Parties under any other Loan Documents from time to time
executed by any of the AIMCO Parties.
This Guaranty shall be an unconditional guaranty of payment and performance and
not of collection, and is in no way conditioned upon any attempt by Lender to
pursue or exhaust any remedy against Borrower (or any other AIMCO Party). This
Guaranty is a continuing guaranty which shall remain in full force and effect
until all of the Guaranteed Obligations have been paid and performed in full;
and Guarantor shall not be released from any obligations to Lender under this
Guaranty as long as any amount payable by any AIMCO Party to Lender, or any
obligation by any AIMCO Party, under the Loan Documents is not performed,
satisfied, settled or paid in full.
3. FORM OF PAYMENT. All payments under this Guaranty shall be made to
Lender in immediately available funds, without reduction by any recoupment,
set-off, counterclaim or cross-claim against Lender.
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4. GUARANTOR'S OBLIGATIONS ARE ABSOLUTE. The obligations of Guarantor
under this Guaranty shall be absolute and unconditional, shall not be subject
to any counterclaim, set-off, recoupment, deduction or defense based upon any
claim Guarantor may have against Lender or Borrower (or any other AIMCO
Party) and shall remain in full force and effect without regard to, and shall
not be released, discharged or terminated or in any other way affected by,
any circumstance or condition (whether or not Guarantor shall have any
knowledge or notice thereof), including, without limitation:
(a) any amendment or modification of, or extension of time for payment of
any of the principal of, interest on or other amounts payable under, the Loan
Documents (except that liability of Guarantor hereunder shall be deemed to apply
to the Loan Documents as so amended or modified or to the payment of all amounts
so extended);
(b) any exercise or non-exercise by Lender of any right, power or remedy
under or in respect of the Loan Documents, or any waiver, consent, forbearance,
indulgence or other action, inaction or omission by Lender under or in respect
of the Loan Documents;
(c) any assignment, sale or other transfer of Borrower's (or any other
AIMCO Party's) interest in all or any part of the real or personal property
which at any time constitutes collateral for the payment of the Guaranteed
Obligations, including, without limitation, a conveyance of such property by
Borrower (or any other AIMCO Party) to Lender by deed in lieu of foreclosure;
(d) any bankruptcy, insolvency, reorganization, adjustment, dissolution,
liquidation or other like proceeding involving or affecting Borrower (or any
other AIMCO Party) or Lender or their respective properties or creditors, or any
action taken with respect to the Loan Documents by any trustee or receiver of
Borrower (or any other AIMCO Party) or Lender, or by any court, in any such
proceeding;
(e) any invalidity or unenforceability, in whole or in part, of any term
or provision of the Loan Documents or Borrower's incapacity or lack of authority
to enter into the Loan Documents;
(f) any release, compromise, settlement or discharge with respect to all
or any portion of Borrower's (or any other AIMCO Party's) obligations under the
Loan Documents;
(g) any acceptance of additional or substituted collateral for payment of
the Guaranteed Obligations or any release or subordination of any collateral
held at any time by Lender as security for the payment of the Guaranteed
Obligations; or
(h) any resort to Guarantor for payment of all or any portion of the
Guaranteed Obligations, whether or not Lender shall have resorted to any
collateral securing the Guaranteed Obligations or shall have proceeded to pursue
or exhaust its remedies against Borrower (or any other Person) primarily or
secondarily liable for the Guaranteed Obligations.
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No exercise, delay in exercise or non-exercise by Lender of any right hereby
given it, no dealing by Lender with Borrower, Guarantor, any other AIMCO Party
or any other Person, no change, impairment or suspension of any right or remedy
of Lender, and no act or thing which, but for this provision, could act as a
release or exoneration of the liabilities of Guarantor hereunder, shall in any
way affect, decrease, diminish or impair any of the obligations of Guarantor
hereunder or give Guarantor or any other Person any recourse or defense against
Lender.
5. WAIVER. Guarantor unconditionally waives the following:
(a) notice of acceptance of this Guaranty and notice of any of the matters
referred to in Section 4 hereof;
(b) all notices which may be required by statute, rule of law or otherwise
to preserve intact any rights which Lender may have against Guarantor under this
Guaranty, including, without limitation, any demand, proof or notice of
non-payment of any of the principal of, interest on or other amounts payable
under the Loan Documents, and notice of any failure on the part of Borrower (or
any other AIMCO Party) to perform and comply with any covenant, agreement, term
or condition of the Loan Documents;
(c) any right to the enforcement, assertion or exercise of any right,
power or remedy conferred upon Lender in the Loan Documents or otherwise;
(d) any requirement that Lender act with diligence in enforcing its rights
under the Loan Documents or this Guaranty;
(e) any right to require Lender to proceed against or exhaust its recourse
against Borrower (or any other AIMCO Party) or any security or collateral held
by Lender at any time for the payment of the Guaranteed Obligations or to pursue
any other remedy in its power before being entitled to payment from Guarantor
under this Guaranty or before proceeding against Guarantor;
(f) any failure by Lender to file or enforce a claim against the estate
(either in administration, bankruptcy or any other proceeding) of Borrower, any
AIMCO Party or any other Person;
(g) any defense based upon an election of remedies by Lender which
destroys or otherwise impairs the subrogation rights of Guarantor or the right
of Guarantor (after payment of the Guaranteed Obligations) to proceed against
Borrower (or any other AIMCO Party) 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 interest in, or the taking of, or failure
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<PAGE>
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(s), including, without limitation, another guarantor,
primarily or secondarily liable for or in respect of the Guaranteed Obligations;
(j) any rights or defenses based upon an offset by Guarantor against any
obligation now or hereafter owed to Guarantor by Borrower (or any other AIMCO
Party);
(k) any defense of the statute of limitations in any action against
Guarantor under this Guaranty; and
(l) all other notices which may or might be lawfully waived by Guarantor;
it being the intention hereof that Guarantor shall remain liable as principal,
to the extent set forth in this Guaranty, until the payment and performance in
full of the Guaranteed Obligations, notwithstanding any act, omission or thing
which might otherwise operate as a legal or equitable discharge of Guarantor
other than the payment and performance in full of the Guaranteed Obligations.
