SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
SCHEDULE 13D
under the Securities Exchange Act of 1934
(Amendment No. 2)
_______________________
CENTURY PROPERTIES FUND XIV
(Name of Issuer)
UNITS OF LIMITED PARTNERSHIP INTEREST
(Title of Class
of Securities)
NONE
(CUSIP Number of Class
of Securities)
_______________________
Michael L. Ashner Copy to:
DeForest Capital I Corporation Mark I. Fisher
100 Jericho Quadrangle Rosenman & Colin
Suite 214 575 Madison Avenue
Jericho, New York 11735-2717 New York, New York 10022-2585
(516) 822-0022 (212) 940-8877
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
August 17, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule
13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4), check the following box ____.(
Check the following box if a fee is being paid with the
statement( x .
----
(A fee is not required only if the reporting person: (1) has a
previous statement on file reporting beneficial ownership of more
than five percent of the class of securities described in Item 1;
and (2) has filed no amendment subsequent thereto reporting
beneficial ownership of five percent or less of such class). (See
Rule 13d-7.) (
Note: Six copies of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-1(a) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in
a prior cover page.
The information required on the remainder of this cover shall not
be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 ("Act") or otherwise subject to
the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).
Page 1 of 299
Page 2 of 299
__________________________________________________________________
1. Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
DeForest Ventures I L.P.
I.R.S. I.D. No. 11-3230287
__________________________________________________________________
2. Check the Appropriate Box if a Member of a Group*
(a) _____
(b) _____
__________________________________________________________________
3. SEC Use Only
__________________________________________________________________
4. Sources of Funds*
__________________________________________________________________
5. Check Box if Disclosure of Legal Proceedings is
Required Pursuant to Items 2(e) of 2(f)
_____
__________________________________________________________________
6. Citizenship or Place of Organization
Delaware
__________________________________________________________________
Number 7. Sole Voting Power 26,446.0543
of ______________________________________________
Shares 8. Shared Voting Power - 0 -
Beneficially ______________________________________________
Owned by Each 9. Sole Dispositive Power 26,446.0543
Reporting ______________________________________________
Person With 10. Shared Dispositive Power - 0 -
__________________________________________________________________
Page 3 of 299
11. Aggregate Amount Beneficially Owned by Each Reporting Person
26,446.0543 Units
__________________________________________________________________
12. Check Box if the Aggregate Amount in Row (11) Excludes
Certain Shares*
____
__________________________________________________________________
13. Percent of Class Represented by Amount in Row (11)
40.81%
__________________________________________________________________
14. Type of Reporting Person*
PN
__________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
Page 4 of 299
This Amendment No. 2 amends certain information contained in
the final amendment to Schedule 14D-1, filed by DeForest Ventures
I L.P. ("DeForest")on November 30, 1994 with respect to units of
limited partnership interest (the "Units") in Century Properties
Fund XIV ("Issuer"), as amended on July 10, 1995, the filing of
which, pursuant to Instruction F of Schedule 14D-1, also
satisfied DeForest's reporting obligations under Section 13(d) of
the Act, and constituted the filing by DeForest on Schedule 13D.
Item 4. Purpose of Transaction.
The following information is hereby added to the information
provided in response to Item 4:
On August 17, 1995, DeForest entered into an agreement (the
"Partnership Units Agreement") pursuant to which it agreed to
sell to Riverside Drive, L.L.C., all of the Units held by
DeForest in the Issuer. The sale of the Units is subject to the
satisfaction of certain conditions (including governmental third
party consents and other conditions not within the control of the
parties to the agreement) and is scheduled to close in January
1996.
DeForest does not expect to acquire any additional Units
prior to the Closing.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer
The following information is hereby added to the information
provided in response to Item 6:
See Item 4
On August 17, 1995, the stockholders of National Property
Investors, Inc. ("NPI"), the sole shareholder of NPI Equity
Investments II, Inc. ("NPI Equity"), the entity which controls
Fox Realty Investors and Fox Capital Management Corporation
("FCMC"), the general partners of Registrant, entered into an
Page 5 of 299
agreement to sell to IFGP Corporation, an affiliate of Insignia
Financial Group, Inc. ("Insignia"), all of the issued and
outstanding stock of NPI. The sale of the stock is subject to
the satisfaction of certain conditions (including governmental
and third party consents and other conditions not within the
control of the parties to the agreement) and is scheduled to
close in January 1996. Upon Closing, it is expected that the
current officers and directors of NPI Equity and FCMC will resign
and Insignia will elect new officers and directors.
Pursuant to the terms of the Partnership Units Agreement,
DeForest and NPI Equity have agreed that, consistent with and
subject to the terms of the Settlement Agreement and subject to
its fiduciary duties as general partner of a Issuer and the
provisions of the partnership agreement of Issuer, until the
closing date of the Partnership Units Agreement, they will vote
all of their respective interests in Issuer against and shall not
take any action to cause (a) any merger, consolidation,
reorganization, other business combination, or recapitalization
involving Issuer, (b) any dissolution, liquidation, or
termination of Issuer, (c) a sale of all or substantially all of
the assets of Issuer in one transaction, (d) the amendment of the
limited partnership agreement or any other organizational
document of Issuer, (e) any change in the general partner of
Issuer, or (f) any proposition the effect of which may be to
inhibit, prohibit, restrict, or delay the consummation of any of
the transactions contemplated by the Partnership Units Agreement
or any of the other agreements contemplated thereby or impair the
contemplated benefits thereunder.
Item 7. Material to Filed as Exhibits
1. Partnership Units Purchase Agreement, dated as of August
17, 1995
2. NPI, Inc. Stock Purchase Agreement, dated as of August
17, 1995
Page 6 of 299
Signatures
After due inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement
is true, complete and correct.
Dated: August 21, 1995
DEFOREST VENTURES I L.P.
By: DeForest Capital I Corporation,
its General Partner
By: /s/ Michael L. Ashner
Name: Michael L. Ashner
Title: President
Page 7 of 299
EXHIBIT INDEX
Exhibit Page No.
1. Partnership Units Purchase Agreement, 8
dated as of August 17, 1995
2. NPI, Inc. Stock Purchase Agreement, 180
dated as of August 17, 1995
PARTNERSHIP UNITS PURCHASE AGREEMENT
Partnership Units Purchase Agreement dated as of
August 17, 1995, among Insignia Financial Group, Inc., a Delaware
corporation with offices at One Insignia Financial Plaza, P.O.
Box 1089, Greenville, South Carolina 29602 ("Insignia"); and
Insignia NPI, L.L.C., a Delaware limited liability company, with
offices at One Insignia Financial Plaza, P.O. Box 1089,
Greenville, South Carolina 29602 ("Insignia LLC", and, together
with Insignia, the "Buyer") and Riverside Drive L.L.C., a
Delaware limited liability company, with offices at One Insignia
Financial Plaza, P.O. Box 1089, Greenville, South Carolina 29602
("Riverside");
and
DeForest Ventures I L.P., a Delaware limited partnership with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, GA
30328 ("Ventures I"); DeForest Ventures II L.P., a Delaware
limited partnership with offices at 5665 Northside Drive, N.W.,
Suite 370, Atlanta, GA 30328 ("Ventures II"); QAL Associates, a
Georgia general partnership with offices at 5665 Northside Drive,
N.W., Suite 370, Atlanta, GA 30328 ("QAL"); and QALA II
Associates, a Georgia general partnership with offices at 5665
Northside Drive, N.W., Suite 370, Atlanta, GA 30328 ("QALA II",
and, together with Ventures I, Ventures II and QAL, the
"Sellers");
and
NPI Property Management Corporation, a Florida corporation with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, GA
30328 ("NPI Property Management"); NPI-AP Management, L.P., a
Delaware limited partnership with offices at 5665 Northside
Drive, N.W., Suite 370, Atlanta, GA 30328 ("NPI-AP Management");
DeForest Capital I Corporation, a Delaware corporation with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, GA
30328, ("DFC I"); DeForest Capital II Corporation, a Delaware
corporation with offices at 5665 Northside Drive, N.W., Suite
370, Atlanta, GA 30328 ("DFC II"); AP-NPI, L.P., a Delaware
limited partnership with offices at 1301 Avenue of the Americas,
New York, NY 10019 ("AP-NPI"); AP-NPI X L.L.C., a Delaware
limited liability corporation with offices at 1301 Avenue of the
Americas, New York, NY 10019 ("AP-NPIX"); AP-NPI II, L.P., a
Delaware limited partnership with offices at 1301 Avenue of the
Americas, New York, NY 10019 ("AP-NPI II"); AP-NPI III, L.P., a
Delaware limited partnership with offices at 1301 Avenue of the
Americas, New York, NY 10019 ("AP-NPI III"; and, together with
AP-NPI, AP-NPIX and AP-NPI II, the "Apollo Entities"); National
Property Investors, Inc., a Delaware corporation with offices at
5665 Northside Drive, N.W., Suite 370, Atlanta, GA 30328 ("NPI
Inc."); NPI Equity Investments, Inc., a Florida corporation with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, GA
30328 ("NPI Equity"); NPI Equity Investments II, Inc., a Florida
corporation with offices at 5665 Northside Drive, N.W., Suite
370, Atlanta, GA 30328 ("NPI Equity II"); Michael L. Ashner, with
an address at 17 Buttonwood Drive, Dix Hills, New York 11746;
Martin Lifton, with an address at 101 Wheatley Road, Old
Westbury, New York 11568; and Arthur N. Queler, with an address
at 7421 Campo Florido, Boca Raton, Florida 33433 (such
individuals being herein collectively called the "NPI
Principals"); and Steven Lifton, with an address at 6 Partridge
Drive, Roslyn, New York 11576; G. Bruce Lifton, with an address
at 100 Cameron Glen Road, Atlanta, Georgia 30328; Judie Lifton,
with an address at 118 East 60th Street, Apt. 19C, New York, New
York 10022; Susan Ashner, with an address at 10 Buttonwood Drive,
Dix Hills, New York 11746; Anise Queler, with an address at 7421
Campo Florido, Boca Raton, Florida 33433; Robert Lifton, Trustee,
under the Martin Lifton 1994 Family Trust, with an address c/o
Martin Lifton at 101 Wheatley Road, Old Westbury, New York 11568;
and Robert Lifton, Trustee, under the Elinor Lifton 1994 Family
Trust, with an address c/o Martin Lifton at 101 Wheatley Road,
Old Westbury, New York 11568 (such additional individuals and
trusts, together with the NPI Principals, collectively called the
"NPI Family Parties"; and together with NPI Property Management,
NPI-AP Management, DFC I, DFC II, AP-NPI, AP-NPIX, AP-NPI II, AP-
NPI III, NPI Inc., NPI Equity and NPI Equity II, the "NPI
Parties");
WITNESSETH:
WHEREAS, Sellers wish to sell, and Buyer wishes
to purchase from Sellers (i) all of the units of limited
partnership interests in the 12 publicly-owned limited
partnerships listed on Schedule A-U (the "Scheduled LPs") owned
by Ventures I, Ventures II, QAL and QALA II, respectively, and
(ii) the loans in the amounts listed and secured by units of
limited partnership interests in the Scheduled LPs listed on
Schedule B-U (the "Unit Loans") owned by Ventures II; except for
828 units of limited partnership interests owned by Ventures II
in the Scheduled LP called National Property Investors II and
2,897 units of limited partnership interests owned by Ventures II
in the Scheduled LP called National Property Investors 4
(collectively, the "Excess Units"), subject to the terms and
conditions set forth herein; and
WHEREAS, Ventures I wishes to sell, and Riverside
wishes to purchase from Ventures I, all of the units of limited
partnership interests in the two publicly-owned limited
partnerships listed on Schedule C-U (the "Commercial LPs", and,
together with the Scheduled LPs, the "Subject LPs") owned by
Ventures I (all of such units of limited partnership interests in
the Subject LPs (excluding the Excess Units) together with the
Unit Loans, collectively called the "Units"), subject to the
terms and conditions set forth herein; and
WHEREAS, pursuant to a Master Agreement (the "Master
Agreement") dated as of November 21, 1994, as amended, with
PaineWebber Real Estate Securities, Inc. ("PaineWebber") and a
related Loan Agreement with Ventures I dated as of November 30,
1994 and a related Loan Agreement with Ventures II dated as of
November 21, 1994, Ventures I has borrowed and there remains
unpaid on the date hereof an aggregate of $15,159,392 and
Ventures II has borrowed and there remains unpaid on the date
hereof an aggregate of $18,154,333.71, respectively
(collectively, the "PaineWebber Debt"), and the Units, together
with certain other assets owned by the NPI Parties, are pledged
as security therefor; and
WHEREAS, QALA V, a Georgia general partnership (the
"NPI-AP Member") and Insignia LLC (sometimes herein called the
"Insignia Member") have entered into a Limited Liability Company
Agreement (the "Riverside Agreement"), dated the date hereof, a
copy of which is attached as Exhibit A; and
WHEREAS, the limited partners of Ventures I that are
not parties to this Agreement have consented to this Agreement
and the transactions contemplated hereby in an agreement by and
between Ventures I, DFC I and PD Associates, L.L.C., dated as of
the date hereof, a copy of which is attached as Exhibit B; and in
an agreement (the "CEM Redemption Agreement"), dated as of the
date hereof, a copy of which is attached as Exhibit C, by and
among Ventures I, DFC I, Emmet J. Cashin, Jr., Trustee of the
Survivors Trust under the Cashin 1990 Trust, Jarold A. Evans,
Trustee of the Jarold A. Evans Revocable Trust, dated April 19,
1989, J.E. Capital Partners, and W. Patrick McDowell, Trustee of
the McDowell Family Revocable Trust, dated April 28, 1978, as
amended; and
WHEREAS, the general partners of Fox Realty Investors
have entered into a Second Amended and Restated Partnership
Agreement (the "Fox Amendment"), dated as of the date hereof,
further amending and restating the Amended and Restated
Partnership Agreement, entered into as of December 6, 1993, of
Fox Realty Investors, as amended by the First Amendment thereto
entered into as of August 8, 1994, a copy of which is attached as
Exhibit D; and
WHEREAS, Insignia, Portfolio Realty Associates, L.P.,
Emmet J. Cashin, Jr. ("Cashin"), Jarold A. Evans ("Evans"), W.
Patrick McDowell ("McDowell"), Janet E. Larson, Trustee, Phillip
A. Larson Family Revocable Trust dated April 17, 1974, as
amended; Trust A, and the NPI Principals have entered into an
Agreement (the "Insignia Indemnity Agreement"), dated as of the
date hereof, a copy of which is attached hereto as Exhibit E; and
WHEREAS, the parties wish to make certain other
agreements in connection with such sale and purchase;
NOW, THEREFORE, in consideration of the premises and
the mutual promises herein made, and in consideration of the
covenants, agreements, representations and warranties herein
contained, the parties hereto hereby agree as follows:
I. The Sale and Purchase
1.01 Sale and Purchase
(a) At the Closing (defined below), Ventures I shall sell
and Insignia LLC shall buy all of the Units listed on Schedule
1.01(a)-U for an aggregate purchase price (subject to adjustment
as provided in Section 2.02) of $14,621,268, in cash, consisting
of: (i) payment of the unpaid principal amount as of the Closing
Date (defined below) of the loan to Ventures I under the
PaineWebber Debt (after prepayment of a portion thereof by
Ventures I under Section 6.01(d)) and the accrued and unpaid
interest thereunder; and (ii) the balance of the purchase price
(after subtracting the dollar amounts of principal and interest
so paid) in cash. Such aggregate purchase price shall be
allocated (subject to adjustment) among the Units being sold by
Ventures I as set forth on Schedule 1.01(a)-U.
(b) At the Closing, Ventures II shall sell and Insignia LLC
shall buy all of the Units listed on Schedule 1.01(b)-U for an
aggregate purchase price (subject to adjustment as provided in
Section 2.02) of $48,440,123, in cash, consisting of:
(i) payment of the unpaid principal amount as of the Closing Date
of the loan to Ventures II under the PaineWebber Debt and the
accrued and unpaid interest thereunder; and (ii) the balance of
the purchase price (after subtracting the dollar amounts of
principal and interest so paid) in cash. Such aggregate purchase
price shall be allocated (subject to adjustment) among the Units
being sold by Ventures II as set forth on Schedule 1.01(b)-U.
(c) At the Closing, QAL and QALA II shall sell and Insignia
LLC shall buy all of the Units listed on Schedule 1.01(c)-U for
an aggregate purchase price (subject to adjustment as provided in
Section 2.02) of $637,934 in cash. Such aggregate purchase price
shall be allocated (subject to adjustment) among the Units being
sold by QAL and QALA II as set forth on Schedule 1.01(c)-U.
(d) At the Closing, Ventures I shall sell and Riverside
shall buy all of the Units of the Commercial LPs listed on
Schedule 1.01(d)-U for an aggregate purchase price (subject to
adjustment as provided in Section 2.02) of $15,010,917 in cash.
Such aggregate purchase price shall be allocated (subject to
adjustment) among the Units of the Commercial LPs being sold by
Ventures I as set forth on Schedule 1.01(d)-U.
(e) At the Closing, QAL and QALA II shall sell and
Riverside shall buy all of the Units of the Commercial LPs listed
on Schedule 1.01(e)-U for an aggregate purchase price (subject to
adjustment as provided in Section 2.02) of $74,304 in cash. Such
purchase price shall be allocated (subject to adjustment) among
the Units being sold by QAL and QALA II as set forth on Schedule
1.01(e)-U.
(f) Sellers and the NPI Parties shall cause Insignia LLC,
effective at the Closing, to be admitted as a substitute limited
partner of each partnership included in the Scheduled LPs as to
the Units (other than the Unit Loans) of such Scheduled LPs being
purchased hereunder, in accordance with the provisions of the
respective partnership agreements. Sellers and the NPI Parties
shall cause Riverside, effective at the Closing, to be admitted
as a substitute limited partner of each partnership included in
the Commercial LPs as to the Units of such Commercial LPs being
purchased hereunder, in accordance with the provisions of the
respective partnership agreements.
(g) Neither Buyer nor Riverside shall be required to
purchase any of the Units to be sold hereunder unless all of the
Units are sold to Buyer and Riverside hereunder at the Closing.
1.02 Delivery of Units and Purchase Price
(a) Each Seller shall deliver at the Closing (i) an
Assignment in the form of Exhibit F of the Units (other than the
Unit Loans), and (ii) an Assignment in the form of Exhibit G of
the Unit Loans, together with any security interests in units of
limited partnership interests securing such Unit Loans, to be
sold by it hereunder duly executed, together with such proof of
power and authority of the Person (defined below) executing such
Assignment as shall be requested by Buyer and Riverside, in each
case together with customary documentary proof, in form and
substance reasonably satisfactory to Buyer and Riverside, of
Insignia LLC's and Riverside's admission as a substitute limited
partner as provided in Section 1.01(d) in accordance with the
provisions of the respective partnership agreements. In the
event Ventures II shall, prior to the Closing, foreclose on or
otherwise accept in satisfaction of any Unit Loan the units of
limited partnership interest securing such Unit Loan, such units
of limited partnership interest shall be deemed "Units" for all
purposes under this Agreement in place of the Unit Loan they
secured as if they had been owned by Ventures II on the date
hereof and, at the Closing, Ventures II shall deliver an
assignment of such Units instead of an assignment of the related
Unit Loan.
(b) At the Closing, Insignia LLC and Riverside shall pay
the purchase prices payable to each Seller hereunder, as adjusted
as provided in this Agreement, by certified or official bank
check payable to such Seller or by wire transfer to such Seller
at the account and in accordance with wire instructions delivered
to Buyer in writing at least two business days prior to the
Closing Date.
II. Purchase Price and Adjustments
2.01 Intentionally Omitted
2.02 Purchase Price Adjustment
(a) The aggregate purchase price payable by Buyer under
this Agreement: (i) shall be reduced dollar for dollar to the
extent that any distributions from the Scheduled LPs are received
by QAL, QALA II, Ventures I or Ventures II from and after March
31, 1995 and through the Closing Date from or with respect to any
of the Units in the Scheduled LPs being sold hereunder, the
Excess Units or any units of limited partnership interest
securing the Unit Loans, and (ii) shall be further adjusted as
provided in Section 8.05 and Article X.
(b) The aggregate purchase price payable by Riverside under
this Agreement: (i) shall be reduced dollar for dollar to the
extent that any distributions from the Commercial LPs are
received by Ventures I, QAL and QALA II from and after the date
hereof and through the Closing Date from or with respect to any
of the Units in the Commercial LPs being sold hereunder and
(ii) shall be further adjusted as provided in Section 8.05 and
Article X.
(c) Notwithstanding anything in this Agreement to the
contrary, it is understood that if Ventures I receives any
distributions in respect of the MRI/CP Units (defined below)
which are applied before the Closing to repayment of a portion of
the unpaid principal amount of the PaineWebber Debt, the
aggregate purchase price payable to Ventures I hereunder shall
not be changed by reason of such repayment but, pursuant to the
formula set forth in Section 1.01(a), the amount of PaineWebber
Debt to be paid by Buyer at the Closing would be accordingly
reduced and the amount of cash payable would be accordingly
increased.
(d) Any purchase price adjustment arising from a fact or
event with respect to a particular Scheduled LP shall be
allocated among the purchase prices payable to the respective
Sellers pro rata in proportion to the number of Units of such
Scheduled LP being sold by each such Seller.
(e) Any purchase price adjustment shall be made by reducing
the amount of cash otherwise payable to each Seller in such
proportion as shall be set forth in the draft Adjusted Purchase
Price Schedule (defined below) delivered under Section 2.02(f).
(f) Not less than three business days prior to the Closing
Date, Sellers shall prepare and deliver to Buyer a draft Schedule
signed by Sellers, the NPI Principals and the Apollo Entities
setting forth the proposed allocation among the Sellers of any
purchase price adjustments required to be made for the approval
of Buyer, which approval shall not be unreasonably withheld. The
draft Schedule shall allocate the adjusted purchase prices among
the Sellers in accordance with this Agreement based on the
economic reality causing the adjustment, and shall be accompanied
by a worksheet showing the basis for such allocation which shall
be certified in such Schedule as true, complete and correct.
Upon approval by Buyer (or as modified to include any agreed
changes), the Schedule shall become the "Adjusted Purchase Price
Schedule" hereunder, and the Buyer and Riverside shall pay the
purchase prices due hereunder as adjusted on such Adjusted
Purchase Price Schedule at the Closing. All of the parties to
this Agreement agree that neither Buyer nor Riverside shall have
any liability to any Person, whether or not a party to this
Agreement, arising out of or relating to any allocation of
purchase price adjustment pursuant to such Adjusted Purchase
Price Schedule, all of which shall be the sole responsibility of
Sellers and the NPI Parties.
III. Closing
3.01 The Closing
The closing of the transactions contemplated by Section
1.01 (the "Closing") shall take place at the offices of Proskauer
Rose Goetz & Mendelsohn LLP, 1585 Broadway, New York, New York,
at 10:00 A.M., local time, on January 15, 1996 or, if the
certificates (the "Certificates") to be delivered under Article X
have not been delivered on or before January 7, 1996, at the
option of any party, the earliest date (i) elected by any party
which is at least seven days after delivery of the Certificates
and which is on or prior to March 15, 1996 or (ii) elected by
Buyer which is at least three days after Buyer's waiver of the
delivery of the Certificates and which is on or prior to March
15, 1996, or at such other time and place as the parties shall
hereafter agree (the "Closing Date").
3.02 Transactions at the Closing
The following transactions shall take place at the
Closing, all of which shall be deemed to have occurred
simultaneously and none of which shall be deemed completed unless
and until all of them shall have been completed (or waived in
writing by the parties entitled to performance):
(a) Sellers shall deliver to Buyer and Riverside the following:
(i) The Assignments of all of the Units being sold to
Buyer and Riverside hereunder together with the evidence of
Insignia LLC's and Riverside's admission into the respective
partnerships described in Sections 1.01(e) and 1.02(a).
(ii) An agreement in the form set forth as Exhibit C to
the CEM Redemption Agreement duly executed by Cashin, Evans,
McDowell and the NPI Principals (the "Insignia Reimbursement
Agreement").
(iii) An agreement in the form set forth as Exhibit D
to the CEM Redemption Agreement duly executed by Cashin, Evans,
McDowell and the NPI Principals (the "Riverside Reimbursement
Agreement").
(iv) An opinion of Rosenman & Colin dated the Closing
Date in form and substance satisfactory to Buyer.
(v) Evidence that all applicable waiting periods (and
any extensions thereof) relating to any transactions to be
completed by any of the Sellers or the NPI Parties under this
Agreement under the HSR Act (defined below) have expired or
otherwise been terminated.
(vi) Certificates from each of the Sellers (and from
each of the NPI Parties listed on Schedule 3.02(a.1)-U) or its
duly authorized general partners, officers, managers or other
legal representatives in form and substance satisfactory to Buyer
certifying its Organizational Documents (defined below), valid
existence and good standing (in all jurisdictions where the
failure to qualify would have a material adverse effect on the
financial condition or operations of such Seller or NPI Party),
incumbency of officers or others acting in a representative
capacity, due authorization of the transactions contemplated
hereby, accuracy of Sellers' and the NPI Parties' representations
and warranties, performance and compliance by Sellers with all of
Sellers' and the NPI Parties' covenants and agreements hereunder
and satisfaction of the conditions to Buyer's and Riverside's
obligations hereunder to be satisfied by any of Sellers or the
NPI Parties and such other matters as Buyer shall reasonably
request.
(vii) A certificate from Sellers and the NPI
Principals pursuant to Section 8.04 in form and substance
satisfactory to Buyer with respect to the absence of any material
adverse change.
(viii) A certificate from Sellers and the NPI
Principals pursuant to Section 7.06 in form and substance
satisfactory to Buyer with respect to Affiliate Transactions.
(ix) Evidence in form and substance satisfactory to
Buyer of all consents to be received by the Sellers or the NPI
Parties pursuant to Section 6.05.
(x) Certificates from Sellers and the NPI Principals
pursuant to Section 8.15(a), (b) and (c) in form and substance
satisfactory to Buyer with respect to the Agreements listed on
Schedule 3.02(a.2)-U hereto (the "Other Agreements").
(xi) Evidence of satisfaction of the PaineWebber Debt
and terminations of all Liens (defined below) created in
connection therewith upon payment of the amount thereof by Buyer,
each in form and substance satisfactory to Buyer, duly executed
by PaineWebber.
(xii) An Adjusted Purchase Price Schedule, if required,
pursuant to Section 2.02(e).
(xiii) The FIRPTA Certificates described in
Section 8.11.
(xiv) The Schedule required to be delivered under
Section 4.26 with respect to transfers of units of limited
partnership interest.
(b) Buyer shall deliver to Sellers the following:
(i) The portion of the adjusted purchase price to be
delivered in cash as specified in Section 1.02(b).
(ii) The Insignia Reimbursement Agreement duly executed
by Insignia and Insignia LLC.
(iii) The Riverside Reimbursement Agreement duly
executed by Insignia.
(iv) An opinion of Proskauer Rose Goetz & Mendelsohn
LLP dated the Closing Date in form and substance satisfactory to
Sellers.
(v) Evidence that all applicable waiting periods (and
any extensions thereof) relating to any transactions to be
completed by Buyer under this Agreement under the HSR Act have
expired or otherwise been terminated.
(vi) Certificates from each of Insignia and Insignia LLC
signed by its duly authorized officers, managers or other legal
representatives in form and substance satisfactory to Sellers
certifying its Organizational Documents, valid existence and good
standing (in all jurisdictions where the failure to qualify would
have a material adverse effect on the financial condition or
operations of Insignia), incumbency of officers or others acting
for such entity in a representative capacity, due authorization
of the transactions contemplated hereby, accuracy of Buyer's
representations and warranties, performance and compliance by
Buyer with all of Buyer's covenants and agreements and
satisfaction of the conditions to Sellers' obligations hereunder
to be satisfied by Buyer and such other matters as Sellers shall
reasonably request.
(vii) A Certificate from Buyer pursuant to Section 9.04
in form and substance satisfactory to Sellers.
(viii) Evidence in form and substance satisfactory to
Sellers of payment of the PaineWebber Debt.
(c) Riverside shall deliver the following:
(i) To Ventures I, the portion of the adjusted purchase price
to be paid by it.
(ii) To Sellers, the Riverside Reimbursement
Agreement duly executed by Riverside.
(iii) To each of Buyer and Sellers, a certificate from
Riverside signed by each of its members in form and substance
satisfactory to Buyer and Sellers certifying its Organizational
Documents and representing and warranting as to its valid
existence and good standing, incumbency of officers or others
acting for it in a representative capacity, due authorization of
the transactions contemplated hereby, and compliance by it with
its covenants and agreements hereunder and such other matters as
Buyer or Sellers shall reasonably request.
IV. Representations and Warranties of Sellers
Sellers and the NPI Parties each, jointly and
severally, represent and warrant to Buyer and Riverside as of the
date hereof and agree with Buyer and Riverside as follows:
4.01 Relationship of the NPI Parties and their
Affiliates
(a) Each of Sellers and each of the NPI Parties is an
individual or entity of the type and/or acting in the capacity
described in the "WHEREAS" clauses of this Agreement. The NPI
Parties own, directly or indirectly, all of the legal and
beneficial equity interests in each of the entities comprising
the Sellers except for the limited partnership interests in
Ventures I owned by the Persons named in and whose interests are
accurately described in the Agreements annexed as Exhibits B and
C whose limited partnership interests shall be redeemed
contemporaneously with the Closing in accordance with that
Agreement (the "Redeemed Partners"). NPI Inc. controls, directly
or indirectly, (through ownership interests, voting trusts or
otherwise) without the requirement for consent of any other
Person as to any matter, (i) the managing general partner of each
Subject LP, (ii) the right to liquidate and dissolve (and the
liquidation and dissolution of) each Subject LP, subject to the
fiduciary duty of the general partner of each Subject LP and any
consent of limited partners under applicable partnership
agreements, and (iii) the sale, financing and management of each
Property (defined below) owned, directly or indirectly, by each
Subject LP, subject to the fiduciary duty of the general partner
of each Subject LP and any consent of limited partners under
applicable partnership agreements, in each case except with
respect to the matters set forth in Schedule 4.01(a.1)-U, which
Schedule lists all agreements which provide for, or limit or in
any manner affect, the rights and ability of NPI Inc. to control
the Subject LPs, and none of such ownership interests, voting
trusts or other agreements or arrangements relating to or
affecting such control shall change in any manner prior to the
Closing. None of the Sellers legally or beneficially, directly
or indirectly, has any assets or owns any interest in any Person
other than the Units being sold hereunder, except that Ventures I
owns the units of limited partnership listed on Schedule
4.01(a.2)-U (the "MRI/CP Units") and Ventures II owns the Excess
Units.
(b) The Unit Loans are valid loans for money advanced
by Ventures II as described in the Tender Offers (defined below)
pursuant to the Settlement Agreements (defined below) secured by
the units of limited partnership interests in Scheduled LPs owned
by the respective borrowers under the Unit Loans; the security
interests in the units of limited partnership interest securing
the Unit Loans create valid and enforceable security interests in
such units of limited partnership interest in favor of the lender
and its assignees; and the Unit Loans are enforceable (and will
be enforceable by Buyer after the Closing) and fully collectable
against the borrowers in accordance with their terms and will be
fully and timely paid in accordance with their terms and, if not
so paid, Buyer will be able to foreclose under such security
interests in accordance with the terms thereof and obtain good
title to such units of limited partnership interest free and
clear of any Liens, at no cost or expense to Buyer, and the
Assignment at the Closing will be effective to validly assign all
rights of Ventures II in such Unit Loans and in such security
interests in the related units of limited partnership interest.
(c) Each Subject LP is an issuer of units of limited
partnership interests registered under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and subject to the
reporting requirements of the Exchange Act. Schedule 4.01(c.1)-U
lists the total number of the outstanding limited partnership
interests in each Subject LP. Except as listed on Schedule
4.01(c.2)-U, no Subject LP directly or indirectly owns, or has
any agreement or commitment to acquire, any unit of limited
partnership interest or other equity interest in any Person.
Schedule 4.01(c.3)-U lists the general partner of each of the
Subject LPs and each other Person, if any, which has a right or
obligation to manage such Subject LP or any of the Properties,
whether by reason of a Management Agreement (defined below) or
through ownership of a general partnership interest in such
Subject LP, or a general partnership interest, capital stock or
other equity interest in an entity which is a general partner of
such limited partnership. No general partner of any Subject LP
is subject to removal as such under the partnership agreement of
such Subject LP as a result of existing facts or circumstances
known to Sellers or the NPI Parties, and the consummation of the
transactions contemplated by this Agreement and the Other
Agreements does not give rise to cause for such removal. Such
Schedule also correctly indicates the Managing General Partner
where not all of the general partners are Managing General
Partners. Each of the Subject LPs has been managed by the Person
indicated as its Managing General Partner in accordance with its
partnership agreement and all applicable fiduciary duties since
the date any NPI Party first owned any general partnership
interest in or managed such Subject LP. Except as set forth on
such Schedule, the Person listed on each such Schedule as the
owner of any interest in any Seller is the legal and beneficial
owner of such interest free and clear of all Liens other than the
Liens expressly granted under the PaineWebber Debt. Except for
the Excess Units, no Seller owns, legally or beneficially, any
other units or other partnership interests or other equity
interests in any other Person, nor does any Seller have any
agreement or commitment to acquire any such units or other equity
interests. Except as set forth on Schedule 4.01(c.4)-U, no NPI
Party or any of their Affiliates (defined below) owns any other
units of limited partnership interest or other equity interests
in any Subject LP or has any agreement or commitment to acquire
any such units or other equity interests. As used in this
Agreement: (i) "Person" means an individual, corporation,
partnership, limited liability company, joint venture,
association, joint-stock company, trust, business trust,
government or any agency or political subdivision thereof,
unincorporated organization or any other entity of any kind,
(ii) "Affiliate" means, with respect to any Person, any other
Person directly or indirectly controlling, controlled by or under
common control with such Person, and (iii) "Lien" means any lien,
pledge, security interest, claim, charge, mortgage, encumbrance,
restriction, voting trust, or any other rights of any other
Person other than any restrictions on the transferability of
limited partnership interests set forth in the Organizational
Documents of the Subject LPs and, with respect to any Property,
other than mechanics liens set forth on Schedule 4.01(c.5)-U or
other mechanics liens not so set forth but as to which the cost
to discharge them as of the Closing Date does not, in the
aggregate, exceed $100,000.
4.02 Organization Chart
The chart set forth on Schedule 4.02-U correctly sets
forth the relationships and ownership interests among the NPI
Parties and Sellers and the Subject LPs. All of the ownership
interests in the entities set forth on that chart correctly
reflect the legal and beneficial ownership of such entities
except that no representation is made as to the ownership of the
Apollo Entities. Except for the Liens expressly granted under
the PaineWebber Debt, Sellers own legally and beneficially the
respective Units being sold to Buyer and Riverside hereunder free
and clear of any Liens.
4.03 Organization and Qualification
Schedule 4.03-U correctly sets forth as to each of the
Sellers and Subject Lps its place of incorporation or formation,
principal place of business, and in the case of each Subject LP
and general partner of a Subject LP, the jurisdictions in which
it is qualified to do business. Sellers have made available to
Buyer with respect to each of the Sellers, each of the NPI
Parties which in not an individual, and each of the Subject Lps,
true, complete and correct copies of each of the following
documents including all amendments and supplements thereto: (a)
the Certificate of Limited Partnership and partnership agreement
for each such Person which is a limited partnership, (b) the
certificate of incorporation, by-laws, shareholders' agreements
and voting trusts, if any, with respect to each such Person which
is a corporation, (c) the articles of organization and operating
agreement, or similar documents, with respect to each such Person
which is a limited liability company, (d) the trust instruments
or an opinion of counsel from attorneys and in form and substance
acceptable to Buyer with respect to formation, powers, authority
and other related matters with respect to each such Person which
is a trust and (e) other similar documents (collectively, such
Person's "Organizational Documents"). Each of the Sellers which
is identified in the first paragraph of this Agreement as a
limited partnership and each of the Subject LPs is a limited
partnership duly organized, validly existing, and in good
standing under the laws of its jurisdiction of organization, and
each of the Sellers which is identified as a general partnership
is a general partnership validly existing under the laws of its
jurisdiction of organization, in each case with all requisite
power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and
from, and declarations and filings with, all federal, state,
local, and other governmental authorities and all courts and
tribunals, to own, lease, license, and use its properties and
assets and to carry on the business in which it is now engaged.
Each of the Subject LPs is duly qualified to transact the
business in which it is engaged and is in good standing as a
foreign limited partnership in every jurisdiction in which its
ownership, leasing, licensing, or use of its property or assets
or the conduct of its business makes such qualification necessary
except for qualification in any jurisdiction in which the failure
to so qualify is not material to the business or financial
condition of such Subject LP.
4.04 Authority
Sellers and the NPI Parties have all requisite power and
authority to execute, deliver, and perfomr this Agreement. All
necessary corporate, partnership, limited liability company,
trust or other proceedings (including, without limitation, any
shareholder or limited partner consents) of or on behalf of any
Sellers and NPI Parties have been duly taken to authorize their
execution, delivery, and performance of this Agreement. This
Agreement and the other documents required to be delivered hereby
have been (or when delivered will be) duly authorized, executed,
and delivered by Sellers and the NPI Parties, and constitute (or
when delivered will constitute) the legal, valid, and binding
obligation of Sellers and the NPI Parties, enforceable as to each
of them in accordance with their terms. Upon the Closing,
Sellers shall (i) transfer to Insignia LLC and Riverside good
title to the Units being sold hereunder, free and clear of all
Liens (assuming payment of the PaineWebber Debt by Buyer), and
(ii) cause Insignia LLC and Riverside to be duly admitted as a
substitute limited partner in each of the Subject LPs in which it
is buying Units.
4.05 Partnership Interests; Substitution of Partner
Each of the Units other than the Unit Loans is a
limited partnership interest in the respective Subject LP set
forth on Schedules 1.01(a)-U, 1.01(b)-U, 1.01(c)-U and 1.01(d)-U,
is duly authorized, validly issued, fully paid, and fully non-
assessable (except that there are statutory rights to recover
certain kinds of distributions provided for under the laws of
California, none of which recoverable distributions have been
made or will be made prior to Closing to any of Sellers or the
NPI Parties), free and clear of all Liens (other than Liens
securing the PaineWebber Debt) and has not been issued and is not
owned or held in violation of the partnership agreement covering
such Subject LP. Schedule 4.01(c.1)-U lists the total number of
issued and outstanding units of limited partnership interest in
each of the Subject LPs. To the knowledge of Sellers and the NPI
Parties, there is no Person (other than Sellers and the NPI
Parties and their Affiliates) who, alone or together with its
Affiliates, owns five percent or more of the outstanding units of
limited partnership interest in any Subject LP. There is no
agreement, commitment (whether or not legally binding), plan, or
arrangement to issue, and no outstanding option, warrant,
security or other instrument convertible into or exchangeable for
or calling for the issuance of, or other right to obtain, any
limited or general partnership interest or security or other
instrument convertible into, exercisable for, or exchangeable for
any limited or general partnership or other equity interest in
any Subject LP. On or before the Closing Date, each of Sellers
and the NPI Parties shall have caused the Subject LPs to take all
action required under their respective Organizational Documents
and the law to authorize, approve and effect the substitution and
admission, simultaneously with the Closing, of Insignia LLC or
Riverside, as the case may be, as a limited partner of each Subject LP.
4.06 Business Conducted
Each of the Sellers conducts no business and has no
assets other than the ownership of Units in the Subject LPs (and,
in the case of Ventures I, the MRI/CP Units and, in the case of
Ventures II, the Excess Units). The Subject LPs each conducts no
business other than the ownership and operation of real
properties and as set forth in its Annual Report on Form 10-K for
the year ended December 31, 1994. All of the real properties
directly or indirectly owned or operated by each of the Subject
LPs are listed on Schedule 4.06-U (individually, a "Property" and
collectively, the "Properties"). Except as set forth on Schedule
4.06-U, each of such Properties is used solely for residential or
commercial purposes as set forth on such Schedule.
4.07 Financial Statements; Subject LP Budgets
(a) Sellers have delivered to Buyer with respect to
each of the Subject LPs copies of (i) the audited financial
statements included in its Annual Report on Form 10-K for the
year ended December 31, 1994 and (ii) the unaudited financial
statements included in its Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1995, and will, as soon as
available, deliver the unaudited financial statements included in
such Subject LP's Quarterly Reports on Form 10-Q for each
subsequent quarterly period ending prior to the Closing Date (all
of such financial statements collectively called the "Subject LP
Financial Statements," and the balance sheets included in the
Subject LP Financial Statements as of March 31, 1995 being herein
called with respect to each such Subject LP the "Most Current
Balance Sheet"). Each of the Subject LP Financial Statements and
the financial statements to be delivered pursuant to Section 6.06
has been (or when so delivered or filed with the SEC (defined
below) will have been) prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied, in
each case based on the books and records of the respective
entities named therein, and fairly presents (or when delivered
will fairly present) the financial condition, results of
operations, assets, liabilities and partners' equity of such
entities for the period covered thereby and as of its date. The
financial and other information to be delivered pursuant to
Section 6.06 and Article X will not contain an untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary, in light of the circumstances in
which such statements are made, to make the statements made
therein not misleading.
(b) Sellers and the NPI Parties have delivered to
Buyer actual budgets for each of the Subject LPs (including
budgets for each Residential Property (defined below) owned by
such Subject LP) for the fiscal year commencing January 1, 1995
(the "Subject LP Budgets") showing all anticipated revenue and
expense, including, without limitation, net operating income,
capital expenditures, and debt service. The Subject LP Budgets
set forth an estimate of projected capital expenditures to be
incurred by each such Subject LP for such fiscal year together
with budgeted expenditures for partnership administration. The
Subject LP Budgets, with respect to the Residential Properties,
had a reasonable basis when made and were based on assumptions
that Sellers and the NPI Parties believed to be reasonable when
made. Schedule 4.07-U is a list of all plans or commitments
(whether or not legally binding) for the Subject LPs for capital
expenditures (including, without limitation, non-recurring
maintenance and repair) at or relating to any of the Residential
Properties of any Subject LP the cost of which were not included
in the Subject LP Budgets.
4.08 Liabilities
Other than Environmental Liabilities (defined below),
there are no liabilities (contingent or otherwise) of any of the
Subject LPs, known or unknown, which are not set forth in the
Subject LP Financial Statements or disclosed in this Agreement or
in a Schedule or Exhibit hereto, except for unknown liabilities
the Deemed Amount (defined below) of which does not exceed
$500,000 in the aggregate for all Subject LPs. Solely for
purposes of the previous sentence, a liability is "unknown" if it
is not known to the knowledge of Sellers and the NPI Parties as
defined in Section 14.18. For purposes of this Section 4.08, the
"Deemed Amount" of a liability means (a) with respect to any
Scheduled LP, the product of (i) the amount of such liability of
or affecting such Scheduled LP multiplied by (ii) the percentage
set forth opposite the name of such Scheduled LP on
Schedule 4.08-U (the "Scheduled Ownership Percentage") and (b)
with respect to any Commercial LP, the product of (i) the amount
of the claim, liability, cost or expense arising from or related
to such unknown liability to which any Residential Property in
any Commercial LP is subject or shall become liable multiplied by
(ii) the Scheduled Ownership Percentage for the Commercial LP
which owns such Residential Property set forth on Schedule 4.08-
U, and (c) with respect to any Commercial LP, the product of (i)
the amount of any other claim, liability, cost or expense arising
from or related to such liability (whether known or unknown)
affecting such Commercial LP which adversely affects, directly or
indirectly, any of Riverside, Insignia or any of its Affiliates
multiplied by (ii) the Scheduled Ownership Percentage for such
Commercial LP set forth on Schedule 4.08-U.
4.09 Insurance
Schedule 4.09-U lists all of the policies of insurance
of any kind (other than title insurance) covering each of the
Subject LPs and their respective assets and businesses, setting
forth the nature of the insurance, the insurance carrier, the
amount of coverage, and the owner of and expiration date of such
policies. Each of the Subject LPs has such insurance in such
amounts and covering such risks as well-run businesses in the
same industry customarily carry. All such policies of insurance
are in full force and effect and all premiums due thereon for all
periods through the Closing Date are or will be on the Closing
Date fully paid. None of the Sellers, the NPI Parties or the
Subject LPs has received any notice of cancellation or
termination with respect to any such policy.
4.10 Material Events and Changes
Since the dates of their respective Most Current
Balance Sheets:
(a) Except as set forth on Schedule 4.10(a)-U, there
has not been a material adverse change in the condition
(financial or otherwise), results of operations, business,
Properties, assets, nature of assets, or liabilities of any of
the Subject LPs.
(b) Except as set forth on Schedule 4.10(b)-U, the
operations and business of the Subject LPs have been conducted in
all respects only in the ordinary course and consistent with past
practice and the fiduciary duty of the general partner of such
Scheduled LP or Commercial LP, in accordance with the partnership
agreement.
(c) Except as set forth on Schedule 4.10(c)-U, none of
the Subject LPs has:
(i) suffered any loss, damage, destruction or
other casualty to any Properties or material assets (unless
completely covered by insurance);
(ii) mortgaged, pledged, subjected to or suffered
any Lien, or granted any Lien, in respect of any Properties, or
incurred any Debt (defined below);
(iii) amended its Organizational Documents;
(iv) defaulted under any Material Agreement
(defined below), license or permit; or
(v) experienced any change in control which is
prohibited by the terms of any note, bond, mortgage, indenture,
lease, license, franchise, agreement or other instrument or
obligation by which it or any of its Properties or assets is
affected or bound.
(d) None of the Commercial LPs has made any
distributions to any of its limited or general partners, except
for a distribution by Century Properties Fund XV in the amount of
$6,299,000.
4.11 No Conflicts or Defaults; No Violations
Neither the execution, delivery or performance of this
Agreement by any of Sellers or the NPI Parties nor the
consummation of the transactions contemplated hereby will (with
or without the giving of notice, lapse of time or both): (a)
contravene any provisions of any law, statute, rule or regulation
or any order, writ, judgment, injunction or decree of any court
or governmental instrumentality; or (b) except as set forth on
Schedule 4.11-U, and assuming that each of the consents and
approvals set forth on Schedule 4.12-U have been obtained,
conflict with or result in any breach of, or constitute a default
under, or result in the creation or imposition of (or the
obligation to create or impose), any Lien upon any of the
property or assets of any of Sellers, the NPI Parties or Subject
LPs pursuant to the terms of any note, bond, indenture, mortgage,
deed of trust, loan agreement, credit agreement, lease,
franchise, partnership agreement, voting trust or any other
agreement, contract or instrument to which any of Sellers, the
NPI Parties or Subject LPs is a party or to which any of their
respective properties or assets is subject (collectively, the
"Existing Agreements"); (c) violate any provision of their
respective Organizational Documents; (d) give any Person or group
of Persons the right to replace any of them as a direct or
indirect general partner of any Subject LP or any other limited
partnership.
4.12 Consents
Except the filing under the HSR Act described in
Section 6.04 and as set forth on Schedule 4.12-U, no approval or
consent of, notice to, or filing or registration with, or
authorization, order, license, certificate, or permit of or from,
any governmental authority or any other notice to or consent of
any third pary is required in connection with(a) the execution,
delivery and performance of, (b) the legality, validity, binding
effect or enforceability of or (c) the consummation of the
transactions contemplated by this Agreement.
4.13 Debt
Schedule 4.13-U is a complete list of all Debt of all (a)
indebtedness for borrowed money, (b) all indebtedness for the
deferred purchase price of property or services, (c) all
obligations evidenced by notes, bonds, debentures or other
similar instruments (other than performance, surety and appeal
bonds arising in the ordinary course of such Person's business),
and all indebtedness secured by mortgage or other Liens against
any of such Person's property or other assets, (d) all
indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired
by such Person, (e) all obligations under capital leases (as such
term is defined by GAAP), (f) all reimbursement, payment or
similar obligations contingent or otherwise, under acceptance,
letter of credit or similar facilities, (g) any obligations of
any of the foregoing kinds of any other Person which is
guaranteed directly or indirectly by such Person or in effect
guaranteed directly or indirectly by such Person, including,
without limitation, through an agreement (i) to pay or purchase
such Debt or to advance or supply funds for the payment or
purchase thereof, (ii) to purchase, sell or lease property or
services primarily for the purpose of enabling the debtor to make
payment of such Debt, (iii) to supply funds to or in any other
manner invest in the debtor (including any obligation to pay for
goods or services whether or not received) or (iv) otherwise to
insure a creditor against loss in respect of such Debt, and
(h) any Debt of any type of any other Person secured by any Lien
on any property or assets of such Person, but excluding any
withdrawal liability with respect to any Multiemployer Plan
(defined below).
4.14 Taxes
No Seller is a foreign person within the meaning of Section
1445 of the Internal Revenue Code of 1986, as amended (the
"Code"). Schedule 4.14(a)-U sets forth the tax identification
number and office address within the United States for each
Seller.
(b) Schedule 4.14(b)-U sets forth the name of each Subject
LP which has made an election under Section 754 of the Code at
any time that any Seller or NPI Party or any Affiliate managed or
operated such Subject LP or owned any general partnership
interest therein or, to the knowledge of Sellers and the NPI
Parties, prior to such time.
(c) Each Subject LP is, since its formation has been and at
the Closing will be a partnership for federal income tax purposes
qualifying under Section 7701 of the Code and, except for the
Subject LPs listed on Schedule 4.14(c)-U, does not constitute a
publicly traded partnership within the meaning of Section 7704 of
the Code.
4.15 Material Agreements; Management Agreements
(a) Schedule 4.15(a)-U lists all agreements to which Sellers are
parties or the Units are subject and lists all agreements to which the
Subject LPs or any Person or Property directly or indirectly owned or
controlled by them are parties or to which any of the respective assets
of the Subject LPs or any such Person or Properties are subject (i) that
cannot be cancelled without penalty within 90 days or (ii) as to which
provision for payments or expenses thereunder are not included in the
Subject LP Budgets (all of such agreements on Schedule 4.15(a)-u, collectively
the "Material Agreements"). Sellers have made available to Buyer true,
complete and correct copies of each such Material Agreement. All of such
agreements are in full force and effect and no party is in payment default
or any other default thereunder except for immaterial defaults.
(b) Schedule 4.15(b)-U is a list of all Existing Agreements
and arrangements of every kind relating to the management of any
of the Properties or under which any Subject LP pays any
management fees or commissions (the "Scheduled Management
Agreements") and identifies the Property subject to such
agreement. Sellers have made available true and complete copies
any Subject LP pays any management fees or commissions
(the "Scheduled Management Agreements") and identifies the
Property subject to such agreement. Sellers have made available
true and complete copies of all such management agreements to Buyer.
On the date hereof, each such management agreement is in full force
and effect and no default has occurred thereunder. Except for the
Scheduled Management Agreements, there are no property management
agreements or asset management agreements or any other
arrangements (i) under which any Seller or Subject LP is the
property manager or asset manager of any Property, (ii) under
which any Person is the property manager or asset manager of any
Property or any Subject LP pays any management fees or
commissions or (iii) which relates to any Subject LP providing or
receiving management, administrative or bookkeeping services, or
any services that contribute income to any Subject LP.
(c) At the Closing, each of the agreements attached hereto
as Exhibit B, Exhibit C, Exhibit D and Exhibit E will be in full
force and effect and enforceable against each of the parties
thereto in accordance with their respective terms, and none of
such agreements will have been amended or modified without the
prior written consent of the Buyer.
4.16 Master Indemnity Agreement
Each of Sellers and the NPI Parties represents and
warrants that it has consulted with its advisors and counsel with
respect to its obligations under the Master Indemnity Agreement
of even date among the Buying Group, Riverside and the Selling
Group, as such terms are defined therein (the "Master Indemnity
Agreement"), and the adequacy of the consideration that it has
received with respect thereto; and that such consideration is in
all respects adequate and the value thereof is not less than the
value of its obligations under the Master Indemnity Agreement.
4.17 Environmental Matters
(a) Except as disclosed on Schedule 4.17(a)-U, all of the
current and past use and operations by or of any of Sellers or
the NPI Parties, or any of their Affiliates or any of the Subject
LPs (at any time that any Seller or NPI Party or Affiliate
thereof managed or operated such Subject LP or owned any general
partnership interest therein) or, to the knowledge of Sellers and
the NPI Parties, any tenant, lessee or other Person at or from
any real property presently or formerly directly or indirectly
owned, used, leased, occupied, managed or operated by any of the
Subject LPs (at any time that any Seller or NPI Party or any
Affiliate thereof managed or operated such Subject LP or owned
any general partnership interest therein) (the "Real Property")
comply and have complied with all applicable Environmental Laws
(defined below). None of Sellers or the NPI Parties or any of
their Affiliates and none of the Subject LPs (at any time that
any Seller or NPI Party or any Affiliate thereof managed or
operated any such Subject LP or owned any general partnership
interest therein), nor, to the knowledge of Sellers or the NPI
Parties, any Subject LP (at any time that none of Sellers or the
NPI Parties or any Affiliate thereof managed or operated any such
Subject LP or owned any general partnership interest therein) or
any tenant, lessee or other Person, has engaged in, authorized,
allowed or permitted any operations or activities upon any of the
Real Property for the purpose of or in any way involving the
handling, manufacture, treatment, processing, storage, use,
generation, release, discharge, emission, dumping or disposal of
any Hazardous Substances (defined below) at, on or under the Real
Property, except in compliance with all applicable Environmental
Laws.
(b) Except as disclosed on Schedule 4.17(b)-U, (i) none of
Sellers or the NPI Parties and none of the Subject LPs (at any
time that any Seller or NPI Party or any Affiliate thereof
managed or operated such Subject LP or owned any general
partnership interest therein) or, to the knowledge of Sellers and
the NPI Parties (based on facts known to any of the Sellers or
the NPI Parties), any tenant, lessee or other Person, or any
Subject LP (at any time that none of Sellers or the NPI Parties
or any Affiliate thereof managed or operated any Subject LP or
owned any general partnership interest therein) has been or is
involved in activities at or related to any portion of any Real
Property directly or indirectly owned or managed by any of
Sellers, the NPI Parties or the Subject LPs which activities
could reasonably be expected to lead to (A) the imposition of any
liability on any of Sellers, the NPI Parties or the Subject LPs
under any Environmental Law, or on any subsequent or former owner
or operator of any portion of any such Real Property, or (B) the
creation of a Lien with respect to any liability on any portion
of any such Real Property under any Environmental Law; and
(ii) to the knowledge of Sellers and the NPI Parties, based on
the facts known to Sellers or the NPI Parties, no activity by any
tenant, lessee or other occupant of any portion of any Real
Property could reasonably be expected to result in a claim or
liability under any Environmental Law on such tenant or occupant,
on any of Sellers, the NPI Parties or the Subject LPs or on any
other subsequent or former owner or operator of any portion of
such Real Property.
(c) Except as disclosed on Schedule 4.17(c)-U, to the
knowledge of Sellers and the NPI Parties, the Real Property does
not contain any Hazardous Substances in, on, over, under or at
the Real Property in concentrations which would presently violate
Environmental Laws or impose liability or obligations on the
present or former owner or operator of the Real Property under
the Environmental Laws for any investigation, corrective action,
remediation or monitoring of Hazardous Substances in, on, over,
under or at the Real Property. To the knowledge of Sellers and
the NPI Parties, none of the Real Property is listed or proposed
for listing on the National Priorities List pursuant to the
Comprehensive Environmental Response, Compensation and Liability
Act, as amended, 42 U.S.C. 9601 et seq., or any similar
inventory of sites requiring investigation or remediation
maintained by any state. None of the Sellers or NPI Parties and
none of the Subject LPs (at any time that any Seller or NPI Party
or any Affiliate managed or operated any Subject LP for or owned
any general partnership interest therein) has received any
notice, whether oral or written, from any governmental entity or
third party of any actual or threatened Environmental Liabilities
(defined below) with respect to the Real Property or the conduct
of the business of any of the Sellers, NPI Parties or Subject
LPs.
(d) Except as set forth in Schedule 4.17(d)-U and except
for non-friable asbestos in ceiling and linoleum tiles, to the
knowledge of Sellers and the NPI Parties, there are no
underground storage tanks, asbestos or asbestos containing
materials, polychlorinated biphenyls, urea formaldehyde, or other
Hazardous Substances (other than small quantities of Hazardous
Substances stored and maintained in accordance with all
applicable Environmental Laws for use in the ordinary course of
the business of the Subject LPs) in, on, over, under or at any
presently owned or operated Real Property.
(e) To the knowledge of Sellers and the NPI Parties, there
are no conditions existing at any Real Property that require, or
which with the giving of notice or the passage of time or both
may require remedial or corrective action, removal or closure
pursuant to the Environmental Laws other than the implementation
of customary operation and maintenance programs with respect to
asbestos of the type commonly known as "O&M" programs.
(f) Each of Sellers, the NPI Parties and Subject LPs has
all the material permits, authorizations and approvals necessary
for the conduct of its business and for the operations on, in or
at the Real Property which are required under applicable
Environmental Laws and is in material compliance with the terms
and conditions of all such permits, authorizations and approvals,
and is capable of continued operation in compliance with
Environmental Laws. Schedule 4.17(f)-U contains a list of all
such required permits, authorization and approvals.
(g) Sellers and the NPI Parties have provided to Buyer all
environmental reports, assessments, audits, studies,
investigations, data and other written environmental information
in their custody, possession or control concerning the Real
Property.
(h) Except as disclosed on Schedule 4.17(h)-U, none of the
Sellers or the NPI Parties has any reason to believe, based on
facts known to Sellers or the NPI Parties, that any of Sellers,
the NPI Parties or Subject LPs may become subject to any
Environmental Liabilities.
(i) As used in this Agreement, the term "Environment" means
any surface or subsurface physical medium or natural resource,
including, air, land, soil, surface waters, ground waters, stream
and river sediments, and biota; the term "Environmental Laws"
means any federal, state, local or common law, rule, regulation,
ordinance, code, order or judgment (including the common law and
any judicial or administrative interpretations, guidances,
directives, policy statements or opinions) relating to the injury
to, or the pollution or protection of human health and safety or
the Environment; the term "Environmental Liabilities" means any
claims, judgments, damages (including punitive damages), losses,
penalties, fines, liabilities, encumbrances, liens, violations,
costs and expenses (including attorneys and consultants fees) of
investigation, remediation or defense of any matter relating to
human health, safety or the Environment of whatever kind or
nature by any party hereto or any of its Affiliates, any Subject
LP, entity, any governmental regulatory authority or any other
Person (i) which are incurred as a result of (A) the existence of
Hazardous Substances in, on, under, at or emanating from any real
property presently or formerly owned or operated by any of
Sellers, the NPI Parties or Subject LPs or any Affiliates thereof
or (B) the offsite transportation, treatment, storage or disposal
of Hazardous Substances generated by any of Sellers, the NPI
Parties or Subject LPs or any third-party customers of any
thereof or (C) the violation of any Environmental Laws or (ii)
which arise under the Environmental Laws; the term "Hazardous
Substances" means petroleum, petroleum products, petroleum-
derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead based paint, urea formaldehyde,
asbestos or any materials containing asbestos, and any materials
or substances regulated or defined as or included in the
definition of "hazardous substances," "hazardous materials,"
"hazardous constituents," "toxic substances," "pollutants,"
"pollutants," "contaminants" or any similar denomination intended
to classify substances by reason of toxicity, carcinogenicity,
ignitability, corrosivity or reactivity under any Environmental
Law. All references in this Section to any of Sellers, the NPI
Parties or Subject LPs shall include all predecessors thereto and
any Person the liabilities of which pursuant to the Environmental
Laws, contractually, by common law or by operation of law, any of
them may have succeeded to.
4.18 Investment Company
None of Sellers, the NPI Parties or Subject LPs is an
"investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of
1940, as amended.
4.19 Employees
All of the executive employees of any of Sellers and
the Subject LPs on the date of this Agreement are listed on
Schedule 4.19.1-U (the "Executive Employees") together with a
list of any employment, compensation, severance or termination
agreements or arrangements to which any of Sellers or the Subject
LPs is a party (the "Employment Agreements"). No other employee
of any of them has any employment agreement, written or oral, and
each such other employee is an employee at will. Other than the
Executive Employees and the other employees listed on Schedule
4.19.2-U (collectively, the "Corporate Employees"), the entire
compensation costs of all other employees of Sellers and the
Subject LPs (the "Reimbursable Employees") are reimbursable under
the Management Agreements with respect to the Properties for
which they work or the limited partnership agreement of the
Subject LP which owns the Property at which they work. Between
the date hereof and the Closing Date, the compensation of the
Reimbursable Employees shall be changed only in the ordinary
course of business consistent with past practice, and no change
shall be made in the compensation of Corporate Employees except
for the payment of one-time bonuses or severance payments in
connection with the consummation of the transactions contemplated
by this Agreement and the Other Agreements. Prior to the
Closing, Sellers and the NPI Parties shall have terminated the
Employment Agreements, shall have obtained the resignation of
each of the Executive Employees effective immediately prior to
the Closing, shall have obtained a general release from each of
the Executive Employees in the form of Exhibit H, and shall have
terminated each of the Corporate Employees. On the Closing Date,
Sellers and the Subject LPs have no liability under or arising
out of any employment compensation, severance or termination
agreements or arrangements with the Executive Employees, the
Corporate Employees or any other employee of any of them or the
termination thereof as contemplated by this Section. On the
Closing Date, the NPI Parties will have paid or provided for, and
no Buyer or Subject LP will be liable for, any severance payment
due as of the Closing Date to any employee of Sellers or the
Subject LPs upon termination of employment, with or without
cause.
Except as set forth on Schedule 4.19.3-U, none of the
Sellers or (at any time since January 1, 1993 or, to the
knowledge of Sellers and the NPI Parties, prior to such date) the
Subject LPs is currently or has ever been a party to or otherwise
bound by and none of its employees is covered by any collective
bargaining agreement or other employment agreement or arrangement
(whether or not legally binding), and none of its employees are
represented by any union. Sellers have given Buyer true,
complete and correct copies of each agreement listed on Schedule
4.19.3-U.
Each of the Sellers and Subject LPs have paid in full
to their employees all wages, salaries, commissions, bonuses and
other direct compensation for all services performed by them,
other than amounts that have not yet become payable in accordance
with such employer's customary practices. None of the Sellers or
Subject LPs is or will as a result of any transactions on or
prior to the Closing Date or contemplated by this Agreement be or
become liable for any severance pay or other payments on account
of termination of any present or former employee. Except as set
forth on Schedule 4.19.4-U, each of the Sellers and Subject LPs
(a) is in compliance in all material respects with all applicable
laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not and has
not engaged in any unfair labor practice, (b) is not the subject
of any pending or threatened unfair labor practice complaint
before the National Labor Relations Board, (c) is not the subject
of any labor strike, dispute, slowdown or stoppage pending or
threatened against or affecting it, (d) is not and has not been
the subject of any representation question respecting its
employees, (e) has not experienced any strike, work stoppage or
other labor difficulty since its formation, and (f) is not
currently negotiating any collective bargaining agreement
relating to any of its employees.
4.20 Employee Benefits
(a) Schedule 4.20(a)-U contains a true and complete list of
all "employee benefit plans," within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and any other bonus, profit sharing,
compensation, pension, severance, deferred compensation, fringe
benefit, insurance, welfare, medical, post-retirement health or
welfare benefit, medical reimbursement, health, life, stock
option, stock purchase, tuition refund, service award, company
car, scholarship, relocation, disability, accident, sick pay,
sick leave, vacation, termination, individual employment,
executive compensation, incentive, bonus, commission, payroll
practices, retention or other plan, agreement, policy, trust fund
or arrangement, maintained, sponsored or contributed to by any of
the Sellers, NPI Parties, Subject LPs or any entity that would be
deemed a "single employer" with any of the Sellers, NPI Parties
or Subject LPs under Section 414(b), (c), (m) or (o) of the Code
or Section 4001 of ERISA (an "ERISA Affiliate") on behalf of any
employee of any of the Sellers, NPI Parties, or Subject LPs
(whether current, former or retired) or their beneficiaries or
with respect to which any of the Sellers, NPI Parties, Subject
LPs or any ERISA Affiliate has or has had any obligation on
behalf of any such employee or beneficiary (each a "Plan" and,
collectively, the "Plans") together with a description of the
funding mechanism for each such Plan. With respect to each Plan
(other than Multiemployer Plans) and, to the extent available to
Sellers, NPI Parties or Subject LPs after using their reasonable
efforts, with respect to each Multiemployer Plan, true and
complete copies of the documents embodying and relating to the
Plan have been delivered to Buyer.
(b) Except as set forth on Schedule 4.20(b)-U, none of the
ERISA Affiliates, nor any of the Sellers, NPI Parties, Subject
LPs or any of their respective predecessors has ever contributed
to or contributes to, or otherwise participated in or
participates in on behalf of employees of any of the Sellers, NPI
Parties, Subject LPs or any ERISA Affiliate any "multiemployer
plan" (within the meaning of Section 4001(a)(3) of ERISA or
Section 414(f) of the Code) ("Multiemployer Plan") or any single
employer pension plan (within the meaning of Section 4001(a)(15)
of ERISA) which is subject to Section 4063 and 4064 of ERISA
("Multiple Employer Plan").
With respect to each Multiemployer Plan and Multiple
Employer Plan:
(i) none of the Sellers, NPI Parties, Subject LPs or ERISA
Affiliates has incurred (or has any reason to believe it has
incurred) any withdrawal liability; no event has occurred which
with the giving of notice would result in such liability under
Section 4201 of ERISA as a result of a complete withdrawal
(within the meaning of Section 4203 of ERISA) or a partial
withdrawal (within the meaning of Section 4205 of ERISA); nor has
any of the Sellers, NPI Parties, Subject LPs or ERISA Affiliates
received any notice of any claim or demand for complete
withdrawal liability or partial withdrawal liability;
(ii) none of the Sellers, NPI Parties, Subject LPs or, to
the knowledge of Sellers and the NPI Parties, ERISA Affiliates,
has received any notice that any Multiemployer Plan is in
"reorganization" (within the meaning of Section 4241 of ERISA),
that increased contributions may be required to avoid a reduction
in plan benefits or the imposition of an excise tax, or that the
Multiemployer Plan is or may become "insolvent" (within the
meaning of Section 4241 of ERISA);
(iii) each of the Sellers, NPI Parties, Subject LPs and
ERISA Affiliates have timely made any required contributions or
payments to any Multiemployer Plan and to any Multiple Employer
Plan;
(iv) to the knowledge of Sellers and the NPI Parties, no
Multiemployer Plan is a party to any pending merger or asset or
liability transfer under Part 2 of Subtitle E of Title IV of
ERISA;
(v) to the knowledge of Sellers and the NPI Parties, the
Pension Benefit Guaranty Corporation (the "PBGC") has not
instituted proceedings against such Multiemployer Plan or
Multiple Employer Plan;
(vi) there is no contingent liability for withdrawal
liability by reason of a sale of assets pursuant to Section 4204
of ERISA;
(vii) except as set forth on Schedule 4.20(b)-U, if any of
the Sellers, NPI Parties, Subject LPs or ERISA Affiliates were to
have a complete or partial withdrawal as of the Closing, no
obligation to pay withdrawal liability would exist on the part of
any of the Sellers, NPI Parties, Subject LPs or any ERISA
Affiliate with respect to any of the Multiemployer Plans;
(viii) if any of the Sellers, NPI Parties, Subject LPs or
ERISA Affiliates were to have a complete or partial withdrawal as
of the Closing, the withdrawal liability of the Sellers, NPI
Parties, Subject LPs and ERISA Affiliates, as of the Closing
Date, would not exceed $100,000 with respect to all Multiemployer
Plans in the aggregate;
(ix) with respect to each Multiple Employer Plan, none of
the Sellers, NPI Parties, Subject LPs or ERISA Affiliates has
withdrawn during a plan year in which it was a "substantial
employer" (within the meaning of Section 4001(a)(2) of ERISA);
and
(x) none of the Sellers, NPI Parties, Subject LPs or ERISA
Affiliates has incurred any liability to the PBGC including,
without limitation, under Section 4063 or 4064 of ERISA.
(c) Each of the Sellers, NPI Parties, Subject LPs, and each
ERISA Affiliate, each Plan and each "plan sponsor" (within the
meaning of Section 3(16) of ERISA) of each "welfare benefit plan"
(within the meaning of Section 3(1) of ERISA) has complied in all
material respects with the requirements of Section 4980B of the
Code and Title I, Subtitle B, Part 6 of ERISA. None of the ERISA
Affiliates, nor any of the Sellers, NPI Parties, or Subject LPs
(or any of their respective predecessors) has ever contributed to
or contributes to, or has participated in or participates in on
behalf of employees of any of the Sellers, NPI Parties, Subject
LPs or ERISA Affiliates, any plan subject to Title IV of ERISA or
Section 412 of ERISA, other than the Multiemployer Plans.
(d) With respect to each of the Plans on Schedule 4.20(a)-U
(other than Multiemployer Plans):
(i) each Plan intended to qualify under Section 401(a) of
the Code has been qualified since its inception and has received
a determination letter from the Internal Revenue Service (the
"IRS") (except for the qualified Plan subject to Section 401(k)
of the Code listed on Schedule 4.20(d)-U which has applied for
such a determination letter) to the effect that the Plan is
qualified under Section 401 of the Code and any trust maintained
pursuant thereto is exempt from federal income taxation under
Section 501 of the Code and nothing has occurred or will occur
through the date of the Closing that caused or could cause the
loss of such qualification or exemption or the imposition of any
penalty or tax liability; each of Sellers, the NPI Parties and
Subject LPs, or ERISA Affiliates, as the case may be, has
applied, or prior to the end of the remedial amendment period, as
defined under Treasury Regulation Section 1.401(b) and as
modified by IRS pronouncements, will apply, for a determination
letter from the IRS pursuant to Revenue Procedure 93-39, for each
Plan intended to qualify under Section 401(a) of the Code
(including the qualified Plan listed subject to Section 401(k) of
the Code on Schedule 4.20(d)-U);
(ii) all payments required by any Plan, any collective
bargaining agreement or by law (including all contributions,
insurance premiums or intercompany charges) with respect to all
periods through the date of the Closing shall have been made
prior to the Closing (on a pro rata basis where such payments are
otherwise discretionary at year end) or provided for by each of
the Sellers, NPI Parties and Subject LPs, as applicable, by full
accruals as if all targets required by such Plan had been or will
be met at maximum levels on its financial statements;
(iii) no claim, lawsuit, arbitration or other action (other
than nonmaterial routine claims for benefits) has been
threatened, asserted, instituted or, to the knowledge of Sellers
and the NPI Parties, anticipated against the Plans, any trustee
or fiduciaries thereof, any of the Sellers, NPI Parties or
Subject LPs, or any ERISA Affiliate, any director, officer or
employee thereof, or any of the assets of any trust or the Plans;
(iv) each Plan complies in all material respects and
has been maintained and operated in all material respects in
accordance with its terms and the terms and the provisions of
applicable law, including, without limitation, ERISA and the
Code;
(v) no"prohibited transaction," within the meaning of
Section 4975 of the Code and Section 406 of ERISA, has occurred
or is expected to occur with respect to each Plan, other than
transactions with respect to which an administrative or statutory
exemption is available under the Code and ERISA.
(vi) to the knowledge of Sellers and the NPI Parties, no
Plan is under audit or investigation by the IRS or the U.S.
Department of Labor or any other governmental authority; no such
completed audit, if any, has resulted in the imposition of any
tax or penalty;
(vii) each Plan intended to qualify for tax-favored
treatment under Sections 79, 106, 117, 120, 125, 127, 129 or 132
of the Code satisfies in all material respects the applicable
requirements under the Code; and
(viii) with respect to each Plan that is funded mostly or
partially through an insurance policy, none of Sellers, the NPI
Parties nor the Subject LPs nor any ERISA Affiliate has any
liability in the nature of retroactive rate adjustment, loss
sharing arrangement or other actual or contingent liability
arising wholly or partially out of events occurring on or before
the Closing.
(e) Except as set forth on Schedule 4.20(e)-U, the
consummation of the transactions contemplated by this Agreement
will not give rise to any liability, including, without
limitation, liability for severance pay, unemployment
compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount
of compensation or benefits due to any current, former, or
retired employee or their beneficiaries solely by reason of such
transactions. No amounts payable under any Plan will fail to be
deductible for federal income tax purposes by virtue of Section
280G of the Code.
(f) None of the Sellers, the NPI Parties nor the Subject
LPs maintains, contributes to, or in any way provides for any
benefits of any kind whatsoever (other than as may be required
under Section 4980B of the Code, Sections 601 through 608 of
ERISA, the Federal Social Security Act or a plan intended to
qualify under Section 401(a) of the Code) to any current or
future retiree or terminee.
(g) Except as expressly required by this Agreement, none of
the Sellers, the NPI Parties nor the Subject LPs nor any ERISA
Affiliate, or any officer or employee thereof, has made any
promises or commitments, to create any additional plan, agreement
or arrangement, or to modify or change any existing Plan.
4.21 Litigation and Claims
Except as set forth on Schedule 4.21-U, there is no
litigation, arbitration, claim, governmental or other proceeding
(formal or informal), or investigation pending, or, to the
knowledge of Sellers and the NPI Parties, threatened, with
respect to any Sellers or Subject LPs, or any of their respective
businesses, properties, or assets, other than relating to routine
landlord-tenant matters, or negligence lawsuits covered by
insurance or vendor claims under $10,000. None of the Sellers or
Subject LPs is: (i) in violation of or in default under any
order, judgment or decree, (ii) in violation of any law, rule, or
regulation, which violation would have a material adverse effect
upon any of Sellers or the Subject LPs, or any of their
respective businesses, properties or assets or (iii) required to
take any action in order to avoid such violation or default. The
litigation listed on Schedule 4.21-U will not prohibit the
consummation of any of the transactions contemplated hereby.
4.22 Intellectual Property
Except as described on Schedule 4.22-U, each of the
Subject LPs owns, or has the contractual right to use, and will
after the Closing own or have the contractual right to use data
processing and management information systems adequate to conduct
all aspects of their respective businesses. There is no right
under any patent, patent application, trademark, trademark
application, trade name, service mark, copyright, franchise, or
other intangible property or asset (all of the foregoing being
hereinafter referred to as "Intangibles") necessary to or used in
the business of the Acquired Companies as presently conducted or
as any of them contemplates conducting, except as set forth on
Schedule 4.22-U. None of the Subject LPs has infringed, is
infringing, or has received notice of infringement asserted with
respect to any Intangibles of others. To the knowledge of
Sellers and the NPI Parties, there are no Intangibles of others
which may materially adversely affect the financial condition,
results of operations, business, properties, assets or
liabilities of any of the Subject LPs.
4.23 Questionable Payments
None of Sellers or the Subject LPs, nor any director,
officer, partner, agent, employee, or other Person associated
with or acting on behalf of any of them has, directly or
indirectly: used any corporate or partnership funds for unlawful
contributions, gifts, entertainment, or other unlawful expenses
relating to political activity; made any unlawful payment to
foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns from corporate
funds; violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; established or maintained any unlawful
or unrecorded fund of corporate monies or other assets; made any
false or fictitious entry on its books or records; made any
bribe, rebate, payoff, influence payment, kickback, or other
unlawful payment; given any favor or gift which is not deductible
for federal income tax purposes; or made any bribe, kickback, or
other payment of a similar or comparable nature, whether lawful
or not, to any Person regardless of form, whether in money,
property, or services, to obtain favorable treatment in securing
business or to obtain special concessions, or to pay for
favorable treatment for business secured or for special
concessions already obtained.
4.24 Intentionally Omitted
4.25 SEC Reports; Tender Offers
Sellers have previously furnished Buyer (or will
simultaneously with its filing with the Securities and Exchange
Commission ("SEC") furnish to Buyer) true and complete copies of
each Schedule 14D-1 and all amendments thereto and other
governmental filings or documents (the "Tender Offer Documents")
relating to each tender offer (the "Tender Offers") for any Units
in the Subject LPs filed since January 1, 1993 by any of Sellers,
the NPI Parties or any of their Affiliates with the SEC or other
governmental agency, and the following reports filed by any of
the Subject LPs with the SEC: Annual Reports on Form 10-K for
each of the fiscal years ended December 31, 1994, 1993, 1992, and
1991, all Quarterly Reports on Form 10-Q and all Current Reports
on Form 8-K filed after December 31, 1994, and all proxy
statements distributed subsequent to December 31, 1991
(collectively, the "SEC Filings"). Each of the Tender Offer
Documents, and each of the SEC Filings did not (and will not), on
the date of filing, contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
All litigation arising out of any of the Tender Offer Documents
have been finally settled pursuant to a final court order, dated
May 19, 1995, and Schedule 4.25-U contains a true, correct and
accurate list of all settlement agreements ("Settlement
Agreements") and court orders entered into in connection with
such final court order (which order is no longer subject to
appeal) (the "Order"), true, correct and complete copies of which
have been delivered to Buyer. All Tender Offers pursuant to the
Tender Offer Documents have been consummated on or prior to the
date of this Agreement in compliance with all applicable laws and
other Legal Requirements (defined below) and Sellers have
performed all of their obligations pursuant to the agreements and
Order listed on Schedule 4.25-U. The recent Tender Offers
commenced pursuant to the Order have been conducted strictly in
accordance with the Settlement Agreements and Order and each of
the Sellers and the NPI Parties has performed all of its
obligations pursuant to the Settlement Agreements and complied
with the Order relating thereto. All press releases and other
publicly released data issued by any Subject LP since
December 31, 1993 were accurate when released.
4.26 Transfers of Units in the Subject LPs
During the period commencing on the date which is one
year prior to the Closing Date and ending on the Closing Date
(after giving effect to the Closing under this Agreement and the
Other Agreements as if they had occurred on the Closing Date), no
Subject LP has transferred limited partnership interests
representing more than 49.9% of the outstanding limited
partnership interests of such Subject LP counting, for purposes
of this Section, only transfers which would be taken into
consideration in determining whether there has been a termination
of the partnership under Section 708(b) of the Code. On the
Closing Date, Sellers shall deliver a Schedule setting forth the
aggregate number of units of limited partnership interest so
transferred during such one-year period for each Subject LP.
4.27 Books and Records; Bank Accounts
(a) The books and records of the Subject LPs are
substantially complete and correct in all material respects, and
the books and records of the general partner of such Subject LPs
contain substantially accurate and complete records of all
material actions taken by the general partners of the Subject LPs
since the date any of Sellers or the NPI Parties first directly
or indirectly acquired any general or limited partnership
interest in each such Subject LP.
(b) Sellers have provided to Buyer accurate lists of all of
the bank and brokerage accounts of each Subject LP and the
authorized signatories for such accounts.
4.28 Fees and Reimbursements
There exists no basis for any claim against any of
Sellers, the NPI Parties or any of their Affiliates in any
material amount relating to any of the fees and reimbursements
paid or payable by any Subject LP to any such Seller, NPI Party
or Affiliate thereof and, on the Closing Date, there will be no
amounts due from any Subject LP (whether or not yet payable) to
any Seller, NPI Party or any of their Affiliates except for any
amounts due and unpaid to NPI-AP from the Subject LPs for
services at the rates provided in the Subject LP Budgets during
the period beginning on a date 45 days prior to the date on which
the Closing occurs and the Closing for management fees and
reimbursement of certain expenses provided for in the respective
partnership agreements, all of which will have been accrued in
accordance with past practice. No material default exists under
any agreement pursuant to which any such fee or reimbursement has
been paid.
4.29 Completeness of Disclosure
No representation or warranty by any of Sellers or the
NPI Parties in this Agreement or any Additional Document (as
defined in the Master Indemnity Agreement) contains, or when
delivered will contain, an untrue statement of a material fact or
omits, or when delivered will omit, to state a material fact
required to be stated therein or necessary, in light of the
circumstances in which such statements are made, to make the
statements made therein not misleading.
4.30 Representations Regarding Real Estate
(a) As used in this Agreement, the following terms have the
following meanings:
"Residential Properties" means the Properties which
consist of residential apartment buildings, all of which are
listed on Schedule 4.30(a)-U.
"Commercial Properties" means the Properties owned by
the Commercial LPs which consist of office buildings, industrial
buildings and shopping centers.
"Existing Documents" means all of the Leases (defined
below), all brokerage agreements relating to payment of Leasing
Commissions (defined below), the Service Contracts (defined
below), the Permitted Exceptions (defined below) and the Loan
Documents (defined below).
"Improvements" means, collectively, all buildings,
structures, structural appurtenances, fixtures, parking areas,
and other improvements of any kind located or to be located on
the Residential Properties.
"Legal Requirements" means all applicable local, state,
or federal laws, municipal ordinances and regulations, orders,
rules and requirements of any federal, state, municipal
department and other governmental authority having jurisdiction
against or affecting the Residential Properties or the
construction, management, ownership, maintenance, operation, use,
improvement, acquisition or sale thereof (including, without
limitation, applicable zoning, building, health and environmental
laws, ordinances, regulations, orders, rules or requirements).
"Permitted Exceptions" means the defects in, exceptions
to, and conditions, Liens, encumbrances and other matters of
record affecting title to the Residential Properties which are
listed in the Title Reports (defined below) set forth on
Schedule 4.30(b.1)-U, including, without limitation, the Loan
Documents.
"Leasing Commissions" means all commissions, fees and
other compensation payable to any real estate broker,
salesperson, finder or any other Person in connection with the
leasing of space at the Improvements.
"Loan Documents" means the mortgages, deeds of trust,
promissory notes, assignments of leases and other documents
executed and delivered in connection with the Existing
Indebtedness (defined below).
"Existing Indebtedness" means Debt which is secured by
mortgage liens or deeds of trust against any of the Properties.
"Service Contracts" means all management, utility and
cable agreements with respect to each of the Residential
Properties or any portion thereof which on the Closing Date will
have a remaining term in excess of one year.
"Leases" means all leases affecting the Residential
Properties on the date hereof, and all amendments, guaranties and
other documents relating thereto.
"Sellers' Knowledge" means with respect to any
representation relating to or affecting the Residential
Properties, the actual knowledge of any individual working for or
employed by Sellers, the NPI Parties or the Scheduled LPs with
the grade of Regional Manager or above, and specifically
including, without limitation, Michael L. Ashner, Martin Lifton,
Arthur N. Queler, Peter Braverman, William Hamilton and Steven
Lifton.
(b) The Scheduled LPs and Commercial LPs have good and
marketable fee title to the Residential Properties, free and
clear of all Liens, except the Permitted Exceptions. The
Commercial Properties and the Residential Properties listed on
Schedule 4.30(a)-U constitute all of the Properties owned by the
Subject LPs. Set forth on Schedule 4.30(b.1)-U is a true,
complete and correct list of the most recent title abstract or
report (whether or not included in a title policy) obtained by
Sellers, the NPI Parties or any of the Subject LPs for each of
the Residential Properties (collectively, the "Title Reports").
Set forth on Schedule 4.30(b.2)-U is a true, complete and correct
list of the title policies for each of the Residential
Properties, which title policies were validly issued and are in
full force and effect. True, complete and correct copies of all
title policies and the Title Reports have been made available to
Buyer. The title premiums payable in connection with issuance of
the title policies listed on Schedule 4.30(b.2)-U have been paid.
No monetary default on the part of any of the Subject LPs exists
under any of the Loan Documents, nor has any notice thereof been
received, and no event has occurred or condition exists which
with the giving of notice, the passage of time, or both would
result in the existence of a monetary default on the part of any
of them under any of the Loan Documents.
(c) Set forth on Schedule 4.30(c.1)-U is a true, complete
and correct list of the Existing Indebtedness. Except for the
Existing Indebtedness, no Subject LP has any Debt. Schedule
4.30(c.1)-U accurately sets forth (i) the name of the current
holder or servicer of each portion of the Existing Indebtedness,
and (ii) the unpaid principal balance of each portion of the
Existing Indebtedness as of the date hereof. There are no
payment defaults under any of the Loan Documents nor, except as
set forth on Schedule 4.30(c.2)-U, any other defaults thereunder
except immaterial defaults. Seller has made available to Buyer
true, accurate and complete copies of all of the Loan Documents.
Prior to Closing, Sellers and the NPI Parties shall use their
reasonable efforts to provide Buyer with the name of each holder
of any portion of the Existing Indebtedness which Sellers and the
NPI Parties cannot currently identify.
(d) Sellers and the NPI Parties shall use their reasonable
efforts to provide true, complete and correct copies of all
Service Contracts to Buyer prior to Closing. Between the date
hereof and the Closing, Sellers and the NPI Parties agree not to
enter into any Service Contract if such agreement would be a
breach of such parties' fiduciary obligations to the Subject LPs.
(e) (i) The rent rolls for the Residential Properties
which have been made available to Buyer are true, complete and
correct as of the date of such rent roll, and accurately reflect
the (A) identity of the tenant, (B) unit leased, (C) monthly
rent, (D) term of the lease, (E) security deposit, if any, and
(F) rental concessions, if any. Sellers and the NPI Parties
agree that if any of such parties presents a plan to convert any
of the Residential Properties to cooperative or condominium
ownership to the tenants of a Residential Property between the
date hereof and Closing, Buyer shall have the right to terminate
this Agreement without liability to Sellers or the NPI Parties,
in which event the provisions of Section 12.04 hereof shall
apply.
(ii) Each of the Subject LPs is currently performing all of
its material obligations under the Leases; the rents and
additional rents reserved under each of the Leases are legal
rents and no claim to the contrary has been asserted by any of
the lessees thereunder; Sellers have made available to Buyer
true, accurate and complete Delinquency Reports as of June 30,
1995 setting forth all amounts which are past due by thirty (30)
days or more by any tenant of the Residential Properties; none of
Sellers, the NPI Parties or Subject LPs have assigned any of
their rights under the Leases except to the holders of the
Existing Indebtedness; no representation or covenant has been
made by any of Sellers, the NPI Parties or Subject LPs to any of
the lessees under the Leases except as incorporated in their
respective leases; all representations made by the lessors under
the Leases are true and correct in all material respects. To
Sellers' Knowledge, there are no rent strikes being asserted by
tenants of any of the Residential Properties.
(f) (i) Except as set forth on Schedule 4.30(f.1)-U and
except pursuant to the Leases, no Person has any possessory
interest in any portion of the Residential Properties or any
other rights with regard to the use thereof or any rights to
acquire or to lease the Residential Properties or participate in
any rents or profits of the Residential Properties, including,
without limitation, any renewals or extension options, or any
part thereof, or otherwise obtain any interest therein and there
are no outstanding rights of first refusal, rights of reverter or
rights of first offer relating to the Properties or any interest
therein.
(ii) There are no Leasing Commissions which are or will be
payable to any Person with respect to, or on account of the
Leases, except those which are disclosed in the SEC Filings for
the Subject LPs or the operating statements of the Subject LPs
which have been made available to Buyer or due upon exercise of
options in or renewals of existing leases for periods beyond the
minimum term of the lease; true, complete and correct copies of
any brokerage agreements evidencing an obligation to pay any
Leasing Commissions have been made available to Buyer.
(g) Until the Closing, Sellers and the NPI Parties shall
cause the Residential Properties to be kept in good repair and
condition (ordinary wear and tear excepted), and use all
reasonable efforts (i) to preserve the good will of Persons
having associations, dealings or relations with the Residential
Properties, (ii) to comply in all material respects with all
Legal Requirements and with all terms, conditions and provisions
of all Existing Documents, (iii) to suffer no payment default
thereunder or other default except immaterial defaults and to
promptly notify Buyer of the receipt or delivery of any written
notice from any party to an Existing Document (other than Leases)
alleging a breach or default thereunder, and (iv) to operate,
manage and maintain the Residential Properties in the same manner
as they have been operated prior to the date hereof. None of
Sellers or the NPI Parties shall permit the removal from any of
the Residential Properties of any personal property, fixtures or
equipment, except in the ordinary course of business.
(h) To Sellers' Knowledge (i) the Residential Properties
and the present use and condition thereof do not violate any
applicable deed restriction or other covenants, restrictions or
agreements, site plan approvals, zoning or subdivision
regulations or urban redevelopment plans applicable to the
Residential Properties and (ii) each of the Residential
Properties has the right of ingress to and egress from a public
street.
(i) All water, sewer, gas, electricity, telephone and other
utilities serving the Residential Properties are supplied
directly to the Residential Properties by facilities of public
and private utilities and the cost of installation of such
utilities have been fully paid for or the annual cost of such
installation is included in the applicable Subject LP Budget.
(j) To Sellers' Knowledge, no federal, state or local
governmental authority has plans to change the highway or road
system in the vicinity of any of the Residential Properties or to
restrict or change access from any such highway or road to the
Residential Properties.
(k) Sellers and the NPI Parties shall make available to
Buyer all certificates of occupancy, permits and other
certificates (the "Improvement Certificates") affecting the
Improvements which are in the possession of such parties.
Sellers and the NPI Parties shall use all reasonable efforts to
obtain all Improvement Certificates affecting the Improvements
which are not in such parties' possession, prior to Closing.
(l) True, complete and correct copies of all existing
insurance policies covering the Properties have been made
available to Buyer. The hazard insurance policies with respect
to each of the Residential Properties are in amounts not less
than the full replacement value of the Improvements. All such
policies are in material compliance with, and fulfill all of the
insurance obligations under, the Existing Documents. Sellers and
the NPI Parties shall cause to be maintained in full force and
effect all insurance policies relating to the Properties between
the date hereof and the Closing. No default exists under any
such insurance policy and no circumstances or state of affairs
exists which with notice, lapse of time, or both would result in
the existence of a default under any such insurance policy. None
of Sellers, the NPI Parties or Subject LPs has received any
notice of cancellation of any such policy.
(m) None of Sellers, the NPI Parties or Subject LPs has
received any written notice or, to Sellers' Knowledge, is aware
of (i) any violation of any applicable Legal Requirements whether
or not officially noted or issued, or (ii) any condition relating
to the Properties which, to Sellers' Knowledge, would constitute
a violation.
(n) To Sellers' Knowledge, there is no (i) pending or
contemplated annexation or condemnation proceeding affecting or
which may affect all or any portion of any of the Residential
Properties, (ii) proposed or pending proceeding to change or
redefine the zoning classification of all or any portion of any
of the Residential Properties or (iii) proposed change in road
patterns or grades which may adversely affect access to any roads
providing a means of ingress to or egress from the Residential
Properties. No written notice has been issued with respect to
any, and to Sellers' Knowledge there is no pending or
contemplated change in any Legal Requirement which may adversely
affect the use, ownership, management or operation of any of the
Properties.
(o) Except as set forth on Schedule 4.30(o.1)-U, and for
any matters covered by insurance which are not material in
nature, routine landlord-tenant matters or vendor claims under
$10,000, there is no action, suit, proceeding, written claim,
order, decree or judgment against any of Sellers, the NPI Parties
or Subject LPs or the Properties, or any portion thereof, or
relating to or arising out of the ownership, management,
operation, use or occupancy of the Properties, pending or being
prosecuted in any court or by or before any federal, state,
county or municipal department, commission, board, bureau or
agency or other governmental instrumentality nor is any such
action, suit, proceeding, written claim, order, decree or
judgment, to Sellers' Knowledge threatened or actually being
asserted. Except as set forth on Schedule 4.30(o.2)-U, none of
Sellers, the NPI Parties or Subject LPs is a party to or subject
to any judgment, writ, decree, injunction or order enjoining or
restraining it from conducting any business in respect of the
Properties.
(p) There have not been any fires or other casualties since
March 31, 1995 for which there does not exist sufficient
insurance proceeds to repair the damage caused by such fire or
other casualty to substantially the same condition as existed
prior to such casualty.
4.31 HUD Consents
Sellers and the NPI Parties know of no reason why the
approvals of HUD (defined below) referred to in Section 6.04
cannot be obtained on or prior to the Closing Date, except for
administrative delays occasioned by HUD and the fact that HUD is
currently giving close reviews to companies which have purchased
other companies with interests in HUD subsidized housing using
deferred purchase price payments.
4.32 Solvency
For purposes of applicable federal and state laws
governing determinations of the insolvency of debtors, or
relating to fraudulent conveyance, or otherwise with respect to
creditors' rights, or similar judicial doctrines: on the Closing
Date after giving effect to the transactions contemplated hereby,
(i) the amount of the "present fair saleable value" of the assets
of each of Sellers and the NPI Parties will, as of such date,
exceed the amount of all "liabilities of such Person, contingent
or otherwise", as of such date, as such quoted terms are
determined in accordance with such laws and doctrines, (ii) the
present fair saleable value of the assets of each of Sellers and
the NPI Parties will, as of such date, be greater than the amount
that will be required to pay such Person's liability on its debts
(defined below) as such debts become absolute and matured,
(iii) none of Sellers or the NPI Parties will have, as of such
date, an unreasonably small amount of capital with which to
conduct its business, (iv) each of Sellers and the NPI Parties
will be able to pay its debts as they mature and (v) the
consideration to be received by each Seller hereunder for the
assets to be sold by such Seller hereunder is not less than the
"present fair saleable value" of such assets. For purposes of
this Section 4.31, "debt" means "liability on a claim", "claim"
means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, and (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to
payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured,
disputed or undisputed, secured or unsecured.
4.33 Absence of Inducement
In entering into this Agreement, none of Sellers or the
NPI Parties has been induced by, or relied upon, any
representations, warranties or statements by Buyer not set forth
or referred to in this Agreement or the Additional Documents,
whether or not such representations, warranties or statement have
actually been made, in writing or orally, and each of the Sellers
and the NPI Parties acknowledges that, in entering into this
Agreement, Buyer has been induced by and relied upon the
representations and warranties of the Sellers and the NPI Parties
herein or therein set forth.
4.34 No Knowledge of Breach
None of Sellers or the NPI Parties has any knowledge on
the date hereof of any fact or circumstances which would cause
any representation or warranty of Buyer in this Agreement or the
Additional Documents to be misleading or incorrect in any respect
or is aware of any statement which was omitted from any such
representation or warranty which is necessary to make the
statements made in any such representation or warranty not
misleading.
V. Representations and Warranties of Buyer
Buyer represents and warrants to Sellers as of the date
hereof and agrees with Sellers as follows:
5.01 Organization
Insignia is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Delaware, and Insignia LLC is a limited liability company duly
organized and validly existing under the laws of the State of
Delaware, each with all requisite power and authority to own,
lease, license, and use its properties and assets and to carry on
the business in which it is now engaged and the business in which
it contemplates engaging. On the date hereof, Insignia LLC is
wholly owned, directly or indirectly, by Insignia; however, no
representation is made as to the ownership of Insignia LLC as of
the Closing Date, except that it will be an Affiliate of
Insignia.
5.02 Authority
Insignia and Insignia LLC each has all requisite power
and authority to execute, deliver, and perform this Agreement.
All necessary corporate and limited liability company proceedings
of Insignia and Insignia LLC have been duly taken to authorize
the execution, delivery, and performance of this Agreement by
Buyer and the issuance of the Insignia Common Stock. This
Agreement has been and the other documents required to be
delivered by Buyer hereby have been (or when delivered will be)
duly authorized, executed, and delivered by Buyer, and constitute
or will constitute the legal, valid, and binding obligation of
Insignia and Insignia LLC, enforceable as to each of them in
accordance with their terms.
5.03 Conflicts or Defaults; No Violations
Neither the execution, delivery or performance of this
Agreement by Buyer nor the consummation of the transactions
contemplated hereby will (with or without the giving of notice,
lapse of time or both): (a) contravene any provisions of any law,
statute, rule or regulation or any order, writ, judgment,
injunction or decree of any court or governmental
instrumentality; or (b) except as set forth on Schedule 5.03-U
conflict with or result in any breach of, or constitute a default
under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of the property
or assets of any of Insignia or Insignia LLC pursuant to the
terms of any note, bond, indenture, mortgage, deed of trust, loan
agreement, credit agreement, lease, franchise, or any other
agreement, contract or instrument to which either of them is a
party or to which any of their respective properties or assets is
subject; or (c) violate any provision of their respective
Organizational Documents.
5.04 Litigation
There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or
investigation pending, or to the knowledge of Buyer, threatened,
relating to, or seeking to prohibit or otherwise challenge the
consummation of this Agreement or the transactions contemplated
by this Agreement or to obtain substantial damages with respect
thereto.
5.05 Investment Company
Buyer is not an "investment company" or a company
"controlled" by an "investment company," within the meaning of
the Investment Company Act of 1940, as amended.
5.06 Consents
Except the fling under the HSR Act described in Section
6.04, the consent of HUD to the transactions conemplated by this
Agreement and the other Agreements, any filing with respect to
any Organizational Documents of any Person (all of which will be
made prior to Closing), and as may be required under any federal
or state securities laws, no approval or consent of, notice to,
or filing or registration with, or authorization, order, license,
certificate, or permit of or from, any governmental authority or
any other notice to or consent of any third party is required to
be made by Buyer in connection with (a) the execution, delivery
and performance of, (b) the legality, validity, binding effect or
enforceability of or (c) the consummation of the transactions
contemplated by this Agreement.
5.07 HUD Consents
Buyer has no knowledge of any reason why the approvals
of HUD referred to in Section 6.05 cannot be obtained on or prior
to the Closing Date, except for administrative delays by HUD and
the fact that HUD is currently giving close reviews to companies
which have purchased other companies with interests in HUD
subsidized housing using deferred purchase price payments.
5.08 Completeness of Disclosure
No representation or warranty by Buyer in this
Agreement or any Additional Document contains, or when delivered
will contain, an untrue statement of a material fact or omits, or
when delivered will omit, to state a material fact required to be
stated therein or necessary, in light of the circumstances in
which such statements are made, to make the statements made
therein not misleading.
5.09 Absence of Inducement
In entering into this Agreement, Buyer has not been
induced by, or relied upon, any representations, warranties or
statements of any of Sellers or the NPI Parties concerning any
matter not set forth or referred to in this Agreement or the
Additional Documents, whether or not such representations,
warranties or statements have actually been made, in writing or
orally, except that Buyer has relied upon Sellers' and the NPI
Parties' having disclosed to Buyer all information, and provided
to Buyer true, complete and correct copies of all agreements,
documents and data, that Buyer or its Affiliates have requested
in connection with its determination whether to enter into this
Agreement and the Other Agreements. Buyer acknowledges that, in
entering into this Agreement, Seller and the NPI Parties have
been induced by, and relied upon, Buyer's representations and
warranties herein set forth.
5.10 Knowledge of Breach
Buyer has no knowledge on the date hereof of any facts
or circumstances which would cause any representation or warranty
of any of Sellers and the NPI Parties in this Agreement or the
Additional Documents to be misleading or incorrect in any respect
or is aware of any statement which was omitted from any such
representation or warranty which is necessary to make the
statements made in any such representation or warranty not
misleading.
VI. Additional Agreements
6.01 Performance of Covenants, Payment of Debt
(a) Sellers and the NPI Parties each, jointly and
severally, covenants and agrees (i) to perform or cause to be
performed the covenants of any of them under this Agreement, (ii)
to cause the NPI-AP Members, immediately prior to the Closing, to
make the capital contribution required to be made by them under
the Riverside Agreement and (iii) to cause Riverside to perform
its covenants under this Agreement.
(b) Insignia and Insignia LLC each, jointly and severally,
covenants and agrees (i) to perform or cause to be performed the
covenants of either of them under this Agreement, (ii) to cause
the Insignia Member, immediately prior to the Closing, to make
the capital contribution required to be made by it under the
Riverside Agreement and (iii) to cause Riverside to perform its
covenants under this Agreement.
(c) Riverside covenants and agrees to perform its covenants
under this Agreement.
(d) Simultaneous with the sale by Ventures I to Riverside
of the Units of the Commercial LPs, Ventures I shall make
prepayment of the loan to Ventures I under the PaineWebber Debt
in an amount equal to the lesser of (i) the amount of the Debt
outstanding or (ii) the amount of the capital contribution made
by the Insignia Member to Riverside less the amount (subject to
adjustment) of such contribution to be used by Riverside to
acquire Units in the Commercial LPs from QAL and QALA II.
6.02 General
(a) Each of Sellers and the NPI Parties will use all
reasonable efforts and take all reasonable steps, and will
cooperate with Buyer to cause to be fulfilled, those of the
conditions set forth in this Agreement to the parties' respective
obligations to consummate the transactions contemplated by this
Agreement and the Other Agreements that are dependent upon the
actions or inactions of any of Sellers or the NPI Parties, and to
execute and deliver such instruments and take such other
reasonable actions as may be necessary or appropriate in order to
carry out the intent of this Agreement and the Other Agreements
and consummate the transactions contemplated hereby and thereby.
(b) Buyer will use all reasonable efforts and take all
reasonable steps, and will cooperate with Sellers and the NPI
Parties to cause to be fulfilled, those of the conditions set
forth in this Agreement to the parties' respective obligations to
consummate the transactions contemplated by this Agreement and
the Other Agreements that are dependent upon the actions or
inactions of Buyer, and to execute and deliver such instruments
and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement
and the Other Agreements and consummate the transactions
contemplated hereby and thereby.
6.03 Other Agreements
Until the Closing Date, Sellers and the NPI Parties and
their Affiliates will each:
(a) use its reasonable efforts to cause all representations
and warranties made by them hereunder or under the Other
Agreements to be true and correct in all material respects as of
the Closing Date as if made on the Closing Date, except for
changes in the ordinary course of business of the Subject LPs
consistent with past practice; provided, however, that nothing
herein shall require any of such Persons to violate any fiduciary
duty obligation owed to any of the Subject LPs; and
(b) use its reasonable efforts to preserve intact the
business organization and operations of Sellers and the Subject
LPs, to keep available the services of its present officers and
employees, to preserve in full force and effect its contracts,
agreements, instruments, leases, licenses, arrangements, and
understandings, and to preserve the present business
relationships and good will of its suppliers, customers, and
others having business relations with any of them.
6.04 Hart-Scott-Rodino, HUD and Other Regulatory Filings
Promptly, but not later than 45 days following the
execution of this Agreement, Buyer and Sellers and the NPI
Parties shall each file or cause to be filed any Notification and
Report Forms and related material that it may be required to file
with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), in connection with the transactions contemplated by this
Agreement and the Other Agreements and shall each make any
further filings pursuant thereto that may be necessary in
connection therewith. Sellers and the NPI Parties, on the one
hand, and Buyer, on the other, shall each pay one-half of the
filing fees payable in connection with such filings. Within 15
business days following the date hereof, Buyer shall apply to the
U.S. Department of Housing and Urban Development ("HUD") for the
approvals referred to in Section 5.06. Sellers and the NPI
Parties shall also promptly file and cause the Subject LPs to
file with applicable regulatory authorities any other
applications, notices or other documents required to be filed by
any of them (and prosecute diligently any related proceedings) in
order to consummate the transactions contemplated by this
Agreement.
6.05 Consents and Filings
As soon as practicable after the date hereof and before
the Closing, except as set forth on Schedule 6.05-U, Sellers
shall use all reasonable efforts to obtain all consents,
approvals, waivers, or other documents from any third parties,
including any governmental authorities, and make all filings,
registrations and other notifications, as (i) may be required to
consummate the transactions contemplated by this Agreement and
the Other Agreements or (ii) are set forth on Schedule 4.12-U.
6.06 Delivery of Financial Statements Required for SEC
Filings; Statements of Operations
(a) Commencing on the date hereof, Sellers, with respect to
themselves and assets owned by Sellers and the Subject LPs shall,
and the NPI Parties shall cause Sellers to, promptly following
any request from Buyer, timely deliver to Buyer such financial
statements and other financial information, with respect to such
accounting periods, of such of Sellers, the NPI Parties and/or
their Affiliates (including, without limitation, the Subject
LPs), and such Property descriptions, as Insignia and/or its
Affiliates shall require in connection with any filings with the
SEC or any other regulatory authority. Such financial statements
shall contain such information, and be in such form, and shall be
delivered with such reports of certified public accountants
thereon and such consents of such certified public accountants,
if any, as shall be required by the SEC or other regulatory
authority. Buyer shall reimburse Sellers for the incremental
accounting fees of their certified public accountants for
preparing any such information or statements which would not
otherwise have been required to be prepared at any time for any
of the NPI Parties. Buyer shall use its reasonable efforts to
give Sellers as much notice as is practicable of the financial
statements and other financial information it will require and
Sellers and the NPI Parties shall use their best efforts to
deliver requested statements and information in the form and at
the time required.
(b) At least seven days prior to the Closing, Sellers and
the NPI Parties shall deliver for each of the Subject LPs an
unaudited Statement of Operations for each of the Subject LPs and
for each of the Residential Properties for the year ending as of
December 31, 1995, in the form customarily generated by the NPI
Parties in the ordinary course of business and consistent with
the Statements of Operations for earlier periods previously
delivered to Buyer (together with similar Statements of
Operations for each additional month ending immediately prior to
the Closing, if any), each prepared from the books and records of
the Subject LPs maintained on a basis consistent with their
maintenance during periods covered by the Subject LP Financial
Statements, which Statements of Operations shall accurately set
forth the information contained therein, and shall be accompanied
by a certificate of the Sellers and the NPI Principals to such
effect in form and substance satisfactory to Buyer.
6.07 Environmental Reports
Within 30 days after the date hereof, Buyer may, but
shall have no obligation to, retain an environmental consultant
reasonably acceptable to Sellers to undertake at Buyer's cost
between the date hereof and the Closing an environmental
assessment of some or all of the Properties, including, without
limitation, a Phase I assessment for each Property and, if
recommended by the environmental consultant in the Phase I
assessment report, a Phase II assessment. A copy of the Phase I
report shall be provided by Buyer to Sellers. The Phase II
assessment may involve, among other things, intrusive sampling
and testing of the soil and groundwater, integrity testing of any
underground storage tanks and an asbestos survey. The Phase II
assessment, if any, shall be undertaken in accordance with a
scope of work to be prepared by the environmental consultant, a
copy of which shall be furnished to Sellers prior to undertaking
the work. At the conclusion of the Phase II assessment scope of
work, the environmental consultant shall prepare a Phase II
assessment report, a copy of which shall be provided by Buyer to
Sellers. Buyer shall use its reasonable efforts to cause such
assessments to be completed promptly and Sellers and the NPI
Parties shall use their reasonable efforts to assist Buyer and
its consultant in connection with such assessments, including,
without limitation, providing reasonable access to the Properties
for the conduct of the Phase I assessment, and, if recommended,
for the Phase II assessment and providing the environmental
consultant with all known and available information and
documentation concerning any environmental matters pertaining to
the Property. Buyer shall indemnify and hold harmless Sellers
and the NPI Parties from and against any and all claims,
liabilities, losses, damages, costs and expenses, including
without limitation, reasonable attorneys fees, arising out of any
damage to any Property caused by Buyer or its consultant in
performing the Phase I and Phase II environmental assessments
undertaken by Buyer; provided, however, that in no event shall
Buyer have any liability with respect to any existing condition
or matter relating to any Property, including, without
limitation, any liability, loss, damage, cost or expense incurred
or suffered by any Person as a result of the discovery of any
existing condition or matter as a result of such Phase I or
Phase II environmental assessments. In the event that Buyer or
its environmental consultants shall cause any damage to any
Property as a result of any Phase I or Phase II environmental
assessment, Buyer shall promptly repair such damage and restore
the damaged portion of the Property to a condition substantially
equivalent to the condition thereof prior to such damage.
6.08 Confidentiality
(a) Each of Sellers and the NPI Parties shall, before and
after the Closing, insure that all confidential information which
any of Sellers or the NPI Parties or their Affiliates, or any of
their respective officers, directors, partners, employees,
counsel, agents, investment bankers, or accountants, may now
possess or may hereafter create or obtain relating to the
condition (financial or otherwise), results of operations,
business, properties, assets, liabilities, or future prospects of
Sellers, any Scheduled LPs, Residential Properties of any
Commercial LPs, or Buyer and its Affiliates, shall not be
published, disclosed, or made accessible by any of them to any
other Person at any time or used by any of them after the
Closing, in each case without the prior written consent of Buyer;
provided, however, that the restrictions of this sentence shall
not apply (i) to the extent any such disclosure may otherwise be
required by law, (ii) to the extent any such disclosure may be
necessary in connection with the enforcement of this Agreement,
or (iii) to the extent such information shall have otherwise
become publicly available without any breach of this Agreement or
any other confidentiality obligations of any Person. Sellers and
the NPI Parties shall, and shall cause the Subject LPs and all
other such Persons to, at Buyer's request after the Closing,
deliver to Buyer any documents or other medium containing such
confidential information to which the restrictions of the
foregoing sentence apply.
(b) Buyer shall, before the Closing, insure that all
confidential information which Buyer or its Affiliates, or any of
their respective officers, directors, partners, employees,
counsel, agents, potential sources of financing, investments
bankers or accountants, may possess or may hereafter create or
obtain relating to the condition (financial or otherwise),
results of operations, business, properties, assets, liabilities,
or future prospects of Sellers, the NPI Parties or any Subject
LP, shall not be published, disclosed, or made accessible by
Buyer to any other Person at any time or used by Buyer (except in
preparation for the consummation of the transactions contemplated
by this Agreement or the Other Agreements), in each case without
the prior written consent of Sellers; provided, however, that the
restrictions of this sentence shall not apply (i) to the extent
any such disclosure that may be required in connection with any
SEC filings by Buyer or its Affiliates, or otherwise be required
by law, (ii) may be necessary in connection with the enforcement
of this Agreement, or (iii) to the extent such information shall
have otherwise become publicly available without any breach of
this Agreement or any other confidentiality obligations of any
Person. If the Closing shall not occur for any reason, Buyer
shall, and shall cause all other such Persons to, at Sellers'
request, deliver to Sellers any documents or other materials
containing such confidential information to which the
restrictions of the foregoing sentence apply.
6.09 Public Statements
Between the date of this Agreement and the Closing,
Sellers, the NPI Parties and their Affiliates shall discuss and
coordinate with Buyer and Buyer shall discuss and coordinate with
the NPI Principals with respect to any public filing or
announcement required concerning any of the transactions
contemplated by this Agreement. No public filing or announcement
concerning any of the transactions contemplated by this Agreement
shall be made by any of them, without the consent of both Sellers
and Buyer, except as required by law. The parties agree that a
press release in the form attached as Exhibit I may be released
by Buyer or its Affiliates upon execution hereof.
6.10 Limited Release
At the Closing, Sellers and the NPI Parties shall
deliver a release from themselves and their named Affiliates in
the form of Exhibit J with respect to certain claims of any of
them or their successors or assigns against Ventures I, Ventures
II, or any of the Subject LPs, their respective partners,
directors, officers, employees, agents, and Affiliates, and any
other control person under Section 15 of the Securities Act of
1933, as amended (the "Securities Act"), or Section 20(a) of the
Exchange Act, and the other parties named in the Exhibit which
includes a covenant not to sue.
6.11 Voting by Sellers
Except as provided in the Settlement Agreement and subject
to its fiduciary duties when acting as general partner of a
Subject LP and as may be required by the provisions of the
partnership agreement of any Subject LP, Sellers and the NPI
Parties each agrees that until the Closing Date under this
Agreement and other Agreements, it will vote all general and
limited partnership interests in the Sellers and in any Subject
Lps in which any of them is entitled to vote against and shall
not take any action to cause (a) any merger, consolidation,
reorganization, other business combination, or recapitalization
involving any Seller or Subject LP other than the redemption of
the interests of the Redeemed Partners, (b) any dissolution,
liquidation, or termination of any Seller or Subject LP, (c) any
sale of any assets of any Seller or Subject LP other than the
sale of the MRI/CP Units or any Commercial Properties or as set
forth on Schedule 6.11-U, (d) the amendment of the limited
partnership agreement or any other Organizational Document of any
Seller or Subject LP, (e) any change in the general partner
(defined below) of such Seller or Subject LP, or (f) any
proposition the effect of which may be to inhibit, prohibit,
restrict, or delay the consummation of any of the transactions
contemplated by this Agreement or any of the Other Agreements or
impair the contemplated benefits to Buyer and its Affiliates of
the transactions contemplated by this Agreement and the Other
Agreements. It is understood that at any time Sellers, the NPI
Parties or any of their Affiliates would be permitted under this
Section to vote their general partnership interest in any Subject
LP in favor of or take any action set forth above because to fail
to do so would be a breach of the fiduciary duty of the general
partner of such Subject LP, the Affiliate which is the holder of
limited partner interests in the same Subject LP shall also be
permitted under this Section to vote such limited partnership
interests in favor of such action. For purposes of this
Agreement, the term "change in the general partner" of a Subject
LP shall include, without limitation, a change in the Person who
is general partner, a change in the powers or authority of such
Person or a change legally or beneficially in the Person or
Persons with the power to direct the general partner.
6.12 Access
Between the date of this Agreement and the Closing Sellers
and the NPI Parties shall (a) give Buyer and its authorized
representatives full access to all offices and other facilities
and properties of Sellers and the Subject LPs and to the books
and records of Sellers and the Subject LPs (and permit Buyer to
make copies thereof), (b) permit Buyer to make inspections
thereof, and (c) cause their respective officers and advisers
(including, without limitation, their auditors, attorneys,
financial advisors and other consultants, agents and advisors) to
furnish Buyer with such financial and operating data and other
information with respect to the business and properties of
Sellers and the Subject LPs, and to discuss with Buyer and its
authorized representatives the affairs of Sellers and the Subject
LPs, all as Buyer may from time to time reasonably request.
Statements made by Sellers, the NPI Parties and their authorized
representatives in the course of any such discussions shall not
constitute representations or warranties for purposes of this
Agreement.
6.13 No Transfers or Encumbrances
Sellers and the NPI Parties shall not, directly or
indirectly, sell, assign, gift, pledge, or otherwise transfer or
encumber any Units before the Closing. Ventures I and Ventures
II shall not agree to any further amendment or modification of
the agreements relating to the PaineWebber Debt or borrow after
the date hereof any further amounts thereunder, in either case
without the consent of Buyer. Until the Closing no Seller or NPI
Party shall commence any tender offer for, or otherwise purchase
or acquire or offer to purchase or acquire, any units of limited
partnership interest in any Subject LP, except units of limited
partnership interest acquired in satisfaction of Unit Loans,
which shall thereupon become "Units" hereunder.
6.14 Notice of Certain Events; SEC Reports
(a) Until the Closing, each of Sellers and the NPI Parties
shall immediately give Buyer (i) written notice of the
occurrence, or failure to occur, of any event or state of facts
that would cause any representation or warranty contained in this
Agreement to be untrue or inaccurate or any covenant, condition
or agreement which is to be performed or satisfied by it
impossible to be so complied with or satisfied or make such
performance or satisfaction materially more difficult than in the
absence of such fact or occurrence or which (if existing and
known at the date of the execution of this Agreement) would have
been required to be set forth or disclosed in or pursuant to this
Agreement or a Schedule or Exhibit hereto; (ii) a copy of each
registration statement, annual, quarterly or current report,
proxy or information statement, or other document (including
exhibits and all material incorporated by reference) filed by any
NPI Party or Subject LP with the SEC or any other governmental
authority (other than filings under the HSR Act); (iii) copies of
all notices of default given to any Seller, NPI Party or Subject
LP with respect to any Debt, Management Agreement or Material
Agreement; and (iv) copies of all reports and other documents
prepared for the limited partners or general partners of any
Subject LP and copies of the minutes of all meetings of, and
actions taken (with or without a meeting), by the limited
partners or any general partner of any Subject LP. No
notification under this Section 6.14(a) shall affect or modify
the representations, warranties, covenants or agreements of any
of Sellers or the NPI Parties or the conditions to the respective
obligations of the parties hereunder.
(b) Until the Closing, Buyer shall immediately give Sellers
(i) written notice of the occurrence, or failure to occur, of any
event or state of facts that would cause any representation or
warranty contained in this Agreement to be untrue or inaccurate
or any covenant, condition or agreement which is to be performed
or satisfied by Buyer impossible to be so complied with or
satisfied or make such performance or satisfaction materially
more difficult than in the absence of such fact or occurrence or
which (if existing and known at the date of the execution of this
Agreement) would have been required to be set forth or disclosed
in or pursuant to this Agreement or a Schedule or Exhibit hereto;
(ii) a copy of each registration statement, annual, quarterly or
current report, proxy or information statement, or other document
(including exhibits and all material incorporated by reference)
filed by Buyer with the SEC or any other governmental authority
other than filings under the HSR Act; and (iii) copies of all
reports and other documents prepared for the stockholders or
members of Buyer. No notification under this Section 6.14(b)
shall affect or modify the representations, warranties, covenants
or agreements of Buyer or the conditions to the respective
obligations of the parties hereunder.
6.15 Other Covenants
Sellers and the NPI Parties, jointly and severally,
covenant and agree to cause the Persons named as Sellers and NPI
Parties to perform all of the covenants and agreements of each of
them set forth in the Other Agreements, and any material breach
of any such covenant or agreement shall be deemed a breach of
this Agreement.
6.16 Other Proposals
Until the Closing or the termination of this Agreement
in accordance with its terms, Sellers and the NPI Parties shall
not, and shall neither authorize nor permit any officer,
director, employee, counsel, agent, investment banker,
accountant, or other representative of any of them or of any
Subject LP, directly or indirectly, to: (i) initiate contact
with any Person in an effort to solicit a Takeover Proposal
(defined below); (ii) cooperate with, or furnish or cause to be
furnished any non-public information concerning the business,
properties, or assets of any of Sellers or the NPI Parties or any
Subject LP to any Person in connection with any Takeover
Proposal; (iii) negotiate with any Person with respect to any
Takeover Proposal; or (iv) enter into any agreement or
understanding with the intent to effect a Takeover Proposal;
provided, however, that nothing herein shall require any NPI
Party to breach any fiduciary duty as general partner of a
Subject LP. Sellers and the NPI Parties will immediately give
written notice to the Purchaser of the details of any Takeover
Proposal of which any of them becomes aware. As used in this
Section 6.16, "Takeover Proposal" means any proposal, other than
as contemplated by this Agreement: (i) for a merger,
consolidation, reorganization, other business combination, or
recapitalization involving any of Sellers or the NPI Parties or
any Subject LP, for the acquisition of a 5% or greater interest
in the equity of any of Sellers or the NPI Parties or any Subject
LP, for the acquisition of the right to cast 5% or more of the
votes on any matter with respect to any of Sellers or the NPI
Parties or any Subject LP, or for the acquisition of a
substantial portion of any of their respective assets other than
in the ordinary course of their respective businesses or (ii) the
effect of which may be to prohibit, restrict, or delay the
consummation of any of the transactions contemplated by this
Agreement or the Other Agreements or to impair the contemplated
benefits to Buyer of any of the transactions contemplated by this
Agreement.
6.17 Other Application of Distributions
Sellers and the NPI Parties will cause all
distributions received by Sellers, the NPI Parties and any of
their Affiliates from or with respect to any of the Units, Excess
Units or units of limited partnership interest securitizing the
Unit Loans being sold hereunder from and after the date hereof
and through the Closing Date to be applied, on or before the
Closing Date, toward repayment of the PaineWebber Debt in
accordance with its terms.
6.18 Other Due Diligence Meetings
Between the date hereof and the Closing, at reasonable
business hours selected by Buyer, during the months of September
through December, 1995 (and if the Closing is after January 15,
1996, in January and February, 1996), Sellers and the NPI Parties
shall make available such officers of NPI-AP Management and other
senior level employees and other employees with detailed
knowledge of the Properties and operations of the Subject LPs as
Buyer shall request (at which time at least one of the NPI
Principals, Peter Braverman and William Hamilton shall be
present) for due diligence meetings (at least two of which shall
be held, at Buyer's option, at Insignia's headquarters in
Greenville, South Carolina and the others in Atlanta, Georgia) at
which they shall make true, complete and correct disclosure of
all information relating to the Properties and the business of
the Subject LPs as Buyer shall request.
6.19 ERISA Matters
On and after the Closing, Sellers and the NPI Parties
shall be liable for, and shall promptly and fully reimburse Buyer
with respect to, all claims incurred prior to Closing under any
Plan that is a health plan (including, without limitation,
medical, dental and hospitalization plans), regardless of whether
such claim arises before, on or after Closing. Sellers and the
NPI Parties acknowledge that they shall be obligated to pay all
such claims on demand to Buyer.
6.20 Tax Returns
Buyer shall cause the federal, state and local income
tax returns and information returns (including any related or
supporting information and schedules) for calendar year 1996 for
each of the Subject LPs and the partnerships which issued the
MRI/CP Units to be prepared so as to, among other things,
(i) reflect each of Insignia LLC, in the case of the Units of the
Scheduled LPs, MRI LLC, in the case of the MRI/CP Units, and
Riverside LLC, in the case of the Units of the Commercial LPs, as
the owner of said units as of the Closing Date, and (ii) close
the books of each partnership described in clause (i) as of the
close of the day immediately preceding the Closing Date and by
treating each of the period through the close of such immediately
preceding day and the period beginning on the Closing Date,
respectively, as a separate taxable year, except that income,
gain, loss, deductions and credits from ordinary operations of
such partnership (but not from any sale or other disposition of
any properties or other assets owned by such partnership) for the
calendar month which includes the Closing Date shall be
apportioned on a per diem basis. Buyer shall cause the Scheduled
LPs to make elections under Section 754 of the Code.
6.21 Price Adjustments
Sellers and the NPI Parties shall use their reasonable
efforts to minimize any price adjustments pursuant to Sections
8.05 and Article X.
VI. Conduct of the Subject LPs' Business Prior to the Closing
7.01 Ordinary Course
Sellers and the NPI Parties each, jointly and severally,
covenants and agrees that from the date hereof until the Closing,
Sellers and the NPI Parties shall (a) cause the Subject LPs and
their businesses and Residential Properties to be operated only
in the ordinary course consistent with past practice and the
fiduciary duties of the general partners, in accordance with the
partnership agreements, utilizing reasonable commercial
standards; and (b) endeavor to operate the Subject LPs and their
businesses and Residential Properties in conformity with the
Subject LP Budgets. Except as otherwise disclosed in this
Agreement or the Other Agreements or any Exhibit or Schedule
hereto or thereto, none of Sellers or the NPI Parties has any
knowledge of any fact or event that would make it unlikely that
any of the Subject LPs could be operated in accordance with its
Subject LP Budget (limited, in the case of the Commercial LPs, to
the Residential Properties).
7.02 Liens
None of Sellers or the NPI Parties will, or will permit any
Subject LP to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets (real or personal,
tangible or intangible) of any Subject LP, whether now owned or
hereafter acquired, or sell any such property or assets subject
to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets (including sales of accounts
receivable with recourse to any Subject LP), or assign any right
to receive income or permit the filing of any financing statement
under the Uniform Commercial Code or any other similar notice of
Lien under any similar recording or notice statute, or grant
rights with respect to, or otherwise encumber or create a
security interest in, such property or assets or any portion
thereof or any other revenues therefrom or the proceeds payable
upon the sale, transfer or other disposition of such property or
asset or any portion thereof, or permit or suffer any such action
to be taken, except the following:
(a) Liens created pursuant to the PaineWebber Debt;
(b) Liens for taxes, assessments or other governmental
charges not yet delinquent or which are being diligently
contested in good faith and by appropriate proceedings, if
(i) reasonable reserves in an amount not less than the tax,
assessment or governmental charge being so contested shall have
been included in the Most Current Balance Sheet for such Subject
LP, or such contested amount shall have been duly bonded in
accordance with applicable law, (ii) no risk of sale, forfeiture
or loss of any real property of any Subject LP or any part
thereof arises during the pendency of such contest and (iii) such
contest does not have a materially adverse effect on any Subject
LP;
(c) Liens in respect of property or assets of any Subject
LP imposed by law, which were incurred in the ordinary course of
business and do not secure any Debt, such as carriers',
warehousemen's, materialmen's, and mechanics' liens and other
similar Liens arising in the ordinary course of business, and
(i) which do not in the aggregate materially detract from the
value of any Subject LP property or assets or materially impair
the use thereof in the operation of the business of any Subject
LP or (ii) which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the
forfeiture or sale of the property or assets subject to any such
Lien; and
(d) Liens on property or assets securing Permitted
Refinancing Debt (defined below) provided that such property or
assets were subject to the Liens securing the Debt so refinanced.
For purposes of this Agreement, "Permitted Refinancing Debt" is
Debt that replaces or refinances Debt of any Subject LP existing
on the date hereof provided that: (i) the aggregate principal
amount of such Debt does not exceed 105% of the sum of (x) the
outstanding principal amount of, and accrued interest on, the
Debt so replaced or refinanced, (y) any closing costs incurred in
connection with such replacement or refinancing, and (z) any
reserves required by the lender under the terms of the loan and
(ii) the incurrence of such Debt and the grant of such Liens do
not cause any representation or warranty herein or in any
Additional Document by any of Sellers or the NPI Parties to be
incorrect in any material respect or constitute a breach of any
covenant or agreement of any of Sellers or the NPI Parties herein
or therein, except to the extent such new Debt is not reflected
in the representation as to Existing Indebtedness and such
omission of such new Debt shall not violate Sellers' covenant to
use reasonable efforts to cause the representations to be true at
the Closing Date.
7.03 Dissolution
No Subject LP shall dissolve, terminate, liquidate, merge
with or consolidate into another Person except as required by the
fiduciary duty of the general partner of such Subject LP.
7.04 New Lines of Business
No Subject LP shall enter into any line of business
other than its business on the date hereof, or make any material
change in the scope or nature of its business, purposes or
operations, or undertake or participate in activities other than
the continuance of its present business.
7.05 Forgiveness of Debt
None of Ventures I, Ventures II or any Subject LP shall
cancel or otherwise forgive, release or waive any claim or Debt
owed to it by any Person or rights of substantial value, except
in the case of any claim or Debt not material individually or in
the aggregate, for adequate consideration and in the ordinary
course of business consistent with past practice.
7.06 Affiliate Transactions
None of Sellers or the NPI Parties shall enter into, or
be a party to, or cause or suffer any Affiliate to enter into or
be a party to any transaction with any Subject LPs or cause any
compensation to be payable from any such Person except
transactions required by Existing Agreements in the ordinary
course of business consistent with past practice and on terms
which are no less favorable to such Subject LP than would be
obtained in a comparable arm's length transaction with an
unrelated third party, and none of Sellers, the NPI Parties or
any of their respective Affiliates shall enter into any new
agreement with or relating to any Subject LP or Residential
Property, or amend, modify or terminate any agreement listed on
Schedules 4.15(a)-U or 4.15(b)-U. Any such transactions will be
disclosed to Buyer in writing at least monthly from the date
hereof until the Closing and on the Closing Date in an Officer's
Certificate of the relevant Person.
7.07 Assets
Except as permitted herein with respect to Unit Loans,
Sellers shall not acquire or dispose of any assets other than the
MRI/CP Units.
7.08 Advances, Investments and Loans
None of Sellers or the NPI Parties will permit any
Subject LP, directly or indirectly, to lend money or credit or
make advances to any Person, or purchase or acquire any stock,
obligations or securities of, or any limited or general
partnership interests or any other interest in, or make any
capital contribution to, any other Person, or purchase or own a
futures contract or otherwise become liable for the purchase or
sale of currency or other commodities at a future date in the
nature of a futures contract, except that a Subject LP may
acquire and hold accounts receivables owing to any of them, if
created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary terms.
7.09 No Contrary Agreements
Prior to the Closing Date, none of Sellers or the NPI
Parties shall agree or otherwise commit, whether or not in
writing, or permit any Subject LP to agree or commit, to do
anything which would not be permitted to be done under this
Agreement.
VIII. Conditions to Obligations of Buyer
The obligations of Buyer under this Agreement are
subject to the following conditions (unless waived by Buyer in
writing at the Closing):
8.01 Accuracy of Representations and Compliance with
Conditions
All representations and warranties of Sellers and/or
the NPI Parties contained in this Agreement shall be accurate as
of the Closing in all material respects with the same effect as
if made on and as of such date, except for changes expressly
permitted or required by this Agreement. As of the Closing,
Sellers and the NPI Parties shall have performed and complied in
all material respects with all covenants and agreements and
satisfied all conditions required to be performed and complied
with by any of them at or before such time. At the Closing,
Buyer shall have received certificates to the effect of the first
two sentences of this Section 8.01 executed by the chief
executive officer and the chief financial officer of each Seller
and such NPI Parties as Buyer shall request dated as of the
Closing Date in form and substance satisfactory to Buyer. It is
expressly agreed that, for purposes of the first sentence of this
Section 8.01 and Section 12.01(b)(v), changes in the ordinary
course referred to in Section 6.03(a) shall not be deemed to be
changes permitted or required by this Agreement and may result in
a failure of the condition set forth in this Section 8.01 to
Buyer's obligations under this Agreement.
8.02 Sellers' Deliveries
Sellers shall have delivered to Buyer the documents set
forth in Section 3.02(a).
8.03 Legal Action
There shall not have been instituted or threatened any
legal proceeding (a) relating to, or seeking to prohibit or
otherwise challenge: (i) the consummation of this Agreement or
the Other Agreements or the transactions contemplated by this
Agreement or the Other Agreements, or to obtain substantial
damages with respect thereto; or (ii)any matter arising out of
or relating to the Tender Offers pursuant to any Tender Offer
Documents or Settlement Agreement; or (iii) which Buyer shall
reasonably determine could have a materially adverse effect on
the business, assets, liabilities, condition (financial or
otherwise) or prospects of any of the Subject LPs or (b) alleging
any violation of any provision of any federal or state securities
law or seeking to obtain any payment or damages pursuant thereto
(in each case, whether or not such allegation shall have any
merit).
8.04 No Material Adverse Change
Since the date of their respective Most Current Balance
Sheets, there shall not have been any material adverse change in
the condition (financial or otherwise), results of operations,
business, Properties, assets, nature of assets or liabilities of
any of the Scheduled LPs or Commercial LPs with respect to the
Residential Properties.
8.05 Property Events
(a) If, between the date hereof and the Closing Date, any
of the Subject LPs incur or become liable for (primarily or
otherwise) any actual or threatened Environmental Liabilities
(exclusive of non-friable asbestos) with respect to any of the
Properties or the conduct of the business of any of the Subject
LPs or, in the course of its due diligence, Buyer learns of
existing environmental conditions or activities based upon which
it is reasonably likely that any of the Subject LPs, Buyer,
Riverside or any of their Affiliates may incur or become liable
for Environmental Liabilities (exclusive of non-friable
asbestos), in each case not disclosed to Buyer on a Schedule or
Exhibit hereto, which aggregate Environmental Liabilities
(exclusive of non-friable asbestos) (calculated by multiplying
the Environmental Liability (exclusive of non-friable asbestos)
of each Subject LP by its Scheduled Ownership Percentage and
totaling such amounts for all Subject LPs) (the "Environmental
Losses") exceed $500,000, Buyer may elect not to close based on
such Environmental Losses without liability to Sellers or the NPI
Parties; unless, either Buyer or Sellers shall elect to require
that the purchase price be reduced by the amount that the
Environmental Losses exceeds $500,000 up to a maximum purchase
price reduction of $2,500,000, in which case the purchase price
shall be so reduced and neither Buyer nor Sellers may then
rightfully refuse to close based on such Environmental Losses;
provided, however, that if the Environmental Losses exceed
$3,000,000, Buyer shall have the sole right to require a purchase
price reduction of $2,500,000 or may, at its sole option, refuse
to close by reason of such Environmental Liabilities without
liability to the Sellers or the NPI Parties and, if Buyer shall
so elect to refuse to close, neither Buyer nor Sellers shall have
the right to elect a purchase price reduction in respect thereof.
(b) If the amount of aggregate Environmental Losses with
respect to Environmental Liabilities disclosed to Buyer on a
Schedule or Exhibit hereto shall exceed $500,000, Buyer shall
have the right to refuse to close based on such Environmental
Losses without liability to Seller or the NPI Parties; provided,
however, that if such aggregate Environmental Losses shall be
less than $3,000,000, Seller may elect to require that the
purchase price be reduced by the amount that the Environmental
Losses exceed $500,000 up to a maximum purchase price reduction
of $2,500,000, in which case the purchase price shall be so
reduced and neither Buyer nor Seller may then rightfully refuse
to close based on such Environmental Losses.
(c) Notwithstanding the provisions of Section 8.05(a) and
8.05(b) if, in the course of its due diligence, Buyer learns that
the sum of Environmental Losses referred to in Section 8.05(a)
and not disclosed to Buyer on a Schedule or Exhibit hereto, plus
Environmental Losses with respect to Environmental Liabilities
disclosed on a Schedule or Exhibit hereto, exceed $3,000,000,
Buyer may elect not to close based on such Environmental Losses
without liability to Sellers or the NPI Parties.
(d) In the event of any purchase price reduction pursuant
to subsection (a) or (b) above, Buyer shall use its reasonable
efforts after the Closing to cause the affected Subject LP to
recover from third parties (assuming Buyer reasonably believes
that a meritorious cause of action exists against a third party)
any amount for which they are liable to such Subject LP because
of the event which resulted in such purchase price reduction. If
and when the Subject LP shall receive any such amounts, Buyer
shall compute a number which is the amount of each such recovery
(net of costs and expenses associated with such recovery)
multiplied by the Scheduled Ownership Percentage in such affected
Scheduled LP ("Buyer's Deemed Recovery"). Buyer shall pay Seller
that portion of Buyer's Deemed Recovery arising from any events
giving rise to such Environmental Losses equal to the amount of
Environmental Losses which exceeds the sum of (i) $500,000 plus
(ii) the aggregate amount of such Environmental Losses in excess
of $2,500,000, but in no event more than the actual purchase
price reduction to Sellers in respect of such Environmental
Losses under Section 8.05(a) or (b).
8.06 No Governmental Action
There shall not have been any action taken, or any law,
rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to
the transactions contemplated by this Agreement by any federal,
state, local, or other governmental authority or by any court or
other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment of Buyer, (a) makes
any of the transactions contemplated by this Agreement illegal,
(b) results in a delay in the ability of the Buyer to consummate
any of the transactions contemplated by this Agreement,
(c) requires the divestiture by Buyer of any of the limited
partnership interests or Unit Loans (and related Units) to be
sold pursuant to this Agreement or of a material portion of the
business of any Subject LP, (d) imposes material limitations on
the ability of Buyer effectively to exercise full rights of
ownership of such limited partnership interest or Unit Loans (and
related Units), including the right to vote such interests on all
matters properly presented to the limited partners of the
respective Subject LP, as the case may be, or (e) otherwise
prohibits, restricts, or delays consummation of any of the
transactions contemplated by this Agreement or any Other
Agreement or impairs the contemplated benefits to Buyer or its
Affiliates of any of the transactions contemplated by this
Agreement or any Other Agreement.
8.07 PaineWebber Debt
The outstanding amount of principal due on the
PaineWebber Debt immediately prior to the Closing shall be not
more than the outstanding principal amount on the date hereof, it
being understood and agreed that Sellers shall not, after the
date hereof, borrow any further amounts thereunder. Sellers
shall pay all interest on the PaineWebber Debt on a current basis
in accordance with its terms. Sellers shall have delivered an
estoppel certificate from PaineWebber dated as of the Closing
certifying to such outstanding amount and evidence in form and
substance satisfactory to Buyer of the satisfaction of the
PaineWebber Debt and termination of all Liens arising in
connection therewith upon payment of such Debt by Buyer and
Ventures I as contemplated herein.
8.08 HUD Approval
Buyer shall have obtained at or prior to the Closing
Date the unconditional written approval of HUD to this Agreement
and the Other Agreements and to the execution, delivery, and
performance of this Agreement and the Other Agreements by the
parties thereto.
8.09 Hart-Scott-Rodino Waiting Period
All applicable waiting periods (and any extensions
thereof) in respect of the transactions contemplated by this
Agreement under the HSR Act shall have expired at or prior to the
Closing.
8.10 Consents
Sellers and the NPI Parties shall have complied with
Section 6.05 to the extent required without any of Sellers, the
NPI Parties nor any Subject LP having made any agreement or
reached any understanding not approved in writing by Buyer as a
condition for obtaining any such consent, authorization,
approval, order, license, certificate or permit.
8.11 FIRPTA Certificate
Each Seller shall deliver to Buyer on or before the
Closing Date a Certificate which states, under penalty of
perjury, the Seller's taxpayer identification number and office
address and that the Seller is not a foreign person for federal
income tax purposes under Section 1445 of the Code.
8.12 Insurance
On or prior to the Closing Date, Buyer shall have
received evidence that all of the Residential Properties are
covered by valid and existing policies of insurance which comport
with the representations of Sellers set forth in Section 4.09
hereof, together with evidence of the payment of all premiums
therefor.
8.13 Absence of Certain Events
On the Closing Date, no event shall have occurred which
would cause (a) any merger, consolidation, reorganization, other
business combination, or recapitalization involving any Seller or
Subject LP other than the redemption of the interests of the
Redeemed Partners, (b) any dissolution, liquidation, or
termination of any Seller or Subject LP, (c) any sale of any
assets of any Seller other than the sale of the MRI/CP Units, (d)
the amendment of the limited partnership agreement or any other
Organizational Document of any Seller or Subject LP, (e) any
change in the general partner of any Subject LP, or (f) the
adoption by any Seller or Subject LP of any proposition the
effect of which may be to inhibit, prohibit, restrict, or delay
the consummation of any of the transactions contemplated by this
Agreement or impair the contemplated benefits to Buyer or its
Affiliates of the transactions contemplated by this Agreement or
the Other Agreements.
8.14 Simultaneous Closing
The Closing of the transactions contemplated by the NPI
Inc. Stock Purchase Agreement, dated as of the date hereof among
(a) Insignia and IFGP Corporation, a Delaware corporation with
offices at One Insignia Financial Plaza, P.O. Box 1089,
Greenville, South Carolina 29602, (b) AP-NPI II and the NPI
Family Parties, and (c) the other parties named therein, shall
have closed simultaneously with the Closing under this Agreement.
8.15 Conditions Precedent Under Other Agreements
The obligation of Buyer to close the transactions
contemplated under this Agreement is subject to the fulfillment
of the following additional conditions precedent on the Closing
Date hereunder:
(a) the representations and warranties of the Sellers and
NPI Parties named therein contained in the Other Agreements shall
be true and correct in all material respects on and as of the
Closing Date hereunder with the same effect as if made on and as
of such date, the covenants and agreements of such Sellers and
NPI Parties shall have been performed and satisfied, all of the
conditions to the obligations of the Buyer named therein shall
have been satisfied, subject only to the consummation of the
Closing thereunder by the Buyer and delivery of all required
certificates, opinions and instruments of transfer by the Sellers
named therein (the form and substance of all of which shall have
been agreed and all of which shall be capable of being delivered
on the date of the Closing hereunder), and no default (or event
which with notice or the passage of time or both would be a
default) shall then exist under any Other Agreement and Sellers
and the NPI Parties shall have delivered to Buyer an Officer's
Certificate to such effect in form and substance satisfactory to
Buyer;
(b) no event shall have occurred which shall make it
probable, in the reasonable opinion of Buyer, that the conditions
to the obligations of Buyer or its Affiliates under any or all of
the Other Agreements will not be satisfied by a date which is not
more than two days after the Closing Date hereunder and the NPI
Parties shall have delivered to Buyer a certificate of the NPI
Principals as to the absence of any events or conditions which
call into question whether the conditions to such obligations of
Buyer or its Affiliates will not be satisfied by such date, in
form and substance satisfactory to Buyer; and
(c) no material adverse change shall have occurred since
March 31, 1995 in the business, property, operations, assets,
liabilities, condition (financial or otherwise) or prospects of
any entity in which Buyer or any of its Affiliates is to acquire
an interest pursuant to any Other Agreement and Sellers and the
NPI Parties shall have delivered a certificate to such effect
in form and substance satisfactory to Buyer.
8.16 Buyer's Elections
Buyer shall not have rightfully elected not to close
pursuant to Article X or Section 4.30(e) or Section 8.05.
8.17 Other Closing Documents
Sellers and the NPI Parties shall have delivered to
Buyer at or prior to the Closing such other documents as Buyer
may reasonably request in form and substance satisfactory to
Buyer.
IX. Conditions to the Obligations of Sellers
The obligations of Sellers under this Agreement are
subject to the following conditions (unless waived by Sellers in
writing at the Closing):
9.01 Accuracy of Representations and Compliance with
Conditions
All representations and warranties of Buyer contained
in this Agreement shall be accurate as of the Closing Date in all
material respects with the same effect as if made on and as of
such date except for changes expressly permitted or required
under this Agreement or the Other Agreements; as of the Closing,
Buyer shall have performed and complied in all material respects
with all covenants and agreements and satisfied all conditions
required to be performed and complied with by Buyer at or before
such time; and Sellers shall have received certificates to that
effect executed by the chief executive officer and the chief
financial officer of Insignia LLC, dated as of the Closing Date,
in form and substance satisfactory to Sellers.
9.02 Buyer's Deliveries
Buyer and Riverside shall have delivered to Seller the
funds and documents set forth in Section 3.02(b).
9.03 Hart - Scott-Rodino Waiting Period
All applicable waiting periods (and any extensions
thereof) in respect of the transactions contemplated by this
Agreement under the HSR Act shall have expired at or prior to the
Closing.
9.04 Closings Under Other Agreements
Buyer shall deliver a Certificate (which may be based
on the Certificate delivered under Section 8.15(b)) in form and
substance satisfactory to Sellers that it has no knowledge of any
events or conditions that call into question whether the
conditions to the obligations of Sellers and/or their Affiliates
under the Other Agreements will be satisfied.
9.05 No Material Adverse Change
No material adverse change shall have occurred since
the date hereof in the condition (financial or otherwise),
business, property, operations, assets or liabilities of
Insignia.
9.06 No Governmental or Legal Action
There shall not have been any action taken, or any law,
rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to
the transactions contemplated by this Agreement by any federal,
state, local, or other governmental authority or by any court or
other tribunal, including the entry of a preliminary or permanent
injunction, which, in the reasonable judgment fo Sellersmakes any
of the transactions contemplated by this Agreement illegal or (b)
otherwise prohibits, restricts, or delays consummation of the
transactions contemplated by this Agreement or any Other
Agreement or impairs the contemplated benefits to Sellers of any
of the transactions contemplated by this Agreement or any Other
Agreement.
9.07 Other Closing Documents
Buyer shall have delivered to Sellers at or prior to
the Closing such other documents of officers of Buyer as Sellers
may reasonably request.
X. Additional Representations, Covenants and Closing
Conditions
10.01 Certain Definitions
(a) For purposes of this Article X, the following terms
have the following meanings (where applicable, as adjusted as
provided below):
"Actual Net Rental Revenue" means, for each Residential
Property owned by a Subject LP, the actual net rental revenue
(determined on a basis consistent with the Subject LP Budgets) in
respect of such Property for the 1995 calendar year.
"Budgeted Net Rental Revenue" means, for each
Residential Property owned by a Subject LP, the budgeted net
rental revenue in respect of such Property for the 1995 calendar
year as shown on the Subject LP Budget for such Property.
"May Operating Statements" means the statements of
operations for each Residential Property owned by each Subject LP
and for each Subject LP for the five-month period ended May 31,
1995 previously delivered by Sellers to Buyer.
"Portfolio Average Occupancy" means, as of any date,
the percentage obtained by dividing (i) the aggregate number of
occupied apartment units in all Residential Properties owned by
all of the Subject LPs as of that date by (ii) the aggregate
number of apartment units in all Residential Properties owned by
all of the Subject LPs as of that date.
"Units Effective Income" means, for any Residential
Property, the product of (i) the aggregate budgeted net operating
income or actual net operating income as shown on the Subject LP
Budgets or the Year End Operating Statements (defined below), as
applicable, of such Residential Property multiplied by (ii) the
Scheduled Ownership Percentage for the Subject LP which owns such
Residential Property.
"Units Net Rental Revenue" means, for any Subject LP,
the product of (i) the Budgeted Net Rental Revenue or the Actual
Net Rental Revenue, as the case may be, of all of the Residential
Properties owned by such Subject LP, multiplied by (ii) the
Scheduled Ownership Percentage for such Subject LP.
"Units Net Cash Equivalent Assets" means, for any
Scheduled LP, as of the date of determination, the product of
(I) all cash and cash equivalents of such Scheduled LP plus
prepaid expenses (determined in good faith consistent with past
practice) less all reasonably estimated accounts payable
(estimated by Sellers and the NPI Principals in good faith
consistent with past practice), all obligations due within 45
days, all security deposits, and all other accrued expenses,
accrued taxes and insurance and reserves of such Scheduled LP
other than any current principal amount in respect of any
Existing Indebtedness, multiplied by (ii) the Scheduled Ownership
Percentage of such Scheduled LP.
"Year End Operating Statements" means the Statements of
Operations for each Residential Property and each Subject LP for
the year ending December 31, 1995 to be delivered to Buyer under
Section 6.06(b).
10.02 Portfolio Average Occupancy
(a) Sellers and the NPI Parties each, jointly and
severally, represents and warrants to Buyer and Riverside that
set forth on Schedule 10.02(a)-U is the total number of apartment
units in each Residential Property owned by the Subject LPs as of
December 31, 1994, the number of occupied apartment units in each
such Property as of December 31, 1994 and the Portfolio Average
Occupancy as of December 31, 1994.
(b) On or before January 7, 1996 (and in no event less than
seven days before the Closing), Sellers and the NPI Parties shall
deliver to Buyer a Certificate, certified by the chief executive
officer of each Seller and the NPI Principals (an "Occupancy
Certificate"), setting forth, in the same form as Schedule
10.02(a)-U, such number of units, number of occupied
units and the Portfolio Average Occupancy Rate as of December 31,
1995.
(c) It shall be a condition to Buyer's obligation to close
the transactions contemplated by this Agreement that the
Portfolio Average Occupancy as of December 31, 1995 shall not be
less than the greater of: (x) the Portfolio Average Occupancy as
of December 31, 1994 less three percent and (y) 92.2%. For
purposes of the foregoing calculation, there shall be excluded
from the determination of Portfolio Average Occupancy as of both
December 31, 1994 and 1995 any apartment units that have been or
are (i) rendered uninhabitable due to insured fire loss after
December 31, 1994 and not returned to service prior to November
1, 1995 or (ii) contained in any Property that is sold or
contracted or committed for sale subsequent to December 31, 1994
and on or prior to the Closing Date. Any such adjustments
provided for in this Section shall be specifically set forth in
the Occupancy Certificate required by this paragraph.
10.03 Units Net Rental Revenue
(a) Sellers and the NPI Parties each, jointly and
severally, represents and warrants to Buyer and Riverside that
set forth on Schedule 10.03(a)-U is the Budgeted Net Rental
Revenue for each Residential Property owned by the Subject LPs
and the corresponding Units Net Rental Revenue derived from such
Budgeted Net Rental Revenue for each Subject LP.
(b) On or before January 7, 1996 (and in no event less than
seven days before the Closing), Sellers and the NPI Parties shall
deliver to Buyer a Certificate (the "Net Rental Revenue
Certificate"), certified by the chief executive officer of each
Seller and the NPI Principals setting forth, in the same form as
Schedule 10.03(a)-U, the Actual Net Rental Revenue for calendar
year 1995 for each Residential Property owned by the Subject LPs
and the corresponding Units Net Rental Revenue derived from such
Actual Net Rental Revenue for each Subject LP.
(c) It shall be a condition to Buyer's obligation to close
the transactions contemplated by this Agreement that the
aggregate Units Net Rental Revenue derived from the Actual Net
Rental Revenue for all Subject LPs in the aggregate is at least
98.5% of the aggregate Units Net Rental Revenue derived from the
Budgeted Net Rental Revenue for all Subject LPs in the aggregate.
For purposes of the foregoing calculations: (w) if any
apartment unit is rendered uninhabitable due to insured fire loss
during 1995, the Budgeted Net Rental Revenue of the Property that
owns such apartment shall be reduced by an amount equal to the
product of the amount of such Budgeted Net Rental Revenue
attributable to such apartment unit and a fraction, the numerator
of which is the number of days during 1995 during which such
apartment was rendered uninhabitable as a result of fire and the
denominator of which is 365; and no insurance proceeds received
in connection with any fire loss for which an adjustment is made
pursuant to the preceding clause shall be included in Actual Net
Rental Revenue, and (x) if a Property is sold or contracted or
committed for sale subsequent to March 31, 1995 and on or prior
to the Closing Date, no amount shall be included in Actual Net
Rental Revenue in respect of that Property and, if such Property
is a Property identified on a list delivered by Sellers to Buyer
prior to the date hereof, no amount shall be included in Budgeted
Net Rental Revenue in respect of that Property, and (y) no
revenue received in respect of any apartment unit or Property
that is constructed or acquired during 1995 shall be included in
Actual Net Rental Revenue, and (z) if any Subject LP enters into
any residential lease which provides for discounts or concessions
that apply to periods after the Closing in a greater proportion
to scheduled rent than those that apply to periods prior to
December 31, 1995, then an amount equal to such increased
discounts or concessions shall be deducted from the Actual Net
Rental Revenue for calendar year 1995 received by such Subject
LP. All adjustments provided for in the preceding sentence shall
be specifically set forth in the Net Rental Revenue Certificate
required by this paragraph.
10.04 Units Effective Income
(a) Sellers and the NPI Parties each, jointly and
severally, represents and warrants to Buyer and Riverside that
set forth on Schedule 10.04(a)-U is the Units Effective Income
for each Residential Property based upon the budgeted net
operating income for such Residential Property shown on the
Subject LP Budgets.
(b) On or before January 7, 1996 (and in no event less than
seven days before the Closing), Sellers and the NPI Parties shall
deliver to Buyer the Year End Operating Statements together with
a Certificate (the "Units Effective Income Certificate"),
certified by the chief executive officer of each Seller and the
NPI Principals, setting forth the Units Effective Income for each
Residential Property based on the actual net operating income
amounts shown on the Year End Operating Statements.
(c) Sellers and the NPI Parties each, jointly and
severally, represents and warrants to Buyer and Riverside as
follows: each of the May Operating Statements has been, and when
delivered each of the Year End Operating Statements shall be,
prepared on a basis consistent with the respective Subject LP
Budgets and fairly presents, or when delivered will fairly
present, the results of operations of all of the Subject LPs
which such statements customarily report for the respective
periods covered thereby. All expenses and expenditures made or
incurred with respect to the Residential Properties have been,
with respect to the May Operating Statements, and when delivered
will have been, with respect to the Year End Operating
Statements, deducted in the calculation of actual net operating
income of the Residential Properties, except: (x) debt service,
(y) partnership expenses of the types not deducted in computing
net operating income on the Subject LP Budgets (and not deducted
thereon in calculating net operating income), and (z) capital
expenditures, replacement reserves and other expenditures
expressly provided for on the respective Subject LP Budgets or
relating to items having useful lives (exclusive of premature
failure or damage) of at least three years, all determined on a
consistent basis for both the May Operating Statements and the
Year End Operating Statements.
(d) It shall be a condition to Buyer's obligation to close
the transactions contemplated by this Agreement that the
aggregate Units Effective Income, as derived from the Year End
Operating Statements, for all Residential Properties in the
aggregate is at least 98.5% of the aggregate Units Effective
Income, as derived from the Subject LP Budgets and, for all
Residential Properties in the aggregate. For purposes of the
foregoing calculation: (x) each of the adjustments to Budgeted
Net Rental Revenue and Actual Net Rental Revenue provided for in
Section 10.03(c) above shall be applied in calculating Units
Effective Income.
10.05 Units Net Cash Equivalent Assets
(a) Sellers and the NPI Parties each, jointly and
severally, represents and warrants to Buyer and Riverside that
set forth on Schedule 10.05(a)-U is the Units Net Cash Equivalent
Assets amount for each Scheduled LP as of March 31, 1995.
(b) On or before January 7, 1996 (and in no event less than
seven days before the Closing), Sellers and the NPI Parties shall
deliver to Buyer a Certificate (a "Net Cash Equivalent Assets
Certificate"), certified by the chief executive officer of each
Seller and the NPI Principals, setting forth the aggregate Units
Net Cash Equivalent Assets for all Scheduled LPs in the aggregate
as of December 31, 1995 derived from the Year End Operating
Statements on a basis consistent with Schedule 10.05(a)-U and a
representation that the aggregate Units Net Cash Equivalent
Assets for all Scheduled LPs as of the Closing Date is not less
than the aggregate Units Net Cash Equivalent Assets for all
Scheduled LPs in the aggregate as of March 31, 1995; provided,
however, that if the amount of the aggregate Units Net Cash
Equivalent Assets for all Scheduled LPs as of December 31, 1995
is less than such amount as of March 31, 1995, and Buyer waives
the condition and elects to close, the reference to March 31,
1995 immediately prior to this proviso shall be deemed a
reference to December 31, 1995.
(c) If the aggregate amount of Units Net Cash Equivalent
Assets derived from the Year End Operating Statements is less
than the aggregate amount of Units Net Cash Equivalent Assets
shown on Schedule 10.05(a)-U, then Buyer shall be entitled to a
dollar for dollar purchase price adjustment up to a maximum
adjustment of $500,000. If the dollar amount of the purchase
price adjustment provided for in the preceding sentence would
exceed $500,000 but for the maximum amount provided for therein,
Buyer shall have no obligation to close the transactions
contemplated by this Agreement. In computing Units Net Cash
Equivalent Assets (prior to applying the Scheduled Ownership
Percentage) for purposes of this Section 10.05, (I) the following
shall be added to the cash and cash equivalents of the applicable
Subject LPs derived from the Year End Operating Statements and as
of the Closing Date: (A) distributions received by QAL, QALA II,
Ventures I or Ventures II that result in a reduction of the
purchase price payable by Buyer under this Agreement pursuant to
Section 2.02, and (B) costs incurred in connection with
refinancing Debt secured by a Lien on Properties owned by a
Subject LP (which refinancing does not constitute a breach of or
default under any provision of this Agreement or any Other
Agreement) and paid to a Person who is not an Affiliate of any
Seller or NPI Party, and (ii) in computing Units Net Cash
Equivalent Assets as of December 31, 1995 and as of the Closing
Date, amounts paid after March 31, 1995 and before December 31,
1995 in repayment of the principal amount of Debt secured by a
mortgage on the Property known as Village in the Woods up to one
million dollars and other prepayments of Debt not to exceed
$150,000 in the aggregate shall be added back to the amount as of
December 31, 1995 and as of the Closing Date.
10.06 Capital Expenditures
If the capital expenditures, net of those funded by
insurance proceeds, paid or incurred by any Subject LPs during
calendar year 1995 exceeds the amount therefor set forth on its
Subject LP Budget, and the aggregate amount of such excess
capital expenditures for all Subject LPs is more than $500,000,
Buyer shall receive a purchase price adjustment equal to eighty
(80%) percent of the fees or proceeds received by NPI Inc., any
Affiliate of NPI Inc. or Grazier Construction in connection with
such excess capital expenditures.
10.07 New Agreements
Between the date hereof and the Closing the Sellers and
the NPI Parties shall not cause any of the Subject LPs to enter
into any new agreements with respect to Residential Properties
not terminable on 30 days' notice (other than agreements for
repairs or renovations made in the ordinary course of business
which require more than 30 days to complete) unless the failure
to do so would constitute a violation of the fiduciary duties of
the general partner of such Subject LP or Buyer consents to such
agreement in writing.
10.02 Other Certificates
(a) On or before January 7, 1996 (and in no event later
than seven days before the Closing), Sellers and the NPI
Principals shall deliver to Buyer a Certificate executed by each
of them certifying to (i) the dollar amount of capital
expenditures, net of insurance proceeds paid or incurred by any
Scheduled LP during calendar year 1995 of each Scheduled LP in
excess of the amount shown for capital expenditures in the
Scheduled LP Budget for such Scheduled LP and the amount of all
fees or proceeds to NPI Inc. and each Affiliate of NPI Inc. or to
Grazier Construction paid or accrued in connection therewith, and
(ii) lists all new agreements of the Subject LPs after the date
hereof which are not terminable on 30 days' notice and have not
been consented to by Buyer in writing.
(b) Time is of the essence with respect to the delivery of
such certificates and all other certificates, Statements of
Operation and other documents required to be delivered to Buyer
under this Agreement at least seven days prior to the Closing.
(c) The failure to deliver any of such certificates,
Statements or other documents shall constitute a material breach
of Sellers' covenants under this Agreement.
(d) Sellers and the NPI Parties each, jointly and
severally, represents and warrants to Buyer and Riverside that
each of such certificates, statements and other documents shall
be when delivered (and they shall so certify that it is) true,
complete and correct.
10.02 Commercial LPs
Notwithstanding any other provisions of this Agreement,
any representation and warranty with respect to any Commercial LP
shall not be deemed breached if the facts or events constituting
the breach relate only to a Commercial Property owned by such
Commercial LP and do not adversely affect, and cannot reasonably
be anticipated to adversely affect, directly or indirectly
(financially or otherwise), Insignia or any of its Affiliates,
the Residential Properties, if any, owned by such Commercial LP
or Riverside's financial interest in such Residential Properties.
XI. Survival of Representations and Warranties and
Covenants
11.01 Survival
(a) All representations, warranties, covenants and
agreements contained in this Agreement or in any Additional
Documents shall, in accordance with the terms of this Agreement
and the Master Indemnity Agreement, survive the Closing under
this Agreement and the Other Agreements notwithstanding any
investigation conducted by or on behalf of any party with respect
thereto.
(b) Notwithstanding any other provision of this Agreement
to the contrary, including but not limited to Section 4.08, other
than with respect to the representations and warranties set forth
in Section 4.17, no representation or warranty of any kind with
respect to the physical condition and state of repair of any
Property shall survive the Closing, it being understood and
agreed that all Property of any Subject LP is being sold "as is"
and in its condition on the Closing Date.
11.02 Time Limitations
(a) The representations and warranties set forth in this
Agreement shall terminate on the date which is eighteen months
after the Closing Date of this Agreement, or, in the case of any
breach based on an alleged violation of a statutory obligation,
the applicable statute of limitations plus 60 days, if longer,
but in no event (except with respect to a representation and
warranty as to a Commercial Property) later than six years and 60
days after the Closing Date; except that no representations or
warranties shall terminate with respect to any claim as to which
notice is given in writing prior to such date. For purposes of
this Agreement, violations of a statutory obligation include
violations of applicable rules and regulations.
(b) No claim may be asserted after the Closing against any
party to this Agreement for breach of any representation or
warranty set forth in this Agreement unless the claim is asserted
on or before the date which is eighteen months after the Closing
Date of this Agreement or, in the case of any breach based on an
alleged violation of a statutory obligation, the applicable
statute of limitations plus 60 days, if longer, but in no event
(except with respect to a representation and warranty as to a
Commercial Property) later than six years and 60 days after the
Closing Date.
(c) Except for the obligation of Sellers and the NPI
Parties pursuant to Section 6.19, no claim may be asserted after
the Closing against any party to this Agreement for breach of any
covenant or agreement set forth in this Agreement of any party
required to be performed at or before the Closing unless the
claim is asserted on or before the date which is eighteen months
after the Closing Date of this Agreement, or, in the case of any
breach based on an alleged violation of a statutory obligation,
the applicable statute of limitations plus 60 days, if longer,
but in no event (except with respect to a covenant or agreement
as to a Commercial Property) later than six years and 60 days
after the Closing Date.
XII. Termination
12.01 Termination
This Agreement and the transactions contemplated hereby may
be terminated at any time on or prior to the Closing Date:
(a) by the mutual written consent of the parties hereto;
(b) by Buyer:
(i) if any material representation or warranty of Sellers
or the NPI Parties made in this Agreement or in any Additional
Document was untrue in any material respect when made, and such
breach is not cured within 20 days of Sellers' receipt of written
notice from Buyer that such breach exists or has occurred; or
(ii)if Sellers or the NPI Parties shall have defaulted in
any material respect in the performance of any covenant,
agreement or obligation under this Agreement, and such default is
not cured within 20 days of Sellers' receipt of written notice
from Buyer that such default exists or has occurred; or
(iii) if there shall occur an Event of Bankruptcy (defined
below) with respect to any of Sellers or the NPI Parties; or
(iv) if termination by Buyer is permitted under Section
4.30(e) or Section 8.05 or in Article X; or
(v)if the conditions to Buyer's obligations hereunder cannot
be satisfied by the Closing Date for any reason other than a
breach by Buyer.
(c) by Sellers:
(i) if any material representation or warranty of Buyer
made in this Agreement or in any Additional Document was untrue
in any material respect when made, and such breach is not cured
within 20 days of Buyer's receipt of written notice from Sellers
that such breach exists or has occurred; or
(ii) if Buyer shall have defaulted in the performance in
any material respect of any covenant, agreement or obligation
under this Agreement, and such default is not cured within 20
days of Buyer's receipt of written notice from Sellers that such
default exists or has occurred; or
(iii) if there shall occur an Event of Bankruptcy with
respect to Buyer; or
(iv) if the conditions to Sellers' obligations hereunder
cannot be satisfied by the Closing Date for any reason other than
a breach by any of Sellers or the NPI Parties.
As used herein, an "Event of Bankruptcy" shall be deemed to
have occurred with respect to a Person if: (a) such Person makes
an assignment for the benefit of creditors; (b) such Person files
a voluntary petition in bankruptcy; (c) such Person is adjudged a
bankrupt or insolvent, or there is entered against such Person
any reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute,
law, rule or regulation; or (d) such Person seeks, consents to or
acquiesces in the appointment of a trustee, receiver or
liquidator of such Person or of all or any substantial part of
such Person's properties.
12.02 Manner of Exercise
In the event of the termination of this Agreement
pursuant to Section 12.01, written notice thereof shall forthwith
be given to the non-terminating parties, and this Agreement shall
terminate and the transactions contemplated hereunder shall be
abandoned without further action by any party hereto; provided,
however, no such notice of termination shall be effective unless
the terminating party shall give or cause to be given a
contemporaneous notice of termination under each of the Other
Agreements which contains provision for termination.
12.03 Effect of Termination
In the event of the termination of this Agreement
pursuant to Section 12.01, all obligations of the parties
hereunder shall terminate, except for the respective obligations
of any of the parties under Section 6.08, Article XIII and
Article XIV, if applicable.
XIII. Liquidated Damages
13.01 General
No termination of this Agreement shall relieve a
defaulting or breaching party from any liability to the other
parties hereto for or in respect of such default or breach,
unless (i) Buyer shall have paid or caused to be paid liquidated
damages as provided in Section 13.02, in which case Buyer shall
have no further liability of any kind whatsoever, or (ii) Sellers
and the NPI Parties shall have paid liquidated damages as
provided in Section 13.02(c), in which case Sellers and the NPI
Parties shall have no further liability of any kind whatsoever.
13.02 Certain Terminations
(a) If Sellers properly terminate this Agreement pursuant
to Section 12.01(c)(i) or 12.01(c)(ii), then, as liquidated
damages and not as a penalty, $9.5 million of the aggregate
principal amount of the PaineWebber Debt in which Buyer's
Affiliate purchased a participation on the date hereof (but not
any of the accrued interest thereon) shall be deemed forgiven,
notwithstanding any of the terms and provisions of the
PaineWebber Debt or such participation, and the remaining
principal amount thereof, if any, together with accrued interest,
shall be payable in full on June 30, 1996, and Buyer shall have
no further liability to any Person under this Agreement, any
Additional Documents or applicable law. Such forgiveness of debt
and payments shall be allocated $6.65 millon to the debt owed by
Ventures I to Buyer's Affiliate and $2.85 million to the debt
owed by Ventures II to Buyer's Affiliate; provided, however, that
if the debt owed by Ventures I to Buyer's Affiliate shall be less
than $6.65 million, the entire amount of the shortfall (up to
$6.65 million of Ventures I shall not owe Buyer's Affiliate any
amount under the PaineWebber Debt) shall be added to the amount
of debt owed by Ventures II to Buyer's Affiliate to be forgiven
hereunder; provided, further, however, that if the amount of such
shortfall shall exceed the Ventures II debt, Buyer shall pay to
Sellers in cash the amount of such excess.
(b) If Buyer properly terminates this Agreement pursuant to
Section 12.01(b)(i) as a result of a willful or nonwillful breach
of a representation or warranty in this Agreement or any
Additional Document or pursuant to Section 12.01(b)(ii) as a
result of a nonwillful default in the performance of any
covenant, agreement or obligation under this Agreement or any
Additional Document: (i) Buyer shall be entitled to recover from
Sellers and the NPI Parties any damages and any other relief
available at law or in equity under this Agreement, the
Additional Documents and applicable law and (ii) an aggregate of
$8,000,000 of the outstanding principal amount of the PaineWebber
Debt in which Buyer's Affiliate purchased a participation shall
become due and payable on March 31, 1996 and the remaining
outstanding principal amount thereof shall become due and payable
on June 30, 1996, each payment to be accompanied by payment of
all then accrued and unpaid interest on the entire outstanding
principal amount of such Debt.
(c) If Buyer properly terminates this Agreement pursuant to
Section 12.01(b)(ii) as the result of a willful default in the
performance of any covenant, agreement or obligation under this
Agreement or any Additional Document (even if there also exists
at such time cause to permit a proper termination of this
Agreement pursuant to Section 12.01(b)(i) then Sellers and the
NPI Parties agree, jointly and severally, to pay to Buyer, as
liquidated damages and not as a penalty: (x) $9.5 million
dollars, payable immediately upon demand, together with interest
thereon at the rate of 14 percent per annum from the date of such
termination to the date of payment, and (y) seventy-five percent
of the excess, if any, of (i) the aggregate Consideration
(defined below) that Sellers, the NPI Parties and their
Affiliates receive in connection with the consummation of any
Acquisition Proposal (defined below) that is consummated, or as
to which any binding written agreement relating to such
acquisition is entered into, on or before the first anniversary
of February 15, 1996 over (ii) the Consideration that Sellers,
the NPI Parties and their Affiliates were to receive under this
Agreement and the Other Agreements for the same properties and
assets. Any amount payable pursuant to clause (y) of the
preceding sentence shall be due and payable immediately upon
receipt thereof by any Seller or any NPI Party or any Affiliate
thereof, together with interest thereon at the rate of 14 per
cent per annum from such date until the date of payment. In the
event of any such termination, an aggregate of $8,000,000 of the
aggregate principal amount of the PaineWebber Debt in which
Buyer's Affiliate purchased a participation shall become due and
payable on March 31, 1996 and the remaining principal amount
shall be due and payable on June 30, 1996, each payment to be
accompanied by payment of all then accrued and unpaid interest on
the entire outstanding principal amount of such Debt.
(d) As used herein, "Acquisition Proposal" means any
proposal, other than those contemplated by this Agreement or any
Other Agreement, for (i) a sale, transfer for consideration,
merger, consolidation, other disposition, reorganization, other
business combination, or recapitalization involving any entity
which was to be acquired, or an equity interest which was to be
acquired, pursuant to this Agreement or any of the Other
Agreements, or any of the Units or Excess Units (the "Subject
Properties"), (ii) for the acquisition of a 50% or greater
interest in any of the Subject Properties or (iii) for the
acquisition of the right to cast 50% or more of the votes on any
matter with respect to any of the Subject Properties. As used
herein, "Consideration" means, with respect to any Acquisition
Proposal, the sum of (i) the total amount received by any
Sellers, the NPI Parties and their respective Affiliates in
connection with the consummation of an Acquisition Proposal,
(ii) the total amount of Debt or other liabilities that are
assumed or satisfied in connection with an Acquisition Proposal,
(iii) the total amount received by Sellers, the NPI Parties and
their respective Affiliates under any employment, consulting,
incentive compensation or other similar arrangement that is paid
off, assumed or created in connection with the consummation of
any Acquisition Proposal, (iv) the total amount received by
Sellers, the NPI Parties and their respective Affiliates pursuant
to any covenant or agreement not to compete that is made or
acquired in connection with any Acquisition Proposal, and (v) the
total amount of distributions received by Sellers, the NPI
Parties and their respective Affiliates from and after the date
hereof in respect of any limited partnership interest or (without
duplication) any other equity interest in any Person which was to
be sold pursuant to this Agreement or any Other Agreement.
Consideration shall include any amount (including any interest or
other amounts earned or receivable thereon) the receipt of which
by Sellers, the NPI Parties or their respective Affiliates is
subject to the occurrence of future events when such contingent
amounts are paid. Consideration shall include all amounts paid
in cash, notes, stock or other evidence of indebtedness,
irrespective of how such indebtedness is secured. In the event
that Consideration is paid in whole or in part in securities,
then (subject to Section 2.02 with respect to the transactions
contemplated by this Agreement) the value of such securities for
purposes of calculating the fee shall be as follows: (i) the
market price as of the date of closing of the Acquisition
Proposal for those securities publicly traded and (ii) the fair
market value of those securities which are not publicly traded.
(e) If facts or circumstances exist which would give rise
to a right of termination by Buyer under Section 12.01(b)(i) or
12.01(b)(ii), and Buyer gives the notice provided for therein and
a cure is not effected within 20 days of Sellers' receipt of such
notice, then Buyer may, in its sole discretion, both require
(subject to the price adjustments provided for under Section 8.05
and Article X) the Closing to occur and, subsequent thereto,
recover from Sellers and the NPI Parties any damages and any
other relief available at law or equity under this Agreement, the
Additional Documents or applicable law.
(f) It is the express agreement and understanding of the
parties that Buyer's election to waive its right to terminate
this Agreement and to elect to close the transactions
contemplated by this Agreement in accordance with Section
13.02(e) or any Other Agreement shall not constitute a waiver of
Buyer's otherwise applicable rights under this Agreement, the
Additional Documents and applicable law with respect to such
facts and circumstances even though the Buyer is fully aware of
the default or breach at the time of the Closing under this
Agreement or a closing under one of the Other Agreements.
However, it is the express agreement and understanding of the
parties that if there shall be an election by Sellers to
terminate this Agreement as contemplated by Section 13.02(a) or
by Buyer as contemplated by Section 13.02(c), then Buyer or
Sellers, as the case may be, shall have no liability or
obligation hereunder except as set forth in Section 13.02(a) or
Section 13.02(c), as the case may be.
Sellers and the NPI Parties shall be jointly and severally
liable for any default or breach of any provision of this
Agreement or any Additional Document and for any remedy flowing
therefrom.
XIV Miscellaneous
14.01 Covenants Not to Sue
(a) After the Closing, Buyer shall not sue any of Sellers
or the NPI Parties for any acts as a direct or indirect general
partner of the Subject LPs or for causing any other NPI Party to
act as a direct or indirect general partner of the Subject LPs
prior to the Closing except for suits based on any rights arising
under or in connection with this Agreement or the Additional
Documents (or as otherwise provided in the Master Indemnity
Agreement).
(b) After the Closing, neither any of Sellers nor the NPI
Parties shall sue Buyer or any Affiliate of Buyer for any acts as
a direct or indirect general partner of the Subject LPs after the
Closing except for suits based on any rights arising under or in
connection with this Agreement or the Additional Documents (or as
otherwise provided in the Master Indemnity Agreement).
(c) If Buyer sells, conveys, transfers or otherwise
disposes of all or substantially all of the Units to any Person,
Buyer shall, and shall cause its Affiliates to, cause such Person
to make adequate provisions such that upon consummation of any
such transaction Sellers and the NPI Parties shall be entitled to
receive from such Person the benefits of the provisions of
Section 14.01(a).
14.02 Joint and Several Liability; Indemnification
(a) With respect to any matter for which Sellers and the
NPI Parties would have joint and several liability to Buyer or
Riverside under this Agreement, the relative liability of the
Apollo Entities on the one hand and Sellers and the other NPI
Parties on the other hand shall be governed by Section 4.07 of
the Master Indemnity Agreement.
(b) After the Closing under this Agreement, all rights of
any parties hereto to sue any other parties for indemnification
or otherwise under this Agreement shall be asserted only under
the Master Indemnity Agreement.
14.03 Brokerage Fees
Each party hereto represents and warrants to the other
parties that it has not engaged a broker or finder in connection
with or as a result of any of the transactions contemplated by
this Agreement.
14.04 Further Actions
At any time and from time to time before and after the
Closing, each party agrees, at its expense, to take such actions
and to execute and deliver such documents as may be reasonably
requested by any other party to effectuate the purposes of this
Agreement.
14.05 Availability of Equitable Remedies
Since a breach of the provisions of this Agreement
could not adequately be compensated by money damages, any party
shall be entitled, after the Closing, in addition to any other
right or remedy available to it, to an injunction restraining
such breach or a threatened breach and to specific performance of
any such provision of this Agreement, and in either case no bond
or other security shall be required in connection therewith, and
the parties hereby consent to the issuance of such an injunction
and to the ordering of specific performance.
14.06 Notices
Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by
certified mail, return receipt requested, by Federal Express,
Express Mail, or similar overnight delivery or courier service,
or delivered (in person or by telecopy, telex, or similar
telecommunications equipment) against receipt to the party to
whom it is to be given at the address of such party set forth in
the preamble to this Agreement (or to such other address as the
party shall hereafter furnish to the other parties hereto in
writing in accordance with the provisions of this Section 14.05).
Any notice addressed to Buyer shall be addressed to the attention
of: General Counsel, with a copy to Proskauer Rose Goetz &
Mendelsohn LLP, 1585 Broadway, New York, New York 10036,
Attention: Arnold S. Jacobs, Esq. Any notice to Sellers or the
NPI Parties shall be addressed c/o and sent only to the NPI
Principals and AP-NPI with a copy to Rosenman & Colin, 575
Madison Avenue, New York, New York 10022-2585, Attention: Joseph
L. Getraer, Esq. and a copy to Battle Fowler LLP, 75 East 55th
Street, New York, New York 10022, Attention: Steven L.
Lichtenfeld, Esq. Any notice or other communication given by
certified mail shall be deemed given three days after the time of
certification thereof, except for a notice changing a party's
address which will be deemed given at the time of receipt
thereof. Any notice given by other means permitted by this
Section 14.06 shall be deemed given at the time of receipt
thereof.
14.07 Waiver
Any waiver by any party of a breach of any term of this
Agreement shall not operate as or be construed to be a waiver of
any other breach of that term or of any breach of any other term
of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions
will not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term or
any other term of this Agreement. Any waiver must be in writing.
14.08 Binding Effect
The provisions of this Agreement shall be binding upon
and inure to the benefit of Sellers, the NPI Parties, Buyer,
Riverside and their respective successors and assigns.
14.09 No Third-Party Beneficiaries
This Agreement does not create, and shall not be
construed as creating, any rights enforceable by any Person not a
party to this Agreement.
14.10 Severability
If any provision of this Agreement is invalid, illegal,
or unenforceable, the balance of this Agreement shall remain in
effect, and if any provision is inapplicable to any Person or
circumstance, it shall nevertheless remain applicable to all
other Persons and circumstances.
14.11 Headings
The headings in this Agreement are solely for
convenience of reference and shall not be deemed a part of or
given effect in the construction or interpretation of this
Agreement.
14.12 Counterparts; Governing Law
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
It shall be governed by and construed in accordance with the laws
of New York, without giving effect to conflict of laws rules.
The parties agree that any action, suit, or proceeding arising
out of, based on, or in connection with this Agreement or the
transactions contemplated hereby may be brought only in the
United States District Court for the Southern District of New
York or the Supreme Court of New York, New York County, and each
party covenants and agrees not to assert, by way of motion, as a
defense, or otherwise, in any such action, suit, or proceeding,
any claim that it is not subject personally to the jurisdiction
of such court, that its property is exempt or immune from
attachment or execution, that the action, suit, or proceeding is
brought in an inconvenient forum, that the venue of the action,
suit, or proceeding is improper, or that this Agreement or the
subject matter hereof may not be enforced in or by such court.
14.13 Attorneys' Fees
In any action or proceeding brought by a party to
enforce any provision of this Agreement, the prevailing party
shall be entitled to recover the reasonable costs and expenses
incurred by it in connection with that action or proceeding
(including, but not limited to, attorneys' fees).
14.14 Waiver of Trial by Jury
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE
PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN OR AMONG
THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION AND THE
RELATIONSHIPS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS
INTENDED TO ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT, AND
THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. EACH PARTY HERETO FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING. IN THE EVENT OF LITIGATION, THIS AGREEMENT
MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
14.15 No Joint Venture or Partnership
Sellers, the NPI Parties, Buyer and Riverside intend
that the relationships created hereunder be solely that of buyer
and seller. Nothing herein is intended to create a joint
venture, partnership, tenancy-in-common, or joint tenancy
relationship between any of the parties.
14.16 Construction of Documents
The parties hereto acknowledge that they were represented by
counsel in connection with the negotiation and drafting of this
Agreement and the documents to be delivered pursuant hereto,
none of which shall be subject to the principle of construing
their meaning against the party which drafted the
document.
14.17 Whole Agreement; Exhibits and Schedules; Amendments
This Agreement and the Other Agreements contain the
entire agreement of the parties hereto and thereto in respect of
the transactions contemplated hereby and thereby, and all prior
agreements among or between such parties, whether oral or
written, with respect to such transactions are superseded by the
terms of this Agreement and the Additional Documents. Exhibits
and Schedules attached hereto or referred to herein, shall be
deemed as fully a part of this Agreement as if set forth herein
in full. This Agreement may be amended only in a writing signed
by the party to be bound thereby.
14.18 Knowledge
For purposes of this Agreement (other than Section 4.30),
the term "to the knowledge of Sellers and the NPI Parties" or any
similar term shall mean the actual knowledge of any of Michael L.
Ashner, Martin Lifton, Arthur N. Queler, Peter Braverman, William
Hamilton and Steven Lifton and, in addition, (i) with respect to
representations or matters relating to or affecting Residential
Properties, any individual working for or employed by the
Sellers, the NPI Parties or the Scheduled LPs with the grade of
Regional Manager or above and (ii) with respect to
representations or matters relating to or affecting Commercial
Properties, Curtis Watt.
14.19 Expenses
Each of the parties hereto shall bear its own expenses in
connection with (i) the preparation and negotiation of this
Agreement and the Other Agreements and (ii) the transactions
contemplated by this Agreement and the Other Agreements, and all
such expenses of Sellers and the NPI Parties shall be paid by
Persons other than those to be acquired by Buyer and its
Affiliates under this Agreement and the Other Agreements.
14.20 Definitions
The following terms are defined in the following Sections:
Defined Term Section
Acquisition Proposal 13.02(d)
Actual Net Rental Revenue 10.01(a)
Additional Document 4.29
Adjusted Purchase Price Schedule 2.02(f)
Affiliate 4.01(c)(ii)
Apollo Entities Parties
Budgeted Net Rental Revenue 10.01(a)
Buyer Parties
Buyer's Deemed Recovery 8.05(b)
Cashin 3.02(a)(ii)
CEM Redemption Agreement Recitals
Certificates 3.01
change in the general partner 6.11
Closing 3.01
Closing Date 3.01
Code 4.14(a)
Commercial LPs Recitals
Commercial Properties 4.30(a)
Consideration 13.02(d)
Corporate Employees 4.19
Debt 4.13
Deemed Amount 4.08
Employment Agreements 4.19
Environment 4.17(i)
Environmental Laws 4.17(i)
Environmental Liabilities 4.17(i)
Environmental Losses 8.05(a)
ERISA 4.20(a)
ERISA Affiliate 4.20(a)
Evans 3.02(a)(ii)
Event of Bankruptcy 12.01(c)(iv)
Excess Units Recitals
Exchange Act 4.01(c)
Executive Employees 4.19
Existing Agreements 4.11
Existing Documents 4.30(a)
Existing Indebtedness 4.30(a)
Fox Amendment Recitals
GAAP 4.07(a)
Hazardous Substances 4.17(i)
HSR Act 6.04
HUD 6.04
Improvements 4.30(a)
Improvement Certificates 4.30(k)
Insignia Indemnity Agreement Recitals
Insignia Member Recitals
Insignia Reimbursement Agreement 3.02(a)(ii)
Intangibles 4.22
IRS 4.20(d)(i)
Leases 4.30(a)
Leasing Commissions 4.30(a)
Legal Requirements 4.30(a)
Lien 4.01(c)(iii)
Loan Documents 4.30(a)
Master Agreement Recitals
Master Indemnity Agreement 4.16
Material Agreements 4.15(a)
May Operating Statements 10.01(a)
McDowell 3.02(a)(ii)
Most Current Balance Sheet 4.07(a)
MRI/CP Units 4.01(a)
Multiemployer Plan 4.20(b)
Multiple Employer Plan 4.20(b)
Net Cash Equivalent Assets
Certificate 10.05(b)
Net Rental Revenue Certificate 10.03(b)
NPI-AP Member Recitals
NPI Family Parties Parties
NPI Parties Parties
NPI Principals Parties
Occupancy Certificate 10.02(b)
Order 4.25
Organizational Documents 4.03
Other Agreements 3.02(a)(x)
PaineWebber Recitals
PaineWebber Debt Recitals
PBGC 4.20(b)(v)
Permitted Exceptions 4.30(a)
Permitted Refinancing Debt 7.02(d)
Person 4.01(c)
Plan/Plans 4.20(a)
Portfolio Average Occupancy 10.01(a)
Property 4.06
Real Property 4.17(a)
Redeemed Partners 4.01(a)
Reimbursable Employees 4.19
Residential Properties 4.30(a)
Riverside Parties
Riverside Agreement Recitals
Riverside Reimbursement Agreement 3.02(a)(iii)
Scheduled LPs Recitals
Scheduled Management Agreements 4.15(b)
Scheduled Ownership Percentage 4.08
SEC 4.25
SEC Filings 4.25
Securities Act 6.10
Sellers Parties
Sellers' Knowledge 4.30(a)
Service Contracts 4.30(a)
Settlement Agreements 4.25
Subject LP Budgets 4.07(b)
Subject LP Financial Statements 4.07(a)
Subject Lps Recitals
Subject Properties 13.02(d)
Takeover Proposal 6.16
Tender Offer Documents 4.25
Tender Offers 4.25
Title Reports 4.30(b)
to the knowledge of Sellers and
the NPI Parties 14.18
Unit Loans Recitals
Units Recitals
Units Effective Income 10.01(a)
Units Effective Income
Certificate 10.04(b)
Units Net Cash Equivalent Assets 10.01(a)
Units Net Rental Revenue 10.01(a)
Year End Operating Statements 10.01(a)
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
BUYER:
INSIGNIA FINANCIAL GROUP, INC.
By: ____________________
Name: John K. Lines
Title: General Counsel and Secretary
INSIGNIA NPI, L.L.C.
By:____________________
Name: John K. Lines
Title: Vice President and Secretary
RIVERSIDE:
RIVERSIDE DRIVE L.L.C.
By: INSIGNIA NPI, L.L.C.
By: INSIGNIA FINANCIAL GROUP, INC.,
member
By: ____________________
Name:
Title:
and
By: QALA V
By: ____________________
Name: Michael L. Ashner
Title: General Partner
SELLERS:
DEFOREST VENTURES I, L.P.
By: DeForest Capital I Corporation,
its general partner
By: ____________________
Name: Michael L. Ashner
Title: President
DEFOREST VENTURES II, L.P.
By: DeForest Capital II Corporation,
its general partner
By: ____________________
Name: Michael L. Ashner
Title: President
QAL ASSOCIATES
By: ______________________
Name: Michael L. Ashner
Title: General Partner
QALA II ASSOCIATES
By: _____________________
Name: Michael L. Ashner
Title: General Partner
NPI PARTIES:
NPI PROPERTY MANAGEMENT CORPORATION
By: ____________________
Name: Michael L. Ashner
Title: General Partner
NPI-AP MANAGEMENT L.P.
By: NPI Property Management Corporation,
its general partner
By: _______________________
Name: Michael L. Ashner
Title: President
DEFOREST CAPITAL I CORPORATION
By:_______________________
Name: Michael L. Ashner
Title: President
DEFOREST CAPITAL II CORPORATION
By:_____________________
Name: Michael L. Ashner
Title: President
NATIONAL PROPERTY INVESTORS, INC.
By:____________________
Name: Michael L. Ashner
Title: President
NPI EQUITY INVESTMENTS, INC.
By:_____________________
Name: Michael L. Ashner
Title: President
NPI EQUITY INVESTMENTS II, INC.
By:____________________
Name: Michael L. Ashner
Title: President
AP-NPI, L.P.
By: AP-NPI Operating Corporation,
its general partner
By:____________________
Name:
Title:
AP-NPI X L.L.C.
By:_____________________
Name:
Title:
AP-NPI II, L.P.
By: AP-NPI Operating Corporation II,
its general partner
By:_____________________
Name:
Title:
AP-NPI III, L.P.
By:_________________, its
general partner
By:____________________
Name:
Title:
_______________________
MICHAEL L. ASHNER
_______________________
MARTIN LIFTON
________________________
ARTHUR N. QUELER
_________________________
STEVEN LIFTON
_________________________
G. BRUCE LIFTON
__________________________
JUDIE LIFTON
__________________________
SUSAN ASHNER
___________________________
ANISE QUELER
THE MARTIN LIFTON 1994 FAMILY TRUST
___________________________
By: ROBERT LIFTON, trustee
THE ELINOR LIFTON 1994 FAMILY TRUST
__________________________
By:ROBERT LIFTON, trustee
NPI INC. STOCK PURCHASE AGREEMENT
Stock Purchase Agreement dated as of August 17, 1995, among Insignia
Financial Group, Inc., a Delaware corporation with offices at One Insignia
Financial Plaza, P.O. Box 1089, Greenville, South Carolina 29602 ("Insignia");
and IFGP Corporation, a Delaware corporation with offices at One Insignia
Financial Plaza, P.O. Box 1089, Greenville, South Carolina 29602; ("IFGP" and,
together with Insignia, the "Buyer");
and
AP-NPI II, L.P., a Delaware limited partnership with offices at 1301 Avenue of
the Americas, New York, New York 10019 ("AP-NPI II"); Michael L. Ashner, with
an address at 17 Buttonwood Drive, Dix Hills, New York 11746; Martin Lifton,
with an address at 101 Wheatley Road, Old Westbury, New York 11568; and Arthur
N. Queler, with an address at 7421 Campo Florido, Boca Raton, Florida 33433
(such individuals being herein collectively called the "NPI Principals"); and
Steven Lifton, with an address at 6 Partridge Drive, Roslyn, New York 11576;
G. Bruce Lifton, with an address at 100 Cameron Glen Drive, Atlanta, Georgia
30328; Judie Lifton, with an address at 118 East 60th Street, Apt. 19C, New
York, New York 10022; Susan Ashner, with an address at 10 Buttonwood Drive,
Dix Hills, New York 11746; Anise Queler, with an address at 7421 Campo
Florido, Boca Raton, Florida 33433; Robert Lifton, Trustee, under the Martin
Lifton 1994 Family Trust, with an address c/o Martin Lifton at 101 Wheatley
Road, Old Westbury, New York 11568; and Robert Lifton, Trustee, under the
Elinor Lifton 1994 Family Trust, with an address c/o Martin Lifton at 101
Wheatley Road, Old Westbury, New York 11568 (such additional individuals and
trusts, together with the NPI Principals, collectively called the "NPI Family
Parties"; and together with AP-NPI II, the "Sellers");
and
National Property Investors, Inc., a Delaware corporation with offices at 5665
Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328 ("NPI Inc."); NPI-AP
Management, L.P., a Delaware limited partnership with offices at 5665
Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328 ("NPI-AP
Management"); NPI Property Management Corporation, a Florida corporation with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328 ("NPI
Property Management"); DeForest Capital I Corporation, a Delaware corporation
with offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328
("DFC I"); DeForest Ventures II L.P., a Delaware limited partnership with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328
("Ventures II"); DeForest Ventures I L.P., a Delaware limited partnership with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328
("Ventures I"); DeForest Capital II Corporation, a Delaware corporation with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328,
("DFC II"); QAL Associates, a Georgia general partnership with offices at 5665
Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328 ("QAL"); QALA II
Associates, a Georgia general partnership with offices at 5665 Northside
Drive, N.W., Suite 370, Atlanta, Georgia 30328 ("QALA II"); AP-NPI L.P., a
Delaware limited partnership with offices at 1301 Avenue of the Americas, New
York, New York 10019 ("AP-NPI"); AP-NPI X L.L.C., a Delaware limited liability
corporation with offices at 1301 Avenue of the Americas, New York, New York
10019 ("AP-NPIX"); AP-NPI III, L.P., a Delaware limited partnership with
offices at 1301 Avenue of the Americas, New York, New York 10019
("AP-NPI III"); NPI Equity Investments, Inc., a Florida corporation with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328
("NPI Equity"); NPI Equity Investments II, Inc., a Florida corporation with
offices at 5665 Northside Drive, N.W., Suite 370, Atlanta, Georgia 30328 ("NPI
Equity II" and together with NPI Inc., NPI-AP Management, DFC I, QAL, QALA II,
Ventures II, NPI Property Management, Ventures I, DFC II, AP-NPI, AP-NPIX, AP-
NPI III, NPI Equity and NPI Equity II, collectively, the "NPI Parties").
WITNESSETH:
WHEREAS, Sellers wish to sell to Buyer, and Buyer wishes to purchase from
Sellers, all of the issued and outstanding common stock, par value $.01 per
share, of NPI Inc. (the "NPI Shares"), subject to the terms and conditions set
forth herein; and
WHEREAS, the parties wish to make certain other agreements in connection
with such sale and purchase; and
WHEREAS, pursuant to a Master Agreement (the "Master Agreement") dated as
of November 21, 1994, as amended, with PaineWebber Real Estate Securities,
Inc. ("PaineWebber") and a related Loan Agreement with Ventures I dated as of
November 30, 1994 and a related Loan Agreement with Ventures II dated as of
November 21, 1994, Ventures I has borrowed and there remains unpaid on the
date hereof an aggregate of $15,159,392.00 and Ventures II has borrowed and
there remains unpaid on the date hereof an aggregate of $18,154,333.71,
respectively (collectively, the "PaineWebber Debt"); and
WHEREAS, the limited partners of Ventures I that are not parties to this
Agreement have consented to this Agreement and the transactions contemplated
hereby in an agreement by and between Ventures I, DFC I and PD Associates,
L.L.C., dated as of the date hereof, a copy of which is attached as
Exhibit A; and in an agreement, dated as of the date hereof, a copy of which
is attached as Exhibit B, by and among Ventures I, DFC I, Emmet J. Cashin,
Jr., Trustee of the Survivors Trust under the Cashin 1990 Trust, Jarold A.
Evans, Trustee of the Jarold A. Evans Revocable Trust, dated April 19, 1989,
J.E. Capital Partners, and W. Patrick McDowell, Trustee of the McDowell
Family Revocable Trust, dated April 28, 1978, as amended; and
WHEREAS, the general partners of Fox Realty Investors, a California
general partnership ("FRI"), have entered into a Second Amended and Restated
Partnership Agreement (the "Fox Amendment"), dated the date hereof, further
amending and restating the Amended and Restated Partnership Agreement entered
into as of December 6, 1993, of FRI, as amended by the First Amendment
thereto entered into as of August 8, 1994 (together with the Fox Amendment,
the "FRI Partnership Agreement"), a copy of which is attached as Exhibit C;
and
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the covenants, agreements,
representations and warranties herein contained, the parties hereto hereby
agree as follows:
I. The Sale and Purchase
1.01 Sale and Purchase
(a) At the Closing (defined below), each of Sellers shall
sell to IFGP and IFGP shall purchase from each of Sellers the number of NPI
Shares set forth opposite such Seller's name on Schedule 1.01-C hereto, such
NPI Shares to consist in the aggregate of all of the issued and outstanding
capital stock of NPI Inc., for an aggregate purchase price of $1,000,000.00,
in cash (the "Purchase Price").
(b) Buyer shall not be required to purchase any of the NPI
Shares to be sold hereunder unless all of the NPI Shares are sold to Buyer
hereunder at the Closing.
1.02 Delivery of Stock Certificates and Purchase Price.
(a) The Sellers shall deliver to IFGP at the Closing stock
certificates representing the NPI Shares being sold by them hereunder duly
endorsed in blank or accompanied by stock powers duly endorsed in blank, in
each case in proper form for transfer, with such proof of power and authority
of the Person (defined below) endorsing such stock certificates or stock
powers as shall be requested by IFGP, and with all required documentary
stamps affixed thereto, and to the extent Buyer reasonably requests, all
appropriate estate tax waivers, in form and substance reasonably satisfactory
to Buyer.
(b) At the Closing, IFGP shall pay the Purchase Price by paying
to each Seller entitled to receive a portion of the Purchase Price as set
forth on Schedule 1.01-C, by certified or official bank check payable to such
Seller or by wire transfer to such Seller at the account and in accordance
with wire instructions delivered to Buyer at least two business days prior to
the Closing Date (defined below).
II. [Intentionally Omitted]
III. Closing
3.01 The Closing
The closing of the transactions contemplated by Section 1.01 (the
"Closing") shall take place at the offices of Proskauer Rose Goetz &
Mendelsohn LLP, 1585 Broadway, New York, New York, at 10:00 A.M., local time,
on the same day as the closing of the transactions under the Partnership
Units Purchase Agreement dated as of the date hereof among the parties named
therein (the "Units Purchase Agreement"), or at such other time and place as
the parties shall hereafter agree (the "Closing Date").
3.02 Transactions at the Closing
The following transactions shall take place at the Closing, all of
which shall be deemed to have occurred simultaneously and none of which shall
be deemed completed unless and until all of them shall have been completed (or
waived in writing by the parties entitled to performance):
(a) Sellers shall deliver to Buyer the following:
(i) The stock certificates representing the NPI Shares
referred to in Section 1.02, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank, in each case in proper form for transfer, with
such proof of power and authority of the person endorsing such stock
certificates or stock powers as shall be requested by Buyer, and with all
required documentary stamps affixed thereto, and to the extent Buyer
reasonably requests, all appropriate estate tax waivers, in form and substance
reasonably satisfactory to Buyer.
(ii) [Intentionally Omitted]
(iii) An opinion of Rosenman & Colin dated the Closing Date in
form and substance satisfactory to Buyer.
(iv) Evidence that all applicable waiting periods (and any
extensions thereof) relating to any transactions to be completed by any of the
Sellers or the NPI Parties under this Agreement under the HSR Act (defined
below) have expired or otherwise been terminated.
(v) Certificates from each of the Sellers (and from each of
the NPI Parties listed on Schedule 3.02(a.1)-C) which is not a natural person
or a trust, signed by its duly authorized general partners, officers,
managers or other legal representatives in form and substance satisfactory to
Buyer certifying its Organizational Documents (defined below), valid existence
and good standing (in all jurisdictions where the failure to qualify would
have a material adverse effect on the financial condition or operations of
such Seller or NPI Party), incumbency of officers or others acting in a
representative capacity, due authorization of the transactions contemplated
hereby, accuracy of Sellers' and the NPI Parties' representations and
warranties, performance and compliance by Sellers and NPI Parties with all of
Sellers' and NPI Parties' covenants and agreements hereunder and satisfaction
of the conditions to Buyer's obligations hereunder to be satisfied by any of
Sellers or the NPI Parties and such other matters as Buyer shall reasonably
request.
(vi) Evidence in form and substance satisfactory to Buyer of
all consents received by Sellers or the NPI Parties pursuant to Section 6.06.
(vii) A certificate of the NPI Principals pursuant to Section
7.06, in form and substance satisfactory to Buyer, with respect to Affiliate
transactions.
(viii) A certificate of Sellers pursuant to Section 8.04 in form
and substance satisfactory to Buyer, with respect to the absence of any
material adverse change.
(ix) A certificate of the NPI Principals pursuant to Section
8.22, in form and substance satisfactory to Buyer, with respect to the
agreements listed on Schedule 3.02(a.2)-C (the "Other Agreements").
(x) Evidence that all directors and officers of the Acquired
Companies (defined below) have submitted their resignations or been removed
effective as of the Closing Date.
(b) Buyer shall deliver to Sellers the following:
(i) The Purchase Price as specified in Section 1.02.
(ii) [Intentionally Omitted]
(iii) An opinion of Proskauer Rose Goetz & Mendelsohn LLP dated
the Closing Date in form and substance satisfactory to Sellers.
(iv) Evidence that all applicable waiting periods (and any
extensions thereof) relating to any transactions to be completed by Buyer
under this Agreement under the HSR Act have expired or otherwise been
terminated.
(v) Certificates from each of Insignia and IFGP, signed by its
duly authorized officers or other legal representatives in form and substance
satisfactory to Sellers certifying its Organizational Documents, valid
existence and good standing (in all jurisdictions where failure to qualify
would have a material adverse effect on the financial condition or operations
of Insignia), incumbency of officers or others acting for such entity in a
representative capacity, due authorization of the transactions contemplated
hereby, accuracy of Buyer's representations and warranties, performance and
compliance by Buyer with all of Buyer's covenants and agreements hereunder and
satisfaction of the conditions to Sellers' obligations hereunder to be
satisfied by Buyer and such other matters as Sellers shall reasonably request.
(vi) A certificate of Buyer pursuant to Section 9.07 in form and
substance satisfactory to Sellers.
(vii) A certificate from Buyer pursuant to Section 9.08 in form
and substance satisfactory to Sellers with respect to no material adverse
change.
(viii) Evidence that the Investment Capital Contribution (defined
below) required to be delivered under Section 9.10 has been made.
IV. Representations and Warranties of Sellers and the NPI Parties
Sellers and the NPI Parties each, jointly and severally, represent and
warrant to Buyer as of the date hereof as follows:
4.01 Relationship of Sellers, the NPI Parties and their Affiliates
Each of Sellers and each of the NPI Parties is an individual or
entity of the type and/or acting in the capacity described in this Agreement.
The Sellers own, directly or indirectly, all of the legal and beneficial
equity interests in NPI Inc. and its direct and indirect subsidiaries as
listed on Schedule 4.01.1-C ("Subsidiaries" and together with NPI Inc., the
"Acquired Companies"). The Acquired Companies (a) own or control, directly or
indirectly, one or more of the general partners in one or more general
partnerships or limited partnerships as set forth on Schedule 4.01.2-C, (each
such general partner hereinafter referred to as a "Controlled GP" and each
such general partnership or limited partnership hereinafter referred to as a
"Controlled Partnership"). None of the Acquired Companies legally or
beneficially, directly or indirectly, has any assets or owns any interest in
any other Person except as listed on Schedules 4.01.1-C and 4.01.2-C. As used
in this Agreement, "Person" means an individual, a corporation, a partnership,
a limited liability company, a joint venture, an association, a joint-stock
company, a trust, a business trust, a government or any agency or political
subdivision thereof, any unincorporated organization or any other entity of
any kind; and an "Affiliate" of any Person means any other Person directly or
indirectly controlling, controlled by or under common control with such
Person.
4.02 Organization Chart
The chart set forth on Schedule 4.02.1-C correctly sets forth the
relationships and ownership interests among Sellers, the NPI Parties and the
Acquired Companies. All of the ownership interests in the entities set forth
on that chart correctly reflect the legal and beneficial ownership of such
entities except that no representation is made as to the ownership of the
Apollo Entities (defined below). Sellers are the only owners of record or
beneficial owners of the capital stock of NPI Inc. and the NPI Shares being
sold to Buyer hereunder are free and clear of any Liens other than the Liens
securing the PaineWebber Debt. As used in this Agreement, "Lien" means any
lien, pledge, security interest, claim, charge, mortgage, encumbrance,
restriction, voting trust or any other rights of any other Person other than
(a) any restrictions on the transferability of partnership interests set forth
in the Organizational Documents of a Controlled Partnership, (b) mechanics
liens set forth on Schedule 4.02.2-C or other mechanics liens not so set forth
but as to which the cost to discharge them as of the Closing Date does not, in
the aggregate, exceed $100,000, or (c) the Voting Trust Agreement dated as of
December 6, 1993 among the parties named therein (the "FCMC Voting Trust").
4.03 Organization and Qualification
(a) Schedule 4.03-C correctly sets forth as to each of the Sellers
(which is not an individual), NPI Parties, the Acquired Companies, and the
Controlled Partnerships, its place of incorporation or formation, principal
place of business, and in the case of each Controlled GP of a Controlled
Partnership, jurisdictions in which it is qualified to do business as a
foreign corporation or partnership, as the case may be.
(b) Sellers have made available to Buyer with respect to each of
the Sellers (which is not an individual), NPI Parties, Acquired Companies and
Controlled Partnerships, true, complete and correct copies of each of the
following documents including all amendments and supplements thereto: (i) the
certificate of limited partnership and partnership agreement for each such
Person which is a limited partnership, and partnership agreement (or other
Organizational Document) for each such Person which is a general partnership,
(ii) the certificate of incorporation or articles of incorporation, by-laws,
shareholders' agreements and voting trusts, if any, with respect to each such
Person which is a corporation, (iii) the articles of organization and
operating agreement, or similar documents, with respect to each such Person
which is a limited liability company, (iv) the trust instruments or an opinion
of counsel from attorneys and in form and substance acceptable to Buyer with
respect to formation, powers, authority and other related matters with respect
to each such Person which is a trust, and (v) other similar documents
(collectively, such Person's "Organizational Documents"). Each of the
Sellers, NPI Parties and Controlled Partnerships which is identified in this
Agreement as a limited partnership or a general partnership is a partnership
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of organization, in each case, with all requisite power and
authority, and all necessary consents, authorizations, approvals, orders,
licenses, certificates, and permits of and from, and declarations and filings
with, all federal, state, local, and other governmental authorities and all
courts and tribunals, to own, lease, license, and use its properties and
assets and to carry on the business in which it is now engaged. Each of the
Sellers, NPI Parties and Acquired Companies which is identified in this
Agreement as a corporation or limited liability company is a corporation or a
limited liability company, respectively, duly organized, validly existing, and
in good standing under the laws of its jurisdiction of organization, with all
requisite power and authority, and all necessary consents, authorizations,
approvals, orders, licenses, certificates, and permits of and from, and
declarations and filings with, all federal, state, local, and other
governmental authorities and all courts and tribunals, to own, lease, license,
and use its properties and assets and to carry on the business in which it is
now engaged. Each of the Sellers which is identified in this Agreement as a
trust is duly organized and existing under the laws of its jurisdiction of
organization, with all requisite power and authority, and all necessary
consents, authorizations, approvals, orders, licenses, certificates, and
permits of and from, and declarations and filings with, all federal, state,
local and other governmental authorities and all courts and tribunals, to own
its assets.
(c) Each of the Controlled GPs that serves directly or indirectly
as the general partner of one or more Controlled Partnerships is duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of organization, with all requisite power and authority, and all
necessary consents, authorizations, approvals, orders, licenses, certificates,
and permits of and from, and declarations and filings with, all federal,
state, local, and other governmental authorities and all courts and tribunals,
to own, lease, license, and use its properties and assets and to carry on the
business in which it is now engaged.
4.04 Authority
Sellers and the NPI Parties have all requisite power and authority
to execute, deliver, and perform this Agreement. All necessary corporate,
partnership, limited liability company, trust or other proceedings, as the
case may be (including, without limitation, any shareholder, member or limited
partner consents, as the case may be) of or on behalf of any Sellers and NPI
Parties have been duly taken to authorize their execution, delivery, and
performance of this Agreement. This Agreement and the other documents
required to be delivered hereby have been (or when delivered will be) duly
authorized, executed, and delivered by Sellers and the NPI Parties, and
constitute (or when delivered will constitute) the legal, valid, and binding
obligation of Sellers and the NPI Parties, enforceable as to each of them in
accordance with their terms. Upon the Closing, Sellers shall transfer good
title to Buyer of all of the NPI Shares being sold hereunder, and the Acquired
Companies shall have good title to all of the general partnership interests in
any of the Controlled Partnerships that it owns, directly or indirectly, and
all of such title shall be free and clear of all Liens (assuming payment of
the PaineWebber Debt by Buyer).
4.05 Capitalization
Schedule 4.05.1-C sets forth the authorized capital stock of each of
the Acquired Companies and the total number of issued and outstanding shares
of each of the Acquired Companies' capital stock. All of the issued and
outstanding shares of capital stock of each of the Acquired Companies is duly
authorized, validly issued, fully paid, and fully non-assessable and are owned
by NPI Inc. free and clear of all Liens (other than Liens securing the
PaineWebber Debt). There is no agreement, commitment (whether or not legally
binding), plan, or arrangement to issue, and no outstanding option, warrant,
security or other instrument or other right to obtain, convert into or
exchange for or call for the issuance of any capital stock or security or
other instrument convertible into, exercisable for, or exchangeable for any
capital stock in any of the Acquired Companies, except as set forth on
Schedule 4.05.2-C. There are no restrictions of any kind on the transfer of
the outstanding capital stock of any of the Acquired Companies, except as set
forth on Schedule 4.05.3-C and those imposed by applicable federal and state
securities laws. There are no contracts or other understandings (whether
formal or informal, written or oral, firm or contingent) that require or may
require any of the Acquired Companies to repurchase any of its capital stock.
There are no preemptive or similar rights with respect to each of the
Acquired Companies' capital stock. Except for the FCMC Voting Trust, and
except as set forth on Schedule 4.05.4-C, none of the Acquired Companies is a
party to any voting agreements, voting trusts, proxies or any other
agreements, instruments or understandings with respect to the voting of any
capital stock of any of the Acquired Companies which shall be in effect at the
Closing Date, or any agreement with respect to the transferability, purchase
or redemption of any capital stock of any of the Acquired Companies.
4.06 Partnership Interests
(a) Schedule 4.06.1-C sets forth the identity of each entity which
serves as a general partner of one or more of the Controlled Partnerships and,
(i) in those instances where such general partner is itself a partnership, the
identity of each general partner of such partnerships, and (ii) the identity
of the managing general partner or general partners, as the case may be, of
each Controlled Partnership. Each of the general partnership interests in the
Controlled Partnerships which is owned or controlled by the Acquired Companies
is duly authorized, validly issued, fully paid and fully non-assessable
(except to the extent of any liability of the owner of the general partnership
interest in the Controlled Partnerships as a general partner as provided in
their respective partnership agreements), free and clear of all Liens (other
than Liens securing the PaineWebber Debt) or voting trusts (other than the
FCMC Voting Trust) or other rights of third parties and has not been issued
and is not owned or held in violation of the partnership agreement covering
such partnership. Except as set forth on Schedule 4.06.2-C, there are no
rights, options, subscriptions or other agreements of any kind to purchase
or acquire any general partnership interest in any of the Controlled GPs.
Except as set forth on Schedule 4.06.3-C, there are no agreements of any kind
limiting or otherwise restricting the authority of any of the Controlled GPs,
acting singly or jointly, to directly or indirectly manage and control in all
respects one or more of the Controlled Partnerships and no other entity is
authorized, singly or jointly, with any other entity, to so manage and control
any Controlled Partnership.
(b) Sellers and the NPI Parties have not breached or permitted any
Controlled GP to breach, or default or violate any of its material
obligations, including but not limited to its fiduciary duty to any Controlled
Partnership or other partners in any Controlled Partnerships, under any
Organizational Documents with respect to such Controlled Partnerships. The
FCMC Voting Trust is in full force and effect, no party is in material default
of any provision thereof and there exist no grounds for removing or replacing
NPI Equity II as the managing partner of FRI. The FRI Partnership Agreement
is in full force and effect and no party is in material default of any
provision thereof. Sellers and the NPI Parties have furnished to Buyer true,
complete and correct copies of information provided by NPI Equity II to
Portfolio Realty Advisers, L.P. ("PRA") pursuant to Section 8 of the FRI
Partnership Agreement since January 1, 1994, including supporting
documentation of NPI Equity II's calculation of such information.
4.07 Business Conducted
Except as set forth on Schedule 4.07.1-C, NPI Inc. conducts no
business and has no assets or Liabilities (defined below) other than the
ownership of shares of capital stock in its Subsidiaries. Except as set forth
on Schedule 4.07.1-C, the Subsidiaries each conducts no business and has no
assets other than the ownership of general partnership interests in the
Controlled Partnerships, which Controlled Partnerships conduct no business
other than the ownership and operation of real properties and the ownership of
general or limited partnership interests. All of the real properties owned or
operated by each of the Controlled Partnerships are listed on Schedule 4.07.2-
C. Except as set forth on Schedule 4.07.3-C, each of the properties is used
solely for residential or commercial purposes and related activities.
4.08 Financial Condition; Assets
(a) On the Closing Date, each of the Acquired Companies shall have
Net Current Assets (defined below) greater than zero. As used in this
Agreement, "Net Current Assets" means cash and cash equivalents less all
Liabilities; and "Liabilities" means any and all obligations and liabilities
of every kind, including, without limitation, contingent liabilities, known
or unknown, obligations to perform services in the future for which fees or
commissions have been prepaid, and contingent or unmatured obligations and
liabilities other than any (i) Acquired Company's potential obligation to
restore the deficit in a general partner's capital account in any Controlled
Partnership, (ii) Acquired Company's potential obligation to return to any
Controlled Partnership a portion of the distributions received by a general
partner on account of its partnership interest in such Controlled Partnership
by reason of the failure of the limited partners in such Controlled
Partnership to receive a specified amount of distributions; (iii) obligations
and liabilities under partnership law of a general partner solely attributable
to its serving as a general partner of a Controlled Partnership; and (iv)
except as set forth on Schedule 4.08(a)-C.
(b) On the Closing Date, each of the Acquired Companies shall have
good and valid title to each of the following assets, free and clear of Liens,
other than the PaineWebber Debt:
(i) the loans and advances set forth on Schedule 4.08(b)-C to
the extent not paid prior to Closing;
(ii) the accounts receivable set forth on Schedule 4.08(b)-C to
the extent not paid prior to Closing;
(iii) all fixed assets currently owned by them, plus any fixed
assets acquired and less any fixed assets disposed of in each case in the
ordinary course of business consistent with past practice between the date
hereof and the Closing Date.
4.09 Insurance
Schedule 4.09-C lists all of the policies of insurance of any kind
covering each of the Acquired Companies and their respective assets and
businesses, setting forth the nature of the insurance, the insurance carrier,
the amount of coverage, and the owner of and expiration date of such policies.
Each of the Acquired Companies has such insurance in such amounts and
covering such risks as well-run businesses in the same industry customarily
carry. All such policies of insurance are in full force and effect and all
premiums due thereon for all periods through the Closing Date are or will be
on the Closing Date fully paid. None of the Sellers, the NPI Parties or
Acquired Companies has received any notice of cancellation or termination with
respect to any such policy.
4.10 Material Events and Changes
Since April 30, 1995, except as set forth on Schedule 4.10-C, none
of the Acquired Companies:
(a) has mortgaged, pledged, subjected to or suffered any Lien, or
granted any Lien, in respect of any of its properties, or incurred any Debt
(defined below), except the PaineWebber Debt; and
(b) is in default under any Material Agreement (defined below),
license or permit; or
(c) has experienced any change in control which is prohibited by
the terms of any note, bond, mortgage, indenture, lease, license, franchise,
agreement or other instrument or obligation by which it or any of its
properties or assets is affected or bound.
4.11 No Conflicts or Defaults; No Violations
Neither the execution, delivery or performance of this Agreement by
any of the Sellers or the NPI Parties nor the consummation of the transactions
contemplated hereby will (with or without the giving of notice, lapse of time
or both): (a) contravene any provisions of any law, statute, rule or
regulation or any order, writ, judgment, injunction or decree of any court or
governmental instrumentality; or (b) except as set forth on Schedule 4.11-C,
and assuming that each of the consents and approvals set forth on Schedule
4.12-C has been obtained, conflict with or result in any material breach of,
or constitute a material default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of any of Sellers, the NPI Parties or the Acquired
Companies pursuant to the terms of any note, bond, indenture, mortgage, deed
of trust, loan agreement, credit agreement, lease, franchise, partnership
agreement, voting trust or any other agreement, contract or instrument to
which any of them is a party or to which any of their respective properties or
assets is subject; (c) violate any provision of their respective
Organizational Documents; (d) give any Person or group of Persons the right to
replace any of them as a direct or indirect general partner of any Controlled
Partnership; or (e) (i) except for payment of one-time bonuses in connection
with the consummation of the transactions contemplated hereby, entitle any
current or former employee of any of Sellers, the NPI Party or Acquired
Company to any severance pay, unemployment compensation or any similar
payment, (ii) accelerate the time of payment or vesting or increase the amount
of any compensation payable to any such employee or former employee, or
(iii) directly or indirectly result in any payment made or to be made to or on
behalf of any person to constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code").
4.12 Consents
Except the filings under the HSR Act, the consent of the Department
of Housing and Urban Development ("HUD") to the transactions contemplated by
this Agreement and the Other Agreements as described in Section 6.05, the
consent of the Rural Economic Community Development and Housing Agency
("RECDHA"), and as set forth on Schedule 4.12-C, no approval or consent of,
notice to, or filing or registration with, or authorization, order, license,
certificate, or permit of or from, any governmental authority or any other
notice to or consent of any third party is required in connection with (a)
the execution, delivery and performance of, (b) the legality, validity,
binding effect or enforceability of or (c) the consummation of the
transactions contemplated by this Agreement.
4.13 Debt
Schedule 4.13-C is a complete list of (a) all Debt for each of the
Acquired Companies (including any intercompany debt or Debt for which the NPI
Shares is security), (b) all Debt of the Controlled Partnerships which is
recourse to the Controlled GP of such Controlled Partnership, and (c) all Debt
in which any Controlled GP is obligated to extend or has extended any lines of
credit, or is committed to make or has made working capital loans, to any
Controlled Partnership. None of the Acquired Companies or Controlled GPs is
the obligor in respect of and no assets of any of the Acquired Companies or
Controlled GPs is security for or otherwise subject to any Debt other than the
Debt described on Schedule 4.13-C. Sellers and the NPI Parties have delivered
to Buyer true, complete and correct copies of all agreements, notes, security
documents and other documents relating to any Debt of the Acquired Companies
in effect on the date hereof, and each such document is in full force and
effect and has not been further modified, amended or terminated and no party
is in payment default thereunder or any other default thereunder other than
immaterial defaults. Each of the Acquired Companies is in substantial
compliance with the terms of any Debt for which it is liable or to which any
of its assets is subject, no payment defaults exist thereunder and no notice
of default with respect thereto has been received by any of Sellers or the NPI
Parties.
As used in this Agreement, "Debt" means, with respect to any Person,
all indebtedness of any kind for which such Person is or could become liable
for repayment or to which any property or other assets of such Person is
subject, including, without limitation, (a) all indebtedness for borrowed
money, (b) all indebtedness for the deferred purchase price of property or
services, (c) all obligations evidenced by notes, bonds, debentures or other
similar instruments (other than performance, surety and appeal bonds arising
in the ordinary course of such Person's business), and all indebtedness
secured by mortgage or other Liens against any of such Person's property or
other assets, (d) all indebtedness created or arising under any conditional
sale or other title retention agreement with respect to property acquired by
such Person, (e) all obligations under capital leases (as such term is defined
by GAAP), (f) all reimbursement, payment or similar obligations contingent or
otherwise, under acceptance, letter of credit or similar facilities, (g) any
obligations of any of the foregoing kinds of any other Person which is
guaranteed directly or indirectly by such Person or in effect guaranteed
directly or indirectly by such Person, including, without limitation, through
an agreement (i) to pay or purchase such Debt or to advance or supply funds
for the payment or purchase thereof, (ii) to purchase, sell or lease property
or services primarily for the purpose of enabling the debtor to make payment
of such Debt, (iii) to supply funds to or in any other manner invest in the
debtor (including any obligation to pay for goods or services whether or not
received) or (iv) otherwise to insure a creditor against loss in respect of
such Debt, and (h) any Debt of any type of any other Person secured by any
Lien on any property or assets of such Person but excluding any withdrawal
liability with respect to any Multiemployer Plan (defined below). As used in
this Agreement, "Debt" does not include any general partner obligation to
restore the deficit in its capital account in any Controlled Partnership and
any general partner obligation to return to any Controlled Partnership a
portion of the distributions received by a general partner on account of its
partnership interest in such Controlled Partnership by reason of the failure
of the limited partners in such Controlled Partnership to receive a specified
amount of distributions.
4.14 Taxes
(a) No Seller is a foreign person within the meaning of Section
1445 of the Code. Schedule 4.14(a)-C sets forth the taxpayer identification
number and office address within the United States for each Seller.
(b) Schedule 4.14(b)-C sets forth the name of each Controlled
Partnership which has made an election under Section 754 of the Code at any
time that any Seller or NPI Party or any Affiliate managed or operated such
Controlled Partnership or owned any general partnership interest therein or,
to the knowledge of Sellers and the NPI Parties (defined below), prior to such
time.
(c) Except as set forth on Schedule 4.14(c)-C, each of the
Controlled Partnerships is and since its formation has been a partnership for
federal income tax purposes qualifying under Section 7701 of the Code and none
of the Controlled Partnerships constitutes a publicly traded partnership
within the meaning of Section 7704 of the Code.
(d) Schedule 4.14(d)-C sets forth the Section 754 amount,
amortization method and accumulated amortization with respect to the basis in
partnership interest which differs from the capital accounts of the tax
returns of any Controlled Partnership for the most recent calendar year.
4.15 Material Agreements
Schedule 4.15-C lists all existing agreements and identifies the
subject matter thereof to which any of the Acquired Companies is a party or is
subject or to which any of their respective properties or assets is subject
which cannot be canceled without penalty within 90 days and which are
material to the financial condition, results of operations, business,
properties, assets or liabilities of any of the Acquired Companies (each a
"Material Agreement"). Sellers have made available to Buyer true, complete
and correct copies of each such Material Agreement. All of such Material
Agreements are in full force and effect and no party is in payment default of
any provision thereof or any other default thereunder except immaterial
defaults.
4.16 Master Indemnity Agreement
Each of Sellers and the NPI Parties represents and warrants that it
has consulted with its advisors and counsel with respect to its obligations
under the Master Indemnity Agreement of even date among the Buying Group,
Riverside and the Selling Group, as such terms are defined therein (the
"Master Indemnity Agreement"), and the adequacy of the consideration that it
has received with respect thereto; and that such consideration is in all
respects adequate and the value thereof is not less than the value of its
obligations under the Master Indemnity Agreement.
4.17 Environmental Matters
(a) Except as disclosed on Schedule 4.17(a.1)-C, and except for the
operating limited partnerships (other than Controlled Partnerships) listed on
Schedule 4.17(a.2)-C (the "March Partnerships"), all of the current and past
use and operations by or of any of Seller or the NPI Parties, or any of their
Affiliates or any of the Controlled Partnerships (at any time that any Seller
or NPI Party or any Affiliate thereof managed or operated such Controlled
Partnership or owned any general partnership interest therein) or, to the
knowledge of Sellers and the NPI Parties, any owner, tenant, lessee or other
Person at or from any real property presently or formerly directly or
indirectly owned, used, leased, occupied, managed or operated by any of the
Controlled Partnerships (at any time that any Seller or NPI Party or any
Affiliate thereof managed or operated such Controlled Partnership or owned any
general partnership interest therein) (the "Real Property"), comply and have
complied with all applicable Environmental Laws (defined below). None of
Sellers or the NPI Parties or any Affiliates thereof and none of the
Controlled Partnerships (at any time that any Seller or NPI Party or any
Affiliate managed or operated such Controlled Partnership or owned any general
partnership interest therein), nor, to the knowledge of Sellers or the NPI
Parties, any Controlled Partnership (at any time that none of Sellers or the
NPI Parties or any Affiliate thereof managed or operated such Controlled
Partnership or owned any general partnership interest therein) or any owner,
tenant, lessee or other Person, has engaged in, authorized, allowed or
permitted any operations or activities upon any of the Real Property for the
purpose of or in any way involving the handling, manufacture, treatment,
processing, storage, use, generation, release, discharge, emission, dumping or
disposal of any Hazardous Substances (defined below) at, on or under the Real
Property, except in compliance with all applicable Environmental Laws.
(b) Except as disclosed on Schedule 4.17(b)-C, and except for the
March Partnerships, (i) none of Sellers or the NPI Parties and none of the
Controlled Partnerships (at any time that any Seller or NPI Party or any
Affiliate thereof managed or operated such Controlled Partnership or owned any
general partnership interest therein) or, to the knowledge of the Sellers and
the NPI Parties, (based on facts known to any of the Sellers of the NPI
Parties), any owner, tenant, lessee or other Person, or any Controlled
Partnership (at any time that none of Sellers or the NPI Parties or any
Affiliate thereof managed or operated such Controlled Partnership or owned any
general partnership interest therein) has been or is involved in activities at
or related to any portion of any Real Property directly or indirectly owned or
managed by any of Sellers, the NPI Parties or the Controlled Partnerships
which activities could reasonably be expected to lead to (A) the imposition of
any liability on any of the Sellers, NPI Parties or the Controlled
Partnerships under any Environmental Law, or on any subsequent or former owner
or operator of any portion of any such Real Property, or (B) the creation of a
Lien with respect to any liability on any portion of any such Real Property
under any Environmental Law; and (ii) to the knowledge of Sellers and the NPI
Parties, based on facts known to Sellers or the NPI Parties, no activity by
any owner, tenant, lessee or other occupant of any portion of any Real
Property could reasonably be expected to result in a claim or liability under
any Environmental Law on such owner, tenant or occupant, on any of Sellers,
the NPI Parties or the Controlled Partnerships or on any other subsequent or
former owner or operator of any portion of such Real Property.
(c) Except as disclosed on Schedule 4.17(c)-C, and except for the
March Partnerships, to the knowledge of Sellers and the NPI Parties, the Real
Property does not contain any Hazardous Substances in, on, over, under or at
the Real Property in concentrations which would presently violate
Environmental Laws or impose liability or obligations on the present or former
owner or operator of the Real Property under the Environmental Laws for any
investigation, corrective action, remediation or monitoring of Hazardous
Substances in, on, over, under or at the Real Property. To the knowledge of
Sellers and the NPI Parties, none of the Real Property is listed or proposed
for listing on the National Priorities List pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
9601 et seq., or any similar inventory of sites requiring investigation or
remediation maintained by any state. None of the Sellers or NPI Parties and
none of the Controlled Partnerships (at any time that any Seller or NPI Party
or any Affiliate managed or operated such Controlled Partnership or owned any
general partnership interest therein) has received any notice, whether oral or
written, from any governmental entity or third party of any actual or
threatened Environmental Liabilities (defined below) with respect to the Real
Property, or the conduct of the business of any of the Sellers, NPI Parties or
Controlled Partnerships.
(d) Except as set forth in Schedule 4.17(d)-C, and except for the
March Partnerships, and except for non-friable asbestos in ceiling and
linoleum tiles, to the knowledge of Sellers and the NPI Parties, there are no
underground storage tanks, asbestos or asbestos containing materials,
polychlorinated biphenyls, urea formaldehyde, or other Hazardous Substances
(other than small quantities of Hazardous Substances stored and maintained in
accordance with all applicable Environmental Laws for use in the ordinary
course of the business of the Controlled Partnerships) in, on, over, under or
at any presently owned or operated Real Property.
(e) To the knowledge of Sellers and the NPI Parties, there are no
conditions existing at any Real Property that require, or which with the
giving of notice or the passage of time or both may require remedial or
corrective action, removal or closure pursuant to the Environmental Laws other
than the implementation of customary operation and maintenance programs with
respect to asbestos of the type commonly known as "O&M" programs. Schedule
4.17(e)-C lists all such O&M programs.
(f) Each of Sellers, the NPI Parties and Controlled Partnerships,
has all the material permits, authorizations and approvals necessary for the
conduct of its business and for the operations on, in or at the Real Property
which are required under applicable Environmental Laws and is in material
compliance with the terms and conditions of all such permits, authorizations
and approvals, and is capable of continued operation in compliance with
Environmental Laws. Schedule 4.17(f)-C contains a list of all such required
permits, authorization and approvals.
(g) Sellers and the NPI Parties have provided to Buyer all
environmental reports, assessments, audits, studies, investigations, data and
other written environmental information in their custody, possession or
control concerning the Real Property.
(h) Except as disclosed on Schedule 4.17(h)-C, and except for the
March Partnerships, none of Sellers or the NPI Parties has any reason to
believe, based on facts known to Sellers or the NPI Parties, that any of
Sellers, the NPI Parties or Controlled Partnerships may become subject to any
Environmental Liabilities.
(i) As used in this Agreement, the term "Environment" means any
surface or subsurface physical medium or natural resource, including, air,
land, soil, surface waters, ground waters, stream and river sediments, and
biota; the term "Environmental Laws" means any federal, state, local or common
law, rule, regulation, ordinance, code, order or judgment (including the
common law and any judicial or administrative interpretations, guidances,
directives, policy statements or opinions) relating to the injury to, or the
pollution or protection of human health and safety or the Environment; the
term "Environmental Liabilities" means any claims, judgments, damages
(including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, violations, costs and expenses (including attorneys and
consultants fees) of investigation, remediation or defense of any matter
relating to human health, safety or the Environment of whatever kind or nature
by any party hereto or any of its Affiliates, any Controlled Partnership,
entity, any governmental regulatory authority or any other Person (i) which
are incurred as a result of (A) the existence of Hazardous Substances in, on,
under, at or emanating from any Real Property presently or formerly owned or
operated by any of Sellers, the NPI Parties or Controlled Partnership or any
Affiliates thereof or (B) the offsite transportation, treatment, storage or
disposal of Hazardous Substances generated by any of Sellers, the NPI Parties
or Controlled Partnerships or any third-party customers of any thereof or (C)
the violation of any Environmental Laws or (ii) which arise under the
Environmental Laws; the term "Hazardous Substances" means petroleum, petroleum
products, petroleum-derived substances, radioactive materials, hazardous
wastes, polychlorinated biphenyls, lead based paint, urea formaldehyde,
asbestos or any materials containing asbestos, and any materials or substances
regulated or defined as or included in the definition of "hazardous
substances," "hazardous materials," "hazardous constituents," "toxic
substances," "pollutants," "pollutants," "contaminants" or any similar
denomination intended to classify substances by reason of toxicity,
carcinogenicity, ignitability, corrosivity or reactivity under any
Environmental Law. All references in this Section to any of Sellers, the NPI
Parties or Controlled Partnerships shall include all predecessors thereto and
any Person the liabilities of which pursuant to the Environmental Laws,
contractually, by common law or by operation of law, any of them may have
succeeded to.
4.18 Investment Company
None of Sellers, the NPI Parties or Acquired Companies is an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
4.19 Employees
(a) All of the executive employees of the Acquired Companies on the
date of this Agreement are listed on Schedule 4.19.1-C (the "Executive
Employees") together with a list of any employment, compensation, severance or
termination agreements or arrangements to which any of Sellers or the Acquired
Companies is a party (the "Employment Agreements"). No other employee of any
of them has any employment agreement, written or oral, and each such other
employee is an employee at will. Other than the Executive Employees and the
employees listed on Schedule 4.19.2-C (collectively, the "Corporate
Employees"), the entire compensation costs of all other employees of the
Acquired Companies (the "Reimbursable Employees") are reimbursable under the
agreements with respect to the properties for which they work or the
partnership agreement of the Controlled Partnership which owns the property at
which they work. Between the date hereof and the Closing Date, the
compensation of the Reimbursable Employees shall be changed only in the
ordinary course of business consistent with past practice, and no change shall
be made in the compensation of Corporate Employees except for the payment of
one-time bonuses or severance payments in connection with the consummation of
the transactions contemplated by this Agreement and the Other Agreements.
Prior to the Closing, Sellers and the NPI Parties (i) shall have terminated
the Employment Agreements, (ii) shall have obtained the resignation of each of
the Executive Employees effective immediately prior to the Closing and (iii)
shall have terminated each of the Corporate Employees. On the Closing Date,
the Acquired Companies shall have no liability under or arising out of any
employment, compensation, severance or termination agreements or arrangements
with any Executive Employee, any Corporate Employee or any other employee of
any of them or the termination thereof as contemplated by this Section. On
the Closing Date, Sellers and the NPI Parties will have paid or provided for,
and no Buyer or Acquired Company shall be liable for, any severance payment
due as of the Closing Date to any employee of the Acquired Companies or the
Controlled Partnerships upon termination of employment, with or without cause.
(b) Except as set forth on Schedule 4.19.3-C, none of the Sellers
or, (at any time since January 1, 1993 or, to the knowledge of Sellers and the
NPI Parties, prior to such date) the Acquired Companies is currently or has
ever been a party to or otherwise bound by and none of its employees is
covered by any collective bargaining agreement or other employment agreement
or arrangement (whether or not legally binding), and none of its employees are
represented by any union. Sellers have given Buyer true, complete and correct
copies of each agreement listed on Schedule 4.19.3-C.
(c) Each of the Sellers and the Acquired Companies have paid in
full to their employees, if any, all wages, salaries, commissions, bonuses and
other direct compensation for all services performed by them, other than
amounts that have not yet become payable in accordance with such employer's
customary practices. Except for payment of one-time bonuses in connection
with the consummation of the transactions contemplated hereby, none of the
Sellers or the Acquired Companies is or will as a result of any transactions
on the Closing Date become liable for any severance pay or other payments on
account of termination of any present or former employee. Except as set forth
on Schedule 4.19.4-C, each of the Sellers and the Acquired Companies (i) is
in compliance in all material respects with all applicable laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, and is not and has not engaged in any unfair labor practice,
(ii) is not the subject of any pending or threatened unfair labor practice
complaint before the National Labor Relations Board, (iii) is not the subject
of any labor strike, dispute, slowdown or stoppage pending or threatened
against or affecting it, (iv) is not and has not been the subject of any
representation question respecting its employees, (v) has not experienced any
strike, work stoppage or other labor difficulty since its formation, and (vi)
is not currently negotiating any collective bargaining agreement relating to
any of its employees.
4.20 Employee Benefits
(a) Schedule 4.20(a)-C contains a true and complete list of all
"employee benefit plans," within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and any other
bonus, profit sharing, compensation, pension, severance, deferred
compensation, fringe benefit, insurance, welfare, medical, post-retirement
health or welfare benefit, medical reimbursement, health, life, stock option,
stock purchase, tuition refund, service award, company car, scholarship,
relocation, disability, accident, sick pay, sick leave, vacation, termination,
individual employment, executive compensation, incentive, bonus, commission,
payroll practices, retention or other plan, agreement, policy, trust fund or
arrangement, maintained, sponsored or contributed to by any of the Acquired
Companies or NPI Parties or any entity that would be deemed a "single
employer" with any of the Acquired Companies or NPI Parties under
Section 414(b), (c), (m) or (o) of the Code or Section 4001 of ERISA (an
"ERISA Affiliate") on behalf of any employee of any of the Acquired Companies
or NPI Parties (whether current, former or retired) or their beneficiaries or
with respect to which any of the Acquired Companies or NPI Parties or any
ERISA Affiliate has or has had any obligation on behalf of any such employee
or beneficiary (each a "Plan" and, collectively, the "Plans") together with a
description of the funding mechanism for each such Plan. With respect to each
Plan, (other than Multiemployer Plans) and, to the extent available to
Sellers, the NPI Parties or the Acquired Companies after using their
reasonable efforts, with respect to each Multiemployer Plan, true and complete
copies of the documents embodying and relating to the Plan have been delivered
to Buyer.
(b) Except as set forth on Schedule 4.20(b)-C, none of the ERISA
Affiliates, nor any of the Acquired Companies or NPI Parties or any of their
respective predecessors has ever contributed to or contributes to, or
otherwise participated in or participates in on behalf of employees of any of
the Acquired Companies or NPI Parties or any ERISA Affiliate any
"multiemployer plan" (within the meaning of Section 4001(a)(3) of ERISA or
Section 414(f) of the Code) ("Multiemployer Plan") or any single employer
pension plan (within the meaning of Section 4001(a)(15) of ERISA) which is
subject to Section 4063 and 4064 of ERISA ("Multiple Employer Plan").
With respect to each Multiemployer Plan and Multiple Employer Plan:
(i) none of the Acquired Companies or NPI Parties or ERISA
Affiliates has incurred (or has any reason to believe it has incurred) any
withdrawal liability; no event has occurred which with the giving of notice
would result in such liability under Section 4201 of ERISA as a result of a
complete withdrawal (within the meaning of Section 4203 of ERISA) or a partial
withdrawal (within the meaning of Section 4205 of ERISA); nor has any of the
Acquired Companies or NPI Parties or ERISA Affiliates received any notice of
any claim or demand for complete withdrawal liability or partial withdrawal
liability;
(ii) none of the Sellers, NPI Parties, the Acquired Companies
or to the knowledge of Sellers and the NPI Parties, ERISA Affiliates has
received any notice that any Multiemployer Plan is in "reorganization" (within
the meaning of Section 4241 of ERISA), that increased contributions may be
required to avoid a reduction in plan benefits or the imposition of an excise
tax, or that the Multiemployer Plan is or may become "insolvent" (within the
meaning of Section 4241 of ERISA);
(iii) each of the Acquired Companies, NPI Parties and ERISA
Affiliates have timely made any required contributions or payments to any
Multiemployer Plan and to any Multiple Employer Plan;
(iv) to the knowledge of Sellers and the NPI Parties, no
Multiemployer Plan is a party to any pending merger or asset or liability
transfer under Part 2 of Subtitle E of Title IV of ERISA;
(v) to the knowledge of Sellers and the NPI Parties, the
Pension Benefit Guaranty Corporation (the "PBGC") has not instituted
proceedings against such Multiemployer Plan or Multiple Employer Plan;
(vi) there is no contingent liability for withdrawal liability
by reason of a sale of assets pursuant to Section 4204 of ERISA;
(vii) except as set forth on Schedule 4.20(b)-C, if any of the
Acquired Companies, NPI Parties or ERISA Affiliates were to have a complete or
partial withdrawal as of the Closing, no obligation to pay withdrawal
liability would exist on the part of any of the Sellers, NPI Parties, the
Acquired Companies or any ERISA Affiliate with respect to any of the
Multiemployer Plans;
(viii) if any of the Acquired Companies, NPI Parties or ERISA
Affiliates were to have a complete or partial withdrawal as of the Closing,
the withdrawal liability of the Acquired Companies, NPI Parties and ERISA
Affiliates would not exceed $100,000 with respect to all Multiemployer Plans
in the aggregate;
(ix) with respect to each Multiple Employer Plan, none of the
Acquired Companies or NPI Parties or ERISA Affiliates has withdrawn during a
plan year in which it was a "substantial employer" (within the meaning of
Section 4001(a)(2) of ERISA); and
(x) none of the Acquired Companies or NPI Parties or ERISA
Affiliates has incurred any liability to the PBGC including, without
limitation, under Section 4063 or 4064 of ERISA.
(c) Each of the Sellers, NPI Parties, the Acquired Companies and
each ERISA Affiliate, each Plan and each "plan sponsor" (within the meaning of
Section 3(16) of ERISA) of each "welfare benefit plan" (within the meaning of
Section 3(1) of ERISA) has complied in all material respects with the
requirements of Section 4980B of the Code and Title I, Subtitle B, Part 6 of
ERISA. None of the ERISA Affiliates, nor any of the Acquired Companies or NPI
Parties (or any of their respective predecessors) has ever contributed to or
contributes to, or has participated in or participates in on behalf of
employees of any of the Acquired Companies or NPI Parties or ERISA Affiliates,
any plan subject to Title IV of ERISA or Section 412 of ERISA, other than the
Multiemployer Plans.
(d) With respect to each of the Plans on Schedule 4.20(a)-C (other
than Multiemployer Plans):
(i) each Plan intended to qualify under Section 401(a) of the
Code has been qualified since its inception and has received a determination
letter from the Internal Revenue Service (the "IRS") (except for the qualified
Plan subject to Section 401(k) of the Code listed on Schedule 4.20(d)-C which
has applied for such a determination letter) to the effect that the Plan is
qualified under Section 401 of the Code and any trust maintained pursuant
thereto is exempt from federal income taxation under Section 501 of the Code
and nothing has occurred or will occur through the date of the Closing that
caused or could cause the loss of such qualification or exemption or the
imposition of any penalty or tax liability; each of Sellers, the NPI Parties
and the Acquired Companies, or ERISA Affiliates, as the case may be, has
applied, or prior to the end of the remedial amendment period, as defined
under Treasury Regulation Section 1.401(b) and as modified by IRS
pronouncements, will apply, for a determination letter from the IRS pursuant
to Revenue Procedure 93-39, for each Plan intended to qualify under Section
401(a) of the Code (including the qualified Plan subject to Section 401(k) of
the Code listed on Schedule 4.20(d)-C);
(ii) all payments required by any Plan, any collective bargaining
agreement or by law (including all contributions, insurance premiums or
intercompany charges) with respect to all periods through the date of the
Closing shall have been made prior to the Closing (on a pro rata basis where
such payments are otherwise discretionary at year end) or provided for by each
of the Acquired Companies and NPI Parties, as applicable, by full accruals as
if all targets required by such Plan had been or will be met at maximum levels
on its financial statements;
(iii) no claim, lawsuit, arbitration or other action (other than
nonmaterial, routine claims for benefits) has been threatened, asserted,
instituted or, to the knowledge of Sellers and the NPI Parties, anticipated
against the Plans, any trustee or fiduciaries thereof, any of the Sellers, NPI
Parties or the Acquired Companies, or any ERISA Affiliate, any director,
officer or employee thereof, or any of the assets of any trust or the Plans;
(iv) each Plan complies in all material respects and has been
maintained and operated in all material respects in accordance with its terms
and the terms and the provisions of applicable law, including, without
limitation, ERISA and the Code;
(v) no "prohibited transaction," within the meaning of Section
4975 of the Code and Section 406 of ERISA, has occurred or is expected to
occur with respect to each Plan, other than with respect to which an
administrative or statutory exemption is available under the Code and ERISA.
(vi) to the knowledge of Sellers and the NPI Parties, no Plan is
under audit or investigation by the IRS or the U.S. Department of Labor or any
other governmental authority; no such completed audit, if any, has resulted in
the imposition of any tax or penalty;
(vii) each Plan intended to qualify for tax-favored treatment under
Sections 79, 106, 117, 120, 125, 127, 129 or 132 of the Code satisfies in all
material respects the applicable requirements under the Code; and
(viii) with respect to each Plan that is funded mostly or partially
through an insurance policy, none of Sellers, the NPI Parties nor the Acquired
Companies nor any ERISA Affiliate has any liability in the nature of
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring on or
before the Closing.
(e) Except as set forth on Schedule 4.20(e)-C, the consummation of
the transactions contemplated by this Agreement will not give rise to any
liability, including, without limitation, liability for severance pay,
unemployment compensation, termination pay or withdrawal liability, or
accelerate the time of payment or vesting or increase the amount of
compensation or benefits due to any current, former, or retired employee or
their beneficiaries solely by reason of such transactions. No amounts payable
under any Plan will fail to be deductible for federal income tax purposes by
virtue of Section 280G of the Code.
(f) None of the NPI Parties nor the Acquired Companies maintains,
contributes to, or in any way provides for any benefits of any kind whatsoever
(other than as may be required under Section 4980B of the Code, Sections 601
through 608 of ERISA, the Federal Social Security Act or a plan intended to
qualify under Section 401(a) of the Code) to any current or future retiree or
terminee.
(g) Except as expressly required by this Agreement, none of the
Sellers, the NPI Parties nor the Acquired Companies nor any ERISA Affiliate,
or any officer or employee thereof, has made any promises or commitments, to
create any additional plan, agreement or arrangement, or to modify or change
any existing Plan.
4.21 Litigation and Claims
Except as set forth on Schedule 4.21-C, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or informal), or
investigation pending, or to the knowledge of Sellers and the NPI Parties,
threatened, with respect to any of the Acquired Companies or Controlled
Partnerships, or any of their respective businesses, properties, or assets,
other than relating to routine landlord-tenant matters, or negligence lawsuits
covered by insurance or vendor claims under $10,000. None of the Acquired
Companies or Controlled Partnerships is: (i) in violation of or in default
under any order, judgment or decree, (ii) in violation of any law, rule or
regulation, which violation would have a material adverse effect upon any of
Sellers or the Acquired Companies or any of their respective properties,
businesses or assets, or (iii) required to take any action in order to avoid
such violation or default. The litigation listed on Schedule 4.21-C will not
prohibit the consummation of any of the transactions contemplated hereby.
4.22 Intellectual Property
Except as described on Schedule 4.22-C, each of the Acquired
Companies owns, or has the contractual right to use, and will after the
Closing own or have the contractual right to use data processing and
management information systems adequate to conduct all aspects of their
respective businesses. There is no right under any patent, patent
application, trademark, trademark application, trade name, service mark,
copyright, franchise, or other intangible property or asset (all of the
foregoing being hereinafter referred to as "Intangibles") necessary to or used
in the business of the Acquired Companies as presently conducted or as any of
them contemplates conducting, except as set forth on Schedule 4.22-C. None of
the Acquired Companies has infringed, is infringing, or has received notice of
infringement asserted with respect to any Intangibles of others. To the
knowledge of Sellers and the NPI Parties, there are no Intangibles of others
which may materially adversely affect the financial condition, results of
operations, business, properties, assets or liabilities of any of the Acquired
Companies.
4.23 Questionable Payments
None of the Sellers, NPI Parties or Acquired Companies, nor any
director, officer, partner, agent, employee, or other Person associated with
or acting on behalf of any of them has, directly or indirectly: used any
corporate or partnership funds for unlawful contributions, gifts,
entertainment, or other unlawful expenses relating to political activity; made
any unlawful payment to foreign or domestic government officials or employees
or to foreign or domestic political parties or campaigns from corporate funds;
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended; established or maintained any unlawful or unrecorded fund of
corporate monies or other assets; made any false or fictitious entry on its
books or records; made any bribe, rebate, payoff, influence payment, kickback,
or other unlawful payment; given any favor or gift which is not deductible for
federal income tax purposes; or made any bribe, kickback, or other payment of
a similar or comparable nature, whether lawful or not, to any Person,
regardless of form, whether in money, property, or services, to obtain
favorable treatment in securing business or to obtain special concessions, or
to pay for favorable treatment for business secured or for special concessions
already obtained.
4.24 [Intentionally Omitted]
4.25 SEC Reports; Tender Offers
Sellers have previously furnished Buyer (or will simultaneously with
its filing with the Securities and Exchange Commission ("SEC") furnish to
Buyer) true and complete copies of each Schedule 14D-1 and all amendments
thereto and other governmental filings or documents (the "Tender Offer
Documents") relating to each tender offer (the "Tender Offers") for any
limited partnership interests in the Controlled Partnerships filed since
January 1, 1993 by any of Sellers, the NPI Parties or any of their Affiliates
with the SEC or other governmental agency, and the following reports filed by
any of the Controlled Partnerships with the SEC: Annual Reports on Form 10-K
for each of the fiscal years ended December 31, 1994, 1993, 1992, and 1991,
all Quarterly Reports on Form 10-Q and all Current Reports on Form 8-K filed
after December 31, 1994, and all proxy statements distributed subsequent to
December 31, 1991 (collectively, the "SEC Filings"). Each of the Tender Offer
Documents, and each of the SEC Filings did not (and will not), on the date of
filing, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. All litigation arising out of any of the Tender Offer
Documents have been finally settled pursuant to a final court order, dated May
19, 1995, and Schedule 4.25-C contains a true, correct and accurate list of
all settlement agreements ("Settlement Agreements") and court orders entered
into in connection with such final court order (which order is no longer
subject to appeal) (the "Order"), true, correct and complete copies of which
have been delivered to Buyer. All Tender Offers pursuant to the Tender Offer
Documents have been consummated on or prior to the date of this Agreement in
compliance with all applicable laws and other Legal Requirements (defined
below) and Sellers have performed all of their obligations pursuant to the
agreements and Order listed on Schedule 4.25-C. The recent Tender Offers
commenced pursuant to the Order have been conducted strictly in accordance
with the Settlement Agreements and Order and each of the Sellers and the NPI
Parties has performed all of its obligations pursuant to the Settlement
Agreements and complied with the Order relating thereto. All press releases
and other publicly released data issued by any Controlled Partnership since
December 31, 1993 were accurate when released.
4.26 Properties
Each of the Acquired Companies owns no real property and has good
title to all other properties and assets used in its business or owned by it
(except such other properties and assets as are held pursuant to leases or
licenses described on Schedule 4.26-C), free and clear of all Liens (except
for the PaineWebber Debt and as set forth on Schedule 4.26-C). No Person
holds a right of first refusal or option to purchase with respect to any asset
of any of the Acquired Companies.
4.27 Books and Records; Bank Accounts
(a) The books and records of each of the Acquired Companies or
Controlled Partnerships are substantially complete and correct in all material
respects, and the books and records of each of the Controlled GPs contain
substantially accurate and complete records of all material actions taken by
such general partners since the date the NPI Parties first directly or
indirectly acquired a general partnership interest in such Controlled
Partnerships.
(b) Sellers have provided accurate lists all of the bank and
brokerage accounts of each of the Acquired Companies and Controlled
Partnerships and the authorized signatories for such accounts.
4.28 Completeness of Disclosure
No representation or warranty by any of Sellers or the NPI
Parties in this Agreement or any Additional Document (as defined in the Master
Indemnity Agreement) contains, or when delivered will contain, an untrue
statement of a material fact or omits, or when delivered will omit, to state a
material fact required to be stated therein or necessary, in light of the
circumstances in which such statements are made, to make the statements made
therein not misleading.
4.29 HUD Consents
Sellers and the NPI Parties know of no reason why the approvals of
HUD referred to in Section 6.05 cannot be obtained on or prior to the Closing
Date, except for administrative delays occasioned by HUD and the fact that HUD
is currently giving close reviews to companies which have purchased other
companies with interests in HUD subsidized housing using deferred purchase
price payments.
4.30 Solvency
For purposes of applicable federal and state laws governing
determinations of the insolvency of debtors, or relating to fraudulent
conveyance, or otherwise with respect to creditors' rights, or similar
judicial doctrines: on the Closing Date after giving effect to the
transactions contemplated hereby, (i) the amount of the "present fair saleable
value" of the assets of each of Sellers and the NPI Parties will, as of such
date, exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in accordance
with such laws and doctrines, (ii) the present fair saleable value of the
assets of each of Sellers and the NPI Parties will, as of such date, be
greater than the amount that will be required to pay such Person's liability
on its debts (defined below) as such debts become absolute and matured, (iii)
none of Sellers or the NPI Parties will have, as of such date, an unreasonably
small amount of capital with which to conduct its business, (iv) each of
Sellers and the NPI Parties will be able to pay its debts as they mature and
(v) the consideration to be received by each Seller hereunder for the assets
to be sold by such Seller hereunder is not less than the "present fair
saleable value" of such assets. For purposes of this Section, "debt" means
"liability on a claim", "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured, and (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured or unmatured, disputed or undisputed, secured or unsecured.
4.31 Absence of Inducement
In entering into this Agreement, none of Sellers or the NPI Parties
has been induced by, or relied upon, any representations, warranties or
statements by Buyer not set forth or referred to in this Agreement or the
Additional Documents, whether or not such representations, warranties or
statement have actually been made, in writing or orally, and each of the
Sellers and the NPI Parties acknowledges that, in entering into this
Agreement, Buyer has been induced by and relied upon the representations and
warranties of the Sellers and the NPI Parties herein or therein set forth.
4.32 Master Agreement
All amounts owing and due under the Master Agreement dated as of
November 12, 1993 among the parties named therein have been paid and satisfied
in full. There have been no NPI Receipts (as such term is defined in a
certain Indemnity and Reimbursement Agreement, dated as of December 6, 1993,
by and among NPI Equity II, PRA, the NPI Principals and the other parties
named therein), other than amounts attributable to the general partnership
interest of NPI Equity II in FRI.
4.33 No Knowledge of Breach
None of Sellers or the NPI Parties has any knowledge on the date
hereof of any fact or circumstances which would cause any representation or
warranty of Buyer in this Agreement or the Additional Documents to be
misleading or incorrect in any respect or is aware of any statement which was
omitted from any such representation or warranty which is necessary to make
the statements made in any such representation or warranty not misleading.
V. Representations and Warranties of Buyer
Buyer represents and warrants to Sellers as of the date hereof and agrees
with Sellers as follows:
5.01 Organization
Each of Insignia and IFGP is a corporation duly organized, validly
existing, and in good standing under the laws of its jurisdiction of
incorporation with all requisite power and authority to own, lease, license,
and use its properties and assets and to carry on the business in which it is
now engaged and the business in which it contemplates engaging. On the date
hereof, IFGP is wholly-owned, directly or indirectly, by Insignia; however, no
representation is made as to the ownership of IFGP as of the Closing Date,
except that it will be an Affiliate of Insignia.
5.02 Authority
Insignia and IFGP, each has all requisite power and authority to
execute, deliver, and perform this Agreement. All necessary corporate
proceedings of Insignia and IFGP have been duly taken to authorize the
execution, delivery, and performance of this Agreement. This Agreement has
been and the other documents required to be delivered by Buyer hereby have
been (or when delivered will be) duly authorized, executed, and delivered by
Buyer, and constitute or will constitute the legal, valid, and binding
obligation of Insignia and IFGP, and is enforceable as to each of them in
accordance with their terms.
5.03 No Conflicts or Defaults; No Violations
Neither the execution, delivery or performance of this Agreement by
the Buyer of the consummation of the transactions contemplated hereby will
(with or without the giving of notice, lapse of time or both): (a) contravene
any provisions of any law, statute, rule or regulation or any order, writ,
judgment, injunction or decree of any court or governmental instrumentality;
or (b) except as set forth on Schedule 5.03-C conflict with or result in any
breach of, or constitute a default under, or result in the creation or
imposition of (or the obligation to create or impose) any Lien upon any of the
property or assets of Insignia or IFGP pursuant to the terms of any note,
bond, indenture, mortgage, deed of trust, loan agreement, credit agreement,
lease, franchise, or any other agreement, contract or instrument to which
either of them is a party or to which any of their respective properties or
assets is subject; or (c) violate any provision of their respective
Organizational Documents.
5.04 Litigation
There is no litigation, arbitration, claim, governmental or other
proceeding (formal or informal), or investigation pending or, to the knowledge
of Buyer, threatened, relating to, or seeking to prohibit or otherwise
challenge the consummation of this Agreement or the transactions contemplated
by this Agreement or to obtain substantial damages with respect thereto.
5.05 Investment Company
Buyer is not an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended.
5.06 Consents
Except the filings under the HSR Act described in Section 6.05, the
consent HUD to the transactions contemplated by this Agreement and the Other
Agreements, the consent of RECDHA, any filing with respect to any
Organizational Documents of an Person (all of which will be made prior to
Closing), and as may be required by federal or state securities laws, no
approval or consent of, notice to, or filing or registration with, or
authorization, order, license, certificate, or permit of or from, any
governmental authority or any other notice to or consent of any third party is
required in connection with the execution, delivery and performance of, (b)
the legality, validity, binding effect or enforceability of or (c) the
consummation of the transactions contemplated by this Agreement.
5.07 HUD Consents
Buyer has no knowledge of any reason why the approvals of HUD
referred to in Section 6.05 cannot be obtained on or prior to the Closing
Date, except for administrative delays by HUD and the fact that HUD is
currently giving close reviews to companies which have purchased other
companies with interests in HUD subsidized housing using deferred purchase
price payments.
5.08 Completeness of Disclosure
No representation or warranty by Buyer in this Agreement or any
Additional Document contains, or when delivered will contain, an untrue
statement of a material fact or omits, or when delivered will omit, to state a
material fact required to be stated therein or necessary, in light of the
circumstances in which such statements are made, to make the statements made
therein not misleading.
5.09 Absence of Inducement
In entering into this Agreement, Buyer has not been induced by, or
relied upon, any representations, warranties or statements of any of Sellers
or the NPI Parties concerning any matter not set forth or referred to in this
Agreement or the Additional Documents, whether or not such representations,
warranties or statements have actually been made, in writing or orally, except
that Buyer has relied upon Sellers' and the NPI Parties' having disclosed to
Buyer all information, and provided to Buyer true, complete and correct copies
of all agreements, documents and data, that Buyer or its Affiliates have
requested in connection with its determination whether to enter into this
Agreement and the Other Agreements. Buyer acknowledges that, in entering into
this Agreement, Seller and the NPI Parties have been induced by, and relied
upon, Buyer's representations and warranties herein set forth.
5.10 No Knowledge of Breach
Buyer has no knowledge on the date hereof of any facts or
circumstances which would cause any representation or warranty of any of
Sellers and the NPI Parties in this Agreement or the Additional Documents to
be misleading or incorrect in any respect or is aware of any statement which
was omitted from any such representation or warranty which is necessary to
make the statements made in any such representation or warranty not
misleading.
VI. Additional Agreements of Sellers and NPI Parties
6.01 Joint and Several Covenants
(a) Sellers and the NPI Parties each, jointly and severally,
covenants and agrees to perform or cause to be performed the covenants of any
of them under this Agreement.
(b) Insignia and IFGP each, jointly and severally, covenants and
agrees to perform or cause to be performed the covenants of either of them
under this Agreement.
6.02 General
(a) Each of Sellers and the NPI Parties will use all reasonable
efforts and take all reasonable steps, and will cooperate with Buyer, to cause
to be fulfilled those of the conditions set forth in this Agreement to the
parties' respective obligations to consummate the transactions contemplated by
this Agreement and the Other Agreements that are dependent upon the actions or
inactions of any of Sellers or the NPI Parties, and to execute and deliver
such instruments and take such other reasonable actions as may be necessary or
appropriate in order to carry out the intent of this Agreement and the Other
Agreements and consummate the transactions contemplated hereby and thereby.
(b) Buyer will use all reasonable efforts and take all reasonable
steps, and will cooperate with Sellers and the NPI Parties, to cause to be
fulfilled those of the conditions set forth in this Agreement to the parties'
respective obligations to consummate the transactions contemplated by this
Agreement and the Other Agreements that are dependent upon the actions or
inactions of Buyer and to execute and deliver such instruments and take such
other reasonable actions as may be necessary or appropriate in order to carry
out the intent of this Agreement and the Other Agreements and consummate the
transactions contemplated hereby and thereby.
6.03 Other Agreements
Until the Closing Date, Sellers and the NPI Parties and their
Affiliates will each use its reasonable efforts to cause all representations
and warranties made by them hereunder or under the Other Agreements to be true
and correct in all material respects as of the Closing Date as if made on the
Closing Date, except for changes in the ordinary course of business of the
Acquired Companies consistent with past practice; provided, however, that
nothing herein shall require any of such Persons to violate any fiduciary duty
obligation owed to any of the Controlled Partnerships.
6.04 Conduct of Business
Until the Closing Date, each of the Sellers and the NPI Parties
will:
(a) except as otherwise requested by Buyer in writing, use its
reasonable efforts to preserve intact the business organization and operations
of the Acquired Companies and Controlled Partnerships, to keep available the
services of their present officers and employees, if any, to preserve in full
force and effect their contracts, agreements, instruments, leases, licenses,
arrangements, and understandings, and to preserve the present business
relationships and good will of their suppliers, customers, and others, if any,
having business relations with any of them;
(b) not permit the Organizational Documents of (i) the Acquired
Companies or (ii) subject to the fiduciary duty obligation owed by a
Controlled GP to a Controlled Partnership, the Controlled Partnership, to be
amended, except for the Fox Amendment; and
(c) cause the business and operations of the Acquired Companies and
Controlled Partnerships to be conducted in all respects only in the ordinary
course consistent with past practices utilizing the highest commercial
standards and in accordance with the terms of the provisions of the
partnership agreements of such partnerships.
6.05 Hart-Scott-Rodino, HUD and Other Regulatory Filings
(a) Promptly, but not later than 45 days following the execution of
this Agreement, Buyer and Sellers and the NPI Parties shall each file or cause
to be filed any Notification and Report Forms and related material that it may
be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), in
connection with the transactions contemplated by this Agreement and the Other
Agreements and shall each make any further filings pursuant thereto that may
be necessary in connection therewith. Sellers and the NPI Parties on the one
hand, and Buyer, on the other, shall each pay one-half of the filing fees
payable in connection with such filings.
(b) Within 15 business days following the date hereof, Buyer shall
apply to HUD for the approvals referred to in Section 8.08. Buyer shall
advise the NPI Principals upon request of the NPI Principals of the status of
the HUD approval process.
(c) Sellers and the NPI Parties shall also promptly file and cause
the partnerships for the properties listed on Schedule 6.05-C to file with
applicable regulatory authorities any other applications, notices or other
documents required to be filed by any of them (and prosecute diligently any
related proceedings) in order to consummate the transactions contemplated by
this Agreement.
6.06 Consents and Filings; Resignations
As soon as practicable after the date hereof and before the Closing,
except as set forth on Schedule 6.06-C, Sellers shall use reasonable efforts
to obtain all consents, approvals, waivers, or other documents from any third
parties, including any governmental authorities, and make all filings,
registrations and other notifications, as (i) may be required to consummate
the transactions contemplated by this Agreement and the Other Agreements or
(ii) are set forth on Schedule 4.12-C. Prior to the Closing Date, Sellers and
the NPI Parties shall have obtained the resignations of each of the directors
and officers of the Acquired Companies effective immediately prior to the
Closing.
6.07 Delivery of Financial Statements Required for SEC Filings
Commencing on the date hereof, Sellers, with respect to the Acquired
Companies shall, and the NPI Parties shall cause Sellers to, promptly
following any request from Buyer, timely deliver to Buyer such financial
statements and other financial information of such of the NPI Parties and/or
their Affiliates (including, without limitation, the Acquired Companies and
the Controlled GPs) as Insignia and/or its Affiliates shall require in
connection with any filings with the SEC or any other regulatory authority.
Such financial statements shall contain such information, and be in such form,
and shall be delivered with such reports of certified public accountants
thereon and such consents of such certified public accountants, if any, as
shall be required by the SEC or other regulatory authority. Buyer shall
reimburse Sellers for the incremental accounting fees of their certified
public accountants for preparing any such information or statements which
would not otherwise have been required to be prepared at any time for any of
the NPI Parties. Buyer shall use its reasonable efforts to give Sellers as
much notice as is practicable of the financial statements and other financial
information it will require, and Sellers and the NPI Parties shall use their
best efforts to deliver requested statements and information in the form and
at the time required.
6.08 Confidentiality
(a) Each of Sellers and the NPI Parties shall before and after the
Closing, insure that all confidential information which any of Sellers or the
NPI Parties or their Affiliates, or any of their respective officers,
directors, partners, employees, counsel, agents, investment bankers, or
accountants, may now possess or may hereafter create or obtain relating to the
condition (financial or otherwise), results of operations, business,
properties, assets, liabilities, or future prospects of the Acquired Companies
and Controlled Partnerships, shall not be published, disclosed, or made
accessible by any of them to any other Person at any time or used by any of
them after the Closing, in each case without the prior written consent of
Buyer; provided, however, that the restrictions of this sentence shall not
apply (i) to the extent any such disclosure may otherwise be required by law,
(ii) may be necessary in connection with the enforcement of this Agreement, or
(iii) to the extent such information shall have otherwise become publicly
available without any breach of this Agreement or any other confidentiality
obligations of any Person. Sellers and the NPI Parties shall, and shall cause
all other such Persons to, at Buyer's request after the Closing, deliver to
Buyer any documents or other medium containing such confidential information
to which the restrictions of the foregoing sentence apply.
(b) Buyer shall, before the Closing, insure that all confidential
information which Buyer or its Affiliates, or any of their respective
officers, directors, partners, employees, counsel, agents, potential sources
of financing, investments bankers or accountants, may possess or may hereafter
create or obtain relating to the condition (financial or otherwise), results
of operations, business, properties, assets, liabilities, or future prospects
of Sellers or the NPI Parties, shall not be published, disclosed, or made
accessible by Buyer to any other Person at any time or used by Buyer (except
in preparation for the consummation of the transactions contemplated by this
Agreement or the Other Agreements), in each case without the prior written
consent of Sellers; provided, however, that the restrictions of this sentence
shall not apply (i) to the extent any such disclosure that may be required in
connection with any SEC filings by Buyer or its Affiliates, or otherwise be
required by law, (ii) may be necessary in connection with the enforcement of
this Agreement, or (iii) to the extent such information shall have otherwise
become publicly available without any breach of this Agreement or any other
confidentiality obligations of any Person. If the Closing shall not occur for
any reason, Buyer shall, and shall cause all other such Persons to, at
Sellers' request, deliver to Sellers any documents or other materials
containing such confidential information to which the restrictions of the
foregoing sentence apply.
6.09 Public Statements
Between the date of this Agreement and the Closing, Sellers, the NPI
Parties and their Affiliates shall discuss and coordinate with Buyer and Buyer
shall discuss and coordinate with the NPI Principals with respect to any
public filing (other than SEC filings) or announcement required concerning any
of the transactions contemplated by this Agreement. No public filing (other
than SEC filings) or announcement concerning any of the transactions
contemplated by this Agreement shall be made by any of them, without the
consent of both Sellers and Buyer, except as required by law. The parties
agree that a press release in the form attached as Exhibit D may be released
by Buyer or its Affiliates upon execution hereof.
6.10 Voting by Sellers
Except as provided in the Settlement Agreement and subject to its
fiduciary duties when acting as a Controlled GP of a Controlled Partnership,
and as may be required by the provisions of the partnership agreement of any
Controlled Partnership, Sellers and the NPI Parties each agrees that until the
Closing Date under this Agreement and the Other Agreements, it will not vote
and will cause each of the Acquired Companies and Controlled GPs not to vote
any capital stock of any general partnership interest in any Controlled
Partnership in which any of them is entitled to vote in favor of, and shall
not take any action to cause (a) any merger, consolidation, reorganization,
other business combination, or recapitalization involving any of the Acquired
Companies or Controlled Partnerships, (b) any dissolution, liquidation, or
termination of any of the Acquired Companies or Controlled Partnerships, (c)
any sale of any assets of the Acquired Companies or Controlled Partnerships,
(d) the amendment of any Organizational Documents of any of the Acquired
Companies or Controlled Partnerships, (e) any "change in the Controlled GP"
(defined below) of any Controlled Partnership, (f) any termination of,
amendment to or other change in the property management agreements, asset
management agreements or other agreements under which any Person is the
property manager or asset manager of any real property or asset, or which
relates to any Person providing management, administrative or bookkeeping
services, including, but not limited to agreements with Metric Management,
Inc., with respect to any Controlled Partnership, or (g) any proposition the
effect of which may be to inhibit, prohibit, restrict, or delay the
consummation of any of the transactions contemplated by this Agreement or any
of the Other Agreements or impair the contemplated benefits to Buyer or its
Affiliates of the transactions contemplated by this Agreement and the Other
Agreements. It is understood that at any time Sellers, the NPI Parties or any
of their Affiliates would be permitted under this Section to vote their
general partnership interest in any Controlled Partnership in favor of or take
any action set forth above because to fail to do so would be a breach of the
fiduciary duty of the Controlled GP of such Controlled Partnership, the
Affiliate which is the holder of limited partner interests in the same
Controlled Partnership shall also be permitted under this Section to vote such
limited partnership interests in favor of such action. For purposes of this
Agreement, the term "change in the Controlled GP" of a Controlled Partnership
shall include, without limitation, a change in the Person who is general
partner, a change in the powers or authority of such Person or a change
legally or beneficially in the Person or Persons with the power to direct the
general partner.
6.11 Access
Between the date of this Agreement and the Closing, Sellers and the
NPI Parties shall (a) give Buyer and its authorized representatives full
access to all offices and other facilities and properties of, or managed,
operated or otherwise controlled by, the Acquired Companies and Controlled
Partnerships and to the books and records of the Acquired Companies and
Controlled Partnerships (and permit Buyer to make copies thereof), (b) permit
Buyer to make inspections thereof, and (c) cause their respective officers and
advisers (including, without limitation, their auditors, attorneys, financial
advisors and other consultants, agents and advisors) to furnish Buyer with
such financial and operating data and other information with respect to the
business and properties of the Acquired Companies or any Controlled
Partnerships and to discuss with Buyer and its authorized representatives the
affairs of the Acquired Companies and any Controlled Partnerships, all as
Buyer may from time to time reasonably request. Statements made by Sellers,
the NPI Parties and their authorized representatives in the course of any such
discussions shall not constitute representations or warranties for purposes
of this Agreement.
6.12 No Transfers or Encumbrances
Sellers and the NPI Parties shall not, directly or indirectly, sell,
assign, gift, pledge, or otherwise transfer or encumber any capital stock or
the general partnership interests in any of the Acquired Companies or any of
the Controlled Partnerships before the Closing.
6.13 Notice of Certain Events
(a) Until the Closing, each of Sellers and the NPI Parties shall
immediately give Buyer (i) written notice of the occurrence, or failure to
occur, of any event or state of facts that would cause any representation or
warranty contained in this Agreement to be untrue or inaccurate or any
covenant, condition or agreement which is to be performed or satisfied by it
impossible to be so complied with or satisfied or make such performance or
satisfaction materially more difficult than in the absence of such fact or
occurrence or which (if existing and known at the date of the execution of
this Agreement) would have been required to be set forth or disclosed in or
pursuant to this Agreement or a Schedule or Exhibit hereto; (ii) a copy of
each registration statement, annual, quarterly or current report, proxy or
information statement, or other document (including exhibits and all material
incorporated by reference) filed by any Seller or NPI Party with the SEC or
any other governmental authority (other than filings under the HSR Act); (iii)
copies of all notices of default given to any Sellers or NPI Party with
respect to any Debt or Material Agreement; (iv) copies of all reports and
other documents prepared for the stockholders or partners of any of the
Acquired Companies or any Controlled Partnerships and copies of the minutes of
all meetings of, and actions taken (with or without a meeting), by the
stockholders or partners of each of the Acquired Companies or Controlled
Partnerships. No notification under this Section shall affect or modify the
representations, warranties, covenants or agreements of any of Sellers or the
NPI Parties or the conditions to the respective obligations of the parties
hereunder.
(b) Until the Closing, Buyer shall immediately give Sellers (i)
written notice of the occurrence, or failure to occur, of any event or state
of facts that would cause any representation or warranty contained in this
Agreement to be untrue or inaccurate or any covenant, condition or agreement
which is to be performed or satisfied by Buyer impossible to be so complied
with or satisfied or make such performance or satisfaction materially more
difficult than in the absence of such fact or occurrence or which (if existing
and known at the date of the execution of this Agreement) would have been
required to be set forth or disclosed in or pursuant to this Agreement or a
Schedule or Exhibit hereto; (ii) a copy of each registration statement,
annual, quarterly or current report, proxy or information statement, or other
document (including exhibits and all material incorporated by reference) filed
by Buyer with the SEC or any other governmental authority other than filings
under the HSR Act; and (iii) copies of all reports and other documents
prepared for the stockholders or partners of Buyer. No notification under
this Section shall affect or modify the representations, warranties, covenants
or agreements of Buyer or the conditions to the respective obligations of the
parties hereunder.
(c) Until the Closing, each of Sellers and the NPI Parties shall
immediately give Buyer written notice of any event at a Controlled Partnership
which may give rise to a claim against any of the Acquired Companies by reason
of its serving, directly or indirectly, as a general partner of a Controlled
Partnership.
6.14 Other Covenants
Sellers and the NPI Parties, jointly and severally, covenant and
agree to cause the Persons named as Sellers and NPI Parties to perform all of
the covenants and agreements of each of them set forth in the Other
Agreements, and any material breach of any such covenant or agreement shall be
deemed a breach of this Agreement.
6.15 Current Assets
If between the date hereof and the Closing, any distributions are
received by an Acquired Company, either directly or indirectly in its capacity
as a Controlled GP with respect to one or more of the Controlled Partnerships,
and such distributions are not applied before Closing to the reduction of the
outstanding principal amount of the PaineWebber Debt, then such distributions
shall be retained by such Acquired Company.
6.16 Due Diligence Meetings
Between the date hereof and the Closing, at reasonable business
hours selected by Buyer, during the months of September through December, 1995
(and if the Closing is after January 15, 1996, in January and February 1996),
Sellers and the NPI Parties shall make available such officers of the Acquired
Companies with detailed knowledge of the properties and operations of the
Controlled Partnerships as Buyer shall request (at which time at least one of
the NPI Principals, Peter Braverman and William Hamilton shall be present) for
due diligence meetings (at least two of which shall be held, at Buyer's
option, at Insignia's headquarters in Greenville, South Carolina and the
others in Atlanta, Georgia) at which they shall make true, complete and
correct disclosure of all information relating to the properties and the
business of the Acquired Companies as Buyer shall request and shall furnish
monthly all regularly prepared financial statements and reports with respect
to the Acquired Companies, Controlled GPs and Controlled Partnerships.
6.17 ERISA Matters
On and after the Closing, Sellers and the NPI Parties shall be
liable for, and shall promptly and fully reimburse Buyer with respect to, all
claims incurred prior to Closing under any Plan that is a health plan
(including, without limitation, medical, dental and hospitalization plans),
regardless of whether such claim arises before, on or after Closing. Sellers
and the NPI Parties acknowledge that they shall be obligated to pay all such
claims on demand to Buyer.
VII. Covenants of Sellers and NPI Parties
7.01 Ordinary Course
Sellers and the NPI Parties each, jointly and severally, covenants
and agrees that from the date hereof until the Closing, Sellers and the NPI
Parties shall cause the Acquired Companies and the Controlled Partnerships and
their businesses and properties to be operated only in the ordinary course
consistent with past practice and the fiduciary duties of the Controlled GPs,
in accordance with the partnership agreements, utilizing reasonable commercial
standards.
7.02 Liens
None of Sellers or the NPI Parties will, or will permit any of the
Acquired Companies to, create, incur, assume or suffer to exist any Lien upon
or with respect to any property or assets (real or personal, tangible or
intangible) of any of the Acquired Companies, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets
(including sales of accounts receivable with recourse to any Controlled GP),
or assign any right to receive income or permit the filing of any financing
statement under the Uniform Commercial Code or any other similar notice of
Lien under any similar recording or notice statute, grant rights with respect
to, or otherwise encumber or create a security interest in, such property or
assets or any portion thereof or any other revenues therefrom or the proceeds
payable upon the sale, transfer or other disposition of such property or asset
or any portion thereof, or permit or suffer any such action to be taken,
except the following:
(a) Liens created pursuant to the PaineWebber Debt;
(b) Liens for taxes, assessments or other governmental charges not
yet delinquent or which are being diligently contested in good faith and by
appropriate proceedings, if (i) reasonable reserves in an amount not less than
the tax, assessment or governmental charge being so contested shall have been
established for such Acquired Company, or such contested amount shall have
been duly bonded in accordance with applicable law, (ii) no risk of sale,
forfeiture or loss of any real property of any Acquired Company or any part
thereof arises during the pendency of such contest and (iii) such contest does
not have a materially adverse effect any Acquired Company; or
(c) Liens in respect of property or assets of any Acquired Company
imposed by law, which were incurred in the ordinary course of business and do
not secure any Debt, such as carriers', warehousemen's, materialmen's, and
mechanics' liens and other similar Liens arising in the ordinary course of
business, and (i) which do not in the aggregate materially detract from the
value of any Acquired Company's property or assets or materially impair the
use there in the operation of the business of any Acquired Company or (ii)
which are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
property or asset subject to any such Lien.
7.03 Dissolution
No Controlled Partnership shall dissolve, terminate, liquidate,
merge with or consolidate into another Person except as required by the
fiduciary duty of the Controlled GP of such Controlled Partnership.
7.04 New Lines of Business
None of the Acquired Companies or Controlled Partnerships shall
enter into any line of business other than its business on the date hereof, or
make any material change in the scope or nature of its business, purposes or
operations, or undertake or participate in activities other than the
continuance of its present business.
7.05 Forgiveness of Debt
None of the Acquired Companies shall cancel or otherwise forgive,
release or waive any claim or Debt owed to it by any Person or rights of
substantial value, (a) except in the case of any claim or Debt not material
individually or in the aggregate, for adequate consideration and in the
ordinary course of business consistent with past practice and (b) other than
to the Persons listed on Schedule 7.05-C in connection with the replacement of
the Investment Capital Contribution as described in Section 9.10 below.
7.06 Affiliate Transactions
None of Sellers or the NPI Parties shall enter into, or be a party
to, or cause or suffer any Affiliate to enter into or be a party to any
transaction with any of the Acquired Companies or Controlled Partnerships or
cause any compensation to be payable from any such Person ("Affiliate
Transactions") except transactions required by existing agreements listed on
Schedule 7.06-C, in the ordinary course of business consistent with past
practice and on terms which are no less favorable to such Acquired Company or
Controlled Partnership than would be obtained in a comparable arm's length
transaction with an unrelated third party, and none of Sellers, the NPI
Parties or any of their respective Affiliates shall enter into any new
agreement with or relating to any of the Acquired Companies or Controlled
Partnerships or amend, modify or terminate any agreement listed on Schedule
4.15-C. Any such transactions will be disclosed to Buyer in writing at least
monthly from the date hereof until the Closing and on the Closing Date in an
Officer's Certificate of the relevant Person.
7.07 Assets
None of the Acquired Companies shall acquire or dispose of any
assets (a) except in the ordinary course of business consistent with past
practice and (b) other than to the Persons listed on Schedule 7.05-C in
connection with the replacement of the Investment Capital Contribution as
described in Section 9.10 below.
7.08 Advances, Investments and Loans
None of Sellers or the NPI Parties will permit any of the Acquired
Companies directly or indirectly, to lend money or credit or make advances to
any Person, or purchase or acquire any stock, obligations or securities of, or
any limited or general partnership interests or any other interest in, or make
any capital contribution to, any other Person, or purchase or own a futures
contract or otherwise become liable for the purchase or sale of currency or
other commodities at a future date in the nature of a futures contract, except
that any Acquired Company may acquire and hold accounts receivables owing to
any of them, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with customary terms.
7.09 No Contrary Agreements
Prior to the Closing Date, none of Sellers or the NPI Parties shall
agree or otherwise commit, whether or not in writing, or permit any of the
Acquired Companies or any of the Controlled Partnerships to agree or commit,
to do anything which would not be permitted to be done under this Agreement.
7.10 Settlement Agreements and Order
Each of Sellers and the NPI Parties shall perform all of its
obligations pursuant to the Settlement Agreements and shall comply with the
Order relating thereto.
VIII. Conditions to Obligations of Buyer
The obligations of Buyer under this Agreement are subject to the
following conditions (unless waived by Buyer in writing at the Closing):
8.01 Accuracy of Representations and Compliance with Conditions
All representations and warranties of Sellers and/or the NPI Parties
contained in this Agreement shall be accurate as of the Closing in all
material respects with the same effect as if made on and as of such date
except for changes expressly permitted or required by this Agreement. As of
the Closing, Sellers and the NPI Parties shall have performed and complied in
all material respects with all covenants and agreements and satisfied all
conditions required to be performed and complied with by any of them at or
before such time. At the Closing, Buyer shall have received certificates to
the effect of the first two sentences of this Section 8.01 executed by the
chief executive officer and the chief financial officer of each Seller (and
such NPI Parties as Buyer shall request) dated as of the Closing Date in form
and substance satisfactory to Buyer. It is expressly agreed that, for
purposes of the first sentence of this Section 8.01 and Section 12.01(b)(v),
changes in the ordinary course referred to in Section 6.04(c) shall not be
deemed to be changes permitted or required by this Agreement and may result in
a failure of the condition set forth in this Section 8.01 to Buyer's
obligations under this Agreement.
8.02 Sellers' Deliveries
Sellers shall have delivered to Buyer the documents set forth in
Section 3.02(a).
8.03 Legal Action
There shall not have been instituted or threatened any legal
proceeding (a) relating to, or seeking to prohibit or otherwise challenge:
(i) the consummation of this Agreement or the Other Agreements or the
transactions contemplated by this Agreement or the Other Agreements, or to
obtain substantial damages with respect thereto; or (ii) any matter arising
out of or relating to the Tender Offers made by Ventures I or Ventures II
pursuant to any Tender Offer Documents or Settlement Agreement; or (iii) which
Buyer shall reasonably determine could have a materially adverse effect on the
business, assets, liabilities, condition (financial or otherwise) or prospects
of any of the Acquired Companies, or (b) alleging any violation of any
provision of any federal or state securities law or seeking to obtain any
payment or damages pursuant thereto (in each case, whether or not such
allegation shall have any merit).
8.04 No Material Adverse Change
Since the date hereof, there shall not have been any material
adverse change in the condition (financial or otherwise), results of
operations, business, properties, assets, nature of assets or liabilities of
any of the Acquired Companies, nor shall any of them have suffered any loss,
damage, destruction or other casualty to any of its properties or material
assets (unless completely covered by insurance).
8.05 Operating Results
(a) None of the following shall have occurred unless in any
individual case specifically waived by Buyer in writing:
(i) Except in the ordinary course of business consistent with
past practice, none of the Acquired Companies shall have entered into or be
subject to any Material Agreement not listed on Schedules 4.15-C, or breached
or made a material amendment or modification in any Material Agreement on such
Schedule or terminated any such listed Material Agreement, except terminations
resulting from the sale of any property listed on Schedule 8.05-C.
(ii) None of the Sellers or NPI Parties (A) shall have incurred
or refinanced any Debt or entered into, amended, modified or terminated, or
suffered any amendment, modification or termination of, any agreements,
instruments or other documents relating to any Debt or Lien, or voluntarily
prepaid any portion of any Debt, in each case to which any of the Acquired
Companies is a party or to which any of their respective properties is
subject.
8.06 No Governmental Action
There shall not have been any action taken, or any law, rule,
regulation, order, judgment, or decree proposed, promulgated, enacted,
entered, enforced, or deemed applicable to the transactions contemplated by
this Agreement by any federal, state, local, or other governmental authority
or by any court of other tribunal, including the entry of a preliminary or
permanent injunction, which, in the reasonable judgment of the Buyer, (a)
makes any of the transactions contemplated by this Agreement illegal, (b)
results in a delay in the ability of Buyer to consummate any of the
transactions contemplated by this Agreement, (c) requires the divestiture by
Buyer of any of the NPI Shares to be sold pursuant to this Agreement or of any
general partnership interest held by a Controlled GP or of a material portion
of the business of the Acquired Companies, (d) imposes material limitations on
the ability of Buyer effectively to exercise full rights of ownership of such
capital stock or general partnership interest including the right to vote such
interests on all matters properly presented stockholders or partners of the
Acquired Companies or Controlled Partnerships, as the case may be, or (e)
otherwise prohibits, restricts, or delays consummation of any of the
transactions contemplated by this Agreement or impairs the contemplated
benefits to Buyer of any of the transactions contemplated by this Agreement or
any Other Agreement.
8.07 PaineWebber Debt
The outstanding amount of principal due on the PaineWebber Debt
immediately prior to the Closing shall be not more than the outstanding
principal amount on the date hereof, it being understood and agreed that the
NPI Parties shall not, after the date hereof, borrow any further amounts
thereunder. Ventures I and Ventures II shall pay all interest on the
PaineWebber Debt on a current basis in accordance with its terms. Sellers
shall have delivered an estoppel certificate from PaineWebber dated as of the
Closing certifying to such outstanding amount and, evidence in form and
substance satisfactory to Buyer of the satisfaction of the PaineWebber Debt
and termination of all Liens arising in connection therewith upon payment of
such Debt by Buyer and Ventures I as contemplated by the Units Purchase
Agreement.
8.08 HUD and RECDHA Approvals
Buyer shall have obtained at or prior to the Closing Date the
unconditional written approvals of HUD and RECDHA to this Agreement and the
Other Agreements and to the execution, delivery and performance of this
Agreement and the Other Agreements by the parties thereto.
8.09 Hart-Scott-Rodino Waiting Period
All applicable waiting periods (and any extensions thereof) in
respect of the transactions contemplated by this Agreement under the HSR Act
shall have expired at or prior to the Closing.
8.10 Consents
Sellers and the NPI Parties shall have complied with Section 6.06 to
the extent required, without any of Sellers, or the NPI Parties having made
any agreement or reached any understanding not approved in writing by Buyer as
a condition for obtaining any such consent, authorization, approval, order,
license, certificate or permit.
8.11 Contractual Consents Needed
(a) Except as set forth on Schedule 4.12-C, Sellers and the NPI
Parties shall have obtained at or prior to the Closing all consents required
for the consummation of the transactions contemplated by this Agreement from
any party to any Material Agreement, property management agreement,
partnership agreement, contract, other agreement or mortgage, instrument,
lease, license, arrangement, or understanding to which any of them is a party,
or to which any of them or any of their respective businesses, properties, or
assets are subject or where the failure to obtain a consent from any such
Person would violate or breach any of the foregoing.
8.12 Tax Allocation Agreement
The Tax Allocation Agreement ("Tax Allocation Agreement") in the
form of Exhibit E shall have been duly authorized, executed, and delivered by
the parties thereto at or prior to the Closing.
8.13 [Intentionally Omitted]
8.14 Other Agreement
The Agreement in the form attached as Exhibit F, shall have been
duly authorized, executed, delivered by the parties thereto, and be effective
at or prior to the Closing.
8.15 FCMC Voting Trust
The FCMC Voting Trust shall be in full force and effect and no party
shall be in material default of any provision thereof.
8.16 Change in Ownership of Controlled Partnerships
From the date hereof until the Closing Date, none of the Controlled
Partnerships has experienced any change in ownership or control of more than
5% of the limited partnership interests of any Controlled Partnership, except
the March Partnerships.
8.17 LPD Agreement
The transactions contemplated by the Sale Agreement, dated the date
hereof, between Insignia Management Group, L.P. and LPD Equities, Inc. in the
form attached as Exhibit G shall have been consummated by the parties thereto
at or prior to the Closing.
8.18 [Intentionally Omitted]
8.19 Insurance
On or prior to the Closing Date, Buyer shall have received evidence
of the existence of valid policies of insurance which comport with the
representations of Sellers set forth in Section 4.09 hereof, together with
evidence of the payment of all premiums therefor.
8.20 Absence of Certain Events
On the Closing Date, no event shall have occurred which would cause
(a) any merger, consolidation, reorganization, other business combination, or
recapitalization involving any of the Acquired Companies, (b) any dissolution,
liquidation, or termination of any of the Acquired Companies, (c) any sale of
any assets of any of the Acquired Companies, (d) the amendment of the
Organizational Documents of any of the Acquired Companies, or (e) the adoption
by any of the Acquired Companies of any proposition the effect of which may be
to inhibit, prohibit, restrict, or delay the consummation of any of the
transactions contemplated by this Agreement or impair the contemplated
benefits to Buyer or its Affiliates of the transactions contemplated by this
Agreement or the Other Agreements.
8.21 Simultaneous Closing
The Closing of the transactions contemplated by the Units Purchase
Agreement shall have closed simultaneously with the Closing under this
Agreement.
8.22 Conditions Precedent Under Other Agreements
The obligation of Buyer to close the transactions contemplated under
this Agreement is subject to the fulfillment of the following additional
conditions precedent on the Closing Date hereunder:
(a) the representations and warranties of the Sellers and NPI
Parties named therein contained in the Other Agreements shall be true and
correct in all material respects on and as of the Closing Date hereunder with
the same effect as if made on and as of such date, the covenants and
agreements of such Sellers and NPI Parties shall have been performed and
satisfied, all of the conditions to the obligations of the Buyer named therein
shall have been satisfied, subject only to the consummation of the Closing
thereunder by the Buyer and delivery of all required certificates, opinions
and instruments of transfer by the Sellers named therein (the form and
substance of all of which shall have been agreed and all of which shall be
capable of being delivered on the date of the Closing hereunder), and no
default (or event which with notice or the passage of time or both would be a
default) shall then exist under any Other Agreement and the Sellers and the
NPI Parties shall have delivered to Buyer an Officer's Certificate to such
effect in form and substance satisfactory to Buyer;
(b) no event shall have occurred which shall make it probable, in
the reasonable opinion of Buyer, that the conditions to the obligations of the
Buyer or its Affiliates under any or all of the Other Agreements will not be
satisfied by a date which is not more than two days after the Closing Date
hereunder and the NPI Parties shall have delivered to Buyer an certificate of
the NPI Principals as to the absence of any events, or conditions which call
into question whether the conditions to such obligations of Buyer or its
Affiliates will not be satisfied by such date, in form and substance
satisfactory to Buyer; and
(c) no material adverse change shall have occurred since the date
hereof in the business, property, operations, assets, liabilities, condition
(financial or otherwise) or prospects of any entity in which Buyer or any
Affiliates is to acquire an interest pursuant to any Other Agreement and the
Sellers shall have delivered a certificate to such effect, in form and
substance satisfactory to Buyer.
8.23 Other Closing Documents
Sellers and the NPI Parties shall have delivered to Buyer at or
prior to the Closing such other documents as Buyer may reasonably request in
form and substance satisfactory to Buyer.
IX. Conditions to the Obligations of Sellers
The obligations of Sellers under this Agreement are subject to the
following conditions (unless waived by Sellers in writing at the Closing):
9.01 Accuracy of Representations and Compliance with Conditions
All representations and warranties of Buyer contained in this
Agreement shall be accurate as of the Closing Date, in all material respects
with the same effect as if made on and as of such date except for changes
expressly permitted or required under this Agreement or the Other Agreements;
as of the Closing, Buyer shall have performed and complied in all material
respects with all covenants and agreements and satisfied all conditions
required to be performed and complied with by Buyer at or before such time;
and Sellers shall have received certificates to that effect executed by the
chief executive officer and the chief financial officer of Buyer, dated as of
the Closing Date, in form and substance satisfactory to Sellers.
9.02 Buyer's Deliveries
Buyer shall have delivered to Seller the funds and documents set
forth in Section 3.02(b).
9.03 Hart-Scott-Rodino Waiting Period
All applicable waiting periods (and any extensions thereof) in
respect of the transactions contemplated by this Agreement under the HSR Act
shall have expired at or prior to the Closing.
9.04 Tax Allocation Agreements
The Tax Allocation Agreement in the form of Exhibit E shall have
been duly authorized, executed, and delivered by the parties thereto at or
prior to the Closing.
9.05 [Intentionally Omitted]
9.06 Other Agreement
The Agreement in the form attached as Exhibit F, shall have been
duly authorized, executed, delivered by the parties thereto, and be effective
at or prior to the Closing.
9.07 Closings Under Other Agreements
Insignia shall deliver a certificate (which may be based on the
certificate delivered under Section 8.22) in form and substance satisfactory
to Sellers that it has no knowledge of any events or conditions that call into
question whether the conditions to the obligations of Sellers and/or their
Affiliates under the Other Agreements will be satisfied.
9.08 No Material Adverse Change
No material adverse change shall have occurred since the date hereof
in the condition (financial or otherwise), business, property, operations,
assets or liabilities of Insignia.
9.09 No Governmental or Legal Action
There shall not have been any action taken, or any law, rule,
regulation, order, judgment, or decree proposed, promulgated, enacted,
entered, enforced, or deemed applicable to the transactions contemplated by
this Agreement by any federal, state, local, or other governmental authority
or by any court or other tribunal, including the entry of a preliminary or
permanent injunction, which, in the reasonable judgment of the Seller, (a)
makes any of the transactions contemplated by this Agreement illegal or (b)
otherwise prohibits, restricts, or delays consummation of the transactions
contemplated by this Agreement or any Other Agreement or impairs the
contemplated benefits to Sellers of any of the transactions contemplated by
this Agreement or any Other Agreement.
9.10 Investment Capital Contribution
IFGP or an Affiliate of Buyer shall have been substituted as the
guarantor of NPI Inc.'s funding obligation in connection with the capital
contributions of NPI Equity and NPI Equity II with respect to the Controlled
Partnerships (the "Investment Capital Contribution") pursuant to the terms of
a certain agreement dated as of the date hereof, by and among Insignia, the
NPI Principals, Emmet J. Cashin, Jr., Jarold A. Evans, W. Patrick McDowell and
the other parties named therein.
9.11 Simultaneous Closing
The Closing of the transactions contemplated by the Units Purchase
Agreement shall have closed simultaneously with the Closing under this
Agreement.
9.12 Other Closing Documents
Buyer shall have delivered to Sellers at or prior to the Closing
such other documents of officers of Buyer as Sellers may reasonably request.
X. Post Closing Covenants
10.01 Tax Returns
Buyer shall cause the federal, state and local income tax returns
and information returns (including any related or supporting information and
schedules) for the calendar year 1996 for each of the Controlled Partnerships
to be prepared in accordance with the provisions of the Tax Allocation
Agreement, so as to. among other things, (i) reflect Insignia NPI, L.L.C., in
the case of the limited partnership units owned by the Scheduled LPs (as such
term is defined in the Units Purchase Agreement), and MRI LLC, in the case of
the MRI/CP Units (as such term is defined in the Units Purchase Agreement),
and Riverside Drive L.L.C., in the case of the limited partnership units owned
by the Commercial LPs (as such term is defined in the Units Purchase
Agreement), as the owner(s) of said units as of the Closing Date, and (ii)
close the books of each partnership described in clause (i) as of the close of
the day immediately preceding the Closing Date and by treating each of the
period through the close of such immediately preceding day and the period
beginning on the Closing Date, respectively, as a separate taxable year,
except that income, gain, loss, deductions and credits from ordinary
operations of such partnership (but not from any sale or other disposition of
any properties or other assets owned by such partnership) for the calendar
month which includes the Closing Date shall be apportioned on a per diem
basis. Buyer shall cause the Scheduled LPs, the MRI LPs and the Commercial
LPs to make elections under Section 754 of the Code to the extent required
under the Tax Allocation Agreement.
10.02 MRI Agreements
Buyer and Sellers shall cause the agreements described on Schedule
10.02-C (the "MRI Agreements") among the parties named therein to be executed
and delivered by the parties thereto.
10.03 Century Agreements
Buyer and Sellers shall cause the agreements described on Schedule
10.03-C (the "Century Agreements") among the parties named therein to be
executed and delivered by the parties thereto.
XI. Survival of Representations and Warranties and Covenants
11.01 Survival
All representations, warranties, covenants and agreements contained
in this Agreement or in any Additional Documents shall, in accordance with the
terms of this Agreement and the Master Indemnity Agreement, survive the
Closing under this Agreement and the Other Agreements notwithstanding any
investigation conducted by or on behalf of any party with respect thereto.
11.02 Time Limitations
(a) The representations and warranties set forth in this Agreement
shall terminate on the date which is eighteen months after the Closing Date of
this Agreement, or, in the case of any breach based on an alleged violation of
a statutory obligation, the applicable statute of limitations plus 60 days, if
longer, but in no event later than six years and 60 days after the Closing
Date; except that no representations or warranties shall terminate with
respect to any claim as to which notice is given in writing prior to such
date. For purposes of this Agreement, violations of a statutory obligation
include violations of applicable rules and regulations.
(b) No claim may be asserted after the Closing against any party to
this Agreement for breach of any representation or warranty set forth in this
Agreement unless the claim is asserted on or before the date which is eighteen
months after the Closing Date of this Agreement, or, in the case of any breach
based on an alleged violation of a statutory obligation, the applicable
statute of limitations plus 60 days, if longer, but in no event later than six
years and 60 days after the Closing Date.
(c) Except for the obligation of Sellers and the NPI Parties
pursuant to Section 6.17, no claim may be asserted after the Closing against
any party to this Agreement for breach of any covenant or agreement set forth
in this Agreement of any party required to be performed at or before the
Closing unless the claim is asserted on or before the date which is eighteen
months after the Closing Date of this Agreement, or, in the case of any breach
based on an alleged violation of a statutory obligation, the applicable
statute of limitations plus 60 days, if longer, but in no event later than six
years and 60 days after the Closing Date.
XII. Termination
12.01 Termination
This Agreement and the transactions contemplated hereby may be
terminated at any time on or prior to the Closing Date:
(a) by the mutual written consent of the parties hereto;
(b) by Buyer:
(i) if any material representation or warranty of Sellers or the
NPI Parties made in this Agreement or in any Additional Document was untrue in
any material respect when made, and such breach is not cured within 20 days of
Sellers' receipt of written notice from Buyer that such breach exists or has
occurred; or
(ii) if Sellers or the NPI Parties shall have defaulted in any
material respect in the performance of any covenant, agreement or obligation
under this Agreement, and such default is not cured within 20 days of Sellers'
receipt of written notice from Buyer that such default exists or has
occurred; or
(iii) if there shall occur an Event of Bankruptcy (defined below)
with respect to any of Sellers or the NPI Parties; or
(iv) if termination by Buyer is permitted under Section 4.30(e)
or Section 8.05 or Article X of the Units Purchase Agreement; or
(v) if the conditions to Buyer's obligations hereunder cannot be
satisfied by the Closing Date for any reason other than a breach by Buyer.
(c) by Sellers:
(i) if any material representation or warranty of Buyer made in
this Agreement or any Additional Document was untrue in any material respect
when made, and such breach is not cured within 20 days of Buyer's receipt of
written notice from Seller that such breach exists or has occurred; or
(ii) if Buyer shall have defaulted in the performance in any
material respect of any covenant, agreement or obligation under this
Agreement, and such default is not cured within 20 days of Buyer's receipt of
written notice from Sellers that such default exists or has occurred; or
(iii) if there shall occur an Event of Bankruptcy with respect to
Buyer; or
(iv) if the conditions to Sellers' obligations hereunder cannot
be satisfied by the Closing Date for any reason other than a breach by any of
Sellers or the NPI Parties.
As used herein, an "Event of Bankruptcy" shall be deemed to have
occurred with respect to a Person if: (a) such Person makes an assignment for
the benefit of creditors; (b) such Person files a voluntary petition in
bankruptcy; (c) such Person is adjudged a bankrupt or insolvent, or there is
entered against such Person any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law, rule or regulation; or (d) such Person seeks, consents to or acquiesces
in the appointment of a trustee, receiver or liquidator of such Person or of
all or any substantial part of such Person's properties.
12.02 Manner of Exercise
In the event of the termination of this Agreement pursuant to
Section 12.01 hereof, written notice thereof shall forthwith be given to the
non-terminating parties, and this Agreement shall terminate and the
transactions contemplated hereunder shall be abandoned without further action
by any party hereto; provided, however, no such notice of termination shall be
effective unless the terminating party shall give or cause to be given a
contemporaneous notice of termination under each of the Other Agreements which
contains provision for termination.
12.03 Effect of Termination
In the event of the termination of this Agreement pursuant to
Section 12.01, all obligations of the parties hereunder shall terminate,
except for the respective obligations of any of the parties under Section 6.08
and Article XIII, if applicable.
12.04 Intentionally Omitted]
XIII. Miscellaneous
13.01 Covenants Not to Sue
(a) After the Closing, Buyer shall not sue any of Sellers or the
NPI Parties for any acts as a direct or indirect general partner of the
Controlled Partnerships or for causing any other NPI Party to act as a direct
or indirect general partner of the Controlled Partnerships prior to the
Closing except for suits based on any rights arising under or in connection
with this Agreement or the Additional Documents (or as otherwise provided in
the Master Indemnity Agreement).
(b) After the Closing, neither any of Sellers nor the NPI Parties
shall sue Buyer or any Affiliate of Buyer for any acts as a direct or indirect
general partner of the Controlled Partnerships after the Closing except for
suits based on any rights arising under or in connection with this Agreement
or the Additional Documents (or as otherwise provided in the Master Indemnity
Agreement).
(c) If Buyer sells, conveys, transfers or otherwise disposes of any
of the Acquired Companies to any Person, Buyer shall, and shall cause its
Affiliates to, cause such Person to make adequate provisions such that upon
consummation of any such transaction Sellers and the NPI Parties shall be
entitled to receive from such Person the benefits of the provisions of Section
13.01(a).
13.02 Joint and Several Liability; Indemnification
(a) With respect to any matter for which Sellers and the NPI
Parties would have joint and several liability to Buyer under this Agreement,
the relative liability of the Apollo Entities on the one hand and Sellers and
the NPI Parties on the other hand shall be governed by Section 4.07 of the
Master Indemnity Agreement.
(b) After the Closing under this Agreement, all rights of any
parties hereto to sue any other parties for indemnification or otherwise under
this Agreement shall be asserted only under the Master Indemnity Agreement.
13.03 Brokerage Fees
Each party hereto represents and warrants to the other parties that
it has not engaged a broker or finder in connection with or as a result of any
of the transactions contemplated by this Agreement.
13.04 Further Actions
At any time and from time to time before and after the Closing, each
party agrees, at its expense, to take such actions and to execute and deliver
such documents as may be reasonably requested by any other party to effectuate
the purposes of this Agreement.
13.05 Availability of Equitable Remedies
Since a breach of the provisions of this Agreement could not
adequately be compensated by money damages, any party shall be entitled,
after the Closing, in addition to any other right or remedy available to it,
to an injunction restraining such breach or a threatened breach and to
specific performance of any such provision of this Agreement, and in either
case no bond or other security shall be required in connection therewith, and
the parties hereby consent to the issuance of such an injunction and to the
ordering of specific performance.
13.06 Notices
Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be mailed by certified mail, return
receipt requested, by Federal Express, Express Mail, or similar overnight
delivery or courier service, or delivered (in person or by telecopy, telex, or
similar telecommunications equipment) against receipt to the party to whom it
is to be given at the address of such party set forth in the preamble to this
Agreement (or to such other address as the party shall hereafter furnish to
the other parties hereto in writing in accordance with the provisions of this
Section 13.06). Any notice addressed to Buyer shall be addressed to the
attention of: General Counsel, with a copy to Proskauer Rose Goetz &
Mendelsohn LLP, 1585 Broadway, New York, New York 10036, Attention: Arnold S.
Jacobs, Esq. Any notice to Sellers or the NPI Parties shall be addressed c/o
and sent only to the NPI Principals and AP-NPI with a copy to Rosenman &
Colin, 575 Madison Avenue, New York, New York 10022-2585, Attention: Joseph
L. Getraer, Esq., and a copy to Battle Fowler LLP, 75 East 55th Street, New
York, New York 10022, Attention: Steven L. Lichtenfeld, Esq. Any notice or
other communication given by certified mail shall be deemed given three days
after the time of certification thereof, except for a notice changing a
party's address which will be deemed given at the time of receipt thereof.
Any notice given by other means permitted by this Section 13.06 shall be
deemed given at the time of receipt thereof.
13.07 Waiver
Any waiver by any party of a breach of any term of this Agreement
shall not operate as or be construed to be a waiver of any other breach of
that term or of any breach of any other term of this Agreement. The failure
of a party to insist upon strict adherence to any term of this Agreement on
one or more occasions will not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of this Agreement. Any waiver must be in writing.
13.08 Binding Effect
The provisions of this Agreement shall be binding upon and inure to
the benefit of Sellers, the NPI Parties, Buyer, and their respective
successors and assigns.
13.09 No Third-Party Beneficiaries
This Agreement does not create, and shall not be construed as
creating, any rights enforceable by any Person not a party to this Agreement.
13.10 Severability
If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if
any provision is inapplicable to any Person or circumstance, it shall
nevertheless remain applicable to all other Persons and circumstances.
13.11 Headings
The headings in this Agreement are solely for convenience of
reference and shall not be deemed a part of or given effect in the
construction or interpretation of this Agreement.
13.12 Counterparts; Governing Law
This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. It shall be governed by and construed
in accordance with the laws of New York, without giving effect to conflict of
laws rules. The parties agree that any action, suit, or proceeding arising
out of, based on, or in connection with this Agreement or the transactions
contemplated hereby may be brought only in the United States District Court
for the Southern District of New York or the Supreme Court of New York, New
York County, and each party covenants and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such action, suit, or proceeding,
any claim that it is not subject personally to the jurisdiction of such court,
that its property is exempt or immune from attachment or execution, that the
action, suit, or proceeding is brought in an inconvenient forum, that the
venue of the action, suit, or proceeding is improper, or that this Agreement
or the subject matter hereof may not be enforced in or by such court.
13.13 Attorneys' Fees
In any action or proceeding brought by a party to enforce any
provision of this Agreement, the prevailing party shall be entitled to recover
the reasonable costs and expenses incurred by it in connection with that
action or proceeding (including, but not limited to, attorneys' fees).
13.14 Waiver of Trial by Jury
TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES TO
THIS AGREEMENT HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION AND THE RELATIONSHIPS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER
IS INTENDED TO ENCOMPASS ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING, WITHOUT
LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO THIS AGREEMENT, AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
EACH PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS
JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
13.15 No Joint Venture or Partnership
Sellers, the NPI Parties and Buyer intend that the relationships
created hereunder be solely that of buyer and seller. Nothing herein is
intended to create a joint venture, partnership, tenancy-in-common, or joint
tenancy relationship between any of the parties.
13.16 Construction of Documents
The parties hereto acknowledge that they were represented by counsel
in connection with the negotiation and drafting of this Agreement and the
documents to be delivered pursuant hereto, none of which shall be subject to
the principle of construing their meaning against the party which drafted the
document.
13.17 Whole Agreement; Exhibits and Schedules; Amendments
This Agreement and the Other Agreements contain the entire agreement
of the parties hereto and thereto in respect of the transactions contemplated
hereby and thereby, and all prior agreements among or between such parties,
whether oral or written, with respect to such transactions are superseded by
the terms of this Agreement and the Additional Documents. Exhibits and
Schedules attached hereto or referred to herein, shall be deemed as fully a
part of this Agreement as if set forth herein in full. This Agreement may be
amended only in a writing signed by the party to be bound thereby.
13.18 Knowledge
For purposes of this Agreement, the term "to the knowledge of
Sellers and NPI Parties" or any similar term shall mean the actual knowledge
of any of Michael L. Ashner, Martin Lifton, Arthur N. Queler, Peter Braverman,
William Hamilton and Steven Lifton.
13.19 Expenses
Each of the parties hereto shall bear its own expenses in connection
with (i) the preparation and negotiation of this Agreement and the Other
Agreements and (ii) the transactions contemplated by this Agreement and the
Other Agreements, and all such expenses of Sellers and the NPI Parties shall
be paid by Persons other than those to be acquired by Buyer and its Affiliates
under this Agreement and the Other Agreements.
13.20 Definitions
The following terms are defined in the following Sections:
Defined Term Section
Acquired Companies 4.01
Additional Documents 4.28
Affiliate 4.01
Affiliate Transactions 7.06
Buyer Recitals
Buying Group 4.16
Purchase Price 1.01(a)
Closing 3.01
Closing Date 3.01
Code 4.11
Controlled Partnership 4.01
Controlled GP 4.01
Corporate Employees 4.19(a)
Debt 4.13
Environment 4.17(i)
Environmental Laws 4.17(i)
Environmental Liabilities 4.17(i)
ERISA Affiliate 4.20(a)
ERISA 4.20(a)
Event of Bankruptcy 12.01
Executive Employees 4.19(a)
FCMC Voting Trust 4.02
Fox Amendment Recitals
FRI Recitals
FRI Partnership Agreement Recitals
Hazardous Substances 4.17(i)
HSR Act 6.05(a)
HUD 4.12
Investment Capital Contribution 9.10
IRS 4.20(d)(i)
Liabilities 4.08(a)
Lien 4.02
March Partnerships 4.17(a)
Master Agreement Recitals
Master Indemnity Agreement 4.16
Material Agreement 4.15
Multiemployer Plan 4.20(b)
Multiple Employer Plan 4.20(b)
Net Current Assets 4.08(a)
NPI Family Parties Parties
NPI Parties Parties
NPI Principals Parties
NPI Shares Recitals
Order 4.25
Organizational Documents 4.03(b)(v)
Other Agreements 3.02(a)(ix)
PaineWebber Debt Recitals
PaineWebber Recitals
PBGC 4.20(b)(v)
Person 4.01
Plan 4.20(a)
PRA 4.06(b)
Real Property 4.17(a)
Reimbursable Employees 4.19(a)
SEC 4.25
SEC Filings 4.25
Securities Act 1.02(c)
Sellers Parties
Selling Group 4.16
Settlement Agreements 4.25
Shareholders 4.24
Subsidiaries 4.01
Tender Offer Documents 4.25
Tender Offers 4.25
to the knowledge of Sellers
and NPI Parties 13.18
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
BUYER:
INSIGNIA FINANCIAL GROUP, INC.
By: _______________________
Name:
Title:
IFGP CORPORATION
By: _______________________
Name:
Title:
Sellers:
AP-NPI II, L.P.
By: AP-NPI Operating Corporation II, its general partner
By: ________________________
Name:
Title:
____________________________
MICHAEL L. ASHNER
____________________________
MARTIN LIFTON
____________________________
ARTHUR N. QUELER
____________________________
SUSAN ASHNER
____________________________
JUDIE LIFTON
____________________________
ANISE QUELER
____________________________
STEVEN LIFTON
____________________________
G. BRUCE LIFTON
THE MARTIN LIFTON 1994 FAMILY TRUST
By: ____________________________
Robert Lifton, Trustee
THE ELINOR LIFTON 1994 FAMILY TRUST
By: ____________________________
Robert Lifton, Trustee
NPI PARTIES:
NATIONAL PROPERTY INVESTORS, INC.
By: ____________________________
Name: Michael L. Ashner
Title: President
NPI-AP MANAGEMENT L.P.
By: NPI Property Management Corporation, its general partner
By: ____________________________
Name: Michael L. Ashner
Title: President
NPI PROPERTY MANAGEMENT
CORPORATION
By: ____________________________
Name: Michael L. Ashner
Title: President
DEFOREST VENTURES I, L.P.
By: DeForest Capital I Corporation, its general partner
By: ____________________________
Name: Michael L. Ashner
Title: President
DEFOREST VENTURES II, L.P.
By: DeForest Capital II Corporation, its general partner
By: ____________________________
Name: Michael L. Ashner
Title: President
DEFOREST CAPITAL I CORPORATION
By: ____________________________
Name: Michael L. Ashner
Title: President
DEFOREST CAPITAL II CORPORATION
By: ____________________________
Name: Michael L. Ashner
Title: President
QAL ASSOCIATES
By: ____________________________
Name: Michael L. Ashner
Title: President
QALA II ASSOCIATES
By: ____________________________
Name: Michael L. Ashner
Title: President
AP-NPI L.P.
By: AP-NPI Operating Corporation, its general partner
By: ____________________________
Name:
Title:
AP-NPI X L.L.C.
By: ____________________________
its managing member
AP-NPI III, L.P.
By: ________________________, its general partner
By: ____________________________
Name:
Title:
NPI EQUITY INVESTMENTS, INC.
By: ____________________________
Name: Michael L. Ashner
Title: President
NPI EQUITY INVESTMENTS II, INC.
By: ____________________________
Name: Michael L. Ashner
Title: President
