CONSENT, MODIFICATION, ASSUMPTION OF INDEMNITY
OBLIGATIONS AND
RELEASE AGREEMENT
THIS
CONSENT, ASSUMPTION OF INDEMNITY OBLIGATIONS AND RELEASE
AGREEMENT is entered into
as of the ___ of ____________, 2004 (“ Agreement
”), by and among JEFFERSON AT SUNSET VALLEY, L.P., a
Texas limited partnership (“ Borrower ”), JPI
PORTFOLIO I GP1 LLC, a Texas limited liability company (“
Existing GP ”), JPI PORTFOLIO I, L.P., a Texas
limited partnership(“ Existing LP ” and
collectively with the Existing GP, the “ Existing
Partners ”), JPI INVESTMENT COMPANY, L.P., a
Texas limited partnership (the “ Existing Indemnitor
”), LASALLE BANK NATIONAL ASSOCIATION (f/k/a LaSalle
National Bank), as Trustee (“ Trustee ”) under
that certain Pooling and Servicing Agreement dated March 1, 1999
(“PSA”) for Certificateholders of COMM 1999-1
Commercial Mortgage Pass-Through Certificates (the “
Lender ”), ORIX CAPITAL MARKETS, LLC (f/k/a Banc One
Mortgage Capital Markets, L.P.), as Servicer pursuant to the PSA
(“ Servicer ”), MAC OF DELAWARE, INC., a
Delaware corporation (“ New GP ”), MID-AMERICA
APARTMENTS, L.P., a Tennessee limited partnership (“ New
LP ” and collectively with the New GP, the “ New
Partners ”) and MID-AMERICA APARTMENTS OF TEXAS,
L.P., a Texas limited partnership, MID-AMERICA APARTMENTS,
L.P., a Tennessee limited partnership, and MID-AMERICA
APARTMENT COMMUNITIES, INC., a Tennessee corporation (each a
“ New Indemnitor ” and collectively the “
New Indemnitors ”).
RECITALS
The
Borrower is indebted to the Lender (as hereinafter defined) for a
loan in the original principal amount of $11,380,000.00 (the
“ Loan ”), which is evidenced by a Promissory
Note dated as of September 28, 1998, in said principal amount (the
“ Note ”) payable by the Borrower to the order
of German American Capital Corporation, a Maryland corporation
(“ Original Lender ”), which Note is
currently held by the Trustee for the benefit of Lender. The
Loan is secured by, among other things, that certain Deed of Trust
and Security Agreement dated as of September 28, 1998 (“
Security Instrument ”), from the Borrower to Original
Lender as assigned by that certain Assignment of Deed of Trust and
Security Agreement dated as of July 22, 1999, from Borrower to
Trustee for the benefit of Lender, encumbering certain improved
real estate described in the Security Instrument and located in
Travis County, Texas (“ Mortgaged Property
”).
The
Existing Partners and the New Partners have agreed that the
Existing Partners shall transfer and assign 100% of their
partnership interests in the Borrower to the New Partners.
Pursuant to Section 6.3 of the Security Instrument, the Borrower,
the Existing Partners, the New Partners, the Existing Indemnitor
and the New Indemnitors have requested that the Lender (i) consent
to the Existing Partners’ transfer and assignment of 100% of
their partnership interests in the Borrower to the New Partners
(“ Interest Transfer ”); (ii) release and
discharge the Existing Partners and the Existing Indemnitor from
their obligations arising after the date of this Agreement pursuant
to the Note, the Security Instrument and all other documents
evidencing, securing, or otherwise relating to the Loan
(collectively, the “ Loan Documents ”); and
(iii) agree to the execution by the New Indemnitors of the that
certain Guaranty (as defined hereinafter) and that certain
Environmental Indemnity Agreement (as defined hereinafter) (“
Assumption ”). The Lender is willing to grant
the foregoing request, but only upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and
other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and to induce the Lender to
consent to the transactions and events described in the foregoing
recitals, the parties hereto agree as follows:
1.