No delay by Lender in exercising any rights and/or powers hereunder or in taking
any action to enforce Borrower's (or any other AIMCO Party's) obligations under
the Loan Documents shall operate as a waiver as to such rights or powers or in
any manner prejudice any and all of Lender's rights and powers hereunder against
Guarantor. The intention of Guarantor under this Guaranty is that, so long as
any of the Guaranteed Obligations remains unsatisfied, the obligations of
Guarantor hereunder shall not be discharged except by performance and then only
to the extent of such performance. Guarantor agrees that Guarantor's
obligations hereunder shall not be affected by any circumstances, whether or not
referred to in this Guaranty, which might constitute a legal or equitable
discharge of a surety or guarantor.
6. ELECTION OF REMEDIES. This Guaranty may be enforced from time to
time, as often as occasion therefor may arise, and without any requirement
that Lender must first pursue or exhaust any remedies available to it against
Borrower (or any other AIMCO Party) under the Loan Documents or against any
other Person or resort to any collateral at any time held by it for
performance of the Guaranteed Obligations 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 Lender in
connection with the enforcement of Guarantor's obligations under this
Guaranty or the protection of Lender's rights under this Guaranty. The
covenants contained in this Section shall survive the payment of the
Guaranteed Obligations.
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<PAGE>
8. CONDITION OF BORROWER. Guarantor is fully aware of the financial
condition of Borrower (and each other AIMCO Party) and is executing and
delivering this Guaranty based solely upon Guarantor's own independent
investigation of all matters pertinent hereto and is not relying in any
manner upon any representation or statement made by Lender. Guarantor
represents and warrants that Guarantor is in a position to obtain, and
Guarantor hereby assumes full responsibility for obtaining, any additional
information concerning Borrower's (and each other AIMCO Party's) financial
condition and any other matters pertinent hereto as Guarantor may desire and
Guarantor is not relying upon or expecting Lender to furnish to Guarantor any
information now or hereafter in Lender's possession concerning the same or
any other matter. By executing this Guaranty, Guarantor knowingly accepts
the full range of risks encompassed within a contract of this type, which
risks Guarantor acknowledges.
9. FURTHER ASSURANCES. Guarantor agrees at any time and from time to
time upon request by Lender to take, or cause to be taken, any action and to
execute and deliver any additional documents which, in the opinion of Lender,
may be necessary in order to assure to Lender the full benefits of this
Guaranty.
10. SUBORDINATION. Guarantor hereby irrevocably and unconditionally agrees
that any claims, direct or indirect, Guarantor may have by subrogation or
other form of reimbursement, against Borrower or to any security or any
interest therein, by virtue of this Guaranty or as a consequence of any
payment made by Guarantor pursuant to this Guaranty, shall be fully
subordinated in time and right of payment to the payment in full of the
Guaranteed Obligations and all other obligations of Guarantor to Lender under
this Guaranty.
11. NO SUBROGATION. Except as expressly provided in Section 10 above,
Guarantor shall not have any right of subrogation against Borrower (or any
other AIMCO Party) by reason of any payment by Guarantor under this Guaranty
until such time as all of the Obligations have been satisfied in full.
Nothing in the foregoing shall affect any claim which any Guarantor has
against Borrower (or any other AIMCO Party) under the terms of the
Contribution Agreement.
12. INSOLVENCY AND LIABILITY OF BORROWER (AND ANY OTHER AIMCO PARTY). So
long as any of the Guaranteed Obligations is unpaid and this Guaranty is in
effect, and to the extent not prohibited by the applicable bankruptcy court,
Guarantor agrees to file all claims against Borrower (or any other AIMCO
Party) in any bankruptcy or other proceeding in which the filing of claims is
required by law in connection with indebtedness owed by Borrower (or any
other AIMCO Party) to Guarantor and to assign to Lender all rights of
Guarantor thereunder up to the lesser of (i) the amount of such indebtedness
or (ii) the amount of the Guaranteed Obligations guaranteed by Guarantor. In
all such cases the Person or Persons authorized to pay such claims shall pay
to Lender the full amount thereof to the full extent necessary to pay the
Guaranteed Obligations, and Guarantor hereby assigns to Lender all of
Guarantor's rights to all such payments to which Guarantor would otherwise be
entitled. Notwithstanding the foregoing, and except to the extent that any
sums owed
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<PAGE>
by Borrower (or any other AIMCO Party) to Lender under the Loan Documents
shall have been fully satisfied thereby, the liability of Guarantor hereunder
shall in no way be affected by
(a) the release or discharge of Borrower (or any other AIMCO Party) in any
creditors', receivership, bankruptcy or other proceedings; or
(b) the impairment, limitation or modification of the liability of
Borrower or the estate of Borrower in bankruptcy resulting from the operation of
any present or future provisions of the Bankruptcy Code or other statute or from
the decision in any court.
13. PREFERENCES, FRAUDULENT CONVEYANCES, ETC. If Lender is required to
refund, or voluntarily refunds, any payment received from Borrower (or any
other AIMCO Party) because such payment is or may be avoided, invalidated,
declared fraudulent, set aside or determined to be void or voidable as a
preference, fraudulent conveyance, impermissible setoff or a diversion of
trust funds under the bankruptcy laws or for any similar reason, including,
without limitation, any judgment, order or decree of any court or
administrative body having jurisdiction over Lender or any of its property,
or any settlement or compromise of any claim effected by Lender with Borrower
(or any other AIMCO Party) or other claimant (a "Rescinded Payment"), then
Guarantor's liability to Lender shall continue in full force and effect, or
Guarantor's liability to Lender shall be reinstated, as the case may be, with
the same effect and to the same extent as if the Rescinded Payment had not
been received by Lender, notwithstanding the cancellation or termination of
any Note or any of the other Loan Documents. In addition, Guarantor shall
pay, or reimburse Lender for, all expenses (including all reasonable
attorneys' fees, court costs and related disbursements) incurred by Lender in
the defense of any claim that a payment received by Lender in respect of all
or any part of the Guaranteed Obligations must be refunded. The provisions
of this Section shall survive the termination of this Guaranty and any
satisfaction and discharge of Borrower by virtue of any payment, court order
or any federal or state law.
