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AGREEMENT AND PLAN OF MERGER
AMONG THE COMPANY AND THE PARTNERSHIPS
This Agreement and Plan of Merger (this "Agreement") dated as of June 30,
2000, is by and among America First Real Estate Investment Partners, L.P., a
Delaware limited partnership (the "Company"); Capital Source L.P., a Delaware
limited partnership ("Cap Source I"); and Capital Source II L.P.-A, a Delaware
limited partnership ("Cap Source II" and together with Cap Source I the
"Partnerships" and individually, a "Partnership"). Capitalized terms used and
not otherwise defined herein shall have the meanings assigned in Section 11.12
of this Agreement.
W I T N E S S E T H:
WHEREAS, the Company and the Partnerships desire to merge the Partnerships
with and into the Company, pursuant to Delaware law, with the Company being the
surviving entity (the "Merger"), as part of the merger by consolidation of the
Partnerships and the Company. The Company has filed a registration statement on
Form S-4, No. 333-52117, including all amendments thereto (the "Registration
Statement"), with the Securities and Exchange Commission (the "SEC") pursuant to
the Securities Act of 1933, as amended (the "Act") relating to the Merger, of
which the amended and restated prospectus/consent solicitation statement of the
Company (the "Prospectus/Consent Solicitation Statement") is a part; and
WHEREAS, Section 17-211 of the Delaware Revised Uniform Limited Partnership
Act (the "Partnership Act") authorizes the merger of Delaware limited
partnerships; and
WHEREAS, the Company's Limited Partnership Agreement permits, and
resolutions adopted by the Company's general partner authorize, this Agreement
and the consummation of the Merger.
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties to this Agreement covenant and agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01. THE MERGER; SURVIVING LIMITED PARTNERSHIP. Subject to the
terms and conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.02 below), the Partnerships shall each be merged with and
into the Company, pursuant to Section 17-211(e) of the Partnership Act, and the
separate existence of each of the Partnerships shall cease. The Company shall be
the surviving entity (the "Surviving Limited Partnership") and shall continue to
be governed by the Partnership Act.
SECTION 1.02. EFFECTIVE TIME. In accordance with Section 17-211(e) of the
Partnership Act, the Merger shall become effective (the "Effective Time") on the
date and time specified in the certificate of merger (the "Certificate of
Merger"), such Effective Time to be at the same time as the effective time of
the merger of Insured Mortgage Equities Inc. and America First
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Capital Source II L.L.C. with and into America First Capital Source I L.L.C.,
with America First Capital Source I L.L.C. being the surviving entity. All other
filings or recordings required by Delaware law in connection with the Merger
shall also be made.
SECTION 1.03. EFFECT OF THE MERGER. The Merger shall have the effects set
forth in Section 17-211 of the Partnership Act.
ARTICLE II
THE SURVIVING LIMITED PARTNERSHIP
SECTION 2.01. NAME. The name of the Surviving Limited Partnership shall be
America First Real Estate Investment Partners, L.P.
SECTION 2.02. LIMITED PARTNERSHIP AGREEMENT. The Amended and Restated
Limited Partnership Agreement of the Company as filed as Appendix E to the
Prospectus/Consent Solicitation Statement shall be the Amended and Restated
Limited Partnership Agreement (the "Limited Partnership Agreement") of the
Surviving Limited Partnership unless and until amended in accordance with its
terms and applicable law.
SECTION 2.03. THE GENERAL PARTNER. Upon consummation of the Merger, America
First Capital Source I L.L.C. shall be the general partner of the Surviving
Limited Partnership and remain general partner until removed and its successor
is duly appointed or until its resignation in accordance with the Company's
Limited Partnership Agreement.
ARTICLE III
CONVERSION OF PARTNERSHIP INTERESTS
SECTION 3.01. CONVERSION OF LIMITED PARTNER INTERESTS.
(a) At the Effective Time, as a result of the Merger each BAC shall
be converted, in proportion to the capital accounts of each Investor and
pursuant to the terms of the Partnership Agreements, into the number of
units (the "Units") of the Company representing assigned limited partner
interests in the Company, as follows:
<TABLE>
<CAPTION>
PARTNERSHIP NUMBER OF UNITS PER BAC
<S> <C>
Cap Source I 1.3957
Cap Source II 0.7620
</TABLE>
At the Effective Time, as a result of the Merger, each Initial Limited
Partner's Limited Partnership Interest shall be canceled and no
consideration shall be issued in respect thereof.
At the Effective Time, as a result of the Merger, the interests of the
Partnerships' general partners (the "Cap Source General Partners") in the
Partnerships shall be canceled and no consideration shall be issued in
respect thereof.
