EXHIBIT 10.4
INTRA-COMPANY SUBORDINATION AGREEMENT
This INTRA-COMPANY SUBORDINATION AGREEMENT (together with all
amendments and supplements hereto, this "AGREEMENT"), is dated as of November 6,
2001, by and among AIMCO PROPERTIES, L.P., a Delaware limited partnership
("AIMCO"), AIMCO/BETHESDA HOLDINGS, INC., a Delaware corporation
("AIMCO/BETHESDA"), and NHP MANAGEMENT COMPANY, a District of Columbia
corporation ("NHP MANAGEMENT") (AIMCO, AIMCO/Bethesda and NHP Management are
jointly and severally collectively referred to herein as the "COMPANIES"), each
of the parties designated as a "LENDER" on Annex 1 attached hereto (each, AN
"INTRA-COMPANY LENDER", and collectively, the "INTRA-COMPANY LENDERS"), and BANK
OF AMERICA, N.A. as Administrative Agent for and representative of the financial
institutions party to the Credit Agreement (as defined herein) (in such capacity
herein called the "AGENT"). Capitalized terms used in this Agreement without
definition have the meanings specified in the Credit Agreement.
RECITALS
A. In accordance with that certain Third Amended and Restated Credit
Agreement (the "CREDIT AGREEMENT"), dated of even date herewith, by and among
the Companies, Bank of America (as Administrative Agent and as a Lender), Fleet
National Bank (as Syndication Agent and as a Lender), First Union National Bank
(as Documentation Agent and as a Lender) and the other Lenders from time to time
party thereto, such Lenders have made or intend to make a $400,000,000 credit
facility to the Companies. As used herein, the term "Credit Facility" shall
refer individually to each of the credit facilities available to the Companies
under the Credit Agreement and shall refer collectively to all such credit
facilities, including, without limitation, all obligations with respect to
principal, premium, if any, interest, and default interest, if any, and all
other obligations secured by the Loan Documents.
B. Each of the Intra-Company Lenders has made a loan or loans (each, an
"INTRA-COMPANY LOAN", and collectively the "INTRA-COMPANY LOANS") to certain
Subsidiaries of the REIT, Companies or any of their Subsidiaries and other
Persons in which the REIT, Companies or any of their Subsidiaries has any equity
interest (collectively, the "INTRA-COMPANY BORROWERS"). Each Intra-Company Loan
is in the principal amount described on Annex 1, and is evidenced by a
promissory note or notes dated as of the date set forth on Annex 1.
C. To induce the Lenders to make the Loans under the Credit Agreement,
each of the Intra-Company Lenders desires to subordinate the Intra-Company Loan
or Intra-Company Loans made by such Intra-Company Lender to the Credit Facility
and to the obligations of each of the guarantors (the "GUARANTORS") under the
Guaranty and to make certain agreements in favor of the Agent and the Lenders.
(As used herein, "APPLICABLE INTRA-COMPANY LOAN" means, with respect to any
Intra-Company Lender, an Intra-Company Loan made by such Intra-Company Lender to
an Intra-Company Borrower.)
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AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. Approval of Credit Facility. Each of the Intra-Company Lenders
acknowledges that it has received, and each Intra-Company Lender hereby consents
to, the Loan Documents.
2. Payment Subordination.
(a) Each Intra-Company Lender agrees that any Applicable
Intra-Company Loan is and shall be subject, subordinate and rendered junior, in
right of payment, to the prior indefeasible payment and performance in full, for
a period of time in excess of all applicable preference or other similar periods
under applicable bankruptcy, insolvency or creditors' rights laws, of the Credit
Facility and all obligations under the Loan Documents, including, without
limitation, all obligations of the Guarantors under the Guaranty.
(b) Each Intra-Company Lender agrees not to ask, demand, xxx for,
take or receive from an Intra-Company Borrower or any other Person, directly or
indirectly, in cash, securities or other property or by set-off or in any other
manner (including without limitation from or by way of collateral), payment of
all or any amounts owing with respect to any Applicable Intra-Company Loan; nor
to accept any such payment; and each of the Intra-Company Borrowers, and each of
the Companies agrees not to make any such payment; unless and until, in each
such case, the Credit Facility and all other obligations under the Loan
Documents, including, without limitation, all obligations of the Guarantors
under the Guaranty, shall have been indefeasibly paid and performed in full, for
a period of time in excess of all applicable preference or other similar periods
under applicable bankruptcy, insolvency or creditors' rights laws; provided,
however, payments may be made under Intra-Company Loans, other than the Finance
Subsidiary Loan, in accordance with Section 7.07 of the Credit Agreement.