14. WAIVER. Neither this Guaranty nor any term hereof may be changed,
waived, discharged or terminated except by an instrument in writing signed by
Lender and Guarantor expressly referring to this Guaranty and to the
provisions so changed or limited. No such waiver shall extend to or affect
any obligation not expressly waived or impair any right consequent thereon.
No course of dealing or delay or omission on the part of Lender in exercising
any right under this Guaranty shall operate as a waiver thereof or otherwise
by prejudice thereto.
15. CROSS-DEFAULT WITH MASTER AGREEMENT. The occurrence of an Event of
Default under the Master Agreement shall constitute a default under this
Guaranty. Upon the occurrence of an Event of Default under the Master
Agreement, Lender, at Lender's option, may exercise any or all of the
remedies to which it may be entitled under this Guaranty or other Loan
Documents upon the breach of any covenant or agreement by Guarantor under
this Guaranty.
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16. SECURITY FOR THE GUARANTY. Guarantor's obligations under this
Guaranty are secured by the Security Documents, if any, executed by
Guarantor from time to time to secure the Guaranty, and reference to the
Master Agreement and such documents is made for Lender's rights upon the
occurrence of a default under this Guaranty. Each Security Document shall be
released as security for the Guaranty and this Guaranty shall be released in
accordance with the provisions of the Master Agreement and the Security
Document.
17. NOTICES. All notices or other communications hereunder shall be
sufficiently given and shall be deemed given when sent in the manner
prescribed by the Master Agreement.
18. ASSIGNABILITY BY LENDER. Lender may, without notice to Guarantor,
assign or transfer the Loans and the Loan Documents, in whole or in part. In
such event, each and every immediate and successive assignee, transferee or
holder of all or any part of the Loans and the Loan Documents shall have the
right to enforce this Guaranty, by legal action or otherwise, as fully as if
such assignee, transferee, or holder were by name specifically given such
right and power in this Guaranty. Lender shall have an unimpaired right to
enforce this Guaranty for its benefit as to so much of the Loans and the Loan
Documents as Lender has not sold, assigned or transferred.
19. GUARANTOR BOUND BY JUDGMENT AGAINST BORROWER. Guarantor shall be
conclusively bound, in any jurisdiction, by the judgment in any action by
Lender against Borrower (or any other AIMCO Party) in connection with the
Loan Documents (wherever instituted) as if Guarantor were a party to such
action even if not so joined as a party.
20. GOVERNING LAW. The provisions of Section 20.06 of the Master
Agreement (entitled Choice of Law; Consent to Jurisdiction; Waiver of Jury
Trial) are hereby incorporated into this Agreement by this reference to the
fullest extent as if the text of such Section were set forth in its entirety
herein.
21. INVALID PROVISIONS. If any provision of this Guaranty or the
application thereof to Guarantor or any circumstance in any jurisdiction
whose laws govern this Guaranty shall, to any extent, be invalid or
unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to the extent of such invalidity
or unenforceability and shall be deemed modified to conform to such statute,
regulation or rule or law. The remainder of this Guaranty and the application
of any such invalid or unenforceable provision to parties, jurisdictions or
circumstances other than those to whom or to which it is held invalid or
unenforceable, shall not be affected by such invalidity or unenforceability
nor shall such invalidity or unenforceability affect the validity or
enforceability of any other provision of this Guaranty.
22. GENERAL PROVISIONS. This Guaranty shall be binding upon the
respective successors and assigns of Guarantor, and shall inure to the
benefit of Lender and its successors and assigns, including, without
limitation, each successive holder of the Notes. The descriptive headings of
the
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Sections of the Guaranty have been inserted herein for convenience of
reference only and shall not define or limit the provisions hereof.
IN WITNESS WHEREOF, Guarantor has signed this Guaranty under seal as of the
day and year first above written.
Guarantor
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a
Maryland corporation
By: /s/ Patricia K. Heath
---------------------------
Patricia K. Heath
Vice President
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<PAGE>
FOURTH AMENDMENT TO THE SECOND
AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P.
This FOURTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF AIMCO PROPERTIES, L.P., dated as of March 25, 1998 (this
"Amendment"), is being executed by AIMCO-GP, Inc., a Delaware corporation (the
"General Partner"), as the general partner of AIMCO Properties, L.P., a Delaware
limited partnership (the "Partnership"), pursuant to the authority conferred on
the General Partner by Section 7.3.C(7) of the Second Amended and Restated
Agreement of Limited Partnership of AIMCO Properties, L.P., dated as of July 29,
1994 (the "Agreement"). Capitalized terms used, but not otherwise defined
herein, shall have the respective meanings ascribed thereto in the Agreement.
WHEREAS, pursuant to Section 4.2.A of the Agreement, the General Partner is
authorized to cause the Partnership to issue Partnership Units with such
designations, preferences and relative, participating, optional or other special
rights, powers and duties as the General Partner shall determine and as shall be
set forth in a written document attached to and made an exhibit to the
Agreement; and
WHEREAS, the General Partner has determined that it is in the best
interests of the Partnership to issue up to 15,000 units of a new class of
Partnership Units in consideration of capital contributions to the Partnership
of $138 per unit.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Agreement is hereby amended by the addition of a new exhibit,
entitled "EXHIBIT I," in the form attached hereto, which shall be attached to
and made a part of the Agreement.
2. Each Person to whom the General Partner shall initially cause the
Partnership to issue any of the Partnership Units described on EXHIBIT I shall
be admitted to the Partnership as a Limited Partner with the rights of holders
of the Partnership Units set forth on EXHIBIT I. The General Partner shall
amend EXHIBIT A to the Agreement to reflect the admittance of each such Person
as a Limited Partner and the issuance of such Partnership Units to each such
Person.
3. Except as specifically amended hereby, the terms, covenants,
provisions and conditions of the Agreement shall remain unmodified and continue
in full force and
<PAGE>
effect and, except as amended hereby, all of the terms, covenants, provisions
and conditions of the Agreement are hereby ratified and confirmed in all
respects.
IN WITNESS WHEREOF, this Amendment has been executed as of the date first
written above.
GENERAL PARTNER:
AIMCO-GP, INC.
By: /s/ Peter K. Kompaniez
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT I
PARTNERSHIP UNIT DESIGNATION
OF THE
CLASS I HIGH PERFORMANCE PARTNERSHIP UNITS
OF AIMCO PROPERTIES, L.P.