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Each of the Partnerships has one class of BACs and all such BACs are
held by the Investors.
The number of Units per BAC to be issued as a result of the conversion
of BACs, as set forth in the above table, shall be multiplied by the number
of BACs held by an Investor on the record date, as defined in the
Prospectus/Consent Solicitation Statement. No fractional Units will be
issued. Each Investor who would otherwise be entitled to a fractional Unit
(which entitlement will be determined by combining such Investor's
allocation of Units from each Partnership as to which such Investor is
receiving Units) will instead receive cash equal to $10 multiplied by the
fraction.
(b) Notwithstanding subparagraph (a) above and subject to the
limitations described herein, Investors who, in connection with the Merger,
elected to receive the Company's Variable Rate Junior Notes Callable On or
After the Date of Issuance ("Notes"), will, except as hereinafter provided,
receive Notes. In the event Investors elect to receive Notes in the
aggregate principal amount which exceeds $20 million, the Notes will be
allocated first to such Investors who voted against the Merger, and any
remaining Notes will be allocated on a pro rata basis (in denominations of
$1,000) to those Investors who elected to receive Notes and either
abstained from voting by indicating their abstention on the consent card or
voted "YES" in favor of the Merger. In such event, the Investors who voted
for the Merger or abstained from voting and who elected to receive Notes
will receive Units in an amount equal to the difference between the
exchange value allocable to such an Investor and the amount of Notes
distributed to such an Investor. Subject to the foregoing limitations, each
BAC held by an Investor who elected to receive Notes shall be converted
into the Notes as follows:
<TABLE>
<CAPTION>
PARTNERSHIP NUMBER OF NOTES PER BAC
<S> <C>
Cap Source I 0.013957
Cap Source II 0.007620
</TABLE>
Each Note will be in a principal amount of $1,000. The Company may, at
its option, issue one note in a corresponding integral amount of $1,000 to
an Investor in lieu of issuing multiple Notes to that Investor.
SECTION 3.02. TAX ASPECTS. For federal income tax purposes, the conversion
of the BACs pursuant to Section 3.01(a) of this Agreement shall be deemed (a) a
contribution by Cap Source II of its assets to Cap Source I in exchange for
Units, Notes and the assumption of its liabilities; (b) the distribution of the
Units and Notes received in the transaction to the Investors in Cap Source II in
liquidation of Cap Source II in accordance with the capital accounts of such
Investors; (c) the conversion of the BACs held by Investors in Cap Source I to
Units; and (d) the exchange of BACs in Cap Source I for Notes. In addition, the
Company will be considered a continuation of Cap Source I for federal income tax
purposes.
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SECTION 3.03. ISSUANCE OF UNITS.
(a) The Company shall designate an exchange agent (the "Exchange
Agent") to act as such in connection with the issuance of certificates
representing Units and Notes pursuant to this Agreement.
(b) As soon as practicable after the Effective Time, the Company
shall cause the Exchange Agent to distribute to each Investor who, in
connection with the Merger, elected to receive Units, or who made no
election with respect to Units or Notes, certificates representing the
number of Units to which such Investor is entitled pursuant to Section
3.01(a).
SECTION 3.04. ISSUANCE OF NOTES. As soon as practicable after the Effective
Time, the Company shall cause the Exchange Agent to distribute to each Investor
who elected to receive Notes in connection with the Merger, Notes to which such
Investor is entitled pursuant to, and subject to the limitations set forth in,
Section 3.01(b) of this Agreement.
ARTICLE IV
TRANSFER AND CONVEYANCE OF ASSETS AND ASSUMPTION OF LIABILITIES
SECTION 4.01. TRANSFER, CONVEYANCE AND ASSUMPTION. At the Effective Time,
the Company shall continue in existence as the Surviving Limited Partnership and
without further transfer, succeed to and possess all the rights, privileges and
powers of the Partnerships, and all the assets and property of whatever kind and
character of the Partnerships shall vest in the Company without further act or
deed. Thereafter, the Company, as the Surviving Limited Partnership, shall be
liable for all of the liabilities and obligations of the Partnerships, and any
claim or judgment against the Partnerships may be enforced against the Company,
as the Surviving Limited Partnership, in accordance with Section 17-211 of the
Partnership Act.
