ACQUISITION AGREEMENT
dated as of
July 26, 1996
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
AIMCO PROPERTIES, L.P.,
AIMCO/XXX PROPERTIES, L.P.,
XXXX X. ENGLISH,
X.X. ENGLISH REAL ESTATE, INC.,
X.X. ENGLISH DEVELOPMENT CO.,
X.X. ENGLISH INVESTMENTS CO.,
X.X. ENGLISH MANAGEMENT CO.,
EASTON FALLS PARTNERS, LTD.,
and
ENGLISH INCOME FUND I, A TEXAS LIMITED PARTNERSHIP
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
1.1 Definitions...............................................................2
ARTICLE II
CONTRIBUTION, PURCHASE AND SALE OF ASSETS
2.1 Contribution, Purchase and Sale of Assets................................16
2.2 Consideration; Assumption of Liabilities.................................17
2.3 Closing..................................................................18
2.4 Deliveries by the Sellers at the Closing.................................19
2.5 Deliveries by the Buyers at the Closing..................................21
2.6 Escrow Closing...........................................................22
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
3.1 Organization and Qualification...........................................24
3.2 Authority Relative to this Agreement.....................................25
3.3 Consents and Approvals; No Violation.....................................25
3.4 Financial Statements.....................................................25
3.5 Ownership Interests......................................................26
3.6 Organizational Documents.................................................26
3.7 Litigation...............................................................27
3.8 Absence of Undisclosed Liabilities.......................................27
3.9 Absence of Changes.......................................................28
3.10 Benefit Plans and Employee Matters.......................................29
3.11 Properties...............................................................30
3.12 Tenant Leases............................................................31
3.13 Personal Property; Leases................................................31
3.14 Contracts................................................................32
3.15 Compliance With Law; Licenses, Permits and Approvals.....................34
3.16 Insurance................................................................35
3.17 Community Property.......................................................35
3.18 Non-Applicability of Certain Regulations.................................35
3.19 Intercompany Liabilities.................................................35
3.20 Brokers..................................................................36
3.21 Environmental............................................................36
3.22 Taxes....................................................................37
3.23 Investment Representations...............................................39
3.24 Disclosure...............................................................40
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
4.1 Organization and Qualification...........................................40
4.2 Authority Relative to this Agreement.....................................41
4.3 Consents and Approvals; No Violation.....................................41
4.4 Litigation...............................................................41
4.5 Organizational Documents.................................................42
4.6 OP Units.................................................................42
4.7 Capitalization...........................................................42
4.8 Reports, Financial Statements and Private Placement Memorandum...........42
4.9 Absence of Certain Changes or Events.....................................43
4.10 Investment Company Status................................................43
4.11 Partnership Status.......................................................43
ARTICLE V
COVENANTS
5.1 Notification of Certain Matters..........................................43
5.2 Further Action, Reasonable Efforts; Consents and Approvals...............44
5.3 Conduct of Business Pending the Closing..................................44
5.4 Access and Investigation.................................................45
5.5 No Negotiations..........................................................46
5.6 Transfer Taxes...........................................................46
5.7 Apportionment............................................................46
5.8 Public Announcements.....................................................47
5.9 Offer to Acquire Limited Partnership Interests...........................47
5.10 Voting and Proxy Agreement...............................................52
5.11 Registration Rights Agreement............................................54
5.12 Pledge Agreement.........................................................54
5.13 Reorganization; Amendment of Partnership Agreements......................54
5.14 Insurance................................................................54
5.15 Property Questionnaires..................................................54
5.16 Employees................................................................55
5.17 No Squeeze-Outs..........................................................56
5.18 Audited Financial Statements.............................................56
5.19 Allocation of Certain Costs..............................................56
5.20 Intercompany Liabilities.................................................57
5.21 Release..................................................................57
5.22 Certain Actions by AIMCO OP After the Closing............................58
5.23 AIMCO OP Debt Allocation.................................................58
5.24 Estoppel Certificates....................................................59
5.25 Payments to Brokers......................................................59
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5.26 Correspondence with Limited Partners.....................................59
5.27 Acquisition of Easton Falls Land and Easton Commons......................59
5.28 Intentionally Omitted....................................................60
5.29 Property Management Agreement............................................60
5.30 Release of Guarantees....................................................60
ARTICLE VI
CONDITIONS TO ESCROW CLOSING; CONDITIONS TO CLOSING
6.1 Conditions to Each Party's Obligation to Effect the Escrow Closing ......60
6.2 Conditions to Obligations of the Buyers to Effect the Escrow Closing.....61
6.3 Conditions to Obligations of the Sellers to Effect the Escrow Closing....62
6.4 Conditions to Each Party's Obligation to Effect the Closing .............63
6.5 Conditions to Obligations of the Buyers to Effect the Closing............63
6.6 Conditions to Obligations of the Sellers to Effect the Closing...........64
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination..............................................................64
7.2 Effect of Termination....................................................66
7.3 Amendment or Supplement..................................................66
7.4 Extension of Time, Waiver, Etc...........................................66
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Sellers...........................................67
8.2 Indemnification by the Buyers............................................68
8.3 Procedures Relating to Indemnification...................................68
8.4 Termination of Indemnification...........................................71
8.5 Exclusive Remedy.........................................................71
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Governing Law............................................................72
9.2 Entire Agreement.........................................................72
9.3 Modification; Waiver.....................................................72
9.4 Notices..................................................................72
9.5 Expenses.................................................................73
9.6 Assignment...............................................................73
9.7 Survival.................................................................74
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9.8 Severability.............................................................74
9.9 Successors and Assigns; Third Parties....................................74
9.10 Counterparts.............................................................74
9.11 Headings.................................................................74
9.12 Time of Essence..........................................................74
9.13 Construction.............................................................74
9.14 Exhibits.................................................................74
9.15 Attorneys' Fees..........................................................74
9.16 Sellers' Knowledge.......................................................75
9.17 Jurisdiction and Venue...................................................75
9.18 Effect of Exercise of Option Agreement...................................75
9.19 Option to Terminate Property Management Contracts........................75
EXHIBITS
EXHIBIT A Determination of Formula Prices...............................A-1
EXHIBIT B Registration Rights Agreement ............................... B-1
EXHIBIT C Assignment and Assumption of Partnership Interest ............C-1
EXHIBIT D Acknowledgment and Acceptance of Admission of
Limited Partner...............................................D-1
EXHIBIT E Xxxx of Sale and Assignment ..................................E-1
EXHIBIT F Instrument of Assumption......................................F-1
EXHIBIT G Assignment and Assumption of Leases and
Property Contracts............................................G-1
EXHIBIT H Pledge Agreement..............................................H-1
EXHIBIT I Agreement of Merger...........................................I-1
EXHIBIT J Opinion of Sellers' Counsel...................................J-1
EXHIBIT K Opinion of Buyers' Counsel....................................K-1
EXHIBIT L Assignment of Loans...........................................L-1
EXHIBIT M Consulting Agreement..........................................M-1
EXHIBIT N Unitholder Registration Rights Agreement......................N-1
EXHIBIT O Property Management Agreement.................................O-1
EXHIBIT P Escrow Agreement..............................................P-1
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SCHEDULES
Schedule 2.1(c)(i) Management Contracts
Schedule 2.1(c)(ii) Other Management Company Assets
Schedule 2.2(a)(i) Allocation Among Contributed Assets
Schedule 2.2(b)(i) Allocation Among Other Assets
Schedule 2.2(b)(ii) AIMCO/XXX Assumed Liabilities
Schedule 2.2(c)(ii) AIMCO OP Assumed Liabilities
Schedule 3.1(c) Organization and Qualifications (Subsidiary
Limited Partnerships)
Schedule 3.1(d) Organization and Qualification (Subsidiary Joint Ventures)
Schedule 3.2 Authority Relative to this Agreement
Schedule 3.3 Consents and Approvals; No Violation (Sellers)
Schedule 3.4 Financial Statements
Schedule 3.5(a) Ownership Interests (LLCs)
Schedule 3.5(b) Ownership Interests (Subsidiary Limited Partnerships)
Schedule 3.5(c) Ownership Interests (Subsidiary Joint Ventures)
Schedule 3.6 Organizational Documents
Schedule 3.7 Litigation
Schedule 3.8 Absence of Undisclosed Liabilities
Schedule 3.9 Absence of Changes
Schedule 3.10(b) Benefit Plans and Employee Matters
Schedule 3.11(a) Properties (Ownership)
Schedule 3.11(b) Properties (Compliance with Laws)
Schedule 3.11(c) Properties (Appraisals)
Schedule 3.12(a) Tenant Leases (Summary)
Schedule 3.12(b) Tenant Leases (Defaults)
Schedule 3.13 Personal Property; Leases
Schedule 3.14 Contracts
Schedule 3.15 Compliance with Law; Licenses, Permits and Approvals
Schedule 3.16(a) Insurance (Description)
Schedule 3.16(b) Insurance (Summary of Losses)
Schedule 3.19(a) Intercompany Liabilities (Company Obligations)
Schedule 3.19(b) Intercompany Liabilities (Seller Obligations)
Schedule 3.19(c) Intercompany Liabilities (Intercompany Obligations)
Schedule 3.20 Brokers
Schedule 3.21(a) Environmental (Compliance)
Schedule 3.21(b) Environmental (Claims)
Schedule 3.21(c) Environmental (Locations)
Schedule 3.21(d) Environmental (Permits)
Schedule 3.21(f) Environmental (Contracts)
Schedule 3.22 Taxes
Schedule 4.3 Consents and Approvals; No Violation (Buyers)
Schedule 5.19 Allocation of Certain Costs
Schedule 5.21 Exceptions to Release
Schedule 5.23 AIMCO OP Debt Allocation
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ACQUISITION AGREEMENT
ACQUISITION AGREEMENT, dated as of July 26, 1996 (the "AGREEMENT"), by
and among Apartment Investment and Management Company, a Maryland corporation
("AIMCO"), AIMCO Properties, L.P., a Delaware limited partnership ("AIMCO OP"),
AIMCO/XXX Properties, L.P., a Delaware limited partnership ("AIMCO/XXX" and,
together with AIMCO and AIMCO OP, the "BUYERS"), Xxxx X. English, an individual
("ENGLISH"), X.X. English Real Estate, Inc., a Texas corporation ("JWE REAL
ESTATE"), X.X. English Development Co., a Texas corporation ("JWE DEVELOPMENT"),
X.X. English Investments Co., a Texas corporation ("JWE INVESTMENTS"), X.X.
English Management Co., a Delaware corporation ("JWE MANAGEMENT"), Easton Falls
Partners, Ltd., a Texas limited partnership ("EASTON FALLS"), and English Income
Fund I, a Texas Limited Partnership, a Texas limited partnership (the "INCOME
FUND" and, together with English, JWE Real Estate, JWE Development, JWE
Investments, JWE Management and Easton Falls, the "SELLERS").
WHEREAS, English, JWE Real Estate and JWE Development own collectively
100% of the equity in the LLCs (as hereinafter defined), which are the general
partners of the Subsidiary Limited Partnerships (as hereinafter defined);
WHEREAS, English, JWE Real Estate and JWE Development desire to
contribute their respective interests in the LLCs to AIMCO OP in exchange for
units of limited partnership interest in AIMCO OP ("OP UNITS"), and AIMCO OP
desires to accept such contributions in exchange for such consideration;
WHEREAS, AIMCO OP has agreed, on the terms and subject to the
conditions of this Agreement, in connection with the contribution of such LLCs
to AIMCO OP, to make offers to the limited partners of the Apartment
Partnerships (as hereinafter defined) to acquire any and all of their limited
partnership interests in the Apartment Partnerships for cash or OP Units or a
combination of cash and OP units;
WHEREAS, JWE Management desires to contribute its rights under certain
contracts and other assets relating to the management of properties, including
properties owned by the Subsidiary Limited Partnerships, to AIMCO OP in exchange
for OP Units, and AIMCO OP desires to accept such contribution in exchange for
such consideration;
WHEREAS, JWE Development desires to contribute its interest in certain
real property known as the Brentwood Apartments to AIMCO OP in exchange for cash
and OP Units, and AIMCO OP desires to accept such contribution in exchange for
such consideration;
WHEREAS, JWE Development desires to sell, convey, assign and transfer
certain real property to AIMCO OP in exchange for cash;
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WHEREAS, JWE Development and JWE Investments desire to sell, convey,
assign and transfer their respective interests in certain townhomes and
condominiums to AIMCO/XXX in exchange for cash;
WHEREAS, the Income Fund desires to sell, convey, assign and transfer
its rights under certain loans to AIMCO OP;
WHEREAS, the Sellers desire to sell, convey, assign and transfer their
rights under certain loans, including loans made by the Sellers to certain of
the Partnerships (as hereinafter defined) to AIMCO OP; and
WHEREAS, in connection with the transactions contemplated hereby, (i)
the Sellers will repay or cause to be repaid all loans made by the Partnerships
to the Sellers and their Affiliates; and (ii) the Sellers will cause the
Partnerships to assign and transfer to AIMCO OP their rights under all loans
made to other Partnerships.
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the terms
and conditions set forth herein, the parties hereby agree as follows:
DEFINITIONS
1.I DEFINITIONS. The capitalized terms used in this Agreement and
not otherwise defined herein shall have the following meanings (unless the
context otherwise requires, such capitalized terms shall include the singular
and plural and the conjunctive and disjunctive forms of the terms defined):
"AAA" shall have the meaning ascribed thereto in SECTION 8.3.
"ACCREDITED INVESTOR" shall have the meaning ascribed thereto in
Regulation D of the Rules and Regulations promulgated under the Securities Act.
"ACKNOWLEDGMENT" shall mean an Acknowledgment and Acceptance of
Admission of Limited Partner, substantially in the form of EXHIBIT D hereto.
"ACQUIRED ASSETS" shall mean (i) the LLC Interests, (ii) the
Management Company Assets, (iii) the Acquired Properties, (iv) the Income Fund
Loans, and (v) the Company Obligations.
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"ACQUIRED BUSINESS" shall mean the Acquired Assets, the assets and
properties of the Companies, the Assumed Liabilities, and the business and
operations of the Companies.
"ACQUIRED PROPERTIES" shall mean the Xxxxxx Xxxxx Townhomes, the
Brentwood Apartments, the Easton Commons, the Easton Falls Land, the Hastings
Land, the Nine Oaks Condominiums, and the Weslayan Condominiums II.
"ACQUISITION PROPOSAL" shall have the meaning ascribed thereto in
SECTION 5.10.
"ADA" shall mean the Americans with Disabilities Act of 1990.
"ADJUSTED EQUITY" shall mean, with respect to any Partnership, (i) in
the case of an Apartment Partnership, such Partnership's "Adjusted Equity," as
defined in EXHIBIT A, and (ii) in the case of any other Partnership, its
partners' equity, as reflected on the Audited Financial Statements prepared as
of the date most recently preceding the Closing, adjusted, in each case, to take
into account (x) Consent Fees paid or payable by such Partnership, and (y) such
Partnership's share of Transaction Costs and Settlement Costs, allocated in
accordance with SCHEDULE 5.19.
"AFFILIATE" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person.
"AGGREGATE ASSETS" shall have the meaning ascribed thereto in SECTION
5.22.
"AIMCO/EASTON FALLS" shall mean a limited partnership, of which AIMCO
OP or one of its affiliates will be the general partner as of the Closing Date,
that the Buyers' have designated to acquire the Easton Falls Land and Easton
Commons.
"AIMCO HOLDINGS" shall mean AIMCO Holdings, L.P., a Delaware limited
partnership.
"AIMCO MARKET PRICE" shall mean, as of any date (the "DETERMINATION
DATE"), the average of the last reported sale price (regular way) of AIMCO Stock
on the New York Stock Exchange on each of ten consecutive trading days ending on
the third trading day prior to the Determination Date; provided, however, that
if the record date for determination of stockholders entitled to receive payment
of a dividend on the AIMCO Stock occurs prior to the Determination Date, and the
first day on which the AIMCO Stock trades ex-dividend with respect to such
dividend (the "EX-DATE") occurs after the first day of such ten-day period, then
the last reported sale price (regular way) of AIMCO Stock for each day prior to
the Ex-Date shall be reduced by the amount of such dividend.
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"AIMCO OP ASSUMED LIABILITIES" shall have the meaning ascribed thereto
in SECTION 2.2.
"AIMCO/XXX ASSUMED LIABILITIES" shall have the meaning ascribed
thereto in SECTION 2.2.
"AIMCO STOCK" shall mean shares of Class A Common Stock, par value
$.01 per share, of AIMCO.
"APARTMENT PARTNERSHIPS" shall mean all of the Subsidiary Limited
Partnerships other than Hastings Green Partners, Ltd., Gulfgate Partners, Ltd.,
Galleria Office Partners, Ltd., Woodway Office Partners, Ltd., Westchase Midrise
Office Partners, Ltd., and 0000 Xxxxxxxxxx Partners, Ltd.
"APPROVALS" shall have the meaning ascribed thereto in SECTION 3.15.
"ASSIGNMENT AND ASSUMPTION OF PARTNERSHIP INTEREST" shall mean an
Assignment and Assumption of Partnership Interest, substantially in the form of
EXHIBIT C hereto.
"ASSIGNMENT OF LEASES" shall mean an Assignment and Assumption of
Leases and Property Contracts, substantially in the form of EXHIBIT G hereto.
"ASSIGNMENT OF LOANS" shall mean an Assignment of Loans, substantially
in the form of EXHIBIT L hereto.
"ASSUMED LIABILITIES" shall mean the AIMCO OP Assumed Liabilities and
the AIMCO/XXX Assumed Liabilities.
"AUDIT" shall mean any audit, assessment of Taxes, other examination
by any Tax Authority, proceeding or appeal of such proceeding relating to Taxes.
"AUDITED FINANCIAL STATEMENTS" shall have the meaning ascribed thereto
in SECTION 5.18.
"XXXXXX XXXXX TOWNHOMES" shall mean the property set forth on SCHEDULE
3.11(a) hereto under the heading "Xxxxxx Xxxxx Townhomes," together with all
Improvements, Real Property, Personal Property, Intangible Property and Leases
relating thereto.
"BASIS REDUCTION EVENT" shall have the meaning ascribed thereto in
SECTION 5.23.
"BENEFIT PLANS" shall mean all Employee Pension Benefit Plans, all
Employee Welfare Benefit Plans, all stock bonus, stock ownership, stock option,
stock
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purchase, stock appreciation rights, phantom stock, and other stock plans
(whether qualified or non-qualified), and all other pension, welfare, severance,
retirement, bonus, deferred compensation, incentive compensation, insurance
(whether life, accident and health, or other and whether key man, group, workers
compensation, or other), profit sharing, disability, thrift, day care, legal
services, leave of absence, layoff, and supplemental or excess benefit plans,
and all other benefit contracts, arrangements, or procedures having the effect
of a plan, in each case, existing on or before the Closing Date, under which any
of the Sellers or the Companies is or may hereafter become obligated in any
manner (including without limitation obligations to make contributions or other
payments).
"XXXX OF SALE AND ASSIGNMENT" shall mean a Xxxx of Sale and
Assignment, substantially in the form of EXHIBIT E hereto.
"BOAT" shall mean the 1992 Fountain powerboat with hull identification
number FGQ47017H293.
"BRENTWOOD APARTMENTS" shall mean the property set forth on SCHEDULE
3.11(a) hereto under the heading "Brentwood Apartments," together with all
Improvements, Real Property, Personal Property, Intangible Property and Leases
relating thereto.
"BUSINESS DAY" shall mean a day other than Saturday, Sunday, or any
day on which the principal commercial banks located in California are authorized
or obligated to close under the laws of California.
"XXXXXXX CONSULTING AGREEMENT" shall mean an agreement, substantially
in the form of EXHIBIT M hereto, pursuant to which Xxx Xxxxxxx shall agree to
provide consulting services to AIMCO OP for a period of one year.
"CLOSING" shall mean the closing of the transactions contemplated by
this Agreement in SECTION 2.1 and SECTION 2.2 hereof.
"CLOSING DATE" shall mean the date on which the Closing occurs.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"COMMERCIALLY REASONABLE EFFORTS" or "COMMERCIALLY REASONABLE STEPS,"
when used with respect to any party, shall mean the reasonable efforts of a
party without the requirement that such party incur any unanticipated (as of the
date hereof) out-of-pocket expenses, including the making of any capital
contribution, or incur any other unanticipated (as of the date hereof) burden or
commence or pursue litigation in any action, suit or proceeding, whether
administrative, civil or criminal.
"COMPANIES" shall mean the LLCs and the Partnerships.
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"COMPANY" shall mean any one of the Companies.
"COMPANY OBLIGATIONS" shall mean the indebtedness, notes, loan
agreements and other instruments set forth on SCHEDULE 3.19(a) hereto.
"COMPANY PROPERTIES" shall mean all real, personal and intangible
property owned or leased by any of the Companies.
"CONSENT FEES" shall mean any and all fees and expenses payable by the
Partnerships in connection with obtaining any Consents.
"CONSENTS" shall have the meaning ascribed thereto in SECTION 5.2.
"CONSIDERATION" shall have the meaning ascribed thereto in SECTION
2.2(a).
"CONTRACT" shall mean any indenture, deed of trust, mortgage, loan
agreement, or other document or instrument or agreement, oral or written, to
which any of the Sellers or the Companies is a party or by which any of the
Sellers, the Companies or their assets or properties is bound.
"CONTRIBUTED ASSETS" shall mean the LLC Interests.
"CONTROL" (and its derivative terms "CONTROLLED," "CONTROLS," etc.)
shall mean the power and right to direct the management and policies of another
Person, whether by ownership of voting securities, the ability to elect a
majority of the board of directors or other managing board or committee,
management contract, or otherwise.
"CURRENT ASSETS" shall mean cash, accounts receivable, notes
receivable, prepaid expenses and other current assets reflected in the most
recent Audited Financial Statements.
"CURRENT LIABILITIES" shall mean accounts payable, accrued expenses,
accrued liabilities (other than the current portion of indebtedness for borrowed
money), including security deposits, and other current liabilities reflected in
the most recent Audited Financial Statements.
"DAMAGES" shall mean any and all costs, damages, liabilities, fines,
fees, penalties, interest obligations, assessments, deficiencies, losses, and
expenses (including without limitation punitive, treble, or other exemplary
damages, amounts paid in settlement, interest, court costs, costs of
investigation, reasonable fees and expenses of attorneys, accountants,
actuaries, and other experts, and other reasonable expenses of litigation or of
any claim, default or assessment).
"DIRECT CLAIM" shall have the meaning ascribed thereto in SECTION 8.3.
