AGREEMENT AND PLAN OF MERGER
BETWEEN
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
and
INSIGNIA PROPERTIES TRUST
Dated as of October 1, 1998
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
October 1, 1998, by and between Apartment Investment and Management
Company, a Maryland corporation ("AIMCO"), and Insignia Properties Trust, a
Maryland real estate investment trust ("IPT").
WHEREAS, AIMCO, AIMCO Properties, L.P., a Delaware limited
partnership ("AIMCO OP"), Insignia Financial Group, Inc., a Delaware
corporation ("IFG"), and Insignia/ESG Holdings, Inc., a Delaware
corporation, have entered into an Amended and Restated Agreement and Plan
of Merger (the "IFG Agreement"), dated as of May 26, 1998;
WHEREAS, pursuant to the IFG Agreement, IFG has merged with and
into AIMCO, with AIMCO being the surviving entity (the "Insignia Merger");
WHEREAS, the IFG Agreement requires AIMCO to propose to acquire
(by merger) IPT and to use its reasonable best efforts to consummate such
merger within three months following the effective time of the Insignia
Merger, and the performance of AIMCO's obligations under this Agreement, if
it uses its reasonable best efforts to consummate the Merger (as
hereinafter defined) within such period, will constitute AIMCO's
performance of such obligations under the IFG Agreement;
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as
of July 18, 1997, by and among Angeles Mortgage Investment Trust, an
unincorporated California business trust ("AMIT"), IPT, IFG and MAE GP
Corporation, a Delaware corporation, AMIT was merged with and into IPT on
September 17, 1998, with IPT being the surviving entity (the "AMIT
Merger");
WHEREAS, the Board of Trustees of IPT (the "IPT Board") has
received the written opinion of Xxxxxx Brothers Inc. dated the date hereof
that the Merger Consideration (as defined in Section 2.1(b)) is fair from a
financial point of view to the holders (the "IPT Shareholders") of common
shares of beneficial interest, par value $.01 per share, of IPT ("IPT
Shares"), other than IFG and AIMCO and their respective Subsidiaries (as
defined in Section 2.1(a));
WHEREAS, the Board of Directors of AIMCO (the "AIMCO Board")
and the IPT Board have approved the merger of IPT and AIMCO (the "Merger"),
upon the terms and subject to the conditions set forth in this Agreement;
and
WHEREAS, the surviving entity in the Merger intends that,
following the Merger, it shall continue to be subject to taxation as a real
estate investment trust (a "REIT") within the meaning of the Internal
Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 Structure of the Merger.
(a) At least 14 business days prior to the anticipated mailing
of the Information Statement/Prospectus (as defined in Section 6.2) AIMCO
shall notify IPT whether, at the Effective Time (as defined in Section 1.4)
(x) IPT shall be merged with and into AIMCO, with AIMCO being the surviving
entity or (y) a subsidiary of AIMCO shall be merged with and into IPT, with
IPT being the surviving entity. If AIMCO elects to cause the Merger to
occur pursuant to (y) above, then this Agreement shall be amended to (i)
add such subsidiary as a party to this Agreement, (ii) make such other
additional incidental amendments as are needed to provide for a subsidiary
merger, and where required, to provide that AIMCO will cause its subsidiary
to take action in lieu of AIMCO, as agreed by IPT and AIMCO and their
respective counsel, and (iii) include an unconditional guarantee by AIMCO
of the obligations of its subsidiary in the Merger.
(b) In the event AIMCO shall have been advised by its tax
counsel that it does not expect to be able to issue the opinion referred to
in Section 7.2(f) of this Agreement at the Closing, in addition to the
actions referenced to in the second sentence of this Section 1.1, IPT,
acting through a majority of the Continuing Trustees, and AIMCO shall use
their best efforts to restructure the form of the transaction to provide
for the issuance of AIMCO Common Stock without materially changing either
the consideration to be received by IPT Shareholders or the tax or other
economic consequences of the transaction to AIMCO and its Subsidiaries, but
if the transaction cannot reasonably be so restructured, it shall be
restructured as an all cash transaction.
Section 1.2 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time IPT shall be merged
with and into AIMCO in accordance with the laws of the State of Maryland.
AIMCO shall be the surviving entity in the Merger and shall continue its
corporate existence under the laws of the State of Maryland. AIMCO after
the Effective Time is sometimes referred to herein as the "Surviving
Entity." The effects of the Merger shall be as set forth in Section 1.3.
AIMCO covenants and agrees to use its reasonable best efforts to consummate
the Merger as soon as possible.
Section 1.3 Effects of the Merger. At the Effective Time, (a)
the charter of AIMCO (the "AIMCO Charter"), as in effect immediately prior
to the Effective Time, shall be the charter of the Surviving Entity until
thereafter amended as provided by law and the AIMCO Charter, (b) the
by-laws of AIMCO, as in effect immediately prior to the Effective Time,
shall be the by-laws of the Surviving Entity until thereafter amended as
provided by law, the AIMCO Charter and such by-laws and (c) the directors
and officers of AIMCO immediately prior to the Effective Time shall be the
directors and officers, respectively, of the Surviving Entity until their
respective successors are duly elected and qualified. Subject to the
foregoing, the additional effects of the Merger shall be as provided in
Section 3-114 of the Maryland General Corporation Law ("MGCL") and Section
8-501.1(n) of Title 8 of the Corporations and Associations Article of the
Annotated Code of Maryland (the "MCAA").
Section 1.4 Effective Time of the Merger. On the Closing Date
(as defined in Section 3.1), articles of merger shall be executed and filed
by AIMCO and IPT with the State Department of Assessments and Taxation of
the State of Maryland pursuant to the MGCL and the MCAA. The Merger shall
become effective upon the acceptance of the articles of merger for record
by the State Department of Assessments and Taxation of the State of
Maryland (the "Effective Time").
ARTICLE II
TREATMENT OF SHARES
Section 2.1 Effect of the Merger on IPT Shares.
(a) Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"AIMCO Collar Price" means the average price (computed based on
the sum of the high and low sales prices of AIMCO Common Stock (as reported
in the NYSE Composite Transactions reporting system as published in The
Wall Street Journal or, if not published therein, in another authoritative
source) divided by two) of a share of AIMCO Common Stock during the ten
consecutive NYSE trading day period ending on (and including) December 31,
1998.
"AIMCO Common Stock" means the Class A Common Stock, par value
$.01 per share, of AIMCO.
"AIMCO Exchange Value" means (a) the AIMCO Reference Price, if
the Effective Time occurs on or prior to December 31, 1998, or (b) the
lesser of the AIMCO Collar Price or the AIMCO Reference Price, if the
Effective Time occurs on or after January 1, 1999.
"AIMCO Reference Period" means the ten consecutive NYSE trading
day period commencing on and including the tenth (10th) NYSE trading day
preceding the IPT Meeting Date (as defined in Section 6.4) and ending on
and including the NYSE trading day immediately preceding the IPT Meeting
Date.
"AIMCO Reference Price" means the average price (computed based
on the sum of the high and low sales prices of AIMCO Common Stock (as
reported in the NYSE Composite Transactions reporting system as published
in The Wall Street Journal or, if not published therein, in another
authoritative source) divided by two) of a share of AIMCO Common Stock
during the AIMCO Reference Period.
"Cash Election Notice" is defined in Section 2.1(e).
"Cash Percentage" is defined in Section 2.1(e).
"Conversion Ratio" means the IPT Exchange Value divided by the
AIMCO Exchange Value.
"Distribution Shortfall Amount" means the aggregate per-IPT
Share amount, if any, of the distributions required to be paid by IPT
pursuant to Section 6.1 but which IPT fails to make for any reason, plus a
return on the amount of each such unpaid distribution at an annual rate
equal to the lesser of 20% or the maximum rate permitted by applicable law,
to be calculated based on the number of days elapsed from and including the
date on which such distribution was required to be paid through and
including the date of the Effective Time (and assuming a 365 day year).
"Excess Distribution Amount" is defined in Section 6.1(c).
"IPT Distribution Amount" means, as of any date of
determination, (a) $.16 during the period from the date of this Agreement
through and including February 28, 1999, and (b) thereafter, the greater of
(i) $.16 and (ii) the amount determined by dividing $13.28 by the AIMCO
Collar Price and multiplying the result by the per share amount of the
corresponding distribution declared by AIMCO in respect of AIMCO Common
Stock.
"IPT Exchange Value" means $13.28.
"NYSE" means the New York Stock Exchange.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Stock Percentage" means a percentage equal to 100% minus the
Cash Percentage.
"Subsidiary" means as to any Person, any other Person of which
at least a majority of the voting power represented by the outstanding
shares of capital stock or other voting securities or interests (including,
without limitation, general partner interests) having voting power under
ordinary circumstances to elect directors or similar members of the
governing body of such other Person shall at the time be held, directly or
indirectly, by such first Person.
(b) General. Subject to Sections 2.1(c) and (d), as of the
Effective Time, by virtue of the Merger and without any action on the part
of any holder of an IPT Share, each issued and outstanding IPT Share shall
be converted into and become the right to receive the following (together
with any cash to be issued in lieu of fractional shares pursuant to Section
2.4, the "Merger Consideration"):
(i) If the Effective Time occurs on or prior to December
31, 1998: (A) that number of shares of AIMCO Common Stock equal to
the Stock Percentage multiplied by the Conversion Ratio; and (B) an
amount in cash equal to the Cash Percentage multiplied by the sum of
(x) $13.25, plus (y) the Distribution Shortfall Amount (if any),
minus (z) the Excess Distribution Amount (if any); and (C) an amount
in cash equal to the IPT Distribution Amount, determined as of
Effective Time, multiplied by the number of days that have elapsed
from and including the day immediately following the record date for
the last regular quarterly distribution declared by IPT through and
including the date immediately preceding the Closing Date, divided by
91; or
(ii) If the Effective Time occurs between January 1, 1999
and January 31, 1999: (A) that number of shares of AIMCO Common Stock
equal to the Stock Percentage multiplied by the Conversion Ratio; and
(B) an amount in cash equal to the Cash Percentage multiplied by the
sum of (w) $13.25, plus (x) $.0018 multiplied by the number of days
that has elapsed from and including January 1, 1999 through and
including the day immediately preceding the Closing Date, plus (y)
the Distribution Shortfall Amount (if any), minus (z) the Excess
Distribution Amount (if any); and (C) an amount in cash equal to the
IPT Distribution Amount, determined as of Effective Time, multiplied
by the number of days that have elapsed from and including the day
immediately following the record date for the last regular quarterly
distribution declared by IPT through and including the date immediately
preceding the Closing Date, divided by 91; or
(iii) If the Effective Time occurs between February 1,
1999 and February 28, 1999: (A) that number of shares of AIMCO Common
Stock equal to the Stock Percentage multiplied by the Conversion
Ratio; and (B) an amount in cash equal to the Cash Percentage
multiplied by the sum of (w) $13.25, plus (x) $.0036 multiplied by
the number of days that has elapsed from and including January 1,
1999 through and including the day immediately preceding the Closing
Date, plus (y) the Distribution Shortfall Amount (if any), minus (z)
the Excess Distribution Amount (if any); and (C) an amount in cash
equal to the IPT Distribution Amount, determined as of Effective
Time, multiplied by the number of days that have elapsed from and
including the day immediately following the record date for the last
regular quarterly distribution declared by IPT through and including
the date immediately preceding the Closing Date, divided by 91; or
(iv) If the Effective Time occurs on or after March 1,
1999: (A) that number of shares of AIMCO Common Stock equal to the
Conversion Ratio; and (B) an amount in cash equal to the IPT
Distribution Amount, determined as of Effective Time, multiplied by
the number of days that have elapsed from and including the day
immediately following the record date for the last regular quarterly
distribution declared by IPT through and including the date immediately
preceding the Closing Date, divided by 91;
and shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate (a
"Certificate") which immediately prior to the Effective Time represented
any such IPT Share shall cease to have any rights with respect to such IPT
Share, except the right to receive the Merger Consideration contemplated by
this Section 2.1.