SECTION 4.02. FURTHER ASSURANCES. If at any time the Company shall consider
or be advised that any further assignment, conveyance or assurance is necessary
or advisable to vest, perfect or confirm of record in the Surviving Limited
Partnership the title to any property or right of the Partnerships, or
otherwise, to carry out the provisions hereof, the proper representatives of the
Partnerships as of the Effective Time shall execute and deliver any and all
proper deeds, assignments and assurances, and do all things necessary and proper
to vest, perfect or convey title to such property or right in the Surviving
Limited Partnership and otherwise to carry out the provisions hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARTNERSHIPS
The Partnerships each severally represent and warrant to the Company and to
each other (with respect only to the Partnership making the representation and
warranty) as follows:
SECTION 5.01. VALIDITY OF ACTIONS. Each Partnership (a) is a limited
partnership duly formed, validly existing and in good standing under the laws of
the State of Delaware, (b) has the
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authority to conduct its business as currently conducted and to own and operate
the properties which it now owns and operates, (c) is qualified to do business
in all jurisdictions in which such qualification is necessary, and (d) has full
power and authority to enter into this Agreement and to carry out all acts
contemplated by it. This Agreement has been duly executed and delivered on
behalf of the Partnerships, and has received all necessary authorization and is
a legal, valid and binding obligation of the Partnerships, enforceable against
the Partnerships in accordance with its terms. The execution and delivery of
this Agreement and consummation of the transactions contemplated by it will not
violate any provision of the Partnership Agreements nor violate, conflict with
or result in any breach of any of the terms, provisions or conditions of, or
constitute a default or cause acceleration of, any indebtedness under any
agreement or instrument to which any of the Partnerships are a party or by which
they or their assets may be bound, or cause a breach of any applicable federal
or state law or governmental regulation, or any applicable order, judgment,
writ, award, injunction or decree of any court or governmental instrumentality.
SECTION 5.02. PARTNERSHIPS' FINANCIAL STATEMENTS. The financial statements
and schedules of the Partnerships, together with related notes (the "Financial
Statements"), set forth in the Registration Statement of the Company, fairly
present, on the basis stated in the Registration Statement, the financial
position of the Partnerships at the date or for the periods specified in the
Registration Statement. The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis ("GAAP"), except to the extent stated therein.
SECTION 5.03. NO MISSTATEMENTS. The representations of the Partnerships
contained in this Agreement and the information supplied by the Partnerships for
inclusion in the Registration Statement and the Prospectus/Consent Solicitation
Statement do not contain any untrue statement of a material fact or omit to
state any fact necessary to make such representations or information not
materially misleading.
SECTION 5.04. NO MATERIAL ADVERSE CHANGE. Since the respective dates as to
which information is given in the Registration Statement and the
Prospectus/Consent Solicitation Statement with respect to the Partnerships, and
except as described in the Registration Statement or the Prospectus/Consent
Solicitation Statement, there have been no changes in the business, operations,
properties, assets or the prospects or condition, financial or otherwise, of the
Partnerships which would, in the aggregate, have a material adverse effect on
the business, properties, prospects, profitability, assets or financial
condition of the Partnerships.
SECTION 5.05. TITLE TO ASSETS. Each Partnership has good and marketable
title to the assets reflected in the most recent balance sheet (the "Balance
Sheet") included in the Financial Statements with respect to such Partnership,
and will hold good and marketable title to such assets, and any assets acquired
by the Partnership prior to the Effective Time, as of the Effective Time, except
for assets disposed of in the ordinary course of business. Such assets, together
with the related goodwill and rights of each Partnership as a going concern,
tangible and intangible, are collectively referred to as the "Assets." Except as
otherwise disclosed in the Balance Sheet or related notes accompanying it, all
of the Assets are owned free and clear of any and all adverse claims, security
interests, charges or other encumbrances or restrictions of every nature, except
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liens for current taxes not yet due and payable or landlords' liens as provided
for in the relevant leases or by applicable law.
SECTION 5.06. LIABILITIES OF THE PARTNERSHIPS. The Partnerships have no
material liabilities, including, without limitation, liabilities for state or
federal income, withholding or other taxes, except to the extent reflected,
reserved against, or provided for in the Balance Sheet, and except for any
material liabilities disclosed in the Prospectus/Consent Solicitation Statement
or any other obligations incurred after March 31, 2000, in the ordinary course
of business which subsequently incurred obligations are of an amount and nature
as to be capable of being discharged from the operations of the Partnerships
without requiring additional equity or borrowing.
SECTION 5.07. REPRESENTATIONS AND WARRANTIES PERTAINING TO REAL PROPERTY.
For purposes of the following representations and warranties, "Real Property"
shall mean those parcels of real property of a Partnership or Operating
Partnership owned by a Partnership as listed in the Prospectus/Consent
Solicitation Statement and "Improvements" shall mean any building, structure or
other improvements situated on the Real Property. Each Partnership makes the
following representations and warranties only with respect to the Real Property
owned by it as specified in the Prospectus/Consent Solicitation Statement.
