EXHIBIT 10.1
REPAIR ESCROW AGREEMENT
This REPAIR ESCROW AGREEMENT ("Agreement") is made and entered into this
______ day of July, 1998, by and between FOX STRATEGIC HOUSING INCOME PARTNERS,
a California limited partnership ("Borrower"), and NEWPORT MORTGAGE COMPANY,
L.P., a Texas limited partnership ("Lender") and its successors and assigns.
W I T N E S S E T H:
WHEREAS, Lender has agreed to make and Borrower has agreed to accept the
Loan, which is to be evidenced by the Note and secured by the Security
Instrument encumbering the Property described on Exhibit "A" attached to, and
incorporated into, this Agreement by reference;
WHEREAS, as a condition of making the Loan, Lender is requiring Borrower to
make the Repairs to the Improvements, which Repairs are generally described in
the Schedule of Work attached to this Agreement as Exhibit "B";
WHEREAS, in order to assure that the Repairs are made and paid for in a
timely manner, Lender is requiring Borrower to establish the Repair Escrow Fund
with Lender pursuant to the terms of this Agreement; and
WHEREAS, Lender and Borrower are desirous of reducing to writing all of
their agreements regarding the Repair Escrow Fund.
NOW, THEREFORE, for and in consideration of the Loan, the mutual promises
and covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender and Borrower
agree as follows:
1. Definitions. The following terms used in this Agreement shall have the
meanings set forth below in this Paragraph 1:
(a) "Completion Date" means the date which is one hundred eighty (180)
days after the date of this Agreement or
, 1999.
(b) "Disbursement Request" means Borrower's written requests to Lender in
the form attached to this Agreement as Exhibit "C" for the
disbursement of money from the Repair Escrow Fund pursuant to
Paragraph 3 below, which requests shall not be made more often than
once every thirty (30) days during the term of this Agreement.
(c) "Improvements" means the multifamily apartment project known as Wood
View Apartments and situated upon the Property.
(d) "Jurisdiction" means the State in which the Property is located.
(e) "Loan" means the loan from Lender to Borrower in the original
principal amount of Five Million Six Hundred Thousand Dollars
($5,600,000.00), as evidenced by the Note and secured by the Security
Instrument.
(f) "Loan Documents" means, collectively, the Note, Security Instrument,
this Agreement and all other instruments and documents executed in
connection with the Loan.
(g) "Minimum Disbursement Request Amount" means Five Thousand and No/100
Dollars ($5,000.00).
(h) "Note" means the promissory note from Borrower to Lender evidencing
the Loan.
(i) "Property" means the real property described on the attached
Exhibit "A".
(j) "Repairs" means the repairs to be made to the Improvements, as
described on the attached Exhibit "B" or as otherwise required by
Lender in accordance with this Agreement.
(k) "Repair Escrow Fund" means the sum of Twenty-One Thousand Seven
Hundred Fifty Dollars and No/100 ($21,750.00) deposited into escrow
with Lender as of the date of this Agreement, together with interest,
if any, to be held in accordance with the provisions of this
Agreement.
(l) "Schedule of Work" means the schedule of work for the Repairs
attached to this Agreement as Exhibit "B".
(m) "Security Instrument" means the mortgage, deed of trust, deed to
secure debt, or other similar security instrument encumbering the
Property and securing Borrower's performance of its Loan obligations.
2. Repair Escrow Fund.
(a) Establishment. Lender hereby acknowledges that Borrower has
established the Repair Escrow Fund by depositing the amount of the
Repair Escrow Fund with Lender. Borrower and Lender agree that all
moneys deposited into the Repair Escrow Fund shall be held by Lender
in an interest bearing account if Lender estimates that the Repairs
will require longer than ninety (90) days to complete, and any
interest earned on such moneys shall be added to the principal balance
of the Repair Escrow Fund and disbursed in accordance with the
provisions of this Agreement. Lender shall be entitled to deduct from
the Repair Escrow Fund a one time fee in the amount of zero Dollars ($
-0-) for establishing the Repair Escrow Fund. Lender shall not be
responsible for any losses resulting from investment of moneys in the
Repair Escrow Fund or for obtaining any specific level or percentage
of earnings on such investment.
