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