1. NUMBER OF UNITS AND DESIGNATION.
A class of Partnership Units is hereby designated as "Class I High
Performance Partnership Units," and the number of Partnership Units initially
constituting such class shall be fifteen thousand (15,000), subject to
adjustment at the Class I High Performance Valuation Date, as provided in
Section 3 hereof.
2. DEFINITIONS.
For purposes of this Partnership Unit Designation, the following terms
shall have the meanings indicated in this Section 2. Capitalized terms used and
not otherwise defined herein shall have the meanings assigned thereto in the
Agreement.
"AIMCO EQUITY CAPITALIZATION" shall mean the quotient obtained by dividing
(i) the sum of the AIMCO Market Values for each trading day included in the
Measurement Period, by (ii) the number of trading days included in the
Measurement Period.
"AIMCO MARKET VALUE" shall mean, for any date, the product of (i) the
number of REIT Shares and Partnership Units (other than Partnership Preferred
Units) outstanding as of the close of business on such date, multiplied by (ii)
the Value of a REIT Share on such date.
"AIMCO TOTAL RETURN" shall mean the Total Return of the REIT Shares for the
Measurement Period.
"AGREEMENT" shall mean the Second Amended and Restated Agreement of Limited
Partnership of the Partnership, as amended.
"CHANGE OF CONTROL" shall mean the occurrence of any of the following
events:
(i) an acquisition (other than directly from the Previous General
Partner) of any voting securities of the Previous General Partner (the "Voting
Securities) by any "person" (as the term "person" is used for purposes of
Section 13(d) or Section
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14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
immediately after which such person has "beneficial ownership" (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) ("Beneficial
Ownership") of 20% or more of the combined voting power of the Previous General
Partner's then outstanding Voting Securities; provided, however, in determining
whether a Change in Control has occurred, Voting Securities that are acquired in
a Non-Control Acquisition (as hereinafter defined) shall not constitute an
acquisition that would cause a Change in Control. "Non-Control Acquisition"
shall mean an acquisition by (A) an employee benefit plan (or a trust forming a
part thereof) maintained by (1) the Previous General Partner or (2) any
corporation, partnership or other person of which a majority of its voting power
or its equity securities or equity interest is owned directly or indirectly by
the Previous General Partner or in which the Previous General Partner serves as
a general partner or manager (a "Subsidiary"), (B) the Previous General Partner
or any Subsidiary, or (C) any person in connection with a Non-Control
Transaction (as hereinafter defined);
(ii) the individuals who constitute the Board of Directors of the
Previous General Partner as of January 1, 1998 (the "Incumbent Board") cease for
any reason to constitute at least two-thirds (2/3) of the Board of Directors;
provided, however, that if the election, or nomination for election by the
Previous General Partner's stockholders, of any new director was approved by a
vote of at least two-thirds (2/3) of the Incumbent Board, such new director
shall be considered as a member of the Incumbent Board; provided, further, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "election contest" (as described in Rule 14a-11 promulgated under the
Exchange Act) (an "Election Contest") or other actual or threatened solicitation
of proxies or consents by or on behalf of a person other than the Board of
Directors (a "Proxy Contest") including by reason of any agreement intended to
avoid or settle any Election Contest or Proxy Contest; or
(iii) approval by stockholders of the Previous General Partner of:
(A) a merger, consolidation, share exchange or reorganization involving the
Previous General Partner, unless (1) the stockholders of the Previous General
Partner, immediately before such merger, consolidation, share exchange or
reorganization, own, directly or indirectly immediately following such merger,
consolidation, share exchange or reorganization, at least 80% of the combined
voting power of the outstanding voting securities of the corporation that is the
successor in such merger, consolidation, share exchange or reorganization (the
"Surviving Company") in substantially the same proportion as their ownership of
the Voting Securities immediately before such merger, consolidation, share
exchange or reorganization, (2) the individuals who were members of the
Incumbent Board immediately prior to the execution of the agreement providing
for such merger, consolidation, share exchange or reorganization constitute at
least two-thirds (2/3) of the
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members of the board of directors of the Surviving Company, and (3) no persons
(other than the Previous General Partner or any Subsidiary, any employee benefit
plan (or any trust forming a part thereof) maintained by the Previous General
Partner, the Surviving Company or any Subsidiary, or any person who, immediately
prior to such merger, consolidation, share exchange or reorganization had
Beneficial Ownership of 15% or more of the then outstanding Voting Securities
has Beneficial Ownership of 15% or more of the combined voting power of the
Surviving Company's then outstanding voting securities (a transaction described
in clauses (1) through (3) is referred to herein as a "Non-Control
Transaction"); (B) a complete liquidation or dissolution of the Previous General
Partner; or (C) an agreement for the sale or other disposition of all or
substantially all of the assets of the Previous General Partner to any person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change of Control shall not be deemed to
occur solely because any person (a "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Previous General
Partner that, by reducing the number of Voting Securities outstanding, increases
the proportional number of shares Beneficially Owned by such Subject Person,
provided that if a Change of Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities by the Previous
General Partner, and after such share acquisition by the Previous General
Partner, such Subject Person becomes the Beneficial Owner of any additional
Voting Securities that increases the percentage of the then outstanding Voting
Securities Beneficially Owned by such Subject Person, then a Change of Control
shall occur.
"CLASS I HIGH PERFORMANCE CASH AMOUNT" shall mean, as of any date, the
lesser of (i) an amount of cash equal to the product of the amount that a Holder
would receive in respect of each Class I High Performance Partnership Unit if
the Partnership sold all of its properties at their fair market value (which may
be determined by reference to the Value of a REIT Share), paid all of its debts
and distributed the remaining proceeds to the Partners as provided in Section
13.2 of the Agreement, determined as of the applicable Valuation Date, or (ii)
in the case of a Declination followed by a Public Offering Funding, the Public
Offering Funding Amount.
"CLASS I HIGH PERFORMANCE PARTNERSHIP UNIT" shall mean a Partnership Unit
with the designations, preferences and relative, participating, optional or
other special rights, powers and duties as are set forth in this EXHIBIT I.
"CLASS I HIGH PERFORMANCE VALUATION DATE" shall mean the earlier to occur
of (i) January 1, 2001, or (ii) the date on which a Change of Control occurs.