(b) Use. The Repair Escrow Fund shall, except as otherwise stated in this
Agreement, be used for the purpose of paying, or reimbursing Borrower
for, the costs of the Repairs.
3. Disbursements. From time to time, as construction and completion of the
Repairs progresses, upon Borrower's submission of a Disbursement Request in
the form attached to this Agreement as Exhibit C, and provided that
Borrower is in full compliance with all the applicable conditions set forth
in this Agreement and in the other Loan Documents, Lender shall make
disbursements from the Repair Escrow Fund for payment or reimbursement of
the actual costs of the Repairs. Borrower's Disbursement Request shall be
signed by Borrower, and Borrower shall include with its Disbursement
Request a report setting out the progress of the Repairs and any other
reports or information relating to the construction of the Repairs that may
be reasonably requested by Lender. Borrower also shall include with each
Disbursement Request copies of any applicable invoices and/or bills and
appropriate lien waivers for the prior period for which disbursement was
made, executed by all contractors and suppliers supplying labor or
materials for the Repairs, and, unless waived by Lender in writing, a
report prepared by the professional engineer employed by Lender as to the
status of the Repairs. Except for the final Disbursement Request, no
Disbursement Request shall be for an amount less than the Minimum
Disbursement Request Amount.
4. Reporting Requirements; Completion. Prior to receiving the final
disbursement from the Repair Escrow Fund, Borrower shall deliver to Lender,
in addition to the information required by Paragraph 3 above, the
following:
(a) Contractor's Certificate. A certificate signed by each major
contractor and supplier of materials, as reasonably determined by
Lender, engaged to provide labor or materials for the Repairs to the
effect that such contractor or supplier has been paid in full for all
work completed and that the portion of the Repairs provided by such
contractor or supplier has been fully completed in accordance with the
plans and specifications (if any) provided to it by Borrower and that
such portion of the Repairs is in compliance with all applicable
building codes and other rules and regulations promulgated by
applicable regulatory or governmental authorities;
(b) Borrower's Certificate. A certificate signed by Borrower to the
effect that the Repairs have been fully paid for, that all money
disbursed hereunder has been used for the Repairs and no claim or
claims exist against the Borrower or against the Property or
Improvements out of which a lien based on furnishing labor or material
exists or might ripen. Borrower may except from the certificate
described in the preceding sentence any claim or claims that Borrower
intends to contest, provided that any such claim or claims are
described in Borrower's certificate and Borrower certifies to Lender
that the Repair Escrow Fund is sufficient to make payment of the full
amount which might in any event be payable in order to satisfy such
claim or claims. If required by Lender, Borrower also shall certify
to Lender that such portion of the Repairs is in compliance with all
applicable zoning ordinances;
(c) Engineer's Certificate. A certificate signed by the professional
engineer employed by Lender to the effect that the Repairs have been
completed in a good and workmanlike manner in compliance with the
Schedule of Work and all applicable building codes, zoning ordinances
and other rules and regulations promulgated by applicable regulatory
or governmental authorities; and
(d) Other Certificates. Any other certificates of approval, acceptance or
compliance required by Lender from or by the city, county, state or
federal governmental authorities having jurisdiction over the Property
and the Repairs.
5. Indirect and Excess Disbursements. Lender, in its sole judgment, is
authorized to hold, use and disburse the Repair Escrow Fund to pay any and
all costs, charges and expenses whatsoever and howsoever incurred or
required in connection with the construction and completion of the Repairs,
or in the payment or performance of any obligation of Borrower to Lender.