(a) To the best knowledge of each Partnership, all assumptions of the
appraisers of the Real Property (the "Appraisers") used by the Appraisers
in preparing the appraisals of the Real Property, as the same may have been
revised (the "Appraisals"), are reasonable assumptions. All information
provided by each Partnership to the Appraisers with respect to the Real
Property was true and correct as of the date given.
(b) To the best knowledge of each Partnership, there is at present no
material violation of any law, ordinance, rule, requirement, resolution,
policy statement or regulation (including, without limitation, those
relating to land use, subdivision, zoning, environmental, occupational
health and safety, water, and building and fire codes) of any governmental
authority (collectively, "Governmental Regulations") applicable to the
construction, alteration, rehabilitation, maintenance, use, operation or
sale of any of the Real Property, which violation would have a material
adverse impact on the use of the Real Property or the Improvements. None of
the Partnerships have received notice or have knowledge that any
governmental authority, or any employee or agent thereof, considers the
operations, use or ownership of any of the Improvements to violate or have
violated in a material manner any Governmental Regulation, or that any
investigation has been commenced or is contemplated regarding such possible
violation.
(c) To the best knowledge of each Partnership, such Partnership has
neither received notice nor has knowledge of any plan or study of any
governmental authority which would materially adversely affect the use of
the Real Property or the Improvements for their intended uses, or result in
any public improvements which will result in any material charge being
levied against, or any material lien assessed upon, all or any portion of
such Real Property or Improvements.
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(d) To the best knowledge of each Partnership, such Partnership has
good and marketable title to the Real Property and Improvements owned by
it, free and clear of all liens, encumbrances, claims, covenants,
conditions and restrictions, easements, rights of way, charges and any
other exceptions to or defects of title ("Encumbrances"), except for (i)
those matters disclosed in the Prospectus/Consent Solicitation Statement or
the Title Insurance Policy issued to each Partnership with respect to each
Real Property (collectively, the "Title Policies"), and (ii) those matters
created by third parties which are the liability of the lessee of such Real
Property and Improvements, or, in the absence of acceptance of
responsibility by such lessee, have been or will be resolved by the
Partnership.
(e) Except as disclosed in the Prospectus/Consent Solicitation
Statement or the Title Policies, to the best knowledge of each Partnership,
there are no delinquent taxes, assessments, charges, debts, liabilities,
claims or obligations arising from the construction, design, development,
ownership, maintenance or operation of, or otherwise relating to, the Real
Property or the Improvements, which matters could give rise to any
mechanic's or materialmen's or other statutory or common law lien against
such Real Property or Improvements or any part thereof which, individually
or in the aggregate, would have a material adverse impact on the value of
such Real Property and Improvements.
(f) Except as disclosed in the Prospectus/Consent Solicitation
Statement, to the best knowledge of each Partnership, none of the Real
Property, which for purposes of this paragraph shall include, without
limitation, subsurface soil and ground water, contains any substance,
including, without limitation, any asbestos, formaldehyde, radioactive
substance, hydrocarbons, industrial solvents, flammables, explosives, and
any hazardous substance or toxic material, which could presently or at any
time in the future cause a material detriment to or materially impair the
value or beneficial use of the Real Property, or constitute or cause a
health, safety or environmental hazard on or relating to the Real Property
or to any person who may enter on the Real Property or require remediation
at the behest of any governmental agency (collectively, "Hazardous
Materials"). Except as disclosed in the Prospectus/Consent Solicitation
Statement, none of the Partnerships have received notice that the
ownership, operation, use and condition of any of the Real Property is in
violation of any federal, state or local law, ordinance or regulation
pertaining to industrial hygiene, Hazardous Materials or environmental
protection. Except as disclosed in the Prospectus/Consent Solicitation
Statement, to the best knowledge of each Partnership, there is no
proceeding or action pending or, to its actual knowledge, threatened by any
person or governmental agency regarding the environmental condition of any
of the Real Property.
SECTION 5.08. INSURANCE. Either each Partnership, or, in the absence of
each Partnership so doing, the respective tenants of the Real Property and
Improvements owned by each Partnership, or, where applicable, each borrower from
each Partnership which holds a loan secured by real property owned by such
borrower, carries, to the extent deemed reasonable by the Partnerships under the
circumstances, comprehensive liability, fire, extended coverage and rental loss
insurance with respect to the Partnerships' properties with policy
specifications and
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insured limits customarily carried for similar properties. All such policies are
currently in effect and will remain in effect after the Merger.