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"EASTON COMMONS" shall mean the property set forth on SCHEDULE 3.11(a)
hereto under the heading "Easton Commons," together with all Improvements, Real
Property, Intangible Property and Leases relating thereto, if any.
"EASTON FALLS LAND" shall mean the property set forth on SCHEDULE
3.11(a) hereto under the heading "Easton Falls Land," together with all
Improvements, Real Property, Intangible Property and Leases relating thereto, if
any.
"EMPLOYEE PENSION BENEFIT PLAN" shall mean each employee pension
benefit plan (whether or not insured), as defined in Section 3(2) of ERISA,
which is or was in existence on or before the Closing Date, and to which any of
the Sellers or the Companies is or would hereafter become obligated in any
manner.
"EMPLOYEE WELFARE BENEFIT PLAN" shall mean each employee welfare
benefit plan (whether or not insured), as defined in Section 3(1) of ERISA,
which is or was in existence on or before the Closing Date, and to which any of
the Sellers or the Companies is or would hereafter become obligated in any
manner.
"ENGLISH CONSULTING AGREEMENT" shall mean an agreement, substantially
in the form of EXHIBIT M hereto, pursuant to which English shall agree to
provide consulting services to AIMCO OP for a period of three years.
"ENVIRONMENTAL ASSESSMENT" shall have the meaning ascribed thereto in
SECTION 5.4.
"ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including, without limitation, potential liability for
investigatory costs, cleanup costs, governmental response costs, natural
resources damages, property damages, person injuries, or penalties) arising out
of, based on or resulting from (a) the presence, or release into the
environment, of any Material of Environmental Concern at any location, whether
or not owned or operated by Seller or (b) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
"ENVIRONMENTAL LAWS" means all federal, state, local and foreign laws
and regulations relating to pollution or protection of human health or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata), including, without limitation, laws
and regulations relating to emissions, discharges, releases or threatened
releases of Materials of Environmental Concern, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern.
"ENVIRONMENTAL PERMITS" shall have the meaning ascribed thereto in
SECTION 3.21.
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"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended (including without limitation any successor act), and the rules
and regulations promulgated thereunder.
"ERISA AFFILIATE" shall mean any Person under common control or a
member of a controlled group of corporations (as defined in Sections 414(b) and
(c) of the Code) with the Seller, the Companies or any of their subsidiaries.
"ESCROW" shall have the meaning ascribed thereto in SECTION 2.6.
"ESCROW AGENT" shall mean the Person named as such in the Escrow
Agreement.
"ESCROW AGREEMENT" shall mean the Escrow Agreement, substantially in
the form of EXHIBIT P hereto, to be entered into by the Buyers, the Sellers and
the Escrow Agent on the Escrow Date.
"ESCROWED AMOUNT" shall have the meaning ascribed thereto in SECTION
2.6(d).
"ESCROW CLOSING" shall have the meaning ascribed thereto in SECTION
2.6.
"ESCROW DATE" shall mean the date on which the Escrow Closing occurs.
"ESTIMATED REIMBURSABLE SEVERANCE COSTS" shall have the meaning
ascribed thereto in SECTION 5.16.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIRNESS OPINION" shall have the meaning ascribed thereto in SECTION
5.9.
"FINANCIAL ADVISOR" shall have the meaning ascribed thereto in SECTION
5.9.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to it in
SECTION 3.4.
"FORMULA PRICE" shall have the meaning ascribed thereto in SECTION
5.9.
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GENERAL PARTNERSHIP INTERESTS" shall mean the general partnership
interests of each of the LLCs in the Subsidiary Limited Partnerships.
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"GOVERNMENTAL AUTHORITY" shall mean any government or any agency,
bureau, board, commission, court, department, official, political subdivision,
tribunal or other instrumentality of any government, whether Federal, state or
local, domestic or foreign.
"HASTINGS LAND" shall mean the property set forth on SCHEDULE 3.11(a)
hereto under the heading "Hastings Land," together with all Improvements, Real
Property, Intangible Property, and Leases relating thereto, if any.
"HSR ACT" shall mean Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976), as amended (including
without limitation any successor act), and the rules and regulations promulgated
thereunder.
"IMPROVEMENTS" shall mean, with respect to any Land, all buildings,
improvements, structures and fixtures located on or in such Land.
"INCOME FUND LOANS" shall have the meaning ascribed thereto in SECTION
2.1.
"INDEMNIFIED PARTY" shall have the meaning ascribed thereto in SECTION
8.3.
"INSTRUMENT OF ASSUMPTION" shall mean an Instrument of Assumption,
substantially in the form of EXHIBIT F hereto.
"INTANGIBLE PROPERTY" shall mean, with respect to any Real Property,
all intangible property owned by the Sellers and used by the Sellers in
connection with the Real Property and/or the Personal Property relating thereto,
including, without limitation, all of the Sellers' right, title and interest in,
to and under: (i) the Leases, all contract rights, books, records, reports, test
results, environmental assessments, as-built plans, specifications and other
similar documents and materials relating to the use, operation, maintenance,
repair, construction or fabrication of the Real Property or the Personal
Property; (ii) all trademarks and trade names; (iii) all transferable business
licenses, architectural, site, landscaping or other permits, applications,
approvals, authorizations and other entitlements affecting the Real Property;
and (iv) all transferable guarantees, warranties and utility contracts relating
to the Real Property.
"INTERCOMPANY OBLIGATIONS" shall mean the indebtedness, notes, loan
agreements and other instruments set forth on SCHEDULE 3.19(c) hereto.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"LAND" shall mean any real property.
9
"LAWS" shall mean all laws, rules, regulations, ordinances, decrees
and orders of all applicable Federal, state, city and other Governmental
Authorities.
"LEASES" shall mean, with respect to any Real Property, the leases,
licenses, tenancies and other occupancy agreements (whether written or oral) in
effect at such Real Property.
"LIEN" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge, option, rights of others or
restrictions (whether on voting, sale, transfer, disposition or otherwise) or
other encumbrance of any kind, whether imposed by agreement, understanding, law
or equity, or any conditional sale contract, title retention contract, or other
contract to give or to refrain from giving any of the foregoing other than
Permitted Encumbrances.
"LLC INTERESTS" shall mean all of the membership, partnership or other
ownership interests in the LLCs.
"LLCS" shall mean the entities listed on SCHEDULE 3.5(a) hereto, and
their successors by merger pursuant to the Reorganization.
"LP UNITS" shall have the meaning ascribed thereto in SECTION 5.9.
"MANAGEMENT COMPANY ASSETS" shall mean the Management Contracts and
the Other Management Company Assets.
"MANAGEMENT CONTRACTS" shall have the meaning ascribed thereto in
SECTION 2.1.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect on the
validity or enforceability of this Agreement, on the ability of the Sellers or
the Buyers to perform their obligations under this Agreement, or on the business
or condition of the Acquired Business.
"MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products.
"NINE OAKS CONDOMINIUMS" shall mean the property set forth on SCHEDULE
3.11(a) hereto under the heading "Nine Oaks Condominiums," together with all
Improvements, Real Property, Personal Property, Intangible Property and Leases
relating thereto.
"NOTICE OF DIRECT CLAIM" shall have the meaning ascribed thereto in
SECTION 8.3.
10
"NOTICE OF THIRD PARTY CLAIM" shall have the meaning ascribed thereto
in SECTION 8.3.
"NOTICES" shall have the meaning ascribed thereto in SECTION 9.4.
"OFFER" shall have the meaning ascribed thereto in SECTION 5.9.
"OFFER CONDITIONS" shall have the meaning ascribed thereto in SECTION
5.9.
"OFFER DOCUMENTS" shall have the meaning ascribed thereto in SECTION
5.9.
"OPTION AGREEMENT" shall mean the Option Agreement, dated as of date
hereof, by and among AIMCO OP and the optionors identified on the signature
pages attached thereto.
"ORDER" shall mean any order, decree, injunction, judgment, edict,
ruling, assessment, pronouncement, determination, decision, opinion, sentence,
subpoena, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" shall mean (i) with respect to a
corporation, its certificate or articles of incorporation and bylaws, (ii) with
respect to any limited liability company, its certificate of formation, articles
of organization, regulations, operating agreement and limited liability company
agreement, as applicable, (iii) with respect to any limited partnership, its
certificate of limited partnership and limited partnership agreement, (iv) with
respect to any general partnership, its partnership agreement, and (v) all other
similar organizational documents.
"OTHER MANAGEMENT COMPANY ASSETS" shall have the meaning ascribed
thereto in SECTION 2.1.
"OWNER'S TITLE COMMITMENTS" shall have the meaning ascribed thereto in
SECTION 6.2.
"PARTNERSHIP PROPERTIES" shall mean the Company Properties owned or
leased by the Partnerships.
"PARTNERSHIPS" shall mean the Subsidiary Limited Partnerships and the
Subsidiary Joint Ventures.
"PCB" shall have the meaning ascribed thereto in SECTION 3.21.
"PERMITTED ENCUMBRANCES" shall mean the following: (i) Liens for
Taxes or assessments or other governmental charges or levies (a) that are not
yet delinquent, or (b) that are being contested in good faith and have been
adequately reserved for;
11
(ii) workers', mechanics', suppliers', carriers', warehousemen's or other
similar liens arising in the ordinary course of business and securing
indebtedness aggregating not in excess of $10,000 at any time outstanding, not
yet due and payable; (iii) zoning restrictions, easements, licenses, or other
restrictions on the use of real property or other minor irregularities in title
(including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such real property, leases or
leasehold estates; and (iv) the Assumed Liabilities.
"PERMITTED EXCEPTIONS" shall have the meaning ascribed thereto in
SECTION 6.2.
"PERSON" shall mean any natural person, corporation, general
partnership, limited partnership, proprietorship, trust, union, association,
court, tribunal, agency, government, department, commission, self-regulatory
organization, arbitrator, board, bureau, instrumentality, or other entity,
enterprise, authority, or business organization.
"PERSONAL PROPERTY" shall mean, with respect to any Real Property, all
tangible personal property, equipment and supplies owned by the Sellers and
situated at the Real Property and used by the Sellers in connection with the
ownership, use, operation, maintenance or repair of the Real Property.
"PLEDGORS" shall mean English, JWE Real Estate, JWE Development and
JWE Investments.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement, substantially in
the form of EXHIBIT H hereto, to be entered into by AIMCO OP and the Pledgor at
the Closing.
"PPM" shall mean AIMCO OP's Private Placement Memorandum, dated May
28, 1996, relating to the issuance of OP Units pursuant to this Agreement.
"PROPERTIES" shall mean the Acquired Properties and all Company
Properties.
"PROPERTY" shall mean any one of the Properties.
"PROPERTY MANAGEMENT AGREEMENT" shall mean the Property Management
Agreement, substantially in the form of EXHIBIT O hereto, to be entered into by
JWE Management and AIMCO OP (or one of its Affiliates) pursuant to SECTION 5.29.
"PROPERTY QUESTIONNAIRE" shall have the meaning ascribed thereto in
SECTION 5.15.
"PROXY" shall have the meaning ascribed thereto in SECTION 5.10.
12
"PTR" shall have the meaning ascribed thereto in SECTION 6.2.
"REAL PROPERTY" shall mean, with respect to any Land, (i) the Land,
(ii) the Improvements thereon, (iii) all apparatus, equipment and appliances
affixed to and used in connection with the operation or occupancy of the Land
and the Improvements (such as heating, air conditioning or mechanical systems
and facilities used to provide any utility services, refrigeration, ventilation,
waste disposal or other services) and now or hereafter located on or in the Land
or the Improvements, and (iv) all of the rights, privileges and easements
appurtenant to or used in connection with the Land and the Improvements,
including, without limitation, all minerals, oil, gas and other hydrocarbon
substances, all development rights, air rights, water, water rights and water
stock relating to the Land, all strips and gores, all of the Sellers' right,
title and interest in and to any streets, alleys, easements, rights-of-way,
public ways, or other rights appurtenant, adjacent or connected to the Land.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, substantially in the form of EXHIBIT B hereto, to be entered into by
AIMCO and certain of the Sellers at the Closing.
"REIMBURSABLE SEVERANCE COSTS" shall have the meaning ascribed thereto
in SECTION 5.16.
"REIT STATUS" shall mean, with respect to any Person, (a) the
qualification of such Person as a real estate investment trust under Sections
856 through 860 of the Code, (b) the applicability to such Person and its
shareholders of the method of taxation provided for in Sections 857 et seq. of
the Code, and (c) the qualification and taxation of such Person as a real estate
investment under analogous provisions of state and local law in each state and
jurisdiction in which such Person owns property, operates or conducts business.
"RELATED DOCUMENTS" shall mean, collectively, the Registration Rights
Agreement, the Unitholder Registration Rights Agreement, the Pledge Agreement,
the Consulting Agreements, the Escrow Agreement, the Property Management
Agreement, and each Assignment and Assumption of Partnership Interest, Xxxx of
Sale and Assignment, Deed, Assignment of Leases, Acknowledgment, Instrument of
Assumption, and Assignment of Loans executed or delivered pursuant hereto.
"RELEASEES" shall have the meaning ascribed thereto in SECTION 5.21.
"REPRESENTATIVE" shall mean, with respect to any Person, any director,
officer, employee, agent, advisor, counsel, accountant, lender or other
representative of such Person or of any Affiliate of such Person or any
Representative of any of the foregoing.
"RESTRICTED PERIOD" shall have the meaning ascribed thereto in SECTION
5.22.
13
"XXXX AGREEMENT" shall mean the Settlement Agreement and Mutual
Release, dated February 2, 1996, by and among English, JWE Management and the
other English Parties (as defined therein), Xxxxxx X. Xxxx and X. X. Xxxx,
L.L.C.
"REORGANIZATION" shall have the meaning ascribed thereto in SECTION
5.13.
"SEC DOCUMENTS" shall have the meaning ascribed thereto in SECTION
4.8.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLER OBLIGATIONS" shall mean the indebtedness, notes, loan
agreements and other instruments set forth on SCHEDULE 3.19(b) hereto.
"SETTLEMENT AGREEMENTS" shall mean the Xxxx Agreement, the Xxxx
Agreement and the TAG Agreement.
"SETTLEMENT COSTS" shall mean the amounts payable under the
Settlement Agreements by the "English Parties" (as defined therein).
"SEVERANCE COSTS" shall have the meaning ascribed thereto in SECTION
5.16.
"XXXX AGREEMENT" shall mean the Settlement Agreement and Mutual
Release, dated January __, 1996, by and among English, JWE Management and the
other English Parties (as defined therein), Xx. Xxxx X. Xxxx, Xxxx Investment
Group, I, and R. Xxxx Xxxxxx.
"SOMERSET AGREEMENT" shall mean the Acquisition Agreement, dated as of
April 30, 1996, by and among AIMCO, AIMCO Somerset, Inc., AIMCO OP, Somerset
REIT, Inc., RJ Holdings, Ltd., Somerset XXX Partnership and RJ Equities, Inc.
"SUBSEQUENT OFFER" shall have the meaning ascribed thereto in SECTION
5.9.
"SUBSEQUENT OFFER PARTNERSHIPS" shall mean Bridgewater Partners, Ltd.,
Hampton Hill Partners, Hastings Place Partners, Peppermill Place Partners, West
Trails Partners, Ltd., Sunbury Partners, Ltd., Seaside Point Partners, Ltd.,
Clear Lake Land Partners, Ltd. and Signature Point Partners, Ltd.
"SUBSIDIARY" shall mean, with respect to any Person, (i) any
corporation with respect to which such Person, directly or indirectly through
one or more subsidiaries, (a) owns more than 50% of the outstanding shares of
capital stock having generally the right to vote in the election of directors or
(b) has the power, under ordinary circumstances, to elect, or to direct the
election of, a majority of the board of directors of such corporation, (ii) any
partnership with respect to which (a) such Person or a subsidiary of such Person
is a general partner, (b) such Person and its subsidiaries together own more
than 50% of the interests therein, or (c) such Person and its
14
subsidiaries have the right to appoint or elect or direct the appointment or
election of a majority of the directors or other Person or body responsible for
the governance or management thereof, (iii) any limited liability company with
respect to which (a) such Person or a subsidiary of such Person is the manager
or managing member, or (b) such Person and its subsidiaries together own more
than 50% of the interests therein, or (c) such Person and its subsidiaries have
the right to appoint or elect or direct the appointment or election of a
majority of the directors or other Person or body responsible for the governance
or management thereof, or (iv) any other entity in which such Person and/or one
or more of its subsidiaries, directly or indirectly, (a) have at least a 50%
ownership interest or (b) has the power to appoint or elect or direct the
appointment or election of a majority of the directors or other Person or body
responsible for the governance or management thereof.
"SUBSIDIARY JOINT VENTURES" shall mean the entities listed on SCHEDULE
3.5(c) hereto.
"SUBSIDIARY LIMITED PARTNERSHIPS" shall mean the entities listed on
SCHEDULE 3.5(b) hereto.
"SURVEY" shall have the meaning ascribed thereto in SECTION 6.2.
"TAG AGREEMENT" shall mean the Settlement Agreement and Mutual
Release, dated January __, 1996, by and among English, JWE Management and the
other English Parties (as defined therein), The Alternative Group Limited
Partnership, Xxxx Investment Group, Inc., Xxxxx X. Xxxx, Xxxxxx X. Xxxx, Xxxxxx
Xxxx, Xxxxxx X. XxXxxxxxxx, Xx. and Xxxxxxx X. Xxxxxx.
"TAX" or "TAXES" shall mean all Federal, state, local and foreign
taxes and other assessments and governmental charges of a similar nature
(whether imposed directly or through withholdings), including any interest,
penalties and additions to Tax applicable thereto.
"TAX AUTHORITY" shall mean the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the administration of
any Taxes.
"TAX RETURNS" shall mean all Federal, state, local and foreign tax
returns, declarations, statements, reports, schedules, forms and information
returns and any amended Tax Return relating to Taxes.
"TENANT LEASES" shall have the meaning ascribed thereto in SECTION
3.12.
"THIRD PARTY CLAIM" shall have the meaning ascribed thereto in SECTION
8.3.
15
"TITLE COMPANY" shall have the meaning ascribed thereto in SECTION
6.2.
"TRANSACTION COSTS" shall mean (i) the fees and expenses of Xxxx
Xxxxxx Realty Inc. payable in connection with the transactions contemplated
hereby, pursuant to that certain letter agreement, dated November 1, 1995, as
amended by letter dated July 23, 1996, by and among Xxxx Xxxxxx Realty Inc.,
English and the entities listed on Annex B thereto, (ii) the fees and expenses
payable to Xxxxx, Xxxxx & Xxxxx for legal services rendered to the Sellers and
the Companies in connection with the transactions contemplated hereby, (iii) the
fees and expenses of the Financial Advisor in connection with the preparation of
the Fairness Opinion, (iv) the fees and expenses of Ernst & Young LLP in
connection with the preparation of the Audited Financial Statements, (v) AIMCO
OP's reasonable costs (including legal fees and expenses) in effecting the
Offers, and (vi) Reimbursable Severance Costs.
"TRANSFERRED EMPLOYEES" shall have the meaning ascribed thereto in
SECTION 5.16.
"UNDERLYING DOCUMENTS" shall have the meaning ascribed thereto in
SECTION 6.2.
"WARN ACT" shall mean the U.S. Worker Adjustment and Retraining
Notification Act of 1988, as amended.
"WESLAYAN CONDOMINIUMS II" shall mean the property set forth on
SCHEDULE 3.11(a) hereto under the heading "Weslayan Condominiums II," together
with all Improvements, Real Property, Personal Property, Intangible Property and
Leases relating thereto.
ARTICLE II
CONTRIBUTION, PURCHASE AND SALE OF ASSETS
2.1 CONTRIBUTION, PURCHASE AND SALE OF ASSETS. Upon the terms and
subject to the conditions set forth herein, at the Closing, the Sellers shall
contribute, sell, convey, assign, transfer and deliver to the Buyers, and the
Buyers shall accept, purchase and acquire from the Sellers, the Acquired Assets
as follows:
(a) English shall contribute all of his LLC Interests to AIMCO
OP, and AIMCO OP shall accept such contribution and immediately contribute such
LLC Interests to AIMCO Holdings;
(b) Immediately after the contribution of such LLC Interests by
AIMCO OP to AIMCO Holdings, each of JWE Real Estate and JWE Development shall
16
contribute their LLC Interests to AIMCO OP, and AIMCO OP shall accept such
contribution;
(c) JWE Management shall sell, convey, assign and transfer all
of its rights in, to and under the Contracts set forth on SCHEDULE 2.1(c)(i)
(collectively, the "MANAGEMENT CONTRACTS") and the assets set forth on SCHEDULE
2.1(c)(ii) (collectively, the "OTHER MANAGEMENT COMPANY ASSETS"), other than the
Boat, to AIMCO OP;
(d) JWE Management shall sell, convey, assign and transfer the
Boat to AIMCO/XXX;
(e) JWE Development shall contribute the Brentwood Apartments to
AIMCO OP, and AIMCO OP shall accept such contribution;
(f) JWE Development shall sell, convey, assign and transfer the
Weslayan Condominiums II to AIMCO/XXX;
(g) JWE Investments shall sell, convey, assign and transfer the
Xxxxxx Xxxxx Townhomes and the Nine Oaks Condominiums to AIMCO/XXX;
(h) The Income Fund shall sell, convey, assign and transfer, all
of its rights in, to and under the indebtedness, notes, loan agreements and
other instruments set forth on SCHEDULE 2.1(h) (collectively, the "INCOME FUND
LOANS") to AIMCO OP;
(i) The Sellers shall sell, convey, assign and transfer all of
their rights in, to and under the Company Obligations to AIMCO OP; and
(j) JWE Development shall sell, convey, assign and transfer the
Hastings Land to AIMCO OP.
2.2 CONSIDERATION; ASSUMPTION OF LIABILITIES.
(a) In exchange for the contribution of the Contributed Assets,
at the Closing, AIMCO OP shall issue to the Sellers, in such quantities to each
Seller as is specified by the Sellers in writing at least 3 Business Days prior
to the Closing Date, an aggregate number of OP Units, which are to be allocated
to each Contributed Asset in accordance with SCHEDULE 2.2(a)(i) hereto, equal to
(x) $14,051,000, divided by (y) the AIMCO Market Price as of the Escrow Date.
(b) In exchange for the sale, conveyance, assignment and
transfer of the Boat, the Weslayan Condominiums II, the Xxxxxx Xxxxx Townhomes
and the Nine Oaks Condominiums to AIMCO/XXX, at the Closing, (i) subject to
SECTIONS 2.2(h) AND 2.6(d), AIMCO/XXX shall pay to the Sellers $3,475,000,
allocated among such assets in accordance with SCHEDULE 2.2(b)(i) hereto; and
(ii) AIMCO/XXX shall
17
assume the liabilities and obligations of the Sellers under indebtedness secured
by the Boat, the Weslayan Condominiums II, the Xxxxxx Xxxxx Townhomes and the
Nine Oaks Condominiums, represented by the Contracts, instruments and agreements
set forth on SCHEDULE 2.2(b)(ii) hereto (collectively, the "AIMCO/XXX ASSUMED
LIABILITIES").