If Lender, for purposes specified in this Paragraph 5, shall elect to pay
any portion of the Repair Escrow Fund to parties other than Borrower, then
Lender may do so, at any time and from time to time, and the amount of
advances to which Borrower shall be entitled under this Agreement shall be
correspondingly reduced.
6. Schedule of Work. All disbursements from the Repair Escrow Fund shall be
limited to the costs of those items set forth on the Schedule of Work
attached to this Agreement as Exhibit "B".
7. Repairs. Borrower covenants and agrees with Lender as follows:
(a) Commencement of Work. Prior to the recordation of the Security
Instrument, no work of any kind has been or will be commenced or
performed upon the Property and no materials or equipment have been or
will be delivered to or upon the Property.
(b) Construction. Borrower will commence the Repairs as soon as
practicable after the date of this Agreement and will diligently
proceed with and complete the Repairs on or before the Completion Date
in a workmanlike manner and in accordance with the Schedule of Work,
good building practices and all applicable laws, ordinances, rules and
regulations.
(c) Changes in Schedule of Work . Without the prior written consent of
Lender, Borrower will make no departures from or alterations to the
Schedule of Work.
(d) Inspections. Borrower will permit Lender or any person designated by
Lender (including without limitation a professional inspection
engineer) and any interested governmental authority, at any time and
from time to time, to inspect the Repairs and Improvements and to
examine and copy all of Borrower's books and records and all contracts
and bills pertaining to the Repairs and Improvements. Lender shall be
entitled to deduct from the Repair Escrow Fund reasonable fees for
performing any such inspections and/or an amount sufficient to
reimburse Lender for all fees and expenses charged by any professional
inspection engineer employed by Lender in connection with any such
inspection. Borrower agrees to cause the replacement of any material
or work that is defective, unworkmanlike, does not comply with any
applicable law, ordinance, rule or regulation, or does not comply with
the requirements of this Agreement, as determined by Lender. Prior to
and as a condition of the final disbursement of funds from the Repair
Escrow Fund, Lender shall inspect or cause to be inspected the Repairs
and the Improvements to determine that all Repairs, including but not
limited to interior and exterior repairs have been completed in a
manner acceptable to Lender.
(e) Purchases. Without the prior written consent of Lender, no materials,
machinery, equipment, fixtures or any other part of the Repairs shall
be purchased or installed under conditional sale contracts or lease
agreements, or any other arrangement wherein title to such Repairs is
retained or subjected to a purchase money security interest, or the
right is reserved or accrues to anyone to remove or repossess any such
Repairs, or to consider them as personal property.
8. Lien Protection. Borrower shall promptly pay or cause to be paid, when
due, all costs, charges and expenses incurred in connection with the
construction and completion of the Repairs, and shall keep the Property and
Improvements free and clear of any and all liens other than the lien of the
Security Instrument and any other junior lien which may be consented to by
Lender.
9. Adverse Claims. Borrower shall promptly advise Lender in writing of any
litigation, liens, or claims affecting the Property and of all complaints
and charges made by any governmental authority or any governmental
department, bureau, commission or agency exercising supervision or control
over Borrower or its business, which may delay or adversely affect the
Repairs.
10. Compliance With Laws; Insurance Requirements.
(a) Compliance With Laws. All Repairs shall comply with all applicable
laws, ordinances, rules and regulations of all governmental
authorities having jurisdiction over the Property and applicable
insurance requirements including, without limitation, applicable
building codes, special use permits, environmental regulations, and
requirements of insurance underwriters.
(b) Insurance Requirements. In addition to any insurance required under
the Loan Documents, Borrower shall provide or cause to be provided
workers' compensation, builder's risk (if required by Lender), and
public liability insurance and other insurance required under
applicable law in connection with any of the Repairs. All such
policies shall be in form and amount satisfactory to Lender. All such
policies which can be endorsed with standard mortgage clauses making
losses payable to Lender or its assigns shall be so endorsed. The
originals of such policies shall be deposited with Lender.