SECTION 5.09. TAXES. Each Partnership has filed timely all federal, state
and local tax returns which it is required to file, has provided to its
Investors all required Form K-l's and such other tax forms as may be required by
federal, state or local authorities, and has no outstanding liability for any
federal, state or local taxes or interest or penalties thereon, whether disputed
or not, except taxes not yet payable which have been provided for in accordance
with GAAP and are disclosed in the Financial Statements.
SECTION 5.10. ACTIONS PENDING. Except as disclosed in the
Prospectus/Consent Solicitation Statement: (a) there are no actions, suits,
proceedings or claims pending or threatened against the Partnerships which, if
determined adversely to such Partnerships, could (i) have a material adverse
effect on the Partnerships, the Assets or the business of the Partnerships when
taken as a whole, or (ii) prevent or delay the consummation of any of the
transactions contemplated by this Agreement; (b) no Partnership, to the best of
its knowledge, is the subject of any pending or threatened investigation
relating to any aspect of such Partnership's operations by any federal, state or
local governmental agency or authority; and (c) each Partnership, to the best of
its knowledge, is not and has not been the subject of any formal or informal
complaint, investigation or inspection under the Equal Employment Opportunity
Act or the Occupational Safety and Health Act (or their state or local
counterparts) or by any other federal, state or local authority.
SECTION 5.11. APPRAISAL OF PARTNERSHIPS. To the best knowledge of each
Partnership, the information furnished by such Partnership to the appraisers
named in the Prospectus/Consent Solicitation Statement for the purposes of
determining the appraised value of the Partnerships is accurate and complete in
all material respects.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Partnerships as follows:
SECTION 6.01. VALIDITY OF ACTIONS. The Company (a) is duly formed, validly
existing and in good standing under the laws of the State of Delaware, (b) has
the authority to conduct its business as currently conducted, (c) is qualified
to do business in all jurisdictions in which such qualification is necessary,
and (d) has full power and authority to enter into this Agreement and to carry
out all acts contemplated by it, and (e) has no commitment to sell or otherwise
transfer any of its assets except in the ordinary course of business. This
Agreement has been duly executed and delivered on behalf of the Company, has
received all necessary authorization and is a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms. The execution and delivery of this Agreement and consummation of the
transactions contemplated by it will not violate any provision of the Limited
Partnership Agreement of the Company nor violate, conflict with or result in any
breach of any of the terms, provisions or conditions of, or constitute a default
or cause acceleration of, any indebtedness under any agreement or instrument to
which the Company is a party or by which it or its assets
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may be bound, or cause a breach of any applicable federal or state law or
regulation, or any applicable order, judgment, writ, award, injunction or decree
of any court or governmental instrumentality.
SECTION 6.02. MISSTATEMENTS. The representations of the Company contained
in this Agreement and the information regarding the Company contained in the
Registration Statement and the Prospectus/Consent Solicitation Statement do not
contain any untrue statement of a material fact or omit to state any fact
necessary to make such representations or information not materially misleading.
SECTION 6.03. INVESTMENT OF CASH. Upon consummation of the Merger, the
Company will invest the cash it receives from the Partnerships so that not more
than 80% of the Company's assets will consist of assets listed under Section
351(e)(1) of the Code.
ARTICLE VII
COVENANTS OF THE PARTIES
SECTION 7.01. PROHIBITED ACTS. Pending consummation of the Merger or prior
to termination of this Agreement, the Partnerships agree that, without prior
written consent of the Company, given in a letter which specifically refers to
this Section of the Agreement, the Partnerships shall:
(a) use their reasonable efforts so as not to perform any act, or
omit to take any action that would make any of their representations made
above or any information pertaining to them in the Registration Statement
or the Prospectus/Consent Solicitation Statement inaccurate or materially
misleading as of the Effective Time;
(b) not enter into any commitment, contract or other transaction in
any way affecting any of the Partnerships' business, except to carry out
its business in the ordinary course, and as contemplated by this Agreement
or in the Prospectus/Consent Solicitation Statement;
(c) not make any loans or advances to, or investments in, any other
corporation, partnership or other legal entity or to any other persons
except in the ordinary course of business;
(d) not borrow money for any purpose or agree to become contingently
liable, by guaranty or otherwise, for the obligations or indebtedness of
any other person other than in the ordinary course of business; and
(e) not mortgage, pledge, encumber, sell, lease or transfer any of
the Assets other than in the ordinary course of business.
SECTION 7.02. NOTICE. Pending the consummation of the Merger or prior to
termination of this Agreement, each party agrees that it will promptly advise
the other of the occurrence of any condition or event which would make any of
its representations contained in this Agreement or the Prospectus/Consent
Solicitation Statement inaccurate, incorrect, or materially misleading.