(c) In exchange for the sale, conveyance, assignment and
transfer of the Management Contracts and the Other Management Company Assets,
other than the Boat, to AIMCO OP, at the Closing, (i) subject to SECTION 2.2(g),
AIMCO OP shall pay the Sellers $254,000, allocated among such assets in
accordance with SCHEDULE 2.2(b)(i) hereto, and (ii) AIMCO OP shall assume the
liabilities and obligations of the Sellers under the Contracts, instruments and
agreements set forth on Schedule 2.2(c)(ii) hereto (collectively, the "AIMCO OP
ASSUMED LIABILITIES").
(d) In exchange for the sale, conveyance, assignment and
transfer of the Income Fund Loans to AIMCO OP, at the Closing, subject to
SECTION 2.6(d), AIMCO OP shall pay to the Income Fund an amount equal to the
indebtedness represented by the Income Fund Loans as of the Closing Date,
including accrued and unpaid interest thereon through the Closing Date.
(e) In exchange for the sale, conveyance, assignment and
transfer of the rights in the Company Obligations to AIMCO OP, at the Closing,
subject to SECTIONS 2.2(h) AND 2.6(d), AIMCO OP shall pay to the Sellers an
amount equal to the indebtedness represented by the Company Obligations as of
the Closing Date, including accrued and unpaid interest thereon through the
Closing Date.
(f) In exchange for the sale, conveyance, assignment and
transfer of the Hastings Land to AIMCO OP, at the Closing, subject to SECTIONS
2.2(h) AND 2.6(d), AIMCO OP shall pay to JWE Development $400,000.
(g) In exchange for the contribution of the Brentwood Apartments
to AIMCO OP, at the Closing, (i) subject to SECTIONS 2.2(h) AND 2.6(d), AIMCO OP
shall pay to JWE Development $2,121,000; and (ii) AIMCO OP shall issue to JWE
Development an aggregate number of OP Units equal to (x) $1,149,000, divided by
(y) the AIMCO Market Price as of the Escrow Date.
(h) The Buyers shall reduce the aggregate amounts payable
pursuant to SECTIONS 2.2(b), (e), (f) AND (g) by the amount of the indebtedness
represented by the Seller Obligations as of the Closing Date, including accrued
and unpaid interest thereon through the Closing Date.
2.3 CLOSING. Upon the terms and subject to the satisfaction or
waiver of all the conditions to Closing set forth in this Agreement, the Closing
shall take place at 10:00 a.m., Los Angeles time, on the twenty-fifth (25th)
Business Day following the Escrow Date at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, 000 Xxxxx Xxxxx
00
Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, unless another date or place is agreed to
in writing by the parties hereto.
2.4 DELIVERIES BY THE SELLERS AT THE CLOSING. At the Closing, the
Sellers shall deliver, or cause to be delivered, to the Buyers the following:
(a) PROOF OF AUTHORITY. Each of those Sellers that is a
corporation, partnership, trust or limited liability company shall deliver to
the Buyers proof of such corporate, partnership, trust or limited liability
company authority and authorization to enter into this Agreement and the
transactions contemplated hereby, and such proof of the power and authority of
the individual(s) executing or delivering any instruments, documents or
certificates on behalf of such Seller to act for and bind it as may be
reasonably required by the Buyers.
(b) BOOKS AND RECORDS. The Sellers shall deliver to the Buyers
all of the books and records of the Companies, including, without limitation,
all records of all proceedings of and actions taken by, their members, partners,
shareholders and boards of directors, and all records relating to the issuance
and transfer of interests therein or other securities thereof.
(c) ASSIGNMENTS AND ASSUMPTION OF PARTNERSHIP INTEREST. Each of
English, JWE Real Estate and JWE Development shall deliver to the Buyers duly
executed counterparts of an Assignment and Assumption of Partnership Interest,
conveying to AIMCO OP the LLC Interests owned by it, free and clear of all liens
and encumbrances.
(d) BILLS OF SALE AND ASSIGNMENT. JWE Management shall deliver
to the Buyers a duly executed Xxxx of Sale and Assignment, conveying to AIMCO OP
the Management Company Assets (other than the Boat), free and clear of all liens
and encumbrances, other than Permitted Encumbrances. JWE Management shall
deliver to the Buyers a duly executed Xxxx of Sale and Assignment, conveying to
AIMCO/XXX the Boat, free and clear of all liens and encumbrances, other than
Permitted Encumbrances. JWE Development shall deliver to the Buyers a duly
executed Xxxx of Sale and Assignment, conveying to AIMCO OP all Personal
Property and Intangible Property included in the Brentwood Apartments, in each
case, free and clear of all liens and encumbrances, other than Permitted
Encumbrances. JWE Development shall deliver to the Buyers a duly executed Xxxx
of Sale and Assignment, conveying to AIMCO/XXX all Personal Property and
Intangible Property included in the Weslayan Condominiums II, in each case, free
and clear of all liens and encumbrances, other than Permitted Encumbrances. JWE
Investments shall deliver to the Buyers a duly executed Xxxx of Sale and
Assignment, conveying to AIMCO/XXX all Personal Property and Intangible Property
included in the Xxxxxx Xxxxx Townhomes, in each case, free and clear of all
liens and encumbrances, other than Permitted Encumbrances. JWE Investments
shall deliver to the Buyers duly executed counterparts of a Xxxx of Sale and
Assignment, conveying to AIMCO/XXX all Personal Property and Intangible Property
included in the Nine Oaks
19
Condominiums, in each case, free and clear of all liens and encumbrances, other
than Permitted Encumbrances.
(e) DEEDS. JWE Development shall deliver to the Buyers a duly
executed and acknowledged special warranty deed in recordable form, conveying to
AIMCO OP fee title to the Brentwood Apartments, subject to Permitted
Encumbrances. JWE Development shall deliver to the Buyers a duly executed and
acknowledged special warranty deed in recordable form, conveying to AIMCO/XXX
fee title to the Weslayan Condominiums II, subject to Permitted Encumbrances.
JWE Investments shall deliver to the Buyers a duly executed and acknowledged
special warranty deed in recordable form, conveying to AIMCO/XXX fee title to
the Xxxxxx Xxxxx Townhomes, subject to Permitted Encumbrances. JWE Investments
shall deliver to the Buyers a duly executed and acknowledged special warranty
deed in recordable form, conveying to AIMCO/XXX fee title to the Nine Oaks
Condominiums, subject to Permitted Encumbrances. JWE Development shall deliver
to the Buyers a duly executed and acknowledged special warranty deed in
recordable form, conveying to AIMCO OP fee title to the Hastings Land, subject
to Permitted Encumbrances.
(f) ASSIGNMENTS OF LEASES. JWE Development shall deliver to
the Buyers duly executed counterparts of an Assignment of Leases, conveying to
AIMCO OP all Leases included in the Brentwood Apartments and pursuant to which
AIMCO OP shall assume the obligations under such Leases. JWE Development shall
deliver to the Buyers duly executed counterparts of an Assignment of Leases,
conveying to AIMCO/XXX all Leases included in the Weslayan Condominiums II and
pursuant to which AIMCO/XXX shall assume the obligations under such Leases.
JWE Investments shall deliver to the Buyers duly executed counterparts of an
Assignment of Leases, conveying to AIMCO/XXX all Leases included in the Xxxxxx
Xxxxx Townhomes and pursuant to which AIMCO/XXX shall assume the obligations
under such Leases.
(g) FIRPTA CERTIFICATES. Each of the Sellers shall deliver to
the Buyers a certification of non-foreign status, in form and substance
satisfactory to the Buyers.
(h) ACKNOWLEDGMENTS. Each Person that is to receive OP Units
pursuant to SECTION 2.2 shall deliver to the Buyers duly executed counterparts
of an Acknowledgment.
(i) INSTRUMENTS OF ASSUMPTION. The Sellers shall deliver to the
Buyers duly executed counterparts of an Instrument of Assumption, pursuant to
which AIMCO OP shall assume the AIMCO OP Assumed Liabilities. The Sellers shall
deliver to the Buyers duly executed counterparts of an Instrument of Assumption
pursuant to which AIMCO/XXX shall assume the AIMCO/XXX Assumed Liabilities.
(j) LEGAL OPINION. The Sellers shall cause Xxxxx, Xxxxx & Xxxxx
to deliver to the Buyers their opinion as to the matters set forth on EXHIBIT J
hereto,
20
subject to such assumptions, exceptions and qualifications as are customarily
included in similar opinions and as are reasonably acceptable to the Buyers.
(k) REGISTRATION RIGHTS AGREEMENT. The Sellers shall deliver to
the Buyers duly executed counterparts of the Registration Rights Agreement.
(l) PLEDGE AGREEMENT. The Pledgor shall deliver to the Buyers
duly executed counterparts of the Pledge Agreement.
(m) ASSIGNMENT OF LOANS. Income Fund shall deliver to the
Buyers a duly executed Assignment of Loans, conveying to AIMCO OP all rights in,
to and under the Income Fund Loans. The Sellers shall deliver to the Buyers a
duly executed Assignments of Loans, conveying to AIMCO OP all rights in, to and
under the Company Obligations.
(n) TENANT SECURITY DEPOSITS. The Sellers shall (i) deliver to
the Buyers a check or checks, payable in next-day funds to the order of such
Persons as the Buyers shall specify in writing at least three Business Days
prior to the Closing Date, (ii) wire transfer funds to such account or accounts
as the Buyers shall specify at least three Business Days prior to the Closing,
or (iii) any combination of the foregoing, in either case, in an aggregate
amount equal to all security deposits held by the Sellers in respect of Tenant
Leases, other than Tenant Leases at Company Properties, as of the Closing Date.
(o) OTHER. The Sellers shall deliver to the Buyers all other
documents, instruments and writings required to be delivered by the Sellers at
or prior to the Closing Date pursuant to this Agreement.
2.5 DELIVERIES BY THE BUYERS AT THE CLOSING. At the Closing, the
Buyers shall deliver, or cause to be delivered, to the Sellers the following:
(a) OP UNITS. AIMCO OP shall deliver to the Sellers a
certificate or certificates representing the number of OP Units specified in
SECTION 2.2, less the number of OP units equal to (i) $5,000,000, divided by
(ii) the AIMCO Market Price as of the Escrow Date, with respect to which AIMCO
OP shall deliver a certificate or certificates to the Collateral Agent pursuant
to SECTION 5.12.
(b) CASH CONSIDERATION. The Buyers shall, subject to SECTION
2.6(d), (i) deliver to the Sellers a check or checks, payable in next-day funds
to the order of such Persons as the Sellers shall specify in writing at least
three Business Days prior to the Closing, (ii) wire transfer funds to such
account or accounts as the Sellers shall specify at least three Business Days
prior to the Closing, (iii) provide for the Escrow Agent to release funds to the
Buyers pursuant to the Escrow Agreement, or (iv) any combination of the
foregoing, in either case, in an aggregate amount equal to the cash
consideration to be paid by the Buyers to the Sellers pursuant to SECTION 2.2.
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(c) ASSIGNMENTS AND ASSUMPTION OF PARTNERSHIP INTEREST. AIMCO
OP shall deliver to the Sellers duly executed counterparts of each Assignment
and Assumption of Partnership Interest referenced in SECTION 2.4(c).
(d) ASSIGNMENTS OF LEASES. AIMCO OP or AIMCO/XXX shall deliver
to the Sellers a duly executed counterpart of each Assignment of Leases
referenced in SECTION 2.4(f).
(e) ACKNOWLEDGMENT. AIMCO OP shall deliver to the Sellers duly
executed counterparts of each Acknowledgment referenced in SECTION 2.4(h).
(f) INSTRUMENTS OF ASSUMPTION. AIMCO OP or AIMCO/XXX shall
deliver to the Sellers a duly executed counterpart of each Instrument of
Assumption referenced in SECTION 2.4(i).
(g) REGISTRATION RIGHTS AGREEMENT. AIMCO shall deliver to the
Sellers a duly executed counterpart of the Registration Rights Agreement.
(h) PLEDGE AGREEMENT. AIMCO shall deliver to the Sellers duly
executed counterparts of the Pledge Agreement.
(i) SELLER OBLIGATIONS. The Buyers shall deliver to the Sellers
evidence of the repayment of the Seller Obligations.
(j) LEGAL OPINION. The Buyers shall cause Skadden, Arps, Slate,
Xxxxxxx & Xxxx to deliver to the Sellers their opinion as to the matters set
forth on EXHIBIT K hereto, subject to such assumptions, exceptions and
qualifications as are customarily included in similar opinions and as are
reasonably acceptable to the Sellers.
(k) CONSULTING AGREEMENTS. AIMCO OP shall deliver to the
Sellers duly executed counterparts of the English Consulting Agreement and the
Xxxxxxx Consulting Agreement.
(l) OTHER. The Buyers shall deliver to the Sellers all other
documents, instruments and writings required to be delivered by the Buyers at or
prior to the Closing Date pursuant to this Agreement.
2.6 ESCROW CLOSING.
(a) ESCROW. On the Escrow Date, the Buyers and the Sellers
shall enter into the Escrow Agreement with a Person mutually agreed to by the
Buyers and the Sellers who will act as the escrow agent thereunder. On the
Escrow Date, pursuant to the Escrow Agreement, the Buyers and the Sellers shall
cause a purchase and sale escrow (the "ESCROW") to be opened with the Escrow
Agent by delivery to the
22
Escrow Agent of the documents, instruments and funds specified in SECTION 2.6(c)
and SECTION 2.6(d) (the "ESCROW CLOSING").
(b) ESCROW DATE. Upon the terms and subject to the satisfaction
or waiver of all the conditions to Escrow Closing set forth in this Agreement,
the Escrow Closing shall take place at 10:00 a.m., Los Angeles time, on a date
to be specified by the parties, which shall be no later than the fifth Business
Day after the satisfaction or waiver of the conditions to Escrow Closing set
forth in this Agreement, at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx,
000 Xxxxx Xxxxx Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, unless another date or
place is agreed to in writing by the parties hereto.
(c) SELLERS' DELIVERIES. At the Escrow Closing, the Sellers
shall deliver, or cause to be delivered, into Escrow, each dated as of the
Closing Date, all of the documents and instruments specified in SECTION 2.4,
other than SECTION 2.4(m), and in SECTION 5.27.
(d) BUYERS' DELIVERIES. At the Escrow Closing, the Buyers shall
(i) deliver, or cause to be delivered, into Escrow, each dated as of the Closing
Date, all of the documents and instruments specified in SECTION 2.5, other than
SECTION 2.5(b), and (ii) either (x) deposit into Escrow funds in an aggregate
amount (the "ESCROWED AMOUNT") equal to the cash consideration to be paid by the
Buyers pursuant to SECTIONS 2.2(b), (c), (f) AND (g) and SECTION 5.27, less the
amount of security deposits held by the Sellers in respect of Tenant Leases,
other than Tenant Leases at Company Properties, as of the Escrow Date, as
indicated by the Sellers in a written notice delivered to the Buyers at least
three Business Days prior to the Escrow Date, or (y) establish or cause to be
established, effective as of the Escrow Date, an irrevocable letter of credit in
favor of English in a maximum aggregate amount equal to the Escrowed Amount,
with a term of at least 30 business days, issued by Bank of America National
Trust & Savings Association or another issuer reasonably acceptable to the
Sellers, which letter of credit shall provide for drawings to be made thereunder
upon delivery of a notice signed by a duly authorized representative of AIMCO,
which notice AIMCO shall deposit into Escrow at the Escrow Closing. If the
Buyers elect to satisfy their obligation pursuant to the foregoing sentence by
establishing a letter of credit, the aggregate amount to be paid by the Buyers
at Closing pursuant to SECTION 2.2 and after the Closing pursuant to Section
5.27 shall be reduced by the amount of the letter of credit, unless (A) the
Sellers have not drawn on the letter of credit and (B) the Sellers deliver to
the Buyers at Closing the notice pursuant to which the letter of credit may be
drawn upon.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each of the Sellers hereby represents and warrants to the Buyers as
follows:
3.1 ORGANIZATION AND QUALIFICATION.
(a) Each of JWE Real Estate, JWE Development, JWE Investments
and JWE Management is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Texas or Delaware (in the case of
JWE Management); and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted; and is duly qualified or licensed as
a foreign corporation in each jurisdiction where the character of the properties
owned, leased or operated or the nature of the business conducted by it makes
such qualification or licensing necessary.
(b) Each of the LLCs is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Texas; and
has the requisite power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as it is
now being conducted; and is duly qualified or licensed as a foreign corporation
in each jurisdiction where the character of the properties owned, leased or
operated or the nature of the business conducted by it makes such qualification
or licensing necessary.
(c) Except as set forth on SCHEDULE 3.1(c), each of the
Subsidiary Limited Partnerships is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Texas; and has the
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted; and is duly qualified or licensed as a foreign limited partnership in
each jurisdiction where the character of the properties owned, leased or
operated or the nature of the business conducted by it makes such qualification
or licensing necessary.
(d) Except as set forth on SCHEDULE 3.1(d), each of the
Subsidiary Joint Ventures is a general partnership, duly formed, validly
existing and in good standing under the laws of the State of Texas; and has the
requisite power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted; and is duly qualified or licensed as a foreign partnership in each
jurisdiction where the character of the properties owned, leased or operated or
the nature of the business conducted by it makes such qualification or licensing
necessary.
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3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Sellers has
all necessary power and authority to execute and deliver this Agreement and each
of the Related Documents to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by each Seller of this Agreement and
each of the Related Documents to which it is a party, the performance by each
Seller of its obligations under this Agreement and each of the Related Documents
to which it is a party, and the consummation by each Seller of the transactions
contemplated by this Agreement and each of the Related Documents to which it is
a party have been duly and validly authorized by all necessary action and,
except as set forth on SCHEDULE 3.2, no other proceedings are necessary on the
part of the Sellers to authorize this Agreement or any of the Related Documents
or to consummate the transactions contemplated hereby or thereby. This
Agreement and each of the Related Documents has been (or, when executed and
delivered, will have been) duly and validly executed and delivered by each
Seller, to the extent each is a party thereto, and, assuming the due
authorization, execution and delivery thereof by the other parties hereto or
thereto, constitutes the legal, valid and binding obligation of each Seller, to
the extent each is a party thereto, enforceable against such Seller in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
3.3 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth on
SCHEDULE 3.3, the execution and delivery by the Sellers of this Agreement, the
consummation by the Sellers of the transactions contemplated hereby and
compliance by the Sellers with the provisions hereof will not (a) conflict with,
result in a breach of, or cause a dissolution or require the consent or approval
of any Person under, any provision of the Organizational Documents of the
Sellers or the Companies, (b) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, (c)
conflict with, or, with or without notice or the passage of time or both, result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any Contract, or give to any third party any right of
termination, cancellation, amendment or acceleration under any Contract or
result in the creation of a Lien on any of the Acquired Assets, or any assets or
properties of the Companies, or (d) violate or conflict with any judgment,
order, writ, injunction, decree, statute, Law, rule or regulation applicable to
any of the Sellers, the Companies or the Acquired Business.
3.4 FINANCIAL STATEMENTS. The Sellers have previously delivered to
the Buyers true, accurate and complete copies of the financial statements of the
Companies set forth on SCHEDULE 3.4 (collectively, the "FINANCIAL STATEMENTS").
Each of the Financial Statements has been prepared on a Federal income tax
basis, and each presents fairly the financial position of the Company to which
it relates as of its date and the results of its operations and changes in
financial position for the period presented therein,
25
as the case may be, subject, in the case of unaudited interim financial
statements included therein, to normal year-end adjustments.
3.5 OWNERSHIP INTERESTS. SCHEDULES 3.5(a), (b) AND (c) set forth a
complete and correct list of all of the Companies, the capital account balances
and participating percentages held by each of the Sellers and the Companies in
each Company, the capital contributions made by each of the Sellers and the
Companies to each Company, and the general partner (in the case of a limited
partnership) or manager or managing member (in the case of a limited liability
company) of each Company. Except as set forth on SCHEDULES 3.5(a), (b) AND (c),
none of the Companies owns or holds any interest or otherwise participates in
any general partnership, limited partnership, corporation, limited liability
company, joint venture, trust or other entity other than the Partnerships. All
of the LLC Interests are owned by English, JWE Real Estate and JWE Development
and, in each case, in the percentages set forth on SCHEDULE 3.5(a) hereto. The
Subsidiary Limited Partnerships are owned by the LLCs in the percentages set
forth on SCHEDULE 3.5(b) hereto. The Subsidiary Joint Ventures are owned by the
Partnerships in the percentages set forth on SCHEDULE 3.5(c) hereto. The
interests of the Sellers and the Companies in the Companies are held free and
clear of all security interests, liens, adverse claims, pledges, options, rights
of first refusal, agreements, limitations on voting rights, charges and other
encumbrances of any nature whatsoever. Except as provided in the Organizational
Documents, there are no (a) options, warrants, agreements, conversion or
exchange rights, preemptive rights or other rights to subscribe for, purchase or
otherwise acquire any membership interest, partnership interest, or other equity
interest in any of the Companies, (b) obligations to invest in any of the
Companies (in the form of a loan, capital contribution or otherwise) or
(c) restrictions on the voting or transfer of such interests. All interests in
all of the Companies have been issued in material compliance with all applicable
laws, including Federal and state securities laws.
3.6 ORGANIZATIONAL DOCUMENTS. The Sellers have delivered to the
Buyers a complete and correct copy of (a) the charter and bylaws of each of the
Sellers that is a corporation, (b) the articles of organization, regulations,
certificate of formation, limited liability company agreement or operating
agreement of each of the LLCs, (c) the certificate of limited partnership and
partnership agreement of each of the Partnerships, and (d) all other
Organizational Documents of the Companies, in each case, as amended, and none of
the Sellers or the Companies is in violation thereof. Except as set forth on
SCHEDULE 3.6, the Organizational Documents of the Subsidiary Limited
Partnerships permit the general partner of each Subsidiary Limited Partnership
to (a) pay the manager of the Property owned by such Subsidiary Limited
Partnership a monthly property management fee at least equal to 5% of gross
receipts, and reimburse the manager for expenses incurred by the manager in the
management of the Properties, (b) receive a monthly partnership administration
fee equal to the greater of $1,000 or 2% of gross receipts, (c) receive, in the
event of a sale or other disposition of the Property owned by such Partnership,
a disposition fee at least equal to 2% of gross proceeds, and (d) receive, in
the event of a refinancing of the Property owned by the Partnership, a fee
26
equal to 1% of the amount of the new financing. Each limited liability company
agreement or regulations of each of the LLCs (prior to the Reorganization), each
partnership agreement of each of the Partnerships and, after the Reorganization,
the LLCs, and each Company Obligation is a valid and binding obligation of the
Sellers and the Companies, to the extent each is a party thereto, enforceable
against such Seller or Company in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and by equitable principles
to which the remedies of specific performance and injunctive and similar forms
of relief are subject.