Consent and Release by the Lender. In reliance upon
and subject to the representations, warranties, conditions, and
covenants set forth herein, the Lender hereby consents to the
following:
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(a) The
absolute transfer and assignment by the Existing Partners of 100%
of the partnership interests in the Borrower to the New
Partners;
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(b) The
execution and delivery of that certain Assignment of Partnership
Interests and amendment to the partnership agreement of the
Borrower, dated as of _____________ (collectively, the “
Amended Partnership Documents ”);
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(d) The
release and discharge of the Existing Partners and the Existing
Indemnitor from their obligations arising after the date hereof
pursuant to the Note, the Security Instrument and all other Loan
Documents, subject to the terms and conditions of this Agreement;
and
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(e) The
execution by the New Indemnitors of the Guaranty and the
Environmental Indemnity Agreement.
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Nothing
herein shall be construed or interpreted as the Lender’s
consent to any subsequent changes, sale, transfer, or encumbrance
of any ownership interest in the Borrower or the Mortgaged
Property, and any such subsequent change, sale, transfer, or
encumbrance shall be governed by the provisions of Section 6.3 of
the Security Instrument, as amended.
The
foregoing is not a waiver of any other requirement of the Loan and
related Loan Documents and applies only to the specific consent
granted herein. The granting of such consent and the
execution of this Agreement in no way obligates the Lender, the
Servicer or any subsequent holder of the Note, to grant any future
consents or waivers nor does it establish in any way a pattern or
practice of dealing that the Borrower, the Existing Partners, the
Existing Indemnitor, the New Partners and the New Indemnitors may
rely upon in seeking any other consent or waiver.
2.
Assumption by the New Partners and the New Indemnitors.
The New Partners hereby adopt, ratify and confirm as
of the origination date of the Loan all of the representations,
warranties and covenants of the Existing Partners under the Loan
Documents (excluding the Original Guaranty [defined hereinafter]
and the Original Environmental Indmenity Agreement [defined
hereinafter]) as if the New Partners were the Existing Partners
named therein and jointly and severally assume all liability of the
Existing Partners under the Loan Documents.
2
New
Indemnitors have executed and delivered to the Lender that certain
Limited Indemnity Agreement dated of even date herewith (the
“ Guaranty ”) and that certain Environmental
Indemnity Agreement dated of even date herewith (the “
Environmental Indemnity Agreement ”).
The
New Partners hereby assume and agree to be bound by, and to pay and
perform, all covenants, representations, warranties, and other
obligations of the Existing Partners relating to or arising from
the Loan and the Loan Documents (excluding the Original Guaranty
and the Original Environmental Indemnity Agreement) to which they
are a party.
3.
Release of the Existing Partners and the Existing
Indemnitor. In reliance upon the representations,
warranties, covenants, and agreements set forth herein, and subject
to the conditions precedent set forth in Section 4 below, the
Lender hereby releases and discharges the Existing Partners and the
Existing Indemnitor from any and all liabilities and obligations
arising from or relating to the Loan and the Loan Documents,
provided that the Existing Partners or the Existing
Indemnitor are not released from any liability pursuant to (i) this
Agreement (except that they shall have no liability with respect to
any representation or warranty by New Partners or New Indemnitors)
or (ii) the provisions of the Limited Indemnity Agreement dated
September 29, 1998 made by the Existing Indemnitor for the benefit
of the Original Lender (the “ Original Guaranty
”), the Environmental Indemnity Agreement dated September 29,
1998 made by the Existing Indemnitor for the benefit of Original
Lender (the “ Original Environmental Indemnity
Agreement ”), Section 4.1 of the Security Instrument or
Section 6(b)(i)-(ix) of the Note, in each case, for any liability
that relates to the period prior to the date hereof regardless of
when any other condition giving rise to any such liability
thereunder is discovered. If any material element of the
representations and warranties contained herein made by the
Existing Partners or the Existing Indemnitor is false as of the
date of this Agreement or in the event the Existing Partners or the
Existing Indemnitor take or cause any other party hereto (other
than the Lender) to take any actions which are in contradiction
with the provisions of Paragraph 9 of this Agreement, then the
release set forth in this Paragraph 3 shall be deemed canceled
effective as of the date of this Agreement and the Existing Partner
or the Existing Indemnitor shall remain obligated under the Loan
Documents as though there had been no such release.