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SECTION 7.03. ADDITIONAL DOCUMENTS. At the request of any party, each party
will execute and deliver any additional documents and perform in good faith such
acts as reasonably may be required to complete the transactions contemplated by
this Agreement.
ARTICLE VIII
CONDITIONS TO THE MERGER
The obligation of the Company and each Partnership to consummate the Merger
shall be subject to compliance with or satisfaction of the following conditions:
SECTION 8.01. BRING DOWN. The representations and warranties set forth in
this Agreement shall be true and correct in all material respects at and as of
the Effective Time as if then made (except for those representations and
warranties made as of a given date, which shall continue to be true and correct
as of such given date), as evidenced by a certificate made by the general
partners of each Partnership and the general partner of the Company, as of the
Effective Time.
SECTION 8.02. COMPLIANCE. The Company and each of the Partnerships shall
have complied with all of the covenants and agreements in this Agreement on its
part to be complied with as of or prior to the Effective Time.
SECTION 8.03. PARTNERSHIP APPROVALS. The Investors holding a majority of
outstanding BACs of each of Cap Source I and Cap Source II shall have approved
the Merger and the dissenting Investors of the Partnerships have not elected to
receive Notes exceeding $20,000,000 in principal amount.
SECTION 8.04. STOCK EXCHANGE LISTING. At or before the Effective Time, the
Units to be issued in the Merger shall be approved for listing on the NASDAQ
National Market, subject to official notice of issuance.
SECTION 8.05. CONSENTS OBTAINED. All necessary consents, waivers,
approvals, authorizations or orders required to be obtained, and the making of
all filings required to be made by any party to the Merger for the
authorization, execution and delivery of this Agreement and the Certificate and
Plan of Merger between the Company and the Partnerships, and the consummation of
the transactions contemplated thereby on or before (and remain in effect at) the
Effective Time shall have been obtained or made.
SECTION 8.06. NO MATERIAL ADVERSE CHANGE. Since the respective dates as to
which information is given in the Registration Statement and the
Prospectus/Consent Solicitation Statement, there shall not have occurred or been
threatened any material adverse changes in the overall business or prospects of
the Partnerships or in the tax or other regulatory provisions applicable to the
Partnerships or the Company, and the Company shall not have become aware of any
facts that, in the sole judgment of the Company and the Cap Source General
Partners, have or may have a material effect, whether adverse or otherwise, on
the Partnerships, taken as a whole, the Merger, or the value to the Company of
the properties of the Partnerships, taken as a whole.
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SECTION 8.07. OPINIONS AND LETTERS. The Company shall have received, on or
prior to the Effective Time, an opinion of counsel, which shall not have been
withdrawn as of the Effective Time, to the effect that for federal income tax
purposes the Merger will be an exchange subject to the nonrecognition provisions
of Section 721 of the Code; provided, however, that for purposes of this Section
8.07, the Merger shall include only the merger of the Partnerships into the
Company.
SECTION 8.08. NO STATUTE, RULE OR REGULATION AFFECTING CONSUMMATION. At the
Effective Time, there shall be no statute, rule, regulation, injunction or court
order enacted or issued by the United States or any State, or by a court, which
prohibits or challenges the consummation of the Merger.
SECTION 8.09. NO DECLARATIONS. At the Effective Time, there shall be no
declaration of suspension of trading in, or limitation on prices for, securities
generally on the NASDAQ National Market, declaration of a banking moratorium by
federal or state authorities or any suspension of payments by banks in the
United States (whether mandatory or not) or of the extension of credit by
lending institutions in the United States, or commencement of war, armed
hostility, or other international or national calamity directly or indirectly
involving the United States, which war, hostility or calamity, in the sole
judgment of the Company, would have a material adverse effect on the business
objectives of the Company, or, in the case of any of the foregoing existing on
the date of the Prospectus/Consent Solicitation Statement, any material
acceleration or worsening thereof.
SECTION 8.10. EFFECTIVENESS OF REGISTRATION STATEMENT. At or prior to the
Effective Time, the Registration Statement shall have been declared effective,
no stop order suspending the effectiveness of the Registration Statement shall
have been issued, no proceedings for such purpose shall have been initiated, and
all necessary approvals under state securities or blue sky laws shall have been
received.