3.7 LITIGATION. Except as set forth on SCHEDULE 3.7, (a) the Sellers
and the Companies have not received notice of any action, suit or proceeding
before any judicial or quasi-judicial body, by any governmental authority or
other third party, pending, or to the Sellers' knowledge, threatened, against or
affecting all or any portion of the Acquired Business or any of the Companies or
the Sellers and, to the Sellers' knowledge, there is no basis for any such
action; (b) there are no actions, suits or proceedings pending, contemplated or,
to the Sellers' knowledge, threatened in connection with all or any portion of
the Acquired Business or any of the Companies or the Sellers; and (c) the
Sellers have not received notice of any attachments, execution proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy, reorganization
or other proceedings pending, or, to its knowledge, threatened, against any of
the Companies or the Sellers. Except as set forth on SCHEDULE 3.7, (a) there is
no Order to which any of the Companies or the Acquired Business is subject; (b)
none of the Sellers is subject to any Order that relates to the Acquired
Business; (c) each of the Sellers and the Companies is, and has been at all
times, in full compliance with all of the terms and requirements of each Order
to which it, or any of the assets owned or used by it, is or has been subject;
(d) to the Sellers' knowledge, no event has occurred, and no condition or
circumstance exists, that could reasonably be expected to (with or without
notice of lapse of time) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any Order to
which any of the Companies or the Acquired Business is subject; and (e) none of
the Sellers or the Companies has received any notice or other communication
(whether oral or written) from any Governmental Authority or any other Person
regarding any actual, alleged, possible or potential violation of, or failure to
comply with, any term or requirement of any Order to which any of the Companies
or the Acquired Business is or has been subject. The Sellers have delivered to
the Buyers and their counsel copies of all pleadings, correspondence and other
documents relating to all actions, suits and proceedings commenced at any time
on or after January 1, 1993, whether pending, settled or dismissed, that
involve, affect or relate to any of the Companies or the Acquired Business. The
Sellers have delivered to the Buyers copies of all correspondence sent or
received after January 1, 1993, between any of the Sellers and the LLCs, on one
hand, and any limited partner of any of the Partnerships.
3.8 ABSENCE OF UNDISCLOSED LIABILITIES. None of the Companies has
any liabilities or obligations of any kind or nature, whether absolute,
contingent or accrued,
27
and whether due or to become due, except (a) those set forth on SCHEDULE 3.8,
(b) those reflected or disclosed in the Financial Statements, and (c) those
arising after December 31, 1995, in the ordinary course of business and
consistent with past practice and that, in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.
3.9 ABSENCE OF CHANGES. Except as set forth on SCHEDULE 3.9 or in
the Financial Statements, since December 31, 1995, (a) there has not been,
occurred, or arisen any change in, or any event (including without limitation
any damage, destruction, or loss, whether or not covered by insurance),
condition, or state of facts of any character that, individually or in the
aggregate, has had or would reasonably be expected to have a Material Adverse
Effect, (b) the Companies have operated only in the ordinary course of business
and consistent with past practice, and (c) without limiting the generality of
the foregoing, none of the Companies has:
(i) declared, set aside, or paid any dividend or other
distribution, or redeemed, purchased or otherwise acquired any membership,
partnership, equity or other ownership interest therein or right to acquire
any such interest, other than cash dividends paid by the LLCs to their
members;
(ii) issued, sold or disposed of any debenture, note,
stock or other security;
(iii) created any Lien on or in any of its assets or
properties or assumed any Lien with respect to any of its assets or
properties, which Lien relates to liabilities that, individually or in the
aggregate, exceeds $10,000;
(iv) incurred any liability for borrowed money that,
individually or in the aggregate, exceeds $10,000;
(v) suffered any damage, destruction or loss (whether or
not covered by insurance) affecting any of its assets or properties which
damage, destruction or loss, individually or in the aggregate, exceeds
$10,000;
(vi) suffered the termination or lapse of, or otherwise
failed to preserve, any material license or permit;
(vii) settled any litigation or dispute;
(viii) amended its articles of incorporation, bylaws,
articles of organization, certificate of formation, regulations, operating
28
agreement, limited liability company agreement, partnership agreement or
any other Organizational Documents; or
(ix) entered into any contract or agreement to take any of
the actions set forth in clauses (i) through (viii) of this Section.
3.10 BENEFIT PLANS AND EMPLOYEE MATTERS.
(a) None of the Companies or the Sellers (other than JWE
Management) have or have ever had any employees. None of the Companies (i) has
any liability under any past or present Benefit Plan, (ii) has any liability to
any employees of the Sellers or any employees of any Affiliate of any of the
Sellers or (iii) is a party to or bound by any collective bargaining or similar
labor contract. None of the Sellers or the Companies have made any
representations or commitments to any of their employees concerning terms or
conditions of employment of such Persons by the Buyers.
(b) Except as set forth on SCHEDULE 3.10(b) or SCHEDULE 3.7:
(i) there is no labor strike, dispute, slowdown, work stoppage or lockout
actually pending or, to the knowledge of the Sellers, threatened against or
affecting JWE Management and, during the past five years, there has not been any
such action; (ii) to the knowledge of the Sellers, there are no union claims to
represent the employees of JWE Management; (iii) JWE Management is neither a
party to nor bound by any collective bargaining or similar agreement with any
labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of JWE Management;
(iv) none of the employees of JWE Management are represented by any labor
organization, and the Sellers have no knowledge of any current union organizing
activities among the employees of JWE Management, nor does any question
concerning representation exist concerning such employees; (v) there are no
written personnel policies, rules or procedures applicable to employees of JWE
Management, other than those which have heretofore been delivered to the Buyers
or their representatives; (vi) JWE Management has at all times been in material
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and is not engaged in any unfair labor
practices, as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation; (vii) there is no unfair labor practice charge or
complaint against JWE Management pending or, to the knowledge of the Sellers,
threatened before the National Labor Relations Board or any similar state or
foreign agency; (viii) there is no grievance or arbitration proceeding arising
out of any collective bargaining agreement or other grievance procedure relating
to JWE Management; (ix) to the knowledge of the Sellers, no charges with respect
to or relating to JWE Management are pending before the Equal Employment
Opportunity Commission or any other corresponding state agency and JWE
Management has at all times been in material compliance with all Federal and
state laws and regulations prohibiting discrimination in the workplace
including, without limitation, laws and regulations that prohibit discrimination
and/or harassment on account of race, national origin, religion, gender,
disability, age, workers compensation status
29
or otherwise; (x) to the knowledge of the Sellers, no Federal, state, local or
foreign agency responsible for the enforcement of labor or employment laws
intends to conduct an investigation with respect to or relating to JWE
Management and no such investigation is in progress; (xi) there are no
threatened or pending wage and hour claims filed against JWE Management with the
United States Department of Labor or any corresponding state agency;
(xii) neither the Occupational Safety and Health Administration nor any
corresponding state agency has threatened to file any citation, and there are no
pending citations relating to JWE Management; (xiii) there is no pending
investigation of, or complaint pending against, JWE Management by the Office of
Federal Contract Compliance Programs or any corresponding state agency; and
(xiv) there are no complaints, controversies, lawsuits or other proceedings
pending against JWE Management brought on behalf of any applicant for
employment, current or former employees, or classes of the foregoing alleging
breach of any express or implied contract of employment, any law or regulation
governing employment or the termination thereof or other discriminatory,
wrongful or tortious conduct in connection with the employment relationship.
(c) Since the enactment of the WARN Act, the Sellers have not
effectuated (i) a "plant closing" (as defined in the WARN Act) affecting any
site of employment or one or more facilities or operating units within any site
of employment or facility of the Sellers, or (ii) a "mass layoff" (as defined in
the WARN Act) affecting any site of employment or facility of the Sellers; nor
have the Sellers been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law. None of the employees of the Sellers has suffered
an "employment loss" (as defined in the WARN Act) since March 1, 1996.
(d) The Reimbursable Severance Costs will not exceed the
Estimated Reimbursable Severance Costs.
3.11 PROPERTIES.
(a) OWNERSHIP. SCHEDULE 3.11(a) sets forth a list and legal
description of all of the Properties, indicating, in each case, the legal and
equitable owner of such Property, each of whom holds good and indefeasible fee
simple title to such Property (subject to Permitted Encumbrances and other
matters reflected on the PTR, the Surveys or the Underlying Documents), with
full right to convey. The Company Properties constitute all of the real,
personal and intangible property currently used in the conduct of the business
of the Companies. Except as disclosed in SCHEDULE 3.11(a), none of the Sellers
or the Companies have granted any options or rights of first refusal or rights
of first offer to third parties to purchase or otherwise acquire an interest in
any of the Properties.
(b) COMPLIANCE WITH LAWS. Except as disclosed on SCHEDULE
3.11(b), to the Seller's knowledge, each Property is in full compliance with all
Laws, including, without limitation, all Laws with respect to zoning, building,
fire and health
30
codes, environmental protection and sanitation and pollution control, but
excluding the ADA. None of the Sellers or the Companies has received notice of,
or has knowledge of, any condition currently or previously existing on any
Company Properties or any portion thereof which may give rise to any violation
of any existing Law (including the ADA) applicable to any of the Properties if
it were disclosed to the authorities having jurisdiction over any of the
Properties.
(c) APPRAISALS. SCHEDULE 3.11(c) sets forth all appraisals of
the Properties obtained or received by the Sellers or the Companies within the
last three years. The Sellers have delivered to the Buyers copies of all such
appraisals.
3.12 TENANT LEASES.
(a) SCHEDULE 3.12(a) is a true, correct and complete summary of
(i) all tenants under leases in effect at the Properties (collectively, the
"TENANT LEASES"), (ii) the commencement and expiration dates of the Tenant
Leases, (iii) the monthly rents payable under the Tenant Leases, (iv) any and
all concessions, allowances, credits or rebates granted under the Tenant Leases,
and (v) all deposits made by tenants under the Tenant Leases.
(b) To the Sellers' knowledge, the Tenant Leases are in full
force and effect and no Company has received notice of any default by the
landlord thereunder and no Company has knowledge of any fact or facts which
would now or with the giving of notice or the passage of time or both be a
default under the terms thereof, except as otherwise set forth on SCHEDULE
3.12(b). To the Sellers' knowledge, there are no pending claims by the tenants
under the Tenant Leases for offsets against rent or other monetary claims made
by tenants against the Sellers, the LLCs, or the Partnerships, in their
capacities as landlord.
(c) All of the Tenant Leases included in the Acquired Properties
are assignable to Buyers in connection with the acquisition of the Acquired
Properties without the necessity for any approval, consent or additional
payment.
(d) Neither the Hastings Land, the Easton Falls Land nor Easton
Commons includes, or is subject to, any Lease.
3.13 PERSONAL PROPERTY; LEASES.
(a) Except as set forth in SCHEDULE 3.13, to the Sellers'
knowledge, each of the Companies owns good and indefeasible title to, or has a
valid leasehold interest in or has a valid right under contract to use, all
personal property that is used in the conduct of its business and operations
(other than the Management Company Assets), or that is carried for value on its
books and records, free and clear of all Liens other than Permitted
Encumbrances.
31
(b) Except as set forth in SCHEDULE 3.13 and except for personal
property of which a Seller is a lessee, all the personal property included in
the Management Company Assets or the Acquired Properties is owned by such Seller
free and clear of all Liens except Permitted Encumbrances. Immediately after
the Closing, the Buyers will have good and marketable title to all the personal
property included in the Management Company Assets or the Acquired Properties
other than leased personal property, free and clear of any Lien other than
Permitted Encumbrances.
(c) Neither the Hastings Land, the Easton Falls Land nor the
Easton Commons includes any Personal Property or Intangible Property.
3.14 CONTRACTS.
(a) SCHEDULE 3.14 sets forth a true and complete list of each of
the following Contracts or other documents or arrangements that are currently in
effect and to which any of the Companies is a party, or by which any of the
Acquired Assets or any of the assets or properties of any of the Companies is
bound (with references to the appropriate clause hereunder to which such
Contract, document or arrangement relates):
(i) all Contracts or arrangements containing any
provision or covenant limiting the ability of any of the Companies to
engage in any line of business or to compete with, or to obtain products or
services from, any Person or to engage in any activity in any area, or, to
the knowledge of the Sellers, limiting the ability of any Person to compete
with, or to provide products or services to, any of the Companies;
(ii) all partnership, joint venture, profit-sharing, or
similar Contracts or arrangements with any Person (other than the
Organizational Documents of the Companies);
(iii) all leases or subleases of real property used in the
business and operations of any of the Companies, and all other leases,
subleases or rental or use Contracts for which any of the Companies is
liable, that involve payments in excess of $10,000;
(iv) all Contracts or arrangements relating to the future
disposition or acquisition by any of the Companies of any assets or
properties of any Person or of any interest in any business enterprise,
except any such Contracts or arrangements that, in the aggregate, do not
involve assets or properties with a value in excess of $25,000;
(v) all Contracts or arrangements (including, without
limitation, those relating to allocations of expenses, personnel,
32
services, or facilities) with any of the Sellers or any Affiliate of any of
the Sellers (other than the Management Contracts);
(vi) all Contracts or arrangements for the provision of
administrative, managerial or other services by or for the Companies to or
from any other Person (other than the Management Contracts);
(vii) all Contracts or arrangements pursuant to which any
Person guarantees an obligation of any of the Companies, or pursuant to
which any of the Companies guarantees any obligation of another Person,
including tenant bonds;
(viii) all Contracts or arrangements not made in the
ordinary course of business;
(ix) all Contracts or arrangements relating to the
settlement of any dispute or litigation;
(x) all Contracts or arrangements that involve any
remaining or unsatisfied obligation to make capital expenditures (whether
through the purchase of real or personal property or otherwise), except any
such Contracts or arrangements that, in the aggregate, do not involve
obligations in excess of $50,000;
(xi) all Contracts or arrangements evidencing or relating
to any direct or indirect indebtedness for borrowed money in excess of
$10,000 (including, but not limited to, loan agreements, lease-purchase
arrangements, guarantees, agreements to purchase goods or services or to
supply funds or make investments or other undertakings on which others rely
in extending credit); or which is or relates to a conditional sales
contract, chattel mortgage, equipment lease agreement or other security
arrangement with respect to personal property (other than unperfected
purchase money security interests created pursuant to sales confirmations
issued by vendors), any one of which has a value equivalent to, or provides
for payments of, $5,000 or more per month in any such instance;
(xii) all Contracts or arrangements that are or relate to
an employment Contract (or other Contract with employees or consultants) or
agency or consulting Contract, other than those that are terminable without
penalty or other liability on not more than thirty (30) days' notice;
(xiii) all Contracts or arrangements for which provision has
not otherwise specifically been made in this Section that (a)
33
involves the prospective obligation to pay more than $10,000 or that has an
unexpired term of more than one year and is not terminable without penalty
on not more than 90 days' notice or (b) is material to the Acquired
Business.
(b) The Sellers have made available to the Buyers a true copy of
each Contract or arrangement described above, as presently in effect, and none
of the Sellers, the LLCs or, to the knowledge of the Sellers, the Partnerships
has received any notice from any party to any such Contract of the termination
thereof. Each of the Contracts listed in SCHEDULE 3.14 is in full force and
effect and constitutes a legal, valid and binding obligation of the Sellers and
the LLCs, to the extent each is a party thereto, and, to the Sellers' knowledge,
each Partnership and other Person that is a party thereto and, upon consummation
of the transactions contemplated by this Agreement (including, without
limitation, the assignment of such Contract to the Buyers), will remain in full
force and effect. None of the Sellers, the LLCs nor, to the knowledge of the
Sellers, any Partnership or other party to any Contract or arrangement disclosed
or required to be disclosed in SCHEDULE 3.14 is currently in violation, breach
or default under any such Contract or arrangement or, with or without notice or
lapse of time or both, would be in violation or breach of or default under any
such Contract or arrangement.
(c) Each Contract or Lease to be assigned by any of the Sellers
to any of the Buyers pursuant to this Agreement may be assigned by the Sellers
to the Buyers.
3.15 COMPLIANCE WITH LAW; LICENSES, PERMITS AND APPROVALS. Except as
set forth on SCHEDULE 3.15, the businesses of the LLCs and, to the knowledge of
the Sellers', the Partnerships have been and are currently being conducted in
compliance with all Laws. SCHEDULE 3.15 sets forth all licenses, franchises,
permits, orders, approvals, authorizations, variances, exemptions,
classifications, certificates, registrations and similar documents or
instruments required by any Governmental Authority or otherwise necessary in
connection with the ownership, development, use or maintenance of any of the
Properties, the Acquired Assets or the Acquired Business, except those the
absence of which would not, individually or in the aggregate, result in a cost,
loss, expense or liability in excess of $10,000 (collectively, the "APPROVALS").
Except as set forth on SCHEDULE 3.15, all of the Approvals to be assigned to the
Buyers pursuant to this Agreement are transferable to the Buyers without the
necessity of any approval or consent or additional payment and no such transfer
will affect the validity thereof. All of the Approvals are, and upon
consummation of the transactions contemplated hereby will be, in full force and
effect, and no Seller or any Company is or, upon consummation of the
transactions contemplated hereby, will be in default under, violation of or
noncompliance with the Approvals.
34
3.16 INSURANCE.
(a) SCHEDULE 3.16(a) sets forth a true and complete list and
description of all casualty, liability, property, workers compensation,
directors and officers liability, and other contracts that insure the business
or operations of any the Companies or affect or relate to the ownership, use or
operations of any of the Acquired Assets or the Acquired Business, and (i) that
have been issued to the Companies (including without limitation the names and
addresses of the insurers and the expiration dates thereof, and coverage
thereof) or (ii) that are held by any of the Sellers or by any Affiliate of the
Sellers (other than the Companies) for the benefit of the Companies. All such
insurance is in full force and effect. All premiums required to be paid
thereunder have been paid and no notice of cancellation or termination has been
received with respect to any such policy. Such policies will remain in full
force and effect through the Closing Date; and will not by their terms in any
way be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. None of the Sellers or the Companies has
received or has knowledge of any notice or request from any insurance company
requesting the performance of any work or alteration with respect to any
Property. None of the Sellers or the Companies has received notice from any
insurance company concerning, nor are any of the Sellers aware of, any defects
or inadequacies in any of the Properties which, if not corrected, would result
in the termination of insurance coverage or increase its cost.
(b) SCHEDULE 3.16(b) sets forth a true and complete summary of
all losses incurred and payments made since January 1, 1995, pursuant to the
insurance described in SECTION 3.16(a) or the Property Insurance Policies.
3.17 COMMUNITY PROPERTY. English is unmarried, and no former spouse
of English or other Person has any community property or other interest in any
of the assets or property to be transferred by English hereunder.
3.18 NON-APPLICABILITY OF CERTAIN REGULATIONS. Each of the Companies
is not, and does not conduct its operations in a manner that could subject it to
registration as, an "investment company" under the U.S. Investment Company Act
of 1940, as amended. None of the Companies is subject to, nor does any of them
conduct its operations in a manner that could subject any of them to, regulation
under the U.S. Public Utility Holding Company Act of 1935, as amended, the U.S.
Federal Power Act, as amended, the U.S. Natural Gas Act, as amended, or any
similar law, rule or regulation of any Governmental Authority.
3.19 INTERCOMPANY LIABILITIES. SCHEDULES 3.19(a), (b) AND (c) set
forth true and complete lists and descriptions, including the obligors,
principal amount outstanding as of the date hereof, and accrued but unpaid
interest thereon as of the date hereof, of (a) all indebtedness owed by any of
the Companies to any of the Sellers or their Affiliates (other than the
Companies), (b) all indebtedness owed by any of the Sellers or their Affiliates
(other than the Companies) to any of the Companies, and (c)
35
all indebtedness owed by any of the Companies to any of the other Companies,
respectively. Except as disclosed in SCHEDULES 3.19(a), (b) AND (c), and except
for obligations under the Management Contracts, there are no obligations,
liabilities, Contracts or commitments between or among any of the Companies, on
the one hand, and any of the Sellers or any Affiliate of any of the Sellers
(including the Companies), on the other.
3.20 BROKERS. Except as disclosed in SCHEDULE 3.20, all negotiations
relative to this Agreement and the transactions contemplated hereby have been
carried out by the Sellers directly with the Buyers, without the intervention of
any Person on behalf of the Seller in such manner as to give rise to any valid
claim by any Person against the Buyers or the Companies for a finder's fee,
brokerage commission, or similar payment.
3.21 ENVIRONMENTAL.
(a) COMPLIANCE. Except as set forth in SCHEDULE 3.21(a), to the
Sellers' knowledge, each of the Sellers and the Companies is in full compliance
with all Environmental Laws, which compliance includes, but is not limited to,
the possession by the Sellers and the Companies of all permits and other
governmental authorizations required under applicable Environmental Laws, and
compliance with the terms and conditions thereof. Except as set forth in
SCHEDULE 3.21(a), none of the Sellers or the Companies has received any
communication (written or oral), whether from a Governmental Authority, citizens
group, employee or otherwise, that alleges that any of the Sellers or the
Companies is not in such full compliance, and, to the Sellers' best knowledge,
there are no circumstances that may prevent or interfere with such full
compliance in the future.
(b) CLAIMS. Except as set forth in SCHEDULE 3.21(b), there is
no Environmental Claim pending or, to the Sellers' knowledge, threatened against
any of the Sellers and the Sellers have not received notice of any Environmental
Claim pending or threatened against the Companies or, to the Sellers' best
knowledge, against any Person or whose liability for any Environmental Claim any
of the Sellers or the Companies has retained or assumed either contractually or
by operation of law. Except as set forth in SCHEDULE 3.21(b), to the Sellers'
knowledge, there are no past or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of Environmental
Concern, that could form the basis of any Environmental Claim against any of the
Sellers or the Companies or against any person or entity whose liability for any
Environmental Claim any of the Sellers or the Companies has retained or assumed
either contractually or by operation of law.