4.
Conditions Precedent. Notwithstanding anything to the
contrary in this Agreement, the Lender’s consent to the
transfer of the partnership interests and the other transactions
described herein are subject to the following conditions
precedent:
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(a) The
due execution and delivery of this Agreement;
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(b) The
due execution and delivery by the New Partners and the New
Indemnitors of the Guaranty and the Environmental Indemnity
Agreement, each in substantially the same form as executed by the
Existing Partners or the Existing Indemnitor in connection with the
Loan;
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(c) Upon
the closing of the Interest Transfer to the New Partners, the
Borrower is in compliance with the provisions of Section 10.4 of
the Security Instrument, as amended hereby, and Section 5.01 of the
Credit Agreement dated as of September 28, 1998 between the
Borrowers and the Original Lender (the “ Credit
Agreement ”);
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(d) The
Lender shall have received such legal opinions as may be reasonably
requested by the Lender in connection with the Interest Transfer,
including an enforceability, authorization and organization legal
opinion and a non-consolidation legal opinion;
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(e) The
Existing Partners or the Existing Indemnitor pay the Lender,
concurrently with the closing of the transfer of the Membership
Interest, all out-of-pocket costs and expenses, including, without
limitation, the transaction fee equal to 1.0% of the outstanding
principal balance of the Loan, which is required to be paid by the
Existing Partners or the Existing Indemnitor in consideration of
the consent to the Interest Transfer and to the Assumption,
reasonable attorneys’ fees incurred by the Lender in
connection with the Interest Transfer and the consummation of the
other transactions described herein (this paragraph does not affect
any separate agreement concerning such fees and expenses between
Existing Partners and New Partners);
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(f) The
Borrower shall have provided evidence satisfactory to the Lender
that the Borrower has fully satisfied the existing mezzanine loan
in the amount of $10,000,000.00 (the “ Mezzanine Loan
”), which Mezzanine Loan is secured by the beneficial
interests in the Existing Partners; and
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(g) The
Borrower and Mid-America Apartments, L.P., a Tennessee limited
partnership (the “ Property Manager ”) shall
have executed and delivered that certain Assignment of Management
Agreement, Consent and Agreement of Manager dated of even date
herewith.
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5.
Representations and Warranties of the Existing GP and the
Existing Indemnitor. As an inducement for the Lender to
grant the consent herein provided, the Existing GP and the Existing
Indemnitor represent and warrant to the Lender as
follows:
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(a) As
of the date hereof, no Event of Default (as such term is defined in
the Security Instrument), or to its knowledge, any event which with
the giving of notice or lapse of time, or both, would constitute an
Event of Default, exists under the Loan Documents;
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(b) There
are no setoffs, defenses, or counterclaims on the part of the
Borrower to the payment or performance of the obligations under the
Loan Documents.
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(c) They
do not have any knowledge that any of the representations,
warranties and certifications made by the Borrower in paragraph 7
below are not true and correct.
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The
Existing GP or the Existing Indemnitor understand and intend that
the Lender will rely on the representations and warranties
contained in this paragraph 5.
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6.
Representations and Warranties of the Borrower, New GP or the
New Indemnitors. As an inducement for the Lender to
grant the consent herein provided, the New GP and the New
Indemnitors represent and warrant to the Lender as
follows:
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(a) Upon
the closing of the Interest Transfer, the representations and
warranties contained in the Loan Documents shall be true and
correct;
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(b) The
New GP is a corporation duly formed, validly existing, and in good
standing under the laws of the State of Delaware and is qualified
to do business in the state of Texas, and the New LP is a limited
partnership duly formed, validly existing and in good standing
under the laws of the State of Tennessee; and
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(c) All
financial statements of the New Partners and the New Indemnitors
heretofore given and hereafter to be given to the Lender are and
will be true and complete in all respects as of their respective
dates and prepared in accordance with generally accepted accounting
principles consistently applied, and fairly represent the financial
conditions of the business or persons to which they pertain, and no
materially adverse change has occurred in the financial conditions
reflected therein since the respective dates thereof.