11. Use of Repair Escrow Fund. Borrower will accept disbursements from the
Repair Escrow Fund in accordance with the provisions of this Agreement and
will use, or cause to be used, each such disbursement solely to pay for
materials, labor and services, or to pay costs and expenses for which such
disbursement is requested.
12. Conditions Precedent. Lender shall not be obligated to make any
disbursement from the Repair Escrow Fund to or for the benefit of Borrower
unless at the time of each Disbursement Request all of the following
conditions prevail:
(a) No Default. There shall exist no condition, event or act which would
constitute a default (with or without notice and/or lapse of time)
under this Agreement or any other Loan Document.
(b) Representations and Warranties. All representations and warranties of
Borrower set forth in this Agreement and in the Loan Documents are
true.
(c) Continuing Compliance. Borrower shall be in full compliance with the
provisions of this Agreement, the other Loan Documents and any request
or demand by Lender permitted hereby.
(d) No Lien Claim. No lien or claim based on furnishing labor or
materials has been filed or asserted against the Property or the
Improvements, unless Borrower has properly provided bond or other
security against loss in accordance with applicable law.
(e) Approvals. All licenses, permits, and approvals of governmental
authorities required for the Repairs as completed to the applicable
stage have been obtained.
(f) Legal Compliance. The Repairs as completed to the applicable stage do
not violate any laws, ordinances, rules or regulations, or building
lines or restrictions applicable to the Property.
13. Right to Complete Repairs. If Borrower abandons or fails to proceed
diligently with the Repairs or otherwise is in default under this
Agreement, Lender shall have the right (but not the obligation) to enter
upon the Property and take over and cause the completion of the Repairs.
Any contracts entered into or indebtedness incurred upon the exercise of
such right may be in the name of Borrower, and Lender is hereby irrevocably
appointed the attorney in fact of Borrower, such appointment being coupled
with an interest, to enter into such contracts, incur such obligations,
enforce any contracts or agreements made by or on behalf of Borrower
(including the prosecution and defense of all actions and proceedings in
connection with the Repairs and the payment, settlement, or compromise of
all claims for materials and work performed in connection with the Repairs)
and do any and all things necessary or proper to complete the Repairs
including signing Borrower's name to any contracts and documents as may be
deemed necessary by Lender. In no event shall Lender be required to expend
its own funds to complete the Repairs, but Lender may, in Lender's sole
discretion, advance such funds. Any funds advanced shall be added to the
outstanding balance of the Note, secured by the Security Instrument and
payable to Lender by Borrower in accordance with the provisions of the
Security Instrument pertaining to the protection of Lender's security and
advances made by Lender. Borrower waives any and all claims it may have
against Lender for materials used, work performed or resultant damage to
the Property.
14. Insufficient Account. If Lender determines in its reasonable discretion
that the Repair Escrow Fund is insufficient to pay for the Repairs, Lender
shall so notify Borrower, in writing, and as soon as possible (but in no
event later than twenty (20) days after such notice) Borrower shall pay to
Lender an amount, in cash, equal to such deficiency, which amount shall be
placed in the Repair Escrow Fund by Lender.
15. Security Agreement. Borrower hereby conveys, pledges, transfers and grants
to Lender and its successors and assigns a security interest pursuant to
the Uniform Commercial Code of the Jurisdiction and other applicable laws
in and to all money in the Repair Escrow Fund as such may increase or
decrease from time to time for the purpose of securing Borrower's
obligations under this Agreement and to further secure Borrower's
obligations under the Note, Security Instrument and other Loan Documents.