(c) LOCATIONS. Without in any way limiting the generality of
the foregoing, to the Sellers' knowledge, (i) all on-site locations where any of
the Sellers or the Companies has stored, disposed or arranged for the disposal
of Materials of
36
Environmental Concern at the Properties are identified in SCHEDULE 3.21(c), (ii)
all underground storage tanks, and the capacity and contents of such tanks,
located at the Properties are identified in SCHEDULE 3.21(c), (iii) except as
set forth in SCHEDULE 3.21(c), there is no asbestos contained in or forming part
of any building, building component, structure or office space at the
Properties, and (iv) except as set forth in SCHEDULE 3.21(c), no polychlorinated
biphenyls ("PCB") or PCB-containing items are used or stored at the Properties.
(d) PERMITS. Each of the Sellers and, to the Sellers' best
knowledge, the Companies has all permits, licenses, registrations,
authorizations and approvals and financial assurance (including, without
limitation, rights under grandfather provisions, exemptions, waivers and the
like) ("ENVIRONMENTAL PERMITS") required to be held or provided by the Sellers
and the Companies in order to conduct their respective businesses as currently
operated or contemplated under applicable Environmental Laws, to the Sellers'
best knowledge, each is in compliance with the requirements of all such
Environmental Permits, and none of the Sellers or the Companies has been
notified by any Governmental Authority or has any basis to believe that any
Environmental Permit may be modified, suspended or revoked, or that any
Environmental Permit cannot be renewed in the ordinary course of business.
SCHEDULE 3.15 lists all Environmental Permits, if any, held by the Sellers and,
to the Sellers' best knowledge, the Companies, and the Sellers and the Companies
have made copies of all such Environmental Permits, or pending applications for
any such Environmental Permits, available for inspection by the Buyers. There
are no orders or decrees (including, without limitation, consent orders or
consent decrees), judgments, settlements, agreements or other binding
obligations of any kind relating to Environmental Claims or Environmental Laws
specifically applicable to the Sellers or the Companies or to any of the
Properties.
(e) REPORTS. The Sellers have provided to the Buyers complete
and correct copies, or originals, of all environmental and worker safety and
health reports, studies, risk assessments, exposure assessments, investigations,
audits, internal assessments of potential responsibility or liability under
Environmental Laws, and records of agency audits under Environmental Laws of
which it has knowledge relating to the Properties.
(f) CONTRACTS. SCHEDULE 3.21(f) and SCHEDULE 3.11(a) list all
properties which are or have been owned, leased or operated by the Companies,
and the Sellers have provided the Buyers with copies of all contracts or
agreements allocating responsibility, obligation or liability for environmental
matters thereunder or pursuant thereto relating to such properties or otherwise
relating to the Companies.
3.22 TAXES.
(a) The Companies have timely filed (or have had timely filed on
their behalf) or will timely file or cause to be timely filed, all Tax Returns
required
37
by applicable law to be filed by any of them prior to or as of the Closing Date.
All such Tax Returns and amendments thereto are or will be true, complete and
correct.
(b) The Companies have paid (or have had paid on their behalf),
or where payment is not yet due, have established (or have had established on
their behalf and for their sole benefit and recourse), or will establish or
cause to be established on or before the Closing Date, an adequate accrual for
the payment of all Taxes due with respect to any period or portion thereof
ending prior to or as of the Closing Date.
(c) No Audit by a Tax Authority is pending or threatened with
respect to any Tax Returns filed by, or Taxes due from, the Companies. No issue
has been raised by any Tax Authority in any Audit of the Companies that if
raised with respect to any other period not so audited could be expected to
result in a material proposed deficiency for any period not so audited. No
deficiency or adjustment for any Taxes has been threatened, proposed, asserted
or assessed against the Companies. There are no liens for Taxes upon the assets
of the Companies, except liens for current Taxes not yet due.
(d) None of the Companies has given or been requested to give
any waiver of statutes of limitations relating to the payment of Taxes or have
executed powers of attorney with respect to Tax matters, which will be
outstanding as of the Closing Date.
(e) Except as set forth on SCHEDULE 3.22, none of the Companies
is a party to, is bound by, or has any obligation to Sellers for Taxes under any
tax sharing, cost sharing, or similar agreement or policy. As of the Closing
Date, any such agreements or policies (whether or not listed on SCHEDULE 3.22
are cancelled, void, and unenforceable. The provisions of any such agreement or
policy listed on SCHEDULE 3.22 shall continue to apply to the Companies through
the close of business on the Closing Date.
(f) There are no changes in the tax accounting methods subject
to Section 481(a) of the Code which have an ongoing effect on the Companies.
(g) Each Seller is not (and each of its shareholders or
partners, if any, is not and at all times since its formation has not been) a
foreign person, foreign corporation, foreign partnership, foreign trust or
foreign estate within the meaning of Section 1445 of the Code.
(h) Each of the Companies is, and has been since its formation,
classified as an association not taxable as a corporation for Federal income tax
purposes for any and all periods up to and including the Closing. The IRS has
not challenged or threatened to challenge the status of any of the Companies as
associations not taxable as corporations for Federal income tax purposes. All
Tax Returns and other filings have been filed on a basis consistent with such
position for Federal income tax purposes.
38
3.23 INVESTMENT REPRESENTATIONS. Each of the Sellers that will
receive OP Units pursuant to Section 2.2:
(a) is an "Accredited Investor," as such term is defined in
Regulation D under the Securities Act;
(b) has received and reviewed the PPM;
(c) has had access to such additional financial and other
information, and has been afforded the opportunity to ask questions of
representatives of AIMCO OP and AIMCO, and to receive answers to those
questions, as it has deemed necessary in connection with its acquisition of OP
Units;
(d) acknowledges that the OP Units that will be acquired
pursuant to this Agreement are being acquired in a transaction not involving any
public offering within the meaning of the Securities Act, and the OP Units, and
any AIMCO Stock that may be issued in exchange for OP Units tendered for
redemption, have not been, and may never be, registered under the Securities
Act;
(e) agrees not to offer, sell, transfer or otherwise dispose of
the OP Units, or any AIMCO Stock issued in exchange for OP Units tendered for
redemption, in the absence of registration under the Securities Act unless it
delivers to AIMCO OP and AIMCO an opinion of counsel reasonably satisfactory to
AIMCO OP and AIMCO, in form and substance satisfactory to AIMCO OP and AIMCO, to
the effect that the proposed sale, transfer or other disposition may be effected
without registration under the Securities Act and under applicable state
securities and blue sky laws;
(f) acknowledges that the OP Units, and any AIMCO Stock issued
in exchange for OP Units tendered for redemption, will be in the form of
physical certificates and that, unless and until such OP Units or AIMCO Stock
shall have been registered under the Securities Act, the certificates will bear
a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT AND UNDER APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
39
(g) has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of an acquisition
of the OP Units and is able to bear the economic risk of a loss of an investment
in the OP Units and is not acquiring any OP Units with a view to the
distribution thereof or any present intention of offering or selling any thereof
in a transaction that would violate the Securities Act or the securities laws of
any state or any other applicable jurisdiction; and
(h) has been advised by its own counsel with respect to this
Agreement and the tax implications of the contributions and transactions
contemplated hereby.
3.24 DISCLOSURE. No representation or warranty of the Sellers
contained in this Agreement and no statement contained in any certificate or
schedule furnished or to be furnished by or on behalf of the Sellers to the
Buyers or any of their Representatives pursuant hereto contains or will contain
any untrue statement of a material fact. To the best of the Sellers' knowledge,
the Sellers have disclosed to the Buyers all information relating to the
Acquired Business that could have a Material Adverse Effect.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
Each of the Buyers hereby represents and warrants to the Sellers, as
follows:
4.1 ORGANIZATION AND QUALIFICATION.
(a) AIMCO is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Maryland. AIMCO has its
principal place of business in the State of Colorado and has the requisite
corporate power and authority and all necessary governmental approvals to own,
lease and operate its properties and to carry on its business as it is now being
conducted. AIMCO is duly qualified or licensed as a foreign corporation in each
jurisdiction where the character of the properties owned, leased or operated or
the nature of the business conducted by it makes such qualification or licensing
necessary.
(b) Each of AIMCO OP and AIMCO/XXX is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with its principal place of business in the State of Colorado, and has
the requisite power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is now
being conducted. Each of AIMCO OP and AIMCO/XXX is duly qualified or licensed
as a foreign limited partnership in each jurisdiction where the character of the
properties owned, leased or operated
40
or the nature of the business conducted by AIMCO OP and AIMCO/XXX makes such
qualification or licensing necessary.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of the Buyers has all
necessary power and authority to execute and deliver this Agreement and each of
the Related Documents to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by each Buyer of this Agreement and
each of the Related Documents to which it is a party, the performance by each
Buyer of its obligations under this Agreement and each of the Related Documents
to which it is a party, and the consummation by each Buyer of the transactions
contemplated by this Agreement and each of the Related Documents to which it is
a party have been duly and validly authorized by all necessary action and no
other proceedings are necessary on the part of the Buyers to authorize this
Agreement or any of the Related Documents or to consummate the transactions
contemplated hereby or thereby. This Agreement and each of the Related
Documents has been (or, when executed and delivered, will have been) duly and
validly executed and delivered by each Buyer, to the extent each is a party
thereto, and, assuming the due authorization, execution and delivery thereof by
the other parties hereto or thereto, constitutes the legal, valid and binding
obligation of each Buyer, to the extent each is a party thereto, enforceable
against such Buyer in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and by equitable principles to which the remedies of
specific performance and injunctive and similar forms of relief are subject.
4.3 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth on
SCHEDULE 4.3, the execution and delivery by the Buyers of this Agreement, the
consummation by the Buyers of the transactions contemplated hereby and
compliance by the Buyers with the provisions hereof will not (a) conflict with,
result in a breach of, or cause a dissolution or require the consent or approval
of any Person under, any provision of the Organizational Documents of the
Buyers, (b) require any consent, approval, authorization or permit of, or filing
with or notification to, any Governmental Authority, (c) conflict with, or, with
or without notice or the passage of time or both, result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any contract to which the Buyers are a party, or give to any third party any
right of termination, cancellation, amendment or acceleration under any such
contract or result in the creation of a Lien on any of the assets or properties
of the Buyers, or (d) violate or conflict with any judgment, order, writ,
injunction, decree, statute, Law, rule or regulation applicable to any of the
Buyers.
4.4 LITIGATION. The Buyers have not received notice of any material
action, suit or proceeding before any judicial or quasi-judicial body, by any
governmental authority or other third party, pending, or to its knowledge,
threatened, against or affecting the Buyers and, to their knowledge, there is no
basis for any such action, suit or proceeding. The Buyers have not received
notice of any attachments, execution proceed-
41
ings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings that are pending, or, to its knowledge,
threatened, against the Buyers.
4.5 ORGANIZATIONAL DOCUMENTS. The Buyers have delivered to the
Sellers a complete and correct copy of (a) the Articles of Incorporation and
Amended and Restated bylaws of AIMCO, (b) the Agreement of Limited Partnership
of AIMCO OP, and (c) the Agreement of Limited Partnership of AIMCO/XXX, in each
case, as amended, and none of the Sellers is in violation thereof.
4.6 OP UNITS. The OP Units, if and when issued to the Sellers in
accordance with this Agreement, will be duly authorized and validly issued.
Subject to the Sellers' delivery of the acknowledgments described in SECTION
2.4(h), the Persons receiving OP Units pursuant to this Agreement will be duly
admitted on and as of the Closing Date as limited partners of AIMCO OP with all
the rights of limited partners of AIMCO OP under the Agreement of Limited
Partnership of AIMCO OP or otherwise.
4.7 CAPITALIZATION. The authorized capital stock of AIMCO consists
of 150,000,000 shares of Class A Common Stock, $.01 par value per share, 685,000
shares of Class B Common Stock, $.01 par value per share, and 10,000,000 shares
of Preferred Stock, $.01 par value per share. As of April 29, 1996, 11,973,832
shares of Class A Common Stock, 585,000 shares of Class B Common Stock and no
shares of Preferred Stock were issued and outstanding. Since May 1, 1996, AIMCO
has not issued any shares of its capital stock, except shares of Class A Common
Stock issued pursuant to the Somerset Agreement or to holders of OP Units upon
redemption of such OP Units. As of April 29, 1996, 2,081,684 OP Units were
issued and outstanding. Except (a) employee options to acquire Class A Common
Stock of AIMCO, (b) as provided in the Agreement of Limited Partnership of AIMCO
OP, (c) as disclosed in SCHEDULE 4.7, (d) issuances of OP Units and shares of
AIMCO Stock in connection with acquisitions of properties, interests in
properties and interests in entities that own properties, and (e) pursuant to
this Agreement, there are no options, warrants or other rights, agreements or
commitments obligating AIMCO to issue shares of its capital stock or obligating
AIMCO OP to issue OP Units.
4.8 REPORTS, FINANCIAL STATEMENTS AND PRIVATE PLACEMENT MEMORANDUM.
(a) The Buyers have previously made available to the Sellers
complete and correct copies of each: (i) annual report on Form 10-K for AIMCO;
(ii) quarterly report on Form 10-Q for AIMCO; (iii) definitive proxy statement
for AIMCO; (iv) current report on Form 8-K for AIMCO; and (v) other form,
report, schedule and statement and filed by AIMCO with the SEC under the
Exchange Act, since January 1, 1996 (collectively, the "SEC DOCUMENTS"). In
addition, the Buyers have delivered to the Sellers the PPM. As of their
respective dates, each of the SEC Documents complied in all material respects
with the requirements of the Exchange Act to the extent applicable to such SEC
Document, and none of such SEC Documents or the PPM (as of their respective
dates) contained an untrue statement of a material fact required to be stated
42
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except as the same was
corrected or superseded in a subsequent document duly filed with the SEC, that
has been delivered to the Sellers. Since January 1, 1995, AIMCO has timely
filed all reports and made all filings required to be filed under the Exchange
Act with the SEC under the rules and regulations of the SEC.
(b) The audited consolidated financial statements and unaudited
consolidated interim financial statements included in the SEC Documents and the
PPM (including any related notes) fairly present the financial position of AIMCO
and its consolidated Subsidiaries as of the dates thereof and the results of
operations and changes in cash flows for the periods specified, subject, where
appropriate, to normal year-end audit adjustments, in each case in accordance
with past practice and GAAP applied on a consistent basis during the period
involved (except as otherwise stated therein). Except as and to the extent set
forth in the SEC Documents or the PPM, since December 31, 1995, the Buyers have
incurred no liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise) other than liabilities and obligations that,
individually and in the aggregate, are not reasonably likely to have a material
adverse effect on their ability to perform their obligations under this
Agreement or on their business and condition.
4.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in the
SEC Documents or the PPM, since December 31, 1995 there has not been, occurred
or arisen any change in the business, financial condition or results or
operations of the Buyers that adversely affects in any material respect their
ability to perform their obligations under this Agreement or would reasonably be
expected to have a material adverse effect upon their business or condition.
4.10 INVESTMENT COMPANY STATUS. Neither AIMCO OP, AIMCO Holdings nor
AIMCO/XXX is an "investment company" within the meaning of Section 721(b) of the
Code and the Treasury regulations thereunder.
4.11 PARTNERSHIP STATUS. AIMCO OP, AIMCO Holdings and AIMCO/XXX are
treated as partnerships, and not as associations taxable as corporations, for
Federal income tax purposes.
ARTICLE V
COVENANTS
5.1 NOTIFICATION OF CERTAIN MATTERS. Each of the parties hereto
shall give prompt notice to the other parties hereto of (a) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause (i) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any
43
material respect, or (ii) any covenant, condition or agreement contained in this
Agreement not to be complied with or satisfied and (b) any failure of such party
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder. Subject to SECTION 8.1, the delivery of any
notice pursuant to this Section shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
5.2 FURTHER ACTION, REASONABLE EFFORTS; CONSENTS AND APPROVALS. Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
use commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, including, without limitation,
using commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, certificates, qualifications and orders of, and make
all filings and required submissions with, all Governmental Authorities, and all
shareholders, lenders and partners of, and parties to contracts with, any of the
Buyers, the Sellers or the Companies and all other Persons, in each case, as are
necessary or desirable for the consummation of the transactions contemplated
hereby (collectively "CONSENTS"). The Sellers shall, as soon as possible prior
to the Closing, deliver to the Buyers copies of all Consents obtained by the
Sellers. The Buyers shall, as soon as possible prior to the Closing, deliver to
the Sellers copies of all Consents obtained by the Buyers. In case at any time
after the Closing Date any further action is necessary or desirable to carry out
the purposes of this Agreement, the Buyers and the Sellers shall use
commercially reasonable efforts to take all such action. Prior to the Closing,
each party shall use its best efforts not to take any action, or enter into any
transaction, that would cause any of its representations or warranties contained
in this Agreement to be untrue.
5.3CONDUCT OF BUSINESS PENDING THE CLOSING. From the date hereof
through the Closing, except as expressly permitted or contemplated by this
Agreement, unless AIMCO shall otherwise agree in writing prior to the taking of
any action prohibited by the terms of this Section, the Sellers shall cause each
of the Companies to conduct its operations and business in the ordinary and
usual course of business and consistent with past practice. Without limiting
the generality of the foregoing, and except as otherwise expressly permitted by
this Agreement, prior to the Closing, without the prior written consent of
AIMCO, to the extent within their control, the Sellers shall not permit any of
the Companies to: (a) amend or modify its articles of incorporation, bylaws,
partnership agreement or any other Organizational Documents; (b) issue, sell,
pledge or dispose of, grant or otherwise create, or agree to issue, sell, pledge
or dispose of, grant or otherwise create any equity interest, any debt or any
securities convertible into or exchangeable for or any equity interest; (c)
purchase, redeem or otherwise acquire or retire, or offer to purchase, redeem or
otherwise acquire or retire, any equity interest (including any options with
respect to any equity interest and any security convertible or exchangeable into
any equity interest); (d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
44
of its equity interests, or subdivide, reclassify, recapitalize, split, combine
or exchange any of its equity interests; provided that the LLCs may make cash
distributions to their members consistent with past practice; (e) incur or
become contingently liable with respect to any indebtedness or guarantee any
such indebtedness or issue any debt securities or incur any other obligation or
liability outside the ordinary course of business; (f) acquire or agree to
acquire by merging or consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
entity; (g) mortgage or otherwise encumber or subject to any lien any of its
properties or assets; (h) sell, transfer or assign any of its assets or
properties; (i) enter into any Contract not terminable within 60 days (other
than Tenant Leases on terms consistent with past practice); (j) pay or settle
any claim or liability, or enter into, amend or terminate any transaction,
Contract, commitment or arrangement, between or among any of the Companies, any
of the Sellers or any Affiliate of any of the Sellers, including, without
limitation, those set forth on SCHEDULE 3.19, other than scheduled payments of
Settlement Costs, allocated in accordance with SCHEDULE 5.19; or (k) authorize
any of, or commit or agree to take any of, the foregoing actions or any action
specified in SECTION 3.9.
5.4 ACCESS AND INVESTIGATION.
(a) Prior to the Closing, the Sellers shall, and shall cause the
Companies and their Representatives to, provide the Buyers and their
Representatives with full and free access, during normal business hours and upon
reasonable notice, to the Companies' personnel, properties, contracts, books and
records and other documents and data, including tax returns, and shall furnish
the Buyers with copies of all documents and with such additional financial and
operating data and other information as the Buyers shall, from time to time,
reasonably request for the purpose of enabling the Buyers to investigate the
affairs of the Companies and the Acquired Business and the accuracy of the
representations and warranties of the Sellers made in this Agreement. During
such investigation, the Buyers and their Representatives shall have the right to
make copies of such contracts, books and records, tax returns and other
documents and data as they may deem advisable. The furnishing of such
information to the Buyers and any such investigation by the Buyers shall not
affect the Buyers' right to rely on any of the representations and warranties
made in this Agreement. The Buyers shall use their best efforts not to
unreasonably disrupt the business or operations of the Sellers or the Companies.
(b) The Buyers and their Representatives shall be entitled, upon
reasonable notice to the Sellers, to cause one or more environmental assessments
of the Properties (each, an "ENVIRONMENTAL ASSESSMENT") to be performed, at the
Buyers' expense. Each Environmental Assessment may include any and all
investigations that the Buyers deem appropriate for assessing the environmental
condition of and any potential environmental liabilities associated with the
Properties. The Sellers shall provide the Buyers and their Representatives with
full access to the Properties, during normal
45
business hours and upon reasonable notice, and shall not interfere with any
Environmental Assessment, and shall provide all necessary information that is in
the Sellers' possession or control that may be necessary or desirable for each
Environmental Assessment. The Buyers shall indemnify the Sellers and the
Companies for any Damages to the Properties as a result of such Environmental
Assessments.
5.5 NO NEGOTIATIONS. The Sellers shall not, and shall not permit any
of their Representatives or any other Person acting for or on behalf of any of
them to, solicit, entertain offers from, negotiate with, or in any manner
discuss, encourage, recommend or agree to any proposal relating to (a) the sale
of the Acquired Business, the Companies or any interest therein, (b) the merger,
consolidation or other combination of the Companies with any Person, or (c) the
liquidation, dissolution or reorganization of the Companies, except (i) as
specifically contemplated by this Agreement, and (ii) to the extent that the
Sellers' failure to do so would, in the opinion of counsel to the Sellers (a
copy of which shall have been delivered to the Buyers), constitute a breach of
the Sellers' fiduciary duties. Without limiting the generality of the
foregoing, the Sellers shall not, and shall not permit any of their
Representatives or any other Person acting for or on behalf of any of them to,
furnish or cause to be furnished any information with respect to the Companies
to any Person other than the Buyers and their Representatives except that, if
necessary, in the opinion of counsel to the Sellers (a copy of which shall have
been delivered to the Buyers), for any LLC to comply with any fiduciary
obligations as a general partner of a Subsidiary Limited Partnership, such LLC
may disclose information to the limited partners of such Partnership or any
other Person. If any of the Sellers or any of their Representatives receives
from any Person any offer, proposal or informational request that may be subject
to this Section, the Sellers shall, as soon as possible, but in any event within
three Business Days, (w) advise the Buyers of such offer, proposal or
informational request, (x) provide the Buyers with a copy of any document or
writing received by any of the Sellers or their Representatives relating to such
offer, proposal or informational request, (y) advise such Person, by written
notice, of the terms of this Section, and (z) deliver a copy of such notice to
the Buyers.
5.6 TRANSFER TAXES. The Sellers shall be liable for, and shall
indemnify and hold the Buyers harmless against, any liability for any sales,
gains, transfer or similar Taxes resulting from the transfer to the Buyers of
any of the Acquired Assets pursuant to this Agreement.