I-3
<PAGE>
"DETERMINATION DATE" shall mean (i) when used with respect to any dividend
or other distribution, the date fixed for the determination of the holders of
the securities entitled to receive such dividend or distribution, or, if a
dividend or distribution is paid or made without fixing such a date, the date of
such dividend or distribution, and (ii) when used with respect to any split,
subdivision, reverse stock split, combination or reclassification of securities,
the date upon which such split, subdivision, reverse stock split, combination or
reclassification becomes effective.
"EXCESS RETURN" shall mean the amount (measured as a percentage), if any,
by which (i) the AIMCO Total Return exceeds (ii) the Hurdle Rate of Return.
"EX-DATE" shall mean (i) when used with respect to any dividend or
distribution, the first date on which the securities on which the dividend or
distribution is payable trade regular way on the relevant exchange or in the
relevant market without the right to receive such dividend or distribution, and
(ii) when used with respect to any split, subdivision, reverse stock split,
combination or reclassification of securities, the first date on which the
securities trade regular way on such exchange or in such market to reflect such
split, subdivision, reverse stock split, combination or reclassification
becoming effective.
"EXTRAORDINARY DISTRIBUTION" shall mean the distribution by the Previous
General Partner, by dividend or otherwise, to all holders of its REIT Shares of
evidences of its indebtedness or assets (including securities) other than cash.
"HURDLE RATE OF RETURN" shall mean the greater of (x) 115% of the Industry
Total Return, or (y) 30% (or, if the Class I High Performance Valuation Date is
not January 1, 2001, a percentage equal to the return over the Measurement
Period that, if compounded annually over three years, would result in a
cumulative return of 30%).
"INDUSTRY TOTAL RETURN" shall mean the Total Return of the securities
included in the Industry Peer Group Index for the Measurement Period, with such
average determined in a manner consistent with the manner in which such index is
calculated; PROVIDED, HOWEVER, that if such Total Return would be less than zero
without giving effect to the reinvestment of dividends, then the "Industry Total
Return" shall be equal to zero.
"INDUSTRY PEER GROUP INDEX" shall mean the Morgan Stanley REIT Index or any
other similar industry index approved by the Board of Directors of the Previous
General Partner.
"MEASUREMENT PERIOD" shall mean the period from and including January 1,
1998 to but excluding the Class I High Performance Valuation Date.
"PARTNERSHIP" shall mean AIMCO Properties, L.P., a Delaware limited
I-4
<PAGE>
partnership.
"TOTAL RETURN" shall mean, for any security and for any period, the
cumulative total return for such security over such period, as measured by (i)
the sum of (A) the cumulative amount of dividends paid in respect of such
security for such period (assuming that all dividends other than Extraordinary
Distributions are reinvested in such security as of the payment date for such
dividend based on the security price on the dividend payment date), and (B) an
amount equal to (1) the security price at the end of such period, minus (2) the
security price at the beginning of such period, divided by (ii) the security
price at the beginning of the measurement period; PROVIDED, HOWEVER, that if the
foregoing calculation results in a negative number, the "Total Return" shall be
equal to zero.
"VALUE" shall have the meaning set forth in the Agreement, except that
Value shall be determined by reference to the average of the daily market prices
for twenty (20) consecutive trading days rather than ten (10) consecutive
trading days.
3. ADJUSTMENT OF UNITS AT CLASS I HIGH PERFORMANCE VALUATION DATE.
(a) If, on the Class I High Performance Valuation Date there is any
Excess Return, then, from and after such date, each Class I High Performance
Partnership Unit shall, without any action on the part of the Partnership, the
General Partner or the Holder thereof, be automatically adjusted to equal a
number of Class I High Performance Partnership Units equal to the quotient
obtained by dividing (x) the product of (A) 15% of the Excess Return, multiplied
by (B) the AIMCO Equity Capitalization, by (y) the product of (A) 15,000 and (B)
the Value of a REIT Share on the Class I High Performance Valuation Date. For
illustrative purposes, examples of the calculation of such adjustment are set
forth in ANNEX I hereto.
(b) If, on the Class I High Performance Valuation Date there is no
Excess Return, then, from and after such date, each Class I High Performance
Partnership Units shall, without any action on the part of the Partnership, the
General Partner or the Holder thereof, be automatically adjusted to equal 1/100
of a Class I High Performance Partnership Unit.
4. DISTRIBUTIONS.
On and after the Class I High Performance Valuation Date, the Holders of
Class I High Performance Partnership Units shall be entitled to receive
distributions (other than distributions upon liquidation) if, as, when and in
the same amounts and of the same type as may be paid to Holders of Partnership
Common Units as if each Holder of Class I High Performance Partnership Units
held an equal number of Partnership Common Units
I-5
<PAGE>
originally issued on the Class I High Performance Valuation Date.
5. ALLOCATIONS.
(a) From and after the Class I High Performance Valuation Date, Net Income
and Net Loss shall be allocated to each of the Holders of Class I High
Performance Partnership Units as if each such Holder was the Holder of an equal
number of Partnership Common Units originally issued on the Class I High
Performance Valuation Date.
(b) In the event that the Partnership disposes of all or substantially all
of its assets in a transaction that will lead to a liquidation of the
Partnership pursuant to Article XIII of the Agreement, then, notwithstanding
Section 6.3.C of the Agreement, each Holder of Class I High Performance
Partnership Units shall be specifically allocated items of Partnership income
and gain in an amount sufficient to cause the Capital Account of such Holder to
be equal to that of a Holder of an equal number of Partnership Common Units.
6. REDEMPTION.
Upon the occurrence of a Change of Control, and subject to the applicable
requirements of Federal securities laws and any securities exchange or quotation
system rules or regulations, each Holder of Class I High Performance Partnership
Units shall have the redemption rights of Qualifying Parties set forth in
Section 8.6 of the Agreement, except that (i) all references therein to
"Redeemable Units" or "Partnership Common Units" shall be deemed to be
references to Class I High Performance Partnership Units, (ii) the first
Twelve-Month Period applicable to all Class I High Performance Partnership Units
shall be deemed to have passed, (iii) all references therein to "Cash Amount"
shall be deemed to be references to the Class I High Performance Cash Amount,
and (iv) in the event that the Previous General Partner elects to acquire Class
I High Performance Partnership Units that have been tendered for Redemption, the
Previous General Partner shall acquire each such Class I High Performance
Partnership Unit in exchange for a number of REIT Shares equal to the quotient
obtained by dividing the Class I High Performance Cash Amount by the Value of a
REIT Share, determined as of the applicable Valuation Date.