(c) Cancellation of Certain IPT Shares. As of the Effective
Time, by virtue of the Merger and without any action on the part of any IPT
Shareholder, all IPT Shares owned directly or indirectly by AIMCO and its
Subsidiaries shall automatically be canceled and retired and shall cease to
exist, and no Merger Consideration or other consideration shall be issued
or delivered in exchange therefor.
(d) Restricted Shares.
(i) Treatment. At the Effective Time, each unvested
restricted IPT Share awarded under the IPT 1997 Share Incentive Plan
(the "IPT Share Plan") shall, by virtue of this Agreement and without
any further action of IPT, AIMCO or the holder of such restricted
share, be converted into that number of restricted shares ("AIMCO
Restricted Shares") of AIMCO Common Stock equal to the Conversion
Ratio. Each such AIMCO Restricted Share shall continue to have, and
be subject to, the same terms and conditions (including rights to
Dividend Equivalents (as defined in the IPT Share Plan), if any) set
forth in the IPT Share Plan and the applicable restricted share
agreement, each as in effect immediately prior to the Effective Time.
(ii) Registration. AIMCO shall (A) cause such shares of
AIMCO Common Stock to be covered by an effective registration
statement on Form S-8 (or any successor or other appropriate forms),
and (B) use its reasonable best efforts to maintain the effectiveness
of such registration statement (and maintain the current status of
the prospectus contained therein) for so long as the restricted
shares remain outstanding.
(e) Cash Election Option. Not later than the close of business
on the second NYSE trading day immediately preceding the first day of the
AIMCO Reference Period, AIMCO shall deliver to IPT a written notice (the
"Cash Election Notice"), which shall be irrevocable, in which AIMCO
specifies a percentage, from 0% to 100%, of the Merger Consideration to be
paid in cash (the "Cash Percentage"); provided, however, that if (x) AIMCO
fails to timely deliver the Cash Election Notice to IPT or (y) the IPT
Meeting Date is on or after March 1, 1999, then AIMCO shall not be entitled
to deliver a Cash Election Notice (i.e., the Cash Percentage shall be
deemed to be zero percent (0%) and AIMCO shall not be entitled to pay any
portion of the Merger Consideration in cash). AIMCO shall use its best
efforts to cause IPT to issue, on the date the Cash Election Notice is
required to be delivered, via the Dow Xxxxx News Service and PR Newswire, a
press release announcing the Cash Percentage.
Section 2.2 Surrender of Certificates.
(a) AIMCO shall provide on the date of the Effective Time to
the paying agent selected by AIMCO (the "Paying Agent") certificates
representing shares of AIMCO Common Stock and funds as necessary to make
issuances and payments pursuant to Sections 2.l(b) and 2.4 (such
certificates and funds being hereinafter referred to as the "Exchange
Fund"). Out of the Exchange Fund, the Paying Agent shall make, pursuant to
irrevocable instructions, the issuances and payments referred to in
Sections 2.1(b) and 2.4, and the Exchange Fund shall not be used for any
other purpose. The Paying Agent may invest portions of the Exchange Fund as
AIMCO may direct, provided that such investments be in obligations of, or
guaranteed by, the United States of America, in commercial paper
obligations receiving the highest rating from either Xxxxx'x Investors
Service or Standard & Poor's Corporation or in certificates of deposit,
bank repurchase agreements or bankers' acceptances of commercial banks with
capital exceeding $100,000,000. Any net profit resulting from, or interest
or income produced by, such investments shall be payable to AIMCO. AIMCO
shall replace any monies lost through any investment made pursuant to this
Section 2.2(a) upon request therefor by the Paying Agent. Any portion of
the Exchange Fund that remains unclaimed after 180 days after the Effective
Time shall be returned to AIMCO upon its request made to the Paying Agent,
after which time the holder of any unsurrendered Certificates shall look
only to AIMCO for delivery of the Merger Consideration. AIMCO shall not be
liable to any Person for any funds delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law.
(b) As soon as practicable after the Effective Time, AIMCO
shall cause the Paying Agent to mail to each holder of record of a
Certificate which immediately prior to the Effective Time represented an
IPT Share that was canceled and became instead the right to receive Merger
Consideration pursuant to Section 2.1(b): (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon actual delivery of the
Certificates to the Paying Agent); and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration. Upon surrender of a Certificate to the Paying Agent for
exchange (or to such other agent or agents as may be appointed by AIMCO),
together with a duly executed letter of transmittal and such other
documents as the Paying Agent shall require, the holder of such Certificate
shall be entitled to receive, in respect of the IPT Shares formerly
represented thereby, (A) a certificate or certificates representing that
number of whole shares of AIMCO Common Stock which such holder has the
right to receive pursuant to the provisions of Section 2.1(b), if any, (B)
the amount of cash which such holder has the right to receive pursuant to
the provisions of Section 2.1(b) and (C) cash in lieu of fractional shares
which such holder is entitled to receive pursuant to Section 2.4. If
payment is to be made to a Person other than the one in whose name a
surrendered Certificate is registered, it shall be a condition of receipt
of the Merger Consideration that the Certificate so surrendered be properly
endorsed or otherwise in proper form for transfer and that the Person
requesting such payment either pay any transfer or other taxes required by
reason of the payment to a Person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Entity that such tax has been paid or is not applicable. Until surrendered
in accordance with the provisions of this Section 2.2, after the Effective
Time each Certificate shall represent for all purposes only the right to
receive the Merger Consideration for each IPT Share represented by such
Certificate, together with any dividends and other distributions paid in
respect thereof after the Effective Time.
Section 2.3 Closing of Transfer Books; Etc. From and after the
Effective Time, the share transfer books of IPT shall be closed, and no
registration of any transfer of any IPT Shares shall thereafter be made on
the records of IPT. If, after the Effective Time, Certificates are
presented to AIMCO for any reason, they shall be canceled, and each IPT
Share represented thereby shall be exchanged for the Merger Consideration,
together with any dividends and other distributions paid in respect thereof
after the Effective Time. Shares of AIMCO Common Stock issued in the Merger
shall be issued as of, and be deemed to be outstanding as of, the Effective
Time. AIMCO shall cause all such shares of AIMCO Common Stock issued
pursuant to the Merger to be duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. In the event any
Certificate(s) shall have been lost, stolen or destroyed, upon the making
of any affidavit of that fact by the IPT Shareholder claiming such
Certificate(s) to be lost, stolen or destroyed and, if reasonably required
by AIMCO or the Paying Agent, upon the posting by such IPT Shareholder of a
bond in such amount as reasonably determined as indemnity against any claim
that may be made against either of them with respect to such
Certificate(s), the Paying Agent shall issue the Merger Consideration in
respect of each IPT Share represented by such lost, stolen or destroyed
Certificate(s). Appropriate procedures shall be established by AIMCO and
the Paying Agent so that each holder of a Certificate at the Effective Time
shall be entitled to vote on all matters subject to the vote of holders of
AIMCO Common Stock with a record date on or after the date of the Effective
Time, whether or not such Certificate holder shall have surrendered
Certificates in accordance with the provisions of this Agreement. For
purposes of the immediately preceding sentence, AIMCO may rely conclusively
on the shareholder records of IPT in determining the identity of, and the
number of IPT Shares held by, each holder of a Certificate at the Effective
Time.
Section 2.4 Fractional Shares. Notwithstanding any other
provision of this Agreement, no fractional shares of AIMCO Common Stock
will be issued, and any IPT Shareholder entitled to receive a fractional
share of AIMCO Common Stock but for this Section 2.4 will be entitled to
receive a cash payment in lieu thereof equal to such shareholder's
proportionate interest in a share of AIMCO Common Stock multiplied by the
AIMCO Reference Price as of the Effective Time.
Section 2.5 No Other Rights. Upon consummation of the Merger,
the holder of a Certificate at and after the Effective Time shall have no
rights under this Agreement with respect to the IPT Shares represented
thereby other than the right to receive the Merger Consideration together
with any dividends and other distributions paid in respect thereof after
the Effective Time, upon the surrender of such Certificate pursuant to
Section 2.2 and the right to receive any declared but unpaid distributions
in respect of such IPT Shares. Nothing in this Agreement supersedes the
right of the IPT Shareholders to enforce Section 5.6 for the period
provided in Section 9.1.
ARTICLE III
THE CLOSING
Section 3.1 Closing. The closing of the Merger (the "Closing")
shall take place at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M., local time,
on the business day on which all of the conditions set forth in Article VII
hereof are first fulfilled or have been waived, provided that all of the
conditions set forth in Article VII hereof continue to be so satisfied or
waived on such day, and if not so satisfied or waived, the Closing shall be
automatically extended from time to time until the first subsequent day on
which all such conditions are again so satisfied or waived, subject,
however, to Article VIII hereof, or shall take place at such other time,
date and place as AIMCO and IPT shall mutually agree (the "Closing Date").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IPT
IPT represents and warrants to AIMCO as follows:
Section 4.1 Organization and Qualification of IPT. IPT is a
real estate investment trust duly formed, validly existing and in good
standing under the laws of the State of Maryland. IPT has furnished to
AIMCO true and complete copies of IPT's Declaration of Trust (the "IPT
Charter") and bylaws (the "IPT Bylaws"), each as is in effect on the date
of this Agreement.
Section 4.2 Organization and Qualification of IPLP. IPLP is a
limited partnership duly formed, validly existing and in good standing
under the laws of the State of Delaware. IPT has furnished to AIMCO true
and complete copies of the Fourth Amended and Restated Agreement of Limited
Partnership of IPLP as in effect on the date of this Agreement (the "IPLP
Limited Partnership Agreement"). As of the date hereof, the sole general
partner of IPLP is IPT, and the sole limited partners of IPLP are IFG and
Insignia Capital Corporation (which is a wholly-owned subsidiary of IFG).