5.7 APPORTIONMENT. Buyers and Sellers shall, as of the Closing Date,
apportion (a) the real property Taxes on all Acquired Properties, (b) other
similar recurring municipal and state charges, assessments and permit fees for
the Acquired Properties, (c) rentals, revenues and other income, if any, from
the Acquired Properties, and (d) service or other contract fees, utility costs
and other expenses affecting the Acquired Properties. All such prorations shall
be allocated so that items relating to time periods ending on or prior to the
Closing Date shall be allocated to the Sellers and items relating to time
periods beginning after the Closing Date shall be allocated to the Buyers (based
on the actual number of days occurring in each such period to the total number
46
of days in the relevant year or other period). The amount of all such
prorations shall be settled and paid on or before the tenth business day
following the Closing Date; provided, however, that final payments with respect
to prorations that are not able to be calculated as of the Closing Date will be
calculated and paid as soon as practicable thereafter. The parties hereto agree
to furnish each other with such documents and other records as shall be
reasonably requested to confirm all proration calculations and other payments
due under this SECTION 5.7. Delinquent rentals as of the Closing Date shall not
be prorated, but when paid to the Buyers shall be delivered by the Buyers to the
Sellers (provided that all current rent has then been paid with respect to the
Tenant Leases). After the Closing, the Sellers shall have no right to proceed
in any manner or make any claim against tenants for rents that were delinquent
as of the Closing Date. All non-delinquent real estate taxes or assessments on
any of the Acquired Properties shall be prorated based on the actual current tax
xxxx, but if such tax xxxx has not yet been received by the Sellers by the
Closing Date or if supplemental taxes are assessed after the Closing for the
period prior to the Closing, the parties shall make any necessary adjustment
after the Closing by cash payment to the party entitled thereto so that the
Sellers shall have borne all real property taxes, including all supplemental
taxes, allocable to the period prior to the Closing and the Buyers shall bear
all real property taxes, including all supplemental taxes, allocable to the
period from and after the Closing. If any expenses attributable to any of the
Acquired Properties and allocable to the period prior to the Closing are
discovered or billed after the Closing, the parties shall make any necessary
adjustment after the Closing by cash payment to the party entitled thereto so
that the Sellers shall have borne all expenses allocable to the period prior to
the Closing and the Buyers shall bear all expenses allocable to the period from
and after the Closing.
5.8 PUBLIC ANNOUNCEMENTS. At all times at or before the Closing,
none of the Buyers or the Sellers shall issue or make, directly or indirectly,
any reports, statements or releases to the public with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of
AIMCO, in the case of the Sellers, or English, in the case of the Buyers;
provided, however, that each of the Buyers and the Sellers may issue or make,
directly or indirectly, any report, statement or release required by Law, its
fiduciary obligations or the rules of the New York Stock Exchange if the other
parties to this Agreement are so notified as soon as possible in advance of such
report, statement or release.
5.9 OFFER TO ACQUIRE LIMITED PARTNERSHIP INTERESTS.
(a) Provided that nothing shall have occurred and be continuing
that would result in a failure to satisfy any of the conditions set forth in
subsection (f) below (the "OFFER CONDITIONS"), AIMCO OP shall, on the Escrow
Date, commence offers (each, an "OFFER") to purchase any and all of the
outstanding limited partnership units of each of the Apartment Partnerships (the
"LP UNITS") at a price per LP Unit equal to the Formula Price (as defined in
subsection (d) below) applicable to such Apartment Partnership; provided,
however, that AIMCO OP shall not have any obligation to make any Offer to
purchase LP Units of any Apartment Partnership if the Formula Price for
47
such Apartment Partnership is zero or less than zero. AIMCO OP shall use its
best efforts to conduct each Offer in compliance in all material respects with
applicable laws and to consummate such Offer on the terms and subject to the
Offer Conditions thereof, as soon as legally permissible.
(b) Each Offer shall be made by means of the Offer Documents (as
defined below) which shall not contain any conditions other than the Offer
Conditions and shall be open for a period of not less than 20 Business Days.
Pursuant to each Offer, AIMCO OP shall offer each holder of LP Units of an
Apartment Partnership who tenders his LP Units to AIMCO OP cash per each LP Unit
in an amount equal to the Formula Price applicable to such Apartment Partnership
and shall provide each such holder who is an Accredited Investor the alternative
of receiving, in lieu of cash consideration for some or all of his LP Units, at
such holder's election, OP Units in a number determined by reference to the
AIMCO Market Price as of the date such Offer is consummated. Without the
consent of English, AIMCO OP shall not reduce the maximum number of LP Units to
be purchased in any Offer, reduce the price to be paid pursuant to an Offer or
amend any other material term of an Offer in a manner adverse to the holders of
the LP Units subject to such Offer. The "OFFER DOCUMENTS" shall consist of (i)
an offer to purchase containing all information required by Law, and (ii) a
private placement memorandum describing the offering of OP Units to Accredited
Investors pursuant to an Offer, containing information substantially similar to
the information contained in the PPM.
(c) The Buyers shall cause the information included, or
incorporated by reference, in the Offer Documents (other than information
provided by the Sellers for inclusion in the Offer Documents) not to 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 not
misleading at the time the Offer Documents (or any amendment or supplement
thereto) are first mailed to the limited partners of the Apartment Partnerships.
The Sellers shall promptly furnish to AIMCO OP all information concerning the
Sellers and the Apartment Partnerships as AIMCO OP may reasonably request in
connection with the preparation of the Offer Documents. The Sellers shall cause
the information supplied by them for inclusion in the Offer Documents not to
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 not misleading at the time the Offer Documents (or any amendment or
supplement thereto) are first mailed to the limited partners of the Apartment
Partnerships. If, at any time prior to the termination of an Offer or the
consummation of the transactions contemplated thereby, any event or circumstance
relating to the Sellers or the Apartment Partnerships is discovered by the
Sellers that makes the information provided by the Sellers to AIMCO OP for
inclusion in the Offer Documents inaccurate, incomplete or misleading, the
Sellers shall promptly inform AIMCO OP thereof. The Sellers shall indemnify
AIMCO OP and its Representatives against all claims and Damages arising out of
or based upon any untrue statement (or alleged untrue statement) of a material
fact contained in the Offer Documents or any amendment or supplement thereto, or
based on any
48
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) relates to the
Sellers or the Apartment Partnerships or is made in reliance upon and in
conformity with information furnished to AIMCO OP by the Sellers for inclusion
therein. The Buyers shall indemnify the Sellers and their Representatives
against all claims and Damages arising out of or based upon any untrue statement
(or alleged untrue statement) of a material fact contained in the Offer
Documents or any amendment or supplement thereto, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except to the extent
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) relates to the Sellers of the Apartment Partnerships or is made in
reliance upon and in conformity with information furnished to AIMCO OP by the
Sellers for inclusion therein. Neither the Buyers' nor the Sellers'
indemnification obligations contained in this paragraph shall apply to the
Fairness Opinion or its contents.
(d) The price to be offered for an LP Unit of an Apartment
Partnership pursuant to each Offer (the "FORMULA PRICE") shall be determined in
good faith by AIMCO OP in accordance with the methodology set forth in EXHIBIT A
hereto.
(e) The Sellers shall retain Houlihan, Lokey, Xxxxxx & Xxxxx
(the "FINANCIAL ADVISOR") to consider the fairness of each Formula Price. Upon
determination of the Formula Prices and prior to commencement of any Offer,
AIMCO OP shall disclose each of the Formula Prices to English, on behalf of the
Sellers. The Sellers shall use commercially reasonable efforts to cause the
Financial Advisor to render its opinion (the "FAIRNESS OPINION") as to the
fairness of each Formula Price within five Business Days after AIMCO OP's
disclosure of such Formula Prices to English. AIMCO OP shall not commence any
Offer unless and until the Financial Advisor has determined that each of the
Formula Prices for the Offers is fair from a financial point of view to the
limited partners of the Apartment Partnerships, and has delivered to the Sellers
and the Buyers its written opinion to such effect, which opinion shall be
addressed to the Sellers and the Buyers. The Buyers and the Sellers shall
provide the Financial Advisor with complete copies of all documents that contain
or summarize the Fairness Opinion prior to their filing with any Governmental
Authority or their being furnished to the limited partners of the Partnerships.
(f) Notwithstanding any other provisions of an Offer, AIMCO OP
shall not be required to accept for payment and pay for any LP Units tendered
pursuant to an Offer, may postpone the purchase of, and payment for, LP Units
tendered, and may terminate or amend an Offer if at any time on or after the
date of the Agreement, and at or before the time of acceptance for payment of
any such LP Units (whether or not any LP Units have theretofore been accepted
for payment and paid for) pursuant to the Offer, any of the following shall
occur:
49
(i) any change (or any condition, event or development
involving a prospective change) shall have occurred or been threatened in
the business, properties, assets, liabilities, capitalization, financial
condition, operations, licenses or franchises, or results of operations of
the Apartment Partnership to which such Offer relates, which change, in the
sole judgment of AIMCO OP, is or may be materially adverse to such
Apartment Partnership, or AIMCO OP shall have become aware of any facts
relating to such Apartment Partnership or its operations which, in the sole
judgment of AIMCO OP, has or may have material significance with respect to
the value of such Partnership or the value of the LP Units to AIMCO OP; or
(ii) there shall have occurred (A) any general suspension
of trading in, or limitation on prices for, securities on any national
securities exchange or the over-the-counter market in the United States,
(B) any extraordinary or material adverse change in the financial markets
or major stock exchange indices in the United States, (C) a declaration of
a banking moratorium or any suspension of payments in respect of banks in
the United States, (D) a commencement of a war, armed hostilities or other
national or international calamity directly or indirectly involving the
United States, (E) any limitation (whether or not mandatory) by any
Governmental Authority on, or any other event which, in the sole judgment
of AIMCO OP, might affect the extension of credit by banks or other lending
institutions, or (F) in the case of any of the foregoing existing at the
time of the commencement of the Offer, in the sole judgment of AIMCO OP, a
material acceleration or worsening thereof; or
(iii) there shall have been threatened, instituted, or
pending any action, proceeding, application or counterclaim by any
government, Governmental Authority or governmental agency, or by any other
Person, before any Governmental Authority, court or regulatory or
administrative agency, authority or tribunal, which (A) challenges or seeks
to challenge the acquisition by AIMCO OP of the LP Units, restrain, or
prohibit or delay the making or consummation of the Offer, prohibit the
performance of any of the contracts or other arrangements entered into by
AIMCO OP (or any Affiliates of AIMCO OP) in connection with the acquisition
of the LP Units, or (if there is a substantial likelihood of success on the
merits) obtain any material amount of Damages or otherwise directly or
indirectly relating to the transactions contemplated by the Offer, (B)
seeks to make the purchase of, or payment for, some or all of the LP Units
pursuant to the Offer illegal or results in a delay in the ability of AIMCO
OP to accept for payment or pay for some or all of the LP Units, (C) seeks
to prohibit or limit the ownership or operation by AIMCO OP of the entity
serving as general partner of the Apartment
50
Partnership or to remove such entity as general partner of the Partnership,
or seeks to impose any material limitation on the ability of AIMCO OP or
any affiliate of AIMCO OP to conduct the Partnership's business or own such
assets, (D) seeks to impose material limitations on the ability of AIMCO OP
to acquire or hold or to exercise full rights of ownership of the LP Units
including, but not limited to, the right to vote the LP Units purchased by
it on all matters properly presented to the limited partners of the
Partnership, or (E) might result, in the sole judgment of AIMCO OP, in a
limitation of the benefits expected to be derived by AIMCO OP as a result
of the transactions contemplated by the Offer or the value of the LP Units
to AIMCO OP; or
(iv) there shall be any action taken, or any statute,
rule, regulation, Order or injunction shall be sought, proposed, enacted,
promulgated, entered, enforced or deemed applicable to the Offer, AIMCO OP
or any Affiliate of AIMCO OP, or any other action shall have been taken,
proposed or threatened, by any government, Governmental Authority or court,
that, in the sole judgment of AIMCO OP, might, directly or indirectly,
result in any of the consequences referred to in clauses (A) through (E) of
paragraph (iii) above; or
(v) the Apartment Partnership shall have (A) changed, or
authorized a change of, the LP Units or the Partnership's capitalization,
(B) issued, distributed, sold or pledged, or authorized, proposed or
announced the issuance, distribution, sale or pledge of (X) any equity
interests (including, without limitation, the LP Units), or securities
convertible into any such equity interests or any rights, warrants or
options to acquire any such equity interests or convertible securities, or
(Y) any other securities in respect of, in lieu of, or in substitution for
LP Units outstanding on the date hereof, (C) purchased or otherwise
acquired, or proposed or offered to purchase or otherwise acquire, any
outstanding LP Units or other securities, (D) declared or paid any dividend
or distribution on any LP Units or issued, authorized, recommended or
proposed the issuance of any other distribution in respect of the LP Units,
whether payable in cash, securities or other property, (E) authorized,
recommended, proposed or announced an agreement, or intention to enter into
an agreement, with respect to any merger, consolidation, liquidation or
business combination, any acquisition or disposition of a material amount
of assets or securities, or any release or relinquishment of any material
contract rights, or any comparable event, not in the ordinary course of
business, (F) taken any action to implement such a transaction previously
authorized, recommended, proposed or publicly announced, (G) issued, or
announced its intention to issue, any debt securities, or securities
convertible into, or rights, warrants or options to acquire, any debt
securities, or incurred, or announced its intention to
51
incur, any debt other than in the ordinary course of business and
consistent with past practice, (H) authorized, recommended or proposed, or
entered into, any transaction which, in the sole judgment of AIMCO OP, has
or could have an adverse affect on the value of the Partnership or the LP
Units, (I) proposed, adopted or authorized any amendment of its
Organizational Documents, or (J) agreed in writing or otherwise to take any
of the foregoing actions; or
(vi) a tender or exchange offer for any LP Units shall
have been commenced or publicly proposed to be made by another Person or
"group" (as defined in Section 13(d)(3) of the Exchange Act), or it shall
have been publicly disclosed or AIMCO OP shall have otherwise learned that
(A) any Person or group shall have acquired or proposed or be attempting to
acquire beneficial ownership of more than ten percent of the LP Units, or
shall have been granted any option, warrant or right, conditional or
otherwise, to acquire beneficial ownership of more than ten percent of the
LP Units, other than acquisitions for bona fide arbitrage purposes, or (B)
any Person or group shall have entered into a definitive agreement or an
agreement in principle or made a proposal with respect to a merger,
consolidation or other business combination with or involving the
Partnership; or
(vii) English and AIMCO OP shall have agreed that AIMCO OP
may terminate the Offer.
(g) AIMCO shall offer registration rights to those limited
partners who take OP Units pursuant to the Offer, pursuant to a Unitholder
Registration Rights Agreement, substantially in the form of EXHIBIT N hereto.
(h) On or prior to the second anniversary of the date that is
180 days subsequent to the Closing Date, AIMCO OP shall commence offers (each, a
"SUBSEQUENT OFFER") to purchase any and all of the outstanding limited
partnership units of each of the Subsequent Offer Partnerships at a price per LP
Unit that is (i) determined in a manner consistent with the calculation of the
Formula Price but using audited operating results for such Subsequent Offer
Partnerships for the year ending December 31, 1998, and (ii) has been determined
to be fair, from a financial point of view, to the limited partners of such
Subsequent Offer Partnership by the Financial Advisor or a major U.S. investment
banking firm; provided, however, that AIMCO OP shall not have any obligation to
make any offer to purchase LP Units of any Subsequent Offer Partnership if the
LP Unit price is zero or less than zero. Each Subsequent Offer shall be subject
to conditions that are similar to the Offer Conditions.
5.10 VOTING AND PROXY AGREEMENT.
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(a) At every meeting of the partners of any of the Partnerships,
and at every adjournment thereof, and on every action or approval by written
consent of the partners of any of the Partnerships, the Sellers shall vote all
of the interests in the Partnerships owned by the Sellers, directly or
indirectly: (i) in favor of any proposal or offer to acquire all or any portion
of the Partnerships, or interest therein, whether by tender or exchange offer,
merger, consolidation, business combination, sale of assets, sale of additional
interests, or similar transaction (each, an "ACQUISITION PROPOSAL") made by
AIMCO OP or one of its Affiliates; (ii) against any Acquisition Proposal not
made by AIMCO OP or one of its Affiliates; (iii) against any action or agreement
that is inconsistent with or that is reasonably likely to impede, interfere
with, delay, postpone or attempt to discourage the transactions contemplated by
this Agreement or any Acquisition Proposal by AIMCO OP or one of its Affiliates;
(iv) against any proposal to remove AIMCO OP or one of its Affiliates as general
partner of any of the Partnerships; and (v) in favor of any proposal initiated
or supported by AIMCO OP and its Affiliates that it is not inconsistent with the
terms of this Agreement.
(b) The Sellers hereby appoint AIMCO OP, with full power of
substitution (AIMCO OP and its substitutes being referred to herein as the
"PROXY"), as attorneys and proxies to vote all interests of the Sellers in the
Partnerships at every meeting of the partners of the Partnerships and on any
matter to which the partners of the Partnerships are entitled to express consent
or dissent in writing without a meeting. The Sellers agree that the Proxy may,
in the Sellers' name (or any of them) and stead, (i) attend any annual or
special meeting of the partners of the Partnerships and vote all interests of
the Sellers in the Partnerships at any such annual or special meeting, and (ii)
execute with respect to all interests of the Sellers in the Partnerships any
written consent to, or dissent from, partnership action. The Sellers agree to
refrain from (i) voting at any annual or special meeting of the partners of the
Partnerships, (ii) executing any written consent in lieu of a meeting of the
partners of the Partnerships, (iii) exercising any rights of dissent with
respect to their interests in the Partnerships, (iv) granting any proxy or
authorization to any person with respect to the voting of their interests in the
Partnerships, except pursuant to this Agreement, or (v) taking any action
contrary to or in any manner inconsistent with the terms of this Agreement. The
Sellers agree that this grant of a proxy is irrevocable and coupled with an
interest and agree that the Person designated as Proxy pursuant hereto may at
any time name any other Person as its substituted Proxy to act pursuant hereto,
either as to a specific matter or as to all matters. The Sellers hereby revoke
any proxy previously granted by them with respect to their interests in the
Partnerships and agree to take such further action as may be necessary or
desirable to effectuate such revocation. In discharging its powers under the
Agreement, the Proxy may rely upon advice of counsel, and any vote made or
action taken by the Proxy in reliance upon such advice of counsel shall be
deemed to have been made in good faith by the Proxy.
(c) The Sellers hereby agree to tender (and not withdraw) all
interests in the Partnerships owned or held, directly or indirectly, by them or
one of their
53
Affiliates to AIMCO OP or one of its Affiliates, as the case may be, pursuant to
the Offers.
(d) Except as contemplated in this Agreement, (i) the Sellers
will not, and will cause their Affiliates not to, directly or indirectly, sell,
transfer, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to the sale,
transfer, pledge, encumbrance, assignment or other disposition of, any interests
in any of the Companies, and (ii) the Sellers will not, and will cause their
Affiliates not to, directly or indirectly, grant or agree to grant any proxies
or authorities with respect to, deposit or agree to deposit into a voting trust,
or enter into or agree to enter into a voting agreement with respect to, any
interests in any of the Companies.
5.11 REGISTRATION RIGHTS AGREEMENT. At or prior to the Closing,
AIMCO and the Sellers shall execute and deliver the Registration Rights
Agreement.
5.12 PLEDGE AGREEMENT. At the Closing, (a) the Pledgors shall enter
into the Pledge Agreement with AIMCO OP, (b) the Pledgors shall deposit with
AIMCO OP a certificate or certificates representing OP Units issued to the
Pledgors at the Closing equal in number to (i) $5,000,000, divided by (ii) the
AIMCO Market Price as of the Escrow Date, and (c) the Pledgors shall deliver
financing statements and other documents reasonably requested by AIMCO OP in
order to perfect the security interest created under the Pledge Agreement.
5.13 REORGANIZATION; AMENDMENT OF PARTNERSHIP AGREEMENTS. Prior to
the Escrow Closing, the Sellers shall cause each of the LLCs to be merged into a
Delaware limited partnership pursuant to an Agreement of Merger in the form of
EXHIBIT I hereto (collectively, the "REORGANIZATION"). Prior to the Escrow
Closing and after the Reorganization, the Sellers shall cause AIMCO Holdings to
be appointed the general partner of each of the LLCs, effective as of, and
conditioned on, the Closing. Prior to the Escrow Closing, to the extent the
relevant Organizational Documents permit the Sellers or the LLCs to take such
action without the consent of the limited partners of the Partnerships, the
Sellers shall amend the partnership agreements of the Partnerships, (a) to the
extent such agreements do not already so provide, to provide that no one can
become a limited partner without the consent of the general partner, which
consent may be denied in the "sole and absolute discretion" of the general
partner, and (b) to elect to have the Texas Revised Partnership Act apply as its
supplemental law.
5.14 INSURANCE. The Sellers shall cause the Buyers to be named as
additional insureds with respect to all Property Insurance Policies during the
period prior to the Closing.
5.15 PROPERTY QUESTIONNAIRES. Prior to the Escrow Closing, the
Sellers shall obtain and deliver to AIMCO completed questionnaires, in the form
provided by AIMCO (each, a "PROPERTY QUESTIONNAIRE"), with respect to each of
the Properties.
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5.16 EMPLOYEES.
(a) At least 10 Business Days prior to the Escrow Date, the
Buyers shall provide the Sellers with a list of those employees (the
"TRANSFERRED EMPLOYEES") of JWE Management to whom the Buyers intend to offer
employment after the Closing, which list shall include substantially all of the
employees of JWE Management who currently provide on-site management of the
Properties. Effective as of the Closing, the Sellers shall terminate the
employment of the Transferred Employees, and AIMCO OP or one of its Affiliates
will offer employment to the Transferred Employees. Such offer of employment to
the Transferred Employees will be at salaries, wages and benefits determined by
AIMCO OP or such Affiliate, but not materially less, on an overall basis, than
the salaries, wages and benefits currently provided to the Transferred Employees
by JWE Management. AIMCO OP or such Affiliate shall give all Transferred
Employees who accept employment with AIMCO OP or such Affiliate credit for prior
service with JWE Management for purposes of determining eligibility and vesting
(but not benefit accrual) under employee benefit plans, policies and
arrangements of AIMCO OP or such Affiliate.
(b) The Sellers acknowledge and agree that (i) the employment of
the Transferred Employees by AIMCO OP or such Affiliate will be at-will, and
(ii) the terms and conditions of the Transferred Employees' employment with
AIMCO OP or such Affiliate will be subject to change at any time in accordance
with the policies of AIMCO OP or such affiliate.