7. STATUS OF REACQUIRED UNITS.
All Class I High Performance Partnership Units which shall have been issued
and reacquired in any manner by the Partnership shall be deemed cancelled and no
longer outstanding.
8. RESTRICTIONS ON OWNERSHIP AND TRANSFER.
I-6
<PAGE>
The restrictions on Transfer set forth in Sections 11.1.B and 11.3.A of the
Agreement shall not apply to Transfers of Class I High Performance Partnership
Units. Prior to the Class I High Performance Valuation Date, the Class I High
Performance Partnership Units shall be owned and held solely by SMP I, L.L.C., a
Delaware limited liability company ("SMP"), Richard S. Ellwood, J. Landis
Martin, Thomas L. Rhodes and John D. Smith. On or after the Class I High
Performance Valuation Date, the Class I High Performance Partnership Units may
be Transferred (i) by SMP to (a) any Person who is a member (a "Member") of SMP
immediately prior to such transfer, (b) a Family Member of a Member, (c) a
Controlled Entity of a Member, (c) any Person with respect to whom the Member
constitutes a Controlled Entity, (d) upon the death of a Member, by will or by
the laws of descent and distribution to any Qualified Transferee, and (ii) by
any other Person to (a) a Family Member of a such Person, (b) a Controlled
Entity of such Person, (c) any other Person with respect to whom such Person
constitutes a Controlled Entity, (d) upon the death of such Person, by will or
by the laws of descent and distribution to any Qualified Transferee,
9. VOTING RIGHTS.
The definition of "Majority in Interest of the Limited Partners" in the
Agreement is hereby amended to read in its entirety as follows:
"MAJORITY IN INTEREST OF THE LIMITED PARTNERS" means Limited Partners
(other than (i) the Special Limited Partner and (ii) any Limited Partner
fifty percent (50%) or more of whose equity is owned, directly or
indirectly, by the (a) General Partner or (b) any REIT as to which the
General Partner is a "qualified REIT subsidiary" (within the meaning of
Code Section 856(i)(2))) holding more than fifty percent (50%) of the
outstanding Partnership Common Units and Class I High Performance
Partnership Units held by all Limited Partners (other than (i) the Special
Limited Partner and (ii) any Partner fifty percent (50%) or more of whose
equity is owned, directly or indirectly, by (a) the General Partner or (b)
any REIT as to which the General Partner is a "qualified REIT subsidiary"
(within the meaning of Code Section 856(i)(2))).
10. ADJUSTMENTS.
(a) In the event of any Extraordinary Distribution occurring on or after
January 1, 1998, for purposes of determining the Value of a REIT Share or the
AIMCO Total Return, each price of a REIT Share determined as of a date on or
after the Ex-Date for such Extraordinary Distribution shall be adjusted by
multiplying such price by a fraction (i) the numerator of which shall be the
price of a REIT Share on the date immediately prior to such Ex-Date, and (ii)
the denominator of which shall be (A) the
I-7
<PAGE>
price of a REIT Share on the date immediately prior to such Ex-Date, minus (B)
the fair market value on the date fixed for such determination of the portion of
the evidences of indebtedness or assets so distributed applicable to one REIT
Share (as determined by the General Partner, whose determination shall be
conclusive); PROVIDED FURTHER, that such amount shall be so adjusted for each
such Extraordinary Distribution occurring on or after January 1, 1998.
(b) In the event that, on or after January 1, 1998, the Previous General
Partner (i) declares or pays a dividend on its outstanding REIT Shares in REIT
Shares or makes a distribution to all holders of its outstanding REIT Shares in
REIT Shares, (ii) splits or subdivides its outstanding REIT Shares, (iii)
effects a reverse stock split or otherwise combines its outstanding REIT Shares
into a smaller number of REIT Shares, or (iv) otherwise reclassifies its
outstanding REIT Shares, then, for purposes of determining the Value of a REIT
Share or the AIMCO Total Return, each price of a REIT Share determined as of a
date on or after the Ex-Date for such transaction shall be adjusted by
multiplying such price by a fraction (x) the numerator of which shall be the
number of REIT Shares issued and outstanding on the Determination Date for such
dividend, distribution, split, subdivision, reverse stock split, combination or
reclassification (assuming for such purposes that such dividend, distribution,
split, subdivision, reverse split or combination has occurred as of such time)
and (y) the denominator of which shall be the actual number of REIT Shares
(determined without the above assumption) issued and outstanding on the
Determination Date for such dividend, distribution, split, subdivision, reverse
stock split, combination or reclassification.
(c) The General Partner shall have authority to appropriately adjust the
AIMCO Market Value, the AIMCO Total Return or the Value of a REIT Share if any
other transaction or circumstance occurs or arises that would have an
inequitable result.
11. GENERAL.
The ownership of Class I High Performance Partnership Units may (but need
not, in the sole and absolute discretion of the General Partner) be evidenced by
one or more certificates. The General Partner shall amend EXHIBIT A to the
Agreement from time to time to the extent necessary to reflect accurately the
issuance of, and subsequent conversion, redemption, or any other event having an
effect on the ownership of, Class I High Performance Partnership Units.
I-8
<PAGE>
ANNEX I TO
EXHIBIT I
NUMERICAL EXAMPLES OF THE CALCULATION OF THE ADJUSTMENT TO THE NUMBER
OF CLASS I HIGH PERFORMANCE PARTNERSHIP UNITS ON THE CLASS I HIGH
PERFORMANCE VALUATION DATE
The following table illustrates the adjustment that would be made on the
Class I High Performance Valuation Date to the number of Class I High
Performance Units under different circumstances. Except as otherwise indicated,
it is assumed, for purposes of the illustration, that: (i) the Class I High
Performance Valuation Date is January 1, 2001; (ii) the AIMCO Total Return is
14% per year; (iii) the Industry Total Return is 10% per year; and (iv) the
weighted average market value of outstanding equity (Common Stock and
Partnership Units, other than Partnership Preferred Units) during the
Measurement Period is $3,000,000,000 (assumptions (i) - (iv) are referred to as
the "Base Case").