ARTICLE IX
OTHER AGREEMENTS
SECTION 9.01. WAIVER BY CAP SOURCE GENERAL PARTNERS. Immediately prior to
the Effective Time, the Cap Source General Partners waive all rights to any fees
not accrued to the Effective Time. The Cap Source General Partners each further
acknowledge that they have no rights to additional distributions of fees or
proceeds of sale or liquidation by the Partnerships. The parties to this
Agreement hereby acknowledge and agree that at the Effective Time, pursuant to
the General Release and Waiver of Amounts Due, dated as of June 30, 2000, CS
Properties I Inc., an affiliate of the Cap Source I General Partners that serves
as the general partner of Oyster Cove Limited Partnership, Cypress Landings II,
Ltd., and Fox Hollow, Ltd. and co-general partner of The Ponds at Georgetown
L.P., and CS Properties II Inc., an affiliate of the general partners of Cap
Source II that also serves as a co-general partner of The Ponds at Georgetown
L.P waive all past due amounts, as set forth in the Partnerships' audited
financial statements for the fiscal year ending December 31, 1998, as included
in the Prospectus/Consent Solicitation Statement, due to or potentially due to
CS Properties I Inc. and CS Properties II Inc. by these limited partnerships.
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SECTION 9.02. INDEMNIFICATION.
(a) To the fullest extent permitted by law, the Partnerships (the
"Indemnifying Parties"), jointly and severally, agree to defend, indemnify
and hold harmless the Company and its general partner, employees and agents
(the "Indemnified Parties") from and against any losses, claims, damages or
liabilities (including, without limitation, attorneys' fees and
disbursements) to which such Indemnified Party may become subject under the
Act, the Securities Exchange Act of 1934, as amended, or otherwise, insofar
as such losses, claims, damages or liabilities (or actions with respect
thereof arise out of or are based upon an untrue statement or an alleged
untrue statement of a material fact contained in the Registration
Statement, the Prospectus/Consent Solicitation Statement, or any amendment
or supplement to such documents, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, or to the extent that such losses, claims, damages or
liabilities (including, without limitation, attorneys' fees and
disbursements) result from a breach by an Indemnifying Party of the
representations and warranties of the Partnerships contained in Article V
of this Agreement.
(b) The Indemnified Parties shall give (or cause to be given) to the
Indemnifying Parties notice of claim or matter for which indemnity is (or
will be) sought under this Section 9.02; such notice shall be given
promptly after the Indemnified Parties receive actual notice or knowledge
of the claim or matter that is subject to indemnification. With respect to
any claim asserted by a third party against any Indemnified Parties for
which indemnity is sought, the relevant Indemnifying Party shall have the
right to employ counsel reasonably acceptable to the relevant Indemnified
Parties to defend against such assertion, and such Indemnifying Parties
shall have the right to compromise or otherwise settle any such action or
claim only with the prior written consent of the relevant Indemnified
Party, which shall not be unreasonably withheld.
(c) This Section 9.02 shall survive the Merger for a period of three
years from the Effective Time.
ARTICLE X
TERMINATION; AMENDMENT; WAIVER
SECTION 10.01. TERMINATION. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware, (a)
by mutual consent of the general partner of the Company and the Cap Source
General Partners, (b) by action of the general partner of the Company in the
event of a failure of a condition to the obligations of the Company set forth in
Article VIII of this Agreement, (c) by action of the Cap Source General Partners
in the event of a failure of a condition to the obligations of the Partnerships
set forth in Article VIII of this Agreement, or (d) by action of the general
partner of the Company or of the Cap Source General Partners in the event that
the Merger is not consummated on or prior to December 31, 2000, or such later
date as the parties shall mutually agree in writing.
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SECTION 10.02. EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 10.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto.
SECTION 10.03. AMENDMENT. The parties hereto may, by written agreement,
amend this Agreement at any time prior to the filing of the Certificate of
Merger with the Delaware Secretary of State, such amendment to be approved by
the parties hereto; provided that, after the approval of the Merger by the
Investors holding a majority of the BACs of each Partnership no amendment shall
be made which alters or changes (a) the amount or kind of consideration which
the Investors of each Partnership are entitled to receive upon conversion of the
BACs of each Partnership, (b) the Limited Partnership Agreement of the Company,
or (c) the terms and conditions of this Agreement if such alteration or change
would have an adverse effect on the Investors of each Partnership or the
unitholders of the Company.
SECTION 10.04. WAIVER. At any time prior to the Effective Time, any party
to this Agreement may extend the time for the performance of any of the
obligations or other acts of any other party hereto, or waive compliance with
any of the agreements of any other party or with any condition to the
obligations hereunder, in each case only to the extent that such obligations,
agreements and conditions are intended for its benefit.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. EXPENSES. The expenses associated with the Merger shall be
paid as set forth in the Prospectus/Consent Solicitation Statement. Any
additional expenses associated with the Merger shall be paid by the Company.
Notwithstanding the foregoing, the Company shall have no obligation to pay any
personal expense of any beneficial owner of a transferor or any expense of a
transferor not a result of transactions contemplated under this Agreement.