Section 4.3 Capitalization. As of the date hereof, the
authorized shares of IPT beneficial interest consist of 400,000,000 IPT
Shares and 100,000,000 preferred shares of beneficial interest, par value
$.01 per share, of IPT ("IPT Preferred Shares"). As of the date hereof,
23,446,538 IPT Shares were issued and outstanding, of which 510,000 have
been issued under the IPT Share Plan. In addition, (a) 25,000 IPT Shares
are issuable upon exercise of outstanding options, and 28,000 IPT Shares
are issuable upon vesting of restricted share awards under the IPT Share
Plan, (b) no IPT Shares were held by IPT's Subsidiaries, (c) no IPT
Preferred Shares were issued and (d) no bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities
having the right to vote) on any matters on which shareholders of IPT may
vote ("Voting Debt") were issued or outstanding. All outstanding IPT Shares
are validly issued, fully paid and nonassessable and are not subject to
preemptive rights. Except as described above, as of the date hereof there
are no outstanding subscriptions, calls, options, contracts, voting trusts,
proxies or other commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating IPT or IPLP
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional IPT Shares, IPT Preferred Shares or other ownership interests in
IPT or IPLP or any Voting Debt of IPT or IPLP or obligating IPT or IPLP to
grant, extend or enter into any such agreement or commitment.
Section 4.4 Authority; Non-Contravention
(a) Authority. IPT has all requisite power to enter into this
Agreement and, subject to obtaining the IPT Shareholders' Approval (as
defined in Section 4.6), to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation
by IPT of the transactions contemplated hereby have been duly authorized by
the IPT Board, which constitutes all necessary action on the part of IPT,
subject to obtaining the IPT Shareholders' Approval. This Agreement has
been duly and validly executed and delivered by IPT and, assuming the due
authorization, execution and delivery hereof by AIMCO, constitutes the
legal, valid and binding obligation of IPT enforceable against IPT in
accordance with its terms.
(b) Non-Contravention. As of the date hereof, the execution and
delivery of this Agreement by IPT do not, and, subject to obtaining the IPT
Shareholders' Approval, the consummation of the transactions contemplated
hereby will not, in any respect, violate, conflict with or result in a
breach of any provision of the IPT Charter or the IPT Bylaws.
Section 4.5 Tax Matters. "Taxes," as used in this Agreement,
means any and all federal, state, local and foreign taxes, including,
without limitation, income, sales and use, withholding, transfer,
franchise, real and personal property, employment, and payroll taxes,
together with any interest, penalties and additions thereto. "Tax Return,"
as used in this Agreement, means any report, return or other information
required to be supplied to any person with respect to Taxes.
(a) REIT Classification. At all times since its organization,
IPT has been organized and operated in conformity with Section 856-860 of
the Code (the "Status Requirements"), and its proposed method of operation
will enable it to meet the Status Requirements and otherwise qualify as a
REIT. The consummation by IPT of the transactions contemplated hereby and
the compliance with or fulfillment of the terms and provisions hereof by
IPT will not adversely affect the qualification of IPT as a REIT for each
taxable year ending on or after the Closing Date.
(b) Subchapter C Earnings and Profits. IPT does not have any
earnings and profits in excess of $1 million accumulated in any non-REIT
year within the meaning of Section 857 of the Code, including as a result
of the AMIT Merger.
Section 4.6 Vote Required. The affirmative vote of a majority
of the IPT Shares outstanding on the record date for the IPT Meeting (as
defined below) at which such vote is taken (the "IPT Shareholders'
Approval") is the only vote of the holders of any class of shares of
beneficial interest of IPT that is required to approve this Agreement, the
Merger and the other transactions contemplated hereby.
Section 4.7 AMIT Merger. AMIT was merged with and into IPT on
September 17, 1998.
Section 4.8 Opinion of Financial Advisor. The IPT Board has
received the opinion of Xxxxxx Brothers Inc., dated the date hereof, that
the Merger Consideration is fair from a financial point of view to the
holders of IPT Shares other than IFG and AIMCO and their respective
Subsidiaries.
Section 4.9 Brokers. Except for Xxxxxx Brothers Inc., no
broker, finder or investment banker is entitled to any broker's, finder's
or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by
or on behalf of IPT.
Section 4.10 Absence of Inducement. In entering into this
Agreement, IPT has not been induced by, or relied upon, any
representations, warranties, or statements by AIMCO not set forth or
referred to in this Agreement, the schedules hereto or the other documents
required to be delivered hereby, whether or not such representations,
warranties, or statements have actually been made, in writing or orally,
and IPT acknowledges that, in entering into this Agreement, AIMCO has been
induced by and relied upon the representations and warranties of IPT herein
set forth and in the other documents required to be delivered hereby. IPT
has made its own investigation of AIMCO prior to the execution of this
Agreement and has not been induced by or relied upon any representations,
warranties or statements as to the advisability of entering into this
Agreement other than as set forth above or in the AIMCO SEC Reports (as
defined in Section 5.4).
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AIMCO represents and warrants to IPT as follows:
Section 5.1 Organization and Qualification. AIMCO is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland. AIMCO is duly qualified and in good standing
to do business in each jurisdiction where such qualification is required,
other than in such jurisdictions where the failure to so qualify would not
have, individually or in the aggregate, a material adverse effect on the
business, assets, financial condition, results of operations or prospects
(a "Material Adverse Effect") of AIMCO and its Subsidiaries taken as a
whole (an "AIMCO Material Adverse Effect"). AIMCO has all requisite
corporate power and authority, and has been duly authorized by all
necessary approvals and orders, to own, lease and operate its assets and
properties to the extent owned, leased and operated and to carry on it
business as it is now being conducted.
Section 5.2 Capitalization. As of the date hereof, the
authorized stock of AIMCO consists of 486,027,500 shares of AIMCO Common
Stock, 262,500 shares of Class B Common Stock, par value $.01 per share
("AIMCO Class B Common Stock") and 24,460,000 shares of Preferred Stock,
par value $.01 per share ("AIMCO Preferred Stock"). As of the date hereof,
(a) 47,982,057 shares of AIMCO Common Stock were issued and outstanding,
(b) 162,500 shares of AIMCO Class B Common Stock were issued and
outstanding, (c) 22,345,921 shares of AIMCO Preferred Stock were issued and
outstanding (including 750,000 shares of AIMCO Class B Cumulative
Convertible Preferred Stock, par value $.01 per share, 2,400,000 shares of
AIMCO 9% Class C Cumulative Preferred Stock, par value $.01 per share,
4,200,000 shares of AIMCO 8.75% Class D Cumulative Preferred Stock, par
value $.01 per share, 8,945,921 shares of AIMCO Class E Cumulative
Convertible Preferred Stock, par value $.01 per share, 4,050,000 shares of
AIMCO Class G Preferred Stock, par value $.01 per share, and 2,000,000
shares of AIMCO Class H Preferred Stock, par value $.01 per share), (d)
5,362,879 shares of AIMCO Common Stock were reserved for issuance upon the
exchange of units of limited partnership in AIMCO OP, (e) 5,115,246 shares
of AIMCO Common Stock were reserved for issuance pursuant to the AIMCO
benefit plans (the "AIMCO Benefit Plans") listed on Schedule 5.2 hereof and
outstanding warrants, (f) 11,408,973 shares of AIMCO Common Stock were
reserved for issuance upon conversion of AIMCO Preferred Stock, (g) 162,500
shares of AIMCO Common Stock were reserved for issuance upon conversion of
AIMCO Class B Common Stock and (h) no Voting Debt of AIMCO was issued or
outstanding. All outstanding shares of AIMCO Common Stock and AIMCO
Preferred Stock are validly issued, fully paid and nonassessable and are
not subject to preemptive rights. Upon consummation of the Merger and
issuance of shares of AIMCO Common Stock which comprise all or a part of
the Merger Consideration, all such shares will be validly issued, fully
paid and nonassessable and will not be subject to preemptive rights. As of
the date hereof, except as set forth on Schedule 5.2 hereof or pursuant to
this Agreement or the AIMCO Benefit Plans, there are no outstanding
subscriptions, calls, options, contracts, voting trusts, proxies or other
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating AIMCO or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other ownership
interest or any Voting Debt of AIMCO or any AIMCO Subsidiary or obligating
AIMCO or any AIMCO Subsidiary to grant, extend or enter into any such
agreement or commitment. Except as set forth on Schedule 5.2 hereof or in
connection with the AIMCO Benefit Plans, after the Effective Time, there
will be no agreement or commitment of any character obligating AIMCO or any
AIMCO Subsidiary to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock or other ownership interest
or any Voting Debt of AIMCO or any AIMCO Subsidiary, or obligating AIMCO or
any AIMCO Subsidiary to grant, extend or enter into any such agreement or
commitment.
Section 5.3 Authority; Non-Contravention; Required Filings.
(a) Authority. AIMCO has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation by AIMCO of the transactions contemplated hereby have been
duly authorized by the AIMCO Board, which constitutes all necessary
corporate action on the part of AIMCO. This Agreement has been duly and
validly executed and delivered by AIMCO and, assuming the due
authorization, execution and delivery hereof by IPT, constitutes the legal,
valid and binding obligation of AIMCO enforceable against AIMCO in
accordance with its terms.
(b) Non-Contravention. The execution and delivery of this
Agreement by AIMCO do not, and the consummation of the transactions
contemplated hereby will not, result in a violation, conflict with or
breach of (any such violation, conflict or breach is referred to herein as
a "Violation") any provisions of (i) the AIMCO Charter or by-laws of AIMCO,
(ii) any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any governmental authority
applicable to AIMCO or any AIMCO Subsidiary or any of their respective
properties or assets or (iii) any note, bond, mortgage, indenture, credit
enhancement agreement, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or agreement of
any kind to which AIMCO or any AIMCO Subsidiary is a party or by which it
or any of its properties or assets may be bound or affected, except in the
case of clause (ii) or (iii) for any such Violation which would not have,
individually or in the aggregate, an AIMCO Material Adverse Effect.
(c) Required Filings. Except as required under the Securities
Act of 1933, as amended (the "Securities Act"), the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and the rules of the NYSE (the
"AIMCO Required Filings"), no declaration, filing or registration with, or
notice to, or authorization, consent or approval of, any court, federal,
state, local or foreign government or regulatory body (including the United
States Department of Housing and Urban Development and/or applicable state
housing agencies (collectively, "HUD"), a stock exchange or other
self-regulatory body) or authority (each, a "Governmental Authority") is
necessary for the execution and delivery of this Agreement by AIMCO or the
consummation by AIMCO of the transactions contemplated hereby, except as
would not result, individually or in the aggregate, in an AIMCO Material
Adverse Effect.
Section 5.4 Reports and Financial Statements. All filings
required to be made by AIMCO since December 31, 1997 under Section 13(a),
13(c), 14 or 15(d) of the Exchange Act have been filed with the Securities
and Exchange Commission ( the "SEC") (the "AIMCO SEC Reports"). The AIMCO
SEC Reports, as of their respective dates, complied in all material
respects with all applicable requirements of the appropriate statutes and
the rules and regulations thereunder. As of their respective dates, the
AIMCO SEC Reports did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading. The audited consolidated financial
statements and unaudited interim financial statements of AIMCO included in
the AIMCO SEC Reports have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis
(except as may be indicated therein or in the notes thereto or, with
respect to unaudited interim financial statements, as permitted by Form
10-Q of the SEC) and fairly present, in all material respects, the
financial position of AIMCO as of the dates thereof and the results of its
operations and cash flows for the periods then ended, subject, in the case
of the unaudited interim financial statements, to normal, recurring audit
and year-end adjustments.
Section 5.5 Absence of Certain Changes or Events. Except as set
forth in the AIMCO SEC Reports, since December 31, 1997, each of AIMCO and
its Subsidiaries has conducted its business in the ordinary course of
business consistent with past practice, and there has not been any AIMCO
Material Adverse Effect.
Section 5.6 Registration Statement, Information
Statement/Prospectus and Schedule 13E-3. The information supplied or to be
supplied by or on behalf of AIMCO for inclusion or incorporation by
reference in (a) the Registration Statement (as defined in Section 6.2), at
the time it is filed with the SEC, at the time it becomes effective under
the Securities Act and at the Effective Time, (b) the Information
Statement/Prospectus (as defined in Section 6.2), at the time it is filed
with the SEC, at the time it is mailed to the IPT Shareholders and at the
time of the IPT Meeting and (c) the Schedule 13E-3 (as defined in Section
6.2), at the time such statement is filed with the SEC, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Registration Statement, the Information
Statement/Prospectus and the Schedule 13E-3 will comply as to form in all
material respects with the provisions of the Securities Act and the
Exchange Act and the rules and regulations thereunder.
Section 5.7 No Vote Required. The approval of this Agreement,
the Merger and the other transactions contemplated hereby, including
without limitation, the issuance and listing on the NYSE of the AIMCO
Common Stock to be issued in the Merger, does not require the vote of the
holders of any class or series of the capital stock of AIMCO or any of its
Subsidiaries.
Section 5.8 Tax Matters.
(a) Filing of Timely Tax Returns. AIMCO and each of its
Subsidiaries have filed (or there has been filed on its behalf) all Tax
Returns required to be filed by each of them under applicable law. All such
Tax Returns were and are in all material respects true, complete and
correct and filed on a timely basis.
(b) Payment of Taxes. AIMCO and each of its Subsidiaries have,
within the time and in the manner prescribed by law, paid all Taxes that
are currently due and payable for all periods through and including the
Closing Date, except for those contested in good faith and for which
adequate reserves have been taken.
(c) Tax Reserves. AIMCO and its Subsidiaries have established
on their books and records reserves adequate to pay all material Taxes and
reserves for deferred income Taxes in accordance with GAAP.
(d) Tax Liens. There are no Tax liens upon the material assets
of AIMCO or any of its Subsidiaries except liens for Taxes not yet
delinquent.
(e) REIT Classification. At all times since the initial public
offering of AIMCO, AIMCO has been organized and operated in conformity with
the Status Requirements, and its proposed method of operation will enable
it to continue to meet the Status Requirements and otherwise qualify as a
REIT.
(f) Continuation as REIT. The consummation by AIMCO of the
transactions contemplated hereby or compliance with or fulfillment of terms
and provisions hereof by AIMCO, will not adversely affect the qualification
of AIMCO as a REIT for each taxable year ending on or after the Closing
Date.
(g) Deficiencies. No deficiencies for any Taxes have been
proposed, asserted or assessed against AIMCO and there is no outstanding
waiver of the statute of limitations with respect to any Taxes or Tax
Returns of AIMCO.
(h) Domestic Control. AIMCO believes that it is a
"domestically-controlled" REIT within the meaning of Section 897(h)(4)(B)
of the Code.
Section 5.9 Brokers. No broker, finder or investment banker is
entitled to any broker's, finder's or other fee or commission in connection
with the Merger or the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of AIMCO.
Section 5.10 Absence of Inducement. In entering into this
Agreement, AIMCO has not been induced by, or relied upon, any
representations, warranties, or statements by IPT not set forth or referred
to in this Agreement or the other documents required to be delivered
hereby, whether or not such representations, warranties, or statements have
actually been made, in writing or orally, and AIMCO acknowledges that, in
entering into this Agreement, IPT has been induced by and relied upon the
representations and warranties of AIMCO herein set forth, the information
set forth in the AIMCO SEC Reports and in the other documents required to
be delivered hereby. AIMCO has made its own investigation of IPT prior to
the execution of this Agreement and has not been induced by or relied upon
any representations, warranties or statements as to the advisability of
entering into this Agreement other than as set forth above.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 IPT and IPLP Distributions.
(a) IPT shall (and shall cause IPLP to) continue to make
regular quarterly distributions, as follows: IPT shall pay on October 15,
1998 its previously declared distribution of $.16 per IPT Share to IPT
Shareholders of record on September 30, 1998; thereafter, IPT shall declare
and pay quarterly distributions with record dates and payment dates which
are exactly the same as the record dates and payment dates for regular
quarterly distributions paid by AIMCO in respect of the AIMCO Common Stock,
in each case at the then current IPT Distribution Amount (determined as of
the applicable record date); provided, however, that with respect to the
first such IPT distribution required to be declared and paid after October
15, 1998, the per-IPT Share amount of such distribution shall be an amount
equal to the otherwise applicable IPT Distribution Amount, multiplied by
the number of days that have elapsed from and including December 23, 1998
through and including the record date for such distribution, divided by 91
(rounded up to the next whole cent).
(b) In the event that the Effective Time has not occurred on or
before February 28, 1999, if at any time thereafter AIMCO declares any
distribution on the AIMCO Common Stock other than a regular quarterly
distribution, with a record date for such distribution which is a date
prior to the date of the Effective Time (a "Special AIMCO Distribution"),
then IPT shall promptly declare and pay a corresponding distribution in an
amount equal to the amount of such Special AIMCO Distribution, multiplied
by the IPT Exchange Value, divided by the AIMCO Collar Price.
(c) If and to the extent that IPT reasonably determines that
the distributions paid by IPT pursuant to the foregoing subsections (a) and
(b) of this Section 6.1 are not sufficient for IPT to meet the distribution
requirements applicable to REITs for its taxable year ended on the Closing
Date, including as a result of the AMIT Merger, then IPT shall, prior to
the Effective Time, pay one or more special distributions, in respect of
the IPT Shares in an aggregate amount equal to amount of such shortfall
(the per-IPT Share aggregate amount of such distributions, if any, is
referred to herein as the "Excess Distribution Amount").
(d) AIMCO covenants and agrees that AIMCO will use its best
efforts to cause IPT to timely declare and pay the distributions it is
required to make pursuant to the foregoing subsections (a), (b) and (c) of
this Section 6.1.
Section 6.2 Registration Statement, Information
Statement/Prospectus and Schedule 13E-3. As soon as reasonably practicable
after the date hereof (a) AIMCO shall prepare and file with the SEC a
registration statement (as amended, the "Registration Statement") in
connection with the issuance of AIMCO Common Stock pursuant to the Merger,
in which the Information Statement/Prospectus (as defined below) shall be
included as a prospectus, and (b) the parties shall prepare and file with
the SEC a combined information statement and prospectus to be distributed
in connection with the Merger and the transactions contemplated hereby (as
amended, the "Information Statement/Prospectus") and a transaction
statement on Schedule 13E-3 (the "Schedule 13E-3"). The parties shall use
their reasonable best efforts to have the Registration Statement declared
effective under the Securities Act by the SEC as soon as practicable after
such filing and to cause the Information Statement/Prospectus to be mailed
to IPT Shareholders as soon as practicable after the Registration Statement
is declared effective by the SEC. Each party shall furnish all information
concerning itself which is required or customary for inclusion in the
Registration Statement, the Information Statement/Prospectus or the
Schedule 13E-3. The information provided by any party for use in the
Registration Statement, the Information Statement/Prospectus or the
Schedule 13E-3 shall be true and correct in all material respects without
omission of any material fact which is required to make such information
not false or misleading. No representation, covenant or agreement is made
by any party with respect to information supplied by the other party for
inclusion in the Registration Statement, the Information
Statement/Prospectus or the Schedule 13E-3. Each party shall also take such
action as may be reasonably required to cause the shares of AIMCO Common
Stock covered by the Registration Statement to be approved for listing on
the NYSE as of the Effective Time, upon official notice of issuance. Each
party shall also take such action as may be reasonably required to cause
the shares of AIMCO Common Stock issuable in connection with the Merger to
be registered or to obtain an exemption from registration under applicable
state "blue sky" or securities laws; provided, however, that no party shall
be required to register or qualify as a foreign corporation or to take
other action which would subject it to general service of process in any
jurisdiction where the Surviving Entity will not be, following the Merger,
so subject.
Section 6.3 Regulatory Matters. Each party shall cooperate and
use its reasonable best efforts to promptly prepare and file all necessary
documentation and to effect all necessary applications, notices, petitions,
filings and other documents, including, without limitation, the AIMCO
Required Filings.
Section 6.4 Shareholder Approval. IPT shall, as soon as
practicable after the date hereof, (a) take all steps necessary to duly
call, give notice of, convene and hold a meeting of the IPT Shareholders
(an "IPT Meeting") for the purpose of voting on the Merger, which meeting
shall be held on a date (the "IPT Meeting Date") which is a NYSE trading
day, provided that the day immediately preceding such date must also be a
NYSE trading day, and (b) distribute to IPT Shareholders the Information
Statement/Prospectus. The IPT Board, acting upon the recommendation of a
majority of the Continuing Trustees (as defined in the IPT Bylaws), unless
otherwise required in accordance with its fiduciary duties to IPT
Shareholders, shall recommend to such shareholders the approval of the
Merger, this Agreement and the transactions contemplated hereby and
cooperate and consult with AIMCO with respect to each of the foregoing
matters. Notwithstanding the foregoing, IPT and the Continuing Trustees may
take and disclose to IPT Shareholders a position contemplated by Rule 14e-2
promulgated under the Exchange Act if required to do so by the Exchange
Act, comply with Rule 14d-9 thereunder and make all other disclosures
required by applicable law.
Section 6.5 Vote of IPT Shares Owned by AIMCO. AIMCO agrees to
vote all IPT Shares owned of record by it, and to cause all IPT Shares
owned of record by its Subsidiaries to be voted, for approval of this
Agreement and the transactions contemplated hereby and has executed a proxy
in favor of Messrs. Aston, Xxxxxx and Xxxxxxxx (the "Proxyholders") to vote
all such IPT Shares held by AIMCO, directly or indirectly, in favor of the
Merger. AIMCO further agrees that, through the Effective Time, it shall not
(i) sell, transfer or otherwise dispose of any IPT Shares owned by it or
any of its Subsidiaries, (ii) cause or permit IPT to issue additional IPT
Shares to any other Person or take any other action which could have the
effect of reducing the proportion of IPT Shares owned by AIMCO and its
Subsidiaries that are entitled to vote on this Agreement and the
transactions contemplated hereby, or (iii) grant any proxies with respect
to such shares; provided, however, that AIMCO may (a) transfer IPT Shares
owned by it to its Subsidiaries so long as such Subsidiary agrees to be
bound by the terms of this Agreement and to execute a proxy to vote such
IPT Shares in favor of the Merger in the form attached as Exhibit 6.5 or
(b) pledge such IPT Shares to a commercial bank or other bona fide
financial institution with capital exceeding $100,000,000 (a "Financial
Institution") so long as such Financial Institution agrees in writing to
(1) honor the proxy given by AIMCO to the Proxyholders with respect to such
pledged IPT Shares on the date hereof, (2) execute a proxy in favor of the
Proxyholders or their successors once the Financial Institution obtains the
right to vote such pledged IPT Shares and (3) cause any transferee of such
IPT Shares from the Financial Institution to execute a proxy in favor of
the Proxyholders or their successors and to agree to cause any subsequent
transferee of the IPT Shares to also agree to the obligations in subsection
(3).
Section 6.6 Public Announcements. Subject to each party's
disclosure obligations imposed by law and the rules of any national
securities exchange or inter-dealer quotation system on or in which the
shares of stock, beneficial interest or other ownership interests of IPT or
AIMCO are now or may later be listed or authorized to be quoted, IPT and
AIMCO shall cooperate with each other in the development and distribution
of all news releases and other public announcements with respect to this
Agreement or any of the transactions contemplated hereby and shall not
issue any public announcement or statement with respect hereto or thereto
without the consent of the other party (which consent shall not be
unreasonably withheld).
Section 6.7 Expenses. All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses.
Section 6.8 Further Assurances. Each party shall, and shall
cause its Subsidiaries to, execute such further documents and instruments
and take such further action, including, without limitation, obtaining any
consents, authorizations, exemptions and approvals, as may be necessary to
perform the obligations and satisfy the conditions to be performed or
satisfied by either party pursuant to this Agreement or as may reasonably
be requested by the other party in order to consummate the Merger in
accordance with the terms hereof. In addition, AIMCO agrees to use its
commercially reasonable efforts to retain counsel within 30 days from the
date hereof to provide the form of opinion required by Section 7.2(g).
Section 6.9 Transfer Taxes. The parties shall cooperate in the
preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding the real property transfer or
gains, sales, use, transfer, value added, stock transfer and stamp taxes,
any transfer, recording, registration and other fees or similar Taxes
("Transfer Taxes") which become payable in connection with the transactions
contemplated by this Agreement that are required to be filed on or before
the Closing Date.
Section 6.10 IPT Trustees and Officers. No later than promptly
after the execution and delivery of this Agreement by both parties, IPT
shall (a) cause two members of the IPT Board to resign their trusteeships,
(b) increase the size of the IPT Board to eleven and cause each of the
trustee candidates designated by AIMCO listed on Schedule 6.10-1 hereto
(together with their successors, the "AIMCO-nominated Trustees") to be
elected as a trustee of IPT, (c) cause the officer candidates designated by
AIMCO and listed on Schedule 6.10-2 hereto to be appointed to the
respective positions indicated on such Schedule, (d) establish a committee
of the IPT Board, consisting solely of AIMCO-nominated Trustees, authorized
and empowered to act to the extent set forth in the IPT Bylaws, (e)
recognize that the Continuing Trustees (as defined in the IPT Bylaws) of
the IPT Board, consisting of Xxxxxx X. Xxxxxx, Xxxxx X. Aston, Xxxxxx X.
Xxxxxxxx, Xxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx, are authorized and
empowered to act to the extent set forth in the IPT Bylaws, and (f)
establish an executive committee of the IPT Board, to consist solely of
AIMCO-nominated Trustees listed on Schedule 6.10-3, to act to the extent
set forth in the IPT Bylaws. The committees referred to in the preceding
sentence shall not be dissolved prior to the Effective Time or the
termination of this Agreement. The powers of the Continuing Trustees shall
not be modified prior to the Effective Time or the termination of this
Agreement without the consent of a majority of the Continuing Trustees. If,
after the date hereof and prior to the Effective Time, any IPT Shareholder
vote is taken for the election of a trustee to any position on the IPT
Board currently occupied by any of the Continuing Trustees or by their
successors duly elected hereunder, AIMCO shall vote its IPT Shares for the
reelection of each such Continuing Trustee or for the election of such
Continuing Trustee's successor designated by a majority of the Continuing
Trustees. If, after the date hereof and prior to the Effective Time, any
vacancy on the IPT Board arises with respect to a trustee position occupied
by a Continuing Trustee, AIMCO shall cause the AIMCO-nominated Trustees to
vote to fill such vacancy by electing a person nominated by a majority of
the Continuing Trustees. After the date hereof and prior to the earlier of
the Effective Time or the termination of this Agreement, without the prior
written consent of a majority of the Continuing Trustees, which shall not
be unreasonably withheld, IPT shall not terminate (x) its independent
auditors, (y) Xxxxxx Brothers Inc. from serving as its financial advisor
with respect to the Merger, or (z) Proskauer Rose LLP, Miles & Stockbridge,
Xxxxxx & Xxxxx or Xxxx, Gump, Strauss, Xxxxx & Xxxx from serving as its
legal counsel with respect to the Merger. The parties agree that Xxxxxxx X.
Xxxxx shall remain as Secretary of the Company, and in such capacity shall
be invited and entitled to attend all meetings of the IPT Board and each
committee thereof. In the event that Xxxxxxx X. Xxxxx shall cease to serve
as Secretary of the Company for any reason, another individual nominated by
a majority of the Continuing Trustees shall be appointed to such position
and be so invited and entitled to attend such meetings. Without the
approval of a majority of the Continuing Trustees, AIMCO shall not, and
shall not permit any AIMCO-nominated Trustee to, remove a Continuing
Trustee as a trustee of the IPT Board or amend the IPT Charter unless such
amendment shall have been approved by a majority of the Continuing
Trustees.
Section 6.11 Modification of Form of Transaction. Upon the
earlier to occur of (i) December 31, 2000 or (ii) such time (if ever) as
any Law is adopted or issued after the date hereof which has the effect, as
supported by the written opinion of outside counsel for AIMCO, of
prohibiting the Merger, or any court of competent jurisdiction in the
United States shall have issued an order, judgment or decree permanently
restraining, enjoining or otherwise prohibiting the Merger, which order,
judgment or decree has become final and nonappealable, IPT, acting upon the
recommendation of the Continuing Trustees, and AIMCO shall use their best
efforts to restructure the form of the transaction to one which has a
materially improved chance of completion and can be accomplished without
materially changing either the consideration to be received by IPT
Shareholders or the tax or other economic consequences of the transaction
to AIMCO and its Subsidiaries. Pending a definitive agreement between IPT
and AIMCO providing for such a restructured transaction, AIMCO and IPT
shall continue to be obligated to diligently pursue the consummation of the
Merger on the terms contemplated by this Agreement until such time, if
ever, as this Agreement is terminated pursuant to Section 8.1.
Section 6.12 Indemnification.
(a) "Losses" shall mean any and all actual costs or expenses
(including, without limitation, attorneys' fees billed at standard hourly
rates, investigation costs and remediation costs, interest, penalties and
fines and all legal and other costs, expenses and disbursements in giving
testimony or furnishing documents in response to a subpoena or otherwise),
judgments, amounts paid in settlement, fines, penalties, assessments, Taxes
(as defined in the IFG Agreement, but excluding Taxes arising from amounts
paid to an Indemnitee (as defined in Section 6.12(b)), losses, actions or
causes of action, claims, demands, damages, liabilities, obligations,
awards, disbursements or assessments of every kind, nature and description
(including, without limitation, counsel's fees billed at standard hourly
rates and expenses, as and when incurred, in connection with any action,
claim or proceeding relating thereto). Notwithstanding the foregoing,
Losses shall be reduced to reflect any insurance proceeds actually
recovered by the Indemnitee relating to such claim, provided that this
reduction shall not be applied if to do so would excuse any insurer from
any obligation to cover any loss. If the Indemnitee receives insurance
proceeds after it receives indemnity hereunder, then the Indemnitee, within
10 days of receipt of such proceeds, shall pay to AIMCO the amount by which
AIMCO's payment would have been reduced if the insurance proceeds had been
received before the indemnity payments.
(b) AIMCO shall save, defend, indemnify and hold harmless each
person who is a trustee or officer of IPT, any person succeeding to their
position prior to the Closing Date, and their respective successors and
heirs (each, an "Indemnitee") to the fullest extent permitted by applicable
law from and against all Losses, as and when incurred, whether or not
involving a third party, that arise out of or are the result of the fact
that he is, was, or is to be, either prior to or after the execution of
this Agreement, a trustee, officer or employee of IPT, except that no
Indemnitee shall be entitled to be indemnified hereunder with respect to
any Loss determined to have been incurred (i) by reason of such
Indemnitee's wilful misconduct or (ii) with respect to attorney's fees and
expenses which are not reasonable, in each case in a written factual
finding issued in a court proceeding or other adjudication not subject to
further appeal or issued in an arbitration (as to (ii) only), and, in the
event of such a finding, any funds advanced to such Indemnitee pursuant to
Section 6.12(c) and which are not found to be within the provision of
clause (i) or (ii) shall be returned by such Indemnitee promptly to AIMCO.
AIMCO shall make payments under this Section 6.12 within 30 days from the
date that an Indemnitee has requested indemnification hereunder.
(c) If any action, suit, proceeding or investigation is
commenced as to which an Indemnitee proposes to demand indemnification, he
shall notify AIMCO with reasonable promptness; provided, however, that
failure to give reasonably prompt notice to AIMCO shall not affect the
indemnification obligations of AIMCO hereunder except to the extent that
the failure to so notify has led to prejudice against AIMCO in such action,
suit, proceeding or investigation. The Indemnitee shall have the right to
retain counsel of its own choice to represent him; and such counsel shall,
to the extent consistent with its professional responsibilities, cooperate
with AIMCO and any counsel designated by AIMCO. AIMCO shall be liable only
for any settlement of any claim against an Indemnitee made with AIMCO's
written consent, which consent shall not be unreasonably withheld. AIMCO
shall not, without the prior written consent of an Indemnitee, settle or
compromise any claim, or permit a default or consent to the entry of any
judgment in respect thereof, unless such settlement, compromise or consent
includes, as an unconditional term thereof, the giving by the claimant to
such Indemnitee of an unconditional release from all liability in respect
of such claim.
(d) Before enforcing his rights under this Section 6.12, an
Indemnitee must first demand indemnification from IPT pursuant to the
indemnification provisions set forth in the IPT Charter, IPT Bylaws and any
contractual arrangement between such Indemnitee and IPT. If, after ten
business days from the date that such Indemnitee had requested
indemnification from IPT pursuant to the indemnification provisions of the
IPT Charter, IPT Bylaws and any contractual arrangement between such
Indemnitee and IPT, IPT has not paid the Indemnitee's claim or
satisfactorily responded to such Indemnitee's request, as reasonably
determined by the Indemnitee, the Indemnitee shall be free to assert a
claim for indemnification pursuant to this Section 6.12.
(e) Notwithstanding any other provision of this Agreement to
the contrary, this Section 6.12 and Section 6.13 shall survive the
consummation of the Merger and termination of this Agreement.
Section 6.13 Insurance. AIMCO and IPT agree that after the date
hereof and until the Effective Time, IPT shall maintain in full force and
effect, and AIMCO shall use its best efforts to cause IPT to maintain in
full force and effect, directors', trustees' and officers' liability
insurance covering the existing and Continuing Trustees, directors and
officers of IPT and its Subsidiaries which is no less favorable than the
insurance coverage which is in effect and covering such trustees, directors
and officers on the date hereof. AIMCO further agrees that following the
Effective Time, the Surviving Entity will maintain such insurance covering
such persons, and each such person covered by such insurance immediately
prior to the Effective Time shall be named as additional insureds.
Section 6.14 Conduct of IPT's Business Pending the Effective
Time.
Each of IPT and AIMCO covenants and agrees that from the date
of this Agreement until the Effective Time:
(a) IPT shall use its best efforts to maintain its listing on
the American Stock Exchange;
(b) none of IPT, IPLP or any Controlled IPT Entity (as defined
in Section 8.2) shall loan money to AIMCO or any Controlled AIMCO Entity
(as defined in Section 8.2);
(c) neither IPT nor IPLP shall reclassify any of their
respective equity securities or other interests or issue or authorize or
propose the issuance of any other securities or interests in respect of, in
lieu or, or in substitution for, their respective equity securities or
other interests;
(d) neither IPT nor AIMCO shall cause the IPLP Limited
Partnership Agreement to be amended, except with the prior consent of a
majority of the Continuing Trustees, provided that IPLP may admit
Additional Limited Partners (as defined the IPLP Limited Partnership
Agreement) other than AIMCO or its affiliates to IPLP in accordance with
the terms of the IPLP Limited Partnership Agreement without such consent;
(e) during such time as AIMCO controls (as such term is defined
in the rules and regulations promulgated under Rule 12b-2 of the Exchange
Act) IPT, neither IPT nor AIMCO shall cause IPT to make termination fee
payments to IFG or any of its subsidiaries under sections 7.1(c), 7.2(c) or
7.2(d) of the IPLP Limited Partnership Agreement or benefit from the rights
provided in Section 9.6 thereof;
(f) IPT shall duly and timely file all reports and other
documents required to be filed pursuant to the Securities Act, the Exchange
Act and the rules and regulations thereunder;
(g) IPT shall follow the same general policy as AIMCO in
releasing and drafting its xxxxxx xxxxx releases and such releases will
include the AIMCO Collar Price (if determinable), the IPT Exchange Value
and, if applicable, the future date through which AIMCO may elect to pay
cash;
(h) AIMCO shall not, nor shall AIMCO permit any of its
Subsidiaries to, willfully take any action that would result in a state of
facts which would make the Merger impossible to be consummated or would
result in a material breach of any provision of this Agreement or in any of
its material representations and warranties set forth in this Agreement
being untrue on and as of the Closing Date; provided, however, that AIMCO
and its Subsidiaries (other than IPT) may issue securities, acquire
securities or assets and otherwise act in the ordinary course of their
business;
(i) all transactions between IPT, IPLP or any Controlled IPT
Entity, on the one hand, and AIMCO or any Controlled AIMCO Entity, on the
other hand, shall be on arms' length terms;
(j) IPT shall not increase its annual general and
administrative expenses in excess of an annual increase based on the
Consumer Price Index (with the amortization of restricted stock outstanding
as of the date hereof being excluded from the definition of general and
administrative expenses); and
(k) neither AIMCO nor any of its affiliates (as defined in Rule
12b-2 of the Exchange Act), directly or indirectly, shall bid for, purchase
or attempt to induce any Person to bid for or purchase AIMCO Common Stock
except in compliance with Regulation M and, treating the purchasing entity
as the "issuer," Rule 10b-18 under the Exchange Act (a) from the fifth
business day prior to the first day of the period in which the AIMCO Collar
Price is determined until the last day of the period in which the AIMCO
Collar Price is determined or (b) from the fifth business day prior to the
first day of the period in which the AIMCO Reference Price is determined
until the last day of the period on which the AIMCO Reference Price is
determined. AIMCO shall report the volume, dates and prices of such
purchases to IPT's Secretary weekly.
ARTICLE VII
CONDITIONS
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction of the following conditions:
(a) Shareholder Approval. The IPT Shareholders' Approval shall
have been obtained on or prior to the Closing Date.
(b) No Injunction. No temporary restraining order or
preliminary or permanent injunction or other order by any federal or state
court preventing consummation of the Merger shall have been issued and be
continuing in effect.
(c) No Change in Law. The Merger and the other transactions
contemplated hereby shall not have been prohibited under any applicable
federal or state law or regulation adopted or amended after the date
hereof.
(d) Effectiveness of Registration Statement. If the Merger
Consideration to be issued pursuant to Section 2.1 consists of any shares
of AIMCO Common Stock, (i) the Registration Statement shall continue to be
effective under the Securities Act at the Effective Time, and no stop order
suspending such effectiveness shall be in effect, and (ii) all applicable
time periods required under the Exchange Act following the mailing of the
Information Statement/Prospectus to IPT Shareholders shall have elapsed.
Section 7.2 Additional Conditions to Obligation of IPT to
Effect the Merger. The obligation of IPT to effect the Merger shall be
further subject to the satisfaction of the following conditions, unless
waived by a majority of the Continuing Trustees of the IPT Board in
writing.
(a) Fairness Opinion. As of the Closing Date, the opinion of
Xxxxxx Brothers Inc. referred to in Section 4.8 shall not have been
withdrawn.
(b) Representations and Warranties. If the Merger Consideration
is to be comprised in whole or in part of AIMCO Common Stock, the
representations and warranties of AIMCO contained in Article V which are
qualified as to materiality shall be true and correct, and all other
representations and warranties of AIMCO contained in this Agreement shall
be true and correct, in all material respects, in each case (i) on and as
of the date hereof and (ii) at and as of the Effective Time with the same
effect as though such representations and warranties had been made at and
as of the Effective Time (except for representations and warranties that
expressly speak only as of a specific date or time which need only be true
and correct as of such date or time); provided that this condition to the
obligation of IPT to consummate the Merger shall be deemed satisfied if the
aggregate losses, costs, damages and expenses to IPT due to breaches of
such representations and warranties (without giving effect to any
materiality qualification or standard contained in any such representations
and warranties), when aggregated with failures to comply with covenants by
AIMCO and AIMCO Material Adverse Effects, does not exceed $50.0 million.
(c) Performance of Obligations of AIMCO. If the Merger
Consideration is to be comprised in whole or in part of AIMCO Common Stock,
each of AIMCO and the AIMCO Subsidiaries shall have performed, in all
respects, all obligations set forth in Sections 6.10, 6.13, 6.14(d) and
6.14(k).
(d) AIMCO Officer's Certificate. If the Merger Consideration is
to be comprised in whole or in part of AIMCO Common Stock, IPT shall have
received a certificate signed by the President of AIMCO, dated as of the
Closing Date, to the effect that, to the best of such officer's knowledge,
the conditions set forth in Sections 7.2(b) and (c) have been satisfied.
(e) AIMCO REIT Opinion. If the Merger Consideration is to be
comprised in whole or in part of AIMCO Common Stock, IPT shall have
received an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to
AIMCO, dated as of the Closing Date, substantially in the form attached
hereto as Exhibit 7.2(e).
(f) AIMCO Reorganization Opinion. If the Merger Consideration
is to be comprised in whole or in part of AIMCO Common Stock, IPT shall
have received an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP,
counsel to AIMCO, dated as of the Closing Date, substantially in the form
attached hereto as Exhibit 7.2(f) or such revised opinion as contemplated
by Section 1.1 which is reasonably satisfactory to a majority of Continuing
Trustees and their counsel; provided, however, that if AIMCO is unable to
deliver either opinion, the Merger Consideration shall include only cash,
regardless of any Cash Election Notice to the contrary.
(g) AIMCO Corporate Law Opinion. IPT shall have received an
opinion, dated as of the Closing Date, substantially in the form attached
hereto as Exhibit 7.2(g) from counsel mutually satisfactory to the parties
hereto.
Section 7.3 Additional Conditions to Obligation of AIMCO to
Effect the Merger. The obligation of AIMCO to effect the Merger shall be
further subject to the satisfaction of the following conditions, unless
waived by AIMCO in writing:
(a) Representations and Warranties. The representations and
warranties of IPT contained in Article IV which are qualified as to
materiality shall be true and correct and all other representations and
warranties of IPT contained in this Agreement shall be true and correct, in
all material respects, on and as of the date hereof; provided that this
condition to the obligation of AIMCO to consummate the Merger shall be
deemed satisfied if the aggregate loss, cost, damage or expense to AIMCO
due to breaches of such representations and warranties (without giving
effect to any materiality qualification or standard contained in any such
representations and warranties) does not exceed $50.0 million.
(b) REIT Opinion. The opinion of Akin, Gump, Strauss, Xxxxx and
Xxxx, L.L.P., counsel to IPT, dated and delivered to AIMCO on the date
hereof, receipt of which is hereby acknowledged by AIMCO, shall not have
been withdrawn on the basis solely of facts existing as of the date hereof.
(c) Opinion of IPT's Counsel. The opinion of Miles &
Stockbridge, counsel to IPT, dated and delivered to AIMCO on the date
hereof, receipt of which is hereby acknowledged by AIMCO, shall not have
been withdrawn on the basis solely of facts existing as of the date hereof.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after receipt of
the IPT Shareholders' Approval contemplated by this Agreement:
(a) by mutual written consent of a majority of the Continuing
Trustees and the AIMCO Board; or
(b) by AIMCO, by written notice to each of the Continuing
Trustees, if the Effective Time shall not have occurred on or before
December 31, 2001; or
(c) by a majority of the Continuing Trustees, on behalf of IPT,
by written notice to AIMCO, if:
(i) the Effective Time shall not have occurred
on or before December 31, 2001;
(ii) a majority of the Continuing Trustees shall
determine in good faith that any proposal by or offer from any Person
relating to any (A) acquisition of a substantial amount of assets of
IPT or IPLP or any of the outstanding IPT Shares or IPLP partnership
interests, (B) offer to purchase outstanding IPT Shares or IPLP
partnership interests or (C) merger, consolidation, business
combination, sale of substantially all assets, recapitalization,
liquidation or similar transaction involving IPT or IPLP, other than
the transactions contemplated by this Agreement (an "Alternative
Proposal"), constitutes a proposal that is reasonably likely to be
consummated and would, if consummated, result in a transaction which
is more favorable, from a financial point of view, to IPT
Shareholders than the transactions contemplated by this Agreement (a
"Superior Proposal"); provided, however, that the Continuing Trustees
may not terminate this Agreement pursuant to this Section 8.1(c)(ii)
unless (x) five days shall have elapsed after delivery to AIMCO of a
written notice of such determination by the Continuing Trustees and
at all reasonable times during such five-day period the Continuing
Trustees shall have cooperated with AIMCO in informing AIMCO of the
terms and conditions of such Alternative Proposal and the identity of
the person or group making such Alternative Proposal, with the
objective of providing AIMCO a reasonable opportunity, during such
five-day period, to propose a modification of the terms and
conditions of this Agreement so that a business combination between
IPT and AIMCO may be effected, (y) during such five-day period, the
Continuing Trustees negotiate in good faith with AIMCO with respect
to such proposed modifications, and (z) at the end of such five-day
period, a majority of the Continuing Trustees continues to believe in
good faith that such Alternative Proposal constitutes a Superior
Proposal; or
(iii) AIMCO has taken any action that constitutes an
anticipatory repudiation of this Agreement and has failed to cure
such action within 10 days from receipt of notice (whether written or
oral) from a majority of the Continuing Trustees.
Section 8.2 Effect of Termination. In the event of termination
of this Agreement by either IPT or AIMCO pursuant to Section 8.1, the
effects and consequences of such termination, and relative rights and
obligations of the parties as a result thereof, shall be as set forth in
this Section 8.2 and in the IPT Bylaws.
(a) Certain Definitions. As used in this Agreement, the
following terms have the following meanings:
"AIMCO Termination Reference Price" means the average
price (computed based on the sum of the high and low sales prices of AIMCO
Common Stock (as reported in the NYSE Composite Transactions reporting
system as published in The Wall Street Journal or, if not published
therein, in another authoritative source) divided by two) of a share of
AIMCO Common Stock during the ten consecutive NYSE trading day period
ending on and including the Termination Date.
"AIMCO Termination Share Value" means (i) the AIMCO
Termination Reference Price, if the Termination Date is on or prior to
December 31, 1998, or (ii) the lesser of the AIMCO Collar Price or the
AIMCO Termination Reference Price, if the Termination Date is on or after
January 1, 1999.
"Control" has the meaning specified in Rule 12b-2
of the Exchange Act.
"Controlled AIMCO Entity" means AIMCO and each Person
which, as of or after the date of this Agreement, is or becomes directly or
indirectly Controlled by AIMCO.
"Controlled IPT Entity" means any Person which, as of or
after the date of this Agreement, is or becomes directly or indirectly
Controlled by IPT, other than IPLP and each wholly-owned Subsidiary of IPT
or IPLP.
"Covered IPT Assets" means any and all (i) securities,
assets (whether real or personal, tangible or intangible) and other things
of value acquired by any Controlled AIMCO Entity from any of IPT, IPLP or
any wholly-owned Subsidiary of IPT or IPLP at any time prior to the
Termination Date (including prior to the Insignia Merger) and (ii) cash and
non-cash distributions received in respect of the foregoing, together, in
the case of cash distributions, with a return thereon at an annual rate of
10%, compounded annually, from the date of receipt thereof through the
Termination Date; provided that to the extent any item which would have
otherwise constituted a Covered IPT Asset has been sold or otherwise
disposed of, the consideration received therefor, together with interest on
any cash portion thereof on the same basis, shall be substituted for such
item.
"Covered Third-Party Assets" means any and all of the
following acquired by any Controlled AIMCO Entity from any Person other
than IPT, IPLP or a wholly-owned Subsidiary of IPT or IPLP at any time
prior to the Termination Date (including prior to the Insignia Merger): (i)
equity securities or debt securities of, or other ownership interests in or
indebtedness of, any Controlled IPT Entity; (ii) assets, whether real or
personal, tangible or intangible, of any Controlled IPT Entity; (iii) any
other thing of value acquired from a Controlled IPT Entity; and (iv) cash
and non-cash distributions received in respect of the foregoing, together,
in the case of cash distributions, with a return thereon at an annual rate
of 10%, compounded annually, from the date of receipt thereof through the
Termination Date; provided that to the extent any item which would have
otherwise constituted a Covered Third-Party Asset has been sold or
otherwise disposed of, the consideration received therefor, together with
interest on any cash portion thereof on the same basis, shall be
substituted for such item.
"IPT Unwind Consideration" means any and all (i)
consideration delivered to IPT, IPLP and wholly-owned Subsidiaries of IPT
and IPLP in exchange for the Covered IPT Assets, and (ii) cash and non-cash
distributions received in respect of the foregoing, together, in the case
of cash distributions, with a return thereon at an annual rate of 10%,
compounded annually, from the date of receipt thereof through the
Termination Date; provided that to the extent any item which would have
otherwise constituted IPT Unwind Consideration has been sold or otherwise
disposed of, the consideration received therefor, together with interest on
any cash portion thereof on the same basis, shall be substituted for such
item.
"IPT Security" means, at the option of the recipients,
either an IPT Share or a Common Partnership Unit (as defined in the IPLP
Limited Partnership Agreement).
"IPT Termination Share Value" means an amount equal to
the IPT Exchange Value, divided by the AIMCO Termination Share Value,
multiplied by the AIMCO Termination Reference Price.
"IPT Unwind Consideration" means the issuance to AIMCO
(or its designee) of a number of fully paid, validly issued and
non-assessable IPT Securities equal to the Termination Purchase Price
divided by the IPT Termination Share Value.
"IPT Unwind Consideration Price" means the consideration
originally paid or delivered by AIMCO or its affiliates to IPT or its
affiliate together with all distributions received with respect thereto
together, in the case of a cash distribution, with interest thereon at an
annual rate of 10%, compounded annually; provided that to the extent any
such consideration has been sold or otherwise disposed of, the
consideration received therefor, together with interest on any cash portion
thereof on the same basis, shall be substituted for such consideration.
"Termination Date" means the date on which this Agreement
is terminated pursuant to Section 8.1.
"Third-Party Unwind Consideration" means a number of
fully paid, validly issued and non-assessable IPT Securities equal to the
Third-Party Unwind Price divided by the IPT Termination Share Value.
"Third-Party Unwind Price" means the aggregate fair value
of the consideration originally paid or delivered by the applicable
Controlled AIMCO Entity in exchange for the Covered Third-Party Assets,
plus interest thereon at an annual rate of 10%, compounded annually, from
the date of acquisition through the Termination Date, minus the aggregate
fair value of all cash and non-cash distributions received in respect of
the Covered Third-Party Assets, minus interest on the amount of cash
distributions at an annual rate of 10%, compounded annually, from the date
of receipt through the Termination Date; provided that to the extent any
such consideration has been sold or otherwise disposed of, the
consideration received therefor, together with interest on any cash portion
thereof on the same basis, shall be substituted for such consideration.
(b) "Third-Party Unwind". As soon as practicable after such
termination, AIMCO shall transfer and assign to IPT or IPLP, as
appropriate, all of the Covered Third-Party Assets, in exchange for which
IPT or IPLP, as appropriate, shall issue to AIMCO (or its designee) the
Third-Party Unwind Consideration, provided that equal cash amounts due from
each party may be netted out.
(c) "IPT Unwind". As soon as practicable after such
termination, AIMCO shall assign and transfer to IPT, IPLP of the
wholly-owned Subsidiary or IPT or IPLP, as applicable, all of the Covered
IPT Assets, in exchange for which IPLP shall return to the applicable
Controlled AIMCO Entity the applicable IPT Unwind Consideration, provided
that equal cash amounts due from each party may be netted out.
(d) Limitation on Liability; Survival. Except as set forth in
this Section 8.2, there shall be no liability on the part of either IPT or
AIMCO or their respective officers, trustees or directors hereunder after a
termination, except that (i) the foregoing limitation on liability shall
not apply with respect to any party whose breach of any representation,
warranty, covenant or agreement is reason for such termination, and (ii) in
all events, in addition to the provisions of Section 9.1, Sections 6.7,
6.10, 6.12, 6.13, 9.10 and this Section 8.2 hereof shall survive such
termination.
Section 8.3 Amendment. This Agreement may be amended, at any
time before or after the IPT Shareholders' Approval has been obtained and
prior to the Effective Time, only by a written instrument signed by AIMCO
and a majority of the Continuing Trustees, on behalf of IPT; provided,
however, that after the IPT Shareholders' Approval has been obtained, no
such amendment shall, without the further approval of the IPT Shareholders,
(a) alter or change the amount or type of Merger Consideration or any
proceedings relating to the treatment of IPT Shares under Article II hereof
or (b) alter or change any of the other terms and conditions of this
Agreement if such alterations or changes, individually or in the aggregate,
would adversely affect the rights of holders of IPT Shares.
Section 8.4 Waiver. At any time prior to the Effective Time,
AIMCO or IPT, acting pursuant to the decision of a majority of the
Continuing Trustees may (a) extend the time for the performance of any of
the obligations or other acts of the other party, (b) waive any
inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions of the other party
contained herein, to the extent permitted by applicable law. Any agreement
on the part of a party to any such extension or waiver shall be valid if
set forth in an instrument in writing signed on behalf of such party,
provided that in order for a waiver by IPT to be valid and effective, such
instrument must be signed by a majority of the Continuing Trustees.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Survival of Representations and Warranties. In
addition to the provisions of Section 8.2, the representations and
warranties contained in this Agreement shall not survive the Effective
Time, except for (i) Section 5.6, which shall remain in effect until one
year after the Effective Time and shall survive the consummation of the
Merger and the termination of this Agreement (ii) Sections 6.14(e), which
shall survive the termination of this Agreement, indefinitely, and (iii)
the third sentence of Section 5.2, which shall survive the consummation of
the Merger indefinitely.
Section 9.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given (a) when delivered
personally, (b) one business day after delivered to a reputable overnight
courier service or (c) when sent via facsimile (which is confirmed by copy
sent within one business day by a reputable overnight courier service) to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(a) If to IPT, to:
Insignia Properties Trust
000 Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy (which shall not constitute notice) to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
(b) If to AIMCO, to:
Apartment Investment and Management Company
0000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx, LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Section 9.3 Adjustment for Dilution. All references in this
Agreement to per share amounts and prices shall be equitably adjusted to
take into account any splits, combinations, equity dividends,
reclassifications and similar transactions, such that no party or IPT
Shareholder is any better or worse off than they would have been had such
transaction not occurred.
Section 9.4 Entire Agreement. This Agreement and the schedules
hereto constitute the entire agreement, and supersede all other prior
agreements and understandings, both written and oral, between the parties
with respect to the subject matter hereof.
Section 9.5 Assignment. This Agreement may not be assigned by
either party and any attempted assignment shall be void and of no effect.
Section 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND SECTION 327(b) OF THE NEW YORK CIVIL PRACTICE
LAWS AND RULES, EXCEPT TO THE EXTENT THAT SECTIONS 1.1, 1.2, 1.3, 1.4 AND
2.1(b) AND (c) ARE EXPRESSLY GOVERNED BY OR DERIVE THEIR AUTHORITY FROM THE
MGCL OR MCAA.
Section 9.7 Interpretation. When reference is made in this
Agreement to Sections or Exhibits, such reference shall be to a Section or
Exhibit of this Agreement unless otherwise indicated. The table of contents
and headings contained in this Agreement are for convenience only and shall
not affect in any way the meaning or interpretation of this Agreement.
Whenever the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
Section 9.8 Counterparts; Effect. This Agreement may be
executed in counterparts, each of which shall be deemed to be an original,
but all of which shall constitute one and the same agreement.
Section 9.9 Parties' Interest. This Agreement shall be binding
upon each party hereto and shall inure solely to the benefit of each party
hereto and the IPT Shareholders. Nothing in this Agreement, express or
implied, is intended to confer upon any third party, other than the IPT
Shareholders, any rights or remedies of any nature whatsoever under or by
reason of this Agreement.
Section 9.10 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, it is agreed that the parties shall
be entitled to an injunction or injunctions, in addition to any other
remedy to which they are entitled at law or in equity, to prevent breaches
of this Agreement and to specifically enforce the terms and provisions of
this Agreement in any federal or state court located in the County of New
York, State of New York. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any federal or
state court located in the County of New York in the event any dispute
arises out of this Agreement or any of the transactions contemplated by
this Agreement, (b) agrees that it shall not attempt to deny such personal
jurisdiction by motion or other request for leave from any such court and
(c) agrees that it shall not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other
than a federal or state court sitting in the County of New York.
Section 9.11 Severability. The provisions of this Agreement
shall be deemed severable, and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof. If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is invalid or
unenforceable, (a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and enforceable, the
intent and purpose of such invalid or unenforceable provision and (b) the
remainder of this Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by such invalidity
or unenforceability, nor shall such invalidity or unenforceability affect
the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
Section 9.12 Letter Agreement. The letter agreement, dated
October 14, 1997, as amended by the letter dated March 2, 1998, between
AIMCO and IFG, if it has been terminated, shall be reinstated each time
AIMCO breaches any of its obligations under Section 6.12, whereupon it
shall remain in effect for a period of two years from the date of breach,
insofar as such agreement applies to Controlled IPT Entities.
Section 9.13 Knowledge. As used herein, the "knowledge"of IPT
or any IPT Subsidiary shall mean the actual knowledge of any of Xxxxxx X.
Xxxxxx, Xxxxx X. Aston, Xxxxx X. Xxxxxxxx, Xxxxxx Xxxxxx or Xxxxxxx X.
Xxxxx, and the "knowledge" of AIMCO or any AIMCO Subsidiary shall mean the
actual knowledge of any of Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxxxx Xxxx,
Xxxxxx X. Xxxxxx or (with respect to property-related matters only) Xxxxx
X. Xxxxxx.
Section 9.14 Breaches. Notwithstanding any other provision
herein, if at the time of execution of this Agreement AIMCO has actual
knowledge of a breach of any representation or warranty by IPT, or IPT has
actual knowledge of a breach of any representation or warranty by AIMCO,
such party shall be deemed to have waived such breach to the extent of its
actual knowledge of such breach at such time.
* * * * *
IN WITNESS WHEREOF, AIMCO and IPT have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the
date first written above.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By: _____________________________
Name:
Title:
INSIGNIA PROPERTIES TRUST
By: _____________________________
Name:
Title:
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGER.......................................................2
Section 1.1 Structure of the Merger.................2
Section 1.2 The Merger..............................2
Section 1.3 Effects of the Merger. ................3
Section 1.4 Effective Time of the Merger . .........3
ARTICLE II
TREATMENT OF SHARES..............................................3
Section 2.1 Effect of the Merger on IPT Shares......3
Section 2.2 Surrender of Certificates...............8
Section 2.3 Closing of Transfer Books; Etc. .......9
Section 2.4 Fractional Shares. ....................9
Section 2.5 No Other Rights. .....................10
ARTICLE III
THE CLOSING.....................................................10
Section 3.1 Closing................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF IPT...........................10
Section 4.1 Organization and Qualification of IPT..10
Section 4.2 Organization and Qualification of IPLP.11
Section 4.3 Capitalization.........................11
Section 4.4 Authority; Non-Contravention...........11
Section 4.5 Tax Matters............................12
Section 4.6 Vote Required..........................12
Section 4.7 AMIT Merger............................12
Section 4.8 Opinion of Financial Advisor...........12
Section 4.9 Brokers................................12
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO.........................13
Section 5.1 Organization and Qualification.........13
Section 5.2 Capitalization.........................13
Section 5.3 Authority; Non-Contravention; Required
Filings .............................14
Section 5.4 Reports and Financial Statements.......15
Section 5.5 Absence of Certain Changes or Events...16
Section 5.6 Registration Statement, Information
Statement/Prospectus and
Schedule 13E-3.......................16
Section 5.7 No Vote Required.......................16
Section 5.8 Tax Matters............................16
Section 5.9 Brokers................................17
Section 5.10 Absence of Inducement..................17
ARTICLE VI
ADDITIONAL AGREEMENTS...........................................18
Section 6.1 IPT and IPLP Distributions.............18
Section 6.2 Registration Statement, Information
Statement/Prospectus and
Schedule 13E-3.......................19
Section 6.3 Regulatory Matters.....................20
Section 6.4 Shareholder Approval. .................20
Section 6.5 Vote of IPT Shares Owned by AIMCO......20
Section 6.6 Public Announcements...................21
Section 6.7 Expenses...............................21
Section 6.8 Further Assurances. ...................21
Section 6.9 Transfer Taxes.........................21
Section 6.10 IPT Trustees and Officers..............21
Section 6.11 Modification of Form of Transaction....22
Section 6.12 Indemnification........................23
Section 6.13 Insurance. ............................25
Section 6.14 Conduct of IPT's Business Pending the
Effective Time.......................25
ARTICLE VII
CONDITIONS......................................................27
Section 7.1 Conditions to Each Party's
Obligation to Effect the Merger......27
Section 7.2 Additional Conditions to Obligation
of IPT to Effect the Merger..........27
Section 7.3 Additional Conditions to Obligation
of AIMCO to Effect the Merger........28
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER...............................29
Section 8.1 Termination............................29
Section 8.2 Effect of Termination..................30
Section 8.3 Amendment..............................33
Section 8.4 Waiver.................................34
ARTICLE IX
GENERAL PROVISIONS..............................................34
Section 9.1 Survival of Representations and
Warranties...........................34
Section 9.2 Notices................................34
Section 9.3 Adjustment for Dilution................35
Section 9.4 Entire Agreement.......................35
Section 9.5 Assignment. ..........................36
Section 9.6 GOVERNING LAW..........................36
Section 9.7 Interpretation. ......................36
Section 9.8 Counterparts; Effect...................36
Section 9.9 Parties' Interest......................36
Section 9.10 Enforcement............................36
Section 9.11 Severability...........................37
Section 9.12 Letter Agreement.......................37
Section 9.13 Knowledge. ...........................37
Section 9.14 Breaches. ............................37
INDEX OF DEFINED TERMS
Page
Agreement.............................................................1
AIMCO.................................................................1
AIMCO Benefit Plans..................................................14
AIMCO Board ..........................................................1
AIMCO Charter.........................................................3
AIMCO Class B Common Stock...........................................13
AIMCO Collar Price....................................................3
AIMCO Common Stock....................................................4
AIMCO Exchange Value..................................................4
AIMCO Material Adverse Effect........................................13
AIMCO OP..............................................................1
AIMCO Preferred Stock................................................13
AIMCO Reference Period................................................4
AIMCO Reference Price.................................................4
AIMCO Required Filings...............................................15
AIMCO Restricted Shares...............................................7
AIMCO SEC Reports....................................................15
AIMCO Termination Reference Price....................................31
AIMCO Termination Share Value........................................31
AIMCO-nominated Trustees.............................................21
Alternative Proposal.................................................30
AMIT..................................................................1
AMIT Merger...........................................................1
Cash Election Notice...............................................4, 7
Cash Percentage....................................................4, 7
Certificate ..........................................................6
Closing .............................................................10
Closing Date.........................................................10
Code .................................................................2
Control..............................................................31
Controlled AIMCO Entity..............................................31
Controlled IPT Entity................................................31
Conversion Ratio......................................................4
Distribution Shortfall Amount.........................................4
Effective Time........................................................3
Excess Distribution Amount........................................4, 19
Exchange Act.........................................................15
Exchange Fund.........................................................8
Financial Institution................................................20
GAAP ................................................................16
Governmental Authority...............................................15
HUD .................................................................15
IFG ..................................................................1
IFG Agreement.........................................................1
Indemnitee .........................................................23
Information Statement/Prospectus.....................................19
Insignia Merger.......................................................1
IPLP Limited Partnership Agreement...................................11
IPT ..................................................................1
IPT Board.............................................................1
IPT Bylaws...........................................................10
IPT Charter..........................................................10
IPT Distribution Amount...............................................4
IPT Exchange Value....................................................5
IPT Meeting Date.....................................................20
IPT Preferred Shares.................................................11
IPT Security.........................................................32
IPT Share Plan........................................................7
IPT Shareholders......................................................1
IPT Shareholders' Approval...........................................12
IPT Shares............................................................1
IPT Termination Share Value..........................................32
IPT Unwind Consideration.............................................32
IPT Unwind Consideration Price.......................................32
Losses...............................................................23
Material Adverse Effect..............................................13
MCAA..................................................................3
Merger................................................................1
Merger Consideration..................................................5
MGCL..................................................................3
NYSE..................................................................5
Paying Agent..........................................................8
Person................................................................5
Proxyholders.........................................................20
Registration Statement...............................................19
REIT..................................................................2
Schedule 13E-3.......................................................19
SEC..................................................................15
Securities Act.......................................................15
Special AIMCO Distribution...........................................18
Status Requirements..................................................17
Stock Percentage......................................................5
Subsidiary ..........................................................5
Superior Proposal....................................................30
Surviving Entity......................................................3
Tax Return...........................................................12
Taxes................................................................12
Termination Date.....................................................32
Transfer Taxes.......................................................21
Violation............................................................15
Voting Debt..........................................................11