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5) (6)
----- ------ ----- ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Cumulative Total Return Over Three Years:
Company Common Stock 48.2% 119.7% 48.2% 48.2% 119.7% 26.0%
Peer Group Index 32.4% 32.4% 71.2% 0% 32.4% 3.0%
115% of Peer Group Index 38.1% 38.1% 83.7% 0% 38.1% 3.5%
Minimum Return 30% 30% 30% 30% 30% 30%
Excess Return 10.1% 81.6% 0% 18.2% 81.6% 0%
Weighted Average Market Value of
Outstanding Equity (millions) $3,000 $4,000 $3,000 $3,000 $10,000 $4,000
Excess Shareholder Return (millions) $303 $3,264 $0 $546 $8,160 $0
Value of High Performance Units (millions) $45.4 $489.6 $0 $81.9 $1,224.0 $0
Value of a REIT Share $50 $70 $50 $50 $70 $40
Adjusted Number of Class I High Performance Units:
Total 908,000 6,994,286 0 1,638,000 17,485,714 0
Per Unit Adjustment 60.5 466.3 0 109.2 1,165.7 0
</TABLE>
(1) Base Case.
(2) Base Case, except that the Company Common Stock has a 30% annual Total
Return and the weighted average market value of outstanding equity is $4
billion.
(3) Base Case, except that the Peer Group Index has a 20% annual Total Return.
(4) Base Case, except that the Peer Group Index has a negative annual Total
Return of 10%.
(5) Base Case, except that the Company Common Stock has a 30% annual Total
Return and the weighted average market value of outstanding equity is $10
billion.
(6) Base Case, except that the Company Common Stock has an 8% annual Total
Return, the Peer Group Index has a 1% annual Total Return and the weighted
average market value of outstanding equity is $4 billion.
I-9
<PAGE>
Amendment No. 1 to the
Apartment Investment and Management Company
1997 Stock Award and Incentive Plan
THIS AMENDMENT NO. 1 TO THE APARTMENT INVESTMENT AND MANAGEMENT COMPANY 1997
STOCK AWARD AND INCENTIVE PLAN (the "Amendment"), is adopted as of January 21,
1998, for the benefit of the eligible employees and directors of Apartment
Investment and Management Company, a Maryland corporation (the "Company"), AIMCO
Properties, L.P., a Delaware limited partnership, and Property Asset Management
Services, L.P., a Delaware limited partnership. Capitalized terms used herein,
but not otherwise defined, shall have the meanings ascribed to them in the
Apartment Investment and Management Company 1997 Stock Award and Incentive Plan
(the "Plan").
1. NUMBER AND SOURCE OF SHARES. Section 3.1 of the Plan is hereby amended
and restated in its entirety to read as follows:
"3.1 NUMBER AND SOURCE OF SHARES. The total number of shares of Stock
reserved and available for issuance under the Plan shall be 20,000,000.
To the extent that (a) a Stock Option expires or is otherwise terminated
without being exercised, or (b) any shares of Stock subject to any
Restricted Stock, Deferred Stock or Performance Share award granted
hereunder are forfeited, such shares shall again be available for
issuance in connection with future awards under the Plan. Such shares may
consist, in whole or in part, of treasury shares, authorized and unissued
shares or shares of Stock reacquired by the Company."
2. APPROVAL OF AMENDMENT BY STOCKHOLDERS. This Amendment shall take effect
upon its adoption by the Board, but this Amendment (and any grants or awards
made in reliance on this Amendment prior to shareholder approval of this
Amendment) shall be subject to ratification by the holders of a majority of the
issued and outstanding shares of voting securities of the Company, voting at a
duly convened shareholders' meeting of the Company, which ratification must
occur within twelve (12) months of the date that this Amendment is adopted by
the Board. In the event that the shareholders of the Company do not ratify this
Amendment at a meeting of the shareholders at which such issue is considered and
voted upon, then this Amendment and all Stock Options, Restricted Stock,
Deferred Stock and Performance Share awards made in reliance hereon shall
immediately terminate and be of no force or effect.
3. ACKNOWLEDGMENT. Other than as modified pursuant to this Amendment, all
of the provisions of the Plan shall continue in full force and effect.
1
<PAGE>
APARTMENT INVESTMENT MANAGEMENT COMPANY
1998 INCENTIVE COMPENSATION PLAN
1. PURPOSE; AWARDS; CONSTRUCTION.
The purpose of the Apartment Investment Management Company 1998 Incentive
Compensation Plan as amended from time to time, (the "Plan") is to afford an
incentive to selected executive officers (each, a "participant") of Apartment
Investment and Management Company a Maryland corporation (together with the
successors, the "Company") or any Subsidiary or Affiliate, to further the
Company's success by reinforcing the identity of their interests with those of
the Company's stockholders. Pursuant to Section 5 of the Plan, Participants may
be awarded incentive compensation based on the achievement of specified
financial goals. The Plan is designed to comply with the requirements for
"performance-based compensation" under Section 162(m) of the Internal Revenue
Code of 1986, as amended from time to time and shall be interpreted in a manner
consistent with the requirements thereof.
2. ADMINISTRATION.
The Plan shall be administered by the Board of Directors of the Company or a
committee thereof established to administer the Plan (the "Administrator"). The
Administrator shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the power and authority either specifically granted to it under
the Plan or necessary or advisable in the administration of the Plan, including,
without limitation, the authority to determine the terms, conditions,
restrictions and performance criteria relating to any award; to determine
whether, to what extent, and under what circumstances an award may be settled,
cancelled, forfeited, exchanged, or surrendered; to make adjustments in the
terms and conditions of, and the criteria and performance objectives included in
awards in recognition of unusual or non-recurring events affecting the Company
or any Subsidiary or Affiliate or the financial statements of the Company or any
Subsidiary or Affiliate, or in response to changes in applicable laws,
regulations, or accounting principles; to designate Affiliates; to construe and
interpret the Plan and any award; to prescribe, amend and rescind rules and
regulations relating to the Plan; and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
The Administrator may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Administrator shall be made by a majority of its members either present in
person or participating by conference telephone at a meeting or by written
consent. The Administrator may delegate to one or more of its members or to one
or more agents such administrative duties as it may deem advisable, and the
Administrator or any person to whom it has delegated duties as aforesaid may
employ one or more persons to render advice with respect to any responsibility
the Administrator or such person may have under the Plan. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all persons, including the Company, and any Participant (or any
person claiming any rights under the Plan from or through any Participant).