(c) On or before the Closing Date, the Sellers shall pay all
Transferred Employees all sums they are due as of the Closing Date for severance
benefits, if any, and earned but unpaid salary, wages and benefits, and any
expense account reimbursements (collectively, "SEVERANCE COSTS"); and, at least
5 Business Days prior to the Escrow Date, the Sellers shall provide the Buyers
with a good faith estimate (the "ESTIMATED REIMBURSABLE SEVERANCE COSTS") of the
amount (the "REIMBURSABLE SEVERANCE COSTS") of Severance Costs for which each of
the Apartment Partnerships is or will be required to reimburse JWE Management or
any of the other Sellers. It is expressly understood and agreed that neither
AIMCO OP, such Affiliate nor any of the other Buyers are assuming any liability
for earned but unpaid salary, wages and benefits, including accrued but unpaid
vacation days and personal holidays, expense account reimbursement obligations
or any other liability for wages, salary, benefits or any other liability or
responsibility to any of the Sellers' employees, including the Transferred
Employees, in connection with their employment with and termination by the
Sellers, and the Sellers shall be solely responsible for such obligations and
liability.
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(d) Nothing in this Agreement shall be construed or interpreted
to mean that AIMCO OP, such Affiliate or any of the other Buyers are assuming or
have assumed any obligation, debt or liability relating to or arising from any
employee's employment with or termination by the Sellers, including, without
limitation, any liability for severance, termination or similar payments which
are payable or become payable as a result of the transactions contemplated by
this Agreement. Without limiting the foregoing, neither AIMCO OP, such
Affiliate nor any of the other Buyers are assuming and have not assumed any of
the Sellers' liabilities under any Benefit Plan or other health, welfare,
insurance, disability, retirement or similar plan, policy or arrangement, or any
other liability or obligation concerning or relating to any current or former
employees or independent contractors of the Sellers, including, without
limitation, the Transferred Employees.
(e) The Sellers agree to assume responsibility for giving all
notices required by the WARN Act or any similar state law or regulation, to
assume liability for any alleged failure to give such notice, and to indemnify
and hold harmless the Buyers and their Affiliates for any and all claims
asserted under the WARN Act or any similar state law or regulation because of a
"plant closing" or a "mass layoff" occurring on or before the Closing Date. For
purposes of this Agreement, the Closing Date is the "effective date" for
purposes of the WARN Act.
(f) Prior to the Closing, JWE Management shall deliver to the
Buyers true, correct and complete copies of all manuals, statements and
documents that set forth JWE Management's policies and procedures with respect
to its employees, and JWE Management agrees that the Buyers shall be entitled to
use of such manuals, statements and documents.
5.17 NO SQUEEZE-OUTS. For a period of three years after the Closing
Date, the Buyers shall not cause or permit any of the Subsidiary Limited
Partnerships to merge with any other entity except on terms that assure each
limited partner thereof will receive fair value for his or her interest in such
Partnership.
5.18 AUDITED FINANCIAL STATEMENTS. The Sellers shall cooperate with
the Buyers' auditors in their preparation of audited financial statements of the
Partnerships as may be requested by the Buyers (collectively, the "AUDITED
FINANCIAL STATEMENTS"). Such cooperation shall include, without limitation,
providing such auditors with access to the books and records of the
Partnerships, and providing such auditors with representation letters as may be
reasonably requested by such auditors.
5.19 ALLOCATION OF CERTAIN COSTS.
(a) On the Closing Date, after the Closing, (i) the Buyers shall
cause each Partnership to pay its share of the Transaction Costs, and (ii) the
Sellers shall pay their share of the Transaction Costs, in each case, allocated
in accordance with the percentages set forth on SCHEDULE 5.19.
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(b) On the Closing Date, after the Closing, the Buyers shall
cause each Partnership to pay its share of the Settlement Costs, allocated in
accordance with SCHEDULE 5.19. If a Partnership's share of the Settlement Costs
exceed its Adjusted Equity, then the Sellers shall pay such Settlement Costs or
such excess, whichever is less.
(c) Each Partnership shall pay its Consent Fees, if any. If a
Partnership's Consent Fees exceed its Adjusted Equity, then (i) the Sellers
shall pay 50% of such Consent Fees or such excess, whichever is less, and (ii)
the Buyers shall pay 50% of such Consent Fees or such excess, whichever is less.
5.20 INTERCOMPANY LIABILITIES.
(a) At the Closing, the Buyers shall repay all monetary
obligations of the Sellers under the Seller Obligations.
(b) At the Closing, the Sellers shall cause all of the Companies
that are lenders under the Intercompany Obligations to deliver to the Buyers
duly executed Assignments of Loans, conveying to AIMCO OP all rights of such
Companies in, to and under the Intercompany Obligations.
(c) In exchange for the sale, conveyance, assignment and
transfer of the rights in the Intercompany Obligations to AIMCO OP, at the
Closing, AIMCO OP shall deliver to each of the sellers thereof a check or
checks, payable in next-day funds to the order of such Person, in an aggregate
amount equal to the indebtedness represented by the Intercompany Obligations
sold by such Person, including accrued and unpaid interest thereon through the
Closing Date.
5.21 RELEASE.
(a) Effective as of the Closing, the Sellers hereby release and
forever discharge the Companies and each of their respective individual, joint
or mutual, past and present, agents, representatives, employees, officers,
directors, affiliates, stockholders, controlling persons, subsidiaries,
successors and assigns, other than AIMCO and those Persons that are Affiliates
of AIMCO prior to the Closing (collectively, "RELEASEES") from any and all
claims, demands, actions, causes of action, judgments, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity which the Sellers (or their
heirs, executors, administrators, successors and assigns) now have, have ever
had or may hereafter have against the respective Releasees arising
contemporaneously with or prior to the Closing Date or on account of or arising
out of any matter, cause or event occurring contemporaneously with or prior to
the Closing Date, including, but not limited to, any rights to indemnification
or reimbursement from the Companies (whether relating to pending claims or
claims asserted after the Closing Date).
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(b) The Sellers hereby represent and warrant that they
understand and acknowledge the significance and consequences of the releases set
forth herein. This release shall not operate, however, to release (i) any
obligation disclosed in SCHEDULE 5.21 or (ii) any claim for indemnification by
the Companies as a result of a third party claim asserted after the Closing, in
either case, that is not inconsistent with any representation or warranty in
this Agreement. The Sellers shall refrain from asserting any matter purported
to be released hereby against any Releasee.
5.22 CERTAIN ACTIONS BY AIMCO OP AFTER THE CLOSING.
(a) Except as provided in SECTION 5.22(b), during the period
beginning on the Closing Date and ending on the third anniversary of the date
that is 180 days after the Closing Date (the "RESTRICTED PERIOD"), without the
consent of the Sellers, the Buyers shall not sell, assign, distribute or
otherwise dispose of any of the Contributed Assets, the Company Properties
(other than the Property owned by Hastings Green Partners, Ltd. and the Weslayan
I Condominiums) or any other assets held by any of the Companies immediately
prior to the Closing (collectively, the "AGGREGATE ASSETS").
(b) During the Restricted Period, the Buyers shall be entitled
to sell, assign, distribute or otherwise dispose of the Aggregate Assets if such
transaction is effected as a tax-deferred exchange of such assets that qualifies
under Section 1031 of the Code and that does not result in the recognition of
gain by any Seller under the Code (whether directly or indirectly from any
partnership).
(c) During the Restricted Period, AIMCO OP will not take any
action inconsistent with its classification as a partnership; and will make any
election, or will consent to the making of any election, to be treated as a
partnership for Federal income tax purposes.
5.23 AIMCO OP DEBT ALLOCATION.
(a) Except as provided in SECTION 5.23(b), during the Restricted
Period (i) AIMCO OP shall allocate to each Seller that becomes a partner of
AIMCO OP on the Closing Date a share of nonrecourse liabilities includible in
the tax basis of such Seller for purposes of Section 752 of the Code in an
amount not less than the amount set forth for such Seller on SCHEDULE 5.23, and
(ii) AIMCO OP shall maintain sufficient non-recourse liabilities in order to
permit the allocation specified in the immediately preceding sentence to be
made. Any allocation of gain or loss of AIMCO OP that is made to any of the
Sellers under Section 704(c) of the Code shall be made under the traditional
method prescribed under Treasury Regulation Section 1.704-3 alone, without
curative or remedial allocations, and any such allocation under Section 704(c)
shall be subject to the reasonable approval of such Seller.
(b) AIMCO OP shall be permitted to allocate to a Seller
described in clause (i) of the first sentence of Section 5.23(a) a share of
nonrecourse
58
liabilities includible in the tax basis of such Seller for purposes of Section
752 of the Code in an amount that is less than the amount set forth for such
Seller on Schedule 5.23 only if both of the following conditions are satisfied:
(i) the reason that the share of such Seller is less than the amount set forth
for such Seller on SCHEDULE 5.23 arises from either principal amortization or
the issuance of additional OP units by AIMCO OP (a "BASIS REDUCTION EVENT")
after the Closing Date, and (ii) AIMCO OP provides at least 90 days notice to
such Seller in advance of such Basis Reduction Event and, at such Seller's
election, causes (not less than 21 days and not more than 60 days prior to such
Basis Reduction Event) those lenders or other holders of debt with respect to
AIMCO OP nonrecourse liabilities to permit such Seller to guarantee, prior to
such Basis Reduction Event, such portion of such nonrecourse liabilities as is
necessary in order for such Seller not to realize gain for Federal income tax
purposes by reason of such Basis Reduction Event.
5.24 ESTOPPEL CERTIFICATES. Prior to the Escrow Closing, the Sellers
shall use commercially reasonable efforts to obtain and deliver to the Buyers,
estoppel certificates, in form and substance reasonably satisfactory to the
Buyers, executed by (a) all lenders to the Companies (other than the Sellers and
the Companies), and (b) all tenants at any Properties other than residential
tenants.
5.25 PAYMENTS TO BROKERS. All claims and obligations with respect to
the items set forth on SCHEDULE 3.20 are the responsibility of and shall be paid
by the Sellers, except for that portion of the fees and expenses of Xxxx Xxxxxx
Realty Inc. that are allocated to the Partnerships pursuant to SCHEDULE 5.19.
5.26 CORRESPONDENCE WITH LIMITED PARTNERS. Prior to the Escrow
Closing, the Sellers shall deliver to the Buyers copies of all prior
correspondence between any of the Sellers or the Companies and any limited
partners in any of the Partnerships. Prior to the Closing, the Sellers shall
deliver to the Buyers copies of all prior correspondence between any of the
Sellers or the Companies and any limited partners in any of the Partnerships.
5.27 ACQUISITION OF EASTON FALLS LAND AND EASTON COMMONS. After the
Closing but on the Closing Date, AIMCO/Easton Falls shall acquire the Easton
Falls Land and Easton Commons. On the Closing Date, (a) Easton Falls shall
deliver, or cause to be delivered, to AIMCO/Easton Falls a duly executed and
acknowledged special warranty deed in recordable form, conveying to AIMCO/Easton
Falls fee title to the Easton Falls Land, subject to Permitted Encumbrances; (b)
JWE Development shall deliver, or cause to be delivered, to AIMCO/Easton Falls
a duly executed and acknowledged special warranty deed in recordable form,
conveying to AIMCO/Easton Falls fee title to Easton Commons, subject to
Permitted Encumbrances; and (c) AIMCO OP shall cause AIMCO/Easton Falls to
deliver (i) to Easton Falls a check or checks, payable in next-day funds, to the
order of Easton Falls in an aggregate amount equal to $1,400,000, and (ii) to
JWE Development a check or checks, payable in next-day funds, to the order of
JWE Development in an aggregate amount equal to $250,000.
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5.28 INTENTIONALLY OMITTED.
5.29 PROPERTY MANAGEMENT AGREEMENT. Upon written notice from English
to AIMCO OP at least 10 Business Days prior to the Escrow Date, AIMCO OP or one
of its Affiliates, as may be designated by the Buyers, shall enter into the
Property Management Agreement with JWE Management.
5.30 RELEASE OF GUARANTEES. From and after the date hereof, the
Buyers and the Sellers shall use commercially reasonable efforts (without
having to incur any out-of-pocket expense) to obtain the release of the Sellers
from any and all guarantees of obligations of the Companies set forth on
SCHEDULE 3.14(a)(VII).
ARTICLE VI
CONDITIONS TO ESCROW CLOSING; CONDITIONS TO CLOSING
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE ESCROW
CLOSING. The respective obligations of each party to this Agreement to effect
the Escrow Closing shall be subject to the following conditions:
(a) GOVERNMENTAL APPROVALS. All consents, approvals and action
of Governmental Authorities required to permit the consummation of the
transactions contemplated hereby shall have been obtained or made, free of any
condition that would have a material adverse effect on the Buyers, the Companies
or the Acquired Assets, and all required authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Authority shall have been obtained or filed or
shall have occurred. AIMCO OP shall have received all state securities or "blue
sky" permits and other authorizations necessary to issue the OP Units pursuant
to SECTION 2.2.
(b) NO INJUNCTIONS. No action shall have been taken, and no
statute, rule, regulation, executive order, decree, or injunction shall have
been enacted, entered, promulgated or enforced (and not repealed, superseded or
otherwise made inapplicable), by any court or Governmental Authority which
prohibits the consummation of the transactions contemplated by this Agreement.
(c) NO RESTRAINING ORDERS. No court of competent jurisdiction
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby which has not been lifted (each party agreeing
to use its reasonable efforts to have any such injunction, order or decree
lifted).
(d) FAIRNESS OPINION. The Financial Advisor shall have
delivered to the Seller and the Buyers one or more Fairness Opinions indicating
that each
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of the Offers is fair from a financial point of view to the limited partners of
the Apartment Partnerships.
6.2 CONDITIONS TO OBLIGATIONS OF THE BUYERS TO EFFECT THE ESCROW
CLOSING. The obligations of the Buyers to effect the Escrow Closing are subject
to the satisfaction of the following conditions, unless waived by the Buyers:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained herein shall be true and correct in all
material respects at and as of the Escrow Date, except for any representation or
warranty that specifically relates to an earlier date, which shall be true and
correct as of such earlier date.
(b) COVENANTS. The Sellers shall have performed, in all
material respects, all obligations and complied, in all material respects, with
all covenants required by this Agreement to be performed or complied with by
them prior to the Escrow Closing.
(c) SELLERS' CERTIFICATES. Each of the Sellers shall have
delivered to the Buyers a certificate, dated the Escrow Date and, if the Seller
is a corporation, signed by its President, certifying as to its compliance with
SECTIONS 6.2(a) AND (b).
(d) TITLE REPORTS. AIMCO OP shall have obtained, at its own
expense, the following: (a) extended coverage preliminary title reports (the
"PTR") relating to the Properties, issued by Xxxxxxx Title Guaranty Company (in
such capacity, the "TITLE COMPANY") (attention: Xxxxx X. Xxxxx and Xxxxx Xxxxx),
together with legible copies of all documents referenced as exceptions therein
(the "UNDERLYING DOCUMENTS"); and (b) a current or currently updated as-built
Texas Society of Professional Surveyors Category IA, Condition II survey of each
of the Properties (each, a "SURVEY"), in form reasonably satisfactory to AIMCO
OP and the Title Company, prepared and certified to AIMCO OP, the Title Company,
the Sellers and such other persons or entities as AIMCO OP may, in its
discretion, request, by a surveyor licensed in the State of Texas, showing all
improvements, all recorded or visible easements, all roads, all utilities, the
number of parking spaces, access to and from the land, and drainage ditches,
set-back lines, protrusions, encroachments, and recorded or visible encumbrances
affecting the same.
(e) TITLE TO PROPERTIES. As of the Escrow Date, the Companies
and the Sellers shall have fee simple title to the Properties, subject only to
those exceptions acceptable to the Buyers (the "PERMITTED EXCEPTIONS"),
Permitted Encumbrances and other encumbrances which do not materially impair the
value or marketability of the Properties.
(f) TITLE POLICIES. The Title Company shall have indicated to
AIMCO OP that, as of the Closing Date, it is prepared and irrevocably committed
to issue (i) with respect to the Acquired Assets, to AIMCO OP, and (ii) with
respect to the
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Company Properties, to each Company that owns such Property, commitments for
owner's policies of title insurance, in the form promulgated by the State Board
of Insurance of the State of Texas, in favor of AIMCO OP or such Company, as the
case may be, for each of the Properties in the amount reasonably designated by
AIMCO OP showing fee title to the Properties vested in AIMCO OP or such Company,
as the case may be, with those endorsements reasonably requested by AIMCO OP or
such Company, as the case may be, including, without limitation, where
available, a non-imputation endorsement, subject only to the Permitted
Exceptions and Permitted Encumbrances (collectively, the "OWNER'S TITLE
COMMITMENTS").
(g) ENVIRONMENTAL ASSESSMENTS. All Environmental Assessments
shall have been completed to the reasonable satisfaction of the Buyers, and no
such Environmental Assessment shall indicate any adverse environmental condition
or potential environmental liability associated with any of the Properties,
other than those disclosed in SCHEDULE 3.21(a) or SCHEDULE 3.21(b).
(h) AUDITED FINANCIAL STATEMENTS. The Buyers shall have
received, and completed their review of, the Audited Financial Statements.
(i) PROPERTY QUESTIONNAIRES. AIMCO shall have received Property
Questionnaires for each of the Properties, completed to the reasonable
satisfaction of AIMCO, and no such Property Questionnaire shall indicate any
fact or circumstance that AIMCO reasonably believes (based on the advice of
counsel) would be likely to result in AIMCO losing its REIT Status if the
transactions contemplated hereby are consummated.
(j) LEGAL OPINION. The Buyers shall have received a favorable
opinion, dated the Escrow Date and addressed to the Buyers, from Xxxxx, Xxxxx &
Xxxxx, counsel to the Sellers, in form and substance satisfactory to the Buyers,
as to the matters set forth on EXHIBIT J hereto.
(k) OTHER. The Sellers shall have delivered to the Buyers such
other documents and instruments, signed and properly acknowledged by the
Sellers, if appropriate, as may be reasonably required by the Buyers, the Title
Company or the Escrow Agent, or otherwise in order to effectuate the provisions
of this Agreement and the Closing of the transactions contemplated herein.
6.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS TO EFFECT THE ESCROW
CLOSING. The obligations of the Sellers to effect the Escrow Closing are
subject to the satisfaction of the following conditions, unless waived by the
Sellers:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Buyers contained herein shall be true and correct in all
material respects at and as of the Escrow Date with the same force and effect as
though made at and as
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of the Escrow Date, except for any representation or warranty that specifically
relates to an earlier date, which shall be true and correct as of such earlier
date.
(b) COVENANTS. The Buyers shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by them
prior to the Escrow Closing.
(c) BUYERS' CERTIFICATES. Each of the Buyers shall have
delivered to the Sellers a certificate dated the Closing Date and signed by its
President or any Vice President, certifying as to the Buyer's compliance with
SECTIONS 6.3(a) AND (b).
(d) LEGAL OPINION. The Sellers shall have received a favorable
opinion, dated the Escrow Date and addressed to the Sellers, from Skadden, Arps,
Slate, Xxxxxxx & Xxxx, in form and substance satisfactory to the Sellers, as to
the matters set forth on EXHIBIT K hereto.
(e) OTHER. The Buyers shall have delivered such other documents
and instruments, properly signed and acknowledged if appropriate, as reasonably
may be required in order to effectuate the provisions of this Agreement and the
closing of the transactions contemplated herein.
6.4 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE CLOSING. The
respective obligations of each party to this Agreement to effect the Closing
shall be subject to the following conditions:
(a) NO INJUNCTIONS. No action shall have been taken, and no
statute, rule, regulation, executive order, decree, or injunction shall have
been enacted, entered, promulgated or enforced (and not repealed, superseded or
otherwise made inapplicable), by any court or Governmental Authority which
prohibits the consummation of the transactions contemplated by this Agreement.
(b) NO RESTRAINING ORDERS. No court of competent jurisdiction
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the
transactions contemplated hereby which has not been lifted (each party agreeing
to use its reasonable efforts to have any such injunction, order or decree
lifted).
6.5 CONDITIONS TO OBLIGATIONS OF THE BUYERS TO EFFECT THE CLOSING.
The obligations of the Buyers to effect the Closing are subject to the
satisfaction of the following conditions, unless waived by the Buyers:
(a) COVENANTS. The Sellers shall have performed, in all
material respects, all obligations and complied, in all material respects, with
all cove-
63
nants required by this Agreement to be performed or complied with by them prior
to the Closing.
(b) SELLERS' CERTIFICATES. Each of the Sellers shall have
delivered to the Buyers a certificate, dated the Closing Date and signed by (i)
if the Seller is an individual, such individual, (ii) if the Seller is a
corporation, its President, and (iii) if the Seller is a partnership, by the
managing member of the limited liability company that acts as general partner of
such partnership, in his capacity as such, in each case, certifying as to its
compliance with SECTIONS 6.5(a).
6.6 CONDITIONS TO OBLIGATIONS OF THE SELLERS TO EFFECT THE CLOSING.
The obligations of the Sellers to effect the Closing are subject to the
satisfaction of the following conditions, unless waived by the Sellers:
(a) COVENANTS. The Buyers shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by them
prior to the Closing.
(b) BUYERS' CERTIFICATES. Each of the Buyers shall have
delivered to the Sellers a certificate dated the Closing Date and signed by (i)
if the Buyer is a corporation, its President or any Vice President, and (ii) if
the Buyer is a partnership, by the President or any Vice President of its
general partner, in his or her capacity as such, in each case, certifying as to
the Buyer's compliance with SECTIONS 6.6(a).
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION.
(a) This Agreement may be terminated and abandoned at any time
prior to the Escrow Closing:
(i) by the mutual written consent of AIMCO and English;
(ii) by AIMCO or English if (i) any Governmental
Authority, the consent of which is a condition to the obligations of the
Buyers and the Sellers to consummate the Closing, shall have determined not
to grant its consent and all appeals of such determination shall have been
taken and have been unsuccessful, or (ii) any court of competent
jurisdiction shall have issued an order, judgment or decree (other than a
64
temporary restraining order) restraining, enjoining or otherwise
prohibiting the Closing, and such order, judgment or decree shall have
become final and nonappealable;
(iii) by AIMCO if (i) there has been a material breach by
any of the Sellers of any representation, warranty, covenant or agreement
set forth in this Agreement, which breach has not been cured within ten
business days following receipt by the breaching party of notice of such
breach; or (ii) an event has occurred that could reasonably be expected to
have a Material Adverse Effect;
(iv) by English if (i) there has been a material breach by
any of the Buyers of any representation, warranty, covenant or agreement
set forth in this Agreement, which breach has not been cured within ten
business days following receipt by the breaching party of notice of such
breach or (ii) an event has occurred that could reasonably be expected to
have a material adverse effect on AIMCO;
(v) by AIMCO if all or any material portion of any of the
Properties is taken by condemnation or eminent domain (or is the subject of
a pending or contemplated taking which has not been consummated);
(vi) by AIMCO if any material part of any of the
Properties is damaged or destroyed by earthquake, flood, landslide, fire or
other casualty; and
(vii) by AIMCO or English if the Escrow Closing has not
occurred by November 1, 1996; provided, however, that (i) AIMCO shall not
be entitled to terminate this Agreement pursuant to this SECTION
7.1(a)(VII) if a knowing or willful breach of this Agreement by the Buyers
has prevented the Escrow Closing from occurring by such date, and (ii)
English shall not be entitled to terminate this Agreement pursuant to this
SECTION 7.1(a)(VII) if a knowing or willful breach of this Agreement by the
Sellers has prevented the Escrow Closing from occurring by such date.