3. In Furtherance of Subordination.
(a) Upon any distribution of all or any of the assets of any of
the Intra-Company Borrowers (i) in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to any of the
Intra-Company Borrowers or to any of their creditors, as such, or to its assets,
(ii) in the event of any liquidation, dissolution or other winding up of any of
the Intra-Company Borrowers, whether voluntary or involuntary and whether or not
involving insolvency or bankruptcy, (iii) in the event of any assignment for the
benefit of creditors or any other marshaling of assets and liabilities of any of
the Intra-Company Borrowers, or (d) in any manner inconsistent with the
provisions of this Agreement, then and in any such event the holder of the
Credit Facility shall receive indefeasible payment in full of all amounts due or
to become due (whether or not an Event of Default has occurred or the maturity
of the Credit Facility has been declared due and payable prior to the date on
which it would otherwise have become due and payable) on or in respect to the
Credit Facility, including any post-petition interest thereon, before any of the
Intra-Company
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Lenders is entitled to receive any payment on account of principal of (or
premium, if any) or interest on any Applicable Intra-Company Loan.
(b) Except as permitted under the Credit Agreement, each
Intra-Company Lender agrees that, so long as the Credit Facility shall remain
unpaid, such Intra-Company Lender shall not loan or advance any additional funds
to the Companies, the REIT, or any of their respective Subsidiaries, other than
the Applicable Intra-Company Loan.
(c) Subject to the provisions in Section 2(b) hereof, all
payments with respect to an Intra-Company Loan or distributions received by an
Intra-Company Lender contrary to the provisions of this Agreement shall be
received in trust for the benefit of the Lenders, shall be segregated from other
funds and property held by such Intra-Company Lender, and shall be forthwith
paid over to the Agent for the ratable benefit of the Lenders in the same form
as so received (with any necessary endorsement) to be applied (in the case of
cash) to, or held as collateral (in the case of non-cash property or securities)
for, the payment or prepayment of the Credit Facility.
4. No Commencement of Any Proceedings. Each Intra-Company Lender agrees
that, so long as the Credit Facility shall remain unpaid, such Intra-Company
Lender will not commence, or join with any creditor other than Lenders in
commencing, or cause the Intra-Company Borrower to commence, any proceeding
referred to in Section 3(a).
5. No Disposition or Amendment of or Exercise of Remedies With Respect
to an Intra-Company Loan. So long as the Credit Facility remains unpaid, each
Intra-Company Lender agrees that it will not:
(a) Sell, assign, transfer, endorse, pledge, encumber or
otherwise enter into any Disposition of the Applicable Intra-Company Loan or any
interest therein except as expressly permitted under the Credit Agreement; or
(b) Enter into any amendment, modification, extension, renewal or
replacement of or accept any collateral or guaranty for any Applicable
Intra-Company Loan except as expressly permitted under the Credit Agreement; or
(c) Take, or permit to be taken, any action to assert, collect or
enforce any Applicable Intra-Company Loan or any part thereof, or to exercise
any of such Intra-Company Lender's remedies with respect to any Applicable
Intra-Company Loan.
6. Rights and Obligations hereunder Not Affected. All rights and
interests of the Agent and the Lenders hereunder, and all agreements and
obligations of each Intra-Company Lender, the Companies, and each Intra-Company
Borrower under this Agreement, shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of the Loan Documents
or any other documents evidencing or securing the Credit Facility;
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(b) any change in the time, manner or place of payment of, or in
any other term of, the Credit Facility, or any other amendment or waiver of or
any consent to departure from the Loan Documents;
(c) any exchange, release or non-perfection of any collateral for
or of any Person liable for all or any of the Credit Facility; or
(d) the rescission or return of any payment on account of the
Credit Facility by any Lender upon the insolvency, bankruptcy or reorganization
of the Companies, the REIT, any of the Intra-Company Borrowers, or any of the
Guarantors, or otherwise, all as though such payment had not been made.
7. Representations and Warranties. The Companies and each Intra-Company
Lender represents and warrants to the Agent and the Lenders that:
(a) Each Intra-Company Lender that is a corporation, partnership,
or limited liability company:
(i) Is duly organized (or formed, in the case of a
partnership or limited liability company), validly existing and in good standing
under the laws of the jurisdiction of its organization; and
(ii) Has the power and authority and all governmental
licenses, authorizations, consents and approvals to perform its obligations
under this Agreement.