No member of the Administrator shall be liable for any action taken or
determination made in good faith with respect to the Plan or any award made
hereunder.
3. ELIGIBILITY.
Subject to the conditions set forth below, awards may be made to selected
executive officers of the Company, in the discretion of the Administrator. In
determining the persons to whom awards shall be made (including the number of
shares to be covered by such award), the Administrator shall take into
1
<PAGE>
account such factors as the Administrator shall deem relevant in connection with
accomplishing the purposes of the Plan.
4. SPECIFIC TERMS OF AWARDS.
At the end of each fiscal year, the Administrator will determine the amount
of Excess Shareholder Value (as defined below), for the year, if any. The
Administrator may award to executive officers of the Company, in the aggregate,
up to fifteen percent (15%) of the Excess Shareholder Value as incentive
compensation. The incentive compensation may be paid in cash, securities of the
Company or any combination thereof, as determined by the Administrator.
"Excess Shareholder Value" means, for any year, the amount, if any, by which
the Total Return (as defined below) of the Company's Common Stock over that year
exceeds the Total Return of stocks in the Morgan Stanley REIT Index or another
index, as determined by the Administrator (the "Peer Group Index"), over the
same period (up to a maximum of 15% of the Total Return of the Peer Group
Index), multiplied by the weighted average market value of the Company's
outstanding equity capitalization (Common Stock and Partnership Units of AIMCO
Properties, L.P.) during the year.
"Total Return" means, for any security and for any period, the cumulative
total return for such security over such period, as measured by (i) the sum of
(a) the cumulative amount of dividends paid in respect of such security for such
period (assuming that all cash dividends are reinvested in such security as of
the payment date for such dividend based on the security price on the dividend
payment date), and (b) an amount equal to (x) the security price at the end of
such period, minus (y) the security price at the beginning of such period,
divided by (ii) the security price at the beginning of the measurement period;
PROVIDED, HOWEVER, that if the foregoing calculation results in a negative
number, the "Total Return" shall be equal to zero.
5. GENERAL PROVISIONS.
(a) APPROVAL OF STOCKHOLDERS. The Plan shall take effect upon its
adoption by the Board. The Plan shall be presented to the stockholders
for their approval, however, the Plan shall be effective and all awards
made hereunder shall be valid regardless of the outcome of the
stockholder vote.
(b) NO RIGHT TO CONTINUED EMPLOYMENT, ETC. Nothing in the Plan or
in any award made pursuant thereto shall confer upon any Participant the
right to continue in the employ of the Company, or to be entitled to any
remuneration or benefits not set forth in the Plan or to interfere with
or limit in any way the right of the Company or any such Subsidiary or
Affiliate to terminate such Participant's employment.
(c) TAXES. The Company is authorized to withhold from any award
made or any payment relating to an award under the Plan, including from a
distribution of Stock, or any other payment to a Participant, amounts of
withholding and other taxes due in connection with any transaction
involving an award, and to take such other action as the Administrator
may deem advisable to enable the Company and Participants to satisfy
obligations for the payment of withholding taxes and other tax
obligations relating to any award. This authority shall include authority
to withhold or receive Stock or other property and to make cash payments
in respect thereof in satisfaction of a Participant's tax obligations.
(d) AMENDMENT AND TERMINATION OF THE PLAN. The Board of Directors
of the Company may at any time and from time-to-time alter, amend,
suspend, or terminate the Plan in whole or in part.
2
<PAGE>
(e) NO RIGHTS TO AWARDS; NO STOCKHOLDER RIGHTS. No Participant
shall have any right to any award under the Plan, and there is no
obligation for uniformity of treatment of Participants. Except as
provided specifically herein, a Participant or a transferee of an award
shall have no rights as a stockholder with respect to any shares of Stock
issued in connection with an award until the date of the issuance of a
stock certificate to him for such shares.
(f) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute
an "unfunded" plan for incentive and deferred compensation. With respect
to any payments not yet made to a Participant pursuant to an award,
nothing contained in the Plan or any award shall give any such
Participant any rights that are greater than those of a general creditor
of the Company.
(g) NO FRACTIONAL SHARES. No fractional shares of Stock shall be
issued or delivered in connection with the payment of any award made
pursuant to the Plan. The Committee shall determine whether cash or other
property shall be paid in lieu of such fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.
(h) LISTING OR REGISTRATION OF STOCK. Each award is subject to the
requirement that, if at any time the Administrator determines, in its
absolute discretion, that the listing, registration or qualification of
Stock issuable in connection with the payment of an award under the Plan
is required by any securities exchange or under any state or federal law,
or the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with an award
or the issuance of Stock, no such payment shall be made or Stock issued,
in whole or in part, unless listing, registration, qualification, consent
or approval has been effected or obtained free of any conditions not
acceptable to the Administrator.
(i) GOVERNING LAW. The Plan and all determinations made and actions
taken pursuant hereto shall be governed by the laws of the State of
Maryland without giving effect to the conflict of laws principles
thereof.
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 35,948
<SECURITIES> 23,759
<RECEIVABLES> 24,586
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 91,720
<PP&E> 1,789,194
<DEPRECIATION> 215,724
<TOTAL-ASSETS> 2,220,471
<CURRENT-LIABILITIES> 0
<BONDS> 811,496
0
240,000
<COMMON> 415
<OTHER-SE> 914,648
<TOTAL-LIABILITY-AND-EQUITY> 2,220,471
<SALES> 0
<TOTAL-REVENUES> 76,157
<CGS> 0
<TOTAL-COSTS> 46,247
<OTHER-EXPENSES> (7,173)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,441
<INCOME-PRETAX> 21,642
<INCOME-TAX> 0
<INCOME-CONTINUING> 21,642
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,642
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.43
</TABLE>