SECTION 11.02. NOTICES. All notices or other communications required or
permitted under the terms of this Agreement by any party shall be made in
writing and shall be delivered by first class mail or by personal delivery,
postage or fees prepaid, to the other parties at America First Companies L.L.C.,
Attn: Michael B. Yanney, 1004 Farnam Street, Suite 400, Omaha, Nebraska 68102,
with a copy to Kutak Rock LLP, 717 17th Street, Suite 2900, Denver, Colorado
80202, Attention: Paul E. Belitz, or to such other address as any of the parties
hereto may designate by notice to the others.
SECTION 11.03. NON-ASSIGNABILITY. This Agreement shall not be assignable by
any of the parties to this Agreement.
SECTION 11.04. ENTIRE AGREEMENT. This Agreement contains the parties'
entire understanding and agreement with respect to its subject matter, and any
and all conflicting or inconsistent discussions, agreements, promises,
representations and statements, if any, between the parties or their
representatives that are not incorporated in this Agreement shall be null and
void and are merged into this Agreement.
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SECTION 11.05. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single agreement.
SECTION 11.06. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to conflicts of law principles.
SECTION 11.07. HEADINGS. The various section headings are inserted for
purposes of reference only and shall not affect the meaning or interpretation of
this Agreement or any provision hereof.
SECTION 11.08. GENDER; NUMBER. All references to gender or number in this
Agreement shall be deemed interchangeably to have a masculine, feminine, neuter,
singular or plural meaning, as the sense of the context requires.
SECTION 11.09. SEVERABILITY. The provisions of this Agreement shall be
severable, and any invalidity, unenforceability or illegality of any provision
or provisions of this Agreement shall not affect any other provision or
provisions of this Agreement, and each term and provision of this Agreement
shall be construed to be valid and enforceable to the full extent permitted by
law.
SECTION 11.10. AUTHORIZATION. The Cap Source General Partners (a) shall be
authorized, at such time in their full discretion as they deem appropriate, to
execute, acknowledge, verify, deliver, file and record, for and in the name of
the Partnerships and, to the extent necessary, the Investors, any and all
documents and instruments and (b) shall do and perform any and all acts required
by applicable law or which the Cap Source General Partners deem necessary or
advisable to effectuate the Merger.
SECTION 11.11. LIMITATIONS OF REMEDIES. If any party hereto becomes aware,
prior to the closing, of a breach of any representation, warranty or covenant
contained in this Agreement, the sole remedy of the nonbreaching party for such
breach shall be limited to termination of this Agreement.
SECTION 11.12. DEFINITIONS. The following terms used in this Agreement have
the meanings specified in this Section 11.12. Unless otherwise defined in this
Agreement, all other initially capitalized terms shall have the meanings
specified in the Partnership Agreements.
"INVESTOR" shall mean any person or entity who is either (a) a BAC holder
or (b) a holder of a Limited Partner Interest, other than each Initial Limited
Partner.
"PARTNERSHIP AGREEMENT" shall mean the respective partnership agreement of
each Partnership, and such agreements are collectively referred to in this
Agreement as the "Partnership Agreements."
"BAC" shall mean (a) a beneficial interest in a Limited Partner Interest
represented by a beneficial assignment certificate and (b) a Limited Partnership
Interest, other than a Limited Partnership Interest held by an Initial Limited
Partner.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by an officer duly authorized to do so, all as of the day and year
first above written.
AMERICA FIRST REAL ESTATE INVESTMENT
PARTNERS, L.P., a Delaware limited
partnership
By: AMERICA FIRST CAPITAL SOURCE I
L.L.C., a Delaware limited liability
company, General Partner
By /s/ Michael Thesing
--------------------------------
Michael Thesing, Vice President
CAPITAL SOURCE L.P., a Delaware limited
partnership
By: AMERICA FIRST CAPITAL SOURCE I
L.L.C., a Delaware limited liability
company, General Partner
By /s/ Michael Thesing
--------------------------------
Michael Thesing, Vice President
By: INSURED MORTGAGE EQUITIES INC., a
Delaware corporation, General Partner
By /s/ Michael Thesing
--------------------------------
Michael Thesing, Vice President
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CAPITAL SOURCE II L.P.-A, a Delaware
limited partnership
By: AMERICA FIRST CAPITAL SOURCE II
L.L.C., a Delaware limited liability
company, General Partner
By /s/ Michael Thesing
--------------------------------
Michael Thesing, Vice President
By: INSURED MORTGAGE EQUITIES II L.P.,
a Delaware limited partnership,
General Partner
By: CS Housing II Inc., a Delaware
corporation, General Partner
By /s/ Michael Thesing
-----------------------------
Michael Thesing, Vice President
16