(b) This Agreement and the Escrow may be terminated and
abandoned at any time after the Escrow Date and prior to the Closing:
(i) by the mutual written consent of AIMCO and
English; and
(ii) by AIMCO or English if (i) any Governmental
Authority, the consent of which is a condition to the obligations of
the
65
Buyers and the Sellers to consummate the Closing, shall have determined not
to grant its consent and all appeals of such determination shall have been
taken and have been unsuccessful, or (ii) any court of competent
jurisdiction shall have issued an order, judgment or decree (other than a
temporary restraining order) restraining, enjoining or otherwise
prohibiting the Closing, and such order, judgment or decree shall have
become final and nonappealable.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by AIMCO or English as provided in SECTION 7.1 hereof, this Agreement
shall forthwith become void and there shall be no liability on the part of the
Buyers, the Sellers or their respective officers or directors; provided that, if
this Agreement is so terminated by a party because one or more of the conditions
to such party's obligations hereunder is not satisfied as a result of the other
party's willful failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies for breach of contract or
otherwise, including, without limitation, Damages relating thereto, shall
survive such termination unimpaired. In the event of termination of this
Agreement by AIMCO or English as provided in SECTION 7.1(b) hereof, either AIMCO
or English may send a Notice of Termination (as defined in the Escrow Agreement)
to the Escrow Agent.
7.3 AMENDMENT OR SUPPLEMENT. This Agreement may be amended or
supplemented in writing by AIMCO and English with respect to any of the terms
contained in this Agreement.
7.4 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Closing:
(a) AIMCO, on behalf of the Buyers, may extend the time for the
performance of any of the obligations or acts of the Sellers and English, on
behalf of the Sellers, may extend the time for the performance of any of the
obligations or acts of the Buyers;
(b) AIMCO, on behalf of the Buyers, may waive any inaccuracies
in the representations and warranties of the Sellers contained herein or in any
document delivered pursuant hereto, and English may do the same on behalf of the
Sellers, with respect to the Buyers; or
(c) AIMCO, on behalf of the Buyers, waive compliance with any of
the agreements or conditions of the Sellers, contained herein, and English, on
behalf of the Sellers, may do the same with respect to the Buyers; provided,
however, that no failure or delay by any party in exercising any right hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right hereunder.
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ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE SELLERS. From and after the Closing, each
of the Sellers shall indemnify, reimburse, defend, and hold harmless the Buyers
and their Representatives for, from, and against all demands, claims, actions or
causes of action, and Damages, asserted against, resulting to, imposed on, or
suffered or incurred by any of the Buyers or their Representatives, directly or
indirectly, in connection with any of the following:
(a) any breach of, or inaccuracy in, any representation or
warranty of the Sellers in this Agreement or any certificate, instrument or
other document delivered pursuant hereto or in connection herewith; provided,
however, that the Sellers shall not have any liability for any breach of, or
inaccuracy in, a representation or warranty set forth in SECTION 3.4, 3.7, 3.8,
3.9, 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.21 OR 3.22, and shall have no
obligation to indemnify the Buyers and their Representatives in respect thereof,
if and to the extent that (i) as a result of such breach, one or more of the
Partnerships suffers Damages, (ii) such breach does not constitute a breach,
violation or default under any Organizational Document of the Companies, and
(iii) such breach was not willful, intentional or fraudulent, and did not occur
as a result of the gross negligence, neglect or willful or intentional
misconduct of (x) any LLC in the performance of its duties as a general partner
of a Partnership or (y) any Seller in the performance of its duties as a manager
of an LLC;
(b) any breach of any covenant of the Sellers contained in this
Agreement;
(c) Taxes of the LLCs and the Sellers for periods (or portions
thereof) ending on or prior to the Closing Date;
(d) any and all liabilities and obligations of JWE Management
other than the Assumed Liabilities; and
(e) the matters disclosed in SCHEDULE 3.1(c);
provided, however, that the Sellers' obligations from time to time under
SECTIONS 8.1(a) AND (b) may not exceed (i) the value of the OP Units subject to
the Pledge Agreement at such time, determined by multiplying the number of such
OP Units by the AIMCO Market Price at such time, minus (ii) the aggregate amount
of cash payments theretofore made by the Sellers to satisfy their obligations
under SECTIONS 8.1(a) AND (b), except that (x) willful, intentional or
fraudulent breaches or inaccuracies shall not be subject to any limitation, and
(y) the Sellers' obligations under SECTIONS 8.1(a) AND (b) may not exceed
$1,000,000 for breaches or inaccuracies that are not willful, intentional or
fraudulent and are disclosed in writing by the Sellers to the Buyers prior to
the Closing Date.
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8.2 INDEMNIFICATION BY THE BUYERS. From and after the Closing, each
of the Buyers shall indemnify, reimburse, defend, and hold harmless the Sellers
and their Representatives for, from, and against all demands, claims, actions or
causes of action, and Damages, asserted against, resulting to, imposed on, or
suffered or incurred by any of the Sellers or their Representatives, directly or
indirectly, in connection with any of the following:
(a) any breach of, or inaccuracy in, any representation or
warranty of the Buyers contained in this Agreement or any certificate,
instrument or other document delivered pursuant hereto or in connection
herewith;
(b) any breach of covenant of the Buyers contained in this
Agreement;
(c) Taxes of the LLCs for periods (or portions thereof)
commencing after the Closing Date; and
(d) dobligations of the Sellers under guarantees of obligations
of the Companies that are set forth on SCHEDULE 3.14(a)(VII);
provided, however, that the Buyers' obligations under SECTIONS 8.2(a) AND (b)
may not exceed (i) $5,000,000 during the period commencing on the Closing Date
and ending on December 31, 1997, or (ii) $1,000,000 (plus the amount of any
obligations for claims made on or prior to December 31, 1997) after December 31,
1997, except that (x) willful, intentional or fraudulent breaches or
inaccuracies shall not be subject to any limitation, and (y) the Buyers'
obligations under SECTIONS 8.2(a) AND (b) may not exceed $1,000,000 for breaches
or inaccuracies that are not willful, intentional or fraudulent and are
disclosed in writing by the Buyers to the Sellers prior to the Closing Date.
8.3 PROCEDURES RELATING TO INDEMNIFICATION.
(a) Each person to be indemnified pursuant to SECTION 8.1 or
SECTION 8.2 (an "INDEMNIFIED PARTY") agrees to give prompt notice (a "NOTICE OF
THIRD PARTY CLAIM") to the indemnifying party of the assertion of any claim, or
the commencement of any suit, action or proceeding, brought against or sought to
be collected from such indemnified party (each, a "THIRD PARTY CLAIM"), in
respect of which indemnity may be sought by such indemnified party under SECTION
8.1 or SECTION 8.2; provided that the omission so to promptly notify the
indemnifying party with respect to a Third Party Claim brought against or sought
to be collected from such indemnified party will not relieve the indemnifying
party from any liability which it may have to such indemnified party under
SECTION 8.1 or SECTION 8.2 except to the extent that such failure has materially
prejudiced such indemnifying party with respect to the defense of such Third
Party Claim. If any indemnified party shall seek indemnity under SECTION 8.1 or
SECTION 8.2 with respect to a Third Party Claim brought against or sought to be
collected from such
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indemnified party, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, to assume and direct the defense and
settlement thereof with counsel satisfactory to such indemnified party; provided
that if such indemnifying party shall so assume the defense and settlement of
any Third Party Claim brought against or sought to be collected from such
indemnified party, such Third Party Claim shall be conclusively deemed a matter
in respect of which such indemnified party is entitled to be indemnified by such
indemnifying party under SECTION 8.1 or SECTION 8.2, as the case may be; and
provided further that if any Third Party Claim brought against or sought to be
collected from any indemnified party includes a request for injunctive or other
equitable relief that, if granted, is reasonably likely to have a Material
Adverse Effect or a similar effect on such indemnified party, such indemnified
party shall be entitled to control and direct the defense and settlement thereof
and in such event the legal and other expenses subsequently incurred by such
indemnified party in connection with the defense thereof shall be paid by the
indemnifying party. After notice from the indemnifying party to an indemnified
party of its election to assume and direct the defense and settlement of a Third
Party Claim brought against or sought to be collected from such indemnified
party which such indemnifying party is entitled to assume and direct under the
terms hereof, the indemnifying party shall not be liable to such indemnified
party under SECTION 8.1 or SECTION 8.2, as the case may be, for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation; provided
that such indemnified party shall have the right to employ counsel to represent
such party if in the reasonable judgment of such party, it is advisable for such
party to be represented by separate counsel because the representation of both
the indemnified party and the indemnifying party in such matter could present
such counsel with a potential conflict of interest and in such event the fees
and expenses of such separate counsel shall be paid by the indemnifying party.
Notwithstanding the foregoing provisions of this SECTION 8.3(a), the
indemnifying party shall not (a) without the prior written consent of an
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which such indemnified party is, or with reasonable
foreseeability, could have been a party and indemnity could have been sought
hereunder by such indemnified party for a Third Party Claim brought against or
sought to be collected from such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
arising out of such proceeding (provided that, whether or not such a release is
required to be obtained, the indemnifying party shall remain liable to such
indemnified party in accordance with SECTION 8.1 or SECTION 8.2 in the event
that a Third Party Claim is subsequently brought against or sought to be
collected from such indemnified party) or (b) be liable for any settlement of
any Third Party Claim brought against or sought to be collected from an
indemnified party effected without such indemnifying party's written consent
(which shall not be unreasonably withheld), but if settled with such
indemnifying party's written consent, or if there is a final judgment for the
plaintiff in any such Third Party Claim, such indemnifying party agrees (to the
extent stated above) to indemnify the indemnified party from and against any
loss, liability, claim, damage or expense by reason or such settlement or
judgment. The indemnification required by SECTION 8.1 or SECTION 8.2, as the
case may be, shall be made by periodic payments of the amount thereof during the
69
course of the investigation or defense, as and when bills are received or loss,
liability, claim, damage or expense is incurred.
(b) In the event any indemnified party should have a claim
(each, a "DIRECT CLAIM") against any indemnifying party under SECTION 8.1 or
SECTION 8.2 that does not involve a Third Party Claim being asserted against or
sought to be collected from such indemnified party, the indemnified party shall
deliver notice (a "NOTICE OF DIRECT CLAIM") of such claim with reasonable
promptness to the indemnifying party. The failure by any indemnified party so
to notify the indemnifying party shall not relieve the indemnifying party from
any liability which it may have to such indemnified party under SECTION 8.1 or
SECTION 8.2 except to the extent that the indemnifying party demonstrates that
it has been materially prejudiced by such failure. If the indemnifying party
does not notify the indemnified party within 10 calendar days following its
receipt of a Notice of Direct Claim, that the indemnifying party disputes its
liability to the indemnified party under SECTION 8.1 or SECTION 8.2, as the case
may be, such claim specified by the indemnified party in such Notice of Direct
Claim will be conclusively deemed a liability of the indemnifying party under
SECTION 8.1 or SECTION 8.2, as the case may be, and the indemnifying party shall
pay the amount of such liability to the indemnified party on demand, or, in the
case of any notice in which the amount of the claim (or any portion thereof) is
estimated, on such later date when the amount of such claim (or such portion
thereof) becomes finally determined.
(c) If the indemnifying party has timely disputed its liability
with respect to a Third Party Claim or a Direct Claim, the indemnifying party
and the indemnified party agree to proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute will be resolved by arbitration held in Los Angeles, California in
accordance with the Rules of the American Arbitration Association (the "AAA")
then in effect unless the parties mutually agree otherwise. Notice of the
demand for arbitration shall be filed in writing by the indemnified party with
the indemnifying party and with the AAA and shall be made within a reasonable
time after the dispute has arisen. Within 30 days after the date the
arbitration notice is filed with the AAA, the indemnified party and the
indemnifying party shall select one person to act as arbitrator. If the parties
are unable to agree upon an arbitrator within 10 days, the arbitrator shall be
selected by the AAA within 30 days thereafter. The arbitrator shall be
independent and impartial. The arbitrator shall promptly schedule all discovery
and the other steps to be taken in resolution of any controversy, dispute or
claim and otherwise assume sufficient initiative and control to effect the
sufficient and expeditious resolution of the dispute. The award rendered by the
arbitrator shall be final and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof. Any liability that the
indemnifying party agrees to assume, or that is determined by the arbitrator to
be a liability of the indemnifying party under SECTION 8.1 or SECTION 8.2 will
be conclusively deemed a liability of the indemnifying party. Except by written
consent of the Person sought to be joined, no arbitration arising out of or
relating to this Agreement shall include, by consolidation, joinder or in any
other manner, any Person not a party to, or otherwise bound by, this Agreement.
The
70
provisions of this Agreement to arbitrate and any other written agreement to
arbitrate referred to herein shall be specifically enforceable under the
prevailing arbitration law.
(d) Notwithstanding anything in this Agreement to the contrary,
the Buyers shall have the right to control any audit or determination by any
authority, to initiate any claim for returns or amended returns, to contest and
defend any assessment, notice or deficiency, or other adjustment or proposed
adjustment of Taxes; provided, however, that the Buyers shall promptly give
notice to the Sellers of the commencement of any audit or examination by any
Taxing Authority, shall provide the Sellers with copies of non-privileged
correspondence, records and other relevant documentation and shall consult with
the Sellers in good faith regarding all such proceedings before any Tax
Authority.
(e) Each indemnified party shall promptly notify AIMCO of its
assertion or surrender of any claim hereunder. Each indemnifying party shall
promptly notify AIMCO of its rejection or acceptance of liability for any claim
asserted hereunder. The arbitrator shall promptly notify AIMCO of its
determination with respect to any disputed claim hereunder.
8.4 TERMINATION OF INDEMNIFICATION. The obligations to indemnify and
hold harmless a party hereto, (a) pursuant to SECTION 8.1(a) and SECTION 8.2(a),
shall terminate when the applicable representation or warranty terminates
pursuant to SECTION 9.7 and (b) pursuant to SECTIONS 8.1(b), (c), AND (d), and
SECTIONS 8.2(b), (c) AND (d) shall not terminate; provided, however, that as to
clause (a) above such obligation to indemnify and hold harmless shall not
terminate with respect to any item as to which the person to be indemnified or
the related party thereto shall have, before the expiration of the applicable
period, previously made a claim by delivering a notice (stating in reasonable
detail the basis of such claim) to the indemnifying party.
8.5 EXCLUSIVE REMEDY. The sole and exclusive liability and
responsibility of the Sellers to the Buyers or of the Buyers to the Sellers
under or in connection with this Agreement or the transactions contemplated
hereby (including without limitation, for any breach or inaccuracy of any
representation or warranty or for any breach of any covenant required to be
performed hereunder after the Closing Date), and, except as set forth in the
immediately following sentence, the sole and exclusive remedy of the Buyers or
the Sellers with respect to any of the foregoing, shall be as expressly set
forth in this Article VIII or any other indemnification provision set forth in
this Agreement and, except as provided in the immediately following sentence,
the Sellers and the Buyers hereby waive, release and agree not to assert (and
the Sellers (before the Closing) and the Buyers (after the Closing) shall cause
the Companies not to assert) any other remedy. Nothing in this SECTION 8.5
shall limit the Buyers or the Sellers in any way from exercising any rights or
securing any remedies in connection with this Agreement or the transactions
contemplated hereby as a result of an intentional, willful or fraudulent breach
of any representation, warranty or covenant hereunder.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law; provided, however, that any matters relating to title to a
Property shall be governed by the laws of the State in which the Property is
located, and matters relating to the transfer of an LLC Interest shall be
governed by the laws of the jurisdiction of formation of the LLC.
9.2 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules attached hereto, and the Option Agreement constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent, negotiations
and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to
either party by the other party in connection with the subject matter hereof
except as specifically set forth herein or in the documents delivered pursuant
hereto or in connection herewith.
9.3 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
9.4 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing and
may be given personally, by registered or certified mail, or by Federal Express
(or other reputable overnight delivery service):
if to any of the Buyers, to it at:
0000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xx. Xxxxx Xxxxxxxxx
Telephone: (000) 000-0000
and
72
00000 Xxxxxxx 000
Xxxxxxxx F-240
X.X. Xxx 0000
Xxxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxx Xxxxxx
Telephone: (000) 000-0000
if to any of the Sellers, to it at:
X.X. English Companies
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxx X. English
Telephone: (000) 000-0000
with a copy to:
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given when received.
9.5 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be consummated, all fees and expenses incurred by any party
hereto in connection with this Agreement shall be borne by such party.
9.6 ASSIGNMENT. No party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto.
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9.7 SURVIVAL. All representations and warranties made by the Sellers
in this Agreement (other than SECTIONS 3.1, 3.2, 3.3, 3.22, 4.1, 4.2 AND 4.3)
shall survive the Closing until December 31, 1997. The representations and
warranties in SECTIONS 3.1, 3.2, 3.3, 3.22, 4.1, 4.2 AND 4.3 shall survive the
Closing until the third anniversary of the Closing Date. All representations
and warranties shall survive notwithstanding any investigation conducted with
respect thereto or any knowledge acquired as to the accuracy or inaccuracy of
any such representation or warranty.
9.8 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
9.9 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 9.6 hereof, all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the benefit
of, and be binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or entity, other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
9.10 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
9.11 HEADINGS. The Section headings of this Agreement are for
convenience of reference only and shall not be deemed to modify, explain,
restrict, alter or affect the meaning or interpretation of any provision hereof.
9.12 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
9.13 CONSTRUCTION. This Agreement shall not be construed more
strictly against one party hereto than against any other party hereto merely by
virtue of the fact that it may have been prepared by counsel for one of the
parties.
9.14 EXHIBITS. All exhibits attached hereto are hereby incorporated
by reference as though set out in full herein.
9.15 ATTORNEYS' FEES. In the event that either party hereto brings an
action or proceeding against the other party to enforce or interpret any of the
covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such
74
action or proceeding shall be entitled to recover all costs and expenses of such
action or proceeding, including, without limitation, attorneys' fees, charges,
disbursements and the fees and costs of expert witnesses.
9.16 SELLERS' KNOWLEDGE. When used herein, the phrase "to the
knowledge of Sellers" or words of similar import shall refer to the knowledge of
Xxxx X. English, Xxxxx Xxxxxxx, Xxx X'Xxxxxx, Xxxxx Xxxxx and each of the
Sellers' regional property managers that have authority or responsibility for
any of the Properties.
9.17 JURISDICTION AND VENUE. The parties hereto hereby consent to
the jurisdiction of any state or federal court located within the State of
California and waive personal service or any and all process upon the parties,
and consent that all such service of process be made by registered mail directed
to the parties at the addresses set forth in SECTION 9.4 hereof and service so
made shall be deemed to be completed five (5) Business Days after the same shall
have been deposited in the United States mails, postage prepaid. The Sellers
hereby irrevocably appoint Xxxx X. English, currently located at 000 Xxxxxx
Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000, as the Sellers' agent for the
purpose of accepting the service of any process within the State of California.
To the extent permitted by law, the parties hereto waive trial by jury and waive
any objection to venue of any action instituted hereunder.
9.18 EFFECT OF EXERCISE OF OPTION AGREEMENT. If the Option Agreement
is exercised at any time with respect to any Property, (a) the Buyers shall have
no obligation to purchase the LLC Interest of the Sellers in the LLC that acts
as general partner of a Partnership that owns, directly or indirectly through
any other Company, such Property, (b) all references to "LLCs" in this Agreement
shall be deemed not to include or refer to any such LLC, (c) the dollar amount
set forth in SECTION 2.2(a) shall be deemed to have been reduced by deducting
therefrom the amount allocated to such LLC Interest pursuant to SCHEDULE
2.2(a)(i) hereto, (d) other provisions of this Agreement that are inconsistent
with the foregoing shall be deemed modified in a manner appropriate to effect
the foregoing intent, and (e) the remaining provisions of this Agreement shall
remain in full force and effect.
9.19 OPTION TO TERMINATE PROPERTY MANAGEMENT CONTRACTS. If the
Buyers so elect, by delivery of a written notice to such effect, delivered to
the Sellers at least three Business Days prior to the Closing, the Sellers
shall, effective as of the Closing, terminate all Contracts pursuant to which
the Sellers or any of their Affiliates provide property management services to
the Companies.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY,
a Maryland corporation
By: /s/ Xxxxx Xxxxxxxxx
------------------------
Name:
Its:
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, Inc.,
its general partner
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name:
Its:
AIMCO/XXX PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO PROPERTIES, L.P.,
it's general partner
By: AIMCO-GP, Inc.,
it's general partner
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Name:
Its:
/s/ Xxxx X. English
---------------------------------------
Xxxx X. English
X.X. ENGLISH REAL ESTATE, INC.,
a Texas corporation
By: /s/ Xxxx X. English
-----------------------------------
Name: Xxxx X. English
Its: President
X.X. ENGLISH DEVELOPMENT CO.,
a Texas corporation
By: /s/ Xxxx X. English
-----------------------------------
Name: Xxxx X. English
Its: President
X.X. ENGLISH INVESTMENTS CO.,
a Texas corporation
BY: /s/ Xxxx X. English
-----------------------------------
Name: Xxxx X. English
Its: President
X.X. ENGLISH MANAGEMENT CO.,
a Delaware corporation
BY: /s/ Xxxx X. English
-----------------------------------
Name: Xxxx X. English
Its: President
EASTON FALLS PARTNERS, LTD.,
a Texas limited partnership
By: JWE Easton Falls, L.L.C.,
a Texas limited liability company
BY: /s/ Xxxx X. English
-----------------------------------
Name: Xxxx X. English
Title: Managing Member
ENGLISH INCOME FUND I, A TEXAS
LIMITED PARTNERSHIP, a Texas limited
partnership
By: JWE Income Fund, L.L.C.,
a Texas limited liability company
BY: /s/ Xxxx X. English
-----------------------------------
Name: Xxxx X. English
Title: Managing Member