(b) The execution, delivery and performance by each Intra-Company
Lender of this Agreement has been duly authorized by all necessary partnership
or other organizational action, and do not and will not:
(i) Contravene the terms of any Intra-Company Lender's
Organization Documents;
(ii) Conflict with, or result in any breach or contravention
of, or the creation of any Lien under, any document evidencing any Contractual
Obligation, to which each Intra-Company Lender is a party or any order,
injunction, writ or decree of any Governmental Authority to which each
Intra-Company Lender or its Properties are subject; or
(iii) Violate any Requirement of Law.
(c) 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, each Intra-Company Lender of this Agreement.
(d) This Agreement constitutes the legal, valid and binding
obligation of each Intra-Company Lender, enforceable against each such
Intra-Company Lender in accordance with its respective terms, except as
enforceability may be limited by applicable bankruptcy,
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insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
(e) All representations and warranties of the Companies with
respect to each Intra-Company Lender and each Intra-Company Borrower (whether
expressly or as a Subsidiary) set forth in the Credit Agreement and the other
Loan Documents are true and correct in all material respects as if made on the
date hereof.
8. Waivers. No waiver of any provision of this Agreement shall in any
event be effective unless the same shall be in writing and signed by the Agent
with any required consent from the Lenders, and then only in the specific
instance and for the specific purpose for which given. Any waiver, forbearance,
failure or delay by the Agent or any Lender in exercising any right, power or
remedy, shall not preclude the further, simultaneous or later exercise thereof,
and every right, power or remedy of the Agent or any Lender shall continue in
full force and effect until such right, power or remedy is specifically waived
in a writing executed by the Agent with any required consent from the Lenders.
9. Cumulative Rights. The rights, powers and remedies of the Agent and
the Lenders under this Agreement shall be in addition to all rights, powers and
remedies given to the Agent and the Lenders by virtue of any statute or rule of
law, the Credit Agreement, or any other agreement, all of which rights, powers
and remedies shall be cumulative and may be exercised successively or
concurrently.
10. Assignment; Successors and Assigns. Each Intra-Company Lender
hereby represents to the Agent and the Lenders that it has not assigned or sold
any interest in any Applicable Intra-Company Loan as of the Closing Date. This
Agreement shall bind the Agents, the Lenders, each Intra-Company Lender, the
Companies, and each Intra-Company Borrower, and their successors and assigns and
shall inure to the benefit of their respective successors and assigns.
11. Counterpart Originals. This Agreement may be executed in
counterpart originals, each of which shall constitute the same agreement.
12. Choice of Law. This Agreement shall be governed by and construed in
accordance with the substantive laws of the State of California, without respect
to conflicts or choice of law rules.
13. Intentionally Omitted.
14. Severability. Every provision of this Agreement is intended to be
severable. In the event any term, provision, section or subsection of this
Agreement is declared to be illegal or invalid, for any reason whatsoever, by a
court of competent jurisdiction, such illegality or invalidity shall not affect
the other terms, provisions, sections or subsections of this Agreement, which
shall remain binding and enforceable.
15. Integration; Modifications. This Agreement and the Loan Documents
(a) integrate all the terms and conditions mentioned in or incidental to this
Agreement and the Loan Documents, (b) supersede all oral negotiations and prior
writings with respect to their subject
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matter, and (c) are intended by the parties as the final expression of the
agreement with respect to the terms and conditions set forth in this Agreement
and the Loan Documents. No representation, understanding, promise or condition
shall be enforceable against any party unless it is contained in the Loan
Documents. This Agreement may not be modified except in a writing signed by the
Agent with any required consent of the Lenders, the Companies, and with respect
to any Intra-Company Loan affected thereby, the applicable Intra-Company
Borrower and Intra-Company Lender.
16. Attorney Costs. If any lawsuit, reference or arbitration is
commenced which arises out of, or which relates to this Agreement, including any
alleged tort action, regardless of which party commences the action, the
prevailing party shall be entitled to recover from each other party to such
action such sums as the court, referee or arbitrator may adjudge to be
reasonable Attorney Costs in the action or proceeding, in addition to costs and
expenses otherwise allowed by law. Any such Attorney Costs incurred by either
party in enforcing a judgment in its favor under this Agreement shall be
recoverable separately from and in addition to any other amount included in such
judgment, and such attorneys' fees obligation is intended to be severable from
the other provisions of this Agreement and to survive and not be merged into any
such judgment.