16. Post Default. If Borrower defaults in the performance of its obligations
under this Agreement or under the Note, Security Instrument or any other
Loan Document, Lender and its successors and assigns shall have all
remedies available to them under Article 9 of the Uniform Commercial Code
of the Jurisdiction and under any other applicable laws and, in addition,
may retain all moneys in the Repair Escrow Fund, including interest, and in
Lender's discretion, may apply such amounts, without restriction and
without any specific order of priority, to the payment of any and all
indebtedness or obligations of Borrower set forth in the Note, Security
Instrument or other Loan Documents, including, but not limited to,
principal, interest, taxes, insurance, reasonable attorneys' fees actually
incurred and/or repairs to the Property.
17. Termination. This Agreement shall terminate upon the completion of the
Repairs in accordance with this Agreement, and the full disbursement by
Lender of the Repair Escrow Fund. In the event there are funds remaining
in the Repair Escrow Fund after the Repairs have been completed in
accordance with this Agreement, and provided no default by Borrower exists
under this Agreement or under any other Loan Documents, such funds
remaining in the Repair Escrow Fund shall be [SELECT AND INITIAL APPLICABLE
ITEM]:
Lender/Borrower
Initials
/ refunded by Lender to the Borrower.
/ deposited by Lender into the Replacement
Reserve account established by Lender
pursuant to the Replacement Reserve
Agreement between Borrower and Lender
dated _________________, 199___.
18. No Amendment. Nothing contained in this Agreement shall be construed to
amend, modify, alter, change or supersede the terms and provisions of the
Note, Security Instrument or any other Loan Document and, if there shall
exist a conflict between the terms and provisions of this Agreement and
those of the Note, Security Instrument or other Loan Documents, then the
terms and provisions of the Note, Security Instrument and other Loan
Documents shall control.
19. Release; Indemnity.
(a) Release. Borrower covenants and agrees that, in performing any of its
duties under this Agreement, neither Lender nor any of its successors
and assigns shall be liable for any losses, costs or damages which may
be incurred by any of them as a result thereof, except for any losses,
costs or damages arising out of the willful misconduct or gross
negligence of such party.
(b) Indemnity. Borrower hereby agrees to indemnify and hold harmless
Lender and its successors and assigns, against any and all losses,
claims, damages, liabilities and expenses including, without
limitation, reasonable attorneys' fees and disbursements, which may be
imposed or incurred by any of them in connection with this Agreement.
20. Choice of Law. This Agreement shall be construed and enforced in
accordance with the laws of the Jurisdiction.
21. Successors and Assigns. Borrower acknowledges and agrees that Lender, at
its option, may assign or otherwise transfer the Loan and all documents
evidencing and securing the Loan, including, but not limited to, this
Agreement, to other parties subsequent to the execution of this Agreement.
This Agreement shall be binding upon the successors and assigns of Borrower
and Lender. Borrowers may not assign its rights, interests, or obligations
under this Agreement without first obtaining Lender's prior written
consent.
22. Attorneys' Fees. In the event that Lender or its successors or assigns
shall engage the services of an attorney at law to enforce the provisions
of this Agreement against Borrower, then Borrower shall pay all costs of
such enforcement, including any reasonable attorneys' fees actually
incurred.
23. Remedies Cumulative. In the event of Borrower's default under this
Agreement, Lender may exercise all or any one or more of its rights and
remedies available under this Agreement, at law or in equity. Such rights
and remedies shall be cumulative and concurrent, and may be enforced
separately, successively or together, and Lender's exercise of any
particular right or remedy shall not in any way prevent Lender from
exercising any other right or remedy available to Lender. Lender may
exercise any such remedies from time to time as often as may be deemed
necessary by Lender.
24. Determinations by Lender. In any instance where the consent or approval of
Lender may be given or is required, or where any determination, judgment or
decision is to be rendered by Lender under this Agreement, the granting,
withholding or denial of such consent or approval and the rendering of such
determination, judgment or decision shall be made or exercised by Lender
(or its designated representative) at its sole and exclusive option and in
its sole and absolute discretion.