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(d) The
financial statements of the New Indemnitors furnished to the Lender
pursuant to the request for consent to the Interest Transfer
reflect in each case a positive net worth as of the date
thereof. The financial condition of the New Indemnitors has
not significantly deteriorated from that reflected in the most
recently provided financial statements.
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(e) The
financial statements of the Borrower (and those of its principals)
furnished to the Lender pursuant to the request for consent to the
Interest Transfer and the Assumption, reflect in each case a
positive net worth as of the date thereof.
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(f) After
the Interest Transfer and the Assumption, New GP will cause
Borrower to have sufficient working capital, including cash flow
from the Mortgaged Property, not only to adequately maintain the
Mortgaged Property, but also to pay all of the Borrower’s
outstanding debts as they come due. All closing funds are
contributed as a capital contribution and are not secured, directly
or indirectly, by an interest in the Borrower or any other
collateral assigned to the Lender.
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They
do not have any knowledge that any of the representations,
warranties and certifications made by the Borrower in paragraph 7
below are not true and correct.
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The
New GP and the New Indemnitors agree that the foregoing
representations and warranties shall be binding upon the New GP and
the New Indemnitors and that the falsity or inaccuracy of any of
the foregoing representations and warranties in any material
respect shall constitute an “Event of Default” pursuant
to the Security Instrument and the other Loan Documents that arises
after the date of this Agreement.
7.
Representations of the Borrower. The Borrower
acknowledges, represents, certifies and warrants to the Lender as
of the date of this Agreement that:
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(a) As
of October 29, 2004, the Note has an unpaid principal balance as of
the date of this Agreement, of $10,668,026.28 and prior to default
bears interest at the rate of 6.9825% per annum, subject to
adjustment as set forth in the Security Instrument. There is
presently a balance of $375,755.04 in the tax escrow account, a
balance of $0.00 in the insurance escrow account, a balance of
$20,658.03 in the replacement reserves escrow account, and a
balance of $37,526.32 in the reserves escrow account, maintained by
the Lender in connection with the Loan.
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(b) The
Note requires that monthly payments of principal and interest in
the amount of $77,133.43 be made on or before the first day of each
month, continuing to September 28, 2008, the Maturity Date (as such
term is defined in the Note), at which time the balance of said
principal sum and all accrued but unpaid interest shall be due and
payable, pursuant to the terms and conditions of the Security
Instrument.
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(c) The
Security Instrument is a valid first lien on the Mortgaged Property
for the full unpaid principal amount of the Loan and all other
amounts as stated in the Loan Documents.
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(d) There
are no defenses, offsets or counterclaims to the Note, the Security
Instrument or the other Loan Documents.
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(e) There
are no defaults by the Borrower under the provisions of the Note,
the Security Instrument or the other Loan Documents, nor are there
any conditions which with the giving of notice or the passage of
time or both may constitute a default by the Borrower under the
provisions of the Note, the Security Instrument or the other Loan
Documents.
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(f) All
provisions of the Note, the Security Instrument and the other Loan
Documents are valid, in full force and effect and enforceable in
accordance with their terms.
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(g) Except
Permitted Encumbrances and other matters permitted by the Security
Instrument, there are no subordinate liens of any kind covering or
relating to the Mortgaged Property, nor are there any recorded
mechanics liens or liens for unpaid taxes or assessments
encumbering the Mortgaged Property, nor has notice of a lien or
notice of intent to file a lien been received that has not been
resolved. There are not presently pending any special
assessments against the Mortgaged Property or any part
thereof.
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(h) Except
as set forth in the Disclosure Schedule (as defined in the Security
Instrument) attached to the Security Instrument, the Mortgaged
Property and the Improvements (as defined in the Security
Instrument) and the current intended use thereof by Borrower comply
in all material respects with all applicable restrictive covenants,
zoning ordinances, subdivision and building codes, flood disaster
laws, health and environmental laws and regulations and all other
ordinances, orders or requirements issued by any state, federal or
municipal authorities having or claiming jurisdiction over the
Mortgaged Property. The Mortgaged Property and Improvements
do not require any rights over, or restrictions against,
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