17. Other Intra-Company Indebtedness. If the Companies, any of the
Intra-Company Lenders, or any of the Intra-Company Borrowers are either an
obligor or an obligee with respect to "Intra-Company Debt" (and whether any such
parties originated the applicable loan or accepted such loan by assignment, or
originally incurred such debt or assumed such debt), and such Intra-Company Debt
is not scheduled on Annex 1 hereto, each of the Companies, the Intra-Company
Lenders, and the Intra-Company Borrowers agrees that such Intra-Company Debt
shall be considered an "Intra-Company Loan" for all purposes hereunder, the
applicable obligor and obligee with respect to such Intra-Company Loan shall be
deemed an Intra-Company Borrower or Intra-Company Lender, respectively,
hereunder, and all representations, warranties, covenants, and other provisions
herein shall apply with respect thereto.
18. Further Assurances. Each of the Companies, the Intra-Company
Lenders, and the Intra-Company Borrowers agrees to execute and deliver such
additional instruments and agreements and to undertake such further acts as may
be deemed necessary or appropriate by the Agent or the Lenders in order to
effectuate the provisions of this Agreement.
19. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST INTRA-COMPANY LENDERS ARISING OUT OF OR RELATING TO
THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE COURT
OF COMPETENT JURISDICTION IN THE STATE OF CALIFORNIA OR IN THE UNITED STATES
DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA. BY EXECUTING AND
DELIVERING THIS AGREEMENT, EACH INTRA-COMPANY LENDER, FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO EACH SUCH
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INTRA-COMPANY LENDER AT ITS ADDRESS SET FORTH IN ANNEX 1 ATTACHED HERETO; (IV)
AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER EACH SUCH INTRA-COMPANY LENDER IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT; (V) AGREES THAT BANK OF AMERICA RETAINS THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST ANY
INTRA-COMPANY LENDER IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES
THAT THE PROVISIONS OF THIS SECTION 19 RELATING TO JURISDICTION AND VENUE SHALL
BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER CALIFORNIA
CODE OF CIVIL PROCEDURE SECTION 410.40 OR OTHERWISE.
20. Waiver of Jury Trial. EACH INTRA-COMPANY LENDER AND EACH OTHER
PARTY TO THIS AGREEMENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT. The scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Each party hereto acknowledges that this waiver is a material inducement for the
parties hereto to enter into a business relationship, that each party hereto has
already relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Each party
hereto further warrants and represents that each has reviewed this waiver with
its legal counsel, and that each knowingly and voluntarily waives its jury trial
rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE,
MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 20 AND EXECUTED BY
EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
21. Provisional Remedies, Self-Help and Foreclosure. No provision of
this Agreement 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.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first set forth above.
COMPANIES
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, INC.,
a Delaware corporation,
its general partner
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
AIMCO/BETHESDA HOLDINGS INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
NHP MANAGEMENT COMPANY,
a District of Columbia corporation
By: /s/ XXXXXXX XXXX
-------------------------------------
Xxxxxxx Xxxx
Executive Vice President
EACH OF THE INTRA-COMPANY LENDERS
AIMCO HOLDINGS QRS, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
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AIMCO PROPERTIES FINANCE CORP.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
AIMCO PROPERTIES FINANCE
PARTNERSHIP, L.P.,
a Delaware limited partnership
By: AIMCO PROPERTIES FINANCE CORP.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
AIMCO/OTC QRS, INC.,
a Delaware corporation
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
CONSOLIDATED CAPITAL
INSTITUTIONAL PROPERTIES,
a California limited partnership
By: CONCAP EQUITIES, INC.
a Delaware corporation,
General Partner
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
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CONSOLIDATED CAPITAL
INSTITUTIONAL PROPERTIES/II,
a California limited partnership
By: CONCAP EQUITIES, INC.
a Delaware corporation,
General Partner
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------------
Xxxxx X. Xxxxxxxxx
President
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ADMINISTRATIVE AGENT
BANK OF AMERICA, N.A.
as Administrative Agent
By: /s/ XXXXX XXXXXXX
-------------------------------------
Xxxxx Xxxxxxx
Principal
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