25. Completion of Repairs. Lender's disbursement of moneys in the Repair
Escrow Fund or other acknowledgment of completion of any Repair in a manner
satisfactory to Lender shall not be deemed a certification by Lender that
the Repair has been completed in accordance with applicable building,
zoning or other codes, ordinances, statutes, laws, regulations or
requirements of any governmental authority or agency. Borrower shall at
all times have the sole responsibility for insuring that all Repairs are
completed in accordance with all such governmental requirements.
26. No Agency or Partnership. Nothing contained in this Agreement shall
constitute Lender as a joint venturer, partner or agent of Borrower, or
render Lender liable for any debts, obligations, acts, omissions,
representations or contracts of Borrower.
27. Entire Agreement. This writing constitutes the entire agreement of the
parties relative to the Repair Escrow Fund. Any modification or amendment
hereto shall be ineffective unless in writing and signed by the parties
hereto.
ATTACHED EXHIBITS. The following Exhibits are attached to this Agreement:
|X | Exhibit A Property Description (required)
|X | Exhibit B Schedule of Work (required)
|X | Exhibit C Disbursement Request (required)
|X | Exhibit D Modifications to Agreement
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
BORROWER:
FOX STRATEGIC HOUSING INCOME PARTNERS,
a California limited partnership
By: Fox Partners VIII, a California general
partnership, General Partner
By: Fox Capital Management Corporation, a
California corporation, Managing Partner
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., Vice President
Borrower's Social Security or Taxpayer Identification No.____________________
LENDER:
NEWPORT MORTGAGE COMPANY, L.P.,
a Texas limited partnership
By: DUSCO, INC., a Texas corporation,
General Partner
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
EXHIBIT A
PROPERTY DESCRIPTION
EXHIBIT B
SCHEDULE OF WORK
REPAIR COSTS
1. Replace brick pavers at the entry roadway with
concrete tampered pavers. $6,500
2. Repair the portion of heaving concrete sidewalk in
front of Building 8, Breezeway C. $200
3. Replace damaged railroad tie retaining wall in front
of Building 2. $800
4. Replace roof on Building 8. $900
Total Repairs $17,400
x 125% $21,750
EXHIBIT C
DISBURSEMENT REQUEST
The undersigned hereby requests from
("Lender") the disbursement of funds in the amount of $
("Disbursement Request") from the Repair Escrow Fund established
pursuant to the Repair Escrow Agreement dated ,
19___ by and between Lender and the undersigned to pay for repairs to the
multifamily apartment project known as
and located in .
The undersigned hereby represents and warrants to Lender that the following
information and certifications provided in connection with this Disbursement
Request are true and correct as of the date hereof:
1. Purpose for which disbursement is requested?
2. To whom shall the disbursement be made (may be the undersigned in the case
of reimbursement for advances and payments made or cost incurred for work
done by the undersigned)?
3. Estimated costs of completing the uncompleted Repairs as of the date of
this Disbursement Request.
4. The undersigned certifies that:
(a) the disbursement requested pursuant to this Disbursement Request will
be used solely to pay a cost or costs allowable under the Repair
Escrow Agreement;
(b) none of the items for which disbursement is requested pursuant to this
Disbursement Request has formed the basis for any disbursement
previously made from the Repair Escrow Fund;
(c) all labor and materials for which disbursements have been requested
have been incorporated into the Improvements or suitably stored upon
the Property in accordance with reasonable and standard building
practices, the Repair Escrow Agreement and all applicable laws,
ordinances, rules and regulations of any governmental authority having
jurisdiction over the Property; and
(d) the materials, supplies and equipment furnished or installed for the
Repairs are not subject to any lien or security interest or that the
funds to be disbursed pursuant to this Disbursement Request are to be
used to satisfy any such lien or security interest.
5. All capitalized terms used in this Disbursement Request without definition
shall have the meanings ascribed to them in the Repair Escrow Agreement.
IN WITNESS WHEREOF, the undersigned has executed this Disbursement Request
as of the day and date first above written.
BORROWER:
Date:
