EXHIBIT 10.4
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ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTERESTS
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THIS ASSIGNMENT (this "Assignment" is made and entered into as of the
25th day of August, 2003, by and between THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA, a New Jersey corporation ("Assignor"), and AMLI RESIDENTIAL
PROPERTIES L.P., a Delaware limited partnership ("Assignee").
RECITALS
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A. Assignor owns 75% of the membership interests, and Assignee
owns 25% of the membership interests, in AMLI at Oakhurst, LLC. a Delaware
limited liability company (the "Company"), pursuant to that certain
Operating Agreement of AMLI at Oakhurst, LLC, dated as of August 25, 2003
(the "Operating Agreement"; capitalized terms used herein and not defined
herein shall have the meanings given them in the Operating Agreement).
B. The Company owns real property located in Aurora, Illinois,
upon which the Company owns, operates and manages an apartment community
known as AMLI at Oakhurst North (the "Community").
C. Prior to the date hereof, the Community was owned by Xxxxx
Oakhurst, L.P., a Delaware limited partnership (the "Partnership").
D. On the date hereof, the Partnership contributed the Community
to the Company in exchange for 100% of the membership interests in the
Company, and immediately thereafter distributed such membership interests
to Assignor and Assignee in the relative proportions identified in
Recital A above.
E. Assignor desires to assign and Assignee desires to acquire all
of Assignor's right, title and interest in Assignor's membership interests
in the Company (the "Assigned Interests") and all interests, rights and
obligations under the Operating Agreement with respect to the Assigned
Interests only, as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing Recitals, and
the warranties and mutual covenants set forth herein, Assignor and Assignee
hereby agree as follows:
1. ASSIGNMENT OF ASSIGNED INTERESTS. Assignor hereby sells,
assigns, transfers, conveys and delivers to Assignee, free and clear
from any liens, encumbrances or defects of title, and Assignee hereby
accepts, acquires and takes assignment and delivery of, the Assigned
Interests, including, but not limited to, all right, title and
interest in and to the properties (real and personal), capital, cash
flow distributions, profits and losses of the Company relating or
allocable to the Assigned Interests.
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2. PURCHASE PRICE. In consideration of the sale,
assignment, transfer, conveyance and delivery of the Assigned
Interests, upon execution hereof Assignee shall pay to Assignor cash
in the amount of $37,500,000 (the "Purchase Price"). The Purchase
Price, plus or minus, as applicable, the amount of the estimated
prorations determined in accordance with Section 5(a) below and as
set forth on Schedule A hereto, shall be paid by wire transfer to
such account as shall be provided in writing by Assignor; provided,
however, that such payment shall be deposited to Assignor's
designated account no later than 11:00 a.m., Chicago Time, on the
Effective Date; and provided further, that if such payment is not
received by Assignor prior to 11:00 a.m., Chicago Time, on the
Effective Date, the parties shall recalculate the proration amounts
pursuant to Section 5(a) as of the day following the Effective Date,
and such later date shall be the "Effective Date" for purposes of
this Assignment.
3. EFFECTIVE DATE. The assignment herein made is effective
as of the date of this Assignment, as may be adjusted pursuant to
Section 2 above (the "Effective Date").
4. CASH FLOW DISTRIBUTIONS. On or before the Effective
Date, all Net Cash Flow (as defined in the Partnership Agreement) and
Capital Event Proceeds (as defined in the Partnership Agreement) of
the Partnership for periods ending prior to the Effective Date and
which have not previously been distributed, shall be distributed to
Assignor and Assignee, in their capacities as partners in the
Partnership, in accordance with the Agreement of Limited Partnership
of Xxxxx Oakhurst, L.P., dated as of June 9, 1998 (the "Partnership
Agreement"), between Assignor and Assignee.
5. PRORATIONS.
(a) On the Effective Date, Assignor and Assignee shall agree
upon the estimated proration amounts with respect to the Community
determined in accordance with Section 5(b), and such estimated
proration amounts shall be, as applicable, added to or deducted from
the Purchase Price as set forth in Schedule A hereto.
(b) On or before October 31, 2003, and in accordance with
Sections 5(c), 5(d) and 5(e) below, Assignor and Assignee shall agree
upon final proration amounts with respect to the Community for the
items set forth in Sections 5(b)(2), 5(b)(3) and 5(b)(4) below. As
soon as practicable after final bills for Taxes (as defined below)
become available for the Community, but in no event later than August
31, 2004. Assignor and Assignee shall agree upon the final proration
amounts for Taxes, as determined in accordance with Section 5(b)(1)
below.
1. TAXES AND ASSESSMENTS. General real estate taxes
and assessments imposed by governmental authority on the
Community and any assessments imposed by private covenant
constituting a lien or charge on the Community for all tax
periods through and including the then current calendar year or
other current tax period (collectively, "Taxes") not yet due
and payable shall be prorated, based upon the number of days in
the applicable period.
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2. COLLECTED RENT. All collected rent and other
collected income (and any applicable state or local tax on
rent) under apartment leases for the Community in effect on the
Effective Date shall be prorated based upon the number of days
in the month. Uncollected rent and other income shall not be
prorated; provided, however, that rent collected after the
Effective Date which relates to periods prior to the Effective
Date shall be prorated. Assignee agrees to make all reasonable
efforts to collect, and to cause the Company to collect, any
rents applicable to the period prior to the Effective Date. Any
prepaid rents for the period on or after the Effective Date
shall be credited to Assignee.
3. UTILITIES. Utilities, including water, sewer,
electric and gas, for the Community shall be prorated based
upon usage of such utilities, as shown by the last reading of
meters prior to the Effective Date. The Company shall endeavor
to obtain meter readings on the day before the Effective Date,
and if such readings are obtained, the proration of such items
shall be based upon such readings.
4. FEES AND CHARGES UNDER SERVICE CONTRACTS. Fees and
charges under contracts for the provision of services to the
Partnership for the Community based upon the periods to which
such service contracts relate (e.g., telephone, internet
services, lawn maintenance, cleaning, etc.) shall be prorated
based upon the number of days in the applicable period. Fees
and charges for services not in the nature of regular or
periodic services (e.g., building repairs) shall not be
prorated.
5. DEPOSITS. Nonrefundable deposits held by the
Partnership in connection with the Community which have not yet
been recognized as income by the Partnership (i.e., amounts
received in the current month) shall be prorated based upon the
number of days in the month. Items already recognized as income
by the Partnership in prior periods shall not be prorated.
(c) The proration amounts in this Section 5 shall be
calculated as if such prorations were being made between the
Partnership and the Company as of the Effective Date and only with
respect to those items directly related to the Community. For
purposes of making the prorations, the Effective Date shall belong to
the Company and all prorations hereinafter provided to be made as of
the Effective Date shall each be made as of the end of the day before
the Effective Date. In each such proration set forth below, the
portion thereof applicable to periods beginning as of the Effective
Date shall be credited or charged to the Company and the portion
thereof applicable to periods ending immediately prior to the
Effective Date shall be credited or charged to the Partnership.
(d) After each of the final prorations is completed and
agreed upon by the parties, the final proration amounts shall be
reconciled with the estimated proration amounts that were added to or
deducted from the Purchase Price on the Effective Date pursuant to
Section 2. If as a result of such reconciliation: (i) amounts are
owed by Assignor to Assignee in excess of the estimated proration
amounts, then Assignor shall pay 75% of such amounts to Assignee; or
(ii) if amounts are owed by Assignee to Assignor in excess of the
estimated proration amounts, then Assignee shall pay 75% of such
amounts to Assignor. In either case, payment shall be made as soon as
practicable (but in no event later than 15 days) after such agreement
is reached.
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(e) With respect to the final proration of Taxes, in the
event Assignee shall decide to appeal a final tax xxxx with the
appropriate governmental agency, the parties shall nonetheless agree
upon the proration of such final tax xxxx and shall reconcile such
proration in accordance with Section 5(d) above. Thereafter,
notwithstanding anything to the contrary contained in this Section 5,
if such appeal results in a refund of Taxes paid by the Company, then
such refund shall be prorated as agreed upon by the parties, and
payment of Assignor's prorated portion of such refund shall be made
as soon as practicable (but in no event later than 15 days) after
such agreement is reached.
(f) Assignor shall have reasonable access to, and the right
to inspect and audit, at its own cost and expense, the books of the
Company, with respect to the Community, to confirm the final
prorations, and Assignee shall cooperate, and shall cause the Company
to cooperate, with Assignor in good faith with respect to such
inspections and audits.
6. REPRESENTATIONS OF ASSIGNOR. Assignor hereby represents and
warrants to Assignee that:
(a) Assignor is duly organized and validly existing under the
laws of the state of its organization and has been duly authorized by
all necessary and appropriate action to enter into this Assignment
and to consummate the transactions contemplated hereby. This
Assignment is a valid and binding obligation of Assignor, enforceable
against Assignor in accordance with its terms, except insofar as
enforceability may be affected by bankruptcy, insolvency or similar
laws affecting creditor's rights generally and the availability of
any particular equitable remedy.
(b) Assignor is the record and beneficial owner of all of the
Assigned Interests, free and clear of any lien, claim, option, call,
right of first refusal, charge, encumbrance, restriction on transfer
(other than any restriction under the Securities Act of 1933, as
amended, or state securities or "blue sky" laws) or other right of
any other party. The Assigned Interests represent all of Assignor's
ownership interest in the Company.
(c) Assignor's execution and delivery of this Assignment, its
performance of its obligations hereunder and its consummation and the
validity of the transactions contemplated hereby do not require it to
obtain any consent, approval or action of, or make any filing with or
give any notice to, any corporation, person or firm or any public,
governmental or regulatory body or judicial authority, which has
not previously been obtained.
(d) (i) Assignor meets the requirements of a "qualified
professional asset manager" as defined in Part V(a) of Prohibited
Transaction Exemption 84-14 granted by the U.S. Department of Labor
("PTE 84-14"); (ii) Assignor is entering into this Assignment on
behalf of an "investment fund" as described in Part V(b) of PTE 84-
14; (iii) the terms of this Assignment have been negotiated on behalf
of the investment fund by the Assignor and the Assignor has made the
decision on behalf of the investment fund to enter into this
Assignment; (iv) the terms of this Assignment have been negotiated
and determined at arm's length, as such terms would be negotiated and
determined by unrelated parties; and (v) neither the Assignor nor any
affiliate (as defined in Part V(d) of PTE 84-14) thereof, nor any
owner, direct or indirect, of a five percent or more interest in
the Assignor, has, within the previous ten years, been convicted
or released from imprisonment as a result of the crimes set forth
in Part I(g) of PTE 84-14.
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7. REPRESENTATIONS OF ASSIGNEE. Assignee hereby represents and
warrants to Assignor that:
(a) Assignee is duly organized and validly existing under the
laws of the state of its organization and has been duly authorized by
all necessary and appropriate action to enter into this Assignment
and to consummate the transactions contemplated hereby. This
Assignment is a valid and binding obligation of Assignee, enforceable
against Assignee in accordance with its terms, except insofar as
enforceability may be affected by bankruptcy, insolvency or similar
laws affecting creditor's rights generally and the availability of
any particular equitable remedy.
(b) Assignee's execution and delivery of this Assignment, its
performance of its obligations hereunder and its consummation and the
validity of the transactions contemplated hereby do not require it to
obtain any consent, approval or action of, or make any filing with or
give any notice to, any corporation, person or firm or any public,
governmental or regulatory body or judicial authority, which has not
previously been obtained.
(c) Neither Assignee nor any of its affiliates (within the
meaning of Part V(c) of PTE 84-14) has, or during the immediately
preceding year has exercised, the authority to appoint or terminate
Assignor as investment manager of any assets of the employee benefit
plans whose assets are held by Assignor or to negotiate the terms of
any management agreement with Assignor on behalf of any such plan.
(d) The transaction contemplated by this Assignment is not
specifically excluded by Part I(b) of PTE 84-14.
(e) Assignee is not a related party of Assignor (as defined
in V(h) of PTE 84-14).
(f) The term of this Assignment have been negotiated and
determined at arm's length, as such terms would be negotiated and
determined by unrelated parties.
8. ASSUMPTION BY ASSIGNEE. Assignee hereby: (i) accepts the
Assigned Interests and all rights of Assignor under the Operating Agreement
in respect thereof; and (ii) assumes (A) all of the liabilities,
obligations and duties of Assignor and the Company as they relate to the
Assigned Interests accruing on or after the Effective Date and (B) all of
the liabilities, obligations and duties of Assignor and the Company under
the Operating Agreement in respect of the Assigned Interests, accruing on
or after the Effective Date, and agrees to be bound by the provisions
thereof with respect thereto. In no event shall the liabilities,
obligations or duties assumed by Assignee include any federal or state
income tax liabilities of Assignor relating to the Company or the Assigned
Interests incurred or accrued, whether known or unknown, as of the
Effective Date.
9. NO BROKERS. No broker, finder or similar intermediary has
acted for or on behalf of, or is entitled to any broker's, finder's or
similar fee or other commission from, Assignor or Assignee or any of their
respective Affiliates in connection with this Assignment or the
transactions contemplated hereby.
10. FURTHER ASSURANCES. Each party, at its sole cost and expense,
upon request of the other party, shall execute and deliver such further
instruments and do or cause to be done such further acts as may be
necessary to be done by such party to effectuate and confirm the assignment
of the Assigned Interests.
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11. MUTUAL RELEASE.
(a) As of the Effective Date, except as explicitly provided
in this Assignment, Assignor, on its behalf and on behalf of each of
its Affiliates and each of their respective representatives, agents,
successors, assigns, officers, directors, members, managers,
employees and each of them (collectively, the "Assignor Parties")
hereby irrevocably waives, releases and discharges, absolutely and
forever. Assignee, the Company and each of their Affiliates from any
and all liabilities to Assignor or the other Assignor Parties of any
kind and nature whatsoever, fixed or contingent, known or unknown,
asserted or unasserted (including in respect of any rights of
contribution or indemnification), in respect of facts, events,
circumstances or conditions arising from or relating to the Company,
the Assigned Interests, the Community or the Operating Agreement.
(b) As of the Effective Date, except as explicitly provided
in this Assignment, each of Assignee and the Company, on its behalf
and on behalf of each of their respective Affiliates and each of
their respective representatives, agents, successors, assigns,
officers, directors, members, managers, employees and each of them
(collectively, the "Assignee Parties") hereby irrevocably waives,
releases and discharges, absolutely and forever, Assignor and each of
its Affiliates, from any and all liabilities to Assignee, the Company
or the other Assignee Parties of any kind and nature whatsoever,
fixed or contingent, known or unknown, asserted or unasserted
(including in respect of any rights of contribution or
indemnification), in respect of facts, events, circumstances or
conditions arising from or relating to the Company, the Assigned
Interests, the Community or the Operating Agreement.
(c) Notwithstanding anything to the contrary in paragraphs
(a) and (b) above, nothing in this Section 11 shall be construed as
a waiver or release by or in favor of either party with respect to
any rights either of them may have pursuant to this Assignment.
12. SUCCESSORS AND ASSIGNS. This Assignment shall be binding upon
and inure to the benefit of Assignor and Assignee and the respective heirs,
legal representatives, successors and assigns of each.
13. SURVIVAL OF REPRESENTATIONS. The representations, warranties,
covenants, indemnities and agreements of the parties contained in this
Assignment are the only such terms made or relied upon by the parties and
shall survive the consummation of the transactions contemplated hereby.
14. MODIFICATION AND WAIVER. No supplement, modification, waiver
or termination of this Assignment or any provision hereof shall be binding
unless executed in writing by the parties to be bound thereby. No waiver of
any of the provisions of this Assignment shall constitute a waiver of any
other provision (whether or not similar), nor shall such waiver constitute
a continuing waiver unless otherwise expressly provided.
15. GOVERNING LAW. This Assignment shall be construed and enforced
in accordance with the laws of the State of Delaware applicable to
agreements made and to be performed entirely within said state.
16. RECOURSE TO ASSIGNEE. ANYTHING CONTAINED HEREIN TO THE
CONTRARY NOTWITHSTANDING, NO PERSONAL LIABILITY OR PERSONAL DEFICIENCY
JUDGMENT SHALL BE ASSERTED OR ENFORCED AGAINST ANY PARTNERS OF ASSIGNEE
AGAINST THE TRUSTEES, OFFICERS, EMPLOYEES, AGENTS, PARTNERS, SHAREHOLDERS'
OR PRINCIPALS OF SUCH PARTNERS, OR AGAINST THE ASSETS OF ANY SUCH PARTIES
FOR PAYMENT OF ANY AMOUNT HEREUNDER OR FOR OBSERVANCE OR PERFORMANCE OF ANY
OF THE OBLIGATIONS OF ASSIGNEE OR THE COMPANY. NOTHING CONTAINED ABOVE
SHALL LIMIT THE REMEDIES AGAINST ANY PERSON FOR SUCH PERSON'S FRAUD OR
INTENTIONAL MISCONDUCT, IN WHICH EVENT SUCH REMEDIES SHALL BE DETERMINED BY
APPLICABLE LAW.
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17. INDEMNIFICATION.
(a) Assignee shall indemnify, defend and hold Assignor
harmless for, from and against any and all actions, causes of action
or suits brought against it by third parties (each, a "Third Party
Claim") for liabilities, losses, costs, damages and expenses,
including, without limitation, reasonable attorneys fees and other
reasonable costs incurred in the investigation, defense and
settlement of the matter (collectively, the "Damages") arising from
such Third Party Claim, suffered or incurred by Assignor in respect
of any facts, events, circumstances or conditions occurring, arising
from or relating to the Company, the Assigned Interests, the
Community or the Operating Agreement, except to the extent such
Damages are caused by the gross negligence, willful misconduct or
fraud of Assignor.
(b) Assignor shall notify Assignee in writing of a Third
Party Claim as promptly as practicable; provided, that the failure of
Assignor to give notice shall not relieve Assignee of its obligations
under this Section 17 except to the extent (if any) that Assignee
shall have been prejudiced thereby. Assignee may, at its election and
own expense, upon notice to Assignor, assume the defense thereof. If
Assignee assumes such defense, Assignor shall have the right (but not
the obligation) to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by
Assignee. If Assignee assumes such defense, Assignor agrees to give
Assignee full authority to defend the Third Party Claim; provided,
however, that Assignee shall have no authority to enter into any
settlement without Assignor's express prior written consent. Whether
or not Assignee chooses to defend or prosecute any such Third Party
Claim, each of the parties hereto shall cooperate in the defense or
prosecution thereof.
18. DISCLAIMER. Assignor has not made, and Assignee acknowledges
that Assignor has not made, any warranty or representation, express or
implied, written or oral, statutory or otherwise concerning or relating to
the Company or Community, including, but not limited to, the following: (i)
the condition of title to the Community; (ii) the nature, physical
condition, safety or other aspect of the Community or any component
thereof, including without limitation, plumbing, sewer, heating,
ventilation, electrical systems, roofing, air conditioning, foundations,
soils and geology; (iii) the income or expense as generated, paid or
incurred in connection with the Community or Company, or other economic
status of the Community or the Company; (iv) the accuracy of any
statements, calculations or conditions stated or set forth in any
documents, instruments, agreements to which Company is a party, which are
binding on Company or the Community, or which relate or are applicable to
the Community or Company, including, but not limited to, title policies,
surveys, floor plans, leases, service contracts, vendor agreements,
reports, environmental assessments, soils reports, rent rolls, pro formas,
revenue and expense projections and other Company and Community books and
records (the "Company Material"); (v) the suitability of the Community for
any intended use, including, without limitations, as depicted on the
Company Materials; (vi) the dimensions of the Community or lot size; (vii)
the status or compliance of the Company or Community with any of the
Company Materials; (viii) the status of and compliance with the current
zoning or governmental approvals of the Community; (ix) the compliance of
the Company with any federal, state or local laws, ordinances, statutes,
rules and regulations; (x) the existence or absence of Hazardous Materials
(as defined below) or mold or other microbial agent or matter in, on,
about, under or affecting the Community; (xi) the compliance of the
Community with Hazardous Waste Laws (as defined below) or any other
federal, state or local laws, ordinances, statutes, rules or regulations
including, without limitation, the Fair Housing Act Amendments of 1988 and
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the Americans with Disabilities Act; or (xii) the merchantability,
habitability or fitness of the Community or any portion thereof for any
particular purpose. The term "Hazardous Materials" shall mean any
substance, chemical, waste or material that is or becomes regulated by any
federal, state or local governmental authority because of its toxicity.
infectiousness, radioactivity, explosiveness, ignitability, corrosiveness
or reactivity including, without limitation, those substances regulated by
any hazardous waste laws. For purposes of this agreement, "Hazardous
Materials Laws" means any local, federal or state statute, ordinance, code,
law, rule or regulation relating to environmental contamination, petroleum
products, asbestos and pollutants. As a result, Assignee is acquiring the
Assigned Interests with the understanding that the Community and other
assets of the Company are in their "AS IS," "WHERE IS" and "WITH ALL
FAULTS" condition.
19. ATTORNEYS FEES. If any suit is brought by either party to this
Assignment against the other regarding the subject matter hereof, the
prevailing party shall be entitled to recover, in addition to any other
relief granted, reasonable attorneys fees and expenses of litigation.
20. ENTIRE AGREEMENT. This Assignment contains all of the
understandings and agreements of whatsoever kind and nature existing
between Assignor and Assignee with respect to the subject matter hereof,
and any and all other prior agreements between the parties with respect to
such subject matter are hereby superseded.
21. HEADINGS. All headings used herein are inserted for
convenience and ease of reference only and shall not be considered in the
construction or interpretation of any provision of this Assignment.
22. SEVERABILITY. If any provisions of this Assignment shall be
held by a court of competent jurisdiction to be contrary to law or public
policy, or otherwise unenforceable, the remaining provisions shall remain
in full force and effect and a court of competent jurisdiction shall supply
a provision or provisions to replace the affected provision(s) which most
closely approximates the original intent of the parties.
* * * * *
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IN WITNESS WHEREOF, this Assignment is executed as of the day and
year first above written.
ASSIGNOR:
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THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By: /s/ Xxxxxx X. Xxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Vice President
ASSIGNEE:
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AMLI RESIDENTIAL PROPERTIES, L.P.
By: AMLI Residential Properties Trust,
Its general partner
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
Title: Senior Vice President
For purposes of Section 11(b) only:
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AMLI AT OAKHURST, LLC
By: AMLI Residential Properties, L.P,
Its managing member
By: AMLI Residential Properties Trust,
Its general partner
By:
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Name: Xxxx Xxxxxxx
Title: Senior Vice President
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SCHEDULE A
Calculation of Purchase Price
Company Value $50,000,000.00
Assignor's percentage interest 75%
Purchase Price for Assignor's membership
interest $37,500,000.00
LESS: Assignor's estimated pro rata share
of the Partnership's income and expenses
related to the Community as of the
Effective Date determined in accordance
with Section 5(a) of the Assignment $ 417,062.33
Net cash amount to be paid to Assignor
by Assignee on the Effective Date $37,082,937.